Summary
stating that "the court rules that allow service of process on an individual might be considered express permission . . . for such a communication with the consumer," but declining to explain what is required for court rules to meet the "express permission" standard
Summary of this case from Hague v. Lyons, Doughty & Veldhuis, PCOpinion
IP 00-1340-C-T/K
November 4, 2002.
Entry On Motions For Summary Judgment and Motion To Disqualify
This Entry is a matter of public record and is being made available to the public on the court's web site, but it is not intended for commercial publication either electronically or in paper form. Although the ruling or rulings in this Entry will govern the case presently before this court, this court does not consider the discussion in this Entry to be sufficiently novel or instructive to justify commercial publication or the subsequent citation of it in other proceedings.
This cause is before the court on Plaintiff's Motion For Summary Judgment As Against Defendant Charles R. Sheeks, Charles Sheeks' Motion For Summary Judgment, and Defendant's Motion To Disqualify Clifford W. Shepard As Counsel For Plaintiffs, which includes a request for an award of attorneys' fees and expenses.
I. Background
Mary A. Spearman is a consumer who resides in Indianapolis, Indiana. Her transaction with Tom Wood Pontiac-GMC, Inc. ("Tom Wood") was primarily for personal, family or household purposes. Charles R. Sheeks is an attorney licensed to practice law in the State of Indiana and has his principle place of business in Indianapolis, Indiana. Mr. Sheeks regularly collects and attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. He is a debt collector as defined by the Fair Debt Collection Practices Act ("FDCPA" or "Act").
On or before October 29, 1999, Tom Wood retained Mr. Sheeks to collect the debt allegedly owed by Ms. Spearman to Tom Wood. On or about November 5, 1999, Mr. Sheeks, on behalf of Tom Wood, filed a Notice of Claim against Ms. Spearman in the Marion County Small Claims Court, Washington Township Division under Cause Number 49K07-9911-07606. A copy of the Notice of Claim is attached to the Complaint as Exhibit B. The Notice of Claim has attached to it the following:
F.D.C.P.A.
EXHIBIT "A" TO NOTICE OF CLAIM
Charles R. Sheeks, a debt collector and Attorney at Law, is attempting to collect the debt that you owe the creditor identified as Plaintiff in the Notice of Claim and any information he or his staff obtains will be used for that purpose.
You are hereby notified of the following information:
1. The amount of the claimed debt: Remaining principal balance $2,400.00; plus reasonable attorney fees as permitted by law, and costs if allowed by the Court;
2. The creditor to whom the debt is owed is the Plaintiff.
3. Unless you, within thirty (30) days after receipt of this Notice, dispute the validity of the debt, or any portion thereof, in writing, I will assume that the debt is valid;
4. If you notify the undersigned in writing within thirty (30) days after receipt of this Notice, that the total debt, or any portion thereof, is disputed, the undersigned will obtain verification of the debt which will be mailed to you from our office; and
5. Upon written request within thirty (30) days after receipt of this Notice, I will provide you with the name and address of the original creditor, if different from the current creditor.
To avoid any misunderstanding, all communications, including but not limited to payment offers, should be in writing, signed by you, and mailed to 6350 North Shadeland, Suite 4, Indianapolis, Indiana 46220. Please include your address and a telephone number at which you can be reached between 9:00 a.m. and 5:00 p.m. on weekdays.
The Notice of Claim was authored and approved by Mr. Sheeks and was the first communication, written or oral, that Ms. Spearman received from him regarding her debt with Tom Wood. She received no further communication from Mr. Sheeks regarding her debt with Tom Wood within five days of the date of the Notice of Claim.
II. Motions for Summary Judgment
Both Ms. Spearman and Mr. Sheeks move for summary judgment on whether the Notice of Claim violates the FDCPA. The purpose of summary judgment "is to isolate and dispose of factually unsupported claims or defenses[.]" Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Summary judgment should be granted only if there is no genuine issue of material fact and the party seeking summary judgment is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). When deciding a summary judgment motion, the court views the facts in the light most favorable to the nonmoving party and draws all reasonable inferences from those facts in that party's favor. Smith v. Ball State Univ., 295 F.3d 763, 767 (7th Cir. 2002).
Because Ms. Spearman's claims against Mr. Sheeks allege violations of 15 U.S.C. § 1692g, which requires a "communication" by a debt collector, the court first addresses Mr. Sheeks' argument that the Notice of Claim was not a "communication" within the meaning of the FDCPA. There is no controlling precedent on this issue.
Mr. Sheeks in Sheeks' Response To Plaintiff's Memorandum On Issues Set Forth In Court's Entry Ordering Briefing acknowledges that "communication" may be broad enough to include litigation pleadings but for the first time asserts that the Notice of Claim was not an initial communication. Mr. Sheeks will not be allowed to make this belated argument. This argument lacks persuasive force, in any event, because, as discussed below, the Notice of Claim satisfies the statutory definition of "communication." Nothing in the FDCPA suggests that the phrase "initial communication" means anything other than the first "communication" under the Act.
