Opinion
No. Civ. 95-0506 RLP/LCS.
September 19, 1996
MEMORANDUM OPINION
THIS MATTER comes on for consideration of Defendants [sic] Motion for Summary Judgment (Docket No. 55), filed June 10, 1996. The Court, having reviewed the Motion, the accompanying memoranda, and the applicable law and being fully advised in the premises, finds that the Motion is well taken and will be granted.
The parties have consented to proceed before a United States Magistrate Judge, pursuant to 28 U.S.C. § 636(c) and FED. R. CIV. P. 73.
Plaintiffs bring this action under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692-1692 o. The Court previously granted in part Defendants' Rule 8 Request for Treatment of Affirmative Defenses as 12B [sic] Motion, dismissing Counts 1, 2, and ¶ 20.F of Count 3 of the four-count Complaint. (Mem. Op. and Order (Docket No. 47), filed May 6, 1996.) Plaintiffs allege in the remaining counts that Credit Bureau of Lancaster and Palmdale, Inc. (Credit Bureau) violated §§ 1692e(1), (4), (5), (7), and (10) and § 1692c(a)(2) of the FDCPA. Credit Bureau now moves for summary judgment on these claims.
The Court rejects Plaintiffs' contention that Defendants' prior motion was converted into a motion for summary judgment and denied with regard to issues presently before the Court when at oral argument Defendants sought to introduce matters outside the pleadings. The Court explicitly excluded consideration of such material at that hearing and in its Memorandum Opinion and Order addressed the motion only as one for dismissal on the pleadings.
Defendant LaSalle was named only in Count 2, which has been dismissed. Therefore, Credit Bureau remains as the sole defendant in this action.
Summary judgment may properly be granted if there are no genuine issues as to any material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). Pleadings and documentary evidence must be liberally construed in favor of the nonmoving party. Cole v. Ruidoso Mun. Schs., 43 F.3d 1373, 1379 (10th Cir. 1994). If the moving party satisfies its initial burden of demonstrating the absence of any genuine issue of material fact, the nonmoving party must identify sufficient evidence requiring submission of the case to a jury. Id.
The FDCPA establishes a general prohibition against the use of "any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692e. The subsections of § 1692e set forth a non-exhaustive list of sixteen practices banned by the statute, including:
(1) The false representation or implication that the debt collector is vouched for, bonded by, or affiliated with the United States or any State, including the use of any badge, uniform, or facsimile thereof.
. . . .
(4) The representation or implication that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action.
(5) The threat to take any action that cannot legally be taken or that is not intended to be taken.
. . . .
(7) The false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer.
. . . .
(10) The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.
A debt collection practice may violate the FDCPA's strict prohibition against deceptive practices even if it does not fall within any of the enumerated subsections, and a single violation is sufficient to establish civil liability. Bentley v. Great Lakes Collection Bureau, 6 F.3d 60, 62-63 (2d Cir. 1993) (citing Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir. 1993); 15 U.S.C. § 1692k).
Although the Tenth Circuit has yet to address the legal standard to be applied in determining a violation of § 1692e, "the most widely accepted test . . . is an objective test standard based on the `least sophisticated consumer.'" Clomon, 988 F.2d at 1318, quoted in Dikeman v. National Educators, Inc., 81 F.3d 949, 954 n. 14 (10th Cir. 1996) ("We note that at least one court has held that `the FDCPA protects all consumers, the gullible as well as the shrewd.'"). The Seventh Circuit has modified the least sophisticated consumer standard, addressing instead the "unsophisticated consumer," in order to "relieve the incongruity between what the standard would entail if read literally, and the way courts have interpreted the standard." Gammon v. GC Servs. Ltd. Partnership, 27 F.3d 1254, 1257 (7th Cir. 1994). Gammon does not significantly change the substance of the least sophisticated consumer standard as applied by courts, but rather reconciles its literal meaning with its application. Avila v. Rubin, 84 F.3d 222, 226-27 (7th Cir. 1996). Thus, the unsophisticated consumer standard is "a distinction without much of a practical difference in application." Id. Whether termed the "least sophisticated" or "unsophisticated" consumer standard, the purpose is the same: "to protect the consumer who is uniformed, naive, or trusting, with consideration given to an objective element of reasonableness which shields complying debt collectors from liability for unrealistic or peculiar interpretations of collections letters." Russey v. Rankin, 911 F. Supp. 1449, 1453 (D.N.M. 1995) (citing Gammon, 27 F.3d at 1257; Clomon, 988 F.2d at 1320).
