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FDCPA Doesn’t Apply to Subrogation Claim

April 29, 2022

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<p style="text-align: justify;">In <em>Felicia Chavanne v. Second Look, Inc</em>., Barry Lefever, and Erie Insurance., Plaintiff Felicia Chavanne brought a lawsuit against two insurance companies for alleged violations of several conumser protection statutes, including the Fair Debt Collection Practices Act, the Fair Credit Extension Uniformity Act, and the Pennsylvania Unfair Trade Practices and Consumer Protection Law. Chavanne’s claims arose out of alleged violations associated with letters sent to her by defendant Erie Insurance and Second Look which sought to collect on a subrogation claim. The claim was related to a fire that occurred at the property where Chavanne resided. The letters sent by Erie Insurance and Second Look advised Chavanne that Erie had settled a claim for property damages to its insured’s property (insured was co-defendant Lefever); that Erie had a right to recovery under the policy; and requested Chavanne provide her insurance information.</p>
<p style="text-align: justify;">Erie Insurance and Second Look filed a Motion for Judgment on the Pleadings, and succeeded. The United States District Court for the Eastern District of Pennsylvania ruled that the FDCPA did not apply to Erie’s attempt to collect on a subrogation claim because such a claim “is not the result of a consumer purchase, but rather flows from the liability of Plaintiff arising out her alleged negligence in causing the fire.” The Court stated that “a subrogation claim such as the one at issue in this case is not a transaction under the FDCPA which constitutes a debt.” The Court ruled that the FCEUA, the Pennsylvania version of the federal FDCPA, and the UTPCPL similarly do not apply for the same reasons.</p>
<p style="text-align: justify;">The takeaway from this case is that insureds cannot utilize the protections of consumer debt protection acts because there is typically no debt or consumer purchase involved in a subrogation claim.</p>
<p style="text-align: justify;">Thanks to Brian Zappala for his contribution to this post. Please contact <a href="mailto:Haquino@wcmlaw.com">Heather Aquino</a> with any questions.</p>

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