Mr. Sheeks' argument is unpersuasive for several reasons. The answer to the question of whether the Notice of Claim constitutes a "communication" under the FDCPA can be found in the statutory definition: "The term `communication' means the conveying of information regarding a debt directly or indirectly to any person through any medium." 15 U.S.C. § 1692a(2). The Notice of Claim satisfies this broad definition-it conveyed information regarding the debt to Tom Wood directly or indirectly to Ms. Spearman through a written medium.
As support for his position, Mr. Sheeks relies solely on McKnight v. Benitez, 176 F. Supp.2d 1301 (M.D.Fla. 2001), which held that "communication" under the FDCPA does not include a "legal action" or pleadings or orders connected therewith. Id. at 1308. In so holding, the court relied on the purpose, wording, intent and structure of the FDCPA. The court also cited the Federal Trade Communication's ("FTC") staff commentary which opined that a formal legal action is not a "communication" under the FDCPA. Id. at 1305-06. Finally, the court said that its interpretation was necessary to avoid serious constitutional questions such as that presented by § 1692c(a)(2). Id. at 1306-07.
The undersigned does not find McKnight persuasive. Though the court quoted the definition of "communication" and recognized it as broad, id. at 1304, its conclusion that a legal action is not a "communication" under the FDCPA ignores the breadth of the plain statutory language. Congress's chosen language is the clearest indication of its intent. See F.B.I. v. Abramson, 456 U.S. 615, 644 (1982) ("Absent compelling evidence requiring a contrary conclusion, the best indication of Congress' intent is Congress' own language.") (O'Connor, J., dissenting). In this court's view, state lawsuits can be used by debt collectors as abusive debt collection practices in some instances. The court agrees that protections other than the FDCPA exist if this happens, but that alone fails to reasonably suggest that Congress did not intend to afford additional protections to consumers through the FDCPA. Though Congress could have added other subsections to § 1692i (legal actions by debt collectors), its failure to do so does not require the conclusion that a legal action is not a "communication" under the FDCPA. In this court's view, the inclusion of the venue provisions of § 1692i in the FDCPA evince Congress' belief that the filing of lawsuits in venues inconvenient to consumers was one type of abusive debt collection practice. Also, Congress could have specifically mentioned legal actions in its definition of "communication" (and it may have been helpful to do so), but it was unnecessary as Congress defined the term so broadly.
The McKnight further relied on the FTC's staff commentary, which it found consistent with the FDCPA's purpose "to curb abusive debt collection practices, not legal actions." McKnight, 176 F. Supp.2d at 1306. This reliance is misplaced. In Heintz v. Jenkins, 514 U.S. 291 (1995), the Supreme Court recognized that the FTC's staff commentary was non-binding and gave no weight to another part of the same commentary. Id. at 298. Moreover, Heintz v. Jenkins held that the term "debt collector" in the FDCPA "applies to attorneys who `regularly,' engage in consumer-debt-collection activity, even when that activity consists of litigation." Id. at 299. Thus, under Heintz v. Jenkins, the FDCPA applies to legal actions. The McKnight court opined that the conclusion that a legal action is a communication under the FDCPA "wreaks havoc on the practice of law and legal actions to collect debts." McKnight, 176 F. Supp.2d at 1306. For support, the court relied on two cases which found a FDCPA notice attached to a complaint or included as part of a summons to be ineffective, see Martinez v. Law Offices of David J. Stern, P.A., 266 B.R. 523 (Bankr.S.D.Fla. 2001) and Mendus v. Morgan Assoc., 994 P.2d 83 (Okla.Ct.App. 1999). Just because these courts found the FDCPA notices insufficient under § 1692g based on the facts presented in those cases does not reasonably lead to the conclusion that all FDCPA validation notices provided as part of a legal action would be inadequate. In this court's view, the determination of whether a validation notice satisfies the FDCPA's requirements depends on the particular facts and circumstances of each case.
In Martinez the initial communication was a sixteen page package including a summons and complaint. The FDCPA notice was on page eight of the package, whereas, the summons, which was on the first page of the package, required a response to the complaint and set forth the harsh consequences of not responding to the complaint. 266 B.R. at 533. In Mendus the initial communication was a summons which contained the FDCPA thirty-day notice provisions but provided only twenty days for a response. 994 P.2d at 86.
