District Court (Cal.) Says Offset is an Affirmative Defense to FDCPA/Rosenthal Act Case

In Rahman v. San Diego Accounts Service, Inc, 2017 WL 1387206 (S.D. Cal. 2017), the District Court found that a debt collector could assert “offset” of the balance owing on the debt to the Plaintiff’s Rosenthal Act/FDCPA claim.

Defendant’s final affirmative defense is one of “offset.” Specifically, “Defendant contends that any recovery by Plaintiff be offset by the amount owed to Defendant resulting from the valid medical debt from which this dispute arose.” (Am. Answer 8.) Plaintiff attacks both the legal and factual sufficiency of Defendant’s pleading. (MTS 12–14.)    Regarding legal sufficiency, Plaintiff first acknowledges that “the Ninth Circuit has not directly addressed the availability of offset to an FDCPA defendant,” and then focuses on caselaw analogies and policy reasons as to why such a defense should not be available. However, this is insufficient to show that the defense has “no possible bearing on the subject matter of the litigation.” Colaprico, 758 F. Supp. at 1339. Accordingly, the Court will not at this stage strike this affirmative defense as a matter of law.    Regarding factual sufficiency, Plaintiff argues that Defendant’s statement “does not give any reference of what the amount is or how said debt should reduce Plaintiff’s recovery.” (MTS 12.) However, Defendant specifically argues that “any recovery” should be offset by “the amount owed to Defendant resulting from the valid medical debt from which this dispute arose.” (Am. Answer 8.) And Plaintiff’s Complaint acknowledges two underlying debt figures which may ultimately be proven to be “valid”: either “the full amount of…services” Dr. Tantuwaya performed, (Compl. ¶ 16), or the amount Dr. Tantauwaya “would have… been able to charge Plaintiff…according to the [relevant] Medi-Cal rate table [,]” (id. ¶ 20). The Court concludes that this is sufficient to plausibly state an affirmative defense for offset. See, e.g., Jacobson v. Persolve, LLC, No. 14-CV-00735-LHK, 2014 WL 4090809, at *9 (N.D. Cal. Aug. 19, 2014) (“Even the minimal language in [Defendant]’s Answer satisfies the heightened ‘plausibility’ standard because the words ‘the amount owed to Defendant’ is self-explanatory in the context of the current dispute.”).