Opinion
CIVIL ACTION NO. 02-3072, SECTION "L" (3).
May 19, 2003.
ORDER REASONS
Before the Court is a motion to dismiss for failure to state a claim and lack of subject matter jurisdiction and, alternatively for summary judgment filed by Defendants Jerry Sullivan, Terri Daigrepont, and Leefe, Gibbs, Sullivan, Dupre Alduous and Plaintiffs' Objections to the Magistrate's Order. For the following reasons, the Defendants' motion for summary judgment is GRANTED and the Plaintiffs' objections to the Magistrate's order is DENIED as moot.
I. BACKGROUND
This case arises out of a dispute over payment for a wedding photo album. Plaintiffs, Amy Menchel and Jeffrey Caire, hired Defendant Terri Daigrepont, dba Paul Daigrepont Studio, as a professional photographer for their wedding and reception on March 10, 2001. Plaintiffs claim that they paid for the supreme wedding picture package totaling $1350.00 and an additional parent album totaling $195.00, plus all applicable taxes prior to the wedding date. According to the Plaintiffs, Defendant Daigrepont breached the agreement by failing to complete the services and failing to produce and return Plaintiffs' wedding pictures. Plaintiffs allege that they did not receive several pictures from the wedding because the Defendant Daigrepont failed to advance the film in the camera.
In an attempt to amicably resolve the dispute, Defendant Daigrepont allegedly agreed to provide extra copies of photos in the wedding album at no additional cost. However, Plaintiffs claim that Defendant later demanded $491.55 for the extra pictures and continues to hold the wedding album until payment is received. Plaintiffs also claim that Defendant Daigrepont made unfounded allegations of defamation against the Plaintiffs and threatened them with a law suit based on the defamation. Plaintiff alleges that Defendant's accusations of defamation were reinforced by her attorneys, Jerry Sullivan and the Leefe law firm, also made Defendants in this case, through correspondence with the Plaintiffs threatening legal action and seeking to recover the debt for Defendant Daigrepont. The Plaintiffs allege violation of the Fair Debt Collection Practices Act and invoke jurisdiction of this Court under the Truth in Lending Act. Plaintiffs also assert state law claims for intentional infliction of emotional distress and loss of intellectual enjoyment resulting from breach of contract.
According to Defendants, the Plaintiffs' claims are entirely based on two letters that Defendant Jerry Sullivan wrote to Plaintiffs' attorney Caire dated November 6, 2001 and May 16, 2002, both in response to letters written by Caire dated October 25, 2001, December 19, 2001, and February 25, 2002. All of these letters are attached to the Defendants' motion.
First, on October 25, 2001, Caire wrote a letter to Defendant Terri Daigrepont indicating that Daigrepont breached her agreement with the Plaintiffs by failing to produce and deliver certain wedding photographs. The letter stated it was an amicable demand for Daigrepont to deliver the wedding album to the Plaintiffs, and pay to them $25,000 in damages for mental anguish and emotional distress. The letter also specifically stated the following: "Should you fail to respond to this amicable demand, or have your attorney do so, within ten days of the date of this letter, I will proceed to take whatever civil action I deem necessary and appropriate to protect the interests of my client."
In response, Daigrepont consulted with Jerry Sullivan, a personal friend and attorney at the Leefe Gibbs law firm, and Sullivan wrote a letter dated November 6, 2001 on the Leefe Gibbs letterhead addressed to Caire, Plaintiffs' attorney. In this letter, Sullivan indicated that he represented Daigrepont and explained Daigrepont's version of the facts and dispute. Sullivan represented that the wedding album remained in the possession of Daigrepont because there was an outstanding balance of $125.06 on the account. In addition, Sullivan asserted in his letter that Plaintiffs had demanded additional photographs at no charge which would normally require the payment of $491.55. The letter went on to read that "We have now learned that your clients have made defamatory statements concerning my client when Ms. Daigrepont refused to provide them with additional free services." The letter written by Sullivan ended with demands that Daigrepont be paid the remaining balance of $125.06, at which time she would turn over all photographs and albums, and that the Plaintiffs "retract any and all defamatory statements made by them to third parties regarding my client and the quality of work performed by Daigrepont studios."
After receiving Sullivan's letter, Caire replied by letter to Sullivan dated December 19, 2001. Caire requested that Sullivan provide him with details of the defamation accusation including the content of the defamatory statements, the person to whom communicated, the date made, and the method by which the statements were communicated. After receiving no response from Sullivan to his request for specific information, Caire wrote another letter to Sullivan dated February 25, 2002 specifically asking for a response to his request for detailed information.