Finally, the McKnight court found its construction that a legal action did not constitute a "communication" to be necessary to avoid serious constitutional questions raised by § 1692c(a)(2). The court believed that § 1692c(a)(2) would prevent a creditor from serving a debtor with process when the creditor knew the debtor was represented by an attorney and the attorney reasonably responded to communication but refused to allow direct communication with the consumer. McKnight, 176 F. Supp.2d at 1306. Under the circumstances in which § 1692c(a) applies, the section nevertheless allows a debt collector to communicate with a consumer with "the express permission of a court of competent jurisdiction." 15 U.S.C. § 1692c(a). The McKnight court said that § 1692c(a)(2) could be construed to allow a debt collector to serve a lawsuit. But the court found this to be an unreasonable construction because it believed a hearing without notice to the debtor would be required and this would change the process of filing suit on a debt. McKnight, 176 F. Supp.2d at 1307. Whether a reasonable construction of § 1692c(a)(2) would require a hearing is an open question. Perhaps the court rules that allow service of process on an individual might be considered express permission (as distinguished from particularized or case-specific permission) for such a communication with the consumer. But this court need not decide this question as the instant case does not involve the application, or constitutional implications, of § 1692c(a)(2). The McKnight court did not have to address these constitutional questions either, since the plaintiff did not claim a violation of that provision.
The statute provides:
Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the collection of any debt — . . . (2) if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney's name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer[.]15 U.S.C. § 1692c(a)(2).
McKnight and Mendus raised constitutional concerns in the undersigned's mind and prompted an order for briefing on issues of the construction of "communication," Congress' authority to include a notice of claim within the meaning of "communication," and preemption of state trial rules. The court appreciates the parties' efforts in addressing these issues. However, on further reflection, the court is of the opinion that it would be inappropriate for the court to address these issues because the case before the court does not necessitate a decision on them. A court should not needlessly reach constitutional issues. See, e.g., Solid Waste Agency of N. Cook County v. Army Corps of Eng'rs, 531 U.S. 159, 172 (2001). Though a construction of "communication" to encompass a notice of claim may present constitutional issues in the application of § 1692c(a)(2), Ms. Spearman has not alleged a violation of that section. As well, in some factual situations there could be a conflict between § 1692g's thirty day period and Rule 2 of the Indiana Rules for Small Claims which allows for a trial on a claim ten days after service of a notice of a claim. But this is not the proper case to address that matter because Ms. Spearman does not base her claims on any failure to afford her the thirty day debt validation period and, in any event, it appears that the statute and rule are reconcilable such that compliance with both is possible. In short, under the facts and claims of this case, construing "communication" to encompass the Notice of Claim received by Ms. Spearman does not present the constitutional concerns which this court believed were lurking in the background.
A conclusion that a legal action is not a "communication" seems in tension with the Supreme Court's statement in Heintz v. Jenkins that the FDCPA "applies to attorneys who `regularly' engage in consumer-debt-collection activity, even when that activity consists of litigation." 514 U.S. at 299 (emphasis added); see also id. at 292 (phrasing the issue presented in the case as "whether the term `debt collector' . . . [under the FDCPA] applies to a lawyer who `regularly,' through litigation, tries to collect consumer debts"). Such a conclusion also is in tension with Jenkins v. Heintz, 25 F.3d 536 (7th Cir. 1994), aff'd, 514 U.S. 291 (1995), in which the Seventh Circuit said courts should not disregard the plain statutory language of the FDCPA. After noting conceivable problems with regulating attorneys' debt collection efforts, the court said:
[O]ur analysis of the statute ends with its language. . . . It appears that by removing the attorney exemption without otherwise adjusting the statute, Congress-wittingly or not-proscribed even certain litigation-related debt collection activities. There may be abundant reasons why Congress should not regulate litigation aimed at collecting debts. But in drafting a broad statute, Congress entered all areas inhabited by debt collectors, even litigation. We must faithfully apply the law as Congress drafted it. We should not disregard plain statutory language in order to impose on the statute what we may consider a more reasonable meaning.
Id. at 539 (citation omitted). The court later reiterated that the removal of the attorney exemption from the FDCPA:
expanded the statute's impact to include some attorneys engaged in debt collection litigation. We are not authorized to second-guess Congress by reading out of the statute certain intrusions we could consider unwarranted. Nor are we allowed to reconstruct the statute's plain meaning. . . . We may only apply the law as Congress drafted it. . . . There is no longer an attorney exemption in the Act, and we cannot create one by judicial fiat.
Id. at 540.
