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Fair Debt Collection: 15.3.3 Holding Up to False Light

The essence of the tort of placing a person in a false light is the false attribution to the debtor of an undesirable or negative character.207 This tort is recognized in most jurisdictions,208 but there are some exceptions.209 While similar to defamation,210 false light claims may avoid several requirements of defamation actions, such as pleading special damages.

Fair Debt Collection: 15.4.1 Overview

Two closely related torts that may occur in the debt collection context are tortious interference with a contract and tortious interference with prospective economic relations. Because the law is protective of existing contracts, the former cause of action is better developed and easier to prove.

Fair Debt Collection: 15.4.2 Tortious Interference with a Contract

A claim of tortious interference with a contract may arise in the debt collection context where a creditor prevents a debtor from benefiting from a contract with a third party.246 For example, the collector’s contacts with the debtor’s employer may cause the debtor to lose a job. As another example, a mortgage lender or servicer may commit this tort if it interferes with a property owner’s contract with a tenant.247

Fair Debt Collection: 15.4.3 Tortious Interference with Prospective Economic Relations

The elements of tortious interference with prospective economic relations have been stated as: (1) a reasonable expectation of entering into a relationship; (2) defendant’s knowledge of that expectancy; (3) intentional265 and unjustified interference by defendant that caused a termination of that expectancy; and (4) damage to plaintiff as a result of defendant’s conduct.266 A claim may arise if the creditor’s or collector’s wrongful acts interfere with the consumer’s ability to obtain other cred

Fair Debt Collection: 15.5.2 Defamation Per Se and Defamation Per Quod

Professor Dodds classifies defamation as a dignitary tort, one that “involve[s] legally cognizable invasions of rights that stand independent of both physical and economic harms, that is, invasions of human dignity in the sense of human worth.”283 In its traditional form, proof of damages was not an element of the tort:

Fair Debt Collection: 15.5.4 Truth As a Defense

The falsity of the statement is an element of a defamation claim, and truth is often called an absolute defense.301 This defense requires proof of more than the validity of the debt or the literal truth of the statement.

Fair Debt Collection: 15.5.5 Immunity and Privilege

In most jurisdictions, malice is an element of the tort of defamation only if the plaintiff is a public figure or the defamatory statement relates to a matter of public concern.308 By virtue of a qualified immunity provision of the Fair Credit Reporting Act (FCRA), however, a plaintiff must plead and prove malice or a willful intent to injure in a defamation claim against a credit reporting agency or against a user of or contributor to a consumer credit report.309 This immunity applies where the

Fair Debt Collection: 15.5.6 Pleading and Proof

Some jurisdictions require allegations of defamation to be pleaded with specificity.321 Whether a statement is defamatory per se is often treated as a question of law, while it is a question of fact whether a statement is defamatory in light of extrinsic facts.322 Some courts, however, state more generally that it is always a question of law whether a statement is capable of a defamatory meaning.323 Yet other courts state that it is a ques

Fair Debt Collection: 15.6.2.2 Institution of a Proceeding

The first required element of a malicious prosecution claim is the institution of a proceeding. Arbitration proceedings356 and small claims actions357 qualify. Filing a complaint is sufficient, even without service of process.358 On the other hand, examples of steps that have been held not to constitute a proceeding include:

Fair Debt Collection: 15.6.2.4 Malice or Improper Purpose

Another required element of a malicious prosecution claim is that the proceeding must have been instituted either maliciously377 or for an improper purpose.378 The plaintiff need not prove intent to harm; “gross negligence or great indifference to persons, property, or the rights of others” is sufficient to show “legal malice.”379 Malice is subjective and may be shown by circumstantial evidence.380 Ma

Fair Debt Collection: 15.6.2.5 Termination in Favor

The final element of a malicious prosecution claim is that the proceeding must have been terminated in the defendant’s favor.393 Because of this requirement, a malicious prosecution action cannot be brought while the underlying suit is still pending.394 Accordingly, it is premature to assert malicious prosecution by way of a counterclaim or defense.395 It is safest to wait until any appeal of the underlying suit has been decided and all appeal peri

Fair Debt Collection: 15.6.3.1 Elements

Abuse of process is often described as the use of “legal process against another in an improper manner to accomplish a purpose for which it was not designed.”415 One court described this tort as having a “broad reach,” and explained that it developed historically “as a ‘catch-all’ category to cover improper uses of the judicial machinery that did not fit within the earlier established, but narrowly circumscribed, action of malicious prosecution.”416

Fair Debt Collection: 15.6.3.2 “Process” Defined

Courts construe the term “process” broadly to include the entire range of procedures incident to the litigation process,431 including discovery requests,432 garnishment,433 motions,434 asserting bogus claims of privilege to obstruct discovery,435 and making misrepresentations to opposing counsel or to the court.436

Fair Debt Collection: 15.6.3.3 Ulterior Purpose

An abuse-of-process claim requires a showing that process was used primarily to accomplish a purpose for which it was not designed.442 Some incidental motive or spite is insufficient.443 Neither bad intentions alone nor lack of probable cause will create liability for abuse of process if the other elements are not met.444 Nonetheless, the fact that a party has at least one valid purpose does not necessarily mean that that purpose is primary; if the

Fair Debt Collection: 15.7.2 Trespass

A collection attempt that involves a visit to the debtor’s home may be a trespass.493 Many states allow repossessors a qualified privilege to enter on private property, however, if this can be done without breach of peace.494 Mortgage lenders and servicers may have a contractual right to enter a home to preserve it in certain circumstances such as abandonment by the homeowner, but acts that go beyond the steps that are reasonably necessary to inspect or protect the property may amount to trespas

Fair Debt Collection: 15.7.3 Conversion and Other Torts Directed Against the Consumer’s Property

The tort of conversion occurs when the defendant wrongfully exercises dominion or control over identifiable personal property that the plaintiff has a right to possess.499 This tort most commonly arises in the repossession context,500 but other collection abuses may also amount to conversion.501 Some courts hold that wrongful seizure of money is not conversion in ordinary circumstances, but allow a conversion claim for money that has been set aside

Fair Debt Collection: 15.7.4 Negligence

Negligence claims can arise in a variety of collection scenarios.509 For example, a negligence claim may lie if a creditor initiates collection activity after negligently failing to realize that a debt has been paid,510 or if it negligently pursues collection activity against the wrong person.511 A number of courts have held creditors liable for negligently extending credit to an identity thief.512 A