Gesten v. Phelan Hallinan, PLC
Filing
35
ORDER granting in part and denying in part 21 Defendant's Motion for Summary Judgment; granting in part and denying in part 29 Plaintiff's Motion for Summary Judgment. Signed by Judge James I. Cohn on 10/30/2014. (drv)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 14-60565-CIV-COHN/SELTZER
RYAN D. GESTEN,
Plaintiff,
vs.
PHELAN HALLINAN, PLC,
Defendant.
__________________________________/
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF’S MOTION FOR
SUMMARY JUDGMENT AND GRANTING IN PART AND DENYING IN PART
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
THIS CAUSE is before the Court on cross motions for summary judgment [DE 21
& 29]. The Court has reviewed the Motions, the Responses [DE 23, 32] and the replies
[DE 27, 28, 34], other relevant portions of the record, and is otherwise advised in the
premises.
Plaintiff sues Defendant under the Federal Fair Debt Collection Practices Act
(“FDCPA”), 15 U.S.C. § 1692, et seq. The facts of this case are not in dispute. Plaintiff
fell behind on his mortgage. Defendant, a law firm, sent Plaintiff two identical letters
concerning the past due debt. Plaintiff contends that, in doing so, Defendant violated
the FDCPA in two ways. Count I of Plaintiff’s Complaint alleges that Defendant violated
the FDCPA because the two letters contained contradictory validation notices. [DE 1 at
5–6.] Count II alleges that Defendant violated the FDCPA because the letters failed to
advise Plaintiff of his “amount due.” [Id. at 6–7.] For the reasons that follow, the Court
will GRANT Defendant’s Motion and DENY Plaintiff’s Motion as to Count I. The Court
will GRANT Plaintiff’s Motion and DENY Defendant’s Motion as to Count II.
I.
Summary Judgment Standard
The Court will grant summary judgment if the pleadings, the discovery and
disclosure materials on file, and any affidavits show “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. The movant “bears the initial responsibility of informing the district court of
the basis for its motion, and identifying those portions of [the record] which it believes
demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). To discharge this burden, the movant must demonstrate a
lack of evidence supporting the nonmoving party’s case. Id. at 325.
After the movant has met its burden under Rule 56, the burden of production
shifts to the nonmoving party who “must do more than simply show that there is some
metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith
Radio Corp., 475 U.S. 574, 586 (1986). The non-moving party may not rely merely on
allegations or denials in its own pleading, but instead must come forward with specific
facts showing a genuine issue for trial. Fed. R. Civ. P. 56; Matsushita, 475 U.S. at 587.
As long as the non-moving party has had ample opportunity to conduct
discovery, it must come forward with affirmative evidence to support its claim.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986). “A mere ‘scintilla’ of
evidence supporting the opposing party’s position will not suffice; there must be enough
of a showing that the jury could reasonably find for that party.” Walker v. Darby, 911
F.2d 1573, 1577 (11th Cir. 1990). If the evidence advanced by the non-moving party is
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merely colorable, or is not significantly probative, summary judgment may be granted.
Anderson, 477 U.S. at 249–50.
II.
Background
The parties agree on the essential facts of this case. Around February 21, 2014,
Defendant sent Plaintiff two identical letters concerning Plaintiff’s default on his
residential mortgage obligations. [DE 21 at 4; DE 21-4 at 3; DE 23-2 at 9.] Defendants
sent one letter to Plaintiff’s office and the other to his home. [See DE 28 at 5; DE 29-1
at 1.]
Each letter contained a validation notice pursuant to 15 U.S.C. § 1692g(a)(3)–(5).
It reads as follows:
Unless you dispute the validity of the debt, or any portion
thereof, within thirty (30) days after the receipt of this notice,
the debt will be assumed to be valid by our firm. If you notify
our office in writing within the thirty (30) day period that the
debt or any portion thereof is disputed, we will obtain and
provide you with verification of the debt by mail. Upon your
written request within the thirty (30) day period, our office will
provide you with the name and address of the original
creditor, if different from the current creditor.
The law does not require us to wait until the end of the thirty
(30) day period before commencing a foreclosure action. If,
however, you request proof of the debt or the name and
address of the original creditor within the thirty (30) day
period that begins with your receipt of this letter, the law
requires us to suspend our efforts (through litigation or
otherwise) to collect the debt until we mail the requested
information to you.