At least two courts have concluded that a summons and pleading served in a state court lawsuit constitute a communication under the FDCPA, see Sprouse v. City Credits Co., 126 F. Supp.2d 1083, 1088-89 n. 8 (S.D.Ohio 2000) (relying on the broad statutory definition of "communication" and stating that "[a] lawsuit initiated to collect debts is certainly included within that definition.") and Mendus v. Morgan Associates, P.C., 994 P.2d 83 (Okla.Ct.App. 1999). In holding that the petition and summons served on the debtor by the defendant law firm was a communication under the FDCPA, the Mendus court relied on the broad definition of "communication." Id. at 87. The court noted the FTC's commentary's exclusion of the filing and service of a complaint and other legal papers in connection with a lawsuit from the meaning of communication, but concluded that reliance on the commentary was questionable in light of Heintz v. Jenkins. The court also said that the commentary's exception for pleadings and process was inconsistent with the broad statutory definition of "communication." Mendus, 994 P.2d at 87-88. The court explained that "pleading, process, and notice are part of lawyers' `litigating activities' and as the Supreme Court said, `for an ordinary court-related document does in fact, `notify' its recipient that the creditor may `invoke' a judicial remedy." Id. at 88 (quoting Heintz, 514 U.S. at 296).
The court concludes that Mr. Sheeks' Notice of Claim sent to Ms. Spearman is a "communication" as defined under the FDCPA. This conclusion comports with the broad statutory definition of the term given by Congress. As the Seventh Circuit observed in Jenkins, "our analysis of the statute ends with its language. . . . We must faithfully apply the law as Congress drafted it. We should not disregard plain statutory language in order to impose on the statute what we may consider a more reasonable meaning." 25 F.3d at 539. This conclusion also is harmonious with the Supreme Court's holding in Heintz that the FDCPA "applies to . . . attorneys who `regularly' engage in consumer-debt-collection activity, even when that activity consists of litigation." 514 U.S. at 299 (emphasis added).
Furthermore, a 1996 amendment to the FDCPA reveals Congress' intent that initial communication under the Act include legal pleadings. Under § 1692e, a "debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692e. The statute was amended to provide that § 1692e is violated by
[t]he failure to disclose in the initial written communication with the consumer, . . . that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose, and the failure to disclose in subsequent communications that the communication is from a debt collector, except that this paragraph shall not apply to a formal pleading made in connection with a legal action.15 U.S.C. § 1692e(11). If a legal pleading was not included within the meaning of communication under the FDCPA, then it would have been unnecessary for Congress to except formal pleadings from the requirements of § 1692e(11). This court is not the first to reach this conclusion, see Alger v. Ganick, O'Brien Sarin, 35 F. Supp.2d 148, 158 n. 18 (D.Mass. 1999). Thus, the 1996 amendment supports the conclusion that Congress intended legal pleadings to fall within the meaning of communication under the FDCPA.
Having decided that the Notice of Claim constitutes a "communication" under the FDCPA, the court turns to Ms. Spearman's alleged violations. Ms. Spearman first contends that Mr. Sheeks failed to state the amount of the debt in the Notice of Claim in violation of § 1692g(a)(1). She specifically argues that the statement of the amount of the debt in the Notice of Claim as "Remaining principal balance of $2,400.00; plus reasonable attorney fees as permitted by law, and costs if allowed by the Court" was insufficient under § 1692g(a)(1) because it did not disclose the amount of attorneys' fees or costs sought.
That section states that "[w]ithin 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. . . ." 15 U.S.C. § 1692g(a)(1).
Ms. Spearman relies on Miller v. McCalla, Raymer, Padrick, Cobb, Nichols and Clark, 214 F.3d 872 (7th Cir. 2002), Bawa v. Bowman, Heintz, Boscia Vician, P.C., IP00-1319-C-M/S, 2001 WL 618966 (S.D.Ind. May 30, 2001), and Wilkerson v. Bowman, 200 F.R.D. 605 (N.D.Ill. 2001), which held that the debt collectors' letters to debtors violated § 1692g(a)(1) for failing to state the amount of the debt. These cases are distinguishable. The collection letter at issue in Miller stated the unpaid principal balance and added that the amount did not include accrued but unpaid interest, late charges, escrow advances or other charges. Miller, 214 F.3d at 875. The Seventh Circuit rejected the argument that it would have been impossible to state the amount of the debt because the amount changes daily. Id. at 875. Similarly, the collection letter at issue in Bawa stated the amount of the debt as a balance of a sum certain "plus accrued interest and/or late charges, and attorney fees, exact amount to be determined," Bawa, 2001 WL 618966, at *1, and the collection letter in Wilkerson stated a balance of a sum certain plus, inter alia, "20.00% interest per annum from February 4, 2000." Wilkerson, 200 F.R.D. at 606.