In a letter dated May 16, 2002, Sullivan finally provided Caire with the information he requested regarding the alleged defamatory statements. In Sullivan's letter, he explained that a friend of the Plaintiffs, Mrs. Salsiccia, made comments to Daigrepont that the Plaintiffs had told her that no photographs taken after the wedding group pictures "came out." Sullivan asserted in his letter that Mrs. Salsiccia was under the impression that no photographs had been developed except the initial group shot, which Sullivan claimed was not the case. After explaining the circumstances of the alleged defamatory statements, Sullivan ended the letter with stating that "if additional disparaging and untruthful remarks are made by your clients against Ms. Daigrepont, she is prepared to address such actions through judicial means."
As stated above, it is the two letters from Sullivan that form the basis of the Plaintiffs' claims under the FDCPA. Defendants, Jerry Sullivan, the Leefe Gibbs law firm and Terri Daigrepont filed this motion to dismiss for failure to state a cause of action and lack of subject matter jurisdiction and, alternatively for summary judgment.
II. LAW AND ANALYSIS
In their motion, Defendants contend that the Federal Debt Collection Practices Act ("FDCPA") does not apply because there has been no debt collection as contemplated by the act. According to Defendants, the letters written by Sullivan were only in response to the letters from the Plaintiffs' attorney specifically demanding a reply from the Defendants. Defendants assert that these letters, specifically, of November 6, 2001, and May 16, 2002, were not demands for payment of a debt from a consumer as contemplated by the FDCPA. Additionally, the Defendants argue that neither Sullivan nor the Leefe Gibbs law firm are debt collectors-they insist they do not regularly or primarily practice or engage in debt collection. If any debt collection business is conducted, Defendants assert that it would comprise less than 1% of its business. Defendants further contend that there have been no activities in this case that qualify as traditional collection efforts; rather, the dispute is over photographs at a wedding. Finally, Defendants argue that no false, deceptive or misleading representations were made in Sullivan's letters. For all of these reasons, the Defendants conclude that the FDCPA does not provide Plaintiffs with a cause of action in this case.
Because the Defendants rely on documents outside of the pleadings, the Court will rule on this motion as one for summary judgment pursuant to Federal Rule of Civil Procedure 12(b), rather than a motion to dismiss. Summary judgment will be granted only if the pleadings, depositions, answers to interrogatories, and admissions, together with affidavits show that there is no genuine issue as to any material fact and that the defendant is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56. If the party moving for summary judgment demonstrates the absence of a genuine issue of material fact "the nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial." Willis v. Roche Biomedical Laboratories, Inc., 61 F.3d 313, 315 (5th Cir. 1995). "[A] dispute about a material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. To oppose a motion for summary judgment, the non-movant cannot rest on mere allegations or denials but must set forth specific facts showing that there is a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 321-22 (1986).
The burden of demonstrating the existence of a genuine issue is not met by "metaphysical doubt" or "unsubstantiated assertions." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586 (1986)). The Court must "resolve factual controversies in favor of the nonmoving party, but only when there is an actual controversy, that is, when both parties have submitted evidence of contrary facts." Id. The Court does not, "in the absence of proof, assume that the nonmoving party could or would prove the necessary facts." Id. If the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, no genuine issue exists for trial. See Matsushita, 475 U.S. at 588. Finally, "the mere existence of some factual dispute will not defeat a motion for summary judgment; Rule 56 requires that the fact dispute be genuine and material." Willis, 61 F.3d at 315. If the evidence leads to only one reasonable conclusion, summary judgment is proper. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).
In opposition to the motion to dismiss/summary judgment, Plaintiffs assert that the FDCPA does provide a cause of action for their claims and this Court does have jurisdiction under the Truth in Lending Act for failure of the creditor to disclose a security interest in the Plaintiffs' property which resulted in the Defendant using self help to impose a lien against Plaintiffs' property. According to the Plaintiffs, Daigrepont is a debt collector under the act and the alleged debt is $491.55. Plaintiffs contend that in the letter of May 16, 2002, Daigrepont attempted to collect by using the name of another in that Defendant Sullivan threatened to bring action for defamation against Plaintiffs with implication this communication was from her attorney. Plaintiffs also complain that Sullivan did not investigate before making false representations that Plaintiffs committed crime of extortion, by stating that defamatory comments were made. Plaintiffs allege that the Defendant Sullivan and the law firm of Leefe Gibbs are liable for violations of the FDCPA to the same extent as the debt collector, Daigrepont.
