Neff v. Schlee & Stillman, LLC et al
Filing
12
ORDER Granting in part and Denying in part Defendants' 5 Motion for Summary Judgment. Signed by District Judge Judith E. Levy. (KWin)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
Steven Neff,
Plaintiff,
Case No. 16-cv-10555
v.
Judith E. Levy
United States District Judge
Schlee & Stillman, LLC and
LVNV Funding, LLC,
Mag. Judge Mona K. Majzoub
Defendants.
________________________________/
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION [5]
This case is before the Court on defendants’ motion to dismiss.
(Dkt. 5.)1 On July 21, 2016, oral argument was heard and the Court
took the matter under advisement. For the reasons set forth below,
defendants’ motion is GRANTED in part and DENIED in part.
Defendants styled their motion as one for “Summary Judgment Pursuant to FRCP
12(b)(6),” not signaling the difference between a motion to dismiss brought under
Rule 12(b)(6), in which the complaint is asserted to lack a claim upon which relief
can be granted, and a motion for summary judgment brought pursuant to Rule 56,
in which it is asserted that the undisputed facts do not support a claim for relief.
Defendants clarified at oral argument that this is a motion to dismiss under Rule
12(b)(6).
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I.
Background
Plaintiff Steven Neff brings this action against defendants Schlee
& Stillman, LLC and LVNV Funding, LLC, asserting violations of the
Fair Debt Collections Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq.
(Dkt. 1.)
Plaintiff alleges that he has a debt obligation related to a
Credit One Bank credit card, and that LVNV acquired this debt after it
was in default.
(Id. at 4.)
He further alleges that LVNV retained
Schlee & Stillman to collect the debt. (Id.) On September 25, 2015,
defendant Schlee and Stillman sent a letter (the “Letter”) on its
letterhead to plaintiff that reads in its entirety:
Re: LVNV Funding LLC Assignee Of CREDIT ONE BANK,
N.A.
STEVEN NEFF
Account No. XXXXXXXXXXXX-4289
Amount: $965.77
Dear STEVEN NEFF:
This matter has been referred to this office.
We will assume this debt to be valid unless you dispute the
validity of all or any part of it within thirty (30) days after
receipt of this letter. If you notify us in writing that you
dispute all or a portion of the debt, we will obtain and send
to you verification of the debt or a copy of a judgment against
you. Upon written request within thirty (30) days after
receipt of this notice we will provide you with the name and
address of the original creditor, if different from the creditor
named above. This letter is an attempt by a debt collector to
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collect a debt, and any information obtained will be used for
that purpose.
In the event that you do not dispute the validity of the
amount owing, please submit your payment or contact this
office to arrange for a reasonable repayment plan.
Very truly yours,
SCHLEE & STILLMAN, LLC
THIS IS AN ATTEMPT TO COLLECT A DEBT AND ANY
INFORMATION OBTAINED WILL BE USED FOR THAT
PURPOSE.
THIS COMMUNICATION IS FROM A DEBT COLLECTOR.
(Dkt. 1-1 (emphasis in original).)
Plaintiff alleges that the Letter violates the FDCPA by (1) failing
to comply with the requirement imposed by 15 U.S.C. § 1692g(a)(2) to
meaningfully convey the name of a creditor in an initial communication
from a debt collector, (2) failing to comply with requirements imposed
by 15 U.S.C. § 1692g(a)(5) to meaningfully convey a specific notice of a
debtor’s right, (3) by making statements in this initial communication
that would cause confusion to the debtor regarding his rights,
prohibited by 15 U.S.C. § 1692g(b), and (4) using false, deceptive, or
misleading representations prohibited by 15 U.S.C. § 1692e. (Id. at 6-
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9.) Plaintiff seeks statutory damages, actual damages, and reasonable
attorney’s fees and costs as allowed by the FDCPA. (Id.)
II.
Standard of Review
When deciding a motion to dismiss under Fed. R. Civ. P. 12(b)(6),
the Court must “construe the complaint in the light most favorable to
the plaintiff and accept all allegations as true.” Keys v. Humana, Inc.,
684 F.3d 605, 608 (6th Cir. 2012). “To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as true, to
state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009). A plausible claim need not contain “detailed
factual allegations,” but it must contain more than “labels and
conclusions” or “a formulaic recitation of the elements of a cause of
action.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
III.
