Summary
In Dechert v. Cadle Co., No. IP01–880C(B/G), 2003 WL 23008969, at *4 (S.D.Ind. Sept. 11, 2003), the defendant made general assertions that it has policies in place which attempt to make sure it is in compliance with the FDCPA.
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CAUSE NO. IP01-880-C(B/G)
September 11, 2003
Steven J Halbert, Attorney at Law, Indianapolis, IN
David J Philipps, Gomolinski Philipps Ltd, Hickory Hills, IL
Victor O Buente Jr, Newton Falls, OH
Richard H Riegner, White Raub LLP, Indianapolis, IN
ENTRY
Plaintiff in this matter is the Trustee of an individual bankrupt estate. So it is not surprising that the substance of the complaint is related to a debt. The Trustee claims that The Cadle Company, a debt servicing and collection corporation, sent a dunning letter to the debtor which did not comply with the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"). Specifically, plaintiff claims that the letter failed to provide the recipient with the full amount of the debt as required under 15 U.S.C. § 1692 g(a)(1). The Trustee also asserts that a notice accompanying the letter which requests confirmation of the amount of the debt or that The Cadle Company be notified of any disagreement with the amount of the debt also violates the FDCPA.
The Trustee's complaint alleges that the defendant sent numerous similar violative letters and asks for certification of a class of plaintiffs with the Trustee as class representative. That certification was granted; however, on appeal our Circuit Court opined on the previously unanswered appellate question of whether the Trustee of a bankruptcy estate can be an appropriate class representative. Dechert v. The Cadle Company, 333 F.3d 801 (7th Cir. 2003). The answer was no, and upon remand this case now involves the Trustee alone as the named plaintiff.
The Trustee has filed a summary judgment motion, attaching the dunning letter and notice, an affidavit of receipt from the debtor and the sworn deposition testimony of Daniel Cadle, the president of the defendant corporation. The motion is straightforward. Trustee relies on Miller v. McCalla, Raymer, Padrick, Cobb, Nichols Clark, LLC, 214 F.3d 872 (7th Cir. 2000) as precedent for finding a violation of the FDCPA where a debt collection letter sets forth the principal balance as the amount due, but adds a notation that additional interest and late charges are not included, but can be determined by placing a phone call to the author of the letter. The Cadle Company responds by maintaining that it was not acting as a "debt collector" as that term is defined in the FDCPA when it sent the letter at issue, the letter does not violate the FDCPA and that there is a factual dispute with regard to whether or not the debt at issue was a "consumer debt" as required for the FDCPA to apply. As a fall back position, defendant asserts the bona fide error defense.
UNDISPUTED MATERIAL FACTS
In July of 2000, an affiliate of The Cadle Company acquired the rights of First Select, Inc. in certain delinquent credit card accounts and related receivables. One of those delinquent accounts belonged to Judy Oyler. On September 18, 2000, The Cadle Company, through account officer Jerry Drake, sent two pages of correspondence to July Oyler inaccurately introducing The Cadle Company as the new owner of "your loan from First Select, Inc.". The first page is a letter that sets forth the principal balance owing, the account number, a manner in which the recipient can take advantage of an automatic withdrawal payment system and asks if any proceedings in bankruptcy have been instituted It goes on to inform Ms. Oyer of the fact that the balance set forth earlier in the letter "does not include any unpaid interest, late charges, negative escrow, etc., that may be due" and instructs her to call the author for a "pay-off figure". In addition it directs her attention to the second page of correspondence which it refers to as a notice provided in compliance with the FDCPA.
The notice page includes a statement that "the purpose of this letter is to collect a debt" and that the notice is being provided in accordance with 15 U.S.C. § 1692e(11). It provides the required notification that the recipient may dispute the validity of the debt within thirty days of receipt of the notice. It also reiterates that the balance provided may not include additional charges and asks that the recipient confirm or dispute the principal balance by completing a form at the bottom of the page. Judy Oyler filed the initial complaint in this cause in June of 2001. On March 4, 2002 Edward Dechart as Trustee of Ms. Oyer's bankruptcy estate was substituted as the plaintiff in interest.
