Miller v. Javitch, Block & Rathbone

• Citation: 561 F.3d 588
• Decision Date: 06 April 2009
• Docket Number: No. 08-3336.,08-3336.
• Parties: Peggy MILLER, Plaintiff-Appellant, United States of America, Intervenor, v. JAVITCH, BLOCK & RATHBONE; Diana J. Prehn; Brian C. Block, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

561 F.3d 588

Peggy MILLER, Plaintiff-Appellant United States of America, Intervenor, v. JAVITCH, BLOCK & RATHBONE; Diana J. Prehn; Brian C. Block, Defendants-Appellees.

No. 08-3336.

United States Court of Appeals, Sixth Circuit.

Argued: December 3, 2008.

Decided and Filed: April 6, 2009.

ARGUED:

Stephen R. Felson, Law Office, Cincinnati, Ohio, for Appellant. Michael D. Slodov, Javitch, Block & Rathbone, Cleveland, Ohio, for Appellees. Howard S. Scher, United States Department of Justice, Washington, D.C., for Intervenor.

ON BRIEF:

Stephen R. Felson, Law Office, Cincinnati, Ohio, Steven C. Shane, Steven C. Shane, Attorney at Law, Bellevue, Kentucky, for Appellant. Michael D. Slodov, Javitch, Block & Rathbone, Cleveland, Ohio, for Appellees. Howard S. Scher, Michael S. Raab, United States Department of Justice, Washington, D.C., for Intervenor.

Before: COLE and COOK, Circuit Judges; EDMUNDS, District Judge.^*

COOK, J., delivered the opinion of the court, in which EDMUNDS, D.J., joined. COLE, J. (pp. 597-601), delivered a separate dissenting opinion.

OPINION

COOK, Circuit Judge.

Peggy Miller filed a putative class action against law firm Javitch, Block & Rathbone and two of its agents (collectively, "JBR") under the Fair Debt Collection Protection Act ("FDCPA"). 15 U.S.C. §§ 1692e et seq. Miller contends that JBR violated the FDCPA by using false, deceptive, and misleading language in a debt-collection complaint. The district court first granted judgment on the pleadings on the falsity claim, and then entered summary judgment in favor of JBR as to the remaining claims. Miller appeals, and because we agree with the district court that Miller failed in her burden to raise a genuine, issue of fact regarding a statutory violation by JBR, we affirm.

I.

This case centers on a form debt-collection complaint drafted and used by JBR in numerous state-court suits, including one filed against Peggy Miller in Scioto County, Ohio. Miller accrued debt on a credit card issued by Providian National Bank. The bank sent her monthly statements detailing the charges on her "Providian Visa Card," and she paid the statements with checks made out to "Providian." But after she stopped making payments—a fact she does not dispute—Providian sold Miller's debt to Palisades Collection LLC ("Palisades"). Palisades then hired JBR, and JBR filed the state-court complaint that prompted this class-action suit.

The state court "COMPLAINT FOR MONEY LOANED" read as follows:

1. Plaintiff acquired, for a valuable consideration, all right, title and interest in and to the claim set forth below originally owed by Defedant(s) to ASTA II/PROVIDIAN-03/NAT As a result of the assignment, Plaintiff became, and now is, the owner of funds loaned on account number xxxx-xxxx-xxxx-0736.

2. There is presently due the Plaintiff from the Defendant (s) on the money loaned on defendant's charge card debt, the sum of $4,604.56.

3. Plaintiff notified Defendant (s) of the assignment and demanded that Defendant (s) pay the balance due on the account, but no part of the forgoing balance has been paid.

4. Defendant (s) is/are in default on this repayment obligation.

WHEREFORE, Plaintiff prays for judgment against Defendant (s) in the amount of $4,604.56 with statutory interest from the date of judgment, costs of this action, and such other and further relief as the Court deems just and proper under the circumstances.

                                                       [signature block omitted]
                

Miller admits that when she read the complaint, she "pretty much" understood it. She took the complaint to a lawyer who responded to it by moving for a more definite statement. JBR then voluntarily dismissed the suit, as large volume collection firms often do when met with resistance.