[DE 29-3 at 2.] Defendant received the letter addressed to his office and the letter
addressed to his home on two different dates. [DE 28 at 5; DE 29-1 at 1.]
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The letters also state the following:
The amount of the debt as of 1/13/2014 is as follows:
Principal Balance
Interest
02/01/2010 through 01/13/2014
Additional/Deferred Interest
Late Charges
Escrow Advances
Servicing Fee
Corporate Advances
TOTAL
$366,614.79
$95,927.46
$0.00
$2,904.48
$10,475.75
$45.00
$4,149.50
$480,116.98
Interest and other items will continue to accrue.
[DE 29-3 at 6.]
Plaintiff has sued Defendant based on these letters. [See DE 1 at 3–7.] Plaintiff
alleges two violations. First, Plaintiff argues that by sending multiple copies of the same
letter to different addresses, which arrived at their intended destinations on separate
dates, Defendant’s letters created impermissible confusion about the validation period
to which Plaintiff was entitled under Section 1692ga(3)–(5). [ Id. at 5–6.] Plaintiff claims
this conduct violated Sections 1692g(b) and 1692e(10) of the FDCPA. [Id. at 5.]
Second, Plaintiff contends that Defendant failed to comply with Section 1692g(a)(1)’s
mandate that the initial letters state “the amount of the debt” because the figure in
Defendant’s letter was more than a month old, and insufficiently detailed. [Id. at 6.]
Plaintiff claims that this conducted violated Sections 1692g(a)(1) and 1692e(10). [Id.]
III.
Discussion
To establish a claim under the FDCPA, the plaintiff must show “(1) the plaintiff
has been the object of collection activity arising from consumer debt, (2) the defendant
is a debt collector as defined by the FDCPA, and (3) the defendant has engaged in an
act or omission prohibited by the FDCPA.” Pescatrice v. Robert J. Orovitz, P.A., 539 F.
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Supp. 2d 1375, 1378 (S.D. Fla. 2008) (internal quotations omitted). The parties do not
dispute that Defendant is a debt collector attempting to collect a consumer debt from
Plaintiff. [DE 28 at 5; 29-2 at 1.] Instead, the controversy before the Court hinges on
whether, by sending the letters in question, Defendant engaged in an act or omission
prohibited by the FDCPA.
The FDCPA, in relevant part, requires a debt collector to include certain
information in its first communications with a debtor, and to refrain from certain
practices. Specifically, “[w]ithin five days after the initial communication with a
consumer in connection with the collection of any debt, a debt collector shall . . . send
the consumer a written notice containing . . . the amount of the debt.” 15 U.S.C. §
1692g(a)(1). Within this same period, a debt collector must send a debtor “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.” 15 U.S.C. § 1692g(a)(3). Further, the statement must inform the debtor
that the debt collector will verify the debt and provide the consumer with the name and
address of the original creditor upon timely request. 15 U.S.C. § 1692g(a)(4)–(5).
Although some lawful collection activities may continue during this thirty-day period,
“[a]ny collection activities and communication during the 30-day period may not
overshadow or be inconsistent with the disclosure of the consumer’s right to dispute the
debt or request the name and address of the original creditor.” 15 U.S.C. § 1692g(b).
In all cases, a debt collector “may not use any false, deceptive, or misleading
representation or means in connection with the collection of any debt.” 15. U.S.C. §
1692e.
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A.
The Least Sophisticated Consumer Standard
In the Eleventh Circuit, whether communications to a consumer run afoul of the
FDCPA is typically decided under the “least sophisticated consumer” standard. See
Jeter v. Credit Bureau, Inc., 760 F.2d 1168, 1177 n.11 (11th Cir. 1985) (“The question is
not whether [a plaintiff] was deceived, but whether the ‘least sophisticated consumer’
would have been deceived.”); see also Iyamu v. Clarfield, Okon, Solomone, & Pincus,
P.L., 950 F. Supp. 2d 1271, 1273 (S.D. Fla. 2013) (applying the “least sophisticated
consumer” standard to alleged violations of Section 1692g(a)).
In LeBlanc v. Unifund CCR Partners, 601 F.3d 1185, 1194 (11th Cir. 2010), the
Eleventh Circuit described this standard thus:
“‘The least sophisticated consumer’” can be presumed to
possess a rudimentary amount of information about the
world and a willingness to read a collection notice with some
care.” Clomon [v. Jackson, 988 F.2d 1314, 1319 (2d Cir.
