Baye v. Midland Credit Management, Inc. et al

Filing 33

ORDER AND REASONS: Plaintiff's 27 motion to reconsider is GRANTED as to Counts III-VI, and is DENIED as to Counts I and II, as set forth in document. Signed by Judge Martin L.C. Feldman on 10/31/2017. (jls)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
JOAN BAYE

CIVIL ACTION

V.

NO. 17-4789

MIDLAND CREDIT
MANAGEMENT, INC., ET AL

SECTION "F"

ORDER AND REASONS
Before the Court is the plaintiff’s motion to reconsider the
Court’s Order and Reasons dated August 9, 2017, in which the Court
granted defendants’ motion to dismiss the plaintiff’s complaint
for failure to state a claim. For the following reasons, the motion
is GRANTED in part (as to Counts III-VI) and DENIED in part (as to
Counts I and II).
Background
Joan Baye had debt. And in 2009 and 2010 her creditors
acknowledged, in what is called a charge-off date, that they likely
would not be successful at collecting the debt, and would consider
it a loss for the company. Within a few years, the statute of
limitations to judicially enforce collection tolled. Accordingly,
creditors who owned her debt could not sue Baye to collect the
outstanding balances or report her to a credit bureau. Sometime
after the debt became time-barred, Midland Funding, Inc. bought

1

the debt for pennies on the dollar. 1 It contracted with Midland
Credit Management, Inc. (MCM) to collect it on Midland’s behalf.
Earlier this year, MCM mailed Baye three letters, on Midland’s
behalf, attempting to collect on the expired debt. In May 2017,
Baye sued Midland and MCM, on behalf of herself and those similarly
situated,

claiming

that

the

letters

violated

the

Fair

Debt

Collection Practices Act (FDCPA).
According to the complaint, Baye had defunct accounts with
three separate entities: she had a balance of $3,416.35 with Target
National Bank, a balance of $1,234.94 with Citibank, and a balance
of $4,017.49 with Chase Bank. All of these debts have been timebarred for years. On February 3, 2017, MCM sent Baye two letters;
one regarding her Chase account and the other her Target account.
MCM’s letters provided information about the debt in the top right
corner, including the original creditor, the current balance, the

1

According to a 2013 Fair Trade Commission study, debt that was
between six and fifteen years old were sold for, on average, 2.2
cents per dollar. Neil L. Sobol, Protecting Consumers from ZombieDebt Collectors, 44 N.M. L. Rev. 327, 354 (2014). Purchasing debt
is a growing industry; the amount of purchased debt increased
twenty-fold, from $6 billion to over $110 billion, between 1993
and 2005. Id. at 335. Credit-card debt accounts for 90% of those
purchases. Id. This growth follows a growth in credit debt.
According to the Federal Reserve Bank of New York, Americans have
$784 billion in credit card debt nationally, with 7.4% being
“seriously delinquent,” as of June 30, 2017. Press Release: Total
Household Debt Increases Driven by Mortgage, Auto and Credit Card
Debt, FED. RES. BANK N.Y. (Aug. 15. 2017),
https://www.newyorkfed.org/newsevents/news/research/2017/rp17081
5.
2

current owner (Midland), and the “discount” it would offer her if
she paid (40%). Then it says “Available Payment Options,” and lists
three options. The first offers 40% off the balance if she makes
one payment, the second offers 20% off if paid over 6 months, and
the third offers monthly payments as low as $50 per month. Below
the options it states:
Benefits of Paying Your Debt
- Save $1,366.54 if you pay by 03-05-2017-Put this debt behind you –
-No more communication on this account –
-Peace of Mind –
The bottom of the letter, in small but readable font, states:
The law limits how long you can be sued
how long a debt can appear on your credit
the age of this debt, we will not sue
report payment or non-payment of it to a

on a debt and
report. Due to
you for it or
credit bureau.

Below the disclaimer is information on how to make the payment.
On March 15, 2017, MCM sent Baye a communication regarding
all three accounts. It included a cover letter, stating that Baye
qualified for a special discount because she had three accounts
with MCM. It lists “benefits” for accepting one of the “offers,”
including “Savings based on all accounts with us” and “Peace of
mind.”

The final sentence states, “Act now to maximize your

savings and put these debts behind you.” There is no mention on
the cover letter that the debts are time-barred. Enclosed are
three, 3-page letters regarding the Target Debt, Citi Debt, and
Chase Debt. Each letter contains nearly identical language as the

3

ones sent in February, offering three options to “maximize your
savings and put this debt behind you.” They each state that the
offer expires April 14, 2017, and the initial payments are due by
then. They also contain the same disclosure below the signature
line stating that MCM will not sue to collect the debt.
In

her

May

10,

2017

complaint,

Baye

alleged

that

MCM’s

letters, sent on Midland’s behalf, violate the FDCPA. The FDCPA
prevents debt collectors (which MCM and Midland both are) from
harassing any debtor, misleading or deceiving the consumer, or
using unfair or unconscionable means to collect any debt. Baye
faults the defendants for failing to sufficiently disclose the
time-barred nature of the debt. Further, Baye alleges that under
Louisiana law, debtors can renounce prescription and revive their
time-barred debt by entering a payment plan, so as to reset the
clock on the statute of limitations and become obligated to pay
their original balance in full. The letters, Baye complains, fail
to notify the consumer of this risk.
Midland and MCM moved to dismiss her complaint for failure to
state a claim on June 26, 2017. The defendants contended that debt
collectors are permitted to seek voluntary payment, even if the
debt is unenforceable, as long as they do not threaten litigation
or make false statements as to the enforceability of the debt.
Moreover, they assert that their disclosure adequately informs the
consumer that they will not sue on the debt. Further, they contend
4

that they do not have an obligation to warn about the potential
revival of a time-barred debt. Any warning would be unnecessary
because under Louisiana law, a debtor cannot revive a time-barred
debt by making partial payment on a prescribed debt.
On August 9, 2017, this Court issued an Order and Reasons
granting

the

defendants’

motion

to

dismiss,

embracing

their

arguments and interpretation of the law. Order and Reasons dtd.
8/9/17. The plaintiff now moves the Court to reconsider its Order
and Reasons, pursuant to Federal Rule of Civil Procedure Rule 59(e)
and Rule 60(b).

I.

