Kowouto v. Jellum Law, P.A.

Background

In September 2021, Samuel Kowouto entered a lease with IH3 Property Minnesota L.P. for a home in Brooklyn Park, Minnesota. The lease required IH3 to invoice him separately for water, sewer, and trash charges. Kowouto alleged that he was not invoiced for those charges, leaving that part of his financial obligation unpaid.

IH3 retained Jellum Law, P.A. to bring an eviction action against Kowouto in Hennepin County District Court. Kowouto alleged that the eviction complaint stated that the landlord was entitled to all attorney fees incurred in the action. The lease, however, provided that the prevailing party could recover reasonable attorney fees and other listed costs, subject to a $500 limit. IH3 and Kowouto later settled without requiring either party to pay attorney fees.

Kowouto then sued Jellum Law under the Federal Debt Collection Practices Act, or FDCPA, on behalf of himself and others similarly situated. He relied on provisions addressing false statements about a debt’s amount or legal status, deceptive collection practices, and collection of amounts not authorized by the agreement or law. Jellum Law removed the case to federal court and moved to dismiss for failure to state a legally sufficient claim.

Analysis

The court explained that a complaint survives a dismissal motion when its factual allegations, accepted as true at this stage, plausibly support relief. The court addressed three arguments by Jellum Law.

First, Jellum Law argued that an eviction action is not an attempt to collect a consumer debt. The court rejected that argument. Minnesota law defines an eviction action as a proceeding to remove a tenant or recover possession of property, and an eviction action for nonpayment of rent is equivalent to a demand for rent. Based on those provisions and prior decisions, the court held that an eviction action under Minnesota law is a debt-collection proceeding to which the FDCPA applies. The court also ruled that the Supreme Court’s decision in Obduskey v. McCarthy & Holthus LLP did not change that result because Obduskey addressed enforcement of security interests, while the eviction action here concerned IH3’s possessory interest in the property.

Second, Jellum Law argued that Kowouto could not prevail because he was represented by an attorney. The court explained that when a consumer is represented, courts may apply a standard focused on whether a competent attorney would have been misled rather than whether an unsophisticated consumer would have been misled. But the parties disputed whether Kowouto had counsel when he received the eviction complaint. Viewing the allegations in Kowouto’s favor, the court concluded that he plausibly alleged that he was not represented at that time. The court therefore applied the unsophisticated-consumer standard at this stage and found that the alleged statement about all attorney fees could plausibly have misled such a consumer.

Third, Jellum Law argued that the statement was directed to the state court, not Kowouto. The court rejected the argument that this alone prevented FDCPA liability. It explained that the FDCPA does not specify that an actionable communication must be directed to the consumer and that statements made to a court require a case-by-case analysis. Viewing the allegations in Kowouto’s favor, the court found that the alleged intentionally false assertion about the amount of attorney fees was enough to plausibly allege an FDCPA violation.

Disposition

Because Kowouto had alleged a facially plausible claim, the court denied Jellum Law’s motion to dismiss. The order did not decide whether Jellum Law violated the FDCPA; it decided only that the complaint could proceed beyond the dismissal stage.

The opinion is signed by Wilhelmina M. Wright, United States District Judge, and dated May 12, 2023.