6th Cir. Says Collection Action Not Compulsory Counter-Claim to FDCPA Action

In Bauman v. Bank of America, N.A., 2015 WL 9310136, at *3-4 (6th Cir. 2015), the Court of Appeals for the Sixth Circuit held that a creditor was not precluded from bringing a debt collection action because it had failed to bring it previously in response to the debtor’s FDCPA Action.

Although we have not squarely addressed whether a counterclaim to collect the underlying debt is compulsory in a FDCPA action, the framework in Maddox, Whigham, and Sanders is instructive, and supports a finding that Defendants were not required to bring a debt collection action as a counterclaim in the Baumans’ FDCPA lawsuit.   First, the Baumans’ FDCPA claim raises different issues of law from those that a foreclosure action would present. . . . Second, while there may be some overlap, the issues of fact presented by the Baumans’ FDCPA claims and a foreclosure action are not “largely the same.” . . .  Further, a foreclosure action requires a lender to prove that the debtor is in default and to prove the amount that the debtor owes. Kolenich, 958 N.E.2d at 200. A FDCPA claim, however, does not focus on the validity of the debt, but instead on the “use of unfair methods to collect it.” Peterson, 638 F.2d at 1136 (holding that a claim on the underlying debt is not a compulsory counterclaim to a FDCPA action); see also Baker v. G.C. Servs. Corp., 677 F.2d 775, 777 (9th Cir.1982) (“[A] debtor has standing to complain of violations of the [FDCPA], regardless of whether a valid debt exists.”). Indeed, the Baumans’ FDCPA claim does not contest their debt obligation, but rather focuses on who attempted to collect the debt and the manner in which they attempted to do so.  Third, the same policy reasons that compelled this Court to find that a counterclaim on the underlying debt in a TILA action is permissive support a similar holding here. A contrary finding would prevent many FDCPA defendants who fail to bring foreclosure actions as a counterclaim from later bringing the actions in state court. “Such a rule could systematically usurp these state law debt claims from adjudication by the state courts.”