CHENAULT v. CREDIT CORP SOLUTIONS, INC.
MEMORANDUM AND/OR OPINION SIGNED BY HONORABLE JAN E. DUBOIS ON 12/1/17. 12/1/17 ENTERED AND COPIES E-MAILED.(ti, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
CREDIT CORP SOLUTIONS, INC.,
December 1, 2017
This action arises under the Fair Debt Collection Practices Act. 15 U.S.C. § 1692. On
November 19, 2013, defendant, Credit Corp Solutions Inc. (“CCS”), purchased from Synchrony
Bank a debt obligation in the amount of $3,685.11 allegedly owed by plaintiff, Ronald Chenault.
Def. Credit Corp Solutions, Inc.’s Am. Mot. for Summary Judgment 3, Document No. 20, June
16, 2017. On December 7, 2015, defendant filed a Statement of Claim against plaintiff in
Philadelphia Municipal Court, alleging an unpaid balance of $3,820.11, which included the
alleged debt of $3,685.11, plus court costs. Def.’s Am. Mot. for Summary Judgment, Ex. G.
On June 23, 2016, after a hearing before the Philadelphia Municipal Court, the court
entered judgment in favor of Chenault on the grounds that CCS failed to produce sufficient
documentary evidence to show that Chenault owed the debt in question. Def.’s Am. Mot. for
Summary Judgment at 4; Pl.’s Opp. to Def.’s Am. Mot. for Summary Judgment at 3.
Following the dismissal of the debt collection action, plaintiff filed suit in the Court of
Common Pleas of Philadelphia County, alleging that defendant’s attempt to collect the debt
violated the Fair Debt Collection Practices Act (“FDCPA”), the Fair Credit Extension
Uniformity Act (“FCEUA”), and the Pennsylvania Unfair Trade Practices & Consumer
Protection Law (“UTPCPL”). Plaintiff also asserted claims for defamation and abuse of the
legal process. Compl. ¶¶ 18–34. Defendant removed the action to this Court on November 10,
2016. (Document No. 1). Presently before the Court is defendant’s Amended Motion for
A. Summary Judgment
The Court will grant a motion for summary judgment if “the movant shows that there is
no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). A factual dispute is material when it “might affect the outcome of
the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A
dispute of fact is genuine “if the evidence is such that a reasonable jury could return a verdict for
the nonmoving party.” Id. “[T]he judge’s function is not himself to weight the evidence and
determine the truth of the matter but to determine whether . . . there is sufficient evidence
favoring the nonmoving party for a jury to return a verdict for that party.” Id. at 249. The
existence of a “mere scintilla” of evidence in support of the nonmoving party is insufficient. Id.
at 252. In considering a motion for summary judgment, “the [C]ourt is required to examine the
evidence of record in the light most favorable to the party opposing summary judgment, and
resolve all reasonable inferences in that party’s favor.” Wishkin v. Potter, 467 F.3d 180, 184 (3d
B. Fair Debt Collection Practices Act
Congress enacted the Fair Debt Collection Practices Act (“FDCPA”) to give consumers a
private cause of action against debt collectors as protection from “abusive” and “unfair” debt
collection practices that “contribute to the number of personal bankruptcies, marital instability, to
the loss of jobs, and to invasions of individual privacy.” 15 U.S.C. § 1692(a). To that end, the
FDCPA “regulates and proscribes certain debt collection practices employed by debt collectors.”
Gigili v. Palisades Collection L.L.C., No. 06-CV-1428, 2008 WL 3853295 (M.D. Pa. Aug. 14,
2008) (citing 15 U.S.C. §§ 1692c–1692f)). Because the FDCPA is a remedial statute, the Court
must broadly construe its provisions to give full effect to its legislative purpose. See Caprio v.
Healthcare Recovery Group, LLC, 709 F.3d 142, 148 (3d Cir. 2013).
Plaintiff’s FDCPA claims are predicated on a Municipal Court debt collection action filed
by defendant. Plaintiff asserts that defendant is liable under the FDCPA for: harassing,
oppressing or abusing plaintiff in connection with the collection of the debt in violation of 15
U.S.C. § 1692d; misrepresenting the amount, character, and legal status of a debt in connection
with the collection of a consumer debt allegedly due in violation of 15 U.S.C. § 1692e; using
unfair or unconscionable means to collect a debt in violation of 15 U.S.C. § 1692f; using
misrepresentations or deceptive means to collect a debt in violation of 15 U.S.C. § 1692e(10);
and attempting to collect an amount not authorized by contract or law in violation of 15 U.S.C.
