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Thorvaldsen and Canne Avert Class Action against Client through Early Dismissal

August 23, 2018

Kara Thorvaldsen (Partner-Boston) and Jason Canne (Associate-Boston) achieved dismissal of a putative class action brought pursuant to the Fair Debt Collection Practices Act by successfully arguing before the U.S. District Court, District of Massachusetts, that an insurer's right to recoup a duplicate payment to its insured was not a "debt" as defined by the statute. The plaintiff was involved in a minor car accident in which the other driver was at fault and received payment for his property damage from his own insurer and from the at-fault driver's insurer. The plaintiff's insurer retained an attorney, the firm's client, to request reimbursement of the duplicative payment, as it had an equitable right to subrogation. When the plaintiff refused, the insurer, represented by Wilson Elser’s client, filed an action seeking recovery of the duplicate payment.

Judge Rya Zobel granted Kara and Jason’s motion to dismiss, agreeing that the obligation to return the duplicative payment was not an "obligation of a consumer to pay money out of a transaction" as a debt is defined under the FDCPA. Instead, it was an equitable right to recoup a double recovery from the plaintiff. The court also agreed that a state consumer protection claim against the attorney failed because the firm's client was not engaged in trade or commerce vis-à-vis the plaintiff when it represented the plaintiff’s insurer in asserting a claim against him. 

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