Legal Standard: Reconsideration

Federal Rule of Civil Procedure 59(e) provides, “[a] motion
to alter or amend a judgment must be filed no later than 28 days
after the entry of the judgment.” “A Rule 59(e) motion to alter or
amend a judgment ‘serve[s] the narrow purpose of allowing a party
to correct manifest errors of law or fact or to present newly
discovered evidence.’” Merritt Hawkins & Assocs. v. Gresham, 861
F.3d 143, 157 (5th Cir. 2017) (quoting Waltman v. Int’l Paper Co.,
875 F.2d 468, 473 (5th Cir. 1989)). It “calls into question the
correctness of a judgement.” In re Transtexas Gas Corp., 303 F.3d
571, 581 (5th Cir. 2002). Accordingly, “[r]econsideration of a
judgment after its entry is an extraordinary remedy that should be

5

used sparingly.” Templet v. HydroChem Inc., 367 F.3d 473, 479 (5th
Cir. 2004).
The plaintiff’s motion is appropriately considered under Rule
59(e). It was filed within 28 days after the entry of judgement,
and seeks to correct errors of law. However, the Court is only
considering

this

motion

under

Rule

59(e).

Rule

60(b)(3)

is

appropriate when the opposing party unfairly obtained a judgment
by misleading the Court. Although the defendants did not always
accurately characterize the cases they were citing, the Court does
not

believe

that

they

actively

misled

it,

or

that

they

are

responsible for the Court’s error. Accordingly, the Court will
consider the motion according to the standards set forth by Rule
59(e).

II.

Legal Standard: Motion to Dismiss

Because the plaintiff is asking the Court to reconsider its
grant

of

defendants’

motion

to

dismiss

under

Rule

12(b)(6),

reviewing the standard for a motion to dismiss is appropriate. In
considering a Rule 12(b)(6) motion, the Court “accept[s] all wellpleaded facts as true and view[s] all facts in the light most
favorable to the plaintiff.” See Thompson v. City of Waco, Texas,
764 F.3d 500, 502 (5th Cir. 2014) (citing Doe ex rel. Magee v.
Covington Cnty. Sch. Dist. ex rel. Keys, 675 F.3d 849, 854 (5th
Cir.

2012)(en

banc)).

But

in

deciding
6

whether

dismissal

is

warranted, the Court will not accept conclusory allegations in the
complaint as true. Id. at 502-03 (citing Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009)).
To survive dismissal, “‘a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that
is plausible on its face.’” Gonzalez v. Kay, 577 F.3d 600, 603
(5th Cir. 2009)(quoting Iqbal, 556 U.S. at 678)(internal quotation
marks omitted). “Factual allegations must be enough to raise a
right to relief above the speculative level, on the assumption
that all the allegations in the complaint are true (even if
doubtful in fact).” Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
555 (2007) (citations and footnote omitted). “A claim has facial
plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (“The
plausibility standard is not akin to a ‘probability requirement,’
but it asks for more than a sheer possibility that a defendant has
acted

unlawfully.”).

This

is

a

“context-specific

task

that

requires the reviewing court to draw on its judicial experience
and common sense.” Id. at 679. “Where a complaint pleads facts
that are merely consistent with a defendant’s liability, it stops
short

of

the

line

between

possibility

and

plausibility

of

entitlement to relief.” Id. at 678 (internal quotations omitted)
(citing Twombly, 550 U.S. at 557). “[A] plaintiff’s obligation to
7

provide the ‘grounds’ of his ‘entitle[ment] to relief’”, thus,
“requires

more

than

labels

and

conclusions,

and

a

formulaic

recitation of the elements of a cause of action will not do.”
Twombly,

550

U.S.

at

555

(alteration

in

original)

(citation

omitted).
III. Issues Presented for Reconsideration
On August 9, 2017, the Court issued an Order and Reasons
granting the defendants’ motion to dismiss the plaintiff’s claim.
In her initial complaint, Baye argued generally that: (1) Midland
and MCM’s letters are misleading and unfair because they are
designed to reduce the likelihood that the consumer will read the
disclosure;

(2)

the

disclosure

misleads

the

consumer

into

believing that Midland is choosing not to sue, where it is actually
prohibited from enforcing the debt; (3) the letters are deceptive
and mislead the consumer as to the character of the debt because
they do not disclose that by entering a payment plan, the consumer
may

revive

the

prescribed

debt

under

Louisiana

law;

(4)

the

suggestion that making payments to Midland provides benefits like
putting the debt behind you and “peace of mind” is deceptive
because

the

consumer

has

no

obligation

to

pay

the

debt

and

therefore will not benefit from it, and doing so could re-instate
significant

debt

obligations;

and

(5)

sending

multiple

communications about the same time-barred debt is harassment and
an unconscionable collection practices.
8

Midland and MCM moved to dismiss her complaint for failure to
state a claim on June 26, 2017. The defendants contended that debt
collectors are permitted to seek voluntary payment, even if the
debt is unenforceable, as long as they do not threaten litigation
or make false statements as to the enforceability of the debt.
Here, the letters fairly disclose to the consumer that they will
not sue to collect, and uses language explicitly endorsed by the
FTC. Further, they contended that even if the disclosure does not
make it clear why it is not going to sue or report to credit
bureaus, it does not matter under the FDCPA because simply stating
that they will not litigate the claim is sufficient.
In response to Baye’s allegation that failing to disclose the
possibility of renunciation is deceptive, the defendants contended
that courts have never required debt collectors to warn of a
potential

revival

of

a

time-barred

claim.

Revival

would

be

inappropriate in this circumstance because entering into a payment
plan

would

not

renounce

prescription

under

Louisiana

law.

According to Midland and MCM, partial payments are not enough; a
signed

writing

is

necessary

to

revive

a

time-barred

claim. 2

Finally, they argued that sending merely three communications

2

Defendants made this claim in their motion to dismiss and their
reply to plaintiff’s opposition to their motion to dismiss.
However, in their response to plaintiff’s motion to reconsider,
defendants concede that a signed writing is not required to
renounce prescription, but maintain that partial payments are not
sufficient.
9

could not be considered harassment, or unconscionable, because
debt collectors are permitted to contact debtors, and letters are
the least invasive way to do so. Because under Louisiana law
debtors maintain a “natural obligation” (like a moral obligation)
to repay debt even after their enforceable obligation has expired,
the defendant has the right to repayment of debt after the statute
of limitations has run. Accordingly, soliciting voluntary payment
of prescribed debt is permissible. The defendants contended that
because the FDCPA permits, as a matter of law, all of the actions
that the plaintiff complains of, Baye failed to state a claim upon
which relief can be granted.
In its August 9, 2017 Order and Reasons, the Court addressed
each claim Baye made, and many of the defendants’ arguments. In
Counts I and II of her complaint, the plaintiff alleged that the
defendants’ letters violated 15 U.S.C. § 1692d because they had
the “natural consequence . . . to harass, oppress, or abuse” the
plaintiff. The Court dismissed these claims, holding that a debt
collector can contact a debtor multiple times in an attempt to
collect a debt and that using letters is the least intrusive means
to do that.
In Counts III and IV, the plaintiff alleged that MCM and
Midland violated 15 U.S.C. § 1692e, which prohibits the use of
“any false, deceptive, or misleading representation or means in
connection with the collection of any debt.” The plaintiff alleged
10