The Notice of Claim in this case is identical in all relevant respects to the one considered by Judge David F. Hamilton of this court in Veach v. Sheeks, IP 00-1793-C H/K, 2002 WL 243658 (S.D.Ind. Jan. 4, 2002), in which he granted the defendant's motion for judgment as a matter of law on several FDCPA claims, including a claim under § 1692g(a)(1). The notice of claim in that case stated that the amount of the debt was a "principal balance" of $1,050, plus "reasonable attorney fees as permitted by law, and costs if allowed by the Court." No amounts for fees or costs were specifically indicated. Id. at *1. The problem in this case, as in Veach, arises "because of the inherent uncertainty about the amount of attorney fees that might be awarded. . . . The determination of the reasonable fee would be left, under state law, to the court." Id. at *2.
Plaintiff's counsel Shepard represented the Veach plaintiff, and the Sheeks defendant in that case is the same Sheeks who is a defendant in this case. The court's docket reveals that Mr. Shepard and Mr. Sheeks battle against each other in many cases in this court.
This court follows Judge Hamilton's thoughtful reasoning, and for the reasons stated in his decision, see id. at *2-4, adopts his conclusion that "[w]here the validation notice properly accompanies or follows an otherwise proper state court complaint or its equivalent, a clear and accurate statement of the relief being sought in state court should be sufficient to comply with the `amount' requirement of § 1692g(a)(1)." Id. at *4. This conclusion leads to the determination that the Notice of Claim in the instant case sufficiently stated the amount of the debt. Therefore, Mr. Sheeks is entitled to summary judgment in his favor on the claimed violation of § 1692g(a)(1).
Ms. Spearman next claims that Mr. Sheeks violated § 1692g(a)(3) by stating that any dispute had to be in writing in order to avoid the presumption of validity of the debt. Cases such as Graziano v. Harrison, 950 F.2d 107 (3rd Cir. 1991), and Castillo v. Carter, No. IP 99-1757-C H/G, 2001 WL 238121 (S.D.Ind. Feb. 28, 2001), hold that § 1692g(a)(3) requires that the dispute of the validity of a debt be in writing. This court, however, respectfully disagrees with those decisions.
§ 1692g(a)(3) states in part that "a debt collector shall, unless the following information is contained in the initial communication . . . send the consumer a written notice containing — . . . (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. . . ." 15 U.S.C. § 1692g(a)(3).
Ms. Spearman has requested the court to apply non-mutual offensive collateral estoppel for the claim found to have violated the FDCPA in the case of Epps v. Creditnet, Inc., IP00-1451-C-G/H (S.D.Ind. 2002). There, Judge Godich concluded that no writing is required to dispute a debt under § 1692g(a)(3) and the statement to the contrary in Mr. Sheeks' notice of claim sent to the plaintiff, identical in all relevant respects to the Notice of Claim at issue in this case, violated § 1692e. Ms. Spearman's request for application of non-mutual offensive collateral estoppel is DENIED because no judgment has been entered on the claims against Sheeks in the Epps case. See Chicago Truck Drivers, Helpers Warehouse Union (Independent) Pension Fund v. Century Motor Freight, Inc., 125 F.3d 526, 530 (7th Cir. 1997) (stating that one of the prerequisites for the application of collateral estoppel is that "the determination of the issue was essential to the final judgment").
In reaching its decision, the Graziano court first acknowledged the difference in language between subsection (a)(3), which does not expressly require that a debtor's dispute be in writing, and subsections (a)(4) and (a)(5), which do expressly require that the debtor's communication be in writing. Graziano, 950 F.2d at 111-12. The court nonetheless concluded that "given the entire structure of section 1692g, subsection (a)(3) must be read to require that a dispute, to be effective, must be in writing." Graziano, 950 F.2d at 112. The court reasoned:
Subsection (a)(3) states that unless the debtor disputes the debt within thirty days of receipt of notice, the debt collector will assume the debt to be valid. Subsection (a)(4) states that if the debtor disputes the debt in writing within thirty days, the debt collector must obtain verification of the debt and must send the debtor a copy of the verification. Subsection (a)(5) states that, if the debtor makes a written request, the debt collector must provide the name and address of the original creditor. Subsection (b) states that if the debtor disputes the debt in writing within thirty days, the debt collector must cease collection efforts until the debt collector has verified the debt. Adopting Graziano's reading of the statute would thus create a situation in which, upon the debtor's non-written dispute, the debt collector would be without any statutory ground for assuming that the debt was valid, but nevertheless would not be required to verify the debt or to advise the debtor of the identity of the original creditor and would be permitted to continue debt collection efforts. We see no reason to attribute to Congress an intent to create so incoherent a system. We also note that there are strong reasons to prefer that a dispute of a debt collection be in writing: a writing creates a lasting record of the fact that the debt has been disputed, and thus avoids a source of potential conflicts. We therefore conclude that subsection (a)(3), like subsections (a)(4) and (a)(5), contemplates that any dispute, to be effective, must be in writing. The district court was not in error in determining that the requirement of a writing did not render the statutory notice invalid.