Plaintiffs allege in Count 3 of the Complaint that the Credit Bureau's letter of May 11, 1994, coupled with inaction by the Defendant for nearly a year after sending the letter to the Spinarskis, violates various subsections of 15 U.S.C. § 1692e. The pertinent portion of the letter reads:
We have made many attempts to settle the above claim in a friendly fashion, however, it appears that you are determined not to pay.
Our intention is to have our attorney file a lawsuit and when judgment is entered in our favor, instructions will be issued to the sheriff to serve you with an `Order To Appear For Examination,' at which time you will be required to appear in person before a municipal court judge to testify under oath as to your assets and liabilities. If you do not appear, a bench warrant will be issued for your arrest.
You can still avoid the additional costs of a lawsuit and a possible `Order To Appear For Examination' by contacting this office within five (5) days.
(Compl. ¶ 8.)
Plaintiffs first assert that the May 11th letter implies that Credit Bureau is "vouched for, or affiliated with, the local California State municipal court and sheriff, by assuming that judgment will be entered in its favor, failing to acknowledge the rights of the Plaintiffs in court proceedings, and suggesting that the sheriff will act as . . . Credit Bureau's agent in carrying out its will, in violation of Section 1692e(1) of the Act." (Compl. ¶ 20.A.) Defendant moves for summary judgment on grounds that the letter does not state in any manner that Credit Bureau was vouched for or affiliated with the California municipal court or sheriff. The Court agrees.
By prohibiting representations or implications by a debt collector that it is "affiliated with" or "vouched for" by a governmental entity, the FDCPA proscribes "a range of implications wider than merely the direct representation that the debt collector is or is a part of state or federal government." Gammon, 27 F.3d at 1257. In Gammon, for example, the Seventh Circuit Court of Appeals found that the statement, "We provided the systems used by a major branch of the federal government and various state governments to collect delinquent taxes," reasonably could be interpreted by an unsophisticated consumer as implying that governmental branches vouch for or are affiliated with the collector. Id. The court felt that the sentence had no purpose other than to intimidate unsophisticated consumers with the insinuation that tax collecting units of the federal and state governments were at the disposal of the debt collector in collecting delinquent debts. Id. at 1258.
As discussed more fully below, however, the California municipal court system is at the disposal of debt collectors. Credit Bureau certainly could inform the Spinarskis of its intention to avail itself of legal remedies if they did not settle the claim. Cf. Higgins v. Capitol Credit Servs., Inc., 762 F. Supp. 1128, 1138 (D. Del. 1991) (failure to set out precise procedural mechanics collector intends to pursue or revealing part of procedure not violation of FDCPA) (citing Riveria v. MAB Collections, Inc., 682 F. Supp. 174, 177-78 (W.D.N.Y. 1988)). Recitation of the legal process does not misrepresent or give a false implication of Credit Bureau's status in relationship to the state courts. Neither does the fact that Credit Bureau frequently makes use of the legal system in such instances and expects to prevail. Even the least sophisticated consumer would not have been misled by this language into thinking that Credit Bureau was affiliated with or vouched for by the California municipal courts or sheriff. Thus, this statement clearly falls outside the scope of Section 1692e(1).
Plaintiffs next maintain that the letter violates § 1692e(4) in that
the representation and implication of the letter was that nonpayment will result in the arrest or imprisonment of the Plaintiffs, which is not lawful under the Thirteenth Amendment to the United States Constitution. The debt collector's intention was actually to take no such action as threatened in the . . . letter, as demonstrated by its failure to seek the arrest of the Plaintiff's [sic], or even commence suit against them.
