Nikkel v. Wakefield & Associates, Inc.
Filing
62
ORDER granting in part and denying in part 36 Defendant Wakefield & Associates, Inc's Motion for Summary Judgment Pursuant to Fed. R. Civ. P. 56. By Judge Philip A. Brimmer on 11/15/12.(pabsec)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 10-cv-02411-PAB-CBS
ROSEMARY NIKKEL,
Plaintiff,
v.
WAKEFIELD & ASSOCIATES, INC.,
Defendant.
ORDER
This matter is before the Court on the Motion for Summary Judgment [Docket
No. 36] filed by defendant Wakefield and Associates, Inc. (“Wakefield”). The motion is
fully briefed and ripe for disposition.
I. BACKGROUND1
This case arises out of Wakefield’s attempts to collect unpaid medical bills that
plaintiff Rosemary Nikkel owed to Children’s Hospital (“Children’s”) in Aurora, Colorado.
In her amended complaint, Ms. Nikkel alleges that Wakefield, in its attempt to collect
such bills, violated the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692
et seq. See Docket No. 10. Ms. Nikkel seeks an award of statutory damages and
attorneys’ fees and costs for Wakefield’s alleged violations of the FDCPA.2
1
2
The following facts, unless otherwise indicated, are not in dispute.
In the Final Pretrial Order [Docket No. 43], Ms. Nikkel advised that she no
longer seeks an award for actual damages. Docket No. 43 at 3; see United
Phosphorus, Ltd. v. Midland Fumigant, Inc., 205 F.3d 1219, 1235 (10th Cir. 2000)
(finding that the final pretrial order supersedes the complaint and is the operative
Sometime before 2009, Ms. Nikkel incurred an obligation to repay Children’s for
$1496.00 in unpaid medical bills.3 Docket No. 36-1 at 1, ¶ 5. The medical bills
stemmed from in-patient treatment her son received at Children’s. Docket No. 36-4 at 8
(Nikkel Dep. 47:11-23). When Ms. Nikkel received Children’s bill, she refused to pay.
Id. at 9 (Nikkel Dep. 48:16-23); id. at 10 (Nikkel Dep. 54:8-21). On March 17, 2009,
Children’s assigned the collection of Ms. Nikkel’s unpaid medical bills to Wakefield.4
Docket No. 36-1 at 1, ¶ 5. The billing statement Children’s provided to Wakefield
identified Ms. Nikkel’s address as “4613 Estes St., Wheat Ridge, CO 80033” (the
“Wheat Ridge address”). Docket No. 36-5.
Ryan Boettcher, vice president of operations at Wakefield, testified as
Wakefield’s Rule 30(b)(6) witness with respect to Wakefield’s collection activities.
According to Mr. Boettcher, Wakefield uses a computer system known as the “Cyclone
software” to perform its collection activities. Docket No. 36-2 at 3 (Rule 30(b)(6) Dep.
28:3-23). Once a debt is assigned to Wakefield, every action taken on that account is
represented in the “account notes” through unique identifiers generated either by the
pleading).
3
Ms. Nikkel’s obligation to repay Children’s meets the definition of the term “debt”
as that term is defined in the FDCPA. 15 U.S.C. § 1692a(5) (“The term ‘debt’ means
any obligation or alleged obligation of a consumer to pay money arising out of a
transaction in which . . . services which are the subject of the transaction are primarily
for personal, family, or household purposes”).
4
Wakefield is a company that uses instrumentalities of commerce for the
principal purpose of collecting debts owed by consumers. As such, Wakefield qualifies
as a “debt collector” as that term is defined in the FDCPA. 15 U.S.C. § 1692a(6). (“The
term ‘debt collector’ means any person who uses any instrumentality of interstate
commerce . . . the principal purpose of which is the collection of any debts”).
2
Cyclone software or by collection agents.5 See Docket No. 36-3. Each unique identifier
represents a specific action taken in connection with the account. Docket No. 36-2 at 2
(Rule 30(b)(6) Dep. 27:12-14).
With respect to the Validation of Debt Notices required by the FDCPA, Mr.
Boettcher testified that, once Wakefield is assigned an account, the Cyclone software
generates an Initial Demand Letter that contains all of the statutorily required
disclosures. Id. at 5-6 (Rule 30(b)(6) Dep. 30:11-31:13). After the Cyclone software
generates the Initial Demand Letter, the letter is sent to a third party letter vendor,
DANTOM Systems, Inc. (“DANTOM”), located in Dearborn, Michigan. DANTOM then
mails the Initial Demand Letter to the consumers and, once it is confirmed that the
letters are mailed, the Cyclone software generates a unique identifier indicating the date
and time the letter was sent. Id. at 5 (Rule 30(b)(6) Dep. 30:21-25). However, neither
DANTOM nor Wakefield keeps paper or electronic copies of the mailed Initial Demand
Letters. Id. (Rule 30(b)(6) Dep. 30:2-13); id. at 7 (Rule 30(b)(6) Dep. 33:1-10). The
Cyclone system generates unique identifiers signifying if an Initial Demand Letter has
been returned as undeliverable. Id. at 9 (Rule 30(b)(6) Dep. 42:1-7).
In this case, Wakefield alleges that it mailed an Initial Demand Letter to Ms.
Nikkel’s Wheat Ridge address on March 17, 2009. Docket No. 36-2 at 4 (Rule 30(b)(6)
5
In the account notes, Docket No. 36-3, every event disclosed is either entered
by the Cyclone software which is denoted with a “99,” Docket No. 36-2 at 3 (Rule
30(b)(6) 28:4-6), or by collection agents represented by their initials. Id. at 12 (Rule
30(b)(6) Dep. 56:9-10); Docket No. 38-1 at 3 (Rule 30(b)(6) Dep. 65:10-16).
3
Dep. 29:5-15).6 Wakefield claims that the Initial Demand Letter sent to Ms. Nikkel on
March 17, 2009 contained all of the disclosures required by the FDCPA, Docket No. 361 at 1, ¶ 6, and that the letter was not returned as undeliverable.7 Docket No. 36-2 at
11 (Rule 30(b)(6) Dep. 47:1-4). Wakefield, however, does not have a copy of the letter
sent to Ms. Nikkel. Id. at 5 (Rule 30(b)(6) Dep. 30:2-6); id. at 7 (Rule 30(b)(6) Dep.
33:1-6).
In her deposition, Ms. Nikkel alleges that she never received Wakefield’s Initial
Demand Letter of March 17, 2009, Docket No. 36-4 at 17 (Nikkel Dep. 87:20-23), not
having lived at the Wheat Ridge address for several years prior to March 17, 2009. Id.
at 2 (Nikkel Dep. 23:23-25).
On March 15, 2010, DANTOM advised Wakefield that Ms. Nikkel had moved
from the Wheat Ridge address. Docket No. 38-1 at 2 (Rule 30(b)(6) Dep. 64:9-14).
Based on his interpretation of the account notes, Mr. Boettcher alleges that DANTOM
told Wakefield’s collection agent “JB” that Ms. Nikkel had not lived at the Wheat Ridge
address for “three-quarters of a year.”8 Id. (Rule 30(b)(6) Dep. 64:22-24); see Docket
6
On May 18, 2009, the Cyclone software generated a second demand letter,
presumably mailed to Ms. Nikkel’s Wheat Ridge address. Docket No. 36-2 at 8 (Rule
30(b)(6) Dep. 41:14-25).
7
Wakefield alleges that the Wheat Ridge address on the Children’s billing
statement was also the address identified in Accurrant, a database of public and nonpublic consumer information. Docket No. 36-2 at 11 (Rule 30(b)(6) Dep. 47:8-11).