§ 1692f(1). Compl. ¶ 19. The Court must first determine whether defendant is governed by the
A. FDCPA Claims
i. Defendant is Governed by the FDCPA
Defendant argues that the provisions of the FDCPA do not apply based on the Supreme
Court decision in Henson v. Santander Consumer USA Inc., 137 S. Ct. 1718 (2017), because it is
not a debt collector within the purview of the FDCPA. The Court disagrees.
The FDCPA defines a debt collector as: “(1) any 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 (2) who regularly collects or attempts to collect, directly or indirectly, debts
owed or due or asserted to be due another.” Machles v. McCabe, Wiesberg & Conway, No. 17CV-1015, 2017 WL 5172516, at *6 (E.D. Pa. Nov. 7, 2017) (quoting 15 U.S.C. § 1692a(6)).
In Henson, the Supreme Court addressed whether Santander Consumer USA Inc., an
entity that purchased defaulted loans and sought to collect on those loans, was a debt collector
who “regularly collects or attempts to collect . . . debts . . . due another” under the second prong
of 15 U.S.C. § 1692a(6). 137 S. Ct. at 1721. In holding that Santander was not a debt collector,
the Court concluded that, under that prong of the statute, “Congress did not intend for debt
buyers to be considered debt collectors for the purposes of the Act, where the debt buyer
attempted to collect debts which the debt buyer owned.” Capozio v. JP Morgan Chase Bank,
NA, No. 16-CV-5235, 2017 WL 5157532, at *3 (E.D. Pa. Nov. 7, 2017) (citing Henson, 137
S.Ct. at 1721–22)). Henson declined to address whether Santander constituted a debt collector
under the first prong of the statute. Thus, defendant in this case may be a debt collector subject
to the FDCPA under the first prong of the statute if its “ ‘principal purpose’ is the collection of
debts or because it ‘regularly’ engages in the collection of debts.” Oppong v. First Union Mortg.
Corp., 215 Fed.Appx. 114, at *118 (3d Cir. Jan. 26, 2007).
Defendant is registered as a collection agency in the state of Utah; moreover, according
to defendant’s website, the company “is a debt collector” that “purchases and collects consumer
debt including unpaid retail finance and sales finance credit cards and personal loans.” Pl.’s
Opp. to Def.’s Mot. for Summary Judgment, Ex. F. The Court concludes that plaintiff has
presented sufficient evidence that defendant is a business whose “principal purpose” is the
collection of debts. Accordingly, defendant is governed by the FDCPA.
15 U.S.C. § 1692d
Plaintiff first asserts that defendant violated 15 U.S.C. § 1692d by “harassing, oppressing,
or abusing Plaintiff in connection with the collection of a debt.” Compl. ¶ 19(a). The Court
disagrees. “[T]he filing of a debt collection lawsuit without the immediate means of proving the
debt does not have the natural consequence of harassing, abusing, or oppressing a debtor. Any
attempt to collect a defaulted debt will be unwanted by a debtor, but employing the court system
. . . cannot be said to be an abusive tactic under the FDCPA.” Harvey v. Great Seneca Fin.
Corp., 453 F.3d 324, 330–31 (6th Cir. 2006) (emphasis in original); see also Shivone v.
Washington Mut. Bank, F.A., No. 07-CV-1038, 2008 WL 3154702, at *1 (E.D. Pa. Aug. 5, 2008)
(adopting the Harvey court’s reasoning to conclude that defendant did not violate § 1692d).
15 U.S.C. § 1692e, 15 U.S.C. § 1692e(10), and 15 U.S.C. § 1692f
Plaintiff also alleges that defendant violated 15 U.S.C. § 1692e by misrepresenting the
amount, character and legal status of a debt in connection with the collection of a consumer debt
and that defendant violated 15 U.S.C. § 1692f by using unfair or unconscionable means to collect
the debt—in this case, filing suit without legal authority and without sufficient proof of the debt.
Compl. ¶ 17. Plaintiff’s § 1692e and § 1692f claims are based on the following assertions:
(1) that defendant failed to establish the amount of the debt owed, because it did not produce
credit card statements, a signed credit card application or agreement, or charge slips to indicate
purchases made on the account and (2) that plaintiff did not incur the debt because he was the
victim of identity theft. Pl.’s Opp. to Def.’s Mot. for Summary Judgment at 3, 13–14.
Plaintiff cites no case law indicating that failure of a defendant to produce credit card
statements, a signed credit card application or agreement, or charge slips, without more, gives
rise to an FDCPA claim. The Court rejects this claim. The Third Circuit has concluded that a
debt collector has no duty “to independently investigate a debt before it begins collection
activities” and may rely on information provided by the entity from whom the debt was
purchased. Dixon v. Stern & Eisenburg, PC, 652 F. App’x 128, 133 (3d Cir. 2016). With
respect to the documentation required, several courts have concluded that “filing a lawsuit
supported by the client affidavit attesting to the existence and amount of the debt . . . is not a
false representation about the character or legal status of a debt, nor is it unfair or
unconscionable.” Deere v. Javitch, Block, and Rathbone, L.L.P., 413 F.Supp.2d 886, 890 (S.D.