that the letters were misleading because the disclosure did not
sufficiently notify the debtor that MCM and Midland are prohibited
from enforcing the time-bared debt. The plaintiff also asserted
that the letters are deceptive in that they invite partial payment,
but do not disclose that engaging in a payment plan could revive
the expired debt under Louisiana law. In its August 9, 2017 Order
and Reasons, the Court rejected the plaintiff’s arguments. It first
faulted the plaintiff for failing to state a specific subsection
of Section 1692e under which relief could be granted. Indicating
that simply stating that the letters are misleading under Section
1692e generally is insufficient, the Court held that the plaintiff
failed to make factual allegations that supported a finding under
any of the specific subsections. Further, the Court held that the
disclosure was sufficient to notify the plaintiff as to the legal
status of the debt, persuaded by the fact that the Federal Trade
Commission has approved the use of the exact same language. The
Court also held that a debt collector is not, as a matter of law,
required to warn of a potential revival of a time-barred claim.
Moreover, Louisiana law does not allow debtors to revive timebarred

debts

by

entering

into

a

payment

plan;

without

the

possibility of revival, there is nothing for MCM and Midland to
disclose.
In Counts V and VI, the plaintiff alleged that MCM and Midland
violated

15

U.S.C.

§

1692f,
11

which

prohibits

“unfair

and

unconscionable means to collect or attempt to collect any debt,”
for the same reasons that defendants’ letters were misleading. The
Court held that to succeed on this claim, the plaintiff was
required to state a new basis that is separate from the other FDCPA
alleged violations. Further, because the plaintiff relied on the
same factual allegations as in counts III and IV, and the Court
held there that the defendants’ alleged conduct does not violate
FDCPA as a matter of law, the plaintiff cannot prevail under
section 1692f for the same reasons.
In her motion for reconsideration, the plaintiff sets out
three main reasons the Court should reconsider its August 9, 2017
Order and Reasons. First, the plaintiff points to the precedential
effect

of

the

United

States

Court

of

Appeals

for

the

Fifth

Circuit’s holding in Daugherty v. Convergent Outsourcing, Inc.,
836 F.3d 507 (5th Cir. 2016), that a debt collection letter that
invites partial payment on a time-barred debt without disclosing
the

possibility

of

revival

is

sufficient

to

give

rise

to

a

plausible FDCPA violation. Despite the plaintiff invoking this
case in her reply to the defendants’ motion to dismiss her claim,
and the defendants’ discussion of it in its reply brief, the Court
failed to consider or cite the case in its August 9, 2017 Order
and Reasons. The Court is persuaded that the Daugherty case is
controlling, and must be considered and applied to the plaintiff’s
claims. Second, the plaintiff contends that the Court erred in
12

finding that the plaintiff was required to cite a subsection of
Section 1692e to sustain a claim for relief. The language of the
section makes it clear that citing a subsection is unnecessary;
the provision provides a blanket prohibition on “false, deceptive,
or misleading representation[s]” and the following subsections are
simply examples. 15 U.S.C. § 1692e (“A debt collection may not sue
any false, deceptive, or misleading representation or means in
connection with the collection of any debt. Without limiting the
general application of the foregoing, the following conduct is a
violation of this section: . . . .”)(emphasis added). Finally, the
plaintiff contends that defendants made a material representation
as to the possibility of revival under Louisiana law. As discussed,
the Court will not consider the plaintiff’s contentions that the
defendants materially misled the Court. However, the Court agrees
that it must revisit its analysis of renunciation (the term in
Louisiana for reviving prescribed debt) under Louisiana law.
In revisiting the plaintiff’s claims, at least in part, the
Court considers anew whether the plaintiff’s factual allegations
as to Counts I-VI state a plausible claim in which relief can be
granted. The parties main points of disagreement can be boiled
down to whether it is plausible that: (1) the letter inviting
partial payment on a time-barred debt could mislead consumers to
believing that the debt is enforceable, despite the disclosure;
(2) entering into a payment plan could renounce the prescription
13

on the debt, thus renewing payment obligations; and (3) whether
sending

three

communications

on

time-barred

debt

could

be

interpreted as harassment or abuse.

IV.

Counts I and II: 15 U.S.C. § 1692d

In Counts I and II of her complaint, the plaintiff alleges
that defendants violated 15 U.S.C. § 1692d when they sent her three
letters about the same time-barred debt. Section 1692d provides
that “[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.” The provision furnishes
a nonexclusive list of prohibited practices, such as threatening
violence, using obscene or profane language, or repeatedly calling
with the intent to annoy or harass. 15 U.S.C. § 1692d(1),(2), and
(4). In its August 9, 2017 Order and Reasons, the Court dismissed
these claims, finding that sending three letters, without more,
could not rise to the level of harassment prohibited under section
1692d. In her motion for reconsideration, the plaintiff did not
defend or otherwise address her 1962d claim, and therefore it is
unclear whether the plaintiff is seeking reconsideration for that
claim. Insofar that the plaintiff is seeking reconsideration, the
Court finds no error in its prior ruling.
Simply attempting to collect on a time-barred debt is not
harassment or abuse. See Daugherty, 836 F.3d at 509 (“[I]t is not
14

automatically unlawful for a debt collector to seek payment of a
time-barred debt . . . .”). While the Fifth Circuit Court of
Appeals has not ruled on any claim seeking relief under section
1962d, the Court is unable to find a district court case in the
Fifth Circuit providing support for plaintiff’s claim. See Birdow
v. Allen, No.A-13-CV-709-LY 2013 WL 4511639, at *3 (W.D. Tex. Aug.
23, 2013) (holding that plaintiff did not state a claim upon which
relief can be granted when he alleged that defendant debt collector
sent him two letters and that violated section 1692d); McGinnis v.
Dodeka, No. 4:09CV334, 2010 WL 1856450, at *4 (E.D. Tex. May 7,
2010) (finding that the plaintiff’s section 1962d claims should be
dismissed because repeated demand letters do not raise to the level
of harassment and abuse contemplated by the statute); Brooks v.
Flagstar Bank, No. 11-67, 2011 WL 2710026, at *8 (E.D. La. July
12, 2011) (holding that the complaint did not allege sufficient
facts to support a finding that the collection letters violated
section 1962d when debt collectors are permitted to contact a
debtor multiple times to collect a debt); but cf. Harding v.
Regent, 347 F. Supp. 2d 334, 336-37 (N.D. Tex. 2004) (holding that
dismissal of a 1692d claim is inappropriate when debt collectors
contacted the debtor several times, by way of demand letters and
phone calls, after the debtor brought the suit and was represented
by counsel) (emphasis added). Although the statute does not limit
the type of behavior prohibited, the examples listed, such as
15

threatening violence and obscene language, indicates that the
level of harassment contemplated by the statute requires more than
the mere sending of a few letters. McGinnis, 2010 WL 1856450, at
*4. Further, demand letters do not violate section 1962d just
because they are misleading and unfair, in violation of sections
1692e and 1692f. Id. Even viewed in the light most favorable to
Baye, that defendants sent three letters to her household is
legally insufficient to state a claim for relief under 15 U.S.C.
§ 1692d. Therefore, there is no relief available to the plaintiff
under Rule 59(e) and the Court will not reconsider the motion to
dismiss as to this Counts I and II.
V.

