Florida Federal Court Holds That Subrogating Insurer Was Not Subject to the FDCPA

The United States District Court for the Middle District of Florida recently held that a mortgage insurance company that subrogated to a lender’s position after paying the insured lender’s claim is not a “debt collector” subject to the provisions of the Fair Debt Collection Practices Act (“FDCPA”).  See Arencibia v. Mortgage Guar. Ins. Corp., 2015 WL 7076691 (M.D. Fla. Nov. 13, 2015).  In the case, the plaintiffs defaulted on a loan, and the lender submitted a claim to its insurance company.  After paying the claim, the insurance company sought deficiency judgments against the plaintiffs.  The plaintiffs filed a complaint alleging that the insurance company sought the judgments before notifying the plaintiffs that they had been assigned the debts, in violation of Florida law and the FDCPA.  The insurance company moved for summary judgment, arguing that it was not a debt collector subject to the FDCPA because it was seeking to collect on its own debt.  Its argument relied in part on the recent Eleventh Circuit decision of Davidson v. Capital One Bank (USA), N.A., which held that an entity that is assigned a debt post-default is not necessarily a debt collector pursuant to the FDCPA.  797 F.3d 1309 (11th Cir. 2015).  The Court granted the insurance company’s motion for summary judgment, agreeing that the Davidson decision controlled and that “{b}ecause Defendant stepped into the shoes of the lenders under subrogation law, Defendant’s collection efforts in this case relate only to debts owed to it–and not ‘to another.’”

An analysis of the Davidson decision can be found by clicking here.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com.