Summary
holding that section 1692g should be interpreted to have a writing requirement
Summary of this case from Chung v. National Check Bureau, Inc. (S.D.Ind. 2005)Opinion
Cause No. IP99-1757-C-H/G
February 28, 2001
ENTRY ON PENDING MOTIONS
Plaintiff Rafael Castillo alleges in this case that defendant Robert B. Carter violated the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., in attempting to collect a debt from Castillo for non-payment of rent. Plaintiff has filed a motion for summary judgment as to liability and several affirmative defenses. Defendant has filed a motion labeled a motion for judgment on the pleadings. As explained below, both motions are denied.
Undisputed Facts
The following facts are undisputed for purposes of the pending motions. For purposes of the FDCPA, plaintiff Castillo is a "consumer" as defined in 15 U.S.C. § 1692a(3), and defendant Carter is a "debt collector" as defined in 15 U.S.C. § 1692a(6).
In 1999, Heritage Park Apartments engaged defendant Carter as an attorney to collect a debt from Castillo. Carter then sent a letter to Castillo on October 13, 1999. The letter, which is Exhibit A to the complaint, stated in relevant part as follows:
RE: Non-Payment of Rent for October: $475; Late Fee $70
to which may be added any other sums that may become due, including attorney fees, if so provided in your lease, plus court costs.
This law office represents Heritage Park Apts., where, I have been informed, you currently reside pursuant to a written lease agreement. We have been advised that you are currently in default of your lease for failure to pay your rent, and said amounts are currently due and owing. Even though we are filing in court for eviction, your rights to dispute and for validation, as stated below, remain in full force and effect.
You have a right to dispute the validity of this debt or any part thereof. Unless you notify this law office in WRITING within thirty (30) days after receipt of this notice that the validity of this debt, or any part thereof, is disputed, the debt will be assumed to be valid. If you notify this law office in WRITING within thirty (30) days after receipt of this notice that this debt, or any part thereof, is disputed, verification of the debt will be sent to you. Upon your WRITTEN request to this law office within thirty (30) days after receipt of this notice, the name and address of the original creditor will be provided to you if different from the current creditor. Upon your WRITTEN notice to this law office within thirty (30) days after your receipt of this notice of a dispute, or requesting proof of this debt or requesting the name of the original creditor, collection efforts by this law office through litigation or otherwise will be suspended until written validation proof of debt or the name of the original creditor has been mailed to you. This is an attempt to collect a debt, any information obtained will be used for that purpose. This is a communication from a debt collector.
Castillo asserts in his undisputed affidavit that he believed, after reading Carter's letter, that he had to notify Carter in writing if he questioned the validity of the debt and that he could not calculate the total amount of the debt to Heritage Park Apartments.
The Claims
Plaintiff Castillo claims that Carter's letter violated the FDCPA in several ways. First, Castillo contends that the letter violated 15 U.S.C. § 1692g(a)(3) by stating that notice of any dispute about the validity of the debt would have to be in writing. This issue has divided the federal courts that have considered it.
Section 1692g provides in its entirety:
(a) Notice of debt; contents. Within 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;
(2) the name of the creditor to whom the debt is owed;
(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;
(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.
(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.
(c) Admission of liability. The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.
Plaintiff Castillo argues that § 1692g(a)(3) gives him the right to dispute the validity of the debt not only in writing but in any way, "whether by letter, telegram, telephone, or even smoke signals so long as the consumer notifies the debt collector of the dispute." He points out that subsection (a)(3), unlike subsections (a)(4) and (a)(5), does not expressly refer to a "writing" or a "written request." Thus, Castillo argues, defendant Carter's reference to a notice "in WRITING" was a deceptive and unfair practice that violated the FDCPA.
Several federal courts have adopted plaintiff's view. See Ong v. American Collections Enterprise, Inc., 1999 WL 51816 (E.D.N.Y. Jan. 15, 1999) (reviewing cases on both sides of issue); see also Castro v. ARS National Services, Inc., 2000 WL 264310 (S.D.N.Y. March 8, 2000); Reed v. Smith, Smith Smith, 1995 WL 907764, at *2 (M.D. La. Feb. 8, 1995); Young v. Credit Bureau of Lockport, Inc., 1989 WL 79054, at *1-2 (W.D.N.Y. July 17, 1989); Harvey v. United Adjusters, 509 F. Supp. 1218, 1221 (D. Ore. 1981).
Defendant Carter relies on the Third Circuit's decision in Graziano v. Harrison, 950 F.2d 107, 112 (3d Cir. 1991). Graziano affirmed a district court's ruling that a notice like Carter's, stating that a message disputing the validity of the debt should be sent in writing, did not violate § 1692g(a)(3). At least one other district court in this circuit has followed the Third Circuit on this issue. See Sturdevant v. Thomas E. Jolas, P.C., 942 F. Supp. 426, 429 (W.D. Wis. 1996).
