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Incur Then Collect, Not the Other Way Around

In Kaymark v.Bank of America, N.A., Udren Law Offices, P.C. , 783 F.3d 168, (3rd Cir. 2015), the Third Circuit Court of Appeals held that mortgage foreclosure complaints cannot contain allegations and claims for attorney’s fees expected to be incurred through the foreclosure process, but not yet incurred as of the time the complaint is filed.  Following its line of reasoning in McLaughlin v. Phelan Hallinan & Schmeig, LLP, 756 F.3d 240 (3d Cir. 2014), where the Court found that similar claims in demand letters violated the federal Fair Debt Collection Practices Act (FDCPA), the Third Circuit found that pleading specific amounts of fees as liquidated amounts, and not estimates, were false communications and therefore a violation of the FDCPA. 

The fact that the alleged violation of the FDCPA was contained in a pleading, rather than a letter or other form of communication, was indistinguishable to the Court.  Citing both the statutory language of the FDCPA and a series of cases interpreting same, the Court found that communications to the consumer can be just as easily found in pleadings as in collection letters.  Make sure the fees and costs have been incurred before they are pled in any foreclosure complaint.  Incur, then collect.

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