STANDARD OF REVIEW
Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to material fact and that the moving party is entitled to a judgment as a matter of law." Fed R. Civ. P. 56(c). A genuine issue of material fact exists if there is sufficient evidence for a reasonable jury to return a verdict in favor of the non-moving party on the particular issue. Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The mere existence of a factual dispute will not bar summary judgment; the facts in dispute must be outcome-determinative. Id. In considering a motion for summary judgment, a court must review the record and draw all reasonable inferences in the light most favorable to the non-moving party. Id. at 255; Del Raso v. United States, 244 F.3d 567, 570 (7th Cir. 2001). "[A] party will be successful in opposing summary judgment only when they present definite, competent evidence to rebut the motion." Smith v. Severn, 129 F.3d 419, 427 (7th Cir. 1997).
FDCPA STANDARDS
The FDCPA seeks to eliminate abusive debt collection practices and to protect consumers against debt collection abuses. 15 U.S.C. § 1692(e). The Seventh Circuit evaluates alleged violations of the FDCPA by viewing a debt collectors conduct through the eyes of the unsophisticated consumer. See Avila v. Rubin, 84 F.3d 222, 226 (7th Cir. 1996) (rejecting the least sophisticated consumer standard). The Seventh Circuit has further recognized that the unsophisticated consumer standard protects the consumer who is uninformed, naive, or trusting, yet it admits an objective element of reasonableness. The reasonableness element in turn shields complying debt collectors from liability for unrealistic or peculiar interpretations of collection letters. Gammon v. GC Services Limited Partnership, 27 F.3d 1254, 1257 (7th Cir. 1994).
THE MILLER CASE
The Trustee correctly points to the case of Miller v. McCalla, Raymer, Padrick, Cobb, Nichols Clark, LLC, 214 F.3d 872 (7th Cir. 2000) as the leading precedent in this circuit with regard to the issue of what constitutes a debt collector's compliance with the FDCPA requirement in 15 U.S.C. § 1692g(a), that a consumer be provided with a written notice containing "the amount of the debt. In Miller the debt collector sent a letter to the plaintiff stating that the unpaid principal balance of the loan was $178,844.65. The letter further provided that this amount did not include accrued but unpaid interest, unpaid late charges, escrow advances or other charges for preservation and protection of the lenders interest in the property, as authorized by the loan agreement. It went on to state that the amount to reinstate or pay off the loan changed daily and the recipient could call the office for complete reinstatement and payoff figures. Id. at 875. Finally, the letter provided a toll-free number the debtor could call. Id. In finding that the letter violated the FDCPA, Judge Posner wrote for the Court:
The statement does not comply with the Act (again we can find no case on the question). The unpaid principal balance is not the debt; it is only a part of the debt; the Act requires statement of the debt. . . . What would or might be impossible for the defendants to do would be to determine what the amount of the debt might be at some future date if for example the interest rate in the loan agreement was variable. What they certainly could do was to state the total amount due interest and other charges as well as principal on the date the dunning letter was sent. We think the statute required this.Id. at 875-876.
The language used by defendant in drafting the letter at issue in our case is nearly identical to the language at issue in the Miller matter. Consequently, with respect to the issue of its failure to identify the total amount of the debt due and owing, the letter violates the FDCPA. Unless any of the other defenses asserted by The Cadle Company have merit, the letter is in violation of the FDCPA.
As noted, plaintiff is also claiming that the communication violated the FDCPA because the second page inappropriately "demanded" information from the consumer and at a minimum was confusing and made it appear as though the consumer had some obligation to provide information in order to challenge the validity of the debt. We do not read the letter in that fashion, but need not reach a conclusion with regard to this issue, having found the letter otherwise in violation of the Act.
A DEBT COLLECTOR UNDER THE FDCPA
The Cadle Company asserts that the letter was not in violation of the FDCPA because it was not sent in an attempt to collect a debt. Defendant argues that nowhere in the letter is there language asserting that the debt was due or requesting that it be paid. According to defendant, it was an introductory informational letter. In essence, The Cadle Company argues that it was not acting as a debt collector under the Act.
