HOEHN v. FCC FINANCE, LLC

Filing 27

MEMORANDUM OPINION. Signed by Magistrate Judge Joel Schneider on 8/27/2015. (TH, )

[Doc. No. 20]
THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
JOANN HOEHN,

:
:
Plaintiff, :
:
v.
:
:
FCC FINANCE, LLC,
:
:
Defendant. :
______________________________:

Civil No. 14-2860 (JS)

MEMORANDUM OPINION
This matter is before the Court on the “Motion for Summary
Judgment” [Doc. No. 20] filed by defendant FCC Finance, LLC
(“FCC”).

The

Court

received

the

response

in

opposition

from

plaintiff Joann Hoehn [Doc. No. 24] and defendant’s reply [Doc.
No. 25]. The Court exercises its discretion to decide defendant’s
motion without oral argument. See Fed. R. Civ. P. 78; L. Civ. R.
78.1. Pursuant to 28 U.S.C. § 636(c), the parties consented to the
jurisdiction of this Court to hear the case. [Doc. No. 16]. For
the

reasons

to

be

discussed,

defendant’s

motion

for

summary

for

alleged

judgment is DENIED.
BACKGROUND
Plaintiff

brings

this

action

for

damages

violations of the Fair Debt Collection Practices Act, 15 U.S.C. §
1692, et seq. (“FDCPA”), which prohibits debt collectors from

1

engaging in abusive, deceptive, and unfair practices. Compl. ¶ 1
[Doc.

No.

1].

The

original

debt

in

this

action

arose

from

plaintiff’s purchase of new windows and a door from Thermo Guard
Windows on September 23, 2000 for the amount of $5,716.00. Def.’s
Br., Ex. A; Def.’s Statement of Material Facts (“SMF”) ¶ 1 [Doc.
No. 20-1]. Pursuant to the contract, plaintiff was required to pay
monthly installments of $137.48 for sixty months to Thermo Guard,
Inc. SMF ¶ 2, Ex. A. Three transfers of ownership of the debt have
since occurred. On October 24, 2000, Thermo Guard, Inc. assigned
the contract to First Consumer Credit, LLC. On October 2, 2001,
First Consumer Credit, LLC converted to First Consumer Credit,
Inc. SMF ¶ 3. By agreement dated October 2, 2007, defendant FCC
Finance, LLC purchased substantially all of the assets of First
Consumer Credit, Inc., including plaintiff’s contract. SMF ¶ 4.
Plaintiff alleges her debt was paid thirteen years prior to
the defendant contacting her. Compl. ¶ 14. Nonetheless, plaintiff
alleges that in or around May 2013, defendant’s collectors began
placing “repeated harassing telephone calls” to her cell phone to
collect the alleged debt. Compl. ¶ 15.
DISCUSSION
1. The Summary Judgment Standard
Pursuant

to

Fed.

R.

Civ.

P.

56,

summary

judgment

is

appropriate where the court is satisfied that “the pleadings,
depositions, answers to interrogatories, and admissions on file,
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together with the affidavits, if any . . . demonstrate the absence
of a genuine issue of material fact.” Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986) (internal citations omitted). Summary
judgment will not lie if the dispute about a material fact is
“genuine,” that is, if the evidence is such that a reasonable jury
could return a verdict in favor of the non-moving party. Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The materiality
of a fact turns on whether under the governing substantive law, a
dispute over the fact might have an effect on the outcome of the
suit. Id. The court must view all evidence and draw all reasonable
inferences in the light most favorable to the non-moving party.
See Startzell v. City of Phila., 533 F.3d 183, 192 (3d Cir. 2008)
(citation omitted).
The moving party bears the initial burden of informing the
court of the basis for its motion and demonstrating the absence of
a genuine issue of material fact. Celotex, 477 U.S. at 322-23.
Once the burden is met, the burden shifts to the non-moving party
to “set forth specific facts showing that there [are] . . . .
genuine factual issues that properly can be resolved only by a
finder of fact because they may reasonably be resolved in favor of
either party.” Anderson, 477 U.S. at 250. The party opposing
summary judgment may not “rest upon mere allegation[s] or denials
of his pleading,” but must set forth specific facts and present
affirmative evidence demonstrating that there is a genuine issue
3

for trial. Id. at 256-57. Additionally, “if the non-moving party's
evidence

‘is

merely

colorable,

...

or

is

not

significantly

probative, ... summary judgment may be granted.’” Trap Rock Indus.,
Inc. v. Local 825, Int'l Union of Operating Engineers, AFL-CIO,
982

F.2d

884,

890-91

(3d

Cir.

