WINANS v. FRANKLIN COLLECTION SERVICE, INC. et al
Filing
20
MEMORANDUM OPINION AND ORDER, signed by CHIEF JUDGE THOMAS D. SCHROEDER on 8/16/2018, for the reasons stated, the court finds that Winans fails to state a claim for relief under the FDCPA or applicable state law an d the Defendants are entitled to judgment as a matter of law. ORDERED that the Defendants' motion for judgment on the pleadings (Doc. 13 ) is GRANTED, and Winans's complaint (Doc. 1 ) is DISMISSED WITH PREJUDICE. A judgment in accordance with this Order will be issued contemporaneously. (Butler, Carol)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
RICHARD L. WINANS, on behalf
of himself and all others
similarly situated, 1
)
)
)
)
)
)
)
)
)
)
)
)
Plaintiff,
v.
FRANKLIN COLLECTION SERVICE,
INC. And DAN FRANKLIN,
Defendant.
17cv659
MEMORANDUM OPINION AND ORDER
THOMAS D. SCHROEDER, Chief District Judge.
This is a civil action arising from the debt collection
activities of the Defendants, Franklin Collection Service, Inc.
(“FCSI”) and Dan Franklin.
Plaintiff Richard L. Winans brings
this action on behalf of himself and others similarly situated,
alleging that the Defendants’ debt collection activities violated
the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692
et seq., the North Carolina Collection Agencies Act (“NCCAA”),
N.C. Gen. Stat. § 58-70-1 et seq., and the North Carolina Debt
Collection Act (“NCDCA”), N.C. Gen. Stat. § 75-50 et seq.
1.)
Defendants now move for judgment on the pleadings pursuant to
Federal Rule of Civil Procedure 12(c).
set
1
(Doc.
forth
below,
the
motion
will
(Doc. 13.)
be
granted
For the reasons
and
the
action
The complaint refers to “herself,” which appears to be a misnomer.
dismissed.
I.
BACKGROUND
The allegations of the complaint, which are accepted as true
and viewed in the light most favorable to Winans for purposes of
the present motion, show the following:
FCSI operates a debt collection business with its principal
place of business located in Mississippi.
¶
12.)
Dan
Franklin
is
the
president,
(Doc. 1 ¶ 12; Doc. 10
sole
officer
executive officer), shareholder, and director of FCSI.
¶ 17; Doc. 10 ¶ 17.)
(chief
(Doc. 1
FCSI holds a license to operate as a
collection agency in North Carolina and conducts debt collection
activities within the state.
(See Doc. 1 ¶¶ 15, 28; Doc. 10 ¶¶ 15,
28.)
At some point during 2015, Winans became unable to pay his
cell phone bill from AT&T.
(Doc. 1 ¶ 25.)
Winans used his cell
phone exclusively for personal, family, and/or household purposes.
(Id. ¶ 26.)
$289.58.
His AT&T account became past due in the amount of
(Id. ¶ 27.)
Sometime in early 2016, AT&T placed Winans’s
account with FCSI for collection.
(Id. ¶ 28.)
On May 18, 2016, Winans received a debt collection letter
from Defendants (the “first letter”).
(Id. ¶ 29; Doc. 2.)
The
letter lists the name of the sender as “The Collection Firm of
Franklin
Collection
Service,
Inc.”
and
includes
identification number referred to as a “FCSI case #.”
2
a
unique
(Doc. 1
¶¶ 30-31; Doc. 2 at 2.)
The second full paragraph of the letter
states, “IF YOU ARE NOT PAYING THIS ACCOUNT IN FULL, CONTACT YOUR
ATTORNEY REGARDING OUR POTENTIAL REMEDIES, AND YOUR DEFENSES, OR
CALL [FCSI’s phone number].”
On
July
21,
2016,
(Doc. 1 ¶ 32.)
Winans
Defendants (the “second letter”).
received
another
letter
from
(Id. ¶ 38; Doc. 2-1.)
The
second letter, printed in red, similarly lists the name of the
sender as “The Collection Firm of Franklin Collection Service,
Inc.” and refers to an “FCSI case number.”
(Doc. 1 ¶ 39.)
The
body of the letter states in relevant part:
WE HAVE MADE SEVERAL ATTEMPTS FOR YOU TO RESOLVE THIS
LETTER VOLUNTARILY, YET IT GOES UNSATISFIED AS OF THE
DATE ON THIS NOTICE. WE SELDOM RESORT TO LITIGATION IF
THE ACCOUNT IS RESOLVED IN A TIMELY MANNER.
AT THIS
TIME, THERE HAS BEEN NO CIVIL ACTION FILED OR JUDGMENT
OBTAINED.
(Id. ¶ 40.)
To the right of the main paragraph, there are two
checkboxes labeled, “Employment Verified” and “Assets Located.”
(Id. ¶ 41.)
Neither checkbox is checked.
(Id.)
At the bottom of
the collection letter it states, “TO BE SURE OF PROPER CREDIT AND
TO STOP FURTHER PROCEDURES, RETURN THIS NOTICE WITH PAYMENT IN
FULL TO FRANKLIN COLLECTION SERVICE, INC.”
(Id. ¶ 42.)
