May v. NCEP, LLC et al

Filing 35

MEMORANDUM AND ORDER - IT IS HEREBY ORDERED that defendant's motion for summary judgment [#24] is granted, and plaintiff's complaint is dismissed with prejudice. IT IS FURTHER ORDERED that plaintiff's motion for partial summary judgment [#13] is denied. A separate Judgment in accord with this Memorandum and Order is issued this same date. Signed by District Judge Catherine D. Perry on May 16, 2014. (MCB)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
DONNA J. MAY,
Plaintiff,
vs.
NCEP, LLC,
Defendant.

)
)
)
)
)
)
)
)
)

Case No. 4:13CV1583 CDP

MEMORANDUM AND ORDER
Donna May opened a charge account at Helzberg Diamonds, accrued a
balance of over $5,000, and didn’t pay it. After her account went into default, it
was purchased by defendant NCEP. NCEP in turn hired a third-party debt
collector, Stoneleigh Recovery Associates, for servicing and collection of the
account.1 Stoneleigh sent two letters about the account to May at her last known
address.2 NCEP eventually credit reported May’s account, and May contacted
NCEP on June 18, 2013, after seeing the negative entry on her credit report. She
recorded that call. May contends that NCEP violated the Fair Debt Collection
Practices Act, 15 U.S.C. § 1692 et seq., during the call by failing to disclose that it
was a debt collector and overshadowing her dispute rights. She also alleges that
1

Stoneleigh is not a defendant in this case.

2

Apparently, May did not receive these letters because she had moved.

NCEP violated the FDCPA by failing to send her a written notice containing the
statutory-required disclosures and credit reporting her. May and NCEP each move
for summary judgment on the issue of liability. After careful review of the entire
record, I find that no material facts are genuinely disputed and that NCEP is
entitled to judgment as a matter of law. I will therefore grant NCEP’s motion for
summary judgment for the reasons that follow.
Standards Governing Summary Judgment
“Summary judgment is proper ‘if the pleadings, the discovery and
disclosure materials on file, and any affidavits show that there is no genuine issue
as to any material fact and that the movant is entitled to judgment as a matter of
law.’” Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011)
(quoting Fed.R.Civ.P. 56(c)(2)). The movant “bears the initial responsibility of
informing the district court of the basis for its motion,” and must identify “those
portions of [the record] . . . which it believes demonstrate the absence of a genuine
issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “If the
movant does so, the nonmovant must respond by submitting evidentiary materials
that set out specific facts showing that there is a genuine issue for trial.”
Torgerson, 643 F.3d at 1042 (internal quotation marks and citations omitted). “On
a motion for summary judgment, facts must be viewed in the light most favorable
-2-

to the nonmoving party only if there is a genuine dispute as to those facts.” Id.
(internal quotation marks and citations omitted). “Credibility determinations, the
weighing of the evidence, and the drawing of legitimate inferences from the facts
are jury functions, not those of a judge.” Reeves v. Sanderson Plumbing Products,
Inc., 530 U.S. 133, 150 (2000) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 255 (1986)). The nonmovant “must do more than simply show that there is
some metaphysical doubt as to the material facts,” and must come forward with
“specific facts showing that there is a genuine issue for trial.” Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87 (1986). “Where the
record taken as a whole could not lead a rational trier of fact to find for the
nonmoving party, there is no genuine issue for trial.” Torgerson, 643 F.3d at 1042
(internal quotation marks and citations omitted).
Undisputed Background Facts
NCEP purchases accounts receivable and bought May’s Helzberg account
on January 9, 2013, after it was in default. While NCEP does have a customer
service department, that department provides account information only and is not
authorized to accept payment. Instead, NCEP hires third parties, including
Stoneleigh, to service and collect its purchased accounts.
After being hired by NCEP to service and collect May’s account, Stoneleigh
-3-

