We have written a fair amount here about the problem of robo-signed affidavits in debt collection cases (see, for instance, Judge Dismisses American Express Complaint After Finding Robo-Testimony; Court Rejects Chase Robo-Testimony; Robo-Signing Nixes Bank of America's Summary Judgment Claim; Law review article: robo-signing and lack of proof), and the mainstream media has written a great deal about the issue of robo-signed affidavits in mortgage foreclosure cases. The term refers broadly to the practice, seemingly implemented by many banks and debt buyers, of submitting to courts affidavits of fact in support of attempts to collect a debt, where the affidavits –
1) are signed by individuals who claim to have personal knowledge of the facts stated in the affidavit when, for various reasons, they do not; and
2) purport to be signed before a notary, when the signature was actually notarized well after the fact.
The requirements of personal knowledge of the facts and a notarized signature are not mere formalities but are evidentiary rules designed to protect litigants from overzealous parties who may be over-reaching in their attempt to prove their case. Nowhere are such protections more necessary than in the area of consumer credit collections. Many collectors' business models are dependent upon high volume, so the temptation to cut corners by engaging in robo-signing and other shortcuts that speed the process and allow for greater numbers of court filings is strong. Courts have generally recognized this situation, and carefully enforced rules to protect consumers.
So it was a bit surprising to see a recent decision from the United States District Court for the District of Maryland which held that a collection law firm that forged signatures on foreclosure documents, and instructed staff to forge notary stamps certifying the forged signature, did not violate the Fair Debt Collection Practices Act (FDCPA) because the actions were not "material."
In the case, a class action, the plaintiffs sued a law firm and its four individual members, Bierman, Geesing, Ward & Wood, alleging that the individual defendants instructed their employees to forge lawyer's names on various foreclosure documents submitted to the court, including affidavits of fact. Eventually, the partners began asking the employees to forge notary signatures and affix notary stamps as well.
The court noted that the plaintiffs claimed defendants did these things to expedite the foreclosure process, but plaintiffs did not allege that any of the documents defendants submitted were factually incorrect; plaintiffs did not identify any substantive error with regard to the debt, or the timing of the foreclosure, nor did plaintiffs allege that they relied on or were mislead by the "substitution" of signatures. However, the plaintiffs argued that, but for the signatures, the foreclosure cases would not be before the court.
After assessing recent developments concerning "materiality" under the FDCPA and cases cited by the defendants in the Sixth, Seventh, and Ninth Circuits, the court concluded that the signatures were false but not material, and were thus not actionable under §§ 1692e or 1692f. With regard to § 1692e (False or misleading representations), citing to Hahn v. Triumph Partnerships, 557 F.3d 755, 758 (7th Cir. 2009), the court stated that "a statement cannot mislead unless it is material, so a false but non-material statement is not actionable" under § 1692e. The court also noted with approval Harvey v. Great Seneca Fin. Corp., 453 F3d 324, 332 (6th Cir. 2006), where the court rejected plaintiff's argument that defendant's conduct violated 1692e because the plaintiff never denied that she owed the alleged debt, nor did she claim that defendant misrepresented the amount she owed.
The court gave short shrift to the plaintiff's claims under § 1692f (Unfair practices). Based on Foti v. NCO Fin. Sys., 424 F. Supp. 2d 643, 667 (S.D.N.Y. 2006) the court concluded that because plaintiff's complaint did not identify any misconduct beyond that which plaintiff's had asserted violated other provisions of the FDCPA, defendant's motion to dismiss should be granted. Although § 1692f serves as a means for a court "to sanction improper conduct that the FDCPA fails to address specifically, plaintiff's §1692f claim here fails to allege any conduct separate and distinct from the alleged § 1692e violations. Therefore, the § 1692f claim failed as well.
The case is called Stewart et al. v. Bierman, et al., US Dist Ct., D. Md., RWT 10 cv 2822, Titus, Justice, May 8, 2012, and is available on Justia.