Carlin v. Davidson Fink LLP

Filing

OPINION, the district court judgment is vacated and remanded, by RSP, BDP, DAL, FILED.[1999790] [15-3105]

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15-3105-cv
Carlin v. Davidson Fink LLP

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In the

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United States Court of Appeals

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for the Second Circuit

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August Term, 2015

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No. 15-3105-cv

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ANDREW CARLIN, individually and on behalf of a class,

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Plaintiff-Appellant,

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v.

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DAVIDSON FINK LLP,

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Defendant-Appellee.
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Argued: April 5, 2016
Decided: March 29, 2017
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Before: POOLER, PARKER, and LIVINGSTON, Circuit Judges.
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This appeal considers whether a letter to a consumer debtor
providing a “Total Amount Due” and stating that the amount may
include estimated fees, costs, additional payments, or escrow
disbursements that are not yet due is sufficient to state the “amount
of the debt” as required by the Fair Debt Collection Practices Act. 15
U.S.C. § 1692g. We hold that, in the circumstances here, it is not. As
a threshold matter, we also clarify that mortgage foreclosure
complaints are not “initial communications” within the meaning of

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the Fair Debt Collection Practices Act. Because Carlin has stated
facts that, if true, give rise to liability under the Fair Debt Collection
Practices Act, we vacate the judgment of the district court and
remand for further proceedings.
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DANIEL A. EDELMAN (Tiffany N. Hardy, on the
brief), Edelman, Combs, Latturner & Goodwin,
LLC, Chicago, IL, for Plaintiff-Appellant.

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ANDREW M. BURNS, Davidson Fink LLP,
Rochester, NY, Matthew J. Bizzaro, L’Abbate,
Balkan, Colavita & Contini, LLP, Garden City,
NY, on the brief, for Defendant-Appellee.

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________

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BARRINGTON D. PARKER, Circuit Judge
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Plaintiff-Appellant Andrew Carlin, individually and on behalf
of others similarly situated, alleges that Defendant-Appellee
Davidson Fink LLP violated the Fair Debt Collection Practices Act,
15 U.S.C. § 1692 et seq. (the “FDCPA”), when it failed to provide the
“amount of the debt” within five days after an initial communication
with a consumer in connection with the collection of a debt, as
required by § 1692g. The complaint alleges that Davidson Fink
made three attempts to collect on a debt and that each time, it failed
to provide adequate notice to Carlin of the amount of the debt.
Carlin urges us to hold that Davidson Fink’s first
communication, a mortgage foreclosure complaint (the “Foreclosure
Complaint”), was an initial communication with a consumer in
connection with the collection of a debt, and that Davidson Fink was
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therefore required to provide the “amount of the debt” within five
days of filing the Foreclosure Complaint. But we decline to so hold
because the plain language of the statute excludes from § 1692g
pleadings in a civil action. Instead, we conclude that Davidson
Fink’s follow-up letter, an unambiguous attempt to collect on a debt,
triggered the disclosure requirements of § 1692g, and that Carlin has
adequately alleged that this second communication by Davidson
Fink did not satisfy those requirements. We therefore vacate the
order and judgment of the district court and remand for further
proceedings consistent with this opinion.

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BACKGROUND

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Because this appeal comes before us on a motion to dismiss,
we accept as true all plausible allegations in the complaint.
Davidson Fink is a law firm whose practice areas include debt
collection and foreclosure. Davidson Fink provides a “wide-range of
debt collection services,” and offers “immediate and inexpensive
options to recover unpaid funds with a comprehensive collection
process.” App. at 3. As part of its practice, Davidson Fink regularly
collects consumer debts, including residential mortgage debts.
There is no dispute that Davidson Fink is a debt collector within the
meaning of the FDCPA.
On June 24, 2013, Davidson Fink filed the Foreclosure
Complaint against Carlin, seeking to collect on a 2005 mortgage
allegedly defaulted on by Carlin. The summons indicated that “[t]he
relief sought in the within action is a final judgment directing the
sale of the premises described above to satisfy the debt secured by
the Mortgage described above.” App. at 12. The Foreclosure
Complaint stated that “this action may be deemed to be an attempt
to collect a debt.” App. at 17. The Foreclosure Complaint also
included a paragraph requesting:

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That if the proceeds of said sale of the
mortgage premises aforesaid be insufficient
to pay the amount found due to the plaintiff
with interest and costs, the officer making the
sale be required to specify the amount of
such deficiency in his report of sale so that
plaintiff may thereafter be able to make
application to this Court, pursuant to Section
1371 of the Real Property Actions and
Proceedings Law, for a judgment against the
defendant(s) referred to in paragraph
FOURTH of this Complaint for any
deficiency which may remain after applying
all of such moneys so applicable thereto,
except that this shall not apply to any
defendant who has been discharged in
bankruptcy from the subject debt[.]
App. at 18. Section 1371 of the New York Real Property Actions and
Proceedings Law provides that “[s]imultaneously with the making
of a motion for an order confirming the sale, . . . the party to whom
such residue shall be owing may make a motion in the action for
leave to enter a deficiency judgment . . . .” N.Y. REAL PROP. ACTS.
LAW § 1371(2) (2016).
Davidson Fink attached to the Foreclosure Complaint a
“Notice Required by the Fair Debt Collection Practices Act,” which
stated that “the amount of the debt is stated in the complaint hereto
attached,” and also that “the debt . . . will be assumed to be valid . . .
unless the debtor, within thirty (30) days after receipt of this notice,
disputes the validity of the debt.” App. at 21. Contrary to the
assurance made in the attached notice, the Foreclosure Complaint
did not state the amount of the debt.

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Apparently prompted by the Foreclosure Complaint’s
warnings, Carlin sent Davidson Fink a letter on July 12, 2013 (the
“July Letter”), disputing the validity of the debt and requesting a
verification of the dollar amount of the purported debt. Davidson
Fink obliged, and on August 9, 2013, sent a letter (the “August
Letter”) to Carlin containing, among other things, a Payoff
Statement. The Payoff Statement was dated July 31, 2013, and
indicated that it was valid through August 14, 2013. The Payoff
Statement included a “Total Amount Due” of $205,261.79. Below the
amount due, however, the statement added, in small print:
To provide you with the convenience of an
extended “Statement Void After” date, the
Total Amount Due may include estimated
fees, costs, additional payments and/or
escrow disbursements that will become due
prior to the “Statement Void After” date, but
which are not yet due as of the date this
Payoff Statement is issued. You will receive
a refund if you pay the Total Amount Due
and those anticipated fees, expenses, or
payments have not been incurred.
App. at 55. The Payoff Statement did not indicate what those
estimated fees, costs, or additional payments were or how they were
calculated.
Carlin brought this action alleging that Davidson Fink
violated the FDCPA, which provides:
Within five days after the initial
communication with a consumer in
connection with the collection of any debt, a
debt collector shall, unless the following
information is contained in the initial
communication or the consumer has paid the
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debt, send the consumer a written notice
containing—

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(1) the amount of the debt . . . .

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15 U.S.C. § 1692g(a). Carlin alleges that the filing of the Foreclosure
Complaint was an “initial communication . . . in connection with the
collection of any debt,” and because Davidson Fink failed to specify
the amount of the debt within five days of filing the complaint, it is
liable for damages under the FDCPA. See id. § 1692k. Alternatively,
Carlin alleges that Davidson Fink was required to respond with the
amount of the debt within five days of receiving the July Letter.
Finally, Carlin alleges that if neither the Foreclosure Complaint nor
the July Letter was an initial communication, then the August Letter
was an initial communication made in connection with the collection
of a debt and the Payoff Statement did not satisfy § 1692g(a) because
the amount due included unaccrued and unspecified fees and costs.

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Davidson Fink moved to dismiss for failure to state a claim. In
September 2014, the district court (Seybert, J.) denied the motion,
saying that Carlin had plausibly alleged that Davidson Fink was
acting as a debt collector, that it engaged in an initial communication
with Carlin, and that it failed to comply with § 1692g(a). Davidson
Fink moved for reconsideration, and in September 2015, the district
court granted the motion and dismissed the complaint, holding that
because the Foreclosure Complaint was not an effort to collect on a
debt within the meaning of § 1692g(a), the complaint failed to
plausibly state a claim. Carlin appeals.

