Smith et al v. Account Research, Inc
Filing
25
MEMORANDUM OPINION in support of the following Order on defendant's motion for summary judgment. Signed by District Judge Thomas A Varlan on 1/31/12. (ADA)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE
JAMES and DEBRA SMITH,
Plaintiffs,
v.
ACCOUNTS RESEARCH, INC.,
Defendant.
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No.:
3:10-CV-213
(VARLAN/SHIRLEY)
MEMORANDUM OPINION
Plaintiffs, James and Debra Smith (referred to hereinafter as “Mr. Smith,” “Mrs.
Smith,” and collectively as “plaintiffs”), brought this civil action against defendant, Accounts
Research Inc., alleging violations of the Fair Debt Collection Practices Act (the “FDCPA”),
15 U.S.C. §§ 1692, et seq. Pending before the Court is defendant’s Motion for Summary
Judgment as to All Claims [Doc. 11], in which defendant moves the Court for an order
dismissing plaintiffs’ claims on grounds that there are no genuine issues of material fact and
defendant is entitled to judgment as a matter of law. Plaintiffs have submitted a response in
opposition [Doc. 15], and defendant has submitted a reply [Doc. 21] to that response.
The Court has carefully considered the pending motion, the responsive pleadings, and
the supporting exhibits in light of the relevant and controlling law. For the reasons set forth
herein, the Court finds the motion for summary judgment well-taken and it will be
GRANTED. Plaintiffs’ claims will be DISMISSED, and this case will be CLOSED.
I.
Facts
Mr. Smith incurred a debt by failing to pay a bill for medical care he received from
Westside Gastrointestinal Specialists (“Westside”) [Doc. 11-3, pp. 2-3; Doc. 15-2]. On
November 25, 2008, Westside placed Mr. Smith’s account with defendant for collection (the
“Smith Account”) [Doc. 11-3, pp. 3-4; Doc. 15-2, p. 1]. At the time defendant received the
Smith Account, the principal balance of Mr. Smith’s bill was $71.60 [Doc. 11-3, pp. 3-4;
Doc. 15-2, p. 1]. The contract with Westside that gave rise to the debt included a provision
stating that in the event of a delinquency, the party liable for the debt agreed to pay interest
charges, attorneys fees, and collection fees [Doc. 11-3, p. 6]. Mr. Smith testified that it was
only his signature on the contract with Westside [Doc. 11-2; p. 3].
Defendant mailed a letter, directed to Mr. Smith and dated December 3, 2008 (the
“December 3, 2008 notice letter”), giving the balance on the Smith Account as $108.48 [Doc.
1-1], and giving notice to Mr. Smith of his right to dispute the debt and seek verification
[Doc. 11-2, p. 17]. Mrs. Smith testified that she saw the December 3, 2008 notice letter and
agreed that it provided such notice [Doc. 11-1, pp. 11-12]. Plaintiffs did not submit a written
dispute of the debt [Doc. 11-2, p. 17].
A year later, on December 11, 2009, defendant placed a phone call to Mrs. Smith via
her cell phone [Doc. 15-2; Doc. 11-1, pp. 6-7]. Mrs. Smith received the call while she was
at work [Doc. 11-1, p. 7]. Ms. Smith testified that Terry Gunner (“Mr. Gunner”), a
representative of defendant, made the call [Id.]. Mrs. Smith testified that she told Mr.
Gunner that “I really need to go. I’m not allowed to be on my cell phone at work.” [Id., pp.
2
7-8]. Mrs. Smith testified that Mr. Gunner told her she had “better make time” to discuss the
debt and that if she would not make time, he would “make it in a court of law” [Id., p. 8].
Mrs. Smith testified that Mr. Gunner threatened to come to her work, subpoena her, garnish
her wages, and “really embarrass [her].” [Id.]. Ms. Smith testified that Mr. Gunner never
actually showed up at her work [Id.]. Mrs. Smith received no other telephone calls from
defendant or a representative of defendant [Id., p. 10].
On July 7, 2009, defendant mailed a second letter, directed to Mrs. Smith, giving the
balance on the Smith Account as $116.11 (the “July 7, 2009 letter”) [Doc. 1-2]. The July 7,
2009 letter states, in pertinent part, that:
We find it necessary to again call this obligation to your attention. You
have ignored our previous requests for immediate settlement and we are
certainly at a loss to understand why.
You realize, of course, that there cannot be any letup in our efforts until
you pay this bill. It is truly to your advantage to demonstrate your
willingness to forward full payment today.
[Id.]. Sometime in the summer of 2009, Mr. Smith testified that he received one telephone
call from defendant on the land line for his home [Doc. 11-2, pp. 5-15]. On December 14,
2009, defendant mailed a third letter, directed to Mrs. Smith, giving the balance on the Smith
Account as $121.76 (the “December 14, 2009 letter”) [Doc. 1-3]. On February 1, 2010, Mr.
