Opinion
IP 00-1319-C-M/S
May 30, 2001
Daniel A. Edelman, Edelman Combs Latturner Chicago, IL.
Clifford W. Shepard, Consumer Protection Law Office Indianapolis, IN.
Ronald Heath Hoover Hull Baker Heath Indianapolis, IN.
Glenn S. Vician Bowman, Heintz, Boscia Vician Merrillville, IN.
ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT
This case presents the simple issue of whether a law firm's collection letter violated the Fair Debt Collection Practices Act ("FDCPA") because it failed to state the total amount of the debt owed, as required by 15 U.S.C. § 1692(g). The plaintiffs, Jerry Bawa and Jacob Salka ("Plaintiffs"), received the letter from Defendant Bowman, Heintz, Boscia Vician, ("Bowman Heintz"), an Indiana law firm. Bowman Heintz contends that the letter complied with the FDCPA. It also claims that even if the letter technically violated the Act, it is shielded from liability under the FDCPA's "bona fide error" defense. 15 U.S.C. § 1692k(c). Both parties have filed fully-briefed Motions for Summary Judgment on the issue, and the Court will now consider their arguments.
I. FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs are residents of Mishawaka, Indiana. Bowman Heintz is a law firm with offices at various locations in Indiana. The firm is a "debt collector" as defined by 15 U.S.C. § 1692a, and holds itself out as practicing in the area of "consumer collection law" and "creditor's rights."
In December, 1999, Bowman Heintz sent Bawa a form collection letter, designated D-78F, in an attempt to collect a debt due on an installment note Plaintiffs signed. Plaintiffs owed Ford Motor Credit Corporation ("Ford Credit") money under a retail installment contract they executed to obtain financing for the purchase of an automobile. The D-78F letter is the first letter Bowman Heintz mails when it is attempting to collect consumer debts on behalf of certain creditors. The letter notified Bawa, in pertinent part, as follows:
There appears to be a disagreement over whether both plaintiffs received a copy of the letter. Because Salka cosigned the installment note, however, he has standing to assert a claim based upon the letter sent to Bawa. Therefore, the factual dispute about whether Salka also received a letter is immaterial.
Re: Your indebtedness to: FORD MOTOR CREDIT COMPANY Balance: $11636.30, plus accrued interest and/or late charges, and attorney fees, exact amount to be determined by agreement between you and us or by a court.
Bowman Heintz claims that it followed its own internal pre-suit and post-suit collection procedures, that it required certain employees to be familiar with those procedures, and that it required those employees to comply with those procedures when performing collection work. Bowman Heintz further contends that on Ford Credit accounts, it had authority to settle debts such as Plaintiffs' in return for payment of the principal alone. Moreover, Bowman Heintz claims that at the time it mailed the letter it sought payment only of the principal stated in the letter.
II. STANDARDS A. SUMMARY JUDGMENT STANDARDS
As stated by the Supreme Court, summary judgment is not a disfavored procedural shortcut, but rather is an integral part of the federal rules as a whole, which are designed to secure the just, speedy, and inexpensive determination of every action. Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986); see United Ass'n of Black Landscapers v. City of Milwaukee, 916 F.2d 1261, 1267-68 (7th Cir. 1990), cert. denied, 111 S.Ct. 1317 (1991). Motions for summary judgment are governed by Rule 56(c) of the Federal Rules of Civil Procedure, which provides in relevant part:
The judgment sought shall be rendered forthwith 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 any material fact and that the moving party is entitled to a judgment as a matter of law.
Once a party has made a properly-supported motion for summary judgment, the opposing party may not simply rest upon the pleadings but must instead submit evidentiary materials which "set forth specific facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e). A genuine issue of material fact exists whenever "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The nonmoving party bears the burden of demonstrating that such a genuine issue of material fact exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Oliver v. Oshkosh Truck Corp., 96 F.3d 992, 997 (7th Cir. 1996), cert. denied, 520 U.S. 1116 (1997). It is not the duty of the court to scour the record in search of evidence to defeat a motion for summary judgment; rather, the nonmoving party bears the responsibility of identifying the evidence upon which he relies. Bombard v. Fort Wayne Newspapers, Inc., 92 F.3d 560, 562 (7th Cir. 1996). When the moving party has met the standard of Rule 56, summary judgment is mandatory. Celotex, 477 U.S. at 322-23; Shields Enters., Inc. v. First Chicago Corp., 975 F.2d 1290, 1294 (7th Cir. 1992).
In evaluating a motion for summary judgment, a court should draw all reasonable inferences from undisputed facts in favor of the nonmoving party and should view the disputed evidence in the light most favorable to the nonmoving party. Estate of Cole v. Fromm, 94 F.3d 254, 257 (7th Cir. 1996), cert. denied, 519 U.S. 1109 (1997). The mere existence of a factual dispute, by itself, is not sufficient to bar summary judgment. Only factual disputes that might affect the outcome of the suit in light of the substantive law will preclude summary judgment. Anderson, 477 U.S. at 248; JPM Inc. v. John Deere Indus. Equip. Co., 94 F.3d 270, 273 (7th Cir. 1996). Irrelevant or unnecessary facts do not deter summary judgment, even when in dispute. Clifton v. Schafer, 969 F.2d 278, 281 (7th Cir. 1992). "If the nonmoving party fails to establish the existence of an element essential to his case, one on which he would bear the burden of proof at trial, summary judgment must be granted to the moving party." Ortiz v. John O. Butler Co., 94 F.3d 1121, 1124 (7th Cir. 1996), cert. denied, 519 U.S. 1115 (1997).
B. 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 collector's 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).
