Author Topic: FDCPA Case Law  (Read 8167 times)

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FDCPA Case Law
« on: October 16, 2005 05:01:04 AM »
United States Court of Appeals for the Second Circuit - June 18    2003

Alibrandi alleged that in a January 27    2000 letter seeking payment of a debt he owed to First Union National Bank    Financial Outsourcing did not include the warnings and declarations of debtor rights that the Act requires to be included in correspondence from debt collectors.

The district court found that    because First Union and Financial Outsourcing deemed Alibrandi’s debts not to be in default when Financial Outsourcing wrote to him    Financial Outsourcing was not a “debt collector” and the FDCPA did not require the January 27    2000 letter to contain the statutory warnings. Accordingly    the court granted Financial Outsourcing’s motion for summary judgment and dismissed the case. Alibrandi appealed. We hold that if First Union retained North Shore Agency    Inc.    and    by reason of a letter that North Shore as its agent sent to Alibrandi    in effect declared Alibrandi’s debt to be in default before First Union referred his account to Financial Outsourcing    the January 27    2000 letter was required to include the warnings. Because it does not appear at this point that Alibrandi’s contentions as to First Union’s retention of North Shore and North Shore’s communication with him are undisputed    we vacate the judgment and remand for further proceedings.

State of Michigan Court of Appeals - March 2    2001

Defendant appeals as of right from an order granting plaintiff’s motion for summary disposition in this debt collection action. We affirm in part and remand.

Defendant first contends that plaintiff did not have standing to bring this suit under the Michigan Collection Practices Act (MCPA) based on the following provisions: Defendant maintains that plaintiff is a collection agency under the Act and has thus violated the above provisions. Plaintiff    on the other hand    contends that it is not a collection agency and purchased the debt in question outright and is not acting on behalf of a creditor.

In the instant case    defendant purchased the vehicle from Repo Depo West    Inc. Repo Depo West    Inc. immediately sold defendant’s account to Guardian National Acceptance Corporation. On June 27   1997    plaintiff purchased defendant’s account from GNA. The purchase agreement states that GNA conveyed all of its interests in the accounts to plaintiff for value.

This Court holds that plaintiff is not a collection agency as defined by the Act. The purchase agreement states that GNA conveyed all of its interest in defendant’s account for valuable consideration.

Defendant also argues that    under the Fair Debt Collection Practices Act    15 USC 1692 et seq. (FDCPA)    plaintiff is a debt collector and is prohibited from suing on accounts it purchased after the debt was in default. Plaintiff concedes that it is a debt collector under the FDCPA. Defendant relies on the following provisions to support his argument:

In the instant case    plaintiff concedes    and we agree    that it is a debt collector under the Act. However    defendant does not allege how    if at all    plaintiff has violated any of the protective provisions of the Act.

United States Court of Appeals for the Seventh Circuit - May 16    1996

Can a person    licensed to practice law    be in violation of the Fair Debt Collection Practices Act (FDCPA)    15 U.S.C. sec. 1692 et seq.    for sending dunning collection letters that purport to be from an "at torney"? This is one of two interesting questions we ad- dress today in this case involving Raul Avila (and a class of similarly situated persons)    the Van Ru Credit Corporation    and Albert G. Rubin    an attorney-at-law from Skokie    Illinois. As Joe Friday would say    let's get to the facts. We will    but unlike Sergeant Friday    it won't be "just the facts" as we'll mix in some observations and findings along the way.

Avila is a student loan debtor living in Connecticut. Van Ru Credit Corporation is a collection agency in Skokie    Illinois. Rubin is an Illinois attorney. Although we were told at oral argument that Rubin and the Van Ru agency are separate    they actually seem to be as closely inter- twined as lovers during an embrace. Here's the situation from which    we think    that conclusion is justified.

United States Court of Appeals for the First Circuit - October 30    2002

To be specific    the appellants -- several former Chapter 7 debtors seeking to represent a putative class -- maintain that the principal defendant    Sears    Roebuck & Company    (1) habitually violated the Bankruptcy Code by the manner in which it essayed to enforce security liens in household goods and other personal property. Their claim has two subparts. First    they allege that redemption agreements between lienholders and debtors    entered into after the granting of a discharge in bankruptcy    invariably violate the prohibitions of the bankruptcy discharge injunction    codified in 11 U.S.C. § 524. Second    they allege that    in all events    such agreements require bankruptcy court approval (which was never obtained).

The district court wrote a thoughtful opinion in which it answered both the bankruptcy and the FDCPA questions adversely to the appellants. Arruda v. Sears    Roebuck & Co.    273 B.R. 332 (D.R.I. 2002). It thereupon dismissed their complaints. Id. at 351. For the reasons that follow    we affirm the district court's order.