sent May a letter. [Doc. #23-1 at 14]. The letter is dated February 14, 2013, and
was sent to the address provided by May when she opened the account.3 The letter
lists the original creditor and account number and identifies NCEP as the current
creditor. The letter states in relevant part:
This account has been purchased by NCEP, LLC and has referred
your delinquent account of $9,054.48 to this agency for collection.
At this time, no attorney has personally reviewed the particular
circumstances of your account. However, if you fail to contact this
office and make arrangements to pay your account, this matter will be
returned to our client who then may forward it to a local attorney for
the purpose of filing suit . . . .This notice has been sent by a collection
agency. This is an attempt to collect a debt. Any information
obtained will be used for that purpose. Unless you notify this office
within thirty (30) days after receiving this notice that you dispute the
validity of this debt or any portion thereof, this office will assume this
debt is valid. If you notify this office in writing within thirty (30)
days from receiving this notice that you dispute the validity of this
debt or any portion thereof, this office will obtain verification of the
debt or obtain a copy of a judgment and mail you a copy of such
judgment or verification. If you request in writing within 30 days
after receiving this notice this office will provide you with the name
and address of the original creditor, if different from the current
creditor. The law does not require our client to wait until the end of
the thirty-day period before suing you to collect this debt. If,
however, you request proof of the debt within the thirty-day period
that begins with your receipt of this letter, the law requires us to
suspend our efforts through litigation or otherwise to collect the debt
until we mail the requested information to you . . . .

3

The address was 5338 Darkmoor Ln, Imperial, Missouri 63052. Although May
apparently moved at some point, there is no dispute that this was her address at the time she
opened the account. In fact, during the call at issue May gave the customer service representative
her current address but said that the account would be listed under this old address.
-4-

May did not respond to this letter. Stoneleigh sent her a second letter to the same
address on April 5, 2013. Like the first letter, this letter also identifies the
previous creditor, the current debt holder, the original account number, and the
balance due. It further states, “We have previously notified you of our client’s
intentions regarding your account. As of this date, you have failed to contact this
office to make arrangements on your account.” It concludes by notifying May that
“[t]his notice has been sent by a collection agency. This is an attempt to collect a
debt. Any information obtained will be used for that purpose.”
May did not respond to the second letter either, so NCEP reported May’s
account as “open, collection” to the credit agencies in June of 2013. After May
saw the negative entry on her credit report, she called NCEP on June 18, 2013.
May recorded the call, and a recording of the call is in the record.4 During that
call, May first reached a customer service representative at NCEP and told him
that she was calling about “a debt that’s on my credit report.” The customer
service representative located her account and then asked her if she “would like to
make payment arrangements?” When May said that she had questions about the

4

May actually called NCEP twice, but the first time she was apparently misdirected
(through a series of automated prompts) to a different third-party collection agency which had no
record of her account. Therefore, she called back a second time. It is this second call which is
the subject of the instant dispute.
-5-

account, including the balance due, he told her that she would have to speak to a
Stoneleigh representative. He then transferred May to a Stoneleigh representative,
who immediately informed May that she was speaking to a debt collector, that the
debt collector was attempting to collect a debt, and that any information would be
used for that purpose. The Stoneleigh representative went on to answer May’s
questions about the account, including informing her that it had previously sent
her two letters to 5338 Darkmoor Lane, which she acknowledged was her old
address. During this call, the Stoneleigh representative explained to May that
NCEP purchased her Helzberg account when it was in default and hired
Stoneleigh to service and collect the account. When May asked him if Stoneleigh
would garnish her wages if she found a job, he told her that they did not garnish
wages. When May explained she could not set up a payment plan for repayment
of the debt, the Stoneleigh agent said he understood and would make a notation in
her file. May ended the call by telling him that she did not have a valid phone
number and would contact him when she could make payment arrangements. May
never called back about the debt, and she was never contacted by phone by NCEP
or Stoneleigh.
Discussion
In this action, May alleges that NCEP violated § 1692e(11) of the FDCPA
-6-