8
The account note states as follows: “0609DL 03/15/10 11:51 JR #02 N/S PER
p/s BD ADD DFNDNT HS NT LVD THR FR 3/4 YRS PR CRRNT TNT UPN INFO BLV
DFNDNTS NW RSD @ 6849 RENO DR. ARVADA CO 80002.” Docket No. 36-3 at 2.
The parties dispute whether the notation “3/4 YRS” stands for “three-quarters of a year”
or “three to four years.”
4
No. 36-3 at 2 (note 0609DL). Ms. Nikkel disputes this fact and claims instead that the
account note reflects that she did not live at the Wheat Ridge address for three to four
years.
On April 1, 2010, after Wakefield learned that Ms. Nikkel did not reside at the
Wheat Ridge address, it initiated an action in the County Court for Jefferson County,
Colorado, seeking a declaration that it was entitled to a judgment in the amount of
$1496.00 in principal and $243.51 in interest as the assignee of the Children’s account.
Docket No. 36-7 at 4. Wakefield applied an eight percent per annum interest rate to
Ms. Nikkel’s Children’s account allegedly pursuant to Colorado law. Docket No. 36-2 at
23 (Rule 30(b)(6) Dep. 90:1-8); id. at 24 (Rule 30(b)(6) Dep. 91:17-18).
On April 4, 2010, Wakefield served Ms. Nikkel with the state court complaint and
summons. Docket No. 36-4 at 18-19 (Nikkel Dep. 95:25-96:5); Docket No. 36-8. The
complaint and summons provided were accompanied by a “cover letter” that advised
Ms. Nikkel to contact Wakefield “immediately” to avoid further litigation costs. Docket
No. 37-3 at 2. Ms. Nikkel’s initial appearance for the state court lawsuit was scheduled
for May 17, 2010. Docket No. 36-4 at 23 (Nikkel Dep. 103:13-17).
On April 22, 2010, Ms. Nikkel contacted Wakefield and spoke with a collection
agent in order to settle the matter and avoid garnishment of her wages. Docket No. 364 at 19 (Nikkel Dep. 96:18-23); id. at 20 (Nikkel Dep. 97:7-9). During the April 22, 2010
phone call, Ms. Nikkel discussed a payment plan with collection agent “JB.” Docket No.
36-2 at 16 (Rule 30(b)(6) Dep. 72:14-19). JB told Ms. Nikkel that, to avoid litigation, she
would have to pay the principal amount on the account in addition to interest and court
costs. Id. at 17 (Rule 30(b)(6) Dep. 73:15-22); Docket No. 36-3 at 2 (note 06u89p). JB
5
knew the amount of interest to apply to Ms. Nikkel’s account because the Cyclone
system has a program that computes applicable interest. Docket No. 36-2 at 21 (Rule
30(b)(6) 88:18-20). Although JB first requested that Ms. Nikkel provide a down
payment of $500 and continue with monthly payments of $250 thereafter, Docket No.
36-4 at 27 (Nikkel Dep. 115:8-9), Ms. Nikkel was able to reach an agreement wherein
Wakefield would receive a $300 down payment with $100 monthly payments until the
debt was satisfied. Id. at 33-34 (Nikkel Dep. 127:25-128:5); Docket No. 36-2 at 16
(Rule 30(b)(6) Dep. 73:19-22).
According to the terms of the agreement discussed on April 22, 2010, Ms. Nikkel
would pay $1496.00 in principal, $246.45 in interest, and $153.85 for court costs for a
total amount of $1,896.30. See Docket No. 36-10. In addition, the agreement included
two clauses9 wherein Ms. Nikkel agreed to waive all legal claims against Wakefield and
agreed to an attorneys’ fees provision to settle any future disputes. See id.
During the April 22, 2010 phone conversation, JB did not discuss the waiver
provision with Ms. Nikkel. Docket No. 37-2 at 3-5 (Rule 30(b)(6) Dep. 106:19-25,
9
The Agreement states, in pertinent part:
4. Defendant(s) waives any and all claims, counterclaims or causes of action including
but not limited to actions under the Colorado Fair Debt Collection Practices Act, the
Federal Credit Reporting Act, and the Federal Fair Debt Collections Practices Act, as
well as any other administrative causes of action.
5. Attorney Fees: If any action is brought because of any breach of, or to enforce or
interpret any of the provisions of this Agreement, the party(s) prevailing in such action
shall be entitled to recover from the opposing party(s) reasonable attorney fees and
court costs incurred in connection with such action, the amount of which shall be fixed
by the court and made a part of any judgment rendered.
Docket No. 36-10 at 1-2.
6
109:25-110:11). According to Mr. Boettcher, Wakefield’s collection agents cannot
counsel consumers on waivers or other legal matters. Id. at 4-5 (Rule 30(b)(6) Dep.
110:19-111:3); id. at 5 (Rule 30(b)(6) Dep. 111:21-25).
On April 26, 2010, Wakefield sent Ms. Nikkel the settlement agreement, Docket
No. 36-2 at 18 (Rule 30(b)(6) Dep. 76:8-10), which she received on or around April 28,
2010, approximately two weeks before the scheduled date for her initial appearance in
the state court action. Docket No. 36-4 at 35-36 (Nikkel Dep. 129:13-17, 132:21-24).
The settlement agreement required Ms. Nikkel to provide Wakefield with a down
payment by May 14, 2010. Id. at 41 (Nikkel Dep. 145:22-25).
Ms. Nikkel was not represented by counsel when she signed the settlement
agreement and Wakefield did not advise her to contact an attorney before signing the
settlement agreement. Docket No. 37-1 at 30 (Nikkel Dep. 312:11-15). Ms. Nikkel
stated that her main concern was to avoid going to court and that she would have
“signed anything to keep from going [to] court.” Docket No. 36-4 at 34 (Nikkel Dep.
128:19-25). She testified that she felt rushed before signing the agreement, Docket No.
37-1 at 34 (Nikkel Dep. 316:13-16), and that, when she signed the waiver, she had
never heard of the FDCPA or the Colorado Fair Debt Collection Practice Act. Docket
No. 36-4 at 39 (Nikkel Dep. 143:8-10). In addition, she did not know that by signing the
waiver she would be forfeiting her rights under the FDCPA, the Colorado Fair Debt
Collection Practices Act, and the Federal Fair Credit Reporting Act. Docket No. 37-1 at
28-29 (Nikkel Dep. 310:25-311:5). Given that she had never heard of these statutes,
she testified that she was not aware that by signing the settlement agreement she
would not be able to bring FDCPA claims in the future. Docket No. 37-1 at 31 (Nikkel
7
Dep. 313:20-25). Furthermore, Ms. Nikkel testified that she knew if she did not sign the
settlement agreement, Wakefield would secure a judgment in the state court action.
Docket No. 36-4 at 38 (Nikkel Dep. 139:14-16).
On May 14, 2010, Ms. Nikkel wrote a check for $300 pursuant to the terms of the
settlement agreement, Docket No. 36-12; Docket No. 36-4 at 42 (Nikkel Dep. 148:821), and mailed the check and the agreement to Wakefield on May 17, 2010. Id. at 43
(Nikkel Dep. 149:6-9). Ms. Nikkel did not appear at the initial hearing for the state court
action because she thought that by sending the agreement her appearance in court
was not necessary. Id. (Nikkel Dep. 149:12-14). Ms. Nikkel testified that she did not
realize that, even though she resolved the matter with the settlement agreement, she
was still required to go to court. Id. at 49 (Nikkel Dep. 167:20-25).
