## Facts

- Gail Schroyer owned a home in Elyria, Ohio, where she lived with her son, Michael Schroyer.
- Gail hired Alexander’s Sewer & Plumbing Company (ASAP) to repair a water-line leak; Michael signed the contract on Gail’s behalf while she was away.
- After the work, Gail paid ASAP by check for $1,004.60, then stopped payment after discovering alleged property damage and asserted code-related deficiencies in the installation.
- ASAP returned and performed additional work, then issued a second invoice totaling $1,954.60 (including the original charge, a stop-payment-related charge, and additional labor/materials/equipment).
- ASAP sued in Elyria Municipal Court to collect $1,954.60; ASAP initially proceeded pro se and later retained attorney Kenneth P. Frankel of Gerald M. Smith Co., L.P.A. (doing business as Smith & Smith).
- The municipal court entered judgment for ASAP against Gail, but found Michael not liable.
- The Schroyers filed consolidated federal actions against Frankel and Smith & Smith, alleging that defendants’ litigation-related conduct violated the FDCPA and the Ohio Consumer Sales Practices Act (OCSPA).
- After a bench trial, the district court entered judgment for defendants, concluding they were not FDCPA “debt collectors,” not OCSPA “suppliers,” and that Gail was precluded from disputing the debt’s validity by the municipal court judgment.

## Issues

1. Whether Frankel and Smith & Smith “regularly” collected debts owed to another such that they were “debt collectors” under the FDCPA.
2. Whether Frankel and Smith & Smith were “suppliers” under the OCSPA based on their role representing ASAP in a consumer dispute.
3. Whether Gail was barred by defensive collateral estoppel from relitigating the validity and amount of the ASAP debt decided in municipal court.

## Decision

- The Sixth Circuit affirmed judgment for Frankel and Smith & Smith.
- The court held defendants were not FDCPA “debt collectors” because debt collection was a small portion of their practice and plaintiffs did not prove debt collection was a principal purpose or regularly undertaken activity within the statutory meaning.
- The court held defendants were not OCSPA “suppliers” because they acted as legal counsel in litigation, not as businesses effecting or soliciting consumer transactions with the Schroyers.
- The court upheld defensive collateral estoppel, precluding Gail from disputing the debt’s validity and amount previously adjudicated against her in municipal court.

## Legal Principles

- FDCPA “debt collector” status requires showing that debt collection is the principal purpose of the business or that the person or entity “regularly” collects debts owed to another; incidental or occasional debt-collection matters within a broader legal practice do not suffice.
- In assessing “regularly collects,” courts may consider the proportion of debt-collection matters in an attorney’s or firm’s overall practice and the presence or absence of evidence of substantial debt-collection revenue or ongoing creditor-collection relationships.
- Under the OCSPA, an attorney providing legal representation in a client’s dispute is not a “supplier” absent business activity directed to effecting or soliciting consumer transactions with the plaintiff beyond incidental involvement.
- Under Ohio issue-preclusion rules, a party may be barred from relitigating issues actually and necessarily decided in a prior action; defensive collateral estoppel may be invoked by a new defendant when the prior judgment resolved the issue against the plaintiff.

## Conclusion

The Sixth Circuit affirmed judgment for the attorney and law firm, holding they fell outside the FDCPA and OCSPA statutory definitions on this record and that a prior state-court judgment establishing the debt’s validity barred the debtor from contesting that issue in a later consumer-protection suit against the creditor’s counsel.


Schroyer v. Frankel, 197 F.3d 1170 (6th Cir. 1999)