Defendants’ Motion
Defendants assert that the language contained in the Letter is not
ambiguous, confusing or otherwise noncompliant with the requirements
of the FDCPA. They argue that plaintiff cannot show that the Letter
contained “allegedly-false statements that would have deceived or
misled the ‘least sophisticated debtor,’” so as to prevail on his section
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1692e and section 1692g(a) claims. (Dkt. 5 at 8 (citing Currier v. First
Resolution Inv. Corp., 762 F.3d 529, 535 (6th Cir. 2014).) Defendants
further argue that even if there were false or misleading statements,
plaintiff cannot show that these alleged misstatements were material.
(Id. at 11 (citing Miller v. Javitch, Block & Rathbone, 561 F.3d 588, 59697 (6th Cir. 2009).) Finally, they assert that this particular case should
be decided as a question of law, by the Court. (Id. at 11-12.)
Plaintiff responds that debt collectors must “unambiguously and
effectively convey the notices required by section 1692g(a),” and that the
Letter failed in this regard by not plainly identifying the name of the
creditor or effectively conveying the debtor’s right to request the name
and address of the original creditor. (Dkt. 9 at 1-2.) Plaintiff further
argues that the violation of 15 U.S.C. § 1692g(b), which prohibits initial
collections communications for “overshadowing” a debtor’s rights, flows
from the Letter’s failure to identify the creditor and effectively convey
the right to request information about the original creditor. (Id. at 1011.) Similarly, the violation of section 1692e arises because the alleged
failure to plainly identify the creditor “is confusing and misleading to
the least sophisticated consumer.” (Id. at 11- 16.) Plaintiff contends
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that the term “LVNV Funding, LLC, Assignee Of Credit One Bank,
N.A.” used in the subject line of the Letter does not make the
relationship between LVNV Funding and Credit One Bank clear to the
least sophisticated consumer. (Id. at 12-13.) Plaintiff next argues that
even if the consumer knew what “assignee of” meant, such a
relationship might not mean that the interest transferred through the
assignment was the ownership interest in the debt. (Id. at 13.) With
respect to section 1692e, plaintiff argues that this language is deceptive
because it is susceptible of being interpreted inaccurately, and it is
material because it could mislead a consumer regarding the exercise of
his rights. (Id. at 15.)
IV.
Analysis
The FDCPA was enacted “to eliminate abusive debt collection
practices by debt collectors, to insure that those debt collectors who
refrain
from
using
abusive
debt
collection
practices
are
not
competitively disadvantaged, and to promote consistent State action to
protect consumers against debt collection abuses.” Miller, 561 F.3d at
591 (quoting 15 U.S.C. § 1692(e)). Congress had identified “abundant
evidence of the use of abusive, deceptive, and unfair debt collection
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practices” and crafted the FDCPA as an “extraordinarily broad”
response.
Barany-Snyder v. Weiner, 539 F.3d 327, 332-33 (6th Cir.
2008) (quoting 15 U.S.C. § 1692(a)).
The objective standard of a “least sophisticated consumer” is used
to determine whether particular conduct violates the FDCPA. Id. at
333 (citing Harvey v. Great Seneca Fin. Corp., 452 F.3d, 329 (6th Cir.
2006)). The FDCPA “protects ‘all consumers,’ the ‘shrewd’ as well as
the ‘gullible,’ . . . from practices that would mislead the ‘reasonable
unsophisticated consumer,’ one with some level of understanding and
one willing to read the document with some care.”
Buchanan v.
Northland Grp., Inc. 776 F.3d 393, 396 (6th Cir. 2015) (quoting Fed.
Home Mortg. Corp. v. Lamar, 503 F.3d 504, 509 (6th Cir. 2007); Wallace
v. Wash. Mut. Bank, F.A., 683 F.3d 323, 327 (6th Cir. 2012)). The “least
sophisticated consumer” is a lower standard “than simply examining
whether particular language would deceive or mislead a reasonable
debtor.” Smith v. Computer Credit, Inc., 167 F.3d 1052, 1054 (6th Cir.
1999) (quoting Swanson v. Southern Oregon Credit Service, Inc., 869
F.2d 1222, 1227 (9th Cir. 1988)). That said, courts in the Sixth Circuit
“will not ‘countenance lawsuits based on frivolous misinterpretations or
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nonsensical assertions of being led astray’” by otherwise reasonably
comprehensible documents. Lamar, 503 F.3d at 514 (quoting Jacobson
v. Healthcare Fin. Servs., Inc., 434 F. Supp. 2d 133, 138 (E.D.N.Y.
2006)).