Counts III-VI: 15 U.S.C. §§ 1692e and 1692f

The plaintiff asks the Court to reconsider its ruling that
she failed to sufficiently allege that the demand letters could
mislead the consumer and were unfair or unconscionable under 16
U.S.C. §§ 1962e and 1962f. She contends that under the United
States Court of Appeals for the Fifth Circuit’s ruling in Daugherty
v. Convergent Outsourcing, Inc., and a plain reading of section
1962e, she has alleged the misleading and deceptive nature of the
“discount programs” in Counts III-VI of her complaint sufficient
to state a plausible claim for relief under sections 1962e and
1962f. Midland and MCM urge the Court to deny the plaintiff’s
request for reconsideration pursuant to Rule 59(e) on the ground
that she fails to identify any new fact or change in the law
16

warranting reconsideration. Rule 59(e) authorizes the Court to
correct errors of law; a review of relevant authorities prompts
the Court to reconsider its ruling with respect to the claims made
under sections 1692e and 1692f.
15

U.S.C.

§

1692e

prohibits

“any

false,

deceptive,

or

misleading representation” made in connection to collecting a
debt. Section 1692e furnishes a nonexclusive list of prohibited
practices, such as falsely representing the character or legal
status of the debt and threatening to take legal action that cannot
be taken. 15 U.S.C. § 1692e(2)(A), (5). 3

Similarly, 15 U.S.C. §

1692f prohibits the use of “unfair or unconscionable means” in
attempting to collect a debt. Section 1692f also furnishes a nonexhaustive list of prohibited practices. Because the lead Fifth
Circuit case on this issue addresses these provisions together,
this

Court

will

do

the

same.

See

Daugherty

v.

Convergent

Outsourcing, Inc., 836 F.3d 507 (5th Cir. 2016).

3

The Court’s Order and Reasons suggested that the plaintiff is
obligated to cite a subsection of 15 U.S.C. § 1692e to sustain a
claim for relief. Order and Reasons, Doc. 25 at 9, 9/6/17. The
language of the section makes it clear that citing a subsection is
unnecessary; the provision provides a blanket prohibition on
“false, deceptive, or misleading representation[s]” and the
following subsections are simply examples. 15 U.S.C. § 1692e (“A
debt collection may not sue any false, deceptive, or misleading
representation or means in connection with the collection of any
debt. Without limiting the general application of the foregoing,
the following conduct is a violation of this section: . . .
.”)(emphasis added).
17

The FDCPA was “clearly intended [by Congress] to have a broad
remedial scope.” Id. at 511 (quoting Serna v. Law office of Jospeh
Onwuteaka, P.C., 732 F.3d 440, 445 (5th Cir. 2013)). In determining
whether collection letters violated 15 U.S.C. §§ 1692e and 1692f,
the Fifth Circuit found that the FDCPA should “be construed broadly
and in favor of the consumer.” Id. To evaluate whether a collection
letter was deceptive or unfair, “a court must view the letter from
the

perspective

of

an

unsophisticated

or

least

sophisticated

consumer.” Id. The court “assume[s] that the plaintiff-debtor is
neither shrewd nor experienced in dealing with creditors.” Goswami
v. America Collections Enterprise, Inc., 377 F.3d 488, 495 (5th
Cir. 2004). However, the least sophisticated consumer is still not
“tied

to

the

‘very

last

rung

on

the

[intelligence

or]

sophistication ladder.’” Id. (alteration in original) (quoting
Taylor v. Perrin, Landry, deLaunay & Durand, 103 F.3d 1232, 1236
(5th Cir. 1997)). Accordingly, “[t]his standard serves the dual
purpose of protecting all consumers, including the inexperienced,
the untrained and the credulous, from deceptive debt collection
practices and protecting debt collectors against liability for
bizarre or idiosyncratic consumer interpretations of collection
materials.” Taylor, 103 F.3d at 1236.
Considering the protective nature of this standard, and the
minimal requirement that the plaintiff allege a facially plausible
claim, “dismissal is appropriate only when it is apparent from a
18

reading of the letter that not even a significant fraction of the
population would be misled by it.” Daugherty, 836 F.3d at 512
(quoting McMahon v. LVNV Funding, LLC, 744 F.3d 1010, 1020 (7th
Cir. 2014)). A court’s determination of “whether a collection
letter is confusing is a question of fact.” Id. (quoting McMahon,
744 F.3d at 1020); cf. Gonzalez v. Kay, 577 F.3d 600, 606-07 (5th
Cir.

2009)

(holding

that

some

letters

are

“so

deceptive

and

misleading as to violate the FDCPA as a matter of law,” others are
not deceptive as a matter of law, and many are somewhere in the
middle, requiring further consideration by the district court
beyond the initial motion to dismiss phase of the pleadings.)
The plaintiff argues, and the Court agrees, the the Court
failed to consider the 2016 Fifth Circuit decision, Daugherty v.
Convergent Outsourcing, Inc., and its precedential effect on this
case in its Order and Reasons granting the defendants’ motion to
dismiss.

The

strikingly

facts

similar

and
to

procedural

the

case

at

posture
hand,

in

and

Daugherty
provide

are

helpful

guidance in addressing the plaintiff’s claims and the defendants’
12(b)(6) motion. In Daugherty, the court overturned the district
court’s grant of defendants’ motion to dismiss, finding that the
collection letters defendants sent could violate the FDCPA. Id. at
513-14. Specifically, it held that “a collection letter seeking
payment

on

a

time

barred

debt

(without

disclosing

its

unenforceability) but offering a ‘settlement’ and inviting partial
19

payment

(without

disclosing

the

possible

pitfalls)

could

constitute a violation of the FDCPA.” Id.
Daugherty,
outstanding
collector,

a

credit

credit
debt.

purchased

card
Id.

the

at

debtor,
509.

plaintiff’s

amassed

Defendant
debt

from

$32,405
LVNV,
the

a

in
debt

original

creditor, and hired another debt collector, defendant Covergent
Outsourcing, to collect the debt on LVNV’s behalf. Id. The statute
of limitations for collecting the plaintiff’s debt expired. Id. In
January 2014, Convergent Outsourcing sent the plaintiff a letter
titled “Settlement Offer” that stated:
This notice is being sent to you by a collection
agency. The records of LVNV Funding LLC show that your
account has a past due balance of $32,405.91.
Our client has advised us that they are willing to
settle your account for 10% of your total balance due to
settle your past balance. The full settlement must be
received in our office by an agreed upon date. If you are
interested in taking advantage of this offer, call our
office within 60 days of this letter. Your settlement
amount would be $3,240.59 to clear this account in full.
Even if you are unable to take advantage of this
offer, please contact our office to see what terms can be
worked out on your account. We are not required to make
this offer to you in the future.
Sincerely,
Convergent Outsourcing, Inc.
Id.

at

509-10.