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DISCUSSION

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We review a district court’s grant of a defendant’s motion to
dismiss de novo. Hart v. FCI Lender Servs., Inc., 797 F.3d 219, 223 (2d
Cir. 2015). To survive a motion to dismiss, “a complaint must
contain sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678

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(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
We must “accept as true all of the allegations contained in a
complaint,” though “[t]hreadbare recitals of the elements of a cause
of action, supported by mere conclusory statements, do not suffice.”
Id. Though we are confined “to the allegations contained within the
four corners of [the] complaint,” Pani v. Empire Blue Cross Blue Shield,
152 F.3d 67, 71 (2d Cir. 1998), we may also consider any “documents
attached to the complaint as an exhibit or incorporated in it by
reference,” Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir.
2002) (quoting Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir.
1993)).
In assessing Carlin’s claim, § 1692g(a) calls upon us to make
three determinations: (1) whether any of the communications
between the parties were “initial communications” within the
meaning of § 1692g, (2) whether any of the communications between
the parties were “in connection with the collection of any debt,” and
(3) whether Davidson Fink provided the amount of the debt within
five days of such a communication. We agree with Davidson Fink
that neither the Foreclosure Complaint nor the July Letter are initial
communications giving rise to the requirements of § 1692g(a). We
hold, however, that the August Letter was an initial communication
in connection with the collection of a debt, and that the Payoff
Statement attached to the August Letter did not adequately state the
amount of the debt.
A.

Initial Communication

The FDCPA does not offer a definition of “initial
communication.” In Goldman v. Cohen, we held that a “debt
collector’s initiation of a lawsuit in state court seeking recovery of
unpaid consumer debts is an ‘initial communication’ within the
meaning of the FDCPA.” 445 F.3d 152, 155 (2d Cir. 2006). After
Goldman, however, Congress amended the FDCPA in 2006 to clarify
that “[a] communication in the form of a formal pleading in a civil
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action shall not be treated as an initial communication for purposes
of subsection (a) of this section.” 15 U.S.C. § 1692g(d) (added by the
Financial Services Regulatory Relief Act of 2006, Pub. L. No. 109-351,
§ 802(a), 120 Stat. 1966, 2006–07 (2006)). We have recognized that
this amendment supersedes our determination in Goldman. See Ellis
v. Solomon & Solomon, P.C., 591 F.3d 130, 136 (2d Cir. 2010).
Despite the plain language of the statute, Carlin insists that the
Foreclosure Complaint is an initial communication. Carlin argues
that our holding in Hart, 797 F.3d at 224, makes clear that a § 1692g
notice is an initial communication. Here, Davidson Fink attached
such a notice to the Foreclosure Complaint, although it was not
required to do so, and Carlin argues that because the notice was not
part of the “formal pleading,” it does not fall within the exception
for formal civil pleadings provided in the statute.
Carlin’s argument finds no refuge in the text of the statute.
Section 1692g(d) states that a “communication in the form of a
formal pleading in a civil action” is not an initial communication.
We have recognized that “courts should avoid statutory
interpretations that render provisions superfluous.” State St. Bank &
Tr. Co. v. Salovaara, 326 F.3d 130, 139 (2d Cir. 2003). Were we to
adopt Carlin’s reading that the exclusion applies only to the formal
documents that make up a standard pleading, we would be ignoring
the plain language instructing that all communications in the form of
a civil pleading are excluded from the definition of initial
communication. Congress could have drawn the exclusion more
narrowly, but it did not. Instead, it adopted a broad exclusion that,
on its face, applies to any communication forming any part of a
pleading. Such an exclusion naturally extends to exhibits attached to
a complaint, and accordingly includes the § 1692g notice attached to
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are superfluously attached to a formal pleading are not initial
communications within the meaning of the FDCPA.1
Carlin protests that the § 1692g notice is misleading because it
erroneously instructed him that he had 30 days to dispute the debt,
which, according to the position now taken by Davidson Fink, was
false. But Carlin has not alleged in his complaint that the notice was
misleading, only that it failed to state the amount of the debt.
Should Carlin wish to amend his complaint to state such a claim,
that issue must be decided by the district court in the first instance,
and we express no view on the merits of such a claim.
Carlin next alleges that the July Letter, sent from him to
Davidson Fink in response to the Foreclosure Complaint, is an initial
communication. Numerous district courts have rejected the notion
that a communication initiated by a debtor to a debt collector may
qualify as an initial communication. See, e.g., Derisme v. Hunt Leibert
Jacobson P.C., 880 F. Supp. 2d 339, 367–68 (D. Conn. 2012); Lane v.
Fein, Such & Crane, LLP, 767 F. Supp. 2d 382, 387 (E.D.N.Y. 2011);
Gorham-Dimaggio v. Countrywide Home Loans, Inc., No. 1:05-cv-0583,
2005 WL 2098068, at *2 (N.D.N.Y. Aug. 30, 2005). Like those courts,
we conclude that, read in the context of the entire statute, initial
communications do not include communications initiated by the
debtor.
“When construing a statute, we begin with its language and
proceed under the assumption that the statutory language, unless
otherwise defined, carries its plain meaning . . . .” Chen v. Major
League Baseball Props., Inc., 798 F.3d 72, 76 (2d Cir. 2015). The statute
specifies that the communication must be “with” a consumer. We