1992)

(quoting

Gray

v.

York

Newspapers, Inc., 957 F.2d 1070, 1078 (3d Cir. 1992)).
2. The Fair Debt Collections Practices Act (FDCPA)
Defendant argues it is entitled to summary judgment because
it

is

not

a

“debt

collector”

under

the

FDCPA.

“The

FDCPA's

provisions generally apply only to ‘debt collectors.’” Pollice v.
Nat'l Tax Funding, L.P., 225 F.3d 379, 403 (3d Cir. 2000) (citation
omitted). Section 1692a(6) of the FDCPA defines a "debt collector"
as:
[A]ny person who uses any instrumentality of
interstate commerce or the mails in any business
the principal purpose of which is the collection of
any debts, or who regularly collects or attempts to
collect, directly or indirectly, debts owed or due
or asserted to be owed or due another.
15 U.S.C. § 1692a(6).
Creditors, in contrast, “generally are not subject to the
FDCPA.” Id. However, “an assignee [creditor] may be deemed a ‘debt
collector’ if the obligation is already in default when it is
assigned.” Pollice v. Nat'l Tax Funding, L.P., 225 F.3d 379, 403
(3d Cir. 2000). “[A]s to a specific debt, one cannot be both a
‘creditor’ and a ‘debt collector,’ as defined in the FDCPA, because

4

those terms are mutually exclusive.” F.T.C. v. Check Investors,
Inc., 502 F.3d 159, 173 (3d Cir. 2007).
Plaintiff argues defendant is a debt collector under the FDCPA
because: (1) the debt was in default at the time it was assigned
to defendant and (2) the principal purpose of defendant’s business
is debt collection or defendant regularly collects debt due to
others. Defendant counters that: (1) the debt was not in default
as of the date it was acquired and (2) there is nothing in the
record to support a finding that the transfer of the Hoehn account
to FCC was made solely in order to facilitate collection of the
debt for another.
For the reasons to be discussed, the Court finds plaintiff
has set forth evidence demonstrating there is a genuine issue of
fact for trial on whether defendant is a debt collector subject to
the FDCPA. Plaintiff has set forth evidence showing that a fact
question exists as to: (1) whether plaintiff’s debt was in default
at the time it was assigned to defendant; (2) whether defendant
regularly collects debts due to another as a bonded debt collector;
and (3) whether plaintiff’s debt was transferred for servicing and
not collection.
The Court first considers whether plaintiff’s debt was in
default

at

the

time

it

was

assigned

to

defendant.

The

term

“default” is not defined in the FDCPA. Plaintiff argues that in
the absence of a statutory definition of default, courts use the
5

definition contained in the applicable contract or agreement to
determine when the debt is in default. See Pl.’s Opp. at 3 (citing
Hartman v. Meridian Financial Servs., Inc., 191 F. Supp. 2d 1031,
1044 (W.D. Wis. 2002); Prince v. NCO Financial Services, Inc., 346
F. Supp. 2d 744, 748 (E.D. Pa. 2004); Alamo v. ABC Fin. Servs.,
Inc., C.A. No. 09-5686, 2011 WL 221766, at *5 (E.D. Pa. Jan. 20,
2011); Kapsis v. American Home Mortg. Servicing, Inc., 923 F. Supp.
2d 430, 440-43 (E.D.N.Y. 2013)). Thus, plaintiff argues that
“default” should be defined by the definition in plaintiff’s
contract, which provides:
Default: Time is of the essence for purposes of this
contract, and if the Buyer does not pay any
installment within ten days from when it is due, if
any bankruptcy or insolvency proceeding is commenced
by or against the Buyer…Buyer is in default.
Pl.’s Opp., Ex. A ¶ 3. Plaintiff contends her contract went into
default on March 5, 2005, ten days after her last payment and two
years before the contract was purchased by defendant. SMF Opp. ¶
4.
Other courts decline to accept the contract definition of
“default” to determine if an entity is subject to the FDCPA. For
example, in Magee v. AllianceOne, Ltd., 487 F. Supp. 2d 1024 (S.D.
Ind. 2007), the court found it was improper to “leave[] it to the
discretion of the creditor whether to declare default” by looking
at the definition of default in the defendant’s contract. Id. at
1026. Instead, the court considered the dictionary definition of
6

