[hannah]

A consumer claimed that a debt collector and a law firm used a bogus settlement of a collection suit to obtain a default judgment against the consumer and got the green light from a federal court to pursue his FDCPA lawsuit in which the court decided that the federal claims were not so interwoven with a state court action to require dismissal of the federal case. (Anderson v. Gamache & Myers, P.C., et al., No. 4:07CV336MLM (E.D. Mo. 05/31/07).)

Direct Merchants Bank charged off Dennis Anderson's debts and assigned them to Worldwide Asset Purchasing, LLC, for collection. Worldwide retained Gamache & Myers, PC, to pursue Anderson. Worldwide sued Anderson. Then American Mediation & Alternative Resolutions offered to represent Anderson, although its agents were not licensed attorneys in Missouri. For whatever ignorant reason, Anderson agreed.

Subsequently, Anderson received a letter stating that the lawsuit was settled and, under the settlement, he was to pay Worldwide $175 per month, although Anderson never consented to the deal. Worldwide later obtained a default judgment against Anderson.

Anderson sued, claiming that by assisting American in the unauthorized practice of law; by sending the consumer a letter stating that the action was settled even though it was not; and by obtaining a judgment even after communicating to Anderson that a $175-per-month payment plan was acceptable, Gamache and Worldwide violated 15 USC 1692e(10)'s prohibition of "using false, deceptive and/or misleading means to collect a debt."

Both Worldwide and Gamache moved to dismiss. Worldwide's motion failed to gain traction with the U.S. District Court, Eastern District of Missouri. Worldwide argued that Anderson's FDCPA claims were intertwined with the action brought in state court and, therefore, should be heard there. One of the central requirements of Worldwide's intertwining argument was that the federal action constituted a direct contest of a relevant state court decision, the District Court explained. But Anderson's claim exclusively addressed "Worldwide's conduct in attempting to collect a debt in violation of the FDCPA, including its submitting an allegedly false affidavit and attaching a copy of the Cardholder Agreement," the court wrote. As a result, the cases were not inextricably intertwined and Anderson's federal action could proceed.

The District Court found Gamache's motion more persuasive. The law firm contended that only Missouri state courts, in their attorney certification and discipline capacity, can regulate the unlicensed practice of law. The court agreed, citing Reade-Alvarez v. Eltman, Eltman & Cooper, P.C., 369 F. Supp.2d 353 (E.D.N.Y. 2005), which explicitly concluded that "allegations relating to the unauthorized practice of law are the province of state bar associations and state courts."

Whatever acts of assisting unauthorized practice the Gamache firm committed, they were matters for the Missouri courts and were not cognizable as a FDCPA violation, the District Court ruled.

The District Court granted the law firm's motion in part and denied it in part, and denied Worldwide's motion in its entirety.

Mitchell B. Stoddard of Consumer Law Advocates in St. Louis represented Anderson. Donald A. Horowitz of Gamache in St. Louis represented the law firm. Edward S. Meyer of Rabbitt and Pitzer in St. Louis represented Worldwide. Case attached.