Generally, in the Sixth Circuit the question of whether a collection
communication letter is misleading is left to the jury. Buchanan, 776
F.3d at 397 (citing Kistner v. Law Offices of Michael P. Margelefsky,
LLC, 518 F.3d 433, 441 (6th Cir. 2008)).
See Russell v. Absolute
Collection Servs., Inc., 763 F.3d 385, 395 (4th Cir. 2014) (describing
circuit split on whether this determination is a question of fact or law).
At the pleading stage, courts “do not lightly reject fact-based claims,”
but may rule on this question “only after drawing all reasonable
inferences from the allegations in the complaint in the plaintiff's favor
and only after concluding that, even then, the complaint still fails to
allege a plausible theory of relief.” Id. (citing Fed. R. Civ. P. 12(b)(6);
Iqbal, 556 U.S. at 677–79). “A claim may be implausible on its face
because even an unsophisticated consumer would not be confused,
making
discovery
pointless
and
jury
resolution
unnecessary.”
Buchanan v. Northland Grp., Inc., 776 F.3d 393, 397 (6th Cir. 2015)
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(citing Evoryv. RJM Acquisitions Funding, L.L.C., 505 F.3d 769, 776-77
(7th Cir. 2007)).
A. The Claims under 15 U.S.C. § 1692g(a)
Section 1692g addresses validation of debts, and requires
collectors to include in their initial communication with a debtor, or
within five days of their initial contact, the following information
relevant to this case:
(2) the name of the creditor to whom the debt is owed
***
and
(5) a statement that, upon the consumer's written request
within the thirty-day period, the debt collector will provide
the consumer with the name and address of the original
creditor, if different from the current creditor.
15 U.S.C. § 1692g(a). To satisfy the notice requirements of § 1692g(a),
“[a] debt collector must “effectively convey” the notice to the debtor.”
Smith, 167 F.3d at 1054 (quoting Swanson, 869 F.2d at 1225).
“A
collector need not parrot the Act to comply with it. A statement works if
it speaks with enough clarity to convey the required information to a
reasonable but unsophisticated consumer.” Wallace v. Diversified
9
Consultants, Inc., 745 F.3d 1235 (Mem) (6th Cir. 2014). Courts are to
apply the least-sophisticated-consumer standard to this inquiry in a
way that “preserv[es] a quotient of reasonableness and presum[es] a
basic level of understanding and willingness to read with care.” Miller,
561 F.3d at 592 (quoting Kistner, 518 F.3d at 438-39).
Defendants’ letter to plaintiff did not “effectively convey” the name
of the creditor to whom the debt is owed. The use of “assignee of” in the
phrase, “LVNV Funding LLC Assignee Of CREDIT ONE BANK, N.A.,”
while familiar to those of us with legal training, is not common
parlance.2
It is not reasonable to expect a “least sophisticated
consumer” to understand what meaning this phrase conveys regarding
the entities LVNV Funding and Credit One Bank.
Common sense
dictates that without more, this phrase, by itself does not meet the
standard defined under Sixth Circuit caselaw to “effectively convey” the
name of the creditor to whom the debt is owed. 15 U.S.C. § 1692g(a)(2).
For this reason, and this reason alone, defendant has failed to
Neither the undersigned nor my law clerks would have known what this term
meant prior to attending law school. The two law student interns working in
chambers this summer also confirmed that the word “assignee” had been foreign to
them prior to law school. And the third intern, an advanced undergraduate student
interested in attending law school, attended oral argument in this matter and later
confessed to having no idea what the term meant.
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demonstrate that the alleged violations of section 1692g(a)(2) should be
dismissed under Rule 12(b)(6).
Plaintiff further argues that the precise meaning of “assignment”
cannot be parsed from the letter sent, and that the language does not
clarify what exactly has been assigned between the two parties—the
right to collect the debt or the property interest in the debt. (Dkt. 9 at
13-14.) But this line of argument fails because it is precisely the type of
“frivolous misinterpretation[]” and “nonsensical assertion[]” that is not
to be tolerated. Lamar, 503 F.3d at 514. All that section 1692g(a)(2)
requires of the collector is to effectively convey the name of the creditor
to whom the debt is owed.
And the term “assignee of” does not
accomplish the task under the least-sophisticated-consumer standard.
Plaintiff’s second count cannot survive defendant’s motion to
dismiss. Plaintiff alleges that the letter failed to include the statement
of the debtor’s right to request in writing the name and address of the
original creditor, if different from the current creditor. (Dkt. 1 at 6-7.)
