Sixth Circuit Holds Limited Liability Company Is a “Person” Protected by FDCPA

The United States Court of Appeals for the Sixth Circuit recently held that a limited liability company may have a valid claim under the Fair Debt Collection Practices Act (“FDCPA”) against a debt collector for a misrepresentation in the debt collector’s foreclosure notification.  See Anarion Investments LLC v. Carrington Mortgage Servs., LLC, 794 F.3d 568 (6th Cir. 2015).  In the case, an attorney leased a property with an option to purchase it.  The owner of the property defaulted on his loan, and the lender commenced a foreclosure action.  While the property was in foreclosure, the attorney assigned the lease and option to his limited liability company.  As part of the foreclosure action, the lender published a number of foreclosure notices in a newspaper in which it stated that another entity was its trustee for the bank loan by a “duly recorded” instrument.  The limited liability company filed a complaint, alleging that the alleged “instrument” did not exist, and the lender had therefore made a misrepresentation in connection with the closing of any debt in violation of the FDCPA.  15 USC 1692e.  The District Court dismissed the complaint, holding that the limited liability company was not a “person” protected under the FDCPA, as the FDCPA was designed to protect consumers.  On appeal, the Sixth Circuit reversed, holding that while a “person” is not defined under the FDCPA, other provisions of the statute imply that a “person” refers to both a natural person and a legal entity.  Therefore, it found that the entity was protected by and had a right to sue under the FDCPA, and remanded the decision to the District Court to determine if the claim was otherwise valid.  Notably, the dissent stated that “[d]espite the thousands of claims that have been brought in federal court since the passage of the FDCPA in 1977, neither the majority nor the parties cite a single instance in which a legal entity has sued as a ‘person’ entitled to relief under the Act.”

For a copy of the decision, please contact Michael O’Donnell at