during the June 18, 2013 telephone call by not identifying itself as a debt
collector5 and § 1692g(b) by overshadowing her dispute rights. She also alleges
that NCEP violated § 1692g(a) of the FDCPA by not sending her the statutorilyrequired disclosures. The FDCPA is a consumer protection statute that prohibits
certain abusive, deceptive, and unfair debt collection practices. See 15 U.S.C. §
1692. Section 1692g(a) of the FDCPA requires collectors give debtors written
notice of their rights as follows:
Within five days after the initial communication with a consumer in
connection with the collection of any debt, a debt collector shall,
unless the following information is contained in the initial
communication or the consumer has paid the debt, send the
consumer a written notice containing–
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within thirty days after
receipt of the notice, disputes the validity of the debt, or any portion
5

NCEP argues in passing that it is not subject to the FDCPA because it is a debt
purchaser, not a debt collector. Although the Eighth Circuit Court of Appeals has yet to address
this issue, other courts have held that the purchaser of debt in default may be considered a debt
collector for purposes of the FDCPA. See, Bridge v. Ocwen Federal Bank, FSB, 681 F.3d 355,
362 (6th Cir. 2012) (“debt collector includes any non-originating debt holder that either acquired
a debt in default or has treated the debt as if it were in default at the time of acquisition.”); F.T.C.
v. Check Investors, Inc., 502 F.3d 159, 172-73 (3d Cir. 2007) (debt purchasers who acquire
defaulted obligation for purposes of collection are debt collectors, not creditors, under FDCPA);
but see, Schlegel v. Wells Fargo Bank, NA, 720 F.3d 1204, 1208 n.2 (9th Cir. 2013) (rejecting
per se rule that debt collectors and creditors are mutually exclusive under FDCPA). Even
assuming for purposes of this motion that NCEP is subject to the requirements of the FDCPA, it
is still entitled to summary judgment for the reasons set out below.
-7-

thereof, the debt will be assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the debt collector in
writing within the thirty-day period that the debt, or any portion
thereof, is disputed, the debt collector will obtain verification of the
debt or a copy of a judgment against the consumer and a copy of such
verification or judgment will be mailed to the consumer by the debt
collector; and
(5) a statement that, upon the consumer’s written request within the
thirty-day period, the debt collector will provide the consumer with
the name and address of the original creditor, if different from the
current creditor.
15 U.S.C. § 1692g(a) (emphasis supplied).
Here, May argues that NCEP has yet to send her the disclosure letter
(sometimes called a dunning letter), see O’Connor v. Diversified Consultants, Inc.,
2014 WL 859822, *2 (E.D. Mo. Mar. 5, 2014), required by § 1692g(a). May’s
position is that her June 18, 2013, phone call was the “initial communication”
which triggered NCEP’s obligation to send her a dunning letter. May is wrong,
because the “initial communication” actually occurred when Stoneleigh sent her
the February 14, 2013, letter. May does not argue that this letter runs afoul of the
FDCPA, as there is no dispute that this letter complies with the requirements of §
1692g(a). Moreover, it is not relevant that May did not receive the letter because
it was sent to her last known address instead of her current address. The FDCPA
only requires that the debt collector send the notice, not that it establish receipt of
-8-

the notice by the debtor. See, 15 U.S.C. § 1692g (the “debt collector . . . shall
send the consumer a written notice containing . . . .”); Mattson v. U.S. West
Communications, Inc., 967 F.2d 259, 261 (8th Cir. 1992) (statute of limitations
begins to run at the time the debt collector places its communication in the mail,
not at the time that the debtor receives it); Mahon v. Credit Bureau of Placer
County Inc., 171 F.3d 1197, 1201 (9th Cir. 1999) (§ 1692g only requires that a
validation of debt notice be sent to the debtor, not that it must be received by the
debtor); Moore v. CCB Credit Services, Inc., 2013 WL 211048, *2-*3 (E.D. Mo.
Jan. 18, 2013) (granting summary judgment on § 1692g claim where debt
validation notice was sent, even though debtor claimed it was never received).
To evade summary judgment, May argues that NCEP was independently
obligated to comply with the provisions of the FDCPA. May’s argument is
inconsistent with her position that “defendant is vicariously liable for Stoneleigh’s
collection attempts . . . .” Stated otherwise, May argues that NCEP was
vicariously engaged in “debt collection” under the statute because it hired
Stoneleigh, but that Stoneleigh’s compliance with the FDCPA in its collection
efforts cannot be attributed to NCEP. If NCEP is bound by Stoneleigh’s collection
efforts on its behalf, then Stoneleigh’s disclosures must be attributable to NCEP as
well. I find that Stoneleigh’s collection efforts are imputed to NCEP as its agent,
-9-

