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Dorrian v. LVNV Funding, LLC

Supreme Judicial Court of Massachusetts, Suffolk

April 9, 2018

TARA DORRIAN [1]
v.
LVNV FUNDING, LLC (and a consolidated case [2]).

          Heard: January 5, 2018.

          Civil actions commenced in the Superior Court Department on August 22 and December 30, 2014.After consolidation, the case was heard by Janet L. Sanders, J., on motions for class certification and for summary judgment.

         The Supreme Judicial Court granted an application for direct appellate review.

          David Schultz (Andrew M. Schneiderman also present) for LVNV Funding, LLC.

          Kenneth D. Quat (Josef C. Culik also present) for Tara Dorrian & another.

          Nadine Cohen & Philip Weinberg for Greater Boston Legal Services & others.

          Merrily S. Gerrish, Special Assistant Attorney General, & Heather L. Bennett for division of banks of the Office of Consumer Affairs and Business Regulation.

          Donald S. Maurice, Jr., & Brady J. Hermann for Receivables Management Association International, Inc.

          Daniel S. Blynn, Meredith L. Boylan, & Benjamin E. Horowitz, of the District of Columbia, David L. Feinberg, Joseph L. Demeo, & Lawrence S. Delaney for Cavalry SPV I, LLC.

          Present: Gants, C.J., Lenk, Gaziano, Lowy, Budd, Cypher, & Kafker, JJ.

          KAFKER, J.

         The primary issue presented is the definition of "debt collector" under G. L. c. 93, § 24, particularly its application to the statute's licensing requirement. After being sued for the failure to pay debts, the plaintiffs, Tara Dorrian and Virginia Newton, each individually filed suit against the defendant, LVNV Funding, LLC (LVNV), claiming unlicensed debt collection. The plaintiffs also alleged violations of G. L. c. 93A, asserted claims of unjust enrichment, [3]and sought to proceed against LVNV in a class action suit. A judge in the Superior Court consolidated the cases and certified them as a class action. On cross motions for summary judgment, the judge concluded that LVNV violated G. L. c. 93, § 24A, because it operated as a debt collector without a license and granted summary judgment to the plaintiffs. On the claim that LVNV violated G. L. c. 93A, the judge granted summary judgment to LVNV because it met the exemption from liability in G. L. c. 93A, § 3, as the division of banks of the Office of Consumer Affairs and Business Regulation (division) had permitted LVNV to operate without a license.

         On appeal, LVNV argues that (1) the judge erred in certifying the class because neither plaintiff is a proper class representative; (2) the judge's remedy was improper, and at most the judgments should merely be voidable; and (3) the judge should have deferred to the division's interpretation of the statute concluding that LVNV did not require a license.

         We conclude that LVNV is not a debt collector under G. L. c. 93, § 24.[4] The statute contains two separate definitions of "debt collector, " neither of which applies to LVNV, a "passive debt buyer, " which is a company that buys debt for investment purposes and then hires licensed debt collectors or attorneys to collect the debt on its behalf. The first definition covers entities of which the "principal purpose" is the "collection of a debt." We conclude that this definition does not apply to LVNV because LVNV has no contact with consumers and the Legislature did not intend for these entities to be treated as debt collectors under G. L. c. 93, § 24. The second definition covers entities that "regularly collect[] or attempt[] to collect, directly or indirectly, debts owed or due" to another. This definition does not apply because LVNV deals only with its own debts, not the debts of another. Because LVNV does not meet either definition, it is not a debt collector under G. L. c. 93, § 24. We therefore vacate the judgment and remand the matter to the Superior Court for further proceedings consistent with this opinion.[5]

         1. Background.

         a. Overview of G. L. c. 93, §§ 24-28.

         In 2003, the Legislature amended G. L. c. 93, §§ 24-28. See St. 2003, c. 130. These provisions, modeled after the Federal Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692p (FDCPA), are often referred to as the Massachusetts Fair Debt Collection Practices Act (MDCPA).[6] Congress passed the FDCPA to combat abusive debt collection practices. 15 U.S.C. § 1692. Although legislative history of the MDCPA is scant, it appears to share the same purpose as the FDCPA.

         The MDCPA also largely follows the FDCPA's language. The term relevant to this case, "debt collector, " is defined substantively the same under both laws. Compare 15 U.S.C. § 1692a(6), with G. L. c. 93, § 24. Under the MDCPA, an entity is a debt collector if (1) it is engaged in a "business the principal purpose of which is the collection of debt, " or (2) it "regularly collects or attempts to collect, directly or indirectly, a debt owed or due . . . another." G. L. c. 93, § 24.

         b. Division of banks.

         The division is a State agency responsible for financial regulation, including the regulation of debt collection. See G. L. c. 93, § 24A (d). Through its regulations, the division defines unlawful debt collection activities. 209 Code Mass. Regs. §§ 18.13-18.21 (2013). As part of its regulatory oversight responsibilities, it issues licenses to debt collectors and advisory opinions on which entities meet the two-part statutory definition of "debt collector." See G. L. c. 3OA, § 8. An entity that meets either definition of "debt collector" must be licensed by the commissioner of banks (commissioner) through the division. See G. L. c. 93, § 24A. To acquire a license, the applicant must establish to the commissioner's satisfaction that its "financial responsibility, character, reputation, integrity and general fitness . . . are such as to command the confidence of the public and to warrant the belief that the business . . . will be operated lawfully, honestly and fairly." G. L. c. 93, § 24B (a.) . The applications for ...


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