The

letter

than

offered

three

payment

“opportunities.” The first offered a “Lump Sum Settlement Offer of
10%” where the consumer would pay $3,240.59, and her “account
[would]

now

be

satisfied

in

full.”

Complaint

at

Exhibit

A,

Daugherty v. Convergent Outsourcing, Inc., No. H-14-3306, 2015 WL
20

3823654 (S.D. Tex. June 18, 2015), rev’d 836 F.3d 507 (5th Cir.
2016). The second offered a “Settlement Offer of 25% & Pay Over 3
Months,” where the consumer would make an initial payment of
$2,700.49 towards the “settlement balance of $8,101.48,” and pay
the remaining balance over the three following months. Id. Finally,
the third directed the plaintiff to pay the balance in full, but
to do so over 12 months. Id.
The plaintiff filed suit against defendants, alleging that
they violated 15 U.S.C. §§ 1692e and 1692f when they did not
disclose that the debt is not judicially enforceable and that a
partial payment would revive the entire debt. Daugherty, 836 F.3d
at 510. Defendants moved to dismiss the plaintiff’s suit for
failure to state a claim for which relief can be granted, pursuant
to Fed. R. Civ. P. 12(b)(6). Id. The district court granted the
motion, “hold[ing] that the FDCPA permits a debt collector to seek
voluntary repayment of a time-barred debt so long as the debt
collector does not initiate or threaten legal action in connection
with its debt collection efforts.” Id.
In Daugherty, the court dedicates most of the opinion to
reviewing how other circuit courts, specifically the Third, Sixth,
Seventh, and Eighth Circuit Court of Appeals, have addressed this
issue. The Third and Eighth Circuits have adopted the same approach
as the district court, finding that soliciting voluntary payment
on time-barred debt is permissible even if the letter does not
21

disclose that the debt is time-barred, as long as the letter does
not threaten legal action. Id. at 513. The Fifth Circuit rejects
this

interpretation

of

the

FDCPA,

and

explicitly

adopts

the

interpretation of the Seventh Circuit in McMahon v. LVNV Funding,
Inc.. Id. at 513 (“The Seventh Circuit, however, concluded that
the FDCPA ‘cannot bear the reading that’ the [Third and Eighth
Circuit] courts have given it . . . . We agree with the Seventh
Circuit’s interpretation of the FDCPA in McMahon, and with the
Sixth Circuit’s opinion in Buchanan insofar as it is consistent
with McMahon.”). Because the Fifth Circuit embraces the Seventh
Circuit’s holding in McMahon, the Court turns to that decision for
greater clarity and detail of the Fifth Circuit’s holding in
Daugherty.
In general, “a debt collector violates the FDCPA when it ‘uses
language

in

its

collection

letter

that

would

mislead

an

unsophisticated consumer into believing that the debt is legally
enforceable.’” Id. at 512 (quoting McMahon v. LVNV Funding, Inc.,
744 F.3d 1010, 1020 (7th Cir. 2014)). Stated more broadly, “[w]hen
a [collection] letter creates confusion about a creditor’s right
to sue, that is illegal.” Id. (quoting Buchanan v. Northland Group,
Inc., 776 F.3d 393 (6th Cir. 2015)). If the letters could mislead
an unsophisticated consumer about the character, amount, or legal
status of their debt, the plaintiff’s FDCPA claim survives a motion
to dismiss. Id. at 509, 512 (citing McMahon, 744 F.3d at 1022)
22

(“While it is not automatically unlawful for a debt collector to
seek payment of a time-barred debt, a collection letter violates
the FDCPA when its statements could mislead an unsophisticated
consumer

to

believe

that

her

time-barred

debt

is

legally

enforceable, regardless of whether litigation is threatened.”). 4
The Fifth Circuit finds that failing to disclose that a debt
cannot be enforced because it is outside the statute of limitations
is a violation of the FDCPA. Id. at 512 (citing Buchanan, 776 F.3d
at 399). The court reasons that if there is no disclosure, the
least sophisticated consumer could be misled as to the legal status
of their debt. Id. Moreover, the court in McMahon and the Fifth
Circuit also interpret the FDCPA to prohibit disclosures that do

4

The defendants contend that the Fifth Circuit in Mahmoud v. De
Moss Owners Ass’n, Inc. limited Daugherty’s holding by suggesting
that collection letters that solicit payment on time-barred debt
without threatening legal action is permissible. 865 F.3d 322, 333
(5th Cir. 2017). But defendants use the court’s statements out of
context. To be sure, the Mahmoud court recognized that the
Daugherty opinion differs from other circuit’s interpretation, and
expressed that it agreed with the general principles put forth by
other circuits that the Daugherty court specifically rejected. Id.
at 333 n.3. However, Mahmoud does not overrule Daugherty, nor does
it interpret the FDCPA in a manner that is relevant to the set of
facts before this Court. Mahmoud is factually distinct from
Daugherty, as the Mahmoud court squarely addresses, and the
limitations it places on Daugherty do not apply here. Mahmoud, 865
F.3d 322, 333 (finding that Daugherty is factually distinguishable
because in this case (1) less than 25% of the debt is time barred,
(2) the statute of limitations may not act as a bar to non-judicial
foreclosure on real property (where in Daugherty, it was undisputed
that the entire debt was time-barred) and (3) the consumers were
not misled by the amount they owed or the consequences of nonpayment).
23

not clearly indicate that the collector cannot sue. The court in
McMahon explains, “[i]f a debt collector stated that it could sue
on a timebarred debt but was promising to forebear, that statement
would be a false representation about the legal status of the
debt.” 5 McMahon, 744 F.3d at 1021 (emphasis in original). The Fifth
Circuit in Daugherty and the Seventh Circuit in McMahon thus assess
the deceptive nature of a letter by evaluating the contents of the
disclosure as a whole, as opposed to finding that a letter is per
se not misleading simply because a letter includes a disclosure,
which states litigation is not forthcoming. See Daugherty, 836
F.3d at 512-13; McMahon, 744 F.3d at 1021. This reflects both
courts’ recognition that the Federal Trade Commission has found
that “most consumers do not understand their legal rights with
respect to time-barred debt.” Daugherty, 836 F.3d at 512 (quoting
McMahon, 744 F.3d at 1021 (citing FED. TRADE COMM’N, REPAIRING
SYSTEM: PROTECTING CONSUMERS

IN

DEBT COLLECTION LITIGATION

AND

A

BROKEN

ARBITRATION 26-

27 (2010))).

