Maloy v. Stucky, Lauer & Young, LLP

Filing 20

OPINION AND ORDER DENYING 12 Plaintiff's Motion for Judgment on the Pleadings. Signed by Chief Judge Theresa L Springmann on 4/5/18. (mlc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION
SAMUEL MALOY, on behalf of himself and all
others similarly situated,
Plaintiff,
v.
STUCKY, LAUER & YOUNG, LLP,
Defendant.

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CAUSE NO.: 1:17-CV-336-TLS

OPINION AND ORDER
This matter comes before the Court on Plaintiff Samuel Maloy’s Motion for Partial
Judgment on the Pleadings [ECF No. 12]. The Plaintiff filed his Complaint [ECF No. 1] on
August 9, 2017. Defendant Stucky, Lauer & Young LLP timely filed its Answer [ECF No. 9] on
October 10, 2017. In his Complaint, the Plaintiff brings four claims under the Fair Debt
Collection Practices Act, 15 U.S.C. § 1692 et seq., (FDCPA) against the Defendant. The instant
matter involves only Count I, whether the Defendant violated 15 U.S.C. § 1692g(a)(4).

BACKGROUND
The following background is taken from the pleadings. The Plaintiff is a resident of
Columbia City, Indiana. (Compl. ¶ 11.) The Parties agree that he is a natural person allegedly
obligated to pay a debt asserted to be owed or due to a creditor other than the Defendant.
(Compl. ¶ 15; Answer ¶ 15.) The Defendant is an entity who at all relevant items was engaged,
by use of the mails and telephone, in the business of attempting to collect a “debt” from the

Plaintiff. (Compl. ¶ 13; Answer ¶ 13.) The Defendant is also a “debt collector” as defined by
15 U.S.C 1692(a)(6). (Compl. ¶ 14; Answer ¶ 14.)
The Defendant sent the Plaintiff a letter (the Letter) in connection with the collection of a
debt on August 11, 2016. (Compl. ¶ 19; Answer ¶ 19; see also Compl. Ex. 1, ECF No. 1-1.) The
Letter was the Defendant’s initial communication with the Plaintiff. (Compl. ¶ 21; Answer ¶ 21.)
The Letter describes the Plaintiff’s rights under the FDCPA as follows:
Federal law gives you thirty days after you receive this letter to dispute the validity
of the debt or any part of it. If you do not dispute it within that period, I’ll assume
that it is valid. If you do dispute it, I will as required by the law, obtain and mail to
you proof of the debt.
(Compl. Ex. 1; see also Compl. ¶ 23; Answer ¶ 23.)
The Defendant raised five affirmative defenses in its Answer, only two of which are
pertinent to the instant Motion. The Defendant’s Third Affirmative Defense raised a statutory
defense based on bona fide error. See 15 U.S.C. § 1692k(c) (“A debt collector may not be held
liable in any action brought under this subchapter if the debt collector shows by a preponderance
of evidence that the violation was not intentional and resulted from a bona fide error
notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.”). Its
Fourth Affirmative Defense is based on the idea of a “safe harbor.” The Seventh Circuit has held
that a debt collector can invoke the “safe harbor” doctrine to avoid liability under the FDCPA so
long as the debt collector uses certain language in its initial communication. See Bartlett v. Heibl,
128 F.3d 497 (7th Cir. 1997). The Plaintiff contends that the Defendant’s Third Affirmative
Defense impermissibly states a legal conclusion and that the Defendant’s Fourth Affirmative
Defense must fail because the Defendant did not use the safe harbor language in its initial
communication. As such, the Plaintiff asserts that it is entitled to partial judgment on the
pleadings.
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STANDARD OF REVIEW
Under Federal Rule of Civil Procedure 12(c), a party may move for judgment after the
plaintiff has filed a complaint and the defendant has filed an answer. See Fed. R. Civ. P. 12(c).
The reviewing court must consider only the pleadings, which “include the complaint, the answer,
and any written instruments attached as exhibits.” N. Ind. Gun & Outdoor Shows, Inc. v. City of
S. Bend, 163 F.3d 449, 452 (7th Cir. 1998) (citations omitted). “Where the plaintiff moves for
judgment on the pleadings, the motion should not be granted unless it appears beyond doubt that
the non-moving party cannot prove facts sufficient to support [its] position.” Hous. Auth. Risk
Retention Grp. v. Chi. Hous. Auth., 378 F.3d 596, 600 (7th Cir. 2004) (citing All Am. Ins. Co. v.
Broeren Russo Const., Inc., 112 F. Supp. 2d 723, 728 (C.D. Ill. 2000)) (internal quotations
omitted). Judgment may be granted on the pleadings only if “all material allegations of fact are
admitted or not controverted in the pleadings and only questions of law remain to be decided by
the district court.” 5C Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure
§ 1367 (3d ed. 2017).