Based on these two letters, Winans filed suit against FCSI
and Franklin, alleging (1) the first letter violated several
provisions of the NCCAA and NCDCA; and (2) the second letter
violated several provisions of the FDCPA as well as the NCCAA and
3
NCDCA.
(Doc. 1.)
Defendants filed an answer and now move for
judgment on the pleadings.
II.
(Doc. 10; Doc. 13.)
ANALYSIS
A.
“A
Standard of Review
Rule
12(c)
motion
tests
only
the
sufficiency
of
the
complaint and does not resolve the merits of the plaintiff’s claims
or any disputes of fact.”
Massey v. Ojaniit, 759 F.3d 343, 353
(4th Cir. 2014) (quoting Drager v. PLIVA USA, Inc., 741 F.3d 470,
474 (4th Cir. 2014)).
The court “accept[s] all well-pleaded
allegations of [the] complaint as true and draw[s] all reasonable
factual inferences in [the plaintiff’s] favor.”
omitted). 2
In
applying
those
standards,
“the
Id. (citation
complaint
will
survive only if it ‘states a plausible claim for relief.’”
Id.
(quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)).
Section 1692e of the FDCPA prohibits debt collectors from
making “false, deceptive, or misleading” statements in connection
with
their
debt
collection
activities
and
illustrative examples of prohibited conduct.
outlines
sixteen
15 U.S.C. § 1692e;
Russell v. Absolute Collection Servs., Inc., 763 F.3d 385, 394
(4th Cir. 2014); see also 15 U.S.C. § 1692a (defining terms).
“Whether a communication is false, misleading, or deceptive in
2
Winans has attached copies of the two debt collection letters to his
complaint (Docs. 2, 2-1), which the court may consider for purposes of
this motion.
Fed. R. Civ. P. 10(c); Sec'y of State for Defence v.
Trimble Navig. Ltd., 484 F.3d 700, 705 (4th Cir. 2007).
4
violation of § 1692e is determined from the vantage of the ‘least
sophisticated
consumer.’”
Russell,
763
F.3d
at
394
(quoting
United States v. Nat'l Fin. Servs., Inc., 98 F.3d 131, 136 (4th
Cir.
1996)).
“The
least-sophisticated-consumer
test
is
an
objective standard that evaluates § 1692e claims based upon how
the least sophisticated consumer would interpret the allegedly
offensive language.”
Id. at 394–95.
“Given the objective nature
of this inquiry, a district court's application of the least
sophisticated consumer test ordinarily presents a question of law
. . . .”
Ramsay v. Sawyer Prop. Mgmt. of Maryland LLC, 593 F.
App'x 204, 208 (4th Cir. 2014); Russell, 763 F.3d at 395 (“Although
we
have
never
directly
addressed
whether
application
of
the
objective least-sophisticated-consumer test to the language of a
dunning letter is a question of law, we have assumed that to be
the case.”).
“While protecting naive consumers, the standard also
prevents liability for bizarre or idiosyncratic interpretations of
collection notices by preserving a quotient of reasonableness and
presuming a basic level of understanding and willingness to read
with care.”
Nat'l Fin. Servs., Inc., 98 F.3d at 136.
North Carolina has enacted two separate statutes regulating
debt
collection
practices.
The
NCCAA
regulates
collection
agencies and prohibits deceptive representations or threatening or
coercive conduct regarding the collection of a debt.
N.C. Gen.
Stat. §§ 58-70-95, 58-70-110; see also id. §§ 58-70-15, 58-705
90(1) (defining “collection agency”).
The NCDCA also prohibits
all other persons who collect consumer debts from engaging in
similar activities.
N.C. Gen. Stat. §§ 75-51, 75-54; see also id.
§ 75-50(3) (defining “debt collector”).
The statutes each provide
illustrative examples of prohibited conduct.
N.C. Gen. Stat.
§§ 58-70-95, 58-70-110, 75-51, 75-54.
Here, Defendants do not dispute that FCSI’s debt collection
activities fall within the scope of the FDCPA and NCCAA, (see Doc.
10 ¶¶ 13-14), but they contend that Winans fails to allege that
the debt collection letters give rise to a plausible claim under
either the state or federal statutes.
Defendants do dispute
whether Franklin may be held liable individually.
They argue that
Franklin cannot be held liable for any alleged FDCPA or NCCAA
violations because Winans failed to allege sufficient facts to
either pierce the corporate veil or suggest that Franklin was
personally involved in the debt collection process.
14-15.)
(Doc. 14 at
Further, while Defendants claim that Franklin does not
qualify as a “collection agency” as defined in N.C. Gen. Stat.
§§ 58-70-15, 58-70-90(1), they have not addressed whether he could
be liable as a “debt collector” under N.C. Gen. Stat. § 75-50(3),
as Winans also alleges.
(See Doc. 1 ¶¶ 21, 79, 87.)
The court
can assume without deciding that Franklin may be held liable for
FCSI’s
debt
collection
activities
6
under
the
FDCPA
and
state
analogues because, for the reasons that follow, Winans’s claims
fail.
Before turning to Winans’s claims, it must be noted that the
court’s analysis is confounded by Winans’s citation generally to
various statutes relating to his potential claims under both
federal and state law in his complaint (id. ¶¶ 64-69, 73-79, 8387) without specifying which provision or provisions he relies on
within the context of his individual allegations (id. ¶¶ 70, 80,
88).