No further discussion/explanation or argument is given by the Plaintiffs as to the application of the Truth and Lending Act. In addition, Plaintiffs' counsel made no argument regarding the application of the Truth and Lending Act. Plaintiffs' blanket assertion in his opposition that the Truth in Lending Act gives this Court jurisdiction is unsupported by any facts or argument of counsel in this case. This Court finds that the Truth in Lending Act clearly is not applicable and will not address the issue further.
In order for the Plaintiffs to defeat the motion for summary judgment, Plaintiffs must show disputed issues of material fact exist as to whether the FDCPA was violated in this case. A claim under the FDCPA requires an act of a "debt collector" or a violation of a specific provision of the act. The FDCPA defines "debt collector" as "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." (emphasis added). 15 U.S.C.A. § 1692(a) (1997). However, liability does not necessarily depend on a person meeting this definition of debt collector. While the term does not ordinarily include creditors who, directly or indirectly, try to collect debts owed to them, the act specifically provides that "debt collector" does include any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. Taylor v. Perrin, Landry, deLaunay Durand, 103 F.3d 1232 (5th Cir. 1997) (citing 15 U.S.C. § 1692a(6)). In addition, a third party such as an attorney or law firm can be in violation of the act without fitting the definition of a debt collector when "it is reasonable to infer that they furnished an attorney collection letter form knowing that it would be used to create the false impression that a third person was participating in the collection of the debt." Taylor, 103 F.3d at 1239.
Defendant Daigrepont does not qualify as a debt collector under these rules. First, Daigrepont obviously does not meet the definition of "debt collector" in the act because there is no evidence she is in any business with the principle purpose being collection of debts and there is no evidence that she regularly attempts to collect debts owed to another. Therefore, the only other way for her to be liable under the act is if she, in the process of collecting a debt, used a name other than her own which would indicate that a third person is collecting or attempting to collect such debt. In this case, Plaintiffs allege that the letters dated November 6, 2001 and May 16, 2002 were attempts by Daigrepont to collect her debt by using the name of Defendant Sullivan and the Leefe Gibbs law firm. Plaintiffs claim that Defendant Sullivan did not review the records of Defendant Daigrepont to reach a judgment prior to mailing the November 6, 2001 or May 16, 2002 letters and had no meaningful involvement in the letters. Plaintiffs assert that the sole function of Sullivan was to lend his name and that of his firm to Daigrepont to furnish an attorney collection letter to her to collect her own debt, knowing that it would be used to create a false impression that Sullivan and the firm were participating in the collection of the debt with the intent to commence civil litigation against the Plaintiffs.
The Plaintiffs rely on the Taylor case to support their argument that Daigrepont has violated the FDCPA. In Taylor, one of the defendants, a company named USI, sent the plaintiff an attorney demand letter when the plaintiff failed to pay his loan timely and failed to respond to USI's direct attempts to collect the debt. 103 F.3d at 1235. The attorney demand letter was a reprint of a form letter prepared by an attorney and his law firm, also defendants, for USI to use in collecting or attempting to collect from their debtors. The letter bore the letterhead of the firm and a facsimile of the attorney's signature. USI regularly used the form letter in attempting to collect their debts and printed a daily business report of amounts due. The company's procedure was to send a notice of deficiency letter from USI to the debtor first, and if unheeded, USI would generate and mail the attorney demand letter. The court held that USI acted as a debt collector and was in violation of the FDCPA because it used the attorney and law firm name to falsely represent to the plaintiff that the collection letter was a communication from an attorney or his law firm. Id. at 1237. The court placed significance on the facts that USI generated the letters and mailed them and neither the attorney nor the law firm actually did any work on the accounts, and did not review the case at any time.
The facts of the present case are significantly different from the facts of the Taylor case. In the present case, although Plaintiffs allege that Sullivan had nothing to do with the two letters other than lending his name to them, the Plaintiffs have put forth no evidence to support these allegations. The Plaintiffs have not put forth any evidence to dispute the facts as attested to by Sullivan in his affidavit, that is, that he wrote and mailed the letters as attorney for Daigrepont in defense of Plaintiffs' threats of litigation and that he met with Daigrepont several times to discuss the facts and circumstances of the case before writing the letters. Quite simply, there is no evidence that Daigrepont, in order to collect her debt, used the name of Sullivan or the law firm to falsely represent to the Plaintiffs that Sullivan and the Leefe Gibbs law firm were collecting the debt. Unlike the Taylor case, there is no evidence that Sullivan's letter was a form letter or that Daigrepont had used such a letter in the past with other debtors. In this case, it was the Plaintiffs' attorney who wrote the initial letter to Daigrepont threatening litigation for the dispute over the wedding photos and demanded a response from either her or her attorney within ten days. When Sullivan wrote back demanding payment of the balance due, this appears to have been no more than an explanation of Daigrepont's position and her potential counterclaim based on the dispute over the wedding photos. After considering the evidence, it appears that Plaintiffs have failed to show that material issues of fact exist as to whether Daigrepont violated the FDCPA.