(Compl. ¶ 20.B.) The Spinarskis also claim violation of § 1692e(5) in that the Credit Bureau threatened to take action that could not legally be taken and was not intended to be taken, incorporating the allegations stated in support of violation of subsection (4). ( Id. ¶ 20.C.)
Plaintiffs' allegations of violations of §§ 1692e(4) and (5) turn on a two-part inquiry: 1) whether Credit Bureau represented or implied that Plaintiffs would be arrested or imprisoned or threatened to bring a lawsuit against them and, if so, 2) whether Credit Bureau legally could take and intended to take these actions. See Newman v. Checkrite California, Inc., 912 F. Supp. 1354, 1379 (E.D. Cal. 1995); see also Swanson v. Southern Oregon Credit Serv., Inc., 869 F.2d 1222 (9th Cir. 1988); Jeter v. Credit Bureau, Inc., 760 F.2d 1168, 1176 (11th Cir. 1985); Tsenes v. Trans-Continental Credit and Collection Corp., 892 F. Supp. 461, 464 (E.D.N.Y. 1995); United States v. National Fin. Servs., Inc., 820 F. Supp. 228, 232-33 (D. Md. 1993) . As discussed above, the issue of what is represented, implied, or threatened is analyzed under the least sophisticated debtor standard. See, e.g., Newman, 912 F. Supp. at 1379 n. 37 (weight of authority applies "least sophisticated consumer" test) (citing Bentley, 6 F.3d 60; Gammon, 27 F.3d 1254; Dutton v. Wolpoff Abramson, 5 F.3d 649 (3d Cir. 1993)). The issue of whether an act legally may be taken is determined by looking to state law. Id. at 1380 (citing Gaetano v. Payco of Wisconsin, Inc., 774 F. Supp. 1404 (D. Conn 1990)). Finally, the issue of intent is one of fact, to be resolved by weighing the conflicting evidence. Id. at 1379 n. 37.
The May 11th letter explicitly states that Defendant intends to file a lawsuit if Mr. Spinarski does not contact Credit Bureau's office within five days. Additionally, the letter describes a scenario following nonpayment which could result in the arrest of Debtor. The letter does not represent or imply, however, that arrest or imprisonment would result from nonpayment. Rather, it states that following judgment in Credit Bureau's favor and failure by Mr. Spinarski to appear after service of an "Order to Appear for Examination," a bench warrant for his arrest would be issued. Giving Plaintiffs the benefit of every doubt under the standard of the least sophisticated debtor, however, such a person conceivably might reasonably believe that the letter implied that nonpayment would result in arrest or imprisonment. The Court, therefore, will proceed under the presumption that Plaintiffs meet the first prong of the inquiry under both §§ 1692e(4) and (5).
Defendant contends, however, that it legally could take and fully intended to take the actions outlined in the letter. The affidavit of David Edward Ambill supports Credit Bureau's position. Mr. Ambill states that he is a member of the State Bar of California and has represented Defendant since 1991, during this period filing in excess of 2,000 complaints on behalf of Credit Bureau in Municipal Court, Antelope Judicial District. (Mem. Supp. Defs.' Mot. Summ. J., Ex. A ¶¶ 2-4.) Mr. Ambill further affirms that it is Credit Bureau's policy to bring suit when appropriate, "but only when an alternative resolution is not possible." ( Id. ¶ 5.) With regard to the Spinarski case, "no litigation seemed appropriate in light of discussions with the debtors about payment plans." ( Id.) Mr. Ambill also describes the right of a judgment creditor under California law to obtain a court order directing the judgment debtor to appear and be examined under oath concerning assets. ( Id. ¶¶ 6-7.) If the judgment debtor does not appear, a bench warrant, which subjects the judgment debtor to arrest, may be issued. ( Id. ¶ 7.) Although it is the policy of the Sheriff's Department only to contact judgment debtors, thus, giving them the opportunity to appear voluntarily, any field officer who stops a judgment debtor for another reason may arrest the debtor on confirmation of the outstanding warrant. ( Id.) Copies of § 708.110, Examination of judgment debtor, and § 708.17, Failure to appear for examination; Penalty for unjustified arrest, of the Code of Civil Procedure, along with a copy of the Application and Order for Appearance and Examination, support Mr. Ambill's affidavit. ( Id. Exs. A, B of Ex. A.)