Ohio 2006); see also Meier v. Law Offices of Weltman, Weinberg & Reis Co., L.P.A., No. 10CV-262, 2011 WL 2039113, at *17 (W.D.Pa. May 5, 2011) (“Plaintiff’s claim that Defendant
debt collector failed to attach the credit contract and/or monthly statements must fail as a matter
of law.”); Donatelli v. Warmbrodt, 08-CV-1111, 2011 WL 2580442, at * 3–4 (W.D. Pa. June 28,
2011) (defendant’s alleged failure to produce documentation including an executed application
or agreement and a statement of accounts to establish that the debt existed did not give rise to a
violation under § 1692e).
The Court agrees with those courts and concludes that the FDCPA does not impose an
obligation “that more of a paper trail should [be] in the lawyers’ hands or attached to the
complaint” prior to filing a collection suit. Deere, 413 F. Supp. 2d at 890. According to
account statements bearing plaintiff’s name and address, the debtor owed $3,685.11. Def.’s Am.
Mot. for Summary Judgment, Ex. C. The Statement of Claim that defendant filed in Municipal
Court sought to collect this precise amount, plus court fees. Id. at Ex. G. In support of its claim,
defendant provided proof of the debt through the two account statements, along with a Bill of
Sale and a sworn affidavit. Id. Plaintiff has not asserted that the information contained in those
documents is false—merely that defendant lacks sufficient documentation to prove that plaintiff
himself owed the debt alleged. The Court accordingly concludes that defendant’s failure to
provide a signed credit card agreement or evidence of the items purchased on the account does
not constitute a violation under § 1692e or § 1692f.
Plaintiff’s claim that he was the victim of identity theft and therefore never owed any
debt also does not give rise to a violation of § 1692e or § 1692f. The account statements bear
plaintiff’s name and address, and plaintiff has not provided any evidence to suggest that
defendant knew or should have known that his identity had allegedly been stolen before
defendant filed the Municipal Court action. 1 “The FDCPA was intended to protect debtors from
offensive, misleading, and aggressive tactics by debt collectors, not to hold debt collectors . . . to
a standard of omniscience as to whether or not a debt will eventually be found to belong
rightfully to someone other than the individual first identified as the debtor.” Farren v. RJM
Acquisition Funding, LLC, No. 04-CV-995, 2005 WL 1799413, at * 27 (E.D. Pa. July 26, 2005)
(no violation of § 1692e where defendant had no reason to know that debt was not owed by
plaintiff); see also Story v. Midland Credit Funding LLC, No. 15-CV-194, 2015 WL 7760190 at
CCS became aware that Chenault claimed that he did not owe the alleged debt at some point after filing its claim in
Municipal Court. In response, CCS sent Chenault a fraud affidavit and requested a police report regarding the
alleged identity theft. Chenault never responded and accordingly, CCS moved forward with its claim. Pl.’s Resp. in
Opp. to Def.’s Mot. for Summary Judgment, Ex. A.
*7 (“communications regarding that debt are not deemed false, misleading, or deceptive simply
because the alleged debt was incurred through identity theft”).
Plaintiff also contends that defendant violated § 1692e(10), which states that a debt
collector may not use “any false representation or deceptive means to collect or attempt to collect
any debt.” § 1692e(10). The Court is not persuaded. “The only means defendant [ ] is alleged
to have used to collect the debt is the filing of a [Municipal] [C]ourt suit, an act which we find is
not deceptive in nature.” Popson v. Galloway, No. 10-CV-77E, 2010 WL 2895945, at *18
(W.D. Pa. July 27, 2010) (failure to attach the proper documentation to a state law claim did not
give rise to a § 1692e(10) claim).
15 U.S.C. § 1692f(1)
Plaintiff further asserts that defendant violated § 1692f(1), which prohibits attempts to
collect an amount not authorized by contract or law. Specifically, plaintiff contends that
“defendant sued plaintiff for interest in the amount of $372.11 without any proof” of an
agreement authorizing the interest payment. Again, plaintiff’s argument is predicated on
defendant’s failure to provide substantiating documentation when it filed the state court
complaint. Section 1692f(1)’s prohibition on collecting interest payments “is directed at debt
collectors who charge fees not contemplated by the original agreement, not debt collectors who
seek to charge fees contemplated by the agreement . . .” Simkus v. Cavalry Portfolio Services,
LLC, 12 F.Supp.3d 1103, 1110 (N.D. Ill. 2014) (citations omitted). In this case, the $372.11
interest charge was imposed by the original creditor. Def.’s Am. Mot. for Summary Judgment,
Ex. C. Moreover, plaintiff does not contend that the interest amount was contrary to the
agreement that created the debt or the law; instead, plaintiff’s contention is that defendant lacked
a copy of the agreement giving rise to the debt. Popson, 2010 WL 2895945, at *20 (granting
defendant’s motion to dismiss with respect to § 1692f(1) where plaintiff’s allegations centered
on failure to provide supporting documents).