Smith testified that he received, on the land line for his home, a second telephone call from
defendant during which Mr. Gunner told Mr. Smith that he was “lying” when Mr. Smith
stated he would pay back the debt when he could get the money [Doc. 11-2, pp. 7-9]. Mr.
Smith received no other calls from defendant or a representative of defendant [Id., p. 14].
3
Mr. Smith testified that around February 2010, his son-in-law also received one call from
defendant on the land line at plaintiffs’ home [Doc. 11-2, pp. 11-12]. On February 3, 2010,
defendant mailed a fourth letter (the “February 3, 2010 letter”), directed to Mr. Smith, giving
the balance on the Smith Account as $123.56 and stating that “[t]he time has passed for
payments, as your creditor and our client wants their money. The above amount is due in full
NOW.” [Doc. 1-4]
After these events, defendant’s compliance administrator, Sharon Greer (“Ms.
Greer”), testified that defendant received a cease and desist letter from plaintiffs [Doc. 11-3,
p. 11]. After receipt of the letter, defendant informed Westside that the Smith Account
needed to be forwarded to an attorney for collection [Id., p. 12]. Westside authorized the
forwarding of the Smith Account to an attorney, who, on March 30, 2010, filed a lawsuit
against plaintiffs in state court [Id., pp. 11-12]. The state court entered judgment against
plaintiffs on the Smith Account [Doc. 11-1, pp. 2-4; Doc. 11-2, pp. 2-3].
Plaintiffs then initiated this lawsuit against defendant, alleging violations of §§
1692c(a)(1), 1692d, 1692d(5), 1692e(4), 1692e(5), 1692e(10), and 1692g(a) of the FDCPA
[Doc. 1]. Defendant filed the instant motion for summary judgment, asserting that there is
no genuine issue of material fact with respect to any of plaintiffs’ claims and defendant is
entitled to summary judgment as to all claims. Plaintiffs filed a response in opposition,
arguing that genuine issues of material fact exist and that summary judgment in favor of
defendant for plaintiffs’ claims under §§ 1692d, 1692e(4), 1692e(10), and 1692g(a) is
inappropriate. Plaintiffs also assert that defendant violated § 1692 of the FDCPA, a claim
4
not raised in their complaint. Plaintiffs, however, provide no responsive argument in regard
to their claims under §§ 1692c(a)(1), 1692d(5), or 1692e(5). In reply, defendant asserts that
plaintiffs’ response offers no issue of disputed material fact and no reason why summary
judgment should not be granted to defendant on all plaintiffs’ claims.
II.
Standard of Review
Summary judgment under Rule 56 of the Federal Rules of Civil Procedure is proper
“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). The moving party bears
the burden of establishing that no genuine issues of material fact exist. Celotex Corp. v.
Catrett, 477 U.S. 317, 330 n.2 (1986); Moore v. Phillip Morris Cos., 8 F.3d 335, 339 (6th
Cir. 1993). All facts and all inferences to be drawn therefrom must be viewed in the light
most favorable to the non-moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986); Burchett v. Kiefer, 310 F.3d 937, 942 (6th Cir. 2002).
“Once the moving party presents evidence sufficient to support a motion under Rule 56, the
nonmoving party is not entitled to a trial merely on the basis of allegations.” Curtis Through
Curtis v. Universal Match Corp., 778 F. Supp. 1421, 1423 (E.D. Tenn. 1991) (citing Celotex,
477 U.S. at 317). To establish a genuine issue as to the existence of a particular element, the
non-moving party must point to evidence in the record upon which a reasonable finder of fact
could find in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The
genuine issue must also be material; that is, it must involve facts that might affect the
outcome of the suit under the governing law. Id.
5
The Court’s function at the point of summary judgment is limited to determining
whether sufficient evidence has been presented to make the issue of fact a proper question
for the factfinder. Anderson, 477 U.S. at 250. The Court does not weigh the evidence or
determine the truth of the matter, id. at 249, nor does the Court search the record “to establish
that it is bereft of a genuine issue of material fact.” Street v. J.C. Bradford & Co., 886 F.2d
1472, 1479-80 (6th Cir. 1989). Thus, “the inquiry performed is the threshold inquiry of
determining whether there is a need for a trial—whether, in other words, there are any
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.
III.
Analysis
Congress enacted the FDCPA to eliminate “abusive, deceptive, and unfair debt
collection practices.” 15 U.S.C. § 1692(a). See Barany-Snyder v. Weiner, 539 F.3d 327, 332
-333 (6th Cir. 2008). When interpreting the FDCPA, courts begin with the language of the
statute itself.” Schroyer v. Frankel, 197 F.3d 1170, 1174 (6th Cir.1999). As the United
States Court of Appeals for the Sixth Circuit has noted, the FDCPA is “extraordinarily
broad,” crafted in response to what Congress perceived to be a widespread problem. Frey
v. Gangwish, 970 F.2d 1516, 1521 (6th Cir.1992).