which includes Stoneleigh’s “initial communication” with May through its
February 14, 2013, letter to her. Because the “initial communication” with May
met the requirements of § 1692g(a), NCEP was not required to send her another
dunning letter after the June 13, 2013, phone call. May’s § 1692g(a) claim
therefore fails as a matter of law.6
My finding that Stoneleigh’s actions are imputed to NCEP as its agent is
fatal to May’s remaining claims. In this case, May never responded to NCEP’s
initial communication with her, which was Stoneleigh’s February 14, 2013, letter.
Thus, she did not dispute the debt or otherwise invoke the 30-day validation
period under the statute. Section 1692g(b) provides that “[i]f the consumer
notifies the debt collector in writing within the thirty-day period described in
subsection (a) of this section that debt, or any portion thereof, is disputed, or that
the consumer requests the name and address of the original creditor, the debt

6

May’s reliance on district court cases from other circuits holding that “[t]he requirement
of providing valid disclosures under § 1692g applies to each debt collector,” Francis v. Synder,
389 F. Supp. 2d 1034, 1040 n.2 (N. D. Ill. 2005), is unavailing here. In each of the cases cited by
May on page 14 of her reply brief [Doc. #32], the collection activities were performed by
subsequent collection agencies. That is not the case here. Stoneleigh is not a subsequent debt
collector; instead, Stoneleigh’s efforts were undertaken as an agent of NCEP. I also note that a
district court within this circuit, relying on caselaw from the districts of Nevada and Maryland,
has reached the opposite conclusion and held that “a § 1692g(a) notice by one debt collector
serves as notice for subsequent attempts by different debt collectors to collect on the same debt.”
Marshall v. Deutsche Bank Nat. Trust Co., 2011 WL 345988, *5 (E. D. Ark. Feb. 1, 2011) (citing
cases).
- 10 -

collector shall cease collection of the debt . . . until the debt collector obtains
verification of the debt . . . .” 15 U.S.C. § 1692g(b). “The validation period is not
a grace period; in the absence of a dispute notice, the debt collector is allowed to
demand immediate payment and to continue collection activity.” Ellis v. Solomon
and Solomon, P.C., 591 F.3d 130, 135 (2nd Cir. 2010)(internal quotation marks
and citations omitted). However “[a]ny collection activities and communication
during the 30-day period may not overshadow or be inconsistent with the
disclosure of the consumer’s right to dispute the debt . . . .” 15 U.S.C. § 1692g(b).
Here, May argues that NCEP’s question about payment arrangements during
the June 18, 2013, phone call “overshadowed” her dispute rights in violation of §
1692g(b).7 Yet, there is no factual dispute that these statements were made well
outside May’s dispute period and therefore could not have “overshadowed” her