On May 19, 2010, Wakefield received the $300 check along with the signed
agreement from Ms. Nikkel, Docket No. 36-2 at 20 (Rule 30(b)(6) Dep. 79:10-14), and
filed the agreement in state court on the same day. Docket No. 36-11; Docket No. 3613. On May 26, 2010, Ms. Nikkel’s check was returned for insufficient funds. Docket
No. 36-14. Because of the invalid check, Wakefield requested an entry of judgment in
the state court action on September 16, 2010, Docket No. 36-15, which the state court
granted on October 4, 2010. Docket No. 36-17.
That same day, Ms. Nikkel commenced this action against Wakefield. Docket
No. 1. On January 10, 2011, Wakefield moved to dismiss plaintiff’s complaint [Docket
No. 12], which the Court denied [Docket No. 22]. On March 26, 2012, Wakefield
moved for summary judgment seeking an order that (1) Ms. Nikkel’s FDCPA claims are
barred by the general waiver clause included in the settlement agreement, Docket No.
8
36-11, and (2) that it is entitled to summary judgment with respect to all of plaintiff’s
FDCPA claims.
II.
STANDARD OF REVIEW
Summary judgment is warranted under Federal Rule of Civil Procedure 56 when
the “movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248-50 (1986); Concrete Works, Inc. v. City &
County of Denver, 36 F.3d 1513, 1517 (10th Cir. 1994); see also Ross v. The Bd. of
Regents of the Univ. of N. M., 599 F.3d 1114, 1116 (10th Cir. 2010). A disputed fact is
“material” if under the relevant substantive law it is essential to proper disposition of the
claim. Wright v. Abbott Labs., Inc., 259 F.3d 1226, 1231-32 (10th Cir. 2001).
Only disputes over material facts can create a genuine issue for trial and
preclude summary judgment. Faustin v. City & Cnty. of Denver, 423 F.3d 1192, 1198
(10th Cir. 2005). An issue is “genuine” if the evidence is such that it might lead a
reasonable jury to return a verdict for the nonmoving party. Allen v. Muskogee, 119
F.3d 837, 839 (10th Cir. 1997). When reviewing a motion for summary judgment, a
court must view the evidence in the light most favorable to the non-moving party. Id.;
see McBeth v. Himes, 598 F.3d 708, 715 (10th Cir. 2010).
A defendant may present an affirmative defense in a summary judgment motion
which entitles it to a judgment as a matter of law. Hutchinson v. Pfeil, 105 F.3d 562,
564 (10th Cir. 1997). A defendant making such a motion, however, must demonstrate
9
that no disputed material fact exists regarding the affirmative defense asserted. Id.;
Madrid v. Phelps Dodge Corp., 211 F. App’x 676, 681 (10th Cir. 2006).
III. ANALYSIS
A. Waiver
Ms. Nikkel argues that her waiver of the right to bring claims against Wakefield
as reflected in the settlement agreement was neither knowing nor voluntary because
she was unaware of her legal rights, was unrepresented, and did not understand that
the waiver would preclude her from asserting claims pursuant to federal and state
statutes. Docket No. 37 at 9-10. In response, Wakefield contends that Ms. Nikkel
knowingly and voluntarily signed the settlement agreement and therefore the waiver
clause bars her FDCPA claim. Docket No. 36 at 10.
As a general rule, “absent some affirmative indication of Congress’ intent to
preclude waiver, [courts] presume[ ] that statutory provisions are subject to waiver by
voluntary agreement of the parties.” United States v. Mezzanatto, 513 U.S. 196, 201
(1995). Plaintiff does not argue that her rights under the FDCPA cannot be waived.
Docket No. 37 at 6-7. Rather, she claims that the waiver analysis should be based on a
heightened standard of voluntariness. Id. at 8 (citing Clark v. Capital Credit & Collection
Serv., Inc., 460 F.3d 1162, 1170 (9th Cir. 2006)).
In Clark, the Ninth Circuit applied the principles of waiver to a claim brought
pursuant to 15 U.S.C. § 1692c(c). Id. at 1170. The court was presented with the
question of whether a consumer could waive his or her protection under § 1692c(c),
which allows a consumer to notify a debt collector to cease all communications with
10
respect to the collection of a debt. See 15 U.S.C. § 1692c(c). The court found that a
consumer could waive his or her right under the cease communication directive in
§ 1692c(c) even though “the plain language of § 1692c(c) [does not] contemplate
waiver.” Clark, 460 F.3d at 1169. The Ninth Circuit reasoned that, “absent some
affirmative indication of Congress’ intent to preclude waiver,” a consumer could waive
certain protections under the FDCPA without undermining the general purpose and
policy of the statute. Id. at 1170. The court found that, because nothing in the FDCPA
affirmatively precludes waiver, a waiver is valid so long as it is knowing and voluntary.
Id. However, the court held that it would apply a heightened standard of voluntariness
to such a waiver, meaning that it would enforce a waiver of the FDCPA only where the
least sophisticated debtor would understand that he or she was waiving his or her
rights. Id. at 1171.
Although Ms. Nikkel argues that the Court should apply the heightened
voluntariness standard from Clark, the Court declines the invitation to do so. Both sides
discuss the factors identified in Torrez v. Pub. Serv. Co. of N.M., Inc., 908 F.2d 687
(10th Cir. 1990), to determine whether Ms. Nikkel’s waiver was knowing and voluntary.
See, e.g., Docket No. 36 at 10-15; Docket No. 37 at 10-11. The Court finds that those
factors appropriately apply to whether she waived her protections under the FDCPA. In
Torrez, the Tenth Circuit held that employment discrimination claims brought pursuant
to Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., and 42 U.S.C.
§ 1981 could be waived pursuant to an agreement. 908 F.2d at 689. The court,
however, held that such waivers must be knowing and voluntary, which “are not lightly
11
to be inferred.” Id. (citing Watkins v. Scott Paper Co., 530 F.2d 1159, 1172 (5th Cir.
1976). In considering whether a waiver of federal rights was knowing and voluntary, the
court adopted a totality of the circumstances test assessing the following seven factors:
(1) the clarity and specificity of the release language; (2) plaintiff’s education and
business experience; (3) the amount of time plaintiff had to consider the release before
signing it; (4) whether plaintiff knew or should have known her rights upon execution of
the release; (5) whether plaintiff was encouraged to seek, or in fact received benefit of
counsel; (6) whether there was an opportunity for negotiating the terms of the release;
and (7) whether the consideration given in exchange for the waiver exceeds the
benefits to which the employee was already entitled to by contract or law.10 Id. at 68990. The court also emphasized that whether a waiver was knowing and voluntary was a
question of fact. Id.
First, Wakefield argues that the language of the settlement agreement clearly
demonstrates a waiver of all claims brought pursuant to the FDCPA. Docket No. 36 at
10. Wakefield asserts that there is no genuine issue of fact with respect to the meaning
of the settlement agreement because it is written in language that someone with Ms.
Nikkel’s level of education would be able to read and understand. See Docket No. 3611 at 1-2, ¶ 4. The Court agrees. Because the language in the settlement agreement
mentions the FDCPA and Colorado’s statutory equivalent, it is more specific than the
language at issue in Torrez. 908 F.2d at 690. Based on the clear import of this clause,
10
The Tenth Circuit also considered, though not specifically articulated, whether a
plaintiff was subject to undue economic pressure to sign a waiver of its rights. Id. at
690 n.3.
12
the Court finds that no reasonable juror could conclude that the rights waived by the
settlement agreement were unclear or ambiguous. Thus, this factor weighs in favor of
Wakefield and summary judgment. Torrez, 908 F.2d at 690 (“[w]hile evaluation of the
language of the contract is necessary to determine the validity of the waiver of
discrimination claims, our inquiry cannot end there”).
