From the moment it was published in July 2014, Crawford v. LVNV Funding, LLC, 758 F.3d 1254 (11th Cir. 2014)—the first reported appellate decision holding that a plaintiff may state a claim under the Fair Debt Collection Practices Act based on a creditor’s bankruptcy proof of claim for an out-of-statute debt—spawned a flurry of litigation both within and outside the Eleventh Circuit. Looking back, however, district courts have largely rebuffed attempts at expanding Crawford’s holding and have refused to sanction enterprising attempts at exporting the Eleventh Circuit’s decision to other jurisdictions. The fallout from Crawford is far from over, however, as several cases are now pending before the various Courts of Appeals, setting up a potential circuit split that could eventually make its way to the Supreme Court.
Most recently, in Castellanos v. Midland Funding, LLC, No. 2:15-CV-559, 2016 WL 25918, at *2 (M.D. Fla. Jan. 4, 2016), the court adopted what is quickly becoming the majority view. Like most of the other lower courts in the Eleventh Circuit that have considered the issue that the Crawfordcourt did not address—“[w]hether the [Bankruptcy] Code ‘preempts’ the FDCPA when creditors misbehave in bankruptcy”—the district court in Castellanos concluded that “the FDCPA and the Bankruptcy Code are at an irreconcilable conflict because the FDCPA prohibits filing a time-barred claim while the Bankruptcy Code permits it. In such cases, the FDCPA must yield to the Bankruptcy Code, which already provides protections for debtors faced with stale proofs of claim” in the form of the bankruptcy claims-allowance process.”
Though the plaintiff in Castellanos has already appealed the dismissal of her FDPCA claims, the issue has already reached the Eleventh Circuit in the form of Johnson v. Midland Funding, LLC, 528 B.R. 462 (S.D. Ala. 2015). As the progenitor of Castellanos and the cases that it followed, the district court in Johnson was the first to confront the preclusion question that the Eleventh Circuit expressly left open. Chief Judge Steele held in Johnson that even if a debtor could otherwise state a claim under the FDCPA, any such claim irreconcilably conflicts with, and therefore is precluded by, the Bankruptcy Code, which gives all creditors (even those who are also debt collectors under the FDCPA) the express right to file a proof of claim for any debt for which they have a right to payment. In other words, “the Code authorizes filing a proof of claim on a debt known to be stale, while the [FDCPA] (as construed by Crawford) prohibits that precise practice,” and “those contradictory provisions cannot possibly be given effect simultaneously.” And in the face of that conflict, “the Act must give way to the Code.” Accordingly, the court dismissed the plaintiff’s would-be nationwide Crawford class action.
Meanwhile, a similar movement has been afoot in the other circuits in which plaintiffs have attempted to assert FDCPA claims in the same vein as Crawford. However...