“default” and determined that a debt collector is an entity which
contacts a consumer “specifically because a debtor has missed a
payment, and the creditor believes the debtor is more likely to
bring her account current if she is contacted by a third-party
debt collector than if she receives a routine bill from the
creditor.” Id. at 1028. The court found that the defendant fell
under this definition because it was hired specifically when a
debtor

missed

a

payment

and

referred

to

itself

as

a

“debt

collector” in its letters to the plaintiff. Accordingly, the Magee
court found the defendant was subject to the FDCPA because the
plaintiff’s debt was in default at the time it was assigned.
The decision in Haber v. Bank of Am., N.A., C.A. No. 14-0169,
2014 WL 2921659 (E.D. Pa. June 27, 2014), articulates a third
approach.

The

court

considered

both

the

contract

definition

approach and the Magee approach and held, “in this Court's view,
the relevant question in this case is whether [the defendant], not
the [plaintiffs], classified the debt as in ‘default’ at the
relevant

time.”

Id.

at

*15.

The

Haber

court

found

that

the

plaintiffs provided sufficient evidence to support the inference
that their mortgage was in default at the time Bank of America was
assigned the debt. Id. Specifically, the plaintiff provided Bank
of America’s payment records and a letter which stated it wanted
to help plaintiff “avoid foreclosure.” Id. Accordingly, the court

7

found that plaintiff had plausibly demonstrated that Bank of
America was a “debt collector” under the FDCPA.
As will be discussed, no matter what approach the Court uses
there is a fact question as to whether plaintiff’s debt was in
default. For discussion purposes the Court employs the Haber
approach and will consider whether defendant classified the debt
as in default at the time it was assigned.1 As in Haber, plaintiff
has presented sufficient evidence to make this inference and avoid
summary judgment. Plaintiff produced her payment history which
reflects that no payment was made after June 16, 2005 (which was
applied to a past due payment) and that a balance remained on the
account following that payment. Pl.’s Opp., Ex. B. Defendant did
not acquire plaintiff’s account until October 2, 2007, over two
years later. In further support of her position, plaintiff produced
a

March

9,

2012

letter

from

defendant

which

states

that

if

plaintiff makes a payment, her account will become “current.”
Def.’s Reply Br., Ex. A [Doc. No. 25-1]. This language could
indicate that defendant considered plaintiff’s account to be in
default at that time. Plaintiff has also produced a May 16, 2013
letter from defendant which attempts to modify plaintiff’s payment

1

Even if the Court employed the contract definition or Magee approach
the result would be the same in that a genuine dispute of material fact exists
as to whether the debt was in default at the time of the assignment. Under the
contract terms approach, plaintiff provided her payment history which shows the
debt was in default 10 days after her last payment was due. Under the Magee
approach, plaintiff produced defendant’s surety bonds which authorize it as a
third party debt collector.

8

terms. Pl.’s Opp. Ex. E. At the bottom of both letters defendant
states: “THIS IS AN ATTEMPT TO COLLECT A DEBT.” Pl.’s Opp., Ex. E;
Def.’s Reply, Ex. A. Additionally, plaintiff produced defendant’s
Third Party Debt Collector Surety Bonds which authorizes defendant
as a debt collector in New Jersey and Texas. Pl.’s Opp., Exs. C
and D. This evidences there is a fact question as to whether
defendant regularly collects debts due to another.
Defendant argues plaintiff’s debt was not in default at the
time it was assigned because the account was current when it was
assigned to its predecessor-in-interest, First Consumer Credit,
LLC.

Defendant

points

out

that

the

FDCPA

excludes

from

the

definition of “debt collector” any person collecting debts for
another when both entities are related by common ownership or
affiliated by corporate control and the entity acting as a debt
collector does so only for the other entity. Def.’s Reply Br. at
5-6 (citing 15 U.S.C. § 1692a(6)(B)). However, defendant has not
produced admissible evidence that it and First Consumer Credit,
LLC are related by common ownership or affiliated by corporate
control or that it only collects debt for First Consumer Credit,
LLC.