United States Court of Appeals for the Seventh Circuit - October 8    1997

A credit-card company hired lawyer John Heibl    the defendant in this case    to collect a consumer credit-card debt of some $1   700 from Curtis Bartlett    the plaintiff. Heibl sent Bartlett a letter    which Bartlett received but did not read    in which Heibl told him that "if you wish to resolve this matter before legal action is commenced    you must do one of two things within one week of the date of this letter": pay $316 toward the satisfaction of the debt    or get in touch with Micard (the creditor) "and make suitable arrangements for payment. If you do neither    it will be assumed that legal action will be necessary."

The letter is said to violate the statute by stating the required information about the debtor's rights in a confusing fashion. Finding nothing confusing about the letter    the district court rendered judgment for the defendant after a bench trial. The plaintiff contends that this finding is clearly erroneous. The defendant disagrees    of course    but also contends that even if the letter is confusing this is of no moment because Bartlett didn't read it. That would be a telling point if Bartlett were seeking actual damages    for example as a consequence of being misled by the letter into surrendering a legal defense against the credit-card company. He can't have suffered such damages as a result of the statutory violation    because he didn't read the letter. But he is not seeking actual damages. He is seeking only statutory damages    a penalty that does not depend on proof that the recipient of the letter was misled. E.g.    Tolentino v. Friedman    46 F.3d 645    651 (7th Cir. 1995); Harper v. Better Business Services    Inc.    961 F.2d 1561    1563 (11th Cir. 1992); Clomon v. Jackson    988 F.2d 1314    1322 (2d Cir. 1993); Baker v. G.C. Services Corp.    677 F.2d 775    780-81 (9th Cir. 1982). All that is required is proof that the statute was violated    although even then it is within the district court's discretion to decide whether and if so how much to award    up to the $1   000 ceiling. E.g.    Tolentino v. Friedman    supra    46 F.3d at 651; Clomon v. Jackson    supra    988 F.2d at 1322.

In the United States Court of Appeals for the Seventh Circuit - APRIL 18    1997

This case presents the novel question of whether the Fair Debt Collection Practices Act ("FDCPA" or "the Act")    15 U.S.C. sec. 1692 et seq.    applies to third-party efforts to collect payment from consumers who use a dishonored check for the purchase of goods or services. The answer turns on whether the payment obligation that arises from a dishonored check constitutes a "debt" as defined in the Act. On cross-motions for partial summary judgment    the district court answered in the affirmative    holding that (1) the Act applies to third- party collectors of dishonored checks    and (2) the defendants' collection practices violated the Act. On appeal    the defendants challenge only the former holding    arguing that the Act applies only to those debts arising from an offer or extension of credit. We now affirm.

United States Court of Appeals for the Second Circuit - June 14    1993

Appeal from summary judgment entered in the United States District Court for the District of Connecticut (Covello    J.)    the district court having dismissed plaintiff's complaint after finding that debt collection letters sent by defendant to plaintiff were not misleading or deceptive within the intendment of the Fair Debt Collection Practices Act.
Reversed and remanded.

United States Court of Appeals for the Seventh Circuit - December 28    2001

The Act forbids a debt collector    which Wexler is conceded to be    to "use any false    deceptive    or misleading representation or means in connection with the collection of any debt   " 15 U.S.C. sec. 1692e    including "the false representation or implication that any individual is an attorney or that any communication is from an attorney." 15 U.S.C. sec. 1692e(3). A lawyer who merely rents his letterhead to a collection agency violates the Act    15 U.S.C. sec. 1692j(a); Taylor v. Perrin    Landry    deLaunay & Durand    103 F.3d 1232    1235-38 (5th Cir. 1997); cf. White v. Goodman    200 F.3d 1016    1018 (7th Cir. 2000)    for in such a case the lawyer is allowing the collection agency to impersonate him.

The significance of such impersonation is that a debtor who receives a dunning letter signed by a lawyer will think that a lawyer reviewed the claim and determined that it had at least colorable merit; so if no lawyer did review the claim    the debtor will have been deceived and the purpose of the Act therefore thwarted. Similarly    a lawyer who    like Wexler    is a debt collector violates section 1692e(3) (and also section 1692e(10)    which forbids "the use of any false representation or deceptive means to collect or attempt to collect any debt") if he sends a dunning letter that he has not reviewed    since his lawyer's letterhead then falsely implies that he has reviewed the creditor's claim.