In his brief on the instant motion, Winans offers no
additional indication of which individual provision(s) he relies
on to support any particular claim, apart from referencing 15
U.S.C. § 1692e(5).
case law.
(See Doc. 17 at 6.)
He also offers little
It is the job of counsel, not the court, to identify
these things.
With this understanding, the court turns to each of the
complaint’s principal allegations with respect to each of the debt
collection letters.
B.
First Letter
Winans alleges that Defendants violated several provisions of
the NCCAA and NCDCA by sending the first letter.
88.) 3
(Doc. 1 ¶¶ 83-
First, he alleges that the letter falsely represents that
3
While Winans cites to several requirements set forth in the NCDPA (Doc.
1 ¶ 87), he references only the NCCAA in his specific allegations (id.
¶ 88).
Nevertheless, the court will address each of the principal
allegations in the complaint under both statutes.
7
FCSI was a law firm.
Winans relies on the fact that the letter
refers to “The Collection Firm of Franklin Service, Inc.,” and
includes FCSI’s “case” number, claiming that these references
“reinforce[d] the impression that FCSI is a law firm treating
Plaintiff’s AT&T account as a legal case.”
(Id. ¶¶ 30-31, 35).
Winans appears to allege that this activity violates the NCCAA and
NCDCA by “[f]alsely representing the status or true nature of the
services rendered by the collection agency [or debt collector].”
N.C. Gen. Stat. §§ 58-70-110(7), 75-54(7).
These
alleged
representations
do
not
actionable claim under the NCCAA or NCDCA.
give
rise
to
an
The use of the word
“firm” is by no means exclusive to the legal profession, and the
term “collection firm” is merely a descriptive reference to FCSI’s
business.
letter
Apart from the reference to a “collection firm,” the
makes
no
other
reference
to
a
firm
and
specifically
identifies FCSI as a corporation and a “debt collector.”
at 2.)
(Doc. 2
In addition, each reference to a case number is preceded
by a reference to “FCSI,” which removes the possible inference
that the “case number” originated from a court of law.
(Id.)
When
interpreting substantively identical language in debt collection
letters
under
the
FDCPA,
at
least
two
district
courts
have
specifically rejected claims that such references impermissibly
imply that FCSI is a law firm or otherwise are false or misleading.
Brunett v. Franklin Collection Serv. Inc., No. 18-CV-163-JPS, 2018
8
WL 2170334, at *5 (E.D. Wis. May 10, 2018) (finding that the use
of identical language did not give rise to a violation of 15 U.S.C.
§ 1692e(3) by falsely representing that FCSI was a law firm);
Bradley v. Franklin Collection Serv., Inc., No. 5:10–cv–01537–AKK,
2013 WL 1346714, at *13 (N.D. Ala. Mar. 28, 2013) (same), aff’d in
part and rev’d on other grounds, 739 F.3d 606 (8th Cir. 2014).
Winans further alleges that the language within the second
full paragraph in the first letter violated applicable state law
by threatening that FCSI would file a lawsuit against the consumer
when neither FCSI nor AT&T intended to do so.
88.); see N.C. Gen. Stat.
75-54(4).
ARE
NOT
(Doc. 1 ¶¶ 32-34,
§§ 58-70-95(7), 58-70-110(4), 75-51(7),
The second paragraph states in relevant part, “IF YOU
PAYING
THIS
ACCOUNT
IN
FULL,
CONTACT
YOUR
ATTORNEY
REGARDING OUR POTENTIAL REMEDIES, AND YOUR DEFENSES, OR CALL
[FCSI’s phone number].”
(Doc. 1 ¶ 32.)
Winans appears to allege
that this language violates the NCCAA and NCDCA by “[t]hreatening
to take any action not in fact taken in the usual course of
business, unless it can be shown that such threatened action was
actually intended to be taken in the particular case in which the
threat was made,” N.C. Gen. Stat. §§ 58-70-95(7), 75-51(7), and
falsely representing the status of any legal proceeding or the
creditor’s rights or intentions, id. §§ 58-70-110(4), 75-54(4).
When interpreting substantively similar language under the
FDCPA, five district courts have held that it did not impermissibly
9
threaten litigation.
Brunett v. Franklin Collection Serv. Inc.,
No. 18-CV-163-JPS, 2018 WL 2170334, at *3-4 (E.D. Wis. May 10,
2018); Hanford v. Franklin Collection Serv., Inc., No. 4:17-CV2005-SNLJ, 2018 WL 2129612, at *4 (E.D. Mo. May 9, 2018); Rivera
v.
Franklin
Collection
Servs.,
Inc.,
No.
CV
17-631,
2017
WL
3075085, at *3 (E.D. Pa. July 19, 2017); Covington v. Franklin
Collection Servs., Inc., No. 16-2262-JWL, 2016 WL 4159731, at *3
(D. Kan. Aug. 5, 2016); Clark v. Franklin Collection Serv., Inc.,
No. 14-CV-8067, 2015 WL 3486767, at *3 (D.N.J. June 2, 2015).
Instead, these courts found that “[t]he letter merely provided the
plaintiff with his options without coercing or misleading the least
sophisticated debtor into thinking that he was required to either
pay or suffer dire consequences.”