Id. (footnotes omitted). The Castillo court agreed with the Graziano court for the reasons stated in that decision as well as in Sturdevant v. Thomas E. Jolas, P.C., 942 F. Supp.2d 426, 429 (W.D.Wis. 1996) (following Graziano and noting an "inherent writing requirement of subsection (a)(3) in connection with § 1692g(a) as a whole" and the impracticality of a contrary holding). Castillo, 2001 WL 238121, at *3-4.
This court is not persuaded by Graziano's reasoning. In interpreting a statute, courts must "look first to its language. . . . If that language is plain, our only function is to enforce it according to its terms. The plain meaning of a statute is conclusive unless literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters." United States v. Balint, 201 F.3d 928, 932-33 (7th Cir. 2000) (quotations omitted). And, importantly, "where Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion." Gozlon-Peretz v. United States, 498 U.S. 395, 404 (1991) (quotation omitted). The Graziano court ignored these rules of statutory interpretation.
Section 1692g(a)(3) states that a debt collector will assume the validity of a debt if no dispute is received within a thirty day period. Thus, if a dispute is received within thirty days, then the debt collector may not assume the debt is valid. The plain language of subsection (a)(3) does not require that the dispute be in writing. Subsections (a)(4) and (5) and subsection (b), however, do require that the notification to the debt collector be in writing. Thus, it should be presumed that the exclusion of the "in writing" requirement from § 1692g(a)(3) was intentional and purposeful. See Gozlon-Peretz, 498 U.S. at 404. Other courts have concluded that no writing requirement should be read into subsection (a)(3). See, e.g., Ong v. Am. Collections Enterp., Inc., No. 98-CV-5117 (JG), 1999 WL 51816, at *2-4 (E.D.N.Y. Jan. 15, 1999); Harvey v. United Adjusters, 509 F. Supp. 1218, 1221 (D. Ore. 1981).
Subsections (a)(4) and (5) require written notice containing:
(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 consumer with the name and address of the original creditor, if different from the current creditor.15 U.S.C. § 1692g(a)(4), (5). Subsection (b) provides:
(b) Disputed debts If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) of this section that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.15 U.S.C. § 1692(b).
Consideration of the purposes and effects of subsections (a)(3), (a)(4), (a)(5) and (b) support the conclusion that Congress did not intend to require a writing under subsection (a)(3). That subsection provides limited protection to the consumer: if notice of a dispute is given within thirty days, then the debt collector may not assume the debt is valid. 15 U.S.C. § 1692g(a)(3). Thus, subsection (a)(3) provides some protection to those consumers who dispute a debt but are unable to do so in writing, perhaps the very consumers who are more likely to be unsophisticated. Subsection (a)(3) places no affirmative duty on the debt collector upon notice of the consumer's dispute of the validity of the debt. Subsections (a)(4), (a)(5) and (b), however, provide greater protections to the consumer and obligate the debt collector to take some affirmative action upon receipt of a written notification or request from the consumer. Subsection (b) also requires the debt collector to stop collection activities until the debt collector undertakes a certain verification process. Thus, subsection (b) gives a consumer the power to halt all collection activities. It therefore makes logical sense for subsections (a)(4), (a)(5) and (b) to require written notification. See Brady v. Credit Recovery Co., Inc., 160 F.3d 64, 66 (1st Cir. 1998) (discussing § 1692(b) in relation to § 1692e(8), which imposes no writing requirement).
The decision whether a practice violates the FDCPA is made from the perspective of the "unsophisticated consumer," Jang v. A.M. Miller Assocs., 122 F.3d 480, 483 (7th Cir. 1997), who is uneducated, uninformed, naive and trusting, see Pettit v. Retrieval Masters Creditors Bureau, Inc., 211 F.3d 1057, 1060 (7th Cir. 2000).
This court agrees with the Graziano court that there are very good reasons to prefer that a dispute of a debt's validity be in writing. But the preference for a writing should not override Congress's intent as evidenced by its chosen statutory language. See Jenkins v. Heintz, 25 F.3d 536, 539 (7th Cir. 1994) ("We should not disregard plain statutory language in order to impose on the statute what we may consider a more reasonable meaning."), aff'd, 514 U.S. 291 (1995). This court therefore concludes that § 1692g(a)(3) does not require that a consumer's dispute of the validity of a debt be in writing. This conclusion enforces the plain meaning of the statute and does not produce a result demonstrably at odds with the intentions of Congress.
The court finds that no genuine issues of material fact exist and Ms. Spearman has established that Mr. Sheeks' imposition of a writing requirement on the dispute of the validity of the debt violated § 1692g(a)(3). However, Mr. Sheeks has raised the bona fide error defense of § 1692k(c), which, if proven, shields him from liability under the FDCPA. The parties' summary judgment motions do not address this defense, so resolution of this issue remains for trial.