Second, Wakefield contends that, although Ms. Nikkel only has a ninth-grade
high school education, her employment with the Food and Drug Administration and her
desire to complete the General Educational Development test are sufficient to establish
that she understood the terms of the contract. Docket No. 36 at 10. In addition,
Wakefield claims that, because Ms. Nikkel reached a payment agreement with Apollo
Credit Agency, Inc. (“Apollo”), another debt collector, one week prior to May 17, 2010,
this shows that she had some experience with settlement agreements. Id. at 11.
It is undisputed that Ms. Nikkel has never taken any college courses, has had no
vocational training, does not hold any professional titles, and that she dropped out of
high school after the ninth grade. Docket No. 36-4 at 3 (Nikkel Dep. 26:19-25). Based
on this educational background, the Court finds that Ms. Nikkel’s limited educational
experience raises a jury question about her ability to understand the scope of her rights
under the FDCPA – a statute that she was not aware of – and the legal implications of
waiving such rights. See Torrez, 908 F.2d at 690 (finding a plaintiff’s confusion about
the scope of a waiver clause reasonable “for a high school educated employee,
unfamiliar with the law”). Moreover, although Ms. Nikkel read the settlement
agreement, the FDCPA was not discussed during the April 22, 2010 phone call.
13
In addition, the fact that Ms. Nikkel signed a settlement agreement with Apollo is
insufficient to show that Ms. Nikkel had experience with settlement negotiations.
Usually, when courts discuss whether an individual has “business experience,” they
refer to the length of time a person has spent in a particular industry and whether,
based on his or her employment duties, that person understood the scope of the
bargain. See, e.g., Rutledge v. Int’l Business Machines Corp., 972 F.2d 357, 1992 WL
189105, at *2 (10th Cir. 1992) (“[p]laintiff had twenty-five years of employment
experience with Defendant and some post-high school education”); Nilsson v. City of
Mesa, 503 F.3d 947, 952 (9th Cir. 2007) (“[b]ased on her college-level education and
prior work experience with the Tempe PD, Nilsson possessed sufficient education and
experience to understand the waiver”); Bittner v. Blackhawk Brewery & Casino, LLC,
No. 03-cv-02274-MSK-PAC, 2005 WL 1924499, at *3 (D. Colo. Aug. 9, 2005)
(“because the Plaintiff held a management position, the Court assumes she had
received training or was at least aware of the existence of anti-discrimination laws”).
Here, the only evidence in the record is that Ms. Nikkel signed a settlement agreement
with Apollo. There is no evidence about whether the agreement with Apollo was signed
after extensive negotiations, the length of time Ms. Nikkel had to consider the Apollo
agreement, and whether the Apollo agreement contained a similar waiver of federal
rights. Without this evidence, the Court finds that the Apollo agreement does not
support a finding that Ms. Nikkel had significant experience with settlement
negotiations. Thus, this factor favors Ms. Nikkel and also weighs against summary
judgment.
14
Third, Wakefield argues that it did not exert pressure on Ms. Nikkel and that she
had approximately nineteen days to consider the settlement. Docket No. 36 at 12.
Wakefield argues that it was also willing to provide Ms. Nikkel with additional time to
consider the offer, which it claims is evidenced by its acceptance of her late settlement
check. Id.
As noted above, Ms. Nikkel received the settlement agreement on April 28, 2010
and had to return the agreement to Wakefield by May 14, 2010. Wakefield also
contends that it would have granted Ms. Nikkel additional time to deliberate had she
requested it, although nothing in the record suggests that it conveyed this fact to her.
Bittner, 2005 WL1924499, at *4. Thus, based on Ms. Nikkel’s knowledge at the time,
she had nineteen days to either accept the settlement agreement or face a judgment in
the state court action. Although Ms. Nikkel testified that she felt rushed to return the
settlement agreement, Docket No. 37-1 at 34 (Nikkel Dep. 316:13-16), the Court finds
that nineteen days was a sufficient amount of time for Ms. Nikkel to consider its terms.
See Madrid v. Phelps Dodge Corp., 211 F. App’x 676, 682 (10th Cir. 2006) (plaintiff’s
“testimony clearly showed his understanding that he had time to think over his decision
to sign the Release if he wanted to do so”); Anderson v. Lifeco Servs. Corp., 881 F.
Supp. 1500, 1504 (D. Colo. 1995) (finding that plaintiff had sufficient time consider the
waiver of her rights because she “reviewed the release for eighteen days before
executing it”). A consumer with a pending appearance in court will always be subject to
a certain amount of pressure about his or her decision to sign a settlement agreement.
Here, however, Ms. Nikkel had a reasonable amount of time to consider her options
15
and review the settlement agreement. Thus, this factor weighs in favor of Wakefield
and summary judgment.
Fourth, Wakefield argues that Ms. Nikkel should have known about the scope of
the FDCPA waiver because she had nineteen days to consider the settlement
agreement. Docket No. 36 at 12-13. In addition, Wakefield argues that, because Ms.
Nikkel was unaware of any rights she waived, the Court should instead focus on
whether Wakefield “mistreated” her during its collection efforts. Id. at 13. The Court
disagrees.
Under this prong of the analysis, the inquiry typically focuses on a plaintiff’s
knowledge at the time he or she signed a general release waiver and not about the way
the debt collector treated the plaintiff. See Torrez, 908 F.2d at 690 (“[h]e testified he
believed he was releasing claims arising out of the voluntary termination and the
benefits package he was accepting”); Wright v. Sw. Bell Tel. Co., 925 F.2d 1288, 1292
(10th Cir. 1991) (“we find no issue of material fact remaining on whether Wright should
have known he was waiving all his related discrimination claims pending with the [Equal
Employment Opportunity Commission] when he endorsed the check”). When focusing
on Ms. Nikkel’s knowledge, it is clear that she was not aware of the FDCPA or her legal
rights under the FDCPA at the time she signed the settlement agreement. Docket No.
36-4 at 39 (Nikkel Dep. 143:8-10). In addition, Wakefield’s collector did not discuss the
waiver clause with Ms. Nikkel. Docket No. 37-2 at 4 (Rule 30(b)(6) Dep. 110:19-111:3);
id. at 5 (Rule 30(b)(6) Dep. 111:21-25). Furthermore, to the extent Wakefield argues
that Ms. Nikkel could have requested clarification, the Court finds that whether it was
reasonable for Ms. Nikkel to seek clarification raises a jury question. Bittner, 2005 WL
16
1924499, at *4 n.1 (noting that “courts are much more likely to find a voluntary
relinquishment of a right that has already been asserted prior to the release than they
are to find a waiver of a right that the employee has not yet asserted and may not even
be aware of”); see Nicholas v. Dep’t of Health, 951 F.2d 1259, 1991 WL 268838, at *4
(10th Cir. Dec. 11, 1991) (“plaintiff obviously knew that she had a right not to be
discriminated against based on age”). Thus, the Court finds that this factor weighs
against summary judgment.
Wakefield argues that, although it did not advise plaintiff to seek counsel, plaintiff
had ample opportunity to seek the advice of counsel. Docket No. 36 at 13. In addition,
Wakefield points to Ms. Nikkel’s current attorneys as evidence that she had the ability
to secure representation. Id.
As discussed in Torrez, the inquiry under this prong focuses on whether a
plaintiff “consulted with an attorney [or] received encouragement from defendant to do
so before [s]he signed the release.” See Torrez, 908 F.2d at 690; cf. Myricks v. Fed.