The Third Circuit acknowledged the arguments based on differences of statutory language between the subsections. The court then explained its view:
The opinions relied on by Graziano have reasoned that the statutory scheme teaches a different lesson. Since subsections (a)(4) and (a)(5) expressly call for written communications, the absence of such a requirement in subsection (a)(3) is strong evidence — so the opinions argue — that Congress advertently omitted an analogous requirement in subsection (a)(3). See Bailey at 5; Young at 3. Nevertheless, we are of the view 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.
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.950 F.2d at 112 (footnotes omitted).
The Seventh Circuit has instructed that district courts should "give most respectful consideration to the decisions of the other courts of appeals and follow them whenever they can," Colby v. J.C. Penney Co., 811 F.2d 1119, 1123 (7th Cir. 1987), but also that district courts should consider those decisions critically, see Citizens for a Better Environment v. Steel Co., 230 F.3d 923, 928 (7th Cir. 2000) (reversing district court decision following other circuits' decisions that did not explain their reasoning persuasively). This court has considered the issue under § 1692g(a)(3) and agrees with the Third Circuit for the reasons stated by that court in Graziano, as well as with the district court in Sturdevant.
The parties have addressed in some detail the First Circuit's decision in Brady v. Credit Recovery Co., 160 F.3d 64 (1st Cir. 1998). The specific issue in that case was whether a debt collector was entitled to summary judgment on a claim under 15 U.S.C. § 1692e(8), which prohibits a debt collector from communicating 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." The debt collector had received a telephone call disputing the debt in question, but had later reported the debt in question to credit reporting agencies without also reporting that it was disputed. The district court had granted summary judgment, citing the Third Circuit in Graziano and extending that case's reasoning to § 1692e(8). See Brady v. Credit Recovery Co., 26 F. Supp.2d 201, 203-04 (D. Mass. 1998).
The First Circuit reversed and concluded that a writing requirement was not implied in § 1692e(8). The First Circuit did not address Graziano explicitly. The First Circuit's reasoning also appears to have left open the possibility of distinguishing between § 1692g(a)(3) and § 1692e(8) on this issue. See Brady, 160 F.3d at 66-67. For example, § 1692g addresses the contents of communications to the alleged debtor, and there is little doubt that a debtor who communicates a dispute in writing is better off than one who does not use a writing. On the other hand, § 1692e(8) is intended to prohibit certain communications by debt collectors (i.e., omissions of the fact that a debt is disputed), so that its interpretation in Brady gives debtors more protection. Although there is some tension between the approaches to statutory interpretation taken in Graziano and Brady, Graziano remains the only circuit decision expressly deciding the issue now before this court, and its reasoning is persuasive. Accordingly, plaintiff is not entitled to summary judgment on the theory that the notice violated § 1692g(a)(3) by stating that messages disputing the validity of the debt should be in writing.
With this resolution, the court need not consider at this point whether the mere existence of the Third Circuit's decision in Graziano would provide a valid defense to a claim like the one presented here, even if the Seventh Circuit or the Supreme Court might later disagree. It is easy to imagine that if Carter had sent another consumer-debtor a collection letter that did not state that dispute messages should be in writing, the recipient of that letter could have sued him for failing to include that statement. That plaintiff would argue that the debt collector had an obligation to state expressly that the message should be in writing in order to give fair notice of what action is required to dispute the debt and to be consistent with Graziano. In fear of such a claim, a debt collector who is aware of Graziano might reasonably decide to include the writing requirement, as Carter did in this case. The court doubts that Congress meant to impose liability on debt collectors who do not correctly anticipate the ultimate resolution of such issues that have divided the federal courts in ways that could trigger strict liability in either direction.
The other issues presented by the parties' pending motions plainly are not suitable to summary judgment on this record. Whether Carter's letter was actually misleading to an "unsophisticated consumer" with respect to the amount of the debt or the reference to "court costs" cannot be decided against defendant on this record and depends on resolution of factual disputes. In addition, defendant is not entitled to judgment on the pleadings based on the contents of plaintiff's witness list. If defendant wishes to file a proper motion for summary judgment presenting the issue of the type of proof needed to establish that a communication is misleading, he may do so promptly.
For the reasons stated above, plaintiff's motion for summary judgment is denied. Defendant's motion for judgment on the pleadings is also denied. Defendant's motion to strike plaintiff's responses to the motion for judgment on the pleadings is denied as moot. This action shall be set for a jury trial beginning at 9:00 a.m. on Monday, August 27, 2001, with a final pretrial conference on Friday, August 17, 2001, at 2:30 p.m. in Room 330, U.S. Courthouse, Indianapolis, Indiana.
So ordered.