Courts therefore use the “least
sophisticated consumer” standard, an objective test, when assessing whether particular
conduct violates the FDCPA. Harvey v. Great Seneca Fin. Corp., 453 F.3d 324, 329 (6th
Cir.2006). This standard ensures “that the FDCPA protects all consumers, the gullible as
well as the shrewd.” Kistner v. Law Offices of Michael P. Margelefsky, LLC, 518 F.3d 433,
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438 (6th Cir.2008) (quotation marks and citations omitted). “[A]lthough this standard
protects naive consumers, it 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.” Id. at 438-39 (quotation marks and
citations omitted).
Plaintiffs claim that defendant violated a number of FDCPA provisions. Defendant
asserts that it is entitled to summary judgment in regard to all plaintiffs’ claims. The Court
addresses each in turn.
A.
15 U.S.C. § 1692c(a)(1)1
Plaintiffs allege that defendant communicated with them at plaintiffs’ place of
employment, a place defendant knew to be inconvenient, by repeatedly contacting plaintiffs
despite their indication that they were unable to receive personal calls at work, in violation
of § 1692c(a)(1) of the FDCPA [Doc. 1, ¶¶ 16, 32(a)]. Section 1692c(a)(1) prohibits a debt
collector from communicating with a consumer in connection with the collection of any debt
“at any unusual time or place known or which should be known to be inconvenient to the
consumer.” 15 U.S.C. § 1692c(a)(1).
It is undisputed that Mrs. Smith received only one call from defendant, via her cell
phone, while she was at work [Doc. 11-1, pp. 6-7]. Mrs. Smith testified that she received no
other calls from defendant, or an agent of defendant, either at work, home, or on her cell
1
Plaintiffs have submitted no argument in support of this claim in their response to
defendant’s motion for summary judgment.
7
phone [Id., p. 10]. Mr. Smith testified that he never received a call from defendant while he
was at work or on his cell phone [Doc. 11-1, pp. 5-15]. According to Mr. Smith’s testimony,
he received two calls from defendant on the land line at his home, one in the summer of
2009, and one in February 2010 [Id.].
The Court finds this undisputed evidence does not show defendant repeatedly
communicated or attempted to communicate with plaintiffs at their work because there is no
evidence that defendant, or defendant’s agent, repeatedly contacted either plaintiff at their
places of employment. Thus, defendant is entitled to summary judgment.
B.
15 U.S.C. § 1692d
Plaintiffs next allege that defendant violated § 1692d of the FDCPA, generally, by
engaging in harassing, oppressive, or abusive conduct in connection with the collection of
a debt and through Mr. Gunner’s statements to Mrs. Smith that her wages would be
garnished, that a legal action would be taken and that defendant would not “letup” in its
collective efforts, and Mr. Gunner’s statement to Mr. Smith that he was lying.
Section 1692d provides that a debt collector may not engage in any conduct the
natural consequence of which is to harass, oppress or abuse, including “causing a telephone
to ring or engaging any person in telephone conversation repeatedly or continuously with
intent to annoy, abuse, or harass any person at the called number.” 15 U.S.C. § 1692d(5).
To prevail under § 1692d, the plaintiff must show not only that the contents of the calls were
harassing, abusive, or misleading, but must also establish the callers’ intent. See Martin v.
Select Portfolio Serving Holding Corp., No. 1:05-cv-273, 2008 WL 618788, at *6 (S.D. Ohio
8
Mar. 3, 2008); Juras v. Aman Collection Serv., Inc., 829 F.2d 739, 741(9th Cir.1987), cert.
denied, 488 U.S. 875 (1988). A debt collector may, however, violate § 1692d(5) when its
employee adopts an intimidating posture in telephone conversations, or immediately calls
back after hanging up. See Fox v. Citicorp Credit Servs., Inc., 15 F.3d 1507, 1516 (9th
Cir.1994); Lovelace v. Stephens & Michaels Associates, Inc., NO. 07-10956, 2007 WL
3333019, at *7 (E.D. Mich. Nov.9, 2007). In determining whether the debt collector
intended to annoy, abuse and harass the consumer, the Court may consider frequency,
persistence, and volume of the telephone calls. See Lovelace, 2007 WL 3333019, at *7;
Sanchez v. Client Servs., Inc., 520 F. Supp. 2d 1149, 1161 (N.D. Cal.2007).
First, in regard to plaintiffs’ allegations concerning Mr. Gunner’s statements regarding
garnishment and a legal action, the Court concludes that under the circumstances of this case,
this conduct does not constitute a violation of § 1692d. Ms. Greer testified, and plaintiffs
have submitted no evidence to the contrary, that after the Smith Account was placed with
defendant, defendant investigated plaintiffs’ assets to determine the possibility of seeking a
garnishment or other legal action in connection with the debt [Doc. 11-3, pp. 9-10]. It is also
undisputed that after defendant informed Westside of plaintiffs’ cease and desist letter,
Westside brought a lawsuit against plaintiffs and ultimately obtained a judgment [Id., pp. 1112; Doc. 11-1, pp. 2-4; Doc. 11-2, pp. 2-3]. Thus, because it is undisputed that defendant and
Westside took steps to determine if a garnishment action was appropriate and filed suit
against plaintiffs, including obtaining a judgment, plaintiffs’ argument that Mr. Gunner made
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statements regarding garnishment and a legal action, on one occasion, does not demonstrate
repetitive, continuous, or harassing conduct, or an intent to harass, oppress, or abuse.