7

May’s claim also fails because NCEP never “demanded” payment from her during that
June 18, 2013. NCEP’s customer service representative asked May if she was calling to make
payment arrangements when she told him that she was calling about “a debt that’s on my credit
report.” Although “[a] violation of the FDCPA is reviewed using the unsophisticated-consumer
standard, . . [it] also contains an objective element of reasonableness to protect debt collectors
from liability for peculiar interpretations of collection [attempts].” Strand v. Diversified
Collection Serv., Inc., 380 F.3d 316, 317-18 (8th Cir. 2004) (internal quotation marks and
citation omitted). “The unsophisticated consumer test is a practical one, and statements that are
merely susceptible of an ingenious misreading do not violate the FDCPA.” Peters v. Gen. Serv.
Bureau, Inc., 277 F.3d 1051, 1056 (8th Cir. 2002) (internal quotation marks and citation
omitted). An unsophisticated consumer would not be misled or confused by the customer service
representative’s question under these facts, even if an “overshadowing” claim could otherwise be
brought. As soon as the agent found out the purpose of May’s call, he directed her to Stoneleigh,
which appropriately answered all her questions in compliance with the FDCPA.
- 11 -

dispute rights as a matter of law. May’s 30-day dispute period was triggered by
the February 14, 2013, letter, and the June 18, 2013, phone call occurred outside
that 30-day period. NCEP’s credit reporting in June of 2013 also fell outside
May’s 30-day dispute period and therefore could not have “overshadowed” her
dispute rights as a matter of law.8 May’s § 1692g(b) claims fail.
Finally, May contends that NCEP violated § 1692e of the FDCPA, which
prohibits a debt collector from using “any false, deceptive, or misleading
representation or means in connection with the collection of any debt.” Under §
1692e(11), a debt collector violates the FDCPA if it fails to “disclose in
subsequent communications that the communication is from a debt collector.” 15
U.S.C. § 1692e(11). Here, May argues that NCEP failed to disclose its status as a
debt collector during the June 18, 2013, phone call. May’s claim is belied by the
facts, as the undisputed evidence demonstrates that Stoneleigh, as an agent of
NCEP, immediately identified itself as a debt collector acting to collect a debt on
behalf of NCEP during the call. May was transferred to the Stoneleigh agent by
NCEP’s customer service representative as soon as May informed him that she had

8

Although reporting a debt to a collection agency may constitute collection activity within
the meaning of the FDCPA, see Edeh v. Midland Credit Mgmt., Inc., 748 F. Supp. 2d 1030,
1035-36 (D. Minn. 2010), this does not change the outcome in this case because May’s debt was
never disputed and NCEP reported it after her 30-day dispute period ended.
- 12 -

questions about the account. After making the required disclosures about
Stoneleigh’s status as a debt collector, the Stoneleigh agent accurately explained
to May that NCEP had purchased her Helzberg account when it was in default and
referred it to Stoneleigh for collection. May was told the original creditor, the
subsequent debt purchaser, the name of collection agency acting as the agent for
the subsequent debt purchaser, the amount of the underlying account balance
when it was referred for collection, and the previous efforts made to contact her
about the debt. There were no false, deceptive, or fraudulent statements made to
May during the call, and NCEP’s agent made no attempt to collect a debt from
May before transferring her to Stoneleigh. Under these circumstances, the
undisputed evidence shows that NCEP did not violate § 1692e(11) during the June
18, 2013, phone call, as NCEP made the required disclosure through Stoneleigh.
There is no evidence from which a reasonable fact-finder could conclude
that May was subjected to any abusive debt collection practices in violation of the
FDCPA. She received a dunning letter in compliance with the statute, and her
account was properly reported as in collection after she failed to dispute the debt
or exercise her dispute rights. May was notified that she was speaking to a debt
collector when she contacted NCEP on June 18, 2013, and no false, deceptive, or
fraudulent statements were made to her during that call. For these reasons, May’s
- 13 -

FDCPA claims fail as a matter of law and must be dismissed.
Accordingly,
IT IS HEREBY ORDERED that defendant’s motion for summary
judgment [#24] is granted, and plaintiff’s complaint is dismissed with prejudice.
IT IS FURTHER ORDERED that plaintiff’s motion for partial summary
judgment [#13] is denied.
A separate Judgment in accord with this Memorandum and Order is issued
this same date.

CATHERINE D. PERRY
UNITED STATES DISTRICT JUDGE

Dated this 16th day of May, 2014.

- 14 -