5

The Seventh Circuit also differs from the Third, Sixth, and
Eighth on this point. Those circuits find that disclosure language
that states the debt collector will not sue, but stylizes it as a
choice, is permissible because the debt collector did not actually
threaten litigation. Daugherty, 836 F.3d at 513; see also McMahon,
744 F.3d at 1020-21. The Fifth Circuit embraces the Seventh
Circuit’s analysis, and rejects this distinction the other
circuits offer, signaling that it agrees with a more consumerfocused interpretation of the FDCPA. Id.
24

The Fifth Circuit also held that offering to “settle” a timebarred debt can be misleading, particularly if the letters invite
partial payment and do not disclose the possibility of reviving
the debt. Id. at 513. An offer to “settle” is problematic because
“an unsophisticated consumer [c]ould believe a letter that offers
to ‘settle’ a debt implies that the debt is legally enforceable.”
McMahon,

744

F.3d

at

1020.

Accordingly,

a

special

offer

is

misleading and violates the FDCPA “[i]f unsophisticated consumers
believe either that the settlement offer is their chance to avoid
court proceedings where they would be defenseless, or if they
believe that the debt is legally enforceable at all.” Id. at 1022.
Further, because an unsophisticated consumer could accept one
of

the

settlement

offers,

and

unintentionally

reset

the

limitations period, the “settlement offers ‘only reinforce[e] the
misleading impression that the debt [is] legally enforceable.’”
Daugherty, 836 F.3d at 512 (quoting McMahon, 744 F.3d at 1021).
The courts are concerned for the well-meaning consumer who believes
that her partial payment only obligates herself to the amount of
that payment, but actually “inadvertently dig[s] herself into an
even deeper hole.” Id. at 512-13 (quoting Buchanan, 776 F.3d at
399) (citing Debt Collection (Regulation F), 78 Fed. Reg. 67,876
(Nov. 12, 2013)). Accordingly, the Fifth Circuit held that inviting
partial payment, without disclosing the possibility of reviving
the time-barred claim, could violate the FDCPA. Id. at 513.
25

A. Possibility of Revival
The parties disagree as to whether it is plausible that
entering into one of Midland’s proposed payment plans would revive
Baye’s

time-barred

debt

under

Louisiana

law.

Because

the

possibility of revival was an important part of the Daugherty
court’s holding, the Court must, for the first time, address
whether renunciation is possible under these circumstances. 6 In
its prior Order and Reasons, the Court found that a debtor can
only renounce prescription with a signed writing. The plaintiff
asserts in her motion for reconsideration that a payment plan is
sufficient to renounce prescription. Upon reconsideration, the
Court agrees.
In most states, making a partial payment on a time-barred
debt will revive the debt, restarting the statute of limitations.
See

Debt

Collection

(Regulation

F),

78

Fed.

Reg.

67,848-01

(proposed Mar. 7, 2013); see also Richard A. Lord, Williston on
Contracts § 8:31 (4th ed. 2017) (“It is unquestionably true that
the promise to pay an existing debt sufficient to remove the bar
of the statute of limitations need not be made expressly, and that
any acknowledgment or admission which by its terms may fairly be
understood as recognizing the existence of a current obligation

6

The court in Daugherty did not address whether revival of
prescribed debt was actually possible under the state laws where
the letters were sent because that issue was not addressed in the
pleadings. Id. at 513 n.5.
26

will suffice.”). Louisiana law has a more stringent requirement;
partial

payments

on

a

time-barred

debt

do

not

suffice

as

a

renunciation of prescription. 7 In re Robertson, No. 11-10354, 2014
WL 6967935, at *2 (Bankr. M.D. La. Dec. 8, 2014)). However, the
law is less clear as to whether entering a payment plan, like that
offered by Midland in its collection letters to Baye, constitutes
renunciation.
“Renunciation of prescription is a technical term designating
the abandonment of rights derived from an accrual of prescription.”
La. Civ. Code art. 3449 (1984), comment c. If a creditor does not
sue to enforce their right to collect on the debt within a certain
period

of

time,

the

debtor

can

bar

the

creditor’s

suit.

“Renunciation allows the debtor to renounce this right after the
creditor's time period has run . . . and abandon rights that have
accrued

due

to

Richardson, Buried

the
by

creditor’s
the

Sands

of

inaction.”
Time:

The

Sally
Problem

Brown
with

Peremption, 70 La. L. Rev. 1179, 1189 (2010).
Renunciation can be express or tacit. La. Civ. Code art. 3450
(1984). However, if it is tacit, it must result “from circumstances
that give rise to a presumption that the advantages of prescription
have been abandoned.” La. Civ. Code art. 3451 (1984). This means

7

Renunciation is the civil law concept for reviving a time-barred
debt. Prescription is the civil law concept for statute of
limitations.
27

that it “must be ‘clear, direct, and absolute and manifested by
words or actions of the party in whose favor prescription has
run.’” Lima v. Schmidt, 595 So.2d 624, 631 (La. 1992)(quoting Queen
v. W. & W. Clarklift, Inc., 537 So.2d 1214, 1216 (La. App. 4th
Cir. 1989). The Supreme Court of Louisiana has held that a debtor
can “acknowledge his debt, and pay part of it, without renouncing
the prescription acquired on it.” Succession of Slaughter, 108 La.
492, 493 (La. 1902). Instead, “renunciation requires a new promise
to pay the debt, as ‘[a] new obligation binding on the debtor is
created when a promise to pay is made after prescription has
accrued.’” Lima, 595 So.2d 624, 631 (quoting Bordelon’s, Inc. v.
Littell, 490 So.2d 779, 781 (La. App. 3 Cir. 1986)). Because the
promise must be “clear, direct, and absolute,” it follows that for
a debtor to make a promise that renounces prescription, she must
be aware that the debt is prescribed. Queen, 537 So.2d at 1216;
see also Mikulecky v. Marriott Corp., 854 F.2d 115, 119 (5th Cir.
1988) (finding that a debtor’s promise to pay a prescribed debt is
sufficient to renounce his prescription defense as long as the
debtor knows that prescription has accrued). Once a new obligation
is created, “[t]he old debt is distinguished, but the natural
obligation

which

remains

supplies

consideration

for

the

new

promise.” 8 Id.

