District Court (Cal.) Finds Collection on Attorney-Fee Judgment Not a “Debt” Subject to FDCPA

In Mazzaferro v. Stanaland, 2011 WL 5444323 (N.D.Cal. 2011), Judge Illston held that an attorney fee award in an underlying case that was reduced to judgment and abstract was not a ‘consumer debt’ under the FDCPA because the judgment did not arise out of a ‘consensual’ transaction.  Judge Illston explained:

Defendant contends that plaintiffs have failed to state a claim because the abstract of judgment is not a consumer “debt” under the FDCPA. The FDCPA defines “debt” as “any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes.” 15 U.S.C. § 1692a(5). In Turner v. Cook, 362 F.3d 1219 (9th Cir.2004), the Ninth Circuit held that the FDCPA is “limited in its reach ‘to those obligations to pay arising from consensual transactions, where parties negotiate or contract for consumer-related goods or services.’ “ Id. at 1227 (quoting Bass v. Stolper, Koritzinsky, Brewster & Neider, S. C., 111 F.3d 1322, 1326 (7th Cir.1997)). The Ninth Circuit held that a tort-judgment resulting from business-related conduct did not qualify as a “debt” under the FDCPA because “ ‘when we speak of ‘transactions,’ we refer to consensual or contractual arrangements, not damage obligations thrust upon one as a result of no more than her own negligence.’ “ Turner, 362 F.3d at 1227 (quoting Hawthorne v. Mac Adjustment, Inc., 140 F.3d 1367, 1371 (11th Cir.1998)); see also Mabe v. G.C. Servs. Ltd. P’ship, 32 F.3d 86, 88 (4th Cir.1994) (obligation to pay child support not a “debt” under the FDCPA because it was not incurred in exchange for consumer goods or services).  ¶  Plaintiffs do not address defendant’s arguments about whether the abstract of judgment is a consumer “debt.” The Court agrees with defendant that the abstract of judgment is not a consumer “debt” within the meaning of the FDCPA. The debts at issue in these cases arise from the state court’s order awarding defendant’s client attorneys’ fees, and they are not the result of a consensual or contractual agreement. The attorneys’ fees award is akin to the tort-judgments in Taylor and Hawthorne, and the obligation to pay child support in Mabe.