1993).] However, the test has an objective component in
that “[w]hile protecting naïve consumers, the standard also
prevents liability for bizarre or idiosyncratic interpretations of
collection notices by preserving
a
quotient of
reasonableness . . . .” [United States v. Nat’l Fin. Servs.,
Inc., 98 F.3d 131, 136 (4th Cir. 1996)] (citing Clomon, 988
F.2d at 1319); Barany-Snyder v. Weiner, 539 F.3d 327, 333
(6th Cir. 2008) (“least-sophisticated consumer” standard is
an objective test); Jacobson v. Healthcare Fin. Servs., Inc.,
516 F.3d 85 (2d Cir. 2008) (same).
The “least sophisticated consumer” standard provides more protection to consumers
than would a “reasonable consumer” standard. LeBlanc, 601 F.3d at 1194.
The parties devote much of their memoranda to arguing whether the least
sophisticated consumer standard applies to this Plaintiff. [E.g., DE 21 at 6–8; DE 23 at
3–6; DE 27 at 1–3; DE 32 at 2–4; DE 34 at 1–3.] Plaintiff is an attorney with at least
some experience litigating FDCPA cases. [DE 21 at 3; DE 23 at 1–2.] In its Motion for
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Summary Judgment, Defendant goes so far as to say that communications between
debt collectors and lawyers, such as the letters at issue here, are “not actionable” at all.
[DE 21 at 7–8.] Defendant relies on four cases to make this argument: (1) Holliston v.
Florida Default Law Group, PL, No. 8:07-cv-336-T-26EAJ, 2008 WL 8946060 (M.D. Fla.
Mar. 13, 2008); (2) Miljkovic v. Shafritz and Dinkin, P.A., No. 8:14-cv-635-T-33TBM,
2014 WL 3587550 (M.D. Fla. July 18, 2014); (3) Champion v. Target Nat’l Bank, No.
1:12-cv-4196-RLV, 2013 WL 8699367 (N.D. Ga. Apr. 15, 2013); and (4) Brazier v. Law
Office of Mitchell N. Kay, P.C., No. 8:08-cv-156-t-17MAP, 2009 WL 764161 (M.D. Fla.
Mar. 19, 2009).
The Court has reviewed these cases and finds them readily distinguishable.
They each concern communications from a debt collector to a third-party attorney
retained by the consumer. They do not concern circumstances where, as here, the
consumer is an attorney himself. The Court therefore will not depart from wellestablished Eleventh Circuit precedent that whether a debt collector’s communications
violate the FDCPA should be judged from the perspective of the least sophisticated
consumer. See Jeter, 760 F.2d at 1177.
B.
Plaintiff’s Claims Under Sections 1915g(b) and 1915e(10)
In his first claim, Plaintiff alleges that Defendant violated the FDCPA by sending
Plaintiff two identical letters, which he received on different dates. Each letter contained
the above-quoted validation notice, allowing Plaintiff to dispute the debt within thirty
days of Plaintiff’s receipt of the letter. Plaintiff argues that, in doing so, Defendant
created impermissible “confusion as to the boundaries of the thirty day period for
requesting validation of the alleged debt” [DE 29 at 9], and that this violates Sections
1692g(b) and 1692e(10) of the FDCPA.
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The Court will grant summary judgment in Defendant’s favor on this claim. There
is no dispute that in sending the two letters, Defendant complied with the FDCPA’s
demand under Section 1692(a) that a debt collector inform a consumer of the
consumer’s right to dispute the debt within thirty days of receiving the notice. Rather,
Plaintiff contends that the second letter (because Plaintiff received it after the first)
violated Section 1692g(b)’s proscription against “collection activities and
communications during the 30-day period that overshadow” or are inconsistent with the
consumer’s right to dispute the debt.
But Defendant’s second letter is not inconsistent with the thirty-day period that
the FDCPA allows Plaintiff to dispute the debt. If anything, the second letter grants
Plaintiff additional time to do so: the difference between thirty days from Plaintiff’s
receipt of the second letter and thirty days from Plaintiff’s receipt of the first. Each letter
states that Plaintiff may dispute the debt within thirty days of his receipt of that letter.