Conclusion – FDCPA Claims
Defendant’s motion for summary judgment is granted with respect to plaintiff’s FDCPA
claims for all of the foregoing reasons.
B. FCEUA and UTPCPL Claims
Plaintiff claims that defendant violated the FCEUA based on the following provision: “it
shall constitute an unfair or deceptive debt collection act or practice under this act if the debt
collector violates any of the provisions of the Fair Debt Collection Practices Act.” Compl. ¶ 21;
73 P.S. §2270.4(a). “The FCEU . . . does not provide its own private cause of action; rather, it is
enforced through the remedial provision of the UTPCPL.” Kaymark v. Bank of America, N.A.,
783 F.3d 168 (3d Cir. 2015). Because the Court rejects the underlying FDCPA claims,
summary judgment must be granted with respect to plaintiff’s claims under the FCEUA and the
UTPCPL. Accordingly, defendant’s motion for summary judgment is granted with respect to
plaintiff’s FCEUA and UTPCPL claims.
C. Defamation Claim
Plaintiff also alleges that defendant defamed plaintiff by filing suit against him “with
reckless disregard to the truth or falsehood of the validity of the alleged debt.” Compl. ¶ 27. “A
statement is entitled to absolute immunity from a defamation claim if it is ‘issued as a regular
part of legal proceeds’ and ‘pertinent and material to the proceedings.’” Downs v. Schwartz, No.
14-CV-630, 2015 WL 4770711, at *14 (E.D. Pa. Aug. 12, 2015) (quoting Bochetto v. Gibson,
580 Pa. 245 (Pa. 2004)). If, however, the statement is later republished to an audience outside of
the legal proceedings, absolute immunity no longer applies. Id.
In his Opposition to Defendant’s Motion for Summary Judgment, plaintiff states that he
has no cause of action for defamation because the statements at issue were not republished to an
audience outside of the legal proceedings. That concession was based on the fact that defendant
did not report the alleged debt to the credit bureaus. Pl.’s Opp. to Def.’s Mot. for Summary
Judgment at 14. Accordingly, defendant’s motion for summary judgment is granted with respect
to plaintiff’s defamation claim.
D. Abuse of Process Claim
Plaintiff also asserts a common law abuse of process claim, arguing that defendant filed
the lawsuit in Municipal Court without a legal basis to do so and that plaintiff suffered
ascertainable losses as a result. “[T]o recover under a theory of abuse of process, a plaintiff must
show that the defendant used legal process against the plaintiff in a way that constituted a
perversion of that process and caused harm to the plaintiff.” General Refractories Co. v.
Fireman’s Fund Ins. Co., 337 F.3d 291, 304 (3d Cir. 2003) (citations omitted). A perversion of
the legal process may occur where one party uses the process “specifically and primarily . . . to
increase the burden and expense of litigation to the other side; and (2) the use of that process
cannot otherwise be said to be for ‘the legitimate or reasonably justifiable purposes of advancing
interests in the ongoing litigation.’” Id. (citations omitted). Where, however, “the defendant has
done nothing more than carry out the process to its authorized conclusion . . .,” there is no abuse
of process. Edwards v. Wyatt, No. 01-CV-1333, 2001 WL 1382503 (E.D. Pa. Nov. 6, 2001).
Plaintiff has failed to provide any evidence that defendant abused the legal process.
Defendant had the right to file to a lawsuit in Municipal Court to collect a debt that it believed
plaintiff owed. See Heintz v. Jenkins, 514 U.S. 291, 296 (1995) (noting that one objective of the
FDCPA is to “preserv[e] creditors’ judicial remedies”). The fact that defendant’s Municipal
Court action was ultimately unsuccessful does not give rise to a claim for abuse of process.
Accordingly, defendant’s motion for summary judgment is granted with respect to plaintiff’s
abuse of process claim.
For the foregoing reasons, Defendant Credit Corp Solutions, Inc.’s Amended Motion for
Summary Judgment is granted and judgment is entered in favor of defendant, Credit Corp
Solutions, Inc., and against plaintiff, Ronald Chenault. An appropriate order follows.
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