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Because we conclude that the erroneously attached notice was not an initial communication, we need
not confront the parties’ extensive arguments regarding whether the initiation of a foreclosure action is
done “in connection with the collection of any debt.” Nor do we need to consider the district court’s
interpretation of the Eleventh Circuit’s ruling in Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d
1211 (11th Cir. 2012), as that case offers little guidance on the issues we confront here.

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cannot discern from this alone whether the statute should be read to
exclude communications initiated by the consumer. Where statutory
language is ambiguous, we may consider legislative history, but in
doing so, we must “construct an interpretation that comports with
[the statute’s] primary purpose and does not lead to anomalous or
unreasonable results.” Puello v. Bureau of Citizenship & Immigration
Servs., 511 F.3d 324, 327 (2d Cir. 2007) (alteration in original) (internal
quotation marks omitted) (quoting Connecticut ex rel. Blumenthal v.
United States Dep’t of the Interior, 228 F.3d 82, 89 (2d Cir. 2000)); see
also Romea v. Heiberger & Assocs., 163 F.3d 111, 118 (2d Cir. 1998)
(noting that the court should avoid interpreting the FDCPA to
“contravene[] the purpose of the statute”).
The FDCPA states that its purpose is to “eliminate abusive
debt collection practices by debt collectors.” 15 U.S.C. § 1692(e)
(emphasis added). We have similarly recognized that the “FDCPA
was passed to protect consumers from deceptive or harassing
actions taken by debt collectors.” Kropelnicki v. Siegel, 290 F.3d 118, 127
(2d Cir. 2002) (emphasis added). And the legislative history makes
clear that the debt collector’s obligation to provide the amount of the
debt arises only “[a]fter initially contacting a consumer.” S. Rep. No.
95-382, at 4 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1699. The
legislative history and stated purpose of the statute thus indicate that
the statute’s primary purpose, particularly where § 1692g is
implicated, is to regulate communications from the debt collector to
the debtor. Thus, imposing liability under § 1692g when a debtor
initiates the communication would run counter to the statute’s
primary purpose and would impose liability in circumstances not
contemplated by either the statute or the legislature. Accordingly,
the July Letter is not an initial communication under the FDCPA.
We have little difficulty concluding, however, that the August
Letter was an initial communication. Davidson Fink argues that the
protections of the FDCPA are not implicated where the debtor is
protected by the procedures of the court system. Davidson Fink’s
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argument fails because the August Letter was not sent in the context
of a litigation, nor was it even sent to Carlin’s attorney. The cases
cited by Davidson Fink are inapposite—those cases, which concern
only misrepresentations under § 1692e, all involve representations
made to an attorney representing the debtor, usually in the context
of a formal proceeding. See, e.g., Gabriele v. Am. Home Mortg.
Servicing, Inc., 503 F. App’x 89, 92 (2d Cir. 2012) (alleged
misstatements made in state foreclosure action); Simmons v. Roundup
Funding, LLC, 622 F.3d 93, 95 (2d Cir. 2010) (alleged misstatements
made in bankruptcy filing); Kropelnicki, 290 F.3d at 123 (alleged
misstatement made over the phone to attorney during settlement
discussions). Here, by contrast, the August Letter was not sent in
connection with the foreclosure proceeding, and in fact makes no
mention of the proceeding. Furthermore, the letter was not sent to
Carlin’s attorney, who had already appeared on behalf of Carlin in
the foreclosure proceeding, but to Carlin himself. Davidson Fink is
thus incorrect that Carlin was amply protected by the procedures of
the court system.
Nor can we say that the August Letter was merely a response
to an unsolicited request for information. The August Letter was
sent in response to the July Letter, which was only sent in the first
place because Carlin was under the mistaken impression that he was
required to dispute the debt within thirty days. In light of such
circumstances, there is little dispute that the August Letter was an
initial communication within the meaning of the FDCPA.
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In Connection With the Collection of Any Debt