But to parrot the applicable caselaw, there is no need to “parrot the Act
to comply with it.” Wallace, 745 F.3d at 1235. The letter only needs
“enough clarity to convey the required information to a reasonable but
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unsophisticated consumer.” Id. Here, the letter is plainly identified as
an attempt to collect a debt and plainly identifies the amount of the
debt. The statutory requirement is to inform the consumer of his right,
and the language does so: “[u]pon written request within thirty (30)
days after receipt of this notice, we will provide you with the name and
address of the original creditor, if different from the creditor named
above.” A reasonable but unsophisticated consumer would understand
this statement to mean that he can write in to learn the name and
address of the original debtor. Just because the relationship defined by
“assignee of” is not clear to such a consumer, it does not follow that he
would be left equally adrift regarding his right to request clarification.
Nor has plaintiff alleged that this language confused him regarding his
right to obtain this information. Considering the pleadings in the light
most favorable to plaintiff, it is not plausible that this letter violated 15
U.S.C. § 1692g(a)(5).
Therefore, defendants’ motion is granted with
regard to section 1692g(a)(5).
B. The Claim under 15 U.S.C. § 1692g(b)
Section 1692g(b) requires that debt-collection activities and
communications “may not overshadow or be inconsistent with the
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disclosure of the consumer’s right to . . . request the name and address
of the original creditor.” 15 U.S.C. § 1692g(b).
Plaintiff alleges that
the violation of section 1692g(a)(5), discussed in section IV.A supra, also
violates section 1692g(b) by causing “confusion as to the consumer’s
right under 15 U.S.C. § 1692g(a)(5)” to request the name and address of
the original creditor. (Dkt. 1 at 7.) However, the complaint does not
plausibly plead a violation of section 1692g(5) in the first instance. The
letter adequately conveys the right to request information, and nothing
else in the letter can be plausibly read to overshadow or contradict this
right. Accordingly, defendants’ motion is granted on this count.
C. The Claim under 15 U.S.C. § 1692e
Finally, plaintiff alleges in his complaint that the letter violated
the provision of section 1692e prohibiting debt collectors from using
“any false, deceptive, or misleading representation or means in
connection with the collection of any debt.” 15 U.S.C. § 1692e.
Courts are to allow “some leeway for the use of legal terms of art
and other language that might be difficult for the least-sophisticated
consumer to understand,” in the evaluation of whether language
violates section 1692e.
Miller, 561 F.3d at 594-95. Rather, the
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document is to be read as a whole to determine if it misleads, deceives,
or suggests falsehoods. Id. In Miller, the term “charge card” used in
lieu of the more accurate term, “credit card” was not found to be
misleading, because reading the document in its entirety led the Court
to conclude that it would not mislead or deceive the least-sophisticated
consumer regarding the debt being collected. Id. at 595. The Court
reasoned that “a lawyer ‘closely parsing [the complaint] like a municipal
bond offering’ may detect some ambiguity or confusion . . . [b]ut the
least-sophisticated-consumer standard is not so exacting.” Id. (quoting
Jacobson, 434 F. Supp. 2d at 138).
Here, as explained above, the term “assignee of” is legal jargon
that is not sufficient under section 1692g(a)(2) to plainly convey the
identity of the current creditor to a “least sophisticated consumer,” but
the letter, read in its entirety, creates no meaningful potential for a
violation of section 1692e.
There are no misrepresentations,
obfuscations, or other deceptive elements, and the plaintiff has not
alleged that the letter left him unable to comprehend any of his rights
under the Act. See, e.g., Wallace, 745 F.3d at 1235; Miller, 561 F.3d at
596; Barany-Snyder, 539 F.3d at 332-33; Lamar, 503 F.3d at 514.
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V.
Conclusion
For the reasons provided above, defendant’s motion is GRANTED
in part and DENIED in part.
Plaintiff’s claims under sections
1692g(a)(5), 1692g(a)(b), and 1692e of the FDCPA are DISMISSED with
prejudice. Plaintiff's claim under section 1992g(a)(2) may proceed.
IT IS SO ORDERED.
Dated: August 12, 2016
Ann Arbor, Michigan
s/Judith E. Levy
JUDITH E. LEVY
United States District Judge
CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served
upon counsel of record and any unrepresented parties via the Court’s
ECF System to their respective email or First Class U.S. mail addresses
disclosed on the Notice of Electronic Filing on August 12, 2016.
s/Kelly Winslow for
FELICIA M. MOSES
Case Manager
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