It is undisputed that an affiliate, not The Cadle Company, owned the debt. The second page of the correspondence specifically states that "the purpose of this letter is to collect a debt". This simply can not be ignored. Defendant meets the definition of "debt collector" contained in 15 U.S.C. § 1692a, and the letter is "communication" as that term is defined. This defense has no merit.
CONSUMER DEBT
Next the defendant argues that there is a factual question regarding whether or not the debt is a "consumer debt". It is undisputed that the account at issue was a delinquent credit card account purchased by an affiliate of The Cadle Company. However, defendant attempts to raise a question as to whether or not a particular cash advance transaction entered into with the credit card was used for "personal, family, or household purposes," as required for the Act to apply.
The attempt to raise this as a material factual issue similarly fails. The Cadle Company relies on pure, inadmissable speculation contained in the affidavit of Daniel Cadle. On its face the account is a consumer debt. Defendant may not attempt to overcome this fact, or bring it into question in order to avoid summary judgment on the basis of mere supposition or speculation. Albiero v. City of Kankakee, 246 F.3d 927, 944 (7th Cir. 2001).
BONA FIDE ERROR
Finally, The Cadle Company attempts to avoid liability for the violation, by asserting the bona fide error defense. It claims that it had procedures in place to comply with the FDCPA and had no intent to violate the Act. The relevant provision in the Act states, "A debt collector may not be held liable in any action brought under this subchapter if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error." 15 U.S.C. § 1692k(c).
In the affidavit of Daniel Cadle, defendant offers testimony, in the most general of terms, to the effect that employees of The Cadle Company are provided verbal training on the requirements of the FDCPA and periodic reviews of form letters are completed to assure compliance. The defendant portrays this verbal training and periodic review as policies and procedures in place and asserts that despite these polices and procedures an error occurred. However, this defense does not shield those who simply misunderstand the obligations imposed by the FDCPA. Clark v. Priority Financial Services, Inc., 2001 WL 1155152 (S.D. Ind. September 8, 2001); Bawa v. Bowman, Heintz, Boscia Vician, 2001 WL 618966, at *4 (S.D. Ind. May 30, 2001).
Further, the defendant offers no evidence of what the error was in this case and how the policies and procedures in place were designed to address such a potential error. Its assertions are much more broad and ambiguous in nature. The Cadle Company is merely asserting, in general, that it attempts to make sure it is in compliance with the FDCPA. However, the dunning letter was not in compliance because it did not provide the total amount of the debt. This is not an error such as a transposition of numbers, or failure to record a payment made. More directly stated, defendant's suggestion that by keeping an eye on collection law, as it develops or changes, it has instituted the type of policies or procedures necessary to demonstrate a lack of intent to violate the law and has shielded itself from liability under the Act just doesn't wash. The letter at issue was sent more than three months after the Miller decision was decided. Apparently the periodic compliance review referred to within the submitted affidavit was not periodic enough.
In addition, the Court agrees with plaintiff when he points out that defendant's broad assertion that it tries to comply with the applicable law can not serve as the type of policies and procedures contemplated by Congress as sufficient to insulate a debt collector from liability. Otherwise, nearly all violations could be claimed to fall within the protection of the bona fide error defense by any offending debt collector.
CONCLUSION
Plaintiff is entitled to summary judgment against defendant with respect to its liability for failing to comply with the FDCPA in its September 18, 2000 communication to Ms. Oyler and, accordingly, the Court GRANTS Plaintiff's Motion For Summary Judgment.The amount of damages to which plaintiff is entitled remains an unanswered issue. No actual damages have been pled. Because this matter is not a certified class action, plaintiff is limited to recovering statutory damages in an amount not to exceed $1,000.00 as well as costs and a reasonable attorneys fee. 15 U.S.C. § 1692k requires the court to examine the frequency and persistence of noncompliance, the nature and extent of noncompliance, as well as the intent of the defendant when it establishes the amount of liability. The record currently before the court is insufficient with regard to these issues for it to determine the amount of damages to assess. A status conference is currently set before Magistrate Judge Godich on September 17, 2003. In addition to potential settlement, that conference should include a discussion of the manner in which the parties will seek to muster evidence with respect to the remaining damage issues.
IT IS SO ORDERED.