Reserve Bank of Atlanta, 480 F.3d 1036, 1041 (11th Cir. 2007) (noting that “an
employee’s decision to consult an attorney before signing a clear release creates a
presumption that the release is enforceable”). Based on the facts in the record, it is
undisputed that Ms. Nikkel was not represented by an attorney, that she never
presented the settlement agreement to an attorney, and that Wakefield did not
encourage her to seek legal advice about the agreement. Docket No. 37-1 at 30
(Nikkel Dep. 312:7-21). The Court finds that this factor weighs in favor of Ms. Nikkel
and against summary judgment.
17
Wakefield next argues that Ms. Nikkel was able to negotiate fair terms with its
collection agents as she reduced the required down payment from $500 to $300 and
reduced the monthly payments from $300 to $100 per month. Docket No. 36 at 14.
Moreover, Wakefield claims that Ms. Nikkel had every opportunity to discuss alternative
payment arrangements, but did not do so because she believed that the agreement
was fair. Id.
It is undisputed that Ms. Nikkel understood that her failure to sign the settlement
agreement could lead to a judgment against her, garnishment of her wages, and an
order to pay court costs. Docket No. 37-1 at 34 (Nikkel Dep. 316:8-16). Given
plaintiff’s ability to negotiate a decrease of her down payment and her monthly
payments in the settlement agreement, the Court finds that this evidence demonstrates
that Ms. Nikkel had an ability to at least negotiate the monetary terms of the agreement.
However, because the waiver clause was not discussed during the phone conversation,
there is no indication in the record that Ms. Nikkel had an opportunity to negotiate the
waiver clause or the necessary understanding of her FDCPA rights to do so. Anderson
v. Lifeco Servs. Corp., 881 F. Supp. 1500, 1504 (D. Colo. 1995) (“the Torrez factors
tend to require a subjective analysis of the employee’s understanding of the
consequences of the release and whether the terms of the release were subject to
negotiation”). In light of these facts, the Court finds that whether Ms. Nikkel’s
conversation with Wakefield’s collection agent provided her with a meaningful
opportunity to negotiate is a question of fact for the jury. Torrez, 908 F.2d at 690 n.3
(plaintiff’s agreement “indicates there may have been duress in the form of unfair
economic pressure placed on plaintiff to sign the release”).
18
Finally, Wakefield argues that Ms. Nikkel’s ability to avoid a judgment and court
costs represents sufficient consideration. Docket No. 36 at 15. The Court agrees. Ms.
Nikkel does not claim that she was not required to repay the Children’s account or that
she would not have been subject to court costs had Wakefield proceeded with the state
court case. Thus, because Ms. Nikkel was able to avoid payment of court costs and
the inconvenience of judicial proceedings through the settlement, she received
something to which she was not already unquestionably entitled. Nicholas, 1991 WL
268838, at *5. Thus, this factor weighs in favor of Wakefield and summary judgment.
Under the Torrez totality of the circumstances test, the factors favoring a
determination that Ms. Nikkel knowingly and voluntarily executed the settlement
agreement are that the terms of the settlement agreement clearly waived the FDCPA
claims, Ms. Nikkel had ample time to deliberate before signing the agreement, and she
received compensation in excess of what she was otherwise entitled. The factors
contrary to a finding of voluntariness are that Ms. Nikkel was not experienced with
respect to settlement negotiations, had only a ninth-grade education, did not know the
scope of her rights under the FDCPA, was not advised to seek counsel, was not
represented by counsel, and did not have an opportunity to negotiate the waiver clause.
Based on this evidence, Wakefield does not demonstrate, as a matter of law, that Ms.
Nikkel knowingly and voluntarily waived her rights under the FDCPA. Because there
remain genuine questions of fact with regard to whether Ms. Nikkel understood the
effect of signing the settlement agreement, the Court finds that it is for the jury to decide
the conclusions to be drawn from the facts in this case. Accordingly, Wakefield is not
entitled to summary judgment because of the waiver clause. Torrez, 908 F.2d at 691.
19
B. FDCPA Claims
The FDCPA was enacted to “eliminate abusive debt collection practices by debt
collectors, to insure that those debt collectors who refrain from using abusive debt
collection practices are not competitively disadvantaged, and to promote consistent
State action to protect consumers against debt collection abuses.” 15 U.S.C.
§ 1692(e). The Act provides a civil cause of action against any debt collector who fails
to comply with its requirements. See 15 U.S.C. § 1692k(a). In addition, the FDCPA
does not typically require a plaintiff to prove that a debt collector acted intentionally
when it violated the act and, as a result, it is often described by courts as a strict liability
statute. Johnson v. Riddle, 305 F.3d 1107, 1122 n. 15 (10th Cir. 2002) (listing cases);
LeBlanc v. Unifund CCR Partners, 601 F.3d 1185, 1190 (11th Cir. 2010).
While the FDCPA forbids a variety of conduct:
The substantive heart of the FDCPA lies in three broad prohibitions. First,
a “debt collector may not engage in any conduct the natural consequence
of which is to harass, oppress, or abuse any person in connection with the
collection of a debt.” § 1692d. Second, a “debt collector may not use any
false, deceptive, or misleading representation or means in connection with
the collection of any debt.” § 1692e. Third, a “debt collector may not use
unfair or unconscionable means to collect or attempt to collect any debt.”
§ 1692f.
Riddle, 305 F.3d at 1117.
In her amended complaint, plaintiff alleges that Wakefield violated 15 U.S.C.
§§ 1692f, 1692g(a), 1692f(1), 1692e(2)(a), and 1692e(10) through its attempts to
collect the Children’s account. See Docket No. 10. To establish a violation of the
20
FDCPA, Ms. Nikkel must show that (1) she is a “consumer”11 within the meaning of 15
U.S.C. § 1692a(3); (2) the Children’s account arises out of a transaction entered into
primarily for personal, family, or household purposes, 15 U.S.C. § 1692a(5); (3)
Wakefield is a “debt collector” within the meaning of 15 U.S.C. § 1692a(6); and (4)
Wakefield, through its acts or omissions, violated a provision of the FDCPA. There is
no dispute that Ms. Nikkel is a consumer, the Children’s account qualifies as a debt
under the statute, and Wakefield is a debt collector under the FDCPA. Thus, to prevail,
Ms. Nikkel need only show that Wakefield violated a provision of the FDCPA.
1. Least Sophisticated Consumer Standard
When deciding claims brought pursuant to § 1692e and § 1692f of the FDCPA,
courts have used a “least sophisticated consumer” standard to determine whether a
debt collector’s representations were false, deceptive, misleading, unfair, or
unconscionable. See Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir. 1993) (listing
cases). The least sophisticated consumer standard ensures protection to all
“consumers, even the naive and the trusting, against deceptive debt collection
practices, and . . . protects debt collectors against liability for bizarre or idiosyncratic
interpretations of collection notices.” Id. at 1320. At least five courts of appeal have
applied the least sophisticated standard to alleged violations of § 1692e and § 1692f.
See, e.g., LeBlanc, 601 F.3d at 1194; Lesher v. Law Offices of Mitchell N. Kay, PC, 650
F.3d 993, 1002 (3d Cir. 2011); Hartman v. Great Seneca Fin. Corp., 569 F.3d 606, 612
(6th Cir. 2009); Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1033 (9th Cir. 2010);
11
“The term ‘consumer’ means any natural person obligated or allegedly
obligated to pay any debt.” 15 U.S.C. § 1692a(3).