Having determined that only the August Letter is an initial
communication, we must assess whether the letter was sent “in
connection with the collection of any debt.” 15 U.S.C. § 1692g(a). In
addressing this question at the motion to dismiss stage, our role is to
determine merely whether, when viewed objectively, the plaintiff
“has plausibly alleged that a consumer receiving the communication
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could reasonably interpret it as being sent ‘in connection with the
collection of [a] debt,’ rather than inquiring into the sender’s
subjective purpose.” Hart, 797 F.3d at 225 (alteration in original). In
Hart, we determined that the letter in question was unambiguously
sent in connection with the collection of a debt because: (1) the letter
directed the recipient to mail payments to a specified address, (2) the
letter referred to the FDCPA by name, (3) the letter informed the
recipient that he had to dispute the debt’s validity within thirty days,
and (4) most importantly, the letter “emphatically announce[d] itself
as an attempt at debt collection: ‘THIS IS AN ATTEMPT TO
COLLECT UPON A DEBT, AND ANY INFORMATION OBTAINED
WILL BE USED FOR THAT PURPOSE.’” Id. at 226. We had “no
difficulty in concluding” that the communication in question was an
attempt to collect on a debt within the meaning of the FDCPA. Id.
Here, too, the August Letter is unambiguous. The Payoff
Statement provides addresses to which Carlin was instructed to mail
or wire his payments, the cover letter mentions the FDCPA by name,
and, most notably, the letter states: “ PLEASE BE ADVISED THAT
DAVIDSON FINK LLP IS A LAW FIRM ACTING AS A DEBT
COLLECTOR. THIS IS AN ATTEMPT TO COLLECT A DEBT.
ANY INFORMATION OBTAINED FROM YOU WILL BE USED
FOR THAT PURPOSE.” App. at 54. These factors, dispositive in
Hart, are similarly instructive here and demonstrate that Carlin has
adequately pleaded that the August Letter was sent in connection
with the collection of a debt.
C.

Amount of the Debt

The remaining inquiry is whether Davidson Fink adequately
stated the amount of the debt in the August Letter, as required by
§ 1692g. We conclude that it did not.
The Payoff Statement included a “Total Amount Due,” but
that amount may have included unspecified “fees, costs, additional
payments, and/or escrow disbursements” that were not yet due at
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the time the statement was issued. The Payoff Statement indicated
that any such fees would accrue by August 14, 2013 (the date on
which the Payoff Statement became void), and that if payment of the
“Total Amount Due” was made prior to August 14, Carlin would
receive a refund in the amount of the unaccrued fees.
When determining whether a debt collector has violated
§ 1692g’s notice requirements, we consider how the “least
sophisticated consumer” would interpret the notice. See Russell v.
Equifax A.R.S., 74 F.3d 30, 34 (2d Cir. 1996) (citing Clomon v. Jackson,
988 F.2d 1314, 1318 (2d Cir. 1993)). We ask whether “the notice fails
to convey the required information ‘clearly and effectively and
thereby makes the least sophisticated consumer uncertain’ as to the
meaning of the message.” DeSantis v. Computer Credit, Inc., 269 F.3d
159, 161 (2d Cir. 2001) (quoting Savino v. Computer Credit, Inc., 164
F.3d 81, 85 (2d Cir. 1998)). Thus, even if a debt collector accurately
conveys the required information, a consumer may state a claim if
she successfully alleges that the least sophisticated consumer would
inaccurately interpret the message.
It is unclear whether Davidson Fink’s notice accurately
conveys the required information. The FDCPA defines “debt” as
“any obligation or alleged obligation of a consumer to pay money
arising out of a transaction . . . , whether or not such obligation has
been reduced to judgment.” 15 U.S.C. § 1692a(5). The Seventh
Circuit has expressed doubt that “debt” includes unaccrued court
costs or attorney fees. See Veach v. Sheeks, 316 F.3d 690, 693 (7th Cir.
2003). But the Payoff Statement does not specify what the
“estimated fees, costs, [and] additional payments” are, and thus we
cannot say whether those amounts are properly part of the amount
of the debt.2 If Davidson Fink improperly included fees and costs

