Kowouto v. Jellum Law, P.A.

Background

Samuel Kowouto signed a residential lease with IH3 Property Minnesota L.P., doing business as Invitation Homes. The lease limited recoverable attorney fees, expenses, and other collection costs in an action to enforce the lease to $500.

Jellum Law filed a Minnesota eviction complaint for Invitation Homes against Kowouto and his co-tenants. The complaint alleged unpaid rent and related charges and stated that the landlord was entitled, under the lease, to all attorney fees incurred. Kowouto alleged that this statement falsely overstated his potential liability because the lease contained the $500 limit. He was not represented when the complaint was served, but he retained an attorney later that day. The eviction case settled out of court.

The record included evidence that Jellum Law used a template developed when Invitation Homes’ lease provision was uncapped, even though Invitation Homes later changed its leases to impose the $500 limit. Jellum Law acknowledged that similar requests for all attorney fees appeared in about 30 eviction complaints involving Invitation Homes. The firm had handled hundreds of Minnesota eviction proceedings over several years, used procedures and templates for this work, and assigned an attorney and a paralegal to eviction matters.

Kowouto filed a putative class action alleging violations of the Fair Debt Collection Practices Act, including provisions addressing false or misleading representations and attempts to collect amounts not authorized by an agreement. The court previously denied Jellum Law’s motion to dismiss, ruling that the Act applies to eviction actions as a matter of law and that factual issues prevented dismissal. Jellum Law then moved for summary judgment.

Summary-Judgment Standard

Summary judgment is appropriate only when there is no genuine dispute about any material fact and the moving party is entitled to judgment as a matter of law. The court does not weigh evidence or decide witness credibility at this stage. It views the evidence favorably to the party opposing summary judgment.

Debt-Collector Status

The court rejected Jellum Law’s argument that it was not a “debt collector” under the Fair Debt Collection Practices Act. The court applied a five-factor framework focused on the regularity of the firm’s collection work, including the number and frequency of collection matters, personnel assigned to that work, systems used to facilitate it, and ongoing relationships with clients seeking collection services.

The court identified evidence supporting Kowouto’s position: Jellum Law had pursued hundreds of eviction actions, typically handled about 100 such actions per year, assigned an attorney and a paralegal to eviction work, maintained procedures and templates specifically for that work, and performed most of its eviction work for Invitation Homes. The court also noted evidence that the firm handled other collection matters and trained employees on compliance with the Act. This evidence created a genuine dispute about whether Jellum Law regularly engaged in debt collection, so the court denied summary judgment on this ground.

Attorney-Fee Demand

The court also rejected Jellum Law’s argument that its demand for attorney fees was an immune, good-faith request made to a court. The court found a clear discrepancy between the complaint’s statement that Invitation Homes could recover all attorney fees and the lease’s $500 limit. It concluded that a reasonable factfinder could determine that the complaint falsely or misleadingly overstated the debt and used an unfair or unconscionable method to collect it.

The court distinguished cases involving good-faith legal positions or collection claims that lacked sufficient evidence. Here, the alleged falsehood arose from misrepresenting an express lease term, not merely from advancing an unsuccessful legal argument. Evidence that the same type of statement appeared in at least 30 other eviction complaints also supported a factual dispute about whether the error was made in good faith.

Deception and Materiality

The court explained that the Fair Debt Collection Practices Act generally evaluates deception from the viewpoint of an unsophisticated consumer. When a consumer is represented, the relevant question can instead be whether the communication would likely deceive a competent, non-specialist attorney. The court did not choose between those standards because it found evidence that either an unsophisticated consumer or a competent, non-specialist attorney could have been misled.

Kowouto’s attorney had questioned the discrepancy between the complaint and the lease and sought clarification twice before settlement discussions. The court determined that a reasonable factfinder could conclude that the complaint’s statement about unlimited attorney fees was misleading. It also held that the alleged misstatement was material because it concerned the amount of the debt and Kowouto’s potential financial exposure.

Bona Fide Error Defense

The Fair Debt Collection Practices Act provides a defense when a debt collector proves that a violation was unintentional, resulted from a reasonable error, and occurred despite procedures reasonably designed to prevent that specific error. The court described this as a narrow, fact-intensive defense and noted that failure to prove any required element defeats it.

Kowouto challenged whether Jellum Law had procedures reasonably adapted to prevent the alleged mistake. The record did not show procedures requiring attorneys to compare eviction complaints with the underlying leases, regularly review templates for accuracy, or communicate with landlord clients about lease changes. The court found that a reasonable factfinder could determine that Jellum Law’s procedures were insufficient, particularly because the misrepresentation appeared in at least 30 complaints and the discrepancy remained undiscovered for at least three years.

Disposition

The court denied Defendant Jellum Law, P.A.’s Motion for Summary Judgment. The ruling left the disputed issues for further proceedings and did not determine whether Jellum Law is ultimately liable under the Fair Debt Collection Practices Act.