21
Evory v. RJM Acquisitions Funding, LLC, 505 F.3d 769, 774 (7th Cir. 2007) (using the
“unsophisticated consumer” standard). The Tenth Circuit has not expressly adopted
this standard, but it has, in an unpublished opinion, “applied an objective standard,
measured by how the least sophisticated consumer would interpret the notice received
from the debt collector.” Ferree v. Marianos, 129 F.3d 130, 1997 WL 687693, at *1
(10th Cir. Nov. 3, 1997) (internal quotation marks omitted). Accordingly, because the
FDCPA is a remedial statute that “should be construed liberally in favor of the
consumer,” Riddle, 305 F.3d at 1117, the Court will apply the least sophisticated
consumer standard to Ms. Nikkel’s claims brought pursuant to § 1692e and § 1692f.
2. Section 1692f
Section 1692f states that “[a] debt collector may not use unfair or
unconscionable means to collect or attempt to collect any debt.” 15 U.S.C. § 1692f.
Ms. Nikkel argues that Wakefield violated § 1692f when it induced her to sign the
settlement agreement without (1) advising her of the legal effect of the waiver provision,
(2) advising her to seek legal counsel, and (3) discussing the inclusion of an attorneys’
fees provision. Docket No. 37 at 13. Ms. Nikkel argues that Wakefield’s actions in
securing the settlement agreement create a triable issue of fact for the jury. Id.
In response, Wakefield contends that obtaining a general release of legal claims
does not constitute a per se violation of the FDCPA. Docket No. 36 at 16-17.
Wakefield states that it does not argue that “there are no circumstances in which the
procurement of a release of claims relating to debt collection activity could violate the
FDCPA,” but that such circumstances are not present in this case because Ms. Nikkel
22
thought the settlement agreement was fair until she contacted an attorney and the
settlement agreement does not otherwise contain inaccuracies. Id. at 17-18.
With respect to the “unfair or unconscionable” language contained in § 1692f,
courts have recognized that “[a]side from the examples of violations provided within
Section 1692f, the FDCPA does not purport to define what is meant by ‘unfair’ or
‘unconscionable.’” LeBlanc, 601 F.3d at 1200. The Seventh Circuit described the
amorphous nature of § 1692f when it stated that “the phrase ‘unfair or unconscionable’
is as vague as they come.” Beler v. Blatt, Hasenmiller, Leibsker & Moore, LLC, 480
F.3d 470, 474 (7th Cir. 2007). The test of whether a means of collection is
unconscionable depends not on the particular plaintiff’s knowledge, but upon how the
least sophisticated consumer would perceive a debt collector’s actions. Turner v.
J.V.D.B. & Assocs., Inc., 330 F.3d 991, 996 (7th Cir. 2003); see also McCollough v.
Johnson, Rodenburg & Lauinger, LLC, 637 F.3d 939, 952 (9th Cir. 2011) (“The FDCPA
measures a debt collector's behavior according to an objective ‘least sophisticated
debtor’ standard.”). Thus, Wakefield’s arguments based on Ms. Nikkel’s actual
perception of its actions are largely irrelevant to the inquiry and instead the Court must
apply an “objective standard.” Ferree, 1997 WL 687693, at *1.
While collection agencies may enter into settlement agreements with indebted
consumers, the FDCPA requires that debt collectors do so in a manner that is not unfair
or unconscionable. See Goswami v. Am. Collections Enter., Inc., 377 F.3d 488, 495-96
(5th Cir. 2004) (discussing settlement offers in connection with the FDCPA). Ms. Nikkel
does not contend that Wakefield’s cover letter, which provided information with respect
23
to settlement, constitutes an unfair or unconscionable means of settlement. Rather,
she claims that it was unfair or unconscionable to send an unsophisticated consumer
like her a settlement agreement two weeks before her initial appearance in state court
proceedings without advising her to retain an attorney and without discussing her
FDCPA rights, particularly given that the settlement agreement contained a waiver of
her legal claims against Wakefield and an attorneys’ fees provision.
Based on these facts, the Court cannot say that, as a matter of law, Wakefield’s
conduct in this case was not unfair or unconscionable. See Turner, 330 F.3d at 999
(question of violation of 1692e was for jury, but violation of 1692f can be for courts as a
matter of law). Although there may be cases where the parties do not dispute allegedly
deceptive, unfair, or unconscionable conduct, in which event the court may determine
as a matter of law whether the undisputed conduct amounts to a violation of the
FDCPA, this is not such a case. Instead, the Court finds that whether Wakefield’s
settlement agreement in this instance constitutes unfair or unconscionable conduct for
purposes of § 1692f presents a jury question. LeBlanc, 601 F.3d at 1201. Thus,
because genuine issues of fact remain in this case, the Court will deny Wakefield’s
motion for summary judgment on plaintiff’s § 1692f claim. See Evory, 505 F.3d at 776
(noting that whether settlement offer violates FDCPA’s unconscionable means
provisions is generally a question of fact and that simply because the offer is not
deceptive on its face does not, by itself, render the offer lawful); but see Waters v.
Kream, 770 F. Supp. 2d 434, 437-38 (D. Mass. 2011) (finding that a debt collector
sending a letter, which suggested that consumer make arrangements with debt
24
collector’s office for settlement so that additional court costs may be avoided by
consumer, is not unconscionable conduct under § 1692f).
3. Section 1692g(a)
Section 1692g(a) requires that a debt collector “[w]ithin five days after the initial
communication with a consumer . . . send the consumer a written notice” containing
specified information unless that information was already included in the initial
communication. 15 U.S.C. § 1692g(a).12 The initial communication must include the
12
Section 1692g(a) 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 debt, send the consumer a written notice
containing -(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within thirty days after receipt of
the notice, disputes the validity of the debt, or any portion thereof, the
debt will be assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the debt collector in writing
within the thirty-day period that the debt, or any portion thereof, is
disputed, the debt collector will obtain verification of the debt or a copy of
a judgment against the consumer and a copy of such verification or
judgment will be mailed to the consumer by the debt collector; and
(5) a statement that, upon the consumer’s written request within the
thirty-day period, the debt collector will provide the consumer with the
name and address of the original creditor, if different from the current
creditor.
15 U.S.C. § 1692g(a).
25
name of the creditor, the dollar amount sought, and alert the consumer that a failure to
dispute the alleged debt will allow the collection agency to assume its validity. Id.
Ms. Nikkel first argues that the “initial communication” she received from
Wakefield was the “cover letter” attached to the state court summons. Docket No. 37 at
18. She claims that, after this initial communication, Wakefield failed to provide her
with the necessary disclosures as required by the FDCPA. Id. Second, Ms. Nikkel
contends that, even assuming Wakefield sent an Initial Demand Letter on March 17,
2009, this letter failed to satisfy the requirements of the FDCPA because she did not
live at the Wheat Ridge address on March 17, 2009 and therefore the letter was not
“properly” sent. Id. Ms. Nikkel asserts that, for an Initial Demand Letter to be properly
sent, a debt collector must send “written notice to a valid and proper address where the
consumer may actually receive it.” Id. at 16 (citation omitted). Third, Ms. Nikkel claims
that, because Wakefield has not produced a copy of the March 17, 2009 letter or a
sample copy of letters it typically sends to consumers, it cannot prove that the contents
of the March 17, 2009 letter complied with the FDCPA. Id. at 17.
Wakefield responds that § 1692g(a) does not require that a debt collector
establish whether a consumer actually received a Validation of Debt Notice, Docket No.
36 at 18, but rather that a debt collector is presumed to have complied with § 1692g(a)
so long as the notice that is mailed is not returned as undeliverable. Id. at 19. Thus,
Wakefield argues, because it sent the letter on March 17, 2009 to the address listed for
Ms. Nikkel both on Children’s billing statement and identified by Accurant, it has met its
obligations under § 1692g(a). Id.