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The only additional fee beyond principal and interest referenced in the underlying note is a 2% “Late
Charge for Overdue Payments.” [JA155] The Payoff Statement does not indicate whether the late charge
is part of the “fees, costs, [and] additional payments” included in the Total Amount Due.

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that it was not entitled to under the note (absent a judgment), the
Payoff Statement would plainly be insufficient under § 1692g.
The least sophisticated consumer standard we use to interpret
the legal effect of FDCPA notices supports this conclusion. Absent
fuller disclosure, an unsophisticated consumer may not understand
how these fees are calculated, whether they may be disputed, or
what provision of the note gives rise to them. Because the statement
gives no indication as to what the unaccrued fees are or how they
are calculated, she cannot deduce that information from the
statement.
We do not hold that a debt collector may never satisfy its
obligations under § 1692g by providing a payoff statement that
provides an amount due, including expected fees and costs. But a
statement is incomplete where, as here, it omits information
allowing the least sophisticated consumer to determine the
minimum amount she owes at the time of the notice, what she will
need to pay to resolve the debt at any given moment in the future,
and an explanation of any fees and interest that will cause the
balance to increase.
We are not ignorant of the safe-harbor statement we
formulated in Avila v. Riexinger & Assocs., LLC, 817 F.3d 72 (2d Cir.
2016). There, we held:
[A] debt collector will not be subject to
liability under Section 1692e for failing to
disclose that the consumer’s balance may
increase due to interest and fees if the
collection notice either accurately informs the
consumer that the amount of the debt stated
in the letter will increase over time, or clearly
states that the holder of the debt will accept
payment of the amount set forth in full

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Case 15-3105, Document 99-1, 03/29/2017, 1999790, Page15 of 15

15-3105-cv
Carlin v. Davidson Fink LLP

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satisfaction of the debt if payment is made by
a specified date.
817 F.3d at 77. However, the Payoff Statement only expresses that
the Total Amount Due may include estimated fees and costs. There is
no clarity as to whether new fees and costs are accruing or as to the
basis for those fees and costs.3
Notices such as the Payoff Statement here may very well be
commonplace in the debt collection industry. But the FDCPA does
not insulate a debt collector from liability merely because others in
the industry engage in the same practice. It is no great chore for
Davidson Fink and other debt collectors to revise their standard
payoff statements to clarify the actual amount due, the basis of the
fees, or simply some information that would allow the least
sophisticated consumer to deduce the amount she actually owes.

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CONCLUSION

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Because Carlin has adequately alleged that the August Letter
is an initial communication sent by a debt collector in connection
with the collection of a debt and that it does not clearly state the
amount of the debt, we vacate the order and judgment of the district
court and remand for proceedings consistent with this opinion.

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3

As we explained in Avila, though not required by the text of the statute, a notice would also satisfy §
1692g if it used language such as : “As of today, [date], you owe $___. This amount consists of a principal
of $___, accrued interest of $___, and fees of $___. This balance will continue to accrue interest after
[date] at a rate of $___per [date/week/month/year].” 817 F.3d at 77 n. 2 (citing Jones v. Midland Funding,
LLC., 755 F.Supp.2d 393, 397 n. 7).

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