District Court (Tenn.) Says Auto Finance Company Not Subject to FDCPA Where It Introduced Evidence that Account Was Not In Default at the Time of Assignment

In Simpson v. American Credit Acceptance, LLC, 2017 WL 1968284, at *3–4 (E.D.Tenn., 2017), Judge Guyton granted summary judgment to an auto finance company under the FDPCA because the account was not in default at the time of the assignment.

The Defendant asserts that it is not subject to the FDCPA because it is not a debt collector. Further, the Defendant argues that the Plaintiff has not alleged that it is a debt collector, nor has the Plaintiff alleged that the Defendant collected a debt due to another entity. . . Several courts have noted that “as to a specific debt, one cannot be both a ‘creditor’ and a ‘debt collector’, as defined in the FDCPA, because those terms are mutually exclusive.” Bridge v. Ocwen Fed. Bank, FSB, 681 F.3d 355, 358 (6th Cir. 2012) (quoting FTC v. Check Investors, Inc., 502 F.3d 159, 173 (3d Cir. 2007)) (other citations omitted). The Sixth Circuit has stated that the language in § 1692a(6)(F)(iii) explains the distinction between a creditor and debt collector. Id. The Court continued, “For an entity that did not originate the debt in question but acquired it and attempts to collect on it, that entity is either a creditor or a debt collector depending on the default status of the debt at the time it was acquired.” Id.; see also Justice v. Ocwen Loan Servicing, LLC, No. 2:13-CV-00165, 2014 WL 526143, at *4 (S.D. Ohio Feb. 7, 2014) (“In other words, if Ocwen acquired the servicing for the Loans before they were in default, then it is not a debt collector under the FDCPA. But if Ocwen acquired the servicing for the Loans after they were in default, it is a debt collector under the FDCPA.”).  In the instant matter, the Defendant has set forth evidence showing that it purchased the Contract from U-Drive before the Plaintiff’s first monthly payment was due and that the Plaintiff was not in default when the Defendant acquired the Contract. [Doc. 14-1 at 3]. The Plaintiff has not responded to the Defendant’s argument. Accordingly, the Court finds the Defendant’s argument well-taken, and the Plaintiff’s claim pursuant to the FDCPA will be dismissed.