26
Based on the evidence in the record, the Court finds that Wakefield has not
established that it sent Ms. Nikkel an Initial Demand Letter compliant with § 1692g(a) on
March 17, 2009. In order for Wakefield to satisfy § 1692g(a), it must not only show that
it sent Ms. Nikkel an Initial Demand Letter, but that such letter actually contained the
necessary disclosures listed in § 1692g(a). It has failed to show both.
Wakefield relies primarily on Mahon v. Credit Bureau of Placer Cnty., 171 F.3d
1197, 1201 (9th Cir. 1999), a case which held that a debt collector satisfies its
obligation under § 1692g(a) if it can show that it “sent” the required notice. Id. at 1201.
Relying on the text of § 1692g(a), the Mahon court found that the statute does not
require that a debt collector guarantee a consumer actually receive a Validation of Debt
Notice to satisfy its obligation. Id. Instead, the Mahon court found that the plain
language states that such a Notice need only be sent to a debtor. Id.
Ms. Nikkel relies on Johnson v. Midland Credit Mgmt., Inc., 2006 WL 2473004
(N.D. Ohio Aug. 24, 2006), where the court found that, although § 1692 does not
require the debt collector to ensure actual receipt of the validation notice, if a debt
collector knows the validation notice was sent to the wrong address, the debt collector
has not complied with the plain language of § 1692g(a). Id. The Johnson court found
that, if debt collectors could satisfy the FDCPA by sending validation notices to any
address, valid or invalid, the statute would not serve to inform consumers of their rights.
Id. The Court need not resolve which interpretation of § 1692g(a) to apply because
Wakefield has not established that it sent Ms. Nikkel a letter on March 17, 2009.
27
As noted above, Wakefield does not send Initial Demand Letters, but instead
relies on DANTOM, its third party vendor, to send the letters. Wakefield’s motion for
summary judgment, however, does not contain any evidence of the procedures and
policies used by DANTOM to ensure that letters created by the Cyclone software are
actually sent to the correct addresses. Instead, Wakefield relies on testimony by Mr.
Boettcher. However, Mr. Boettcher has no personal knowledge of the policies in place
at DANTOM for mailing Initial Demand Letters. Compare Boomer v. AT&T Corp., 309
F.3d 404, 415 n.5 (7th Cir. 2002) (“In this case, AT&T presented proof through the
Declaration of Ellen Reid, the AT&T employee who oversaw the mailing of the
[consumer service agreement] to AT&T customers, verifying that proper mailing
procedures were followed. Boomer does not present any conflicting evidence in this
regard. Thus, we must presume that Boomer received the mailing.”). Mr. Boettcher
does not state that the proper procedures were followed in the DANTOM office for
mailing Ms. Nikkel’s letter on March 17, 2009 and does not show that this letter was
generated using an appropriate template. See Godfrey v. United States, 997 F.2d 335,
338 (7th Cir. 1993) (a presumption exists that a mailing is received where there is “proof
of procedures followed in the regular course of operations which give rise to a strong
inference that the [correspondence] was properly addressed and mailed”).
In fact, apart from Mr. Boettcher’s testimony about the Cyclone software, there is
no evidence in the record from DANTOM, the only entity with personal knowledge of
whether Ms. Nikkel’s letter was sent on March 17, 2009.13 See Anderson v. Credit
13
The procedures in Mahon differ significantly from those used by Wakefield in
this case. In Mahon, the Credit Bureau’s computer system generated the notice, and
28
Bureau Collection Servs., 422 F. App’x 534, 538 (7th Cir. 2011) (finding affidavit from
company director about procedures of third-party vendor were inadmissible hearsay
because director was not custodian of the records, had no personal knowledge of thirdparty vendor procedures, and did not have knowledge of whether these procedures
were followed in the particular instance).
Additionally, Wakefield does not provide evidence that the contents of the March
17, 2009 letter complied with § 1692g(a). In order to show that its letter complied with
the requirements of § 1692g(a), Wakefield must prove the contents of that letter.
However, Wakefield has provided neither the original letter, a copy of such letter, or a
sample letter from which the March 17, 2009 letter was produced. Accordingly, the
Court finds that Wakefield is not entitled to summary judgment on Ms. Nikkel’s
§ 1692g(a) claim.
4. Section 1692f(1)
Section 1692f(1) prohibits “unfair or unconscionable means to collect or attempt
to collect any debt . . . [consisting of t]he collection of any amount (including any
interest, fee, charge, or expense incidental to the principal obligation) unless such
amount is expressly authorized by the agreement creating the debt or permitted by
then another machine mechanically addressed and stuffed the notice into an envelope.
171 F.3d at 1201-02. The notice was then mailed, but before mailing, Credit Bureau
employees ensured that the number of outgoing notices corresponded with the number
assigned to the daily “batch” of notices to be sent. Id. Here, Wakefield does not mail
the letters and there is no indication from the third party vendor whether they check the
letters prior to mailing to ensure the information is correct. Mr. Boettcher cannot testify
as to these procedures because he does not have personal knowledge of them.
29
law.” 15 U.S.C. § 1692f(1); Maynard v. Cannon, 401 F. App’x 389, 397-98 (10th Cir.
2010).
Ms. Nikkel argues that Wakefield violated § 1692f(1) when it advised her that
she had to pay eight percent interest on the Children’s account during the April 22,
2010 phone conversation. Docket No. 37 at 19. Ms. Nikkel claims that, because
Wakefield has not provided the instrument creating her debt, it has not conclusively
established that the eight percent interest attributed to the Children’s account was
permitted by law. Id. Ms. Nikkel states that, under Colorado law, if the agreement
creating the debt specifies an interest rate, debt collectors cannot apply the statutory
default rate of eight percent to that debt. Docket No. 37 at 19.
Wakefield responds that, because Colorado’s statutory default rate of eight
percent per annum is permissible by law, it has not violated § 1692f(1).14 Docket No. 36
at 20. Moreover, Wakefield asserts that the state court judgment affirms the legality of
the eight percent interest rate. Docket No. 38 at 10.
Neither party disputes that the conversation between Ms. Nikkel and collection
agent JB on April 22, 2010 constitutes a “communication”15 as that term is defined
14
To the extent Wakefield claims that this interest rate was applied based on the
advice of counsel, the Court finds this unavailing. See Jerman v. Carlisle, McNellie,
Rini, Kramer & Ulrich LPA, --- U.S. ----, 130 S.Ct. 1605, 1608-09 (2010) (that a mistake
of law is not a defense under the FDCPA, that is, a violation of the FDCPA resulting
from a debt collector’s incorrect interpretation of the legal requirements of the Act is not
subject to an excuse); Clark v. Capital Credit Collection Servs., Inc., 460 F.3d 1162,
1176 (9th Cir. 2006) (finding that the FDCPA makes debt collectors liable for violations
that are not knowing or intentional).
15
A “communication” constitutes “conveying of information regarding a debt
directly or indirectly to any person through any medium.” 15 U.S.C. § 1692a(2).
30
under § 1692f(1).16 To evaluate whether Wakefield’s collection attempt was “permitted
by law,” it is necessary to determine by which “law” it was permitted. Riddle, 305 F.3d
at 1117-18. In other words, the Court must determine whether state substantive law
permitted Wakefield to apply an eight percent interest rate to Ms. Nikkel’s Children’s
account. Riddle, 305 F.3d at 1118.