Second, in regard to plaintiffs’ allegations that Mr. Gunner called Mr. Smith a “liar,”
the Court concludes that this statement, which the Court views in the light most favorable to
plaintiffs, and even if viewed as inappropriate, nonetheless does not demonstrate harassing,
abusive, or oppressive conduct in connection with a debt. Plaintiffs cite several cases which
they assert stand for the proposition that debt collectors are liable for § 1692d violations
when they refer to consumers as “liars,” or call into doubt the consumer’s character and
honesty [Doc. 15-1, pp. 7-9 (citing Chiverton v. Fed. Fin. Group, Inc., 399 F. Supp. 2d 96
(D. Conn. 2006) and Moore v. Firstsource Advantage, No. 07-CV-770, 2011 WL 4345703
(W.D. N.Y. Sept. 15, 2011))].
The facts of Chiverton and Moore, however, are
distinguishable from the facts of this case.
In Chiverton, the district court held that the defendant-collector violated § 1692d(2)
by making repeated calls to the plaintiff-consumer after the plaintiff hung up repeatedly on
the defendant, asked the defendant to stop calling, and after the plaintiff told the defendant’s
agent that he had supplied the defendant with proof that his debt had been paid, to which the
agent responded by calling the plaintiff a “liar.” Id., 399 F. Supp. 2d at 99, 103-104. Thus,
in Chiverton, the defendant knew there was no need to communicate with the plaintiff
because the defendant had notice that the debt had been paid. In this case, there is no such
evidence. In addition, in Chiverton, there was evidence of repeated phone calls by the
defendant to the plaintiff, and evidence that the plaintiff repeatedly hung up on the defendant.
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Id. at 99-100. In this case, there is evidence of only four, non-repetitive phone calls, only
three of which were received by plaintiffs, and only one of which involved the accusation of
lying.
In Moore, in addition to the plaintiff-consumer’s allegation that the defendantcollector mocked her and called her a liar, the district court found a genuine issue of fact as
to the volume, frequency, pattern, and substance of the defendant’s communications with the
plaintiff. Id., 2011 WL 4345703, at *14-*15.2 In particular, the Moore court referenced
evidence that when the plaintiff answered a call from the defendant, the agent would begin
singing “Mama Mia” and then hang up. Id. In this case, there is no evidence that defendant
repeatedly called plaintiffs, no evidence that plaintiffs repeatedly hung up on defendant, and
no evidence that an agent of defendant called plaintiffs, sang or behaved in a similarly
inappropriate manner, and hung up. Rather, the evidence shows that defendant made, at the
most, four phone calls to plaintiffs, and plaintiffs have alleged only one conversation between
Mr. Smith and Mr. Gunner in which the accusation of “lying” was made.
Third, in regard to plaintiffs’ argument regarding the statement in the July 7, 2009
letter that “[y]ou realize, of course, that there cannot be any letup in our efforts until you pay
this bill[,]” the Court does not find this to demonstrate an intent to harass and abuse plaintiffs
[Doc. 1-3; Doc. 15-1, p. 7]. While plaintiffs cite several cases which involve collection
2
The Moore court noted that the record was not clear as to how many calls the defendant had
placed to the plaintiff, noting the plaintiff’s estimate that 90 prerecorded phone calls were made,
while the defendant argued that it had made only a maximum of 58 calls. Id., 2011 WL 4345703,
at *14. Either way, these numbers far exceed the number of phone calls alleged by plaintiffs in this
case.
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letters threatening legal action, the Court finds these cases distinguishable [Doc. 15-1, pp.
8-9 (citing Henderson v. Credit Bureau of Lockport, Inc., No. Civ-87-123E, 1989 WL 78235
(W.D. N.Y. July 14, 1989) and Rutnya v. Collection Accounts Terminal, Inc., 478 F. Supp.
980 (N.D. Ill. 1979))].