III. DISCUSSION A. DOES BOWMAN HEINTZ' LETTER ADEQUATELY STATE THE AMOUNT OF THE DEBT?
Plaintiffs contend that the letter Bowman Heintz sent Bawa failed to comply with the FDCPA because it did not adequately state the amount of the debt. Section 1692(g)(a) of the FDCPA provides that, in connection with the collection of a debt, a debt collector must provide the consumer with a written notice containing certain information, including "the amount of the debt," the name of the creditor, and directions for the consumer to follow should he or she wish to dispute the debt.
In support of their argument, Plaintiffs rely upon the Seventh Circuit's decision in Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, and Clark, LLC, 214 F.3d 872 (7th Cir. 2000), where 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 does not include accrued but unpaid interest, unpaid late charges, escrow advances or other charges for preservation and protection of the lender's interest in the property, as authorized by your loan agreement. The amount to reinstate or pay off your loan changes daily. You may call our office for complete reinstatement and payoff figures." Id. at 875. Finally, the letter provided a toll-free number the debtor could call. Id. Judge Posner had little difficulty finding that the letter violated the FDCPA:
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.
Plaintiffs have also alerted the Court to a recent decision from the United States District Court for the Northern District of Illinois in which Bowman Heintz was a defendant. Wilkerson v. Bowman, Heintz, Boscia, Vician, No. 00-C-5199 (N.D.Ill. March 26, 2001). In Wilkerson, Judge Pallmeyer was faced with nearly identical facts — Bowman Heintz had mailed a similar letter to Wilkerson, a debtor. In concluding that Bowman Heintz' letter violated the FDCPA, Judge Pallmeyer found Miller to be the controlling authority. In this matter, Bowman Heintz concedes that its letter is similar to the one involved in Miller in that "neither provides an exact number for accrued interest and late charges." See Defendant's Response to Plaintiffs' Motion for Partial Summary Judgment and Memorandum in Support of Cross-Motion for Summary Judgment (hereinafter "Defendant's Brief"), at 6. Bowman Heintz argues that Miller is not controlling because it was only attempting to collect the principal, and the letter gave a correct number for that amount. Defendant's Brief at 6.
This Court agrees with Judge Pallmeyer that Miller controls the outcome of this matter. It is difficult to determine from Bowman Heintz' letter the amount of the debt it sought to recover. Indeed, the letter informed Plaintiffs that they owed "$11636.30, plus accrued interest and/or late charges, and attorney fees, exact amount to be determined by agreement between you and us or by a court." Like the letter in Miller, this failed to state the total amount due — including interest and other charges as well as principal — on the date the letter was sent. As in Wilkerson, Bowman Heintz provided "no explanation for the failure to be precise about the amount owed. The fact that they did not in fact intend to collect any amounts beyond the balance is unsatisfying. Most importantly, that fact is not disclosed in the letter itself." See Wilkerson at 6. In sum, based upon Miller and Wilkerson, the Court concludes that Bowman Heintz' letter violated the FDCPA.
B. IS BOWMAN HEINTZ PROTECTED BY THE BONA FIDE ERROR DEFENSE?
Under the FDCPA, a debt collector may not be held liable if it shows by a preponderance of the evidence that the violation (1) was not intentional, and (2) resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error. 15 U.S.C. § 1692k(c). Bowman Heintz maintains that it is entitled to protection under this provision because it was "not seeking to collect any amounts on a pre-suit basis other than the principal and the letter gave an exact figure for that amount." Defendant's Brief at 8. It claims that its actions were unintentional, as demonstrated by the fact that the balance stated reflected the full amount sought during the pre-suit collection process. Id. at 10. Bowman Heintz made similar arguments in Wilkerson, which Judge Pallmeyer rejected:
In this court's view, Defendants' error in this case cannot fairly be characterized as unintentional. The form letter itself was prepared and reviewed by Defendants, attorneys in a sophisticated debt collection law practice. Attorneys at the firm routinely review each such letter before it is mailed. Although the information set forth in the letter is obtained from Defendants' clients, it is Defendants themselves who make the determination about the specifics to be included in the letter. If it is not possible for Defendants to be precise about the amount owed by the debtor at the time the letter is sent, they have not explained why this is so. Nor does the statute direct disclosure of `the amount sought' or `the amount to be collected.' It requires disclosure of `the amount of the debt.'
Wilkerson at 7. Judge Pallmeyer further distinguished the two cases Bowman Heintz relies upon in this matter, Jenkins v. Heintz, 124 F.3d 824 (7th Cir. 1997), cert. denied, 523 U.S. 1022 (1998), and Jenkins v. Union Corp. 999 F. Supp. 1120 (N.D.Ill. 1998). Judge Pallmeyer noted that in Heintz the defendants were entitled to the bona fide error defense because they did not know that the premiums for "force placed" insurance were unauthorized, and that in Union Corp., the defendant was shielded from liability because it had no way of knowing that the service charge it sought to collect was unauthorized at the time of collection. The Court agrees with Judge Pallmeyer that "[n]either of these cases stand for the proposition that a mistaken view of the obligations imposed by FDCPA will support the bona fide error defense." Wilkerson at 8.
Although the Court recognizes that Bowman Heintz has established procedures to guard against these types of errors, it agrees with Judge Pallmeyer that under these facts the error was not unintentional. Instead, it appears that Bowman Heintz — as it did in Wilkerson — simply misunderstood its obligations under the FDCPA. As a result, the bona fide error defense is unavailable and Plaintiffs are entitled to summary judgment.
IV. CONCLUSION
Accordingly, the Court GRANTS Plaintiffs' Motion for Summary Judgment and DENIES Bowman Heintz' Motion for Summary Judgment.
IT IS SO ORDERED.