ANALYSIS
The Plaintiff has moved for judgment on the pleadings only as to Count I. In Count I, the
Plaintiff alleges that the Defendant violated 15 U.S.C. § 1692g(a)(4) when the Defendant mailed
the Letter to the Plaintiff. Section 1692g(a)(4) requires that the initial communication between a
debt collector and debtor contain:
[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

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and a copy of such verification or judgment will be mailed to the consumer by the
debt collector[.]1
(emphasis added). The Letter contains the following language in its third paragraph:
Federal law gives you thirty days after you receive this letter to dispute the validity
of the debt or any part of it. If you do not dispute it within that period, I’ll assume
that it is valid. If you do dispute it, I will as required by the law, obtain and mail to
you proof of the debt.
The Letter does not communicate to an alleged debtor that she must notify the debt
collector in writing to obtain proof of the debt. However, the Defendant argues that it is shielded
from liability based on a bona fide error defense, see 15 U.S.C. § 1692k(c), and a “safe harbor”
defense, see Bartlett, 128 F.3d at 501–02. The Court now turns its analysis to these defenses.

A.

Fourth Affirmative Defense (Safe Harbor)
To begin, the Letter does not track the Seventh Circuit’s safe harbor language. In Bartlett,

the Seventh Circuit articulated specific language that a debt collector may use to shield itself
from liability under the FDCPA. The safe harbor applies where a defendant has included the
following language:
Federal law gives you thirty days after you receive this letter to dispute the validity
of the debt or any part of it. If you don’t dispute it within that period, I’ll assume
that it’s valid. If you do dispute it—by notifying me in writing to that effect—I will,
as required by the law, obtain and mail to you proof of the debt.
Bartlett, 128 F.3d at 501–02 (emphasis added). The “by notifying me in writing to that effect”
language is important because 15 U.S.C. 1692g(a)(4) contains a notification in writing
requirement. Hence the safe harbor incorporates this statutory requirement. The Letter, however,

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If the initial communication does not contain this information, then the debt collector may also provide
the same information in a written notice “[w]ithin five days after the initial communication with the
consumer in connection with the collection of any debt . . . .” In the instant case, the parties appear to
agree that the Letter is the only relevant communication for the Court to consider.

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does not contain this safe harbor language—“by notifying me in writing to that effect”—and
does not contain alternate language that communicates the statutory writing requirement. Parties
who depart from the safe harbor language “do so at their risk.” Bartlett, 128 F.3d at 502. Here,
the Defendant departed from the safe harbor language and did not provide any other language
that would satisfy the statutory requirement in its initial communication.
The Defendant highlights that this Court has held that the FDCPA does not require
consumers to give debt collectors written notice to dispute the validity of a debt. See Campbell v.
Hall, 624 F. Supp. 2d 991, 1000–01 (N.D. Ind. 2009). This is true. But the Court in Campbell
interpreted 15 U.S.C. § 1692g(a)(3), whereas the instant claim arises under 15 U.S.C.
§ 1692g(a)(4). Section 1692g(a)(3) determines when a debt may be assumed valid and does not
contain a writing requirement; § 1692g(a)(4) lays out the steps a consumer must take to obtain
verification of a debt and contains a writing requirement. Compare 15 U.S.C. § 1692g(a)(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”), with 15 U.S.C. § 1692g(a)(4) (“[A] statement that if the consumer notifies the debt
collector in writing within the thirty-day period . . . .”). The Court is therefore not persuaded that
the Defendant’s Fourth Affirmative Defense resolves the instant action.

B.