Rivera, 2017 WL 3075085, at *3;
see Brunett, 2018 WL 2170334, at *3-4.
line of cases. 4
The court agrees with this
Nothing in the cited language of the first letter
would suggest to the least sophisticated consumer that FCSI was
impermissibly threatening litigation.
For these reasons, the court finds that Winans has failed to
state a claim under either the NCCAA or NCDCA arising from the
4
Winans’s complaint also alleges that the first letter violates the
NCCAA and NCDPA by “[f]alsely stating that FSCI [sic] sometimes files
civil lawsuits against consumers.”
(Doc. 1 ¶ 88.)
Apart from
instructing the consumer to “contact your attorney regarding our
potential remedies,” the letter contains no other reference to civil
litigation, much less FCSI’s propensity to file civil lawsuits. Winans
offers no argument to support this allegation, nor can the court discern
how this letter would give rise to such a representation.
10
alleged misrepresentations and language within the first letter.
C.
Second Letter
With regard to the second letter, Winans alleges several
violations of the FDCPA, NCDCA, and NCCAA.
He claims that the
second letter (1) falsely represents that FCSI was a law firm; (2)
impermissibly threatens to take legal action against the recipient
when neither FCSI nor AT&T intended to do so; (3) impermissibly
threatens to garnish wages and/or seize assets belonging to the
consumer;
and
(4)
improperly
threatens
to
contact
(Doc. 1 ¶¶ 70, 80.) 5
employer regarding his debt.
Winans’s
Each of these
alleged violations will be addressed in turn.
1.
False Representation that FCSI is a Law Firm
Relying on FCSI’s use of the term “collection firm” and
reference to “case” number, Winans again alleges that the second
letter falsely represents that FCSI was a law firm in violation of
both the FDCPA and state law.
(Doc. 1 ¶¶ 70, 80); see 15 U.S.C.
§ 1692e(3); N.C. Gen. Stat. §§ 58-70-110(7), 75-54(7).
Section
1693e(3) prohibits a debt collector from making “[t]he false
representation or implication that any individual is an attorney
or
that
any
communication
is
from
5
an
attorney.”
15
U.S.C.
Winans also alleges that the second letter falsely claims that FCSI
“sometimes files lawsuits against consumers,” relying on the fact that
FCSI is not a law firm. (Doc. 1 ¶ 48.) This language is not present
in the letter, which rather states “WE SELDOM RESORT TO LITIGATION IF
THE ACCOUNT IS RESOLVED IN A TIMELY MANNER.” (Doc. 2-1 at 2.) As with
the first letter, Winans offers no argument or case law in his response
to support this allegation, and the court can discern none.
11
§ 1693e(3).
Apart from the reference that “WE SELDOM RESORT TO
LITIGATION,” the letter otherwise contains no other reference that
would arguably suggest that either FCSI is a law firm or the
communication is from an attorney.
(Doc. 2-1 at 2.)
For reasons
similar to those previously discussed regarding the first letter,
the court finds that Winans has failed to state a claim under
either
federal
or
state
law
with
misrepresentation on these grounds.
regard
to
any
alleged
See Brunett, 2018 WL 2170334,
at *5; Bradley, 2013 WL 1346714, at *13.
2.
Threat of Litigation
Winans alleges that the second letter violated portions of
the FDCPA and NCDCA by threatening to take legal action against
him and other putative class members when neither FCSI nor AT&T
intended to do so.
(Doc. 1 ¶¶ 70, 80).
Winans claims that the
least sophisticated consumer would interpret the letter to imply
that failure to pay the total due would result in FCSI engaging in
further “procedures” to collect the debt, which Winans says is
code for legal action.
In particular, Winans relies on the
following language:
WE HAVE MADE SEVERAL ATTEMPTS FOR YOU TO RESOLVE THIS
MATTER VOLUNTARILY, YET IT GOES UNSATISFIED AS OF THE
DATE ON THIS NOTICE. WE SELDOM RESORT TO LITIGATION IF
THE ACCOUNT IS RESOLVED IN A TIMELY MANNER.
AT THIS
TIME, THERE HAS BEEN NO CIVIL ACTION FILED OR JUDGMENT
OBTAINED. [. . .]
TO
BE
SURE
OF
PROPER
CREDIT
12
AND
TO
STOP
FURTHER
PROCEDURES, RETURN THIS NOTICE WITH PAYMENT IN FULL TO
FRANKLIN COLLECTION SERVICE, INC.
(Doc. 2-1 at 2; Doc. 1 ¶ 40.)
Winans claims that the least
sophisticated consumer would interpret the letter to imply that
“FCSI sues consumers who do not timely pay, that the recipient has
not timely paid, and that, therefore, the recipient will face the
‘further procedure’ of a lawsuit if he does not pay immediately.”
(Doc. 1 ¶ 49.)
Winans appears to allege that FCSI’s text violates
15 U.S.C. § 1692e(5) and (10) and N.C. Gen. Stat. §§ 58-70-95(7),
58-70-110(4), 75-51(7), 75-54(4).
language
does
not
suggest
an
Defendants argue that this
imminent
or
actual
threat
litigation so as to give rise to a violation of the FDCPA.
14 at 10-11.)
of
(Doc.
