mug blittWhether or not your jurisdiction is a notice or fact pleading state, it is understood that the basic purpose of a complaint is to make allegations. Plaintiffs are not required to prove their cases in the complaint, merely to set out what they believe the facts to be. It is at trial or summary judgment where the court will determine if there is sufficient evidence to support the allegations.

That may have changed this spring. In Kaymark v. Bank of America and Udren Law Offices, P.C. the 3rd Circuit Court overturned dismissal of an FDCPA case which had claimed the collector sought amounts to which it was not entitled when the complaint alleged the plaintiff had incurred flat attorney fees and certain costs related to mortgage foreclosures prior to those fees being incurred.

The consumer asserted, at the time the complaint alleged the fees were due, none of them had actually been incurred. In response, the district court had found the alleged FDCPA violation to be “hypertechnical” given the fees were reasonably expected to be incurred. The appeals court disagreed, noting it was a violation of the FDCPA to attempt to collect fees or costs incidental to the principal obligation unless expressly authorized by the agreement creating the debt or by law. Therefore, the FDCPA claim was sufficient because the collection firm could not be authorized to collect fees for not-yet-performed legal services where the contract required the fees be incurred for services performed. In making this decision, the court expressly disagreed that the remedy for the complaint’s alleged deficiencies was under the state rules of civil procedure.

It is axiomatic that when considering dispositive motions, courts construe the complaint’s allegations as true. Or put in a negative sense, a court is saying, if not for having to consider this summary judgment motion, we would neither treat the facts as true or not true; that is your burden at trial. For that reason, it is hard to comprehend how an allegation in a complaint could be misleading: While the complaint laid out specific sums, these fees could be denied or reduced by the court at trial.

In the greater Chicago area, there is a general understanding that where attorney fees are allowed by a contract, the same amount of fees are granted for the filing of the complaint and a first appearance. As a result, where allowed by the contract and their clients, most attorneys plead for that exact sum in every complaint. Importantly, few collection attorneys seek additional fees even where the litigation has gone far beyond a default, i.e., discovery, motion practice or a trial. In other words, while this courtesy benefits the consumer, such actions do not permeate in FDCPA decision-making. But thanks to Kaymark, even though this sum is authorized by the court, it is now questionable if seeking those fees in the body of the complaint would lead to an FDCPA violation.

Just as in last year’s Brock v. Pressler and Pressler, LLP, where a collection firm’s use of paralegals was found to be outside the bounds of propriety despite their use in other types of legal practices, the Kaymark case just as forcefully shows collector’s legal practices are considered diminished forms of law. First, the sum sought was explicitly authorized by Fannie Mae. Second, for a non-collection law firm to claim to have expended $1,600 in preparing and drafting a complaint for litigation would be considered fair and reasonable. And, in the context of multiple court appearances, continuances to allow for short-sales and the desire not to force consumers from their homes, all of us know a maximum cap of $1,600 per file likely means the firm would be losing money. Finally, given our experiences with FDCPA lawsuits, no court would blink an eye in awarding a consumer attorney twice that much for filing a complaint and settling a case. A dose of reality of the life of a collection practitioner might be very valuable.

So where do we go from here? As usual, we must adjust. We have to ensure best practices are in place in re-evaluating the language used in our complaints. Where a specific sum could be requested, we will need to qualify allegations with the claims by circumstances that would allow the court to assess the fees or costs. While time-consuming, keep in mind changing a single word can save you thousands of dollars.

Fred N. Blitt, Esq., is a partner with Blitt and Gaines, PC in Illinois and Couch, Conville and Blitt in Louisiana. He is past president of NARCA. Contact: This email address is being protected from spambots. You need JavaScript enabled to view it..