Fla. App. Court (2nd DCA) Rules Florida’s Notice of Assignment of Debt Does Not Apply to Deficiency Actions

The District Court of Appeal of Florida, Second District, recently held that section 559.715 of the Florida Consumer Collection Practices Act (FCCPA) does not create a condition precedent that an assignee of a mortgage loan debt must give notice to the consumer 30 days before filing an action seeking a deficiency judgment.

A copy of the opinion in Dyck O’Neal, Inc. v. Kami Ward is available at:  Link to Opinion.

A borrower defaulted on her mortgage loan and the property was foreclosed upon and sold at a foreclosure sale. The judgment was then assigned to a debt collector, who filed a complaint against the borrower seeking a deficiency judgment.

The borrower raised as an affirmative defense the plaintiff debt collector’s alleged failure to comply with a supposed condition precedent under FCCPA section 559.715, which provides as follows:

This part does not prohibit the assignment, by a creditor, of the right to bill and collect a consumer debt. However, the assignee must give the debtor written notice of such assignment as soon as practical after the assignment is made, but at least 30 days before any action to collect the debt. The assignee is a real party in interest and may bring an action to collect a debt that has been assigned to the assignee and is in default.

See § 559.715, Florida Statutes.

The borrower argued that she received notice of the assignment only 13 days before the deficiency action was filed instead of 30 days as supposedly required. The trial judge agreed and granted summary judgment in the borrower’s favor, from which the plaintiff debt collector appealed.

The Court of Appeal agreed with the debt collector’s argument that section 559.715 does not apply to deficiency actions.

Citing its recent ruling in Aluia v. Dyck-O’Neal, where the Court interpreted a provision of the federal Fair Debt Collection Practices Act (FDCPA) and explained that “[a] deficiency suit is not a ‘legal action on’ the note; it is an action on the final judgment of foreclosure.  The final judgment of foreclosure is not ‘an obligation … of a consumer to pay money,’ nor does it arise from a business dealing or consensual obligation. The final judgment of foreclosure is a judgment in rem or quasi in rem which arises from the foreclosure proceeding.”

The Court reasoned that because the definition of “debt” in both the FCCPA and FDCPA are basically the same, and include the words “arising out of a transaction” with a consumer, its analysis in Aluia applied to the case at bar.

Thus, the Appellate Court concluded, “[i]t follows that a deficiency action is not an action to collect a consumer debt as contemplated by either act.”  Because “a deficiency action is not an action to collect consumer debt, section 559.715’s [30-day notice] requirement …does not apply.

Accordingly, the trial court’s summary judgment ruling was reversed and the case remanded for further proceedings.

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Hector Lora has substantial experience in all phases of complex commercial litigation, including motion practice, written discovery, depositions, mediations, bench and jury trials, and appellate practice. For more than a decade, his practice has focused extensively on the defense of civil enforcement actions filed by the FTC, as well as real estate litigation, and contested mortgage and condominium lien foreclosures and foreclosure of security interests under UCC Article 9. Hector also has substantial experience in advising a variety of types of businesses regarding their compliance with applicable federal and state laws, including the Federal Trade Commission Act, the Telephone Consumer Protection Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act, the Telemarketing Sales Rule, the Controlling the Assault of Nonsolicited Pornography and Marketing Act of 2003, and Florida laws governing telephone solicitation and communication. Hector received his Juris Doctor from the Georgetown University Law Center, and his undergraduate degree with honors from the University of Florida.