Under the same rationale, Defendants contend that
the letter does not violate the NCDCA.
(Id. at 11.)
Debt collection letters will not violate § 1692e(5) unless
the least sophisticated consumer “would reasonably believe that
the notices threaten legal action.”
135.
Nat'l Fin. Servs., 98 F.3d at
“For a collection letter to threaten legal action under
§ 1692e(5), it must communicate that a lawsuit is not merely a
possibility, but that a decision to pursue legal action is either
imminent or has already been made.”
Jenkins v. Union Corp., 999
F. Supp. 1120, 1136 (N.D. Ill. 1998); Bentley v. Great Lakes
Collection Bureau, 6 F.3d 60, 62 (2d Cir. 1993) (noting the
threatened legal action must be “authorized, likely and imminent”
13
to give rise to a violation of § 1692e(5)).
“Even indirect or
oblique threats give rise to liability, provided they indicate
that
‘legal
future.’”
action
is
underway
or
contemplated
in
the
near
Combs v. Direct Mktg. Credit Servs., Inc., 1998 WL
911691, at *2 (7th Cir. 1998) (quoting Jenkins, 999 F. Supp. at
1136).
While the “standard is lower than simply examining whether
particular language would deceive or mislead a reasonable debtor,”
“[e]ven the ‘least sophisticated consumer’ can be presumed . . .
to read a collection notice with some care.”
Powell v. Comput.
Credit, Inc., 975 F. Supp. 1034, 1039 (S.D. Ohio Jul. 24, 1997)
(citations omitted).
Here,
the
second
letter,
while
referencing
litigation,
contains no explicit statement that legal action is underway,
either now or in the future.
It clearly states that there is “NO
CIVIL ACTION FILED OR JUDGMENT OBTAINED” against the recipient,
and it offers no indication of when any legal action or further
“procedures” would be taken.
Lockport,
Inc.,
886
F.2d
22,
Cf. Pipiles v. Credit Bureau of
25–26
(2d
Cir.
1989)
(finding
violation of § 1692e(5) where letter indicated that debt “Has
Already Been Referred for Collection Action” and “We Will At Any
Time After 48 Hours Take Action As Necessary And Appropriate To
Secure Payment In Full”).
The question is whether the inclusion of the phrasing, “WE
SELDOM RESORT TO LITIGATION IF THE ACCOUNT IS RESOLVED IN A TIMELY
14
MANNER,” when coupled with the other representations of “FURTHER
PROCEDURES” as well as the admonition in the first letter to
“CONTACT YOUR ATTORNEY,” suggests the negative pregnant — that
FCSI will likely resort to litigation if the account is not
resolved timely.
Larsen v. JBC Legal Group, P.C., 533 F. Supp. 2d
290, at 302 (E.D.N.Y. 2008) (“To determine whether a communication
from a debt collector constitutes a threat, the reviewing court
should look to the language used as a whole.” (citations omitted)).
As the Fourth Circuit has noted in the context of § 1692g, “[t]here
are numerous and ingenious ways of circumventing [the law] under
a cover of technical compliance.”
Nat'l Fin. Servs., 98 F.3d at
138 (alterations in original) (quoting Miller v. Payco-General Am.
Credits, Inc., 943 F.2d 482, 485 (4th Cir. 1991)).
Therefore, the
court must carefully assess whether a communication nevertheless
has
the
effect
collection laws.
of
undermining
the
protections
of
the
debt
On the other hand, courts must be mindful that
debtors who are already overdue on payment cannot be expected to
readily respond to mere invitations to pay, and thus legitimate
forms of persistence may be allowed.
Madonna v. Acad. Collection
Serv., No. 95-CV-00875, 1997 WL 530101, at *8 (D. Conn. Aug. 12,
1997) (Cabranes, J., sitting by designation) (noting that “[i]t
would
be
counterproductive
to
penalize
a
debt
collector
for
suggesting that steps which legally could be taken might in fact
be taken” (quoting Sluys v. Hand, 831 F. Supp. 321, 326 (S.D.N.Y.
15
Sept. 13, 1993))).
While a closer question, the court concludes that even the
least sophisticated consumer should not reasonably conclude that
FCSI’s letters impermissibly threaten litigation.
“Seldom” means “on few occasions, in few cases or instances,
not
often;
rarely,
infrequently.”
Oxford
English
Dictionary
Online, http://www.oed.com/view/Entry/175021?redirectedFrom=seld
om.
The letter’s admonition that litigation is “seldom resort[ed]
to . . . if the account is resolved in a timely manner” (Doc. 2-1
at
2)
certainly
possibility.
suggests
that
litigation
remains
at
least
a
But, as to the imminence of legal action, the letter
does not imply any more than that.
The letter only expressly
states that if the account is not satisfied “voluntarily” and
“timely,” “further procedures” are likely to occur. (Id.)
Although Winans does not argue it, the court notes that the
antonyms
of
“seldom”
include
“often,”
Webster’s
Third
New
International Dictionary 2058 (1986), as well as “frequently” and
“usually,”
Roget’s
743 (3d ed. 2005).
21st
Century Thesaurus
in
Dictionary
Form
However, it does not reasonably follow from
the language of the second letter that if the debt is not resolved
timely, litigation is likely.