8

When a party enters into a contract, they may have a civil
obligation and a natural obligation. See Marjorie Nieset
28

Less clear under Louisiana law is whether a new promise to
pay part of the debt is sufficient to establish renunciation, or
if the promise must be to pay the debt in full. The Court has only
identified one case that addresses this issue, and it only does in
part. In Harmon v. Harmon, a Louisiana appeals court held that an
oral promise to pay $50 per month on a time-barred debt until the
debt was satisfied renounced prescription. 308 So. 2d 524, 526
(La. App. 3 Cir. 1975). There, the plaintiff loaned the defendant
$2,300 in four installment between 1967 and 1968. Id. at 525. The
debt prescribed in 1971. Id. In 1972, the plaintiff called the
defendant and he agreed to pay the plaintiff $50 per month. Id. at
526. The plaintiff claimed that the defendant also promised to pay
her until the balance was settled, but the defendant denied that
any

promise

was

made.

Id.

The

court

reasoned

that

if

the

Neufeld, Prescription and Peremption-The 1982 Revision of the
Louisiana Civil Code, 58 Tul. L. Rev. 593, 596 (1983). “A civil
obligation is the legal right of enforcement of an obligation,”
which is then extinguished by prescription. Id. On the other hand,
“[a] natural obligation arises from circumstances in which the law
implies a particular moral duty to render a performance.” La. Civ.
Code art. 1760 (1984). A natural obligation cannot be enforced
through judicial action, but it still has legal consequences; “any
amounts paid by the obligor in satisfaction of this obligation may
not be recovered as payment of a thing not due.” Nuefeld, supra;
La. Civ. Code art. 1761 (1984) (“[W]hatever has been freely
performed in compliance with a natural obligation may not be
reclaimed.”). Not all circumstances give rise to natural
obligations, but the Code provides that civil obligations
extinguished by prescription do. La. Civ. Code art. 1760 (1984).

29

plaintiff’s testimony is correct, the defendant made a new promise
to pay the debt, and therefore renounced prescription. But if the
defendant’s testimony is correct, “no new promise to pay the entire
debt was made.” Id. The court accepted the plaintiff’s testimony,
and held that the defendant made “a promise to pay the whole debt.”
Id.
The court’s analysis of why the phone call would not renounce
the prescription if the defendant’s testimony was accepted is most
telling. Harmon could be interpreted to mean that the defendant’s
version of the phone call did not establish renunciation because
he did not promise to pay the whole debt. But it could also be
read to mean that the defendant’s version did not renounce the
prescription because he did not make a new promise at all. Although
neither the parties’, nor the Court’s research at this time,
resolves the dispute concerning whether a promise to partially pay
prescribed

debt

would

renounce

the

prescription

defense,

it

appears plausible that a new promise to pay a significant portion
of the debt could renounce prescription.
The

plaintiff’s

allegation—that

“[i]f

[the]

[p]laintiff

enters into a payment plan for any of the [d]ebts, then such
agreement would constitute a new, enforceable obligation under
Louisiana law”—thus meet the plausibility test. By sending in money
pursuant

to

one

of

the

collection

letters’

“options,”

it

is

plausible given the state of the law that the plaintiff could be
30

making a new, express promise to pay back her time-barred debt.
Beyond a promise, the plaintiff could have also entered into an
enforceable contract to pay the entire amount stated in the option
by making an initial payment. 9 See La. Civ. Code art. 1906 (1984)
(“A contract is an agreement by two or more parties whereby
obligations are created, modified, or extinguished.”); La. Civ.
Code art. 1756 (1984) (“An obligation is a legal relationship
whereby

a

person,

called

the

obligor,

is

bound

to

render

a

performance in favor of another, called the obligee. Performance
may consist of giving, doing, or not doing.”). For example, imagine
that the plaintiff selected Option 2, where she would pay 80% of
the balance through six payments over six months. Under Louisiana
contract law, the payment plans constitute an offer (and are
characterized as such in the letters). 10 By selecting that option,
and

mailing

defendants

the

first

of

the

six

payments,

the

plaintiff’s conduct could be construed as accepting the offer

9

In the plaintiff’s reply papers, she suggests that if she selected
option 2, she would be liable for 80% of the debt, regardless of
whether she renounced prescription, because she would have formed
a contract (as just discussed). That argument would prompt the
Court to consider whether it is possible that the defendants’
communications could be misleading under the FDCPA even if
Louisiana law does not allow for renunciation in these
circumstances. Because this issue was not timely raised, and it is
not necessary to the Court’s findings here, the Court will reserve
analysis of that argument until further stages of litigation, if
necessary.
10

Exhibit C of plaintiff’s complaint states, “These offers may
start as low as . . . .” (emphasis added).
31

through performance. La. Civ. Code art. 1939 (1984) (“When an
offeror invites an offeree to accept by performance and, according
to usage or the nature or the terms of the contract, it is
contemplated that the performance will be completed if commenced,
a

contract

is

formed

when

the

offeree

begins

the

requested

performance.”) By confecting a contract, the plaintiff promises to
pay back 80% of the balance.
The

line

between

making

partial

payments,

which

cannot

renounce prescription, and making a new promise to pay back timebarred debt, which can, is fuzzy when the only thing that makes
entering the defendants’ payment plan a promise is that the debtor
is reacting to a request by the debt collectors to make partial
payments. To better assess if conduct amounts to a new promise on
a debt, a court would consider whether the debtor was aware that
the debt was prescribed and chose to renounce it. Under these
circumstances,

a

court

could

find

that

a

debtor

intended

to

renounce the debt; the letters all disclose that the debt is
prescribed. Although they might have the effect of misleading some
unsophisticated consumers, a court could still find that the debtor
knew that the debt was prescribed, and by making a promise to pay
back a large portion of the debt, is choosing to renounce their
prescription defense.
Renunciation is difficult to establish under Louisiana law.
And Louisiana law in no way suggests that a plaintiff always
32

revives her time-barred claims by opting into a payment plan, as
it does in other states. But as the law is not clear and it is
plausible that a Louisiana court could find that entering a payment
plan renounces a debtor’s defense of prescription, this Court
reconsiders its prior holding and finds that the plaintiff states
a claim upon which relief can be granted as to this issue.