Miller then went on the offensive in federal court, suing JBR on behalf of herself and others similarly situated. She claimed that JBR—a "debt collector" for purposes of the FDCPA, see Heintz v. Jenkins, 514 U.S. 291, 299, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995)—violated the FDCPA by including false, deceptive, and misleading language in its state-court complaint. JBR answered and moved for a judgment on the pleadings.¹ The district court granted the motion in part, finding that Miller failed to state a claim when she alleged that "for money loaned" amounted to a false statement. But the court—attentive to how a true statement may still be misleading—also denied JBR's motion in part, finding that Miller stated a claim with respect to four potentially misleading statements: (1) the complaint was "for money loaned," (2) Palisades was "the owner of funds loaned on account number xxxx ..."; (3) "there is presently due the Plaintiff from the Defendant(s) on the money loaned on defendant's charge card debt ..."; and (4) "Plaintiff acquired, for valuable consideration, all right, title, and interest in and to the claim set forth below originally owed by Defendant(s)...."

The matter never reached a jury. After discovery, the district court examined the evidence and found nothing to suggest that these four statements qualified as deceptive or misleading under the FDCPA. Accordingly, the district court granted JBR's summary judgment motion. Miller appeals the district court's judgment on the pleadings and its summary judgment.

II.

Congress enacted the FDCPA "to eliminate abusive debt collection practices by debt collectors, to insure that those debts collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." 15 U.S.C. § 1692(e). The FDCPA's relevant sections read:

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:

...

(2) The false representation of—(A) the character, amount, or legal status of any debt;

...

(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 ...

(12) The false representation or implication that accounts have been turned over to innocent purchasers for value.

15 U.S.C. § 1692e.

These provisions sweep with "extraordinar[y]" breadth, Frey v. Gangwish, 970 F.2d 1516, 1521 (6th Cir.1992), and call for "strict liability, ... meaning that a consumer may recover statutory damages if the debt collector violates the FDCPA even if the consumer suffered no actual damages," Fed. Home Loan Mortgage Corp. v. Lamar, 503 F.3d 504, 513 (6th Cir.2007) (citing 15 U.S.C. § 1692k(a)). This court, in determining whether a statement qualifies as misleading, employs an objective, "least-sophisticated-consumer" test. Kistner v. Law Offices of Michael P. Margelefsky LLC, 518 F.3d 433, 438-39 (6th Cir.2008). This standard "protects naive consumers [while] prevent[ing] liability for bizarre or idiosyncratic interpretations of collection notices by preserving a quotient of reasonableness and presuming a basic level of understanding and willingness to read with care." Id. (quoting Lamar, 503 F.3d at 509-10). Stated differently, we "will not `countenance lawsuits based on frivolous misinterpretations or nonsensical interpretations of being led astray.'" Lamar, 503 F.3d at 514 (quoting Jacobson v. Healthcare Fin. Servs. Inc., 434 F.Supp.2d 133 (E.D.N.Y.2006)).

Applying these principles to Miller's claim, we begin by analyzing the district court's judgment on the pleadings, and then consider its summary judgment.

A.

JBR's state-court complaint characterized Miller's credit-card debt as a loan. Miller thinks that description counts as false under the FDCPA. Credit-card debt, so her argument goes, is actually a merchant's account receivable, not a loan. The district court rejected this position in its judgment on the pleadings. Reviewing the issue de novo, Roger Miller Music, Inc. v. Sony/ATV Publ'g, LLC, 477 F.3d 383, 389 (6th Cir.2007), we agree with the district court and rely on its well-reasoned analysis:

Typically, credit card debt is one that is considered "an account" where there is a balance sheet of sorts that lists the purchases made with the credit card and the payments received by the card issuer. This approach of calling it a loan is a novel one. Although the Ohio Rules of Civil Procedure do provide for a complaint for money loaned, the question is whether or not a claim that has historically been one on an account can now be plead as one for money loaned. Defendant cites a handful of cases from other circuits and state courts as well as various other secondary sources for the proposition that a credit