See Avila v. Riexinger & Assocs.,
LLC, 644 F. App'x 19, 22 (2d Cir. 2016) (holding that letter did
not violate § 1962e(5) where letter indicated that “the debt
collector ‘may consider additional remedies’ and that the accounts
16
were placed with an attorney for ‘such action as necessary’”
(emphasis in original)); Madonna, 1997 WL 530101, at *6–9 (finding
that statement, “[f]ailure to comply may result in our informing
our client that you have refused to cooperate, they may pursue
legal action,” did not constitute an impermissible threat to pursue
legal action); Knowles v. Credit Bureau of Rochester, Div. of
Rochester
Credit
Ctr.,
No.
91-CV-14S,
1992
WL
131107,
at
*1
(W.D.N.Y. May 28, 1992) (finding that statement, “FAILURE TO PAY
WILL LEAVE OUR CLIENT NO CHOICE BUT TO CONSIDER LEGAL ACTION,”
threatened “no action whatsoever”); Riveria v. MAB Collections,
682 F. Supp. 174, 178–79 (W.D.N.Y. 1988) (finding that language,
“YOU LEAVE US NO CHOICE BUT TO ADVISE YOUR CREDITOR THAT YOU HAVE
IGNORED OUR EFFORTS, AND THAT LEGAL ACTION MAY BE NECESSARY IN
ORDER TO COLLECT THIS BIL [sic],” did not constitute an improper
threat of litigation).
The letters in this case can be distinguished from those that
implied either that litigation was inevitable or that the debt
collector would pursue all legal remedies.
Cf. Huling v. Franklin
Collection Service, Inc., No. 1:16CV-0370-CC-JSA, 2016 WL 4803196
(N.D. Ga.
Sept. 13, 2016) (denying motion to dismiss and finding
fact issue existed as to intent to seek legal action where FCSI
letter contained similar language to the first letter but included
additional statement that debt “WILL BE PURSUED TO A CONCLUSION!”);
Larsen, 533 F. Supp. 2d at 302 (finding that statement, “WARNING:
17
You may be sued 30 days after the date of this notice if you do
not
make
payment,”
signed
by
an
attorney,
constituted
an
impermissible threat of litigation); Bentley, 6 F.3d at 62-63
(holding that statement, “THEY HAVE INSTRUCTED US TO PROCEED WITH
WHATEVER LEGAL MEANS IS NECESSARY TO ENFORCE COLLECTION,” would
reasonably
be
interpreted
by
least
sophisticated
consumer
as
threat of imminent litigation); Nat'l Fin. Servs., 98 F.3d at 136
(finding
impermissible
threats
where
letters
from
attorney
contained phrases such as, “only your immediate payment will stop
further legal action,” “I have filed suits [in similar cases],” “I
will consider the use of legal remedies,” and “instructions have
been given to take any action, that is legal, to enforce payment”).
In assessing whether communications threaten legal action,
“the fact that an attorney — as opposed to a debt collection
service —
sent
the
letter
‘may
create
a
sliding-scale
which
increases the sensitivity of the debtor to language in the letter
threatening litigation.’”
Baptist v. Glob. Holding and Inv. Co.,
L.L.C., 2007 WL 1989450, at *4 (E.D.N.Y. Jul. 9, 2007) (collecting
cases).
This is because, as the Fourth Circuit has observed, “to
most consumers, the relevant distinction between a collection
agency and an attorney is the ability to sue.”
Inc., 98 F.3d at 136.
determinative.
Nat’l Fin. Servs.,
In a close case, this factor can be
See Jenkins, 999 F. Supp. at 1137 (noting that “in
cases where the likelihood of legal action is not clear from the
18
language, the letter's source can be determinative, especially if
it
purports
to
be
from
an
attorney,”
which
“signals
to
the
unsophisticated consumer that legal action is at hand” (collecting
cases)); Canlas v. Eskanos & Adler, P.C., No. C 05-00375 JF, 2005
WL 1630014, at *3 (N.D. Cal. Jul. 6, 2005) (finding that “the
threat is implied by the combination of vague language regarding
‘further action’ and the identity of the sender” as an attorney
(emphasis in original)).
an attorney.
Here, neither letter purports to be from
This factor therefore weighs against any threat of
imminent legal action.
For these reasons, the court finds that, taken as a whole,
the language of the two dunning letters does not impermissibly
threaten
litigation
determination,
adequately
the
alleged
under
court
that
§
1692e(5).
need
FCSI
did
not
Having
address
not
intend
made
whether
to
bring
this
Winans
suit.
Jenkins, 999 F. Supp. at 1138.
Finally,
§
1692e(10)
prohibits
“[t]he
use
of
any
false
representation or deceptive means to collect or attempt to collect
any debt or to obtain information concerning a consumer.”
U.S.C. § 1692e(10).
15
A debt collection letter violates § 1692e(10)
where it falsely represents “that unpaid debts would be referred
to an attorney for immediate legal action.”
Nat'l Fin. Servs.,
Inc., 98 F.3d at 138; Combs, 1998 WL 911691, at *2.
For the above
reasons, the court finds that the second letter does not contain
19
any false threat of “immediate legal action” that would give rise
to a violation of § 1692e(10).
