Court of Appeals (Mich.) Says Creditor Was Subject to the FDCPA Because In-House Counsel’s Letters Suggested Counsel and Creditor Were Different Entities; Said In-House Counsel Was Not Subject to the FDCPA’s “Employee Exemption”

In Nitzkin v. Craig, 2018 WL 3074061 (Mich.App.), 3 (Mich.App., 2018), the Michigan Court of Appeals found that a creditor’s in-house counsel’s letters subjected the creditor to liability.

With regard to the second and third requirements, the letter and Craig’s deposition testimony make it clear that Guardian was collecting a debt owed to it while using the name of another. At the outset, the letter was sent to collect a debt owed to Guardian. Further, the letterhead indicated that the letter was sent from the “Law Offices of Robert M. Craig & Associates,” and was signed by Joan Green, a legal assistant. Craig testified at his deposition that at all times relevant to this lawsuit, he worked as general or in-house counsel for Guardian. He explained that Guardian signed his paycheck, which was made payable to him as an individual. He also stated that the “Law Offices of Robert M. Craig & Associates” was not a separate legal entity as it was just a name he used to do business while employed by Guardian. Although Guardian’s name appeared on the letter, the letter referred to Guardian as a “client” of the Law Office or Green, which suggests a separation of identity. Further, the letter stated that Nitzkin’s account with Guardian was “turned … over” to the Law Offices/Green, which again suggests that Guardian and the individual attempting to collect the debt were different entities. Accordingly, viewed in the light most favorable to Nitzkin, the nonmoving party, Guardian attempted to collect a debt owed to it while using the name of another. The second and third requirements are, therefore, satisfied.

The Court of Appeals also held that the in-house counsel was subject to the FDCPA.

Craig argues, however, that despite meeting the general definition in 15 USC 1692a(6), he is excluded from the definition of debt collector by 15 USC 1692a(6)(A) and (B), which provide that a person is not a debt collector if that person is: “(A) any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor;
(B) any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts[.]”  However, subdivision (A) is inapplicable because, although Craig was employed by Guardian, he was not collecting a debt for Guardian using Guardian’s name. In addition, subdivision (B) is inapplicable because, as the Sixth Circuit Court of Appeals has observed, 15 USC 1692a(6)(B) refers to artificial persons, because “[n]atural persons are not related or affiliated in those ways.” Anarion Investments LLC v. Carrington Mtg. Servs., LLC, 794 F.3d 568, 569 (C.A. 6, 2015). See also Cruz v. Int’l Collection Corp., 673 F.3d 991, 999 (C.A. 9, 2012) (explaining that the employee of debt collector may be held liable for violations of FDCPA if the employee independently meets the definition of the term “debt collector”); and Pollice v. Nat’l Tax Funding, LP, 225 F.3d 379, 404 (C.A. 3, 2000) (stating “vicarious liability under the FDCPA will be imposed for an attorney’s violations of the FDCPA if both the lawyer and the client are debt collectors”) (quotations marks and citations omitted). Thus, contrary to Craig’s argument on appeal, the trial court properly determined that Craig is a debt collector.