Kaiden & Kaiden, LLC

A Georgia Consumer Advocacy Law Firm


1st Nationwide v. Werner,
288 Ga.App. 457

A collection agency, 1st Nationwide sued the consumer for a medical debt in the State court of Cobb County. The consumer retained Kaiden & Kaiden, LLC for representation. Kaiden & Kaiden, LLC filed the Answer disputing the medical debt allegedly owed and moved for counterclaims against the collection agency for violations of the Fair Debt Collection Practices Act (FDCPA) and the state Fair Business Practices Act (FBPA). Kaiden & Kaiden, LLC showed that the collection agency had failed to give the consumer notice of the assignment of the medical debt for collection as required by O.C.G.A. § 44-12-22; that from the date of assignment of the debt for collection until the filing of lawsuit and beyond, the collection agency continued its collection campaign against the consumer in the name of the original creditor; that the collection agency failed to give the consumer notices as required by 15 U.S.C.S. § 1692g(a)(1)-(5) and 1692e(11); that the collection agency falsely represented that it made a demand upon the consumer to pay the alleged debt, when in fact no such demand had been made; and that the collection agency failed to communicate the alleged debt as disputed in the consumer’s credit reports, despite the consumer’s court filings disputing the debt. After the State Court dismissed the collection agency’s complaint, Kaiden & Kaiden, LLC further moved the court to add an additional claim against the collection agency for continuing to falsely represent and communicate to credit reporting agencies that a balance was still due when it knew the State Court had dismissed the collection agency’s case against the consumer. After the State Court entered a money judgment in favor of the consumer on all grounds, the collection agency appealed.

The findings of the Court of Appeals lead to a landmark decision. Kaiden & Kaiden, LLC again successfully argued that the collection agency’s efforts in the attempt to collect the medical debt had violated the consumer’s rights under the FDCPA. Also, Kaiden & Kaiden, LLC argued the groundbreaking theory that the collection agency’s violations of the FDCPA were also violations of the consumer’s rights under the FBPA, entitling said consumer to treble damages. As a result, the Court of Appeals affirmed the state court’s judgment against the collection agency and a big win for consumer rights in Georgia.

The Court of Appeals held that medical services were a “consumer transaction” that extended to collection efforts of a personal medical debt, and thus, the FBPA applied. Further, it held that misrepresenting consumers' financial indebtedness to others or falsely reporting consumers' credit histories has a potential adverse effect on the consumer marketplace and the economy in general. As such, collecting a debt incurred during a consumer transaction could harm the general consuming public if conducted via deceptive acts or practices and clearly fell within the parameters of the FBPA. Furthermore, the Court of Appeals stated that  that since interpretation and construction of the FBPA must be consistent with interpretations of the Federal Trade Commission Act (FTC) Act, the collection agency’s violation of the FDCPA in collecting the consumer’s medical debt was a violation of the FTC Act; therefore, the violation of FDCPA constituted a violation of the FBPA. Finally, the Court of Appeals concluded that evidence was sufficient to support the trial court’s award of treble damages against the collection agency for its intentional violations of the FBPA. And, that evidence was also sufficient to support the trial court’s award of attorney’s fees and cost against the collection agency.

Kaiden & Kaiden, LLC’s novel and creative arguments were fundamental to bettering the lives of all Georgia consumers.

In re Roche, 361 B.R. 615, 625(Bkrtcy.N.D.Ga.,2005)

After being advised by Kaiden & Kaiden, LLC of Chapter 13 bankruptcy filing, the judgment creditor stayed, but refused to release prepetition (before the filing of the bankruptcy case) garnishment of debtor’s account without a finding from the court regarding the creditor’s right to the garnished funds. On behalf of the consumer, Kaiden & Kaiden, LLC brought an adversary proceeding (a lawsuit in the bankruptcy) to recover for the willful violation of the automatic stay (an injunction).

Kaiden & Kaiden, LLC successfully argued that the automatic stay is a fundamental debtor’s protection right provided by bankruptcy law and is designed to provide relief from creditor action, including from property that the creditor has seized prepetition. And, because Congress placed the responsibility on creditors to ensure that they do not violate the stay once notified, the consumer is not required to take any more action to halt creditor’s attempts to collect; otherwise, the consumer would be subjected to financial pressures that the stay was designed to temporarily abate. Since the stay requires creditors to cease collection, the continuation of the garnishment action against the consumer was a violation of the automatic stay. Kaiden & Kaiden, LLC moved for actual and punitive damages to be awarded to the consumer for the creditor’s willful violation of the automatic stay.

The findings of the Bankruptcy Court lead to a landmark decision on a novel issue regarding prepetition garnishments. The Court held that the purpose of automatic stay is to protect debtor, and the creditor has the burden to ensure that the automatic stay is not violated. Hence, the creditor may not continue to actively or passively assert control indefinitely over estate property once notified of the automatic stay; instead, once given notice, creditors must cease collection activities against debtor and seek to enforce any rights to adequate protection through the courts.

Herein, once in receipt of the request for release of the garnished funds, the creditor could not demand that the debtor’s attorney establish, to its satisfaction, an entitlement to the release, while taking no steps to obtain determination of its rights to same funds from the court, within a reasonable time period. The Court further held that the judgment creditor’s conduct rose to the level of a “willful” violation since after receipt of the notice of the bankruptcy filing, it knew of the automatic stay and intentionally failed to affirmatively halt collection, by failing to dismiss the garnishment in conjunction with the failure to seek adequate protection from Court.

Kaiden & Kaiden, LLC demanded damages for consumer for creditor’s violation of the automatic stay. The Court found that it may limit damages awarded for willful violation of automatic stay to debtor's reasonable attorney fees, where this willful violation had only de minimis impact on debtor. The court ordered the garnished funds immediately released to the consumer, and an award judgment against creditor for actual damages, attorney’s fees and costs.

Because this prepetition garnishment issue was novel one before the court and the creditor relied on some reported decisions that could be construed as providing justification for creditor's actions, the Court held that the violation was not such as to warrant an award of punitive damages. However, Kaiden & Kaiden, LLC’s novel and creative arguments were fundamental in establishing and regulating the conduct of creditors regarding the treatment of prepetition garnished funds after a bankruptcy filing.

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