The company initially contacted the debtor regarding a secured car loan, and then subsequently filed suit on behalf of the lender, seeking to repossess the vehicle and collect any outstanding amounts on the loan. The company then dismissed the suit, and the debtor filed the current suit in response, alleging that the company was a debt collection agency. The debtor further alleged that the company had violated Indiana law by acting as an unlicensed debt collector, and that the company had violated the Fair Debt Collections Practices Act (FDCPA) by attempting to collect a debt when the company was not licensed and by attempting to collect a debt when the creditor did not have a perfected security interest. The company subsequently moved to dismiss the case under Fed. R. Civ. P. 12(b)(6).
In Washtour v. Weltman Weinberg & Reis Co., No. 1:24-CV-405-HAB, 2025 WL 57149, 2025 U.S. Dist. LEXIS 4475 (N.D. Ind. Jan. 8, 2025) (opinion not yet released for publication), the court granted the company’s Rule 12(b)(6) motion to dismiss the case. While acknowledging the company is not licensed to collect debts, the court noted that the statutory violations did not entitle the debtor to bring a claim. To obtain a private right of action under Indiana law for an alleged violation of a statute, the debtor must show the legislature that passed the statute “intended to establish not just a standard of conduct but a duty enforceable by tort law.” Stachowski v. Estate of Radman, 95 N.E.3d 542, 544 (Ind. Ct. App. 2018). To make this determination, the court first looks to see if the statute creates an express right of action, and if not, the court then employs a two-step inquiry of the statute in which it seeks to determine “(1) whether the statute or ordinance was designed to protect particular individuals or the public in general and (2) whether it includes an independent enforcement mechanism.” Id. The court noted that “there is no express right of action in the licensing statutes,” and even if there were, the enforcement action under the statute is “criminal prosecution” and not a “duty enforceable by tort law.” Therefore, the court dismissed the debtor’s complaint under state law. Furthermore, the court had previously held that state licensing law violations were not FDCPA violations and dismissed the debtor’s claim. In the alternative, the debtor alleged that the company violated the FDCPA “because the debt was not legally collectible,” because the lender had failed to record its security interest with the Indiana Secretary of State. The court disagreed, noting that the “only prerequisite to a perfected security interest in a vehicle” is that the interest is indicated on the certificate of title. Therefore, the lender’s failure to record its security interest with the Secretary of State did not make the debt uncollectible, nor did it create a cause of action under the FDCPA. For these reasons, the court granted the company’s motion to dismiss the case.
By Jace Brown [email protected]]
Edited By Conor Doris [email protected]
Edited By Hayden Mariott [email protected]