In Henderson, the district court noted that the defendant- collector had previously sent
several “48-hour notices” to the plaintiff-consumers and that the handwritten words “NO
MORE FALSE PROMISES” appeared on one of the later notices. Id., 1989 WL 78235, at
*2-*3. The Henderson court stated that “[t]he only function of [the defendant’s] words were
to vent his personal frustration concerning a debtor’s elusiveness, and to compel payment by
harassment.” Id. at *3. The Henderson court also found that the notices violated other
requirements of the FDCPA because the notices implied that the plaintiffs’ employers might
be contacted, did not distinguish between different debts owed by the plaintiffs, and did not
include notice to the plaintiffs that a debt would be assumed valid if the plaintiffs did not
dispute the debt in writing. Id. at *2-*3. Here, there are no similar facts indicating that either
plaintiff previously promised to pay the Smith Account before the July 7, 2009 letter was
sent,3 that the letters sent by defendant were not similarly in violation of the FDCPA as the
notices in Henderson, or that plaintiffs were elusive regarding payment of the Smith
Account. While defendant’s typed statement in the February 3, 2010 letter that the debt is
“due in full NOW” [Doc. 1-4] is somewhat similar to the handwritten statement in
3
The Court notes that Mr. Gunner’s statement that Mr. Smith was “lying” came in February
2010, after the July 7, 2009 letter.
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Henderson, the Court does not find that this one statement demonstrates defendant’s or Mr.
Gunner’s intent to be intimidating, harassing, abusive, or misleading towards plaintiff.
In Rutyna, the plaintiff-consumer incurred a debt for medical services and erroneously
believed that her insurance had paid the debt in full. Id., 478 F. Supp. at 981. An agent of
the defendant called the plaintiff and when she denied that she owed the debt, the agent
responded that “you owe it, you don’t want to pay, so we’re going to have to do something
about it.” Id. The defendant then sent a letter to the plaintiff stating that the defendant’s
“field investigator has been instructed to make an investigation in your neighborhood and to
personally call your employer. The immediate payment of the full amount, or a personal visit
to this office, will spare you this embarrassment.” Id. The Rutyna court found the tone in the
letter to be one of “intimidation, and . . . intended as such in order to effect a collection. The
threat of an investigation and resulting embarrassment to the alleged debtor is clear[.]” Id.
at 982.
The “NOW” statement referenced by plaintiffs does not rise to the level of the
statements made in Henderson or Rutyna. It is not accompanied with a threat to do
something about plaintiffs’ nonpayment, nor does the letter threaten to make personal contact
with plaintiffs’ employers. In addition, there is no evidence that plaintiffs told defendant
they had paid the debt. In sum, viewing the statements and all inferences in the light most
favorable to plaintiffs, they have not submitted sufficient evidence that defendant had the
intent to harass, oppress, or abuse plaintiffs into paying the Smith Account. Accordingly,
defendant is entitled to summary judgment.
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C.
15 U.S.C. § 1692d(5)4
Plaintiffs next allege that defendant caused their telephone to ring repeatedly or
continuously with the intent to annoy, abuse, or harass them, in violation of § 1692d(5) of
the FDCPA. Section 1692d(5) prohibits a debt collector from “causing a telephone to ring
or engaging any person in telephone conversation repeatedly or continuously with intent to
annoy, abuse, or harass.” 15 U.S.C. § 1692d(5). Id.; see Hicks v. America's Recovery
Solutions, LLC, — F. Supp. 2d —, —, No. 1:09 CV 2650, 2011 WL 4540755, at *6 (N.D.
Ohio Sept. 29, 2011). District courts have followed the Federal Trade Commission's
interpretations, finding that the term “repeatedly” means “calling with excessive frequency
under the circumstances,” and that “continuously” means “making a series of calls, one right
after the other.” Hicks, 2011 WL 4540755, at *6; McVey v. Bay Area Credit Serv,, No.
4:10–CV–359–A, 2010 WL 2927388, at *6 (N.D. Tex. July 26, 2010) (citing Federal Trade
Comm'n Staff Commentary on the Fair Debt Collection Practices Act, Fed. Reg. 50097).
Although a court may consider the “frequency, persistence, and volume of the telephone
calls” to determine intent, the mere fact that a call is unwelcome is “insufficient to constitute
a violation of the FDCPA.” Martin, 2008 WL 618788, at *6. Furthermore, a significant
disparity between the number of telephone calls placed by the defendant and answered by
the plaintiff may suggest difficulty in reaching the plaintiff rather than intent. See Saltzman
v. I.C. Sys., Inc., No. 09–10096, 2009 WL 3190359, at *7 (E.D. Mich. Sept. 30, 2009).
4
Plaintiffs have submitted no argument in support of this claim in their response to
defendant’s motion for summary judgment.
14
According to Mrs. Smith’s testimony, she received only one call from defendant on
her cell phone and received no calls at work or at home [Doc. 11-1, p. 10]. According to Mr.
Smith’s testimony, he received two calls from defendant on his land line at home, received
no calls on his cell phone or at work, and his son-in-law received one call at plaintiffs’ home
[Doc. 11-2, pp. 13-15]. Thus, plaintiffs have identified a total of four telephone calls that
defendant placed to plaintiffs’ cell and home phones, most of which were separated by
several months. The Court does not find these calls to constitute calls made on a continuous
basis, one right after the other, or with excessive frequency under the circumstances. In
addition, the Court notes that the mere fact that a call or letter is unwelcome is not a violation
of the FDCPA. Accordingly, defendant is entitled to summary judgment.
