Hekel v. Hunter Warfield, Inc.

Background

Hannah Hekel was evicted from an apartment she rented in Rochester for not paying rent and other fees. Her landlord hired Hunter Warfield, Inc. to collect the debt. In January 2022, Hunter Warfield sent Hekel a letter stating that she owed nearly $7,700 in principal and $870 in interest. The letter also stated that interest would continue to accrue at six percent.

Hekel brought one claim under the Fair Debt Collection Practices Act (FDCPA). She argued that Hunter Warfield violated the statute by stating that six percent interest would accrue when, in her view, Minnesota law allowed only four percent. Hekel moved for partial summary judgment, which asks the court to decide an issue without a trial when there is no genuine dispute about the facts.

Issue

The FDCPA prohibits a debt collector from collecting or attempting to collect interest that is not authorized by the agreement creating the debt or permitted by law. The lease did not provide for interest, and the parties did not dispute that Hunter Warfield attempted to collect six percent interest. The dispute was whether Minnesota law permitted that rate.

Minnesota Statutes § 549.09 generally provides a formula that would produce a four-percent rate in this case. Minnesota Statutes § 334.01, however, provides that interest on legal indebtedness is six percent per year unless a different rate is agreed to in writing.

Court’s analysis

The court rejected Hekel’s argument that the Minnesota Supreme Court’s decision in Poehler v. Cincinnati Insurance Co. made § 549.09 the only statute governing prejudgment interest. The court said Poehler involved pre-award interest on an insurance appraisal award and that its broad statement about § 549.09 was, at most, unintended dicta.

The court relied on Minnesota decisions stating that § 549.09 supplements rather than replaces existing interest law, including § 334.01. It also relied on Eighth Circuit decisions explaining that the Minnesota Supreme Court had not definitively ruled that § 334.01 could not apply to debts like Hekel’s. The court concluded that § 334.01 allowed interest on legal indebtedness such as back rent, so that statute—not § 549.09—applied.

The court added that even under Hekel’s interpretation, summary judgment for her would not be proper. A debt collector’s attempt to collect interest under a statute that might later be challenged does not necessarily mean the collector attempted to collect interest not permitted by law. The court also rejected Hekel’s argument that the debt was not sufficiently definite because she disputed how much she owed, explaining that back rent can be readily ascertainable even when the renter disputes defenses or the amount owed.

Although Hunter Warfield had not moved for summary judgment, the court determined that the undisputed legal issue warranted judgment in its favor.

Disposition

The court denied Hekel’s Motion for Partial Summary Judgment. It granted summary judgment in favor of Hunter Warfield on Hekel’s FDCPA claim and dismissed with prejudice the case.