Third Affirmative Defense (Bona Fide Error)
The analysis does not end there, however. The Defendant has also included a Third

Affirmative Defense, which states that the Defendant can satisfy the statutory bona fide error
defense. See 15 U.S.C. § 1692k(c). A defendant must show three things, by a preponderance, to
establish a bona fide error defense: (1) that the presumed FDCPA violation was not intentional;

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(2) that the presumed FDCPA violation resulted from a bona fide error; and (3) that the
Defendant maintained procedures reasonably adapted to avoid such error. Kort v. Diversified
Collection Serv., Inc., 394 F.3d 530, 537 (7th Cir. 2005). An error is “bona fide” if it is made in
good faith, meaning a genuine, rather than contrived, mistake. Id. at 538.
The Plaintiff alleges that the Defendant has not sufficiently pleaded its Third Affirmative
Defense, and therefore that the Court can properly grant judgment on the pleadings as to Count I.
When a party responds to a pleading, it must state “in short and plain terms its defenses to each
claim asserted against it.” Fed. R. Civ. P. 8(b)(1)(A). This type of pleading is known as an
affirmative defense. Federal Rule of Civil Procedure 8(c) provides a non-exhaustive list of
affirmative defenses, and a defense not listed in Rule 8(c) is still an affirmative defense so long
as “the defendant bears the burden of proof” or if the defendant does not “controvert the
plaintiff’s proof.” Winforge, Inc. v. Coachment Indus., Inc., 691 F.3d 856, 872 (7th Cir. 2012)
(internal quotations omitted). An affirmative defense must contain a “short and plain statement
of the facts” and “allege the necessary elements” rather than simply provide “bare bones
conclusory allegations[.]” Heller Fin. Inc. v. Midwhey Powder Co., 883 F.2d 1286, 1295 (7th
Cir. 1989). In Heller, the Seventh Circuit rejected an affirmative defense that “omitted any short
and plain statement of facts and failed totally to allege the necessary elements of the alleged
claims.” Id. at 1295.
The Seventh Circuit has not yet determined whether affirmative defenses are subject to
the pleading standard articulated in Bell Atlantic Corp. v. Twombly, 530 U.S. 544 (2007), and
Ashcroft v. Iqbal, 556 U.S. 662 (2009). See, e.g., Hoffman v. CMP Entm’t (USA) Inc., No. 17-cv3299, 2018 WL 1115210, at *2 (C.D. Ill. Mar. 1, 2018); Spiegel v. Ashwood Fin., Inc., No. 1:16cv-1998, 2017 WL 1091250, at *4 (S.D. Ind. Mar. 23, 2017); Perez v. PBI Bank, Inc., No. 1:14-

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cv-1429, 2015 WL 500874, at (S.D. Ind. Feb. 4, 2015). The Court continues to agree with those
cases declining to apply the Twombly and Iqbal standards to affirmative defenses. See Husainy v.
Allied Collection Serv., Inc., No. 4:15-CV-95, 2016 WL 1604824, at *1 (N.D. Ind. Apr. 22,
2016); Cottle v. Falcon Holdings Mgmt., LLC, No. 2:11-CV-95, 2012 WL 266968 (N.D. Ind.
Jan. 30, 2012) (discussing the issue extensively and citing supporting cases). As such, the Court
will analyze the Defendant’s affirmative defense under Heller, which requires defendants to state
more than a mere legal conclusion as an affirmative defense.
As a general rule, an affirmative defense must provide a plaintiff with adequate notice as
to basis for the claim. See Husainy, 2016 WL 1604824, at *2. The Defendant’s Third
Affirmative Defense states that “[t]he conduct and actions of defendant, to the extent that any
violation of the FDCPA may be found, result from a bona fide error, insulating defendant from
liability.” (Answer at 30.) At first glance this appears insufficient under Heller. That said, based
on the Parties’ briefing, the Parties appear to understand that the Defendant is raising a statutory
affirmative defense, and the Court will construe it as such. The Defendant must establish three
elements by a preponderance to satisfy the statutory defense. These three elements, as explained
by the Plaintiff in its Reply, are: (1) that the presumed FDCPA violation was not intentional; (2)
that the presumed FDCPA violation resulted from a bona fide error; and (3) that the Defendant
maintained procedures reasonably adapted to avoid such error. See Kort, 394 F.3d at 537.
Whether the Defendant can prove the elements necessary to satisfy the defense is not at issue at
this stage. The Third Affirmative Defense provides the Plaintiff with sufficient notice of the
grounds upon which the Defendant denies that it is liable under the FDCPA and, thus, sufficient
notice on how to proceed through discovery, dispositive motion practice, or trial.

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CONCLUSION
For these reasons, the Court DENIES Plaintiff Samuel Maloy’s Motion for Partial
Judgment on the Pleadings [ECF. No. 12].
SO ORDERED on April 5, 2018.
s/ Theresa L. Springmann
CHIEF JUDGE THERESA L. SPRINGMANN
UNITED STATES DISTRICT COURT

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