B. Adequate Disclosure of Prescription Period and
“Settlement” Language
The Court turns to consider whether the plaintiff’s claims as
to the adequacy of the disclosure and the deceptive nature of the
offered

“discount

programs”

state

a

claim

to

relief

that

is

plausible on its face. In its prior Order and Reasons, the Court
held that the disclosure was sufficient to notify the plaintiff as
to the legal status of the debt, and that debt collectors were
permitted to solicit voluntary payment on time-barred debt. But in
considering Fifth Circuit precedent and reviewing the language of
the letters, the Court finds that reconsideration of its judgment
is appropriate under Rule 59.
Unlike the defendants in Daugherty and McMahon, Midland and
MCM included a disclosure stating that they would not sue on the
time-barred debt. In fact, the FTC endorsed the same disclosure
language in a 2012 Consent Decree. See Asset Acceptance Consent
Decree,

https://www.ftc.gov/sites/default/files/documents/cases/
33

2012/01/120131assetconsent.pdf, at *13 (Jan. 31, 2012). However,
the FTC specified that the disclosure should be displayed “clearly
and prominently,” meaning:
that information presented in writing shall be in a type size
and location sufficient for an ordinary consumer to read and
comprehend it, and shall be disclosed in a manner that would
be easily recognizable and understandable in language and
syntax to an ordinary consumer. If the information is
contained in a multi-page document, the disclosure shall
appear on the first page.
Id. at *3-4. The disclosure in the letters sent to Baye, in small
writing at the bottom of the page, was not clear or conspicuous. 11
Even

though

the

FTC

has

approved

the

language

of

the

disclosure, it is plausible that an unsophisticated person would
not

understand

it

to

mean

that

the

debt

is

not

judicially

enforceable. The law has developed since the FTC entered into this
consent decree over five years ago, and courts have provided more
clarity as to what constitutes an informative and clear disclosure.
Defendants contend that “[s]ince Midland’s letters here did not
threaten (or even imply) legal action . . . Daugherty does not
apply.” The Court disagrees. The Daugherty court makes clear that
a communication is not immunized from attack simply because it
does not threaten litigation on time-barred claims. Daugherty, 836
F.3d at 509 (“While it is not automatically unlawful for a debt

11

Also, the disclosure does not appear on the first page of the
March communication. However, it does appear on each letter
enclosed within that communication.
34

collector

to

seek

payment

of

a

time-barred

debt, a

collection letter violates the FDCPA when its statements could
mislead an unsophisticated consumer to believe that her timebarred

debt

is

legally

enforceable,

regardless

of

whether

litigation is threatened.”). Daugherty is controlling law on these
issues, and provides ultimate guidance as to the adequacy of the
disclosure,

despite

what

the

FTC

has

allowed

under

certain

circumstances in years past.
The

defendants

distinguish

between

further

contend

disclosures

that

that

the

indicate

law

does

not

that

the

debt

collectors are choosing not to sue, rather than are not legally
allowed

to.

Again,

the

defendants

misapprehend

the

case

literature. The McMahon court, and by adoption the Daugherty court,
disagree with defendants’ interpretation. McMahon, 744 F.3d at
1021 (“If a debt collector stated that it could sue on a timebarred
debt but was promising to forebear, that statement would be a false
representation about the legal status of the debt.”) (emphasis in
original). The disclosures’ language—“Due to the age of this debt,
we will not sue you for it”—could reasonably be interpreted to
mean that MCM and Midland are electing not to sue. Further, common
sense might lead a consumer to believe that a collector would only
try to collect on enforceable debt because an indebted consumer
previously avoiding payment would likely not voluntarily choose to
pay a time-barred debt. The disclosure is not so clear, especially
35

in context of the rest of the letter, that it would unequivocally
notice the least sophisticated consumer that judicial enforcement
of the debt is not possible.

Although the defendants’ letter is

not as deceptive as the defendants in Daugherty or McMahon, the
Court cannot find as a matter of law that the disclosure adequately
informs the consumer of the legal status of her debt, rather than
confusing and misleading them.
The

letters’

invitation

to

make

partial

payments

could

plausibly be construed as misleading, notwithstanding the absence
of “settlement” language. Defendants correctly point out that in
Daugherty and the cases it relies on, the courts were troubled by
the letters’ “settlement offer,” believing that it could mislead
the consumer to believing the debt was legally enforceable. The
defendants’ letters do not offer “settlement.” But the Daugherty
court was not exclusively concerned with the settlement offers,
holding that “offering a ‘settlement’ and inviting partial payment
without

disclosing

the

possible

pitfalls

could

constitute

a

violation of the FDCPA.” Daugherty, 836 F.3d at 513 (emphasis
added). Further, the concerns with the use of “settlement offer”
are not exclusive to that word, but with the implication that by
offering

relief

from

debt

for

a

negotiated

price,

an

unsophisticated consumer could believe that the debt is still
enforceable. Language such as “[a]ct now to maximize your savings”
and “put this debt behind you” implies that there is an obligation
36

to pay. By offering a significant discount if the consumer makes
a payment within a month, the letters imply that if the consumer
does not make that payment, she will owe the entire amount, even
though the debt is unenforceable. It is plausible that the special
offer

language

could

prompt

an

unsophisticated

consumer

to

“believe either that the settlement offer is their chance to avoid
court proceedings where they would be defenseless, or . . . that
the debt is legally enforceable at all,” in violation of the FDCPA.
McMahon, 744 F.3d at 1020.
The discount program offer is especially problematic because
the letters fail to disclose the possibility that entering into a
payment plan could revive the prescribed claim under Louisiana
law. In direct contrast with defendants’ assertion that “[n]o case
has determined that a debt collector must warn of a potential
revival of a time-barred claim,” the Daugherty court explicitly
held that soliciting partial payment without warning of a potential
revival of a prescribed debt could violate the FDCPA. Daugherty,
836 F.3d at 513. The Fifth Circuit is concerned, as is the Consumer
Financial

Protection

Bureau,

that

debtors

would

inadvertently

revive their time-barred debt because of the misleading nature of
a letter silent to that risk. 12 The Court is not persuaded that

12

The Consumer Financial Protection Bureau is currently
considering proposals in its FDCPA rulemaking that would prevent
debt collectors from collecting on revived debts, in addition to
requiring time-barred debt disclosure. Small Business Review
37

entering into a payment plan does not revive a time-barred debt in
Louisiana as a matter of law; thus the Court finds that the
plaintiff has stated a plausible claim insofar as she alleges that
defendants’ letters soliciting partial payment without disclosing
the possibility of revival violate the FDCPA. Therefore, in order
to correct an error of law, the Court finds that the plaintiff’s
motion to reconsider its Order and Reasons granting the defendants’
motion to dismiss her claims pursuant to 15 U.S.C. §§ 1692e and
1692f must be granted.
Accordingly, the plaintiff’s motion to reconsider is GRANTED
as to Counts III-VI, and is DENIED as to Counts I and II. Because
the Court finds that the plaintiff has stated a plausible Section
1962e and 1962f claim, the Court hereby rescinds its August 9,
2017 Order and Reasons. Further, the Court DENIES the defendants’
motion to dismiss the plaintiff’s complaint with regards to Counts
III-VI, and grants the motion to dismiss with regards to Counts I
and II.
New Orleans, Louisiana, October 31, 2017

______________________________
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE

Panel for Debt Collector and Debt Buying Rulemaking: Outline of
Proposals Under Consideration and Alternatives Considered, CFBP
20 (July 28,
2016), http://files.consumerfinance.gov/f/documents/20160727_cfp
b_ Outline_of_proposals.pdf.
38