United States Court of Appeals for the First Circuit - November 18    1998

Plaintiff William H. Brady ("Brady") filed this action against defendant The Credit Recovery Company ("CRC" or "defendant") and its president and clerk Leslie A. Clark ("Clark" or "defendant") to redress alleged violations of the Fair Debt Collection Practices Act (the "FDCPA")    15 U.S.C. §§ 1692-1692o    and of related state law obligations.

The district court dismissed Brady's FDCPA claim for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6) and dismissed the remaining state law claims without prejudice for lack of jurisdiction. In its memorandum and order    the district court recited the standard governing 12(b)(6) motions to dismiss but relied in part on materials outside of the pleadings. We therefore treat the motion as one for summary judgment. See Dominique v. Weld     73 F.3d 1156    1158 (1st Cir. 1996).
We review a grant of summary judgment de novo     viewing the facts in the light most favorable to the nonmovant    plaintiff    see id.     and conclude that the order of dismissal/grant of summary judgment must be reversed. Accordingly    we remand this case for action consistent with this opinion.

United States Court of Appeals for the Eleventh Circuit. - Aug. 15    1997.

This appeal presents the issue of whether unpaid administrative and other fees charged under the rental agreement by an automobile and truck rental company in the event of an accident constitute "debt" under the Fair Debt Collection Practices Act. We hold that such fees fall within the ambit of the Act    and remand for further proceedings.

United States Court of Appeals for the Ninth Circuit. - July 8    1997

This case presents an issue of first impression in this circuit: whether a third-party debt collector's efforts to collect a dishonored check are governed by the Fair Debt Collection Practices Act ("FDCPA" or "the Act")    15 U.S.C. SS 1692- 1692o. The district court ruled that the FDCPA does not apply to efforts to collect a dishonored check    because a dishonored check is not a "debt" under the FDCPA.

The only federal court of appeals that has considered this question is the Seventh Circuit. In a well-reasoned and persuasive opinion    that court recently held that a dishonored check is a "debt" under the FDCPA. Bass v. Stolper    Koritzinsky    Brewster & Neider    S.C.    111 F.3d 1322 (7th Cir. 1997).

We agree with its conclusion that    because "an offer or extension of credit is not required for a payment obligation to constitute a `debt' under the FDCPA   " id. at 1326    the FDCPA governs the collection of dishonored checks. We therefore reverse.

United States Court of Appeals for the Forth Circuit - April 5    1999

Plaintiffs    Mohammad and Diana Chaudhry    filed the present action against Defendants Michael Gallerizzo and his law firm    Gebhardt & Smith    in the United States District Court for the District of Maryland    alleging various violations of the Fair Debt Collection Practices Act ("FDCPA")    15 U.S.C.A. § 1692a    et seq. (West 1998). The district court granted a motion for judgment as a matter of law in favor of Defendants on all counts. In addition    the district court levied sanctions against Plaintiffs and their attorney for filing frivolous claims. We affirm.

United States Court of Appeals for the Seventh Circuit - June 23    1997

Plaintiff Carl Chauncey sued defendant JDR Recovery Corporation alleging violations of the Fair Debt Collection Practices Act (15 U.S.C. sec.sec. 1692-1692o) ("FDCPA"). The defendant is a professional debt collection agency and wrote plaintiff on December 10   1994    a letter seeking to collect a $1   541.28 debt allegedly owed to Bridgestone/Firestone. On December 8 of the following year    plaintiff sued defendant alleging two violations of 15 U.S.C. sec. 1629g(a). The suit sought statutory damages    costs and reasonable attorney's fees under 15 U.S.C. sec. 1692k. On June 14   1996    the district court handed down an opinion finding defendant liable on one claim of plaintiff and finding it unnecessary to rule on plaintiff's second claim because a single violation of the FDCPA is sufficient to entitle plaintiff to an award of statutory damages. However    the order did not determine the amount of statutory damages and attorney's fees but permitted the parties to put in evidence on those amounts. 1

The question before us is whether the dunning letter sent by defendant demanding payment within the 30-day debt validation period violates the FDCPA.

United States Court of Appeals for the Second Circuit - October 30    2001

Plaintiff brought action under the Fair Debt Collection Practices Act alleging that debt collector's letter violated the terms of the Act. The United States District Court for the Eastern District of New York (Mishler    J.)    dismissed the action for failure to state a claim on which relief can be granted    and plaintiff appealed. The Court of Appeals    Leval    J.    vacates and remands    holding that plaintiff's complaint states claim that debt collector's letter contradicted or confused the message required to be given by the Act.