D.
15 U.S.C. §§ 1692e(4), (5), and (10)
In their complaint, plaintiffs also allege that defendant, through Mr. Gunner,
represented or implied to Mrs. Smith that nonpayment of the Smith Account would result in
seizure or garnishment of plaintiffs’ property or wages, in violation of § 1692e(4), and that
defendant threatened to take legal action that cannot legally be taken, in violation of §
1692e(5). Plaintiffs also allege that defendant made false representations or used deceptive
means to attempt to collect or obtain information concerning plaintiffs, in violation of §
1692e(10). Specifically, plaintiffs allege that the four letters sent by defendant were
“inconsistent” and contained “different amounts due in each letter with no explanation why
the amount increased or changed.” [Doc. 1, ¶ 21]. Defendant has requested summary
15
judgment in regard to all these claims. In their response, plaintiffs do not provide any
argument in regard to their claims under §§ 1692e(5) and (10).
Section 1692e of the FDCPA generally prohibits the use of “false, deceptive, or
misleading representation or means in connection with the collection of any debt.” 15 U.S.C.
§ 1692e. Section 1692e(4) prohibits:
The 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.
15 U.S.C.A. § 1692e(4). Section 1692e(5) proscribes “[t]he threat to take any action that
cannot legally be taken or that is not intended to be taken,” and § 1692e(10) prohibits “[t]he
use of any false representation or deceptive means to collect or attempt to collect any debt[.]”
15 U.S.C. § 1692e(5), (10).
1.
15 U.S.C. § 1692e(4)
As to the alleged violation of § 1692e(4) of the FDCPA, defendant asserts that after
receiving the Smith Account, defendant undertook investigations into plaintiffs’ employment
and the extent of their assets to determine plaintiffs’ capability of paying the debt and to
verify appropriate contact information [Doc. 11-3, pp. 9-10]. Ms. Greer testified that this
investigation was part of defendant’s standard procedure [Id.].
As a result of its
investigations, defendant asserts that after plaintiffs failed to pay the debt, Westside decided
to pursue legal action against plaintiffs by filing suit. Thus, defendant points out, a legal
action was pursued against plaintiffs and a judgment against plaintiffs was in fact entered.
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Accordingly, defendant asserts that Mr. Gunner’s statements regarding wage or property
garnishment and seizure were not a violation of § 1692e(4) because defendant did in fact take
steps to determine the feasibility of those actions.
In response, plaintiffs argue that because defendant’s investigation into whether they
had the ability to pay the debt was “standard procedure,” defendant cannot show that it made
the statements regarding garnishment and legal action with the requisite level of intent to
overcome, on summary judgment, plaintiffs’ claim under § 1692e(4) because Mr. Gunner’s
statements to Mrs. Smith constitute a representation or implication to take actions which
defendant did not intend to take. The Court disagrees. The fact that defendant followed a
standard procedure in verifying plaintiffs’ assets and employment for purposes of
determining whether they would be able to pay the underlying debt, even if such actions were
not ultimately pursued, does not demonstrate a lack of intent to pursue such actions if
feasible, or that defendant represented or implied that it would take actions it never intended
to take. Under plaintiffs’ argument, the only way a debt collector could show intent to
pursue a garnishment or a seizure so as not to violate § 1692e(4) is by actually pursuing the
garnishment or seizure. The Court finds this argument untenable and does not find that Mr.
Gunner’s statement concerning a garnishment or legal action, coupled with defendant’s
investigation into the feasibility of pursuing such actions, to violate § 1692e(4). Because
plaintiffs have pointed to no other evidence that would constitute a violation of § 1692e(4),
the Court finds that defendant is entitled to summary judgment.
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2.
15 U.S.C. § 1692e(5)5
As to the alleged violation of § 1692e(5) of the FDCPA, defendant asserts that
assuming Mr. Gunner told Mrs. Smith she would have to discuss the debt in a court of law
and that “court papers” would be filed if plaintiffs did not pay the debt, because Westside
actually filed suit against plaintiffs, there is no evidence of a threat of a legal action that
could not be pursued and no evidence that these statements were made without intent to take
such actions. The Court agrees with defendant for the same reasons given above in regard
to the Court’s analysis of plaintiff’s claim for a violation of § 1692e(5). Accordingly,
defendant is entitled to summary judgment in regard to this claim as well.
3.
15 § U.S.C. 1692e(10)6
As to plaintiffs’ claim under § 1692e(10) of the FDCPA, defendant asserts that
plaintiffs acknowledged receipt of the December 3, 2008 notice letter and acknowledged that
the letter gave notice regarding the right to dispute the debt and seek verification, yet
plaintiffs never submitted a written dispute [Doc. 11-2, p. 17]. Defendant also points out that
plaintiffs have not disputed that they owed the original balance of $71.60 on the Smith
Account [Id.]. Rather, plaintiffs’ claims are based on their submission that they do not
“understand how additional amounts were being added to [that amount.]” [Id.]. Defendant
points out, however, that Mr. Smith testified that his signature was on the contract with
5
Plaintiffs have submitted no argument in support of this claim in their response to
defendant’s motion for summary judgment.
