On many occasions, a legal claim for a debt collector or lender’s breach of collection harassment laws stems out of another lawsuit. For example, if a mortgage company has filed a foreclosure suit and the homeowner has hired an attorney, the mortgage company may be in violation of collection law if they continue to directly contact the homeowner after the homeowner hired the attorney.
This relationship between the collection violation and the collection case can create a strategic question of whether the borrower wants to file a lawsuit for the harassing conduct against the lender in the collection case (which is called a “counterclaim”) or whether the borrower wants to file a separate case to address the conduct. In my experience, the collection violation case is generally given more credibility when it is filed independently. But a challenge can arise because in some cases, a related lawsuit is required to be filed in the same case as the underlying action We call this a “compulsory” counterclaim.
In Kimrough v. Provident Funding Associates, L.P., 20 Fla. L. Weekly Supp. 870a (April 24, 2013), the Court addressed this issue of whether a claim under the Florida Consumer Collection Practices Act (“FCCPA”) relating to a foreclosure action was a compulsory counterclaim. The Circuit Court, acting in an appellate capacity for the County Court case, followed a long line of case law on the Federal version of the FCCPA, known as the Fair Debt Collection Practices Act (“FDCPA”), and held that debt collection violations that occur during a foreclosure case are merely “permissive” counterclaims, and therefore can be filed in a separate action.
The case can be viewed on the Florida Law Weekly website, which requires a subscription.