Nat'l Fin. Servs., Inc., 98 F.3d
at
Combs,
138
(4th
(unpublished)
Cir.
1996);
(applying
see
1998
unsophisticated
WL
911691,
debtor
at
standard
*2
and
holding that debt collection letter did not violate § 1692e(10)
where notice warned consumer “[t]his is your opportunity to resolve
this matter amicably,” and “[w]e advise you to consult with your
attorney regarding your liability” (alterations in original)); cf.
Nat'l
Fin.
Servs.,
Inc.,
98
F.3d
at
136–38
(applying
least
sophisticated consumer standard and holding that debt collection
letter violated § 1692e(10) where notice stated “[y]our account
will be transferred to an attorney if it is unpaid after the
deadline date” and advised consumer to “remember your attorney
will want to be paid,” id. at 136).
For these same reasons, the court finds that Winans fails to
state a plausible claim under either the NCCAA or the NCDCA with
regard to any alleged threat of litigation.
See N.C. Gen. Stat.
§§ 58-70-95(7), 58-70-110(4), 75-51(7), 75-54(4).
3.
Winans
Threat of Wage Garnishment and Asset Forfeiture
alleges
that
the
second
letter
impermissibly
threatened “imminent asset seizure,” claiming that use of the term
“further
procedures”
when
coupled
with
the
unchecked
boxes
entitled “Employment Verified” and “Assets Located” constituted an
impermissible threat of wage garnishment as well as attachment of
20
the recipient’s assets.
(Doc. 1 ¶¶ 50, 54.)
Winans appears to
allege that these representations violate 15 U.S.C. §§ 1692e(4),
(5) & (10), 1692f(6), and N.C. Gen. Stat. §§ 58-70-95(6), (7),
& (8), 58-70-110(4), 75-51(6), (7), & (8), 75-54(4).
Defendants
argue that this “bizarre or idiosyncratic” interpretation amounts
to “a quantum and far-fetched leap even for the sophisticated
consumer.”
(Doc. 14 at 12 (first quotation quoting Nat'l Fin.
Servs., Inc., 98 F.3d at 136).)
In addition to prohibiting any threat of conduct otherwise
prohibited by law or the use of false representations or deceptive
means,
15
U.S.C.
§§
1692e(5),
(10),
section
1692e
expressly
prohibits a debt collector from making “[t]he representation or
implication that nonpayment of any debt will result in . . . the
seizure, garnishment, attachment, or sale of any property or wages
of any person unless such action is lawful and the debt collector
or creditor intends to take such action.”
1692f(6)
also
prohibits
a
debt
Id. § 1692e(4).
collector
from
Section
“[t]aking
or
threatening to take any nonjudicial action” to dispossess or
disable property where the collector lacks either a right to
repossess such property or a present intent to take possession of
the property.
Id. § 1692f(6).
Here, the second letter does not contain any language to
suggest any impermissible threat of “imminent asset seizure,” as
Winans alleges.
The letter does not contain any reference to
21
property,
attachment,
seizure,
garnishment,
paychecks,
accounts, or the participation of law enforcement.
2.)
bank
(Doc. 2-1 at
Apart from a vague reference to “further procedures” being
taken, the letter contains no suggestion that FCSI will conduct an
immediate investigation into the consumer’s employment status or
assets.
While it might be a different case if the boxes entitled
“Employment Verified” and “Assets Located” were checked, here they
only inform the recipient that his employment status and available
assets have not been, and may never be, verified.
Cf. Swanson v.
S. Oregon Credit Serv., Inc., 869 F.2d 1222, 1226–28 (9th Cir.
1988) (holding that letter threatening that “within 48 hours a
complete investigation will begin concerning your employment and
assets” gave rise to a violation of the FDCPA under the least
sophisticated debtor standard).
Applying the least sophisticated
consumer standard, the court does not find that these references
impermissibly threatened wage garnishment or attachment so as to
give rise to a violation of the FDCPA.
Under
North
Carolina
collectors
are
similarly
nonpayment
of
an
law,
collection
prohibited
alleged
debt
may
from
agencies
and
debt
“[r]epresenting
that
result
in
the
seizure,
garnishment, attachment, or sale of any property or wages unless
such action is in fact contemplated by the debt collector and
permitted by law.”
addition,
a
N.C. Gen. Stat. §§ 58-70-95(6), 75-51(6).
collection
agency
22
or
debt
collector
may
In
not
“[t]hreaten[] to take any action not permitted by law,” id. §§ 5870-95(8), 75-51(8) or otherwise “[t]hreaten[] to take any action
not in fact taken in the usual course of business, unless it can
be shown that such threatened action was actually intended to be
taken in the particular case in which the threat was made,”
§§ 58-70-95(7), 75-51(7).
id.
For the reasons discussed above, the
court finds that the language within the second letter does not
give rise to a violation of the NCCAA or NCDCA.
4.
Winans
“Employment
Threat of Third-Party Contact with Employer
also
claims
Verified”
that
implies
the
unchecked
that
FCSI
box
will
entitled
contact
the
recipient’s employer regarding the debt, an action it was not
legally
permitted
to
take.
(Doc.
1
¶
52);
see
§ 1692c(b); N.C. Gen. Stat. §§ 58-70-105(1), 75-53(1).
15
U.S.C.