In order to prevail on summary judgment Plaintiffs must show that there is no genuine issue of material fact as to Credit Bureau's ability or intent to sue or to eventually seek issuance of a bench warrant. See Newman, 912 F. Supp. at 1379. The Spinarskis do not refute Defendant's rendition of the procedures and rights available to it under California law. Defendant's statements, then, that Debtor could be arrested on a bench warrant for failure to comply with an Order for Appearance and Examination following entry of judgment in its favor and that Credit Bureau intended to file suit are both actions that are lawful and may legally be taken.
Plaintiffs do raise the issue of whether a New Mexico resident "would or could ever be arrested" pursuant to such a warrant. (Br. Supp. Pls.' Resp. to Mot. Summ. J. ¶ 4.) Defendant replies, however, that on May 11, 1994, the Spinarskis were not New Mexico residents and that the letter was sent to their Lancaster, California, address. (Reply to Pls.' Resp. ¶ 2.) Credit Bureau further maintains that when Vivian Spinarski contacted Credit Bureau in response to the letter, she did so from a Mojave, California, address, and, thus, was still subject to California state law. ( Id.) Neither party has offered any exhibits in support of the issue of Plaintiffs' residence. Given that the debt was incurred in California and that Plaintiffs have not contested Credit Bureau's argument that they were California residents on or about May 11, 1994, the Court proceeds under that presumption.
Plaintiffs also fail to show that Credit Bureau did not intend to take these actions. Credit Bureau has offered evidence of its policy and practice to bring suit in such cases. It also has explained that it did not bring suit in this matter because of negotiations concerning payment, a fact supported by Plaintiffs:
The Plaintiff, Vivian Spinarski, wrote a letter in response to the Defendant Credit Bureau, explaining that her husband, Plaintiff Scott Spinarski, had been out of work, and that they "didn't have any extra money to pay." She told the Defendant Credit Bureau that they had every intention of paying the bill, when it was incurred, and still do, but that they "have nothing." She stated, "I will send as much money monthly as I can. But I cannot promise more than $20.00 monthly starting June 30th."
(Compl. ¶ 12.) In opposition to Credit Bureau's evidence, Plaintiffs must do more than attempt to raise doubt by merely stating that no suit was brought. See Higgins, 762 F. Supp. at 1136 n. 2; see also Tsenes, 892 F. Supp. at 465 (plaintiff will have to affirmatively show that defendant did not intend to bring legal action, to show that possibility of lawsuit could be ruled out because, for example, creditor had fixed practice of not bringing suit). They must come forward with facts which show a genuine dispute as to intent. This they have not done. While intent and motive are ordinarily issues for the trier of fact, Newman, 912 F. Supp. at 1380 (citing Simpson v. United States, 652 F.2d 831 (9th Cir. 1981)), "summary judgment is appropriate if all reasonable inferences defeat the claims of one side," id. (citing White v. Roper, 901 F.2d 1501, 1505 (9th Cir. 1990)). See also Wegmans Food Markets, Inc., v. Scrimpsher (In re Scrimpsher), 17 B.R. 999, 1013-14 (Bankr. N.D.N.Y. 1982). Therefore, summary judgment will be granted to Credit Bureau as to Plaintiffs' §§ 1692e(4) and (5) claims.