Because

the

Court

must

view

all

evidence

and

draw

all

reasonable inferences in the light most favorable to the nonmoving party, defendant’s unsupported argument is rejected.
Defendant also argues there is nothing in the record to
support a finding that the transfer of the Hoehn account to
9

defendant was made solely in order to facilitate collection of
plaintiff’s debt for another. Def.’s Reply Br. at 2. [Doc. No.
25]. The only specific evidence defendant offers in support of its
contention that it did not acquire plaintiff’s debt solely for the
purpose of debt collection is that defendant attempted to enter
into a loan modification agreement with plaintiff. Def.’s Reply
Br. at 4. Defendant cites Ademiluyi v. PennyMac Mortg. Inv. Trust
Holdings I, LLC, 2015 U.S. Dist. LEXIS 66930 (D. Md. 2015), without
comment, to support its position. In Ademiluyi, the defendant
argued that it was not a “debt collector” under the FDCPA because:
(1) the debt was not in default at the time it was acquired and
(2) it did not acquire the debt “solely for the purpose of
collection.” Id. at *40. In support of its argument that the debt
was

not

acquired

solely

for

the

purpose

of

collection,

the

defendant argued that it attempted to first modify the loan before
seeking

foreclosure.

Id.

at

*41.

Without

discussing

the

defendant’s second argument, the court found that the defendant
was not a debt collector because the debt was not in default when
it was acquired. Id. The court did not discuss the defendant’s
argument

that

the

loan

modification

agreement

was

evidence

defendant did not acquire the debt “solely for the purpose of
collection.”

Thus,

the

Court

finds

2

Ademiluyi

unpersuasive.2

Defendant also cites Henson v. Santander Consumer USA, Inc., C.A. No.
12-3519, 2014 WL 1806915, at *5 (D. Md. May 6, 2014), reconsideration denied,
2015 WL 433475 (D. Md. Feb. 2, 2015). In that case, the court found that the

10

Further, in Haber, the court found that the plaintiff plausibly
demonstrated that the defendant was a debt collector even though
it sent the plaintiff a letter asking him to call the defendant
because

it

“want[ed]

to

help

[plaintiff]

avoid

foreclosure.”

Haber, 2014 WL 2921659, at *50. Thus, there is a fact question as
to whether the assignment was made for a reason other than to
facilitate the collection of plaintiff’s debt, particularly given
that defendant is a bonded debt collector.
For these reasons, plaintiff has provided sufficient evidence
to withstand summary judgment. Plaintiff has produced evidence
that defendant classified plaintiff’s debt as in default at the
time of the assignment. Plaintiff has also produced evidence that
defendant is a bonded debt collector in New Jersey and Texas.
Further, there is a fact question as to whether defendant attempted
to

acquire

plaintiff’s

debt

for

a

purpose

other

than

debt

collection.
CONCLUSION

plaintiff had not plausibly pleaded that the defendant fell under the assignee
exception. The court found that the plaintiff had not provided evidence the
defendant acquired the debt solely for the purpose of collection. Id. at *11.
However, in that case, the plaintiff simultaneously argued the defendant was a
servicer and a debt collector. Id. In contrast, in this case, plaintiff does
not allege defendant is a servicer. Further, plaintiff produced letters sent by
defendant which state that defendant was attempting to collect a debt, as well
as defendant’s Third Party Debt Collector Surety Bonds which authorize defendant
as a debt collector in New Jersey and Texas.
Defendant also cites Allen v. Bank of Am., N.A., 933 F. Supp. 2d 716, 729
(D. Md. 2013) and Padgett v. OneWest Bank, FSB, C.A. No. 10-08, 2010 WL 1539839
(N.D.W.Va. Apr. 19, 2010). In both cases, the defendant-mortgagees were
characterized as creditors because they both serviced the loan and attempted to
collect any amount in default.

11

Accordingly, for all the foregoing reasons, defendant FCC
Finance LLC’s motion for summary judgment [Doc. No. 20] is DENIED.
An appropriate Order follows.

s/ Joel Schneider
JOEL SCHNEIDER
United States Magistrate Judge
Dated: August 27, 2015

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