Ms. Spearman also alleges that the imposition of the writing requirement violated §§ 1692f, 1692e and 1692e(8). Though she did not cite these sections in her Complaint or the parties' Case Management Plan, the court will consider them as nothing compels her to do so. The court does not believe that § 1692f, which prohibits the use of unfair or unconscionable means to collect or attempt to collect a debt, is applicable to her claim that the FDCPA was violated by the Notice of Claim's requirement that disputes of the debt's validity be in writing. Though § 1692f's list of proscribed conduct is not intended to be exhaustive, the court believes that the specific examples give meaning to the general application. See, e.g., Watkins v. Peterson Enterp., Inc., 57 F. Supp.2d 1102, 1109 (E.D.Wash. 1999) (looking at the six examples of conduct which violate § 1692d in concluding that debt collector's repeated service of writs did not violate that section). The Notice of Claim's assertion that disputes of the debt's validity be in writing is nothing like the conduct specifically proscribed by § 1692f. See, e.g., 15 U.S.C. § 1692f(3) ("[t]he solicitation by a debt collector of any postdated check or other postdated payment instrument for the purpose of threatening or instituting criminal prosecution" is a violation of § 1692f). Furthermore, Ms. Spearman has not directly addressed how the representation that disputes of the validity of the debt had to be in writing was "unfair" or "unconscionable." For these reasons, the court finds that Mr. Sheeks is entitled to summary judgment on the claim under § 1692f.
Section 1692f states that "[a] debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt." 15 U.S.C. § 1692f. Section 1692e states that "[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. . . . Without limiting the general application of the foregoing, the following conduct is a violation of this section: . . . (8) Communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed." 15 U.S.C. § 1692e(8). Ms. Spearman cites § 1692d as well, but given the context, the court believes this is an error. (See Mem. Law Support Pl.'s Mot. Summ. J. at 20 (first citing § 1692f and then § 1692d and asserting that this section states that a "debt collect [sic] may not use unfair . . . means to collect . . . any debt.")).
In the court's view, the conduct about which Ms. Spearman complains does not fall under § 1692e(8), which applies to "credit information" and suggests that it applies to information given to third parties rather than to the consumer. See 15 U.S.C. § 1692e(8); Morse v. Dun Bradstreet, Inc., 87 F. Supp.2d 901, 904 n. 1 (D.Minn. 2000) (noting that § 1692e(8) prohibits threats to communicate false credit information to third parties). So, Mr. Sheeks is entitled to summary judgment on the claim under § 1692e(8).
However, the conduct about which Ms. Spearman complains arguably violates § 1692e, which prohibits the use of "any false, deceptive, or misleading representation . . . in the connection with the collection of any debt." 15 U.S.C. § 1692e. The assertion in the Notice of Claim that the dispute of the debt's validity had to be in writing, when it does not, is false. The court finds that there are no genuine issues of material fact and Ms. Spearman has established a violation of § 1692e. However, Mr. Sheeks has raised the bona fide error defense of § 1692k(c), and the parties' summary judgment motions do not address this defense, so the court does not decide whether the defense shields him from liability on the § 1692e claim.
III. Motion To Disqualify Class Counsel And For Sanctions
Mr. Sheeks filed a motion to disqualify Attorney Shepard as counsel for the Plaintiffs. Mr. Sheeks also seeks a court order directing Shepard to pay Defendants' attorneys' fees and expenses incurred in connection with Mr. Shepard's deposition.
Mr. Shepard filed the Complaint in this case requesting class certification and his appointment as class counsel. Subsequently, he filed a motion seeking class certification against Mr. Sheeks.
By Entry dated January 11, 2001, the court deferred ruling on the class certification issues until after the anticipated summary judgment issues had been decided.
On February 22, 2002, Mr. Sheeks served on Attorney Shepard a Notice Of Deposition of Attorney Shepard, noticing his deposition on March 21, 2002, for purposes of determining his fitness as class counsel. Mr. Shepard was not served with a subpoena for his deposition. He did, however, appear for his deposition. At the deposition Mr. Sheeks appeared on his own behalf; G. Ronald Heath also appeared on Sheeks' behalf. Apparently, Jason A. Scheele appeared on behalf of Tom Wood, who previously had obtained summary judgment and entry of judgment in its favor.
During his deposition Mr. Shepard stated that he was declining to be deposed because within sixty days substitute counsel would appear on behalf of the Plaintiff and putative class and he would withdraw his appearance. Early in the deposition Mr. Shepard said that he was refusing to answer any questions that would be asked of him because in his view they would be irrelevant and not reasonably calculated to lead to relevant information because of his impending withdrawal. He then stated:
And consequently, I apologize for the imposition. I was under the expectation that I would be doing this unless I could find qualified substitute counsel who would agree to step in.