[See DE 29-3 at 6.] There is no evidence that Defendant would not have honored this
deadline. Defendant’s required notice was therefore not overshadowed or contradicted.
Instead it was expanded and emphasized.
The Court finds support for this conclusion in the following observation of the
Bankruptcy Court for the Middle District of Florida:
Cases in which courts have found violation of section 1692g
address collection letters that demanded payment within a
time period that was less than the statutory thirty day period
to dispute the debt, that emphasized the duty to make the
payment, and that obscured the fact that the debtor had
thirty days to dispute the debt.
In re Hathcock, 437 B.R. 696, 702 (M.D. Fla. Bankr. 2010) (citing Terran v. Kaplan, 109
F.3d 1428, 1433 (9th Cir. 1997)). Here, as in Hathcock and Terran, Defendant’s letter
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contains no explicit demand for payment at all. Instead the letter states that it is a
“notice” sent to Plaintiff “pursuant to the requirements of Federal law,” and informs
Plaintiff of the thirty-day period to request validation of the debt. [See DE 29-3 at 6.]
Sending multiple copies of such a notice to different addresses calculated to reach the
consumer seems a prudent practice. Plaintiff’s argument would effectively forbid it.
The Court acknowledges that this conclusion conflicts with the Eastern District of
Pennsylvania’s decision in Adams v. Law Offices of Stuckert & Yates, 926 F. Supp. 521
(E.D. Pa. 1996), which Plaintiff relies upon in his Motion [DE 29 at 10]. In Adams, the
court considered a situation in which a debt collector sent identical letters to a
consumer’s home and office. The Adams court concluded that “the least sophisticated
[consumer] would be confused as to the boundaries of the thirty day period if he
receives copies of the letter on different days, as Mr. Adams did here.” Adams, 926 F.
Supp. at 528. But the case provides no supporting rationale. Instead, the case relies
on two other violations to support summary judgment in Plaintiff’s favor: (1) that the
letters included a demand for “immediate” payment, contrary to the validation notice and
(2) that the letters stated that the thirty-day validation period runs from the sending of
the letter rather than its receipt. Id. at 527–28. The Court therefore does not find
Adams persuasive.
C.
Plaintiff’s Claims Under Sections 1692a(1) and 1692e(10)
The Court will enter summary judgment for Plaintiff on his second claim,
however. Defendants letters do not comply with Section 1692(a)(1)’s requirement that
they state “the amount of the debt.”
Defendant’s letters state the amount of the debt “as of 01/13/2014.” But the
Defendant sent the letters on February 21, 2014. As the letter observes, “interest and
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other items will continue to accrue.” By its own terms, the letter therefore provides
Plaintiff with a figure less than his actual amount due. This figure therefore “is not the
debt; it is only part of the debt.” Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, and
Clark, L.L.C., 214 F.3d 872, 875 (7th Cir. 2000). “The Act requires statement of the
debt.” Id.
Of course, strict compliance with the FDCPA’s mandate that a debt collector’s
initial communications state “the amount of the debt” is often impossible, especially
where variable interest and other items accrue day-to-day. Even if the statement is
accurate when the letter is drafted and sent, it may not be accurate by the time it is
received. This conundrum has produced “conflicting judicial opinions.” Jones v.
Midland Funding, LLC, 755 F.Supp. 2d 393, 397 (D. Conn. 2010). Jones v. Midland
Funding, LLC provides a fair sampling:
Some courts have held that a validation notice fails to satisfy
the statute unless it states the total amount due as of the
date the letter is sent and also discloses whether the amount
of the debt will increase due to interest. See Miller v.
McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, L.L.C.,
214 F.3d 872 (7th Cir. 2000); Dragon [v. I.C. System, Inc.,
483 F. Supp. 2d 198, 201–03 (D. Conn. 2007)]; Smith v.
Lyons, Doughty & Veldhuius, P.C., No. 07-5139, 2008 WL
2885887, at *6 (D. N.J. July 23, 2008); Jackson v. Aman
Collection Serv., No. IP 01-0100-C-T/K, 2001 WL 1708829,
at *3 (S.D. Ind. Dec. 14, 2001). More recently, other courts
have held that a validation notice satisfies the statute if it
states the total amount of the debt (including interest and
any other charges) as of the date the letter is sent. See
Adlam v. FMS, No. 09 Civ. 9129(SAS), 2010 WL 1328958,
at *3 (S.D.N.Y. April 5, 2010); Pifko v. CCB Credit Servs.,
No. 09-CV-3057 (JS)(WDW), 2010 WL 2771832, at *3–4
(E.D.N.Y. July 7, 2010); Weiss v. Zwicker & Assocs., 664 F.