Next, with respect to Defendants Sullivan and the Leefe Gibbs law firm, the Plaintiffs must show that material issues of fact exist as to these Defendants' violations of the FDCPA to avoid summary judgment. Therefore, as explained earlier, Sullivan and Leefe Gibbs must either meet the definition of "debt collector" under the act or have furnished an attorney collection letter form knowing that it would be used to create the false impression that a third person was participating in the collection of the debt.
In 1995, the United States Supreme Court addressed the issue of whether a lawyer could be considered a debt collector under the FDCPA in the case of Heintz v. Jenkins, in which the Court held that "the Act applies to attorneys who 'regularly' engage in consumer-debt-collection activity, even when that activity consists of litigation." 115 S.Ct. 1489, 514 U.S. 291, 131 L.Ed.2d 395 (1995). In 1999, the Sixth Circuit Court of Appeals clarified the amount of debt collection activity required for the court to find an attorney as a "debt collector" under the FDCPA. Schroyer v. Frankel, 197 F.3d 1170, 1176 (6th Cir. 1999). In Schroyer, the court explained that "for a court to find that an attorney or law firm 'regularly' collects debts for purposes of the FDCPA, a plaintiff must show that the attorney or law firm collects debts as a matter of course for its clients or for some of its clients, or collects debts as a substantial, but not principal, part of his or its general law practice." Id. The Sixth Circuit affirmed the decision of the district court dismissing plaintiffs' FDCPA claims against defendants, relying on the district court's findings that only two percent of the law firm's overall practices consisted of debt collection cases, and that the firm did not employ individuals full time for the purpose of collecting debts. Id. Other courts have similarly required that an attorney's or law firm's practice be substantially involved in debt collection in order to qualify as a debt collector under the FDCPA. See Fox v. Citicorp Credit Services, Inc., 15 F.3d 1507 (9th Cir. 1994) (holding that attorney whose practice was at least 80% in area of debt collection fell within definition of "debt collector" under FDCPA); Scott v. Jones, 964 F.2d 314 (4th Cir. 1992) (holding that attorney was debt collector under FDCPA since at least 70% of attorney's legal fees were generated from collection of debts and "principle purpose" of work was collection of debt).
The Defendants submitted an affidavit of Jerry Sullivan attesting the following: "neither his practice nor [the Leefe Gibbs law firm] regularly involves the collection of consumer debts and/or acting as a debt collector and on very rare occasion where either may attempt to collect a debt, which are generally not consumer debts, this is done as a favor or on an isolated basis, and, if done at all would amount to less than 1% of the practice." Plaintiffs have not put forth any evidence to controvert these facts and did not dispute them in their opposition. Applying these facts, it is clear that neither Sullivan nor the Leefe Gibbs firm is a debt collector under the FDCPA. Furthermore, Plaintiffs have put forth no evidence to support their allegations that the letters from Sullivan were merely form attorney demand letters, which either Sullivan or the firm provided to Daigrepont knowing she would use it to create the false impression that they were collecting the debt. Without evidence of this, and without evidence that Sullivan and Leefe Gibbs regularly engaged in collecting debts, Plaintiffs have no claims against these Defendants for violations of the FDCPA. Therefore, summary judgment is proper as to all Defendants.
II. CONCLUSION
For the foregoing reasons, the motion to dismiss for failure to state a claim and lack of subject matter jurisdiction and, alternatively for summary judgment filed by Defendants Jerry Sullivan, Terri Daigrepont, and Leefe, Gibbs, Sullivan, Dupre Alduous is GRANTED and the Plaintiffs' objections to the Magistrate's order is DENIED as moot. Accordingly, the Plaintiffs' claims against Defendants Jerry Sullivan, Terri Daigrepont, and Leefe, Gibbs, Sullivan, Dupre Alduous are DISMISSED WITH PREJUDICE.