[author: Carter Lawson]

The Eighth Circuit Court of Appeals held that the actions of a debt collector are not necessarily imputed to a debt buyer. This holding reversed the Western District of Arkansas District Court, which held that the actions of the debt collector are necessarily imputed to the debt buyer. The full opinion of Reygadas v. DNF Associates, LLC can be found by clicking here.

DNF Associates, LLC (“DNF”) purchased a debt owed by Stephanie Reygadas (“Reygadas”). DNF subsequently hired an attorney and brought a claim against Reygadas in state court. Reygadas hired defense counsel and the state claim was ultimately dismissed in her favor. After the dismissal, DNF hired a collection agency, Radius Global Solutions, LLC (“RGS”), to collect Reygadas’ debt.

The dispute, in this case, arose from one action and one alleged omission. The action was that RGS sent an offer to settle the debt directly to Reygadas; the omission was that DNF allegedly failed to inform RGS that Reygadas was represented by counsel. Reygadas then filed suit claiming DNF violated the Fair Debt Collection Practices Act (“FDCPA”), and the Arkansas Fair Debt Collection Practices Act (“AFDCPA”) when RGS contacted her directly despite having knowledge that she was represented by an attorney.

The central question on appeal focused on the language of Section 1692c(a)(2) of the FDCPA, which states in relevant part that a debt collector cannot communicate directly with a consumer regarding the collection of any debt if the debt collector “knows the consumer is represented by an attorney . . . and has knowledge of, or can readily ascertain, such attorney’s name and address.”  Again, DNF knew Reygadas was represented by defense counsel, but RGS sent the offer to settle directly to Reygadas. According to the Court, RGS must have had actual knowledge that Reygadas was represented by counsel to violate Section 1692c(a)(2). Additionally, the Court noted that agency law does not dictate that knowledge of the principal is imputed to the agent. Therefore, in order to succeed, Reygadas must put forth evidence establishing that DNF is responsible for the letter RGS sent directly to her and that, on some level, DNF informed RGS that Reygadas was represented by counsel.

For these reasons, the Court concluded that the district court erred in granting partial summary judgment in favor of Reygadas sua sponte. The Court then vacated the district court’s judgment and remanded the case for further proceedings for the parties to present more evidence regarding the relationship between DNF and RGS.