6
Plaintiffs have submitted no argument in support of this claim in their response to
defendant’s motion for summary judgment.
18
Westside that gave rise to the debt and in that contract, he agreed to pay interest charges,
attorney’s fees and collection costs in the event of a delinquency [Id., pp. 3-4; Doc. 11-1, p.
5].7 Furthermore, the Court notes that plaintiffs have submitted no law stating that a debt
collector is required to inform a consumer, by a notice letter or otherwise, that a debt has
increased or may increase due to added interest or attorneys fees allowable under the
underlying contract. Accordingly, given the above-referenced testimony, and having no
other evidence that plaintiffs were misled by defendant’s letters, or that a least sophisticated
consumer would be misled by such letters, the Court finds that defendant is entitled to
summary judgment.
E.
15 U.S.C. § 1692g(a)
Plaintiffs submit that the December 3, 2008 notice letter was addressed solely to Mr.
Smith, and not Mrs. Smith, and therefore defendant violated § 1692g(a) of the FDCPA
because it failed to notify Mrs. Smith of her right to dispute the debt within five days of
contacting her via her cell phone, on December 11, 2009. Plaintiffs assert that because
defendant independently sought collection of the debt from Mrs. Smith, defendant should
also have provided written notice to her pursuant to § 1692g(a). Defendant contends that Mr.
Smith was the only “consumer” requiring notice of the debt for purposes of § 1692g(a), and
7
Plaintiffs also submit that they were never given a copy of the underlying contract with
Westside, yet they acknowledge that they never asked for a copy of that contract prior to the state
court lawsuit [Doc. 11-1, p. 5; Doc. 11-2, p. 4].
19
submits that the undisputed evidence shows that Mr. Smith was provided with the required
notice of the debt.
Section 1692g(a) requires debt collection agencies to provide written notice to
consumers that discloses, among other things, the name of the creditor and the amount owed.
15 U.S.C. § 1692g(a). See Millsap v. CCB Credit Servs., Inc., No. 07-11915, 2008 WL
8511691, at *4 (E.D. Mich. Sept. 20, 2008). By definition, a consumer is “any natural person
obligated or allegedly obligated to pay any debt.” 15 U.S.C. § 1692a(3). Specifically, §
1692g(a) provides that:
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 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
20
consumer with the name and address of the original creditor, if
different from the current creditor.
15 U.S.C. § 1692g(a). Courts have observed that this provision “requires only that a Notice
be ‘sent’ by a debt collector,” and a collector need not “establish actual receipt by the debtor”
to satisfy the statutory requirement of notice. Mahon v. Credit Bureau of Placer Cnty. Inc,
171 F.3d 1197, 1201 (9th Cir.1999); see also Crain v. Pinnacle Fin. Group, Inc., No. 0712075, 2007 WL 3408540, at *3 (E.D. Mich. Nov.14, 2007) (“Denial of receipt . . . is
irrelevant for purposes of the FDCPA.”); Zamos v. Asset Acceptance, LLC, 423 F. Supp. 2d
777, 785-86 (N.D. Ohio 2006) (same). Once the initial notice is sent, the debtor is given a
30-day opportunity to dispute the validity of the debt in writing, and such a written objection
requires the debt collector to suspend its collection efforts until it produces verification of the
debt. See 15 U.S.C. § 1692g(b). If the debtor does not dispute the debt within the 30-day
period, however, the debt is presumed to be valid and verification is not required from the
debt collector. See 15 U.S.C. § 1692(a)(3); see also Mahon, 171 F.3d at 1202-03; Crain,
2007 WL 3408540, at *4. Standing in an action against a debt collector under § 1692g is
limited to the consumer involved in the debt transaction. See, e.g., Montgomery v.
Huntington Bank, 346 F.3d 693, 697 (6th Cir. 2003) (explaining that the provisions of the
FDCPA that are limited to consumers, as opposed to the provisions applicable to any person,
restrict standing to consumers); Wright v. Fin. Serv. of Norwalk, Inc., 22 F.3d 647, 649 n.1
(6th Cir. 1994) (en banc) (stating that where the section forbids actions by creditors against
consumers, enforcement of the violations is limited to consumers). The FDCPA defines the
21
term “consumer” as “any natural person obligated or allegedly obligated to pay any debt.”
15 U.S.C. § 1692a(3).
In the instant case, plaintiffs have acknowledged receipt of the December 3, 2008
notice letter and have acknowledged that this letter contained information regarding Mr.
Smith’s right to dispute the debt and seek verification [Doc. 1-1; Doc. 11-1, pp. 11-12]. In
its motion for summary judgment, defendant has submitted Ms. Greer’s testimony that Mr.
Smith, as the patient, was the party obligated to pay the underlying debt [Doc. 11-1, pp. 2-3],
and Mr. Smith testified that it was only his signature on the contract with Westside that gave
rise to the underlying debt [Doc. 11-2, p. 3]. While plaintiffs allege in the complaint that
both Mr. Smith and Mrs. Smith are “consumers” for purposes of their FDCPA claims,
plaintiffs have not presented any evidence in their response to defendant’s motion that both
Mr. Smith and Mrs. Smith are consumers for purposes of § 1692(g), that is, that both Mr. and
Mrs. Smith were involved in the underlying debt transaction with Westside.8 Thus, plaintiffs
have not offered evidence to contradict the evidence that Mr. Smith was the only party
obligated to pay the underlying debt and the only “consumer” for purposes of § 1692g(a).
Thus, the Court finds defendant is entitled to summary judgment in regard to this claim.
8
Mrs. Smith testified that she was the one who handled bill payment in plaintiffs’ home, and
that she had seen the December 3, 2008 notice letter [Doc. 11-1, p. 12]. There is no testimony or
evidence in the record, however, that Mrs. Smith was legally responsible or obligated to pay the debt
underlying the Smith Account.
22
F.
15 U.S.C. § 1692f(1)
In response to defendant’s motion for summary judgment, plaintiffs for the first time
assert a violation of § 1692f of the FDCPA, which prohibits a debt collector from using
“unfair or unconscionable means to collect or attempt to collect any debt,” and prohibits “the
collection of any amount (including any interest, fee, charge, or expense incidental to the
principal obligation) unless such amount is expressly authorized by the agreement creating
the debt or permitted by law.” 15 U.S.C. § 1692f(1). Defendant objects to this claim on
grounds that it is improper to raise a new legal argument at the summary judgment stage.
The Sixth Circuit considered a similar issue in Tucker v. Union of Needltracks, Indus.
& Textile Employees, 407 F.3d 784 (6th Cir. 2005). In Tucker, the plaintiff argued that the
district court erred in failing to consider a claim for promissory estoppel which she had not
raised until her response to the defendant’s motion for summary judgment. Id., 407 F.3d at
788. The Sixth Circuit held that the claim had been properly rejected since, although the
facts necessary to plead her omitted claim were within the plaintiff’s knowledge, she had
failed to timely amend her complaint when she learned of those facts. Id. at 789. In doing
so, the court of appeals stated that,” to permit a plaintiff to [assert a new claim at the
summary judgment stage] would subject defendants to unfair surprise.” Id. at 788.
In this case, plaintiffs were clearly aware of the facts from which they have based their
claim under § 1692f. This case has been pending since May 10, 2009, and, as shown by
plaintiffs’ other allegations and claims, plaintiffs possessed the letters sent by defendant
containing the statements which form the basis of plaintiffs’ new claim, along with plaintiffs’
23
other claims, and thus, plaintiffs and counsel for plaintiffs were clearly aware of these facts.
Plaintiffs never sought to amend their complaint to add a claim under § 1629f, and the time
for amendments to pleadings has expired. Rather, plaintiffs waited until their response to
defendant’s summary judgment motion, filed approximately three months prior to the trial
date, to assert this claim. On this alone, the Court could decline to consider plaintiffs’ claim
under § 1692f.
However, for purposes of completeness, the Court has considered plaintiffs’ § 1692f
claim and finds that defendant is entitled to summary judgment in regard to this claim as
well. Plaintiffs assert the same allegations raised in regard to their other claims, each of
which the Court has determined do not involve genuine issues of material fact and that
defendant is entitled to judgment as a matter of law. That is, allegations that defendant acted
in an unfair and unconscionable manner when Mr. Gunner called Mr. Smith a liar and when
defendant set forth “varying amounts in its written correspondence, and failed to provide
plaintiff with any explanation for the increases.” As the Court found above, a single instance
of Mr. Gunner telling Mr. Smith he was lying when Mr. Smith stated that he was going to
pay the debt does not demonstrate harassing, abusive, or oppressive conduct when there is
no other evidence that defendant or its agent made this statement continuously or repeatedly
or with an intent to harass or abuse plaintiffs. Furthermore, plaintiffs have failed to address
defendant’s argument that the differing amounts in the letters mailed to plaintiffs were
authorized by the underlying contract with Westside creating the debt, and the Court has
been presented with no law stating that the FDCPA requires a debt collector to explain why
24
a consumer’s debt has increased due to added interest or attorneys fees allowable by the
underlying contract.
IV.
Conclusion
For the reasons set forth herein, defendant’s Motion for Summary Judgment as to All
Claims [Doc. 11] will be GRANTED and plaintiffs’ claims against defendant will be
DISMISSED. The Clerk will be DIRECTED to close this case. An appropriate order will
be entered.
ORDER ACCORDINGLY.
s/ Thomas A. Varlan
UNITED STATES DISTRICT JUDGE
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