Yes, but what's REALLY bothering you?

Day 27 of 30 Days of Debt Collection (now into its 104th calendar day!) finds me thinking about the question of whether your damages are linked to your claims. Or, as the headline says, what's really bothering you? Is it the violation of the, or something else?

The Fair Debt Collection Practices Act (FDCPA) lets debtors sue for emotional distress and other "actual damages" caused by debt collectors who violate the law -- but not every bad thing that happens to a debtor is caused by the bad things that the debt collector did.

That's the lesson of Thomas v. Law Firm of Simpson & Cybak, a 2007 7th Circuit case that considered whether a debtor's claim was moot after the debtor rejected an offer of settlement.

Thomas, the debtor, defaulted on his automobile payments, and got a sued by the law firm of "Simpson & Cybak" representing his creditor, GMAC. Thomas responded to that suit by countersuing GMAC and the law firm, claiming (apparently correctly, but that's not clear) that the law firm had violated the FDCPA by not including the "validation notice" required with initial communications. Thomas was deposed, and was asked about his damages -- the harm the failure to send the validation notice had caused. Thomas responded that his "actual damages" were that he had lost the use of the car that had been repossessed. When questioned further, Thomas candidly admitted that his loss of the Blazer had nothing to do with the alleged FDCPA violation.

That is, the law firm's (alleged) failure to include the validation notice did not, in Thomas' opinion, cause him to lose his Blazer. Thomas admitted that even if he had been given the validation notice (which only requires that he be told he can dispute the debt and obtain verification of that, as well as the name of the original creditor) he could not have gone on making payments.

With that, the defendants opted to short-circuit Thomas' claims (which went on for seven years, total, a staggering length of time for a simple lawsuit) by offering him $5,000 to settle. Thomas rejected the offer, and the defendants moved to dismiss the case as "moot."

A case is moot when there's no reason to go on suing, and in this case, there was no reason to go on suing, the defendants said, because they'd offered Thomas everything he could hope to gain in a lawsuit -- more, in fact. They said that they'd offered him full compensation, and that he could not possibly do better than $5,000 if his case continued.

"You can't go on suing after you've won," is a saying heard in many FDCPA cases like this, and that rule applied to Thomas, too: The Court dismissed his case as moot.

The Seventh Circuit Court of Appeals agreed with that decision, noting that Thomas could provide no link between the FDCPA violation and what he claimed were his damages. Thomas argued on appeal that not only had he lost his Blazer, but he'd also suffered "extreme embarrassment and humiliation," and said he wanted $20,000, not just $5,000, for that. But again, he couldn't tie that in to the FDCPA; he'd said at his deposition that his embarrassment had come from testimony in the lawsuit to get the car back, not from the lack of a validation notice.

Thomas' injuries were real-- he no doubt was embarrassed by the testimony and no doubt missed his Blazer -- but they were not really related to the FDCPA. And that's the real message of his case: you can't just be injured, you have to be injured by the violation. The FDCPA allows for actual damages only where the damages were actually caused by the debt collector.

But if the violation didn't harm you, don't despair: remember that there's still "statutory damages," so you could collect up to $1,000 for a violation even if you weren't harmed.

There's another lesson in Thomas, too, and that lesson is this: Don't be greedy. Thomas was offered $5,000 -- a not insubstantial sum of money for a guy whose claim was that a letter didn't include a notice. He turned it down and tried to get even more, and in the end, went home empty handed.




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