Banking and Finance Law Daily Scope of 'costs' recoverable under FDCPA does not include damages
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Monday, June 8, 2020

Scope of 'costs' recoverable under FDCPA does not include damages

By Colleen M. Svelnis, J.D.

The 7th Circuit agreed with an Indiana district court that recoverable costs under Rule 54(d) and the FDCPA do not include any kind of damages, or the compensation for an individual’s time and mailing expenses in a bill of costs.

The U.S. Court of Appeals for the Seventh Circuit has decided that the recovery of costs under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692k(a), Federal Rule 54(d) of the Federal Rules of Civil Procedure, do not include damages. In a case involving a letter sent by IMC, a debt collector, to Norman Peck on behalf of Medical Associates, LLC, regarding a debt that Peck allegedly owed, the district court correctly denied Peck’s bill of costs. The case came down to the definition of "costs" in an offer of judgment by the parties. The court affirmed the U.S. District Court for the Southern District of Indiana because Peck requested costs not contemplated by the federal rules and the FDCPA. (Peck v. IMC Credit Services, June 5, 2020. Per Curiam.).

Violation of FDCPA. A debt collection letter sent to Peck by IMC had a clear pane that revealed a barcode containing Peck’s personal information. Peck sued IMC violating the Fair Debt Collection Practices Act in numerous ways. Peck alleged that the debt collector violated the FDCPA by revealing his personal information on the envelope, and by failing to verify that Peck owed the debt after he disputed it. IMC made an offer of judgment in the amount of $1,101, "plus costs to be awarded by the court." Peck believed IMC’s offer of "costs" included the damages he claimed under the FDCPA, while IMC’s offer was for "taxable costs as a prevailing party" The offer accounted for $1,101 in statutory damages with interest, plus the costs typically recoverable by the prevailing party in civil litigation.

Scope of costs. The district court concluded that there was no meeting of the minds about the offer of judgment. However, in response to an interlocutory motion by Peck, the district court found that because "the objective manifestation of mutual assent" governs contract formation, Peck had accepted the offer of judgment. It ordered the entry of judgment consistent with the terms of IMC’s Rule 68 offer.

The court instructed Peck to file a bill of costs that was "limited to those contemplated by [Federal Rule of Civil Procedure] 54(d)." Instead, Peck demanded $24,137.50 in actual damages costs and $1,000 in additional damage costs, as well as $47,425.02 in punitive damages, leading the court to deny his bill of costs and enter a final judgment awarding just $1,101.

Peck argued on appeal that the district court erred by failing to award the "costs" he requested, which he contends are recoverable under 15 U.S.C. § 1692k(a). Peck cited Marek v. Chesny, 473 U.S. 1, 9 (1985), which states that the term "costs" in Rule 68 was intended to refer to "all costs properly awardable under the relevant substantive statute or other authority." Peck argued that all costs properly awardable in an action should be considered within the scope of Rule 68 "costs." The court held, however, that nothing in Marek equates "costs" with "damages" and damages are not part of the costs "properly awardable under" § 1692k(a). The statute allows recovery of "actual damage" and discretionary "additional damages" up to $1,000. Under another section, costs of the action are allowed to be recovered. The court pointed out that if "costs of the action" include actual or statutory damages, then the damages sections are superfluous. According to the court, without a special definition in the FDCPA, the "costs" it contemplates are those awardable under Federal Rule of Civil Procedure 54(d), which do not include any kind of damages, or the compensation Peck seeks for his time and mailing expenses. Therefore, the district court correctly denied Peck’s bill of costs.

The case is No. 19-3187.

Attorneys: Norman Peck, pro se. Nicholas W. Levi (Kightlinger & Gray LLP) for IMC Credit Services.

Companies: IMC Credit Services

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