Colo. Rev. Stat. § 5-12-101, entitled “Legal rate of interest,” provides that “[i]f
there is no agreement or provision of law for a different rate, the interest on money shall
be at the rate of eight percent per annum, compounded annually.” Colo. Rev. Stat. § 512-101. Thus, under Colorado law, “[w]hen the instrument being sued upon provides
for prejudgment interest at a specific rate, section 5-12-101(1) does not apply, and the
clear implication is that prejudgment interest will be awarded at the rate specified in the
contract.” Westamerica Mortg. Co. v. First Nationwide Bank, No. 86-cv-01901-AAA,
1988 WL 76377, at *7 (D. Colo. July 15, 1988). Moreover, where such instrument
provides for a rate of interest in excess of eight percent, prejudgment interest will be
awarded at the higher rate. Colo. Rev. Stat. § 5-12-103(1). By contrast, creditors
recovering prejudgment interest after a judgment has entered in a case do so pursuant
to Colo. Rev. Stat. § 5-12-102. Here, it is undisputed that, on April 22, 2010, Wakefield
had not yet secured a judgment on the Children’s account and therefore Colo. Rev.
Stat. § 5-12-102 is inapplicable. See Mesa Sand & Gravel Co. v. Landfill, Inc., 776
P.2d 362, 363-64 (Colo. 1989) (“The purpose of section 5-12-102 is to discourage a
16
Although § 1692f(1) mentions only the term “collection” and not “attempt to
collect,” courts have found that § 1692f(1) protects consumers from attempted
collections as well as actual collections. Allen v. LaSalle Bank, N.A., 629 F.3d 364, 367
n.4 (3d Cir. 2011).
31
person responsible for payment of a claim to stall and delay payment until judgment or
settlement”) (citation omitted). Thus, the issue here is whether the debt obligation
between Ms. Nikkel and Children’s provided an interest rate other than eight percent.
Riddle, 305 F.3d at 1118 (“The statute does not ask whether Riddle’s actions were
permitted by law (or at least non-sanctionable), it asks whether the amount he sought to
collect was permitted by law”).
Because Wakefield has not presented the “agreement creating the debt,” the
Court is unable to determine whether an interest rate other than eight percent is
applicable. Therefore, Wakefield has not provided sufficient evidence to prove that, on
April 22, 2010, it was entitled to collect an interest rate of eight percent on the
Children’s account. Moreover, to the extent Wakefield argues that the judgment in
state court bars Ms. Nikkel from raising a § 1692f(1) claim, Docket No. 38 at 10, the
Court finds this argument unpersuasive for the reasons identified in its order on the
motion to dismiss. See Docket No. 22 at 6-10.
Accordingly, without evidence of the interest rate specified on the Children’s
account, Wakefield is not entitled to summary judgment on Ms. Nikkel’s § 1692f(1)
claim. See Gigli v. Palisades Collection, LLC, 2008 WL 3853295, at *8 (M.D. Pa.
August 14, 2008) (declining defendant’s motion for summary judgment because of
inconsistent testimony regarding how the interest rate was determined and the
defendant refused to produce the original agreement).
32
5. Section 1692e(2)(A)
Section 1692e(2)(A) reads, in relevant part: “[a] debt collector may not use any
false, deceptive, or misleading representation or means in connection with the
collection of any debt . . . the following conduct is a violation of this section: (2) The
false representation of . . . (a) the character, amount, or legal status of any debt.” 15
U.S.C. § 1692e(2)(A). Ms. Nikkel claims that Wakefield misrepresented the amount
owed by demanding payment of accrued interest not expressly authorized by her debt
with Children’s. If the interest rate provided for by the Children’s account specifies an
interest rate that is not eight percent, then Wakefield’s communication with Ms. Nikkel
on April 22, 2010 would have falsely represented the amounts Wakefield could lawfully
collect in violation of § 1692e(2)(A). Ditty v. CheckRite, Ltd., Inc., 973 F. Supp. 1320
(D. Utah 1997); Terech v. First Resolution Mgmt. Corp., 854 F. Supp. 2d 537, 544 (N.D.
Ill. 2012) (“the Court finds that the allegation that Defendants misrepresented their legal
entitlement to collect waived interest, which would necessarily then misrepresent the
amount of debt, states a claim under § 1692e”). Accordingly, the Court finds that there
remain genuine issues of fact and Wakefield is not entitled to summary judgment on
plaintiff’s § 1692e(2)(A) claim. See Sparks v. Phillips & Cohen Assocs., Ltd., 641 F.
Supp. 2d 1234, 1248 (S.D. Ala. 2008) (explaining that the “gist of § 1692e is that ‘where
some aspect of a debt collector’s communication-whether explicit or implied-has the
purpose or effect of making a debtor more likely to respond, the FDCPA requires that it
be true.’”).
33
6. Section 1692e(10)
Section 1692e(10) provides that “[a] debt collector may not use any false,
deceptive, or misleading representation or means in connection with the collection of
any debt,” including specifically “[t]he use of any false representation or deceptive
means to collect or attempt to collect any debt or to obtain information concerning a
consumer.” 15 U.S.C. § 1692e(10). In determining whether the defendant’s actions
are deceptive under the FDCPA, courts must assume that the plaintiff-debtor is neither
shrewd nor experienced in dealing with creditors. Goswami, 377 F.3d at 495. This
standard serves the purpose of protecting all consumers, “including the inexperienced,
the untrained and the credulous, from deceptive debt collection practices.” Id. At the
same time, however, courts do not consider the debtor as tied to the “very last rung on
the [intelligence or] sophistication ladder.” Id.
Ms. Nikkel asserts the same facts in support of this claim as those above,
namely, Wakefield’s failure to discuss the waiver clause and its attempt to collect
interest, claiming that they constitute deceptive and misleading collection practices.
Docket No. 37 at 20. However, none of the statements Wakefield made to Ms. Nikkel
were false. First, the cover letter did not include any false statements and Ms. Nikkel
testified that her willingness to negotiate was due primarily to her desire to avoid
garnishment. Kream, 770 F. Supp. 2d at 437. Moreover, the settlement agreement did
not use complex legal terms and was written in a manner that a person with a ninthgrade education could read and understand. Beler, 480 F.3d at 473. Furthermore,
34
even the least sophisticated consumer would understand that Wakefield sought only to
collect on the amount due under the debt. Kream, 770 F. Supp. 2d at 438.
To the extent Ms. Nikkel argues that the inclusion of the waiver clause or the
attorneys’ fees provision was misleading or deceptive, the Court finds this argument
unconvincing. There is no indication in the record that the waiver clause or the
attorneys’ fees provision played any role in Ms. Nikkel’s decision of whether to accept
or reject the settlement agreement. O’Rourke v. Palisades Acquisition XVI, LLC, 635
F.3d 938, 942 (7th Cir. 2011) (noting that, to be actionable under § 1692e(10), a debt
collector’s misleading statement must have the ability to influence a consumer’s
decision). In fact, because Ms. Nikkel’s primary objective in reaching a settlement
agreement was to avoid garnishment, it is likely that the waiver and attorneys’ fees
provision played little or no role in her decisionmaking. Thus, the waiver and attorneys’
fees provisions were not means used in connection with collecting the debt because
they were never discussed by Ms. Nikkel or Wakefield’s collector. See Rogers v.
Capital One Servs., LLC, 447 F. App’x 246, 248 (2d Cir. 2011) (consumer failed to state
claim under § 1692e(10) where debt collector’s letter used attractive repayment terms
to “lure” consumers into negotiations with seasoned debt collectors, but did not allege
that repayment offer was not as represented). Accordingly, the Court finds that Ms.
Nikkel has not raised a genuine issue of fact that Wakefield violated § 1692e(10) and
Wakefield is entitled to summary judgment on this claim.
35
IV. CONCLUSION
Accordingly, it is
ORDERED that Defendant Wakefield & Associates, Inc.’s Motion for Summary
Judgment Pursuant to Fed. R. Civ. P. 56 [Docket No. 36] is DENIED in part and
GRANTED in part.
DATED November 15, 2012.
BY THE COURT:
s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge
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