Supp. 2d 214, 217 (E.D.N.Y. 2009).
Jones, 755 F. Supp. 2d at 397 (“I agree with the Miller line of cases that when a debt is
accruing interest, a validation notice fails to correctly state the amount of the debt as
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required by § 1692g unless it discloses the fact that interest is accruing and informs the
consumer of the applicable interest rate.”) Still other courts have held that as long as a
debt collector states the amount due as of a date certain, the FDCPA is satisfied. See
Jolly v. Shapiro, 237 F. Supp. 2d 888, 893 (N.D. Ill. 2002); Kelley v. Nationstar Mortg.,
LLC, No. 3:13-cv-00311-JAG, 2013 WL 5874704, at *5–6 (Oct. 31, 2013). The
Eleventh Circuit has not addressed this issue. The parties here have likewise identified
no relevant persuasive authority from the other district courts within the Eleventh Circuit.
The Court therefore addresses this as a matter of first impression within this circuit.
The Court is reluctant to lay down a bright-line rule on this issue, as other courts
have done. Defendants certainly would have satisfied the FDCPA had they provided
Plaintiff with a payoff amount as of the date of the letters and supplied the information
required to calculate the payoff amount for some reasonable number of days into the
future. Under Miller, providing the payoff amount as of the date of the letter, the
applicable interest rate, and a warning that additional charges may be applied from dayto-day might do. In the cases upon which Defendant relies—Jolly and Kelley—the
courts found that providing the amount due as of up to fifteen days prior to the date of
the purportedly offending letter satisfied the FDCPA.
Here, though, Defendant’s letters fall below the standard of compliance set by
any of the cases Defendant cites. 1 Defendant’s letters contain an “amount due” that
1
Moreover, Jolly appears to apply a “reasonable person” standard to Section
1692g(a) instead of the “least sophisticated consumer” standard, and should be
discounted for this reason. See Jolly, 237 F. Supp. 2d at 893 (“The Court finds that a
collection letter which states the amount of debt as of a specific date does not violate
§1692g, and no reasonable person could conclude that such a collection letter does not
inform the debtor of the amount due.” (emphasis added).) Kelley relies on Jolly, but
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was 39-days stale as of the time they were sent. This is longer than a typical
residential mortgage billing cycle. While the letter does inform Plaintiff that “[i]nterest
and other items will continue to accrue,” the letter neither states the interest rate nor
identifies these “other items.” Moreover, Defendant’s Rule 30(b)(6) witness, Emilio
Lenzi, stated in deposition that it typically takes Defendant only two days to receive an
updated payoff amount from its client. [DE 23-2 at 10.] Under these circumstances, the
Court will grant summary judgment in Plaintiff’s favor on this issue. Defendant has not
met its obligations under 1692g(a)(1) and 1692e(10).
IV.
Conclusion
Based on the foregoing, it is ORDERED AND ADJUDGED as follows:
1.
Defendant’s Motion for Summary Judgment [DE 21] is GRANTED in part
and DENIED in part. Summary judgment is granted in Defendant’s favor as to Count I
of Plaintiff’s Complaint and denied in all other respects.
2.
Plaintiff’s Motion for Summary Judgment [DE 29] is GRANTED in part
and DENIED in part. Summary judgment is granted in Plaintiff’s favor as to Count II of
Plaintiff’s Complaint and denied in all other respects.
3.
Plaintiff’s attorney is directed to confer with counsel for Defendants and
submit a proposed final judgment on or before November 7, 2014. If the parties are
unable to agree on a proposed final judgment, they shall also file a brief joint notice
highlighting their areas of disagreement by this same date.
4.
The calendar call and trial dates in this matter are STRICKEN.
does acknowledge that the “least sophisticated consumer” standard applies. See
Kelley, 2013 WL 5874704, at *5.
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DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County,
Florida, this 30th day of October, 2014.
Copies provided to counsel of record via CM/ECF.
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