That I only accomplished [it] right before coming down here and consequently was not able to broadcast this bit of news. I apologize for the imposition upon all folks.
And I do anticipate I will do more than apologize, I suspect that there will be costs to pay which I will readily agree to do upon confirmation what that is and the appropriate requests for the same. So, there is my statement, and that's all I have to say.
(Shepard Dep. at 7.) Mr. Sheeks then asked, "You are refusing to answer any questions at this deposition?" (Id. at 8.) Mr. Shepard answered, "Yes, Mr. Sheeks, I am." (Id.) After what from the deposition transcript appears to have been a few minutes of further questions and answers, Mr. Shepard left his deposition. (Id. at 15.) Mr. Sheeks proceeded to ask approximately thirty questions which went unanswered since Mr. Shepard had already left. Mr. Sheeks then stated on the record that Mr. Shepard had informed him more than one month before that he would be withdrawing his representation and another attorney would be entering an appearance. (Id. at 21.)
On April 23, 2002, Attorney Michael P. Mcllree entered an appearance in this case as counsel for Plaintiff. On June 6, 2002, Mr. Shepard filed his motion to withdraw his appearance on behalf of the putative class members. His motion stated that he would remain counsel for Plaintiff. That motion was granted on June 11, 2002, and Mr. Shepard's appearance on behalf of the putative class was withdrawn. Thus, the motion to disqualify Mr. Shepard as counsel, which, based on the attached exhibits the court understands to be a motion to disqualify him as counsel for the putative class, is DENIED
His Appearance By Counsel In A Civil Case does not expressly state that he was entering his appearance on behalf of the putative class, but the court interprets it as such given Mr. Shepard's subsequent motion to withdraw his appearance on behalf of the putative class as well as his statement at his deposition that substitute counsel would appear on behalf of the putative plaintiff class.
Before proceeding further, the court feels compelled to express its deep displeasure with the way the deposition was approached and handled by Mr. Shepard. The court expects more courtesy and consideration from officers of the court. Even though Mr. Shepard stated that minutes before going to the deposition he had just confirmed who the substitute counsel would be, the matter could have been handled in such a way as to avoid wasting the time of those present at the deposition. And that is what the deposition turned out to be — a waste of everyone's time.
But the court finds that Mr. Sheeks' request that Mr. Shepard be ordered to pay Defendants' attorneys' fees and expenses incurred in connection with his deposition should be denied. There are several reasons for this. First and foremost, though Rule 30(a)(1) of the Federal Rules of Civil Procedure provides that a party may depose any person by deposition, the attendance of non-party witnesses can be compelled only by subpoena as provided in Rule 45. Fed.R.Civ.P. 30(a)(1). As stated, Mr. Shepard was not subpoenaed for his deposition. Thus, he had no legal obligation to appear and be deposed, let alone answer any questions. For this reason alone the request for fees and costs should be denied. Therefore, the court finds that the motion requesting such a sanction should be DENIED.
Moreover, Shepard agreed to pay only costs, not attorneys' fees, with the caveat that there be an appropriate requests for costs, which the court understands to mean a sufficient request for reasonable costs. Besides Defendants have not established that the fees they seek are reasonable under the circumstances. Because Sheeks represented himself at the deposition, he would not be entitled to an award of attorney's fees for his own time. He should not be awarded any fees charged by Heath or a paralegal as they did not actively participate in the deposition, and Sheeks has not shown that their attendance on his behalf in addition to his own was necessary and reasonable. Similarly, there has been no showing that the fee requested for co-counsel for Tom Wood is reasonable. The request for court reporter expenses strikes this court as unreasonably high given the apparent brevity of the deposition-the transcript is less than 24 pages-and the fact that Sheeks proceeded to ask questions even after the record reflects Shepard had left the deposition.
IV. Conclusion
For the foregoing reasons, Plaintiff's request for application of non-mutual offensive collateral estoppel is DENIED; Plaintiff's motion for summary judgment is DENIED; Defendant's motion for summary judgment is GRANTED IN PART; Defendant's motion to disqualify is DENIED AS MOOT; and Defendant's motion for attorney's fees and expenses is DENIED.
Defendant Sheeks will be granted summary judgment on the claimed violations of § 1692g(a)(1), § 1692e(8), and § 1692f. Because Defendant Sheeks has asserted the bona fide error defense under § 1692k(c) and this defense was not addressed by the parties' cross motions, summary judgment in favor of Ms. Spearman on the claims under § 1692g(a)(3) and § 1692e would be inappropriate.
By separate order, the court will set a pretrial conference for purposes of selecting a trial date for the remaining claims.
As claims remain no judgment should be entered at this time.
ALL OF WHICH IS ORDERED this 4th day of November 2002.