He appears
to allege that this representation gives rise to a violation of 15
U.S.C. § 1692e(5) and N.C. Gen. Stat. §§ 58-70-95(8), 58-70-110(4),
75-51(8),
75-54(4).
Defendants
contend
that
debt
collectors
routinely verify consumers’ employment by directly asking the
consumer and that the presence of this unchecked box does not
amount to an impermissible threat of illegal action.
12-13.)
(Doc. 14 at
No party cites any relevant case law on this issue.
The FDCPA prohibits debt collectors from communicating with
third parties regarding a consumer’s debt.
15 U.S.C. § 1692c(b);
see also id. § 1692a(2) (defining “communication”).
23
However, debt
collectors may communicate with third parties for the sole purpose
of obtaining “location information,” provided that the collector
does not convey or otherwise imply the existence of the consumer’s
debt. Id. § 1692c(b); see id. § 1692b (outlining proper procedures
for obtaining such information); Brown v. Van Ru Credit Corp., 804
F.3d
740,
745
provisions
of
“communication”
(6th
Cir.
§
1692b
in
this
2015)
and
(discussing
competing
context).
the
safe
harbor
interpretations
“Location
of
information”
is
defined as “a consumer’s place of abode and his telephone number
at such place, or his place of employment.” 15 U.S.C. § 1692a(7).
Under North Carolina law, collection agencies and debt collectors
are similarly prohibited from making unauthorized communications
“with any person other than the debtor or his attorney, except
. . . . [f]or the sole purpose of locating the debtor, if no
indication of indebtedness is made.”
N.C. Gen. Stat. §§ 58-70-
105(1), 75-53(1); see also id. § 75-50(4) (defining “location
information”).
Here,
suggests
verified.
the
that
unchecked
the
box
consumer’s
entitled
employment
“Employment
status
has
Verified”
not
been
The letter refers to “employment,” and not “employer.”
Moreover, it is permissible to verify employment with the debtor
himself.
The letter does not therefore imply that contact with
the employer about the debt was made or is contemplated.
In
contrast to other cases where courts have found that references to
24
a debtor’s employment gave rise to a violation of the FDCPA, the
letter does not contain any reference to Winans’s employer or
contain
language
that
would
otherwise
suggest
an
immediate
investigation into his employment status would take place.
Cf.
Shand-Pistilli v. Prof'l Account Servs., Inc., No. 10-CV-1808,
2010 WL 2978029, at *3–4 (E.D. Pa. July 26, 2010) (holding that
plaintiff stated a claim under § 1692c(b) where debt collector
sent her a letter indicating it had “contacted her employer and
verified her employment status”); Swanson, 869 F.2d at 1226–28
(holding that letter threatening that “within 48 hours a complete
investigation will begin concerning your employment and assets,”
id. at 1226, gave rise to a violation of § 1692e(5) under the least
sophisticated
debtor
standard,
where
“[t]he
phrase
‘complete
investigation’ connote[d] something more than simply obtaining
permissible location information,” id. at 1228); Sherman v. Fin.
Credit, LLC., No. 03 C 00023, 2003 WL 1732601 (N.D. Ill. Apr. 1,
2003) (holding, under pre-Iqbal pleading standard, that dunning
letter indicating that debtor was “gainfully employed at BAHAMA
BREEZE,” id. at *1, her current employer, stated a claim for a
violation of FDCPA, but noting that this interpretation was “a
stretch even under the most expansive interpretation of the general
provisions of § 1692e,” id. at *2); Raimondi v. McAllister &
Assocs., Inc., 50 F. Supp. 2d 825, 827 (N.D. Ill. June 15, 1999)
(granting summary judgment in favor of plaintiff for alleged
25
violations of § 1692e(5) and (10), where letter indicated that “a
professional collector will investigate your financial situations
through
. . .
employers”).
Applying
the
least
sophisticated
consumer standard, the court does not find that these references
threatened impermissible third party contact with an employer so
as to give rise to a violation of the FDCPA.
See Herbert v. Wexler
& Wexler, No. 95 C 1452, 1995 WL 535107, at *1 (N.D. Ill. Sept. 5,
1995) (applying unsophisticated consumer standard and finding that
debt collection letter did not violate § 1692e(5) where notice
stated “[w]e have advised our client of the fact that you are
employed and the location of your employment; we have further
advised them that you have the ability to pay this debt but refuse
to do so” (alteration in original)).
With regard to Winans’s alleged violations of the NCCAA and
NCDCA, the court finds this analysis persuasive and concludes that
he has failed to state a claim under either statute for any alleged
threat of unauthorized third-party contact.
See N.C. Gen. Stat.
§§ 58-70-95(8), 58-70-110(4), 75-51(8), 75-54(4).
III. CONCLUSION
For the reasons stated, the court finds that Winans fails to
state a claim for relief under the FDCPA or applicable state law
and the Defendants are entitled to judgment as a matter of law.
IT IS THEREFORE ORDERED that the Defendants’ motion for
judgment on the pleadings (Doc. 13) is GRANTED, and Winans’s
26
complaint (Doc. 1) is DISMISSED WITH PREJUDICE.
A judgment in
accordance with this Order will be issued contemporaneously.
/s/
Thomas D. Schroeder
United States District Judge
August 16, 2018
27
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?