Plaintiffs also maintain that the May 11 letter employed false and deceptive means "to collect or attempt to collect a debt, in that the suggestion that a law suit [sic] would be filed in five (5) days, and the sheriff would arrest the Plaintiffs, was false and deceptive," in violation of § 1692e(10). (Compl. ¶ 20.E.) This claim also fails for the reasons stated above. Determining whether a particular representation or means of collection is deceptive turns on whether the least sophisticated debtor would be misled. National Fin. Servs., 820 F. Supp. at 232 (citing Jeter, 760 F.2d at 1175). Neither the legal procedures described by Credit Bureau in the May 11th letter nor Credit Bureau's intent to make use of those procedures were misrepresentations. Furthermore, Credit Bureau did not suggest that a lawsuit would be filed within five days, as Plaintiffs contend. Rather, Credit Bureau gave the Spinarskis five days within which to respond to the letter. Plaintiffs did contact Credit Bureau in a timely manner to arrange payments, even though not within five days, thereby obviating the need for Credit Bureau to file suit. Finally, the fact that Plaintiffs could be subject to arrest if a warrant were issued for failure to appear also is not misleading or deceptive. Thus, the May 11 letter simply is not abusive or deceptive, even under the least sophisticated debtor standard, and summary judgment also will be granted as to this claim. As the Higgins court noted, the FDCPA "does not prohibit debt collectors from attempting to collect debts, but merely from doing so unscrupulously." 762 F. Supp. at 1138.
Plaintiffs' last claimed violation of § 1692e is for "[t]he false representation and implication that the consumer committed a crime by not paying the bill, which was intended to disgrace the Plaintiff[s]," in violation of subsection (7). (Compl. ¶ 20.D.) Reference to the language of the letter itself shows that it in no way stated or implied that Plaintiffs had committed a crime by not paying the bill. Furthermore, summary judgment may not be avoided by merely raising an issue of intent, in this instance, the alleged intent to disgrace the Spinarskis. Given the Court's analysis of the letter above and the fact that Plaintiffs again offer no support whatsoever for the claim, it also fails.
In Count IV of the Complaint Plaintiffs allege that Credit Bureau violated § 1692c(a)(2) by contacting the Plaintiffs directly by letter dated February 27, 1995, after having been informed by the Spinarskis' counsel by letter dated January 5, 1995, that he represented them. Section 1692c, Communication in connection with debt collection, provides in relevant part:
(a) Communication with the consumer generally — 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) (emphasis added).
Credit Bureau moves for summary judgment on this claim on grounds that its subsequent communication was in regard to a different debt than the debt for which the Spinarskis had secured the services of counsel. The May 11th letter concerned a debt due to Antelope Valley Hospital Medical Center and was assigned account number 238840. (Mem. Supp. Defs.' Mot. Summ. J., Ex. B ¶ 3.) The letter from the Spinarskis' counsel to Credit Bureau on January 5, 1995, reads: "Re: Scott Spinarski, account number 238840." ( Id., Ex. B ¶ 5, Ex. A to Ex. B.) The February 27th letter from Credit Bureau to Mr. Spinarski concerned a debt due Dr. Vache Chakmakian and was assigned account number 71186. ( Id., Ex. B ¶¶ 6, 7, Ex. B to Ex. B.) It was only by letter dated March 16, 1995, that the Spinarskis' counsel informed Credit Bureau that he represented Plaintiffs as to all accounts referred to Defendant, not just account number 238840. ( Id., Ex. B ¶ 8, Ex. C to Ex. B.)
Knowledge by a debt collector that a debtor is represented by counsel on a particular debt does not preclude direct communication as to another debt. Robinson v. Transworld Sys., Inc., 876 F. Supp. 385, 390 (N.D.N.Y. 1995) (citing Graziano v. Harrison, 950 F.2d 107, 113 (3d Cir. 1991)). It is clear that when Credit Bureau contacted the Spinarskis on February 27, 1995, as to the subsequent debt, it had been informed that they were represented by counsel only as to the hospital debt, account number 238840. Plaintiffs do not challenge this rendition of the events and, in fact, offer no argument whatsoever against summary judgment on Count IV. As the second letter concerned a subsequent debt, concerning which Credit Bureau had not been notified that Plaintiffs were represented by counsel, summary judgment also will be granted to Defendant's on this claim.
An Order in accordance with this Memorandum Opinion shall be entered.
ORDER
THIS MATTER came on for consideration of Defendants [sic] Motion for Summary Judgment (Docket No. 55), filed June 10, 1996. A Memorandum Opinion was entered this date.WHEREFORE,
IT IS HEREBY ORDERED that Defendants [sic] Motion for Summary Judgment (Docket No. 55), filed June 10, 1996, be, and hereby is, granted and Plaintiffs' Complaint is dismissed with prejudice.