Pepper Hamilton

The definition of “debt collector” has become a central issue as Pepper Hamilton faces a federal lawsuit alleging that a partner used unfair debt collection practices in payment demands to his tenants that were printed on firm letterhead.

In a Jan. 10 motion to dismiss the complaint, Pepper Hamilton contended that, as a law firm, it is not a debt collector under federal law, and neither is partner M. Kelly Tillery. Lawyers for Donald and Holly Adams countered on Tuesday that the plaintiffs were “the least sophisticated debtors,” and therefore reasonably believed that Pepper Hamilton was acting as a debt collector for Tillery.

In a complaint filed in November in the Eastern District of Pennsylvania, the Adamses said Tillery never referenced Pepper Hamilton or his status as a lawyer in documents leasing a $750,000 home to them for $5,000 a month. But when the parties terminated their contract for the Adamses to eventually purchase Tillery’s property and the Adamses moved out of the house in September 2016, Tillery allegedly asserted they were “holdover” tenants and that they owed him around $10,000.

Tillery requested payment in two letters written on Pepper Hamilton letterhead and also threatened a lawsuit, the complaint said. The Adamses claim that the letters did not include the proper disclosures under the Fair Debt Collection Practices Act and gave the false impression that the matter was being handled by Pepper Hamilton, acting as debt collectors for Tillery.

In their motion to dismiss, Tillery and Pepper Hamilton called the complaint “a transparent attempt at retaliation for Mr. Tillery’s exercise of his rights as their former landlord.” The Adamses, in response, said Tillery’s argument that he was simply seeking to collect his own debt was “nonsensical.”

Tillery’s motion to dismiss argued that neither he nor his firm is a debt collector as defined in the FDCPA. The law defines a debt collector as a person who collects or attempts to collect debts “regularly,” and does not include creditors who collect debt in their own name, the motion said.

“Indisputably, Mr. Tillery is a creditor who attempted to collect his own debt in his own name, rendering the FDCPA inapplicable to him,” Pepper Hamilton’s motion said. “Mr. Tillery most certainly was not attempting to collect a debt owed to another.”

Additionally, the motion said, the appearance of Pepper Hamilton’s logo and address on the letters did not constitute an act of debt collection. The firm does not regularly collect debts, the firm added.

In opposition to Tillery’s motion, the Adamses said the letters led them to believe Tillery was acting as an attorney with the full resources of his firm behind him. And, they argued, the law firm qualifies as a debt collector under federal law due to some of its activities representing clients.

“A reasonable inference that must be drawn in the plaintiffs’ favor is that given the size and scope of the defendants’ legal practice, they must represent creditors with the collection of consumer debts even if it’s with litigation matters and not direct collections,” the opposition brief said.

Christopher Chiacchio of Hovatter Friedman Saputelli & Levi is representing the Adamses.

“We still stand behind the allegations as set forth in the complaint,” he said. “I’m still confident that we’ll prevail.”

Thomas Zemaitis of Pepper Hamilton is representing the firm and Tillery. He did not respond to a request for comment.

Lizzy McLellan can be contacted at 215-557-2493 or Follow her on Twitter @LizzyMcLellTLI.

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