Plaintiff appeals from the judgment of the United States District Court for the Eastern District of New York (Jacob Mishler    Senior District Judge)    dismissing claims under the Fair Debt Collection Practices Act    15 U.S.C. § 1692 et seq. ("the Act")    for failure to state a claim on which relief can be granted. See Fed. R. Civ. P. 12(b)(6). We vacate and remand.

United States Court of Appeals for the Eighth Circuit - April 27    2001

Troy L. Freyermuth (Freyermuth) appeals the district court's entry of summary judgment in favor of Credit Bureau Services    Inc.    d/b/a/ Checkmate of Fremont (Checkmate). Freyermuth commenced this action pursuant to the Fair Debt Collection Practices Act (FDCPA)    for abusive practices in seeking to collect payment for dishonored checks. 15 U.S.C. §§1692 et seq. The District Court granted summary judgment for defendant. We affirm.

United States Court of Appeals Fifth Circuit - April 23    1997

In early April 1993    Bell South Mobility retained the law firm of Richard S. Derbes    A Professional Law Corporation    to collect delinquent telephone bills from certain customers. Over the next nine months    Richard S. Derbes    on behalf of the law firm    mailed approximately 639 demand letters to individual customers of Bell South. Daniel Garrett received one of these demand letters and then filed an action against Derbes and his law firm (jointly    "Derbes") alleging several violations of the Fair Debt Collection Practices Act    15 U.S.C. § 1692 et seq.

United States Supreme Court - April 18    1995

Petitioner Heintz is a lawyer representing a bank that sued respondent Jenkins to recover the balance due on her defaulted car loan. After a letter from Heintz listed the amount Jenkins owed as including the cost of insurance bought by the bank when she reneged on her promise to insure the car    Jenkins brought this suit against Heintz and his law firm under the Fair Debt Collection Practices Act    which forbids "debt collector" to make false or misleading representations and to engage in various abusive and unfair practices. The District Court dismissed the suit    holding that the Act does not apply to lawyers engaging in litigation. The Court of Appeals disagreed and reversed.

Held: The Act must be read to apply to lawyers engaged in consumer debt collection litigation for two rather strong reasons. First    a lawyer who regularly tries to obtain payment of consumer debts through legal proceedings meets the Act's definition of "debt collector": one who "regularly collects or attempts to collect    directly or indirectly    [consumer] debts owed . . . another   " 15 U.S.C. § 1692a(6). Second    although an earlier version of that definition expressly excluded "any attorney at law collecting a debt as an attorney on behalf of and in the name of a client   " Congress repealed this exemption in 1986 without creating a narrower    litigation related    exemption to fill the void. Heintz's arguments for nonetheless inferring the latter type of exemption--(1) that many of the Act's requirements    if applied directly to litigation activities    will create harmfully anomalous results that Congress could not have intended; (2) that a postenactment statement by one of the 1986 repeal's sponsors demonstrates that    despite the removal of the earlier blanket exemption    the Act still does not apply to lawyers' litigating activities; and (3) that a nonbinding "Commentary" by the Federal Trade Commission's staff establishes that attorneys engaged in sending dunning letters and other traditional debt collection activities are covered by the Act    while those whose practice is limited to legal activities are not--are unconvincing. Pp. 3-8. 25 F. 3d 536    affirmed.

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The part collectors hate
« Reply #1 on: November 23, 2005 02:35:35 AM »
FDCPA lawsuit and action to collect underlying debt are not compulsory

Peterson v. United Accounts, Inc., 638 F.2d 1134 (8th Cir.
1981). Consumer is therefore not barred from filing separate FDCPA
action even when previously sued on the debt. Debt collector may not
maintain collection action as counterclaim in federal court - Kuhn v.
Account Control Technology, Inc., 865 F.Supp. 1443 (D. Nev. 1994).

In FDCPA litigation brought against the debt collector, the collector normally may not assert a counterclaim for the underlying debt.

Peterson v. United Accounts, Inc., 638 F.2d 1134 (8th Cir. 1981)

Leatherwood v. Universal Business Service Co., 115 F.R.D. 48 (W.D.N.Y.

Gutshall v. Bailey & Assoc., 1991 U.S.Dist. LEXIS 12153 (N.D.Ill. 1991)

Hart v. Clayton-Parker & Assoc., 869 F. Supp. 774 (D.Ariz. 1994)

Ayres v. National Credit Management Corp., 1991 U.S. Dist. LEXIS 5629, 1991 WL 66845, at *4 (E.D. Pa. April 25, 1991)

Zhang v. Haven-Scott Assoc., Inc., 95-2126, 1996 WL 355344, 1996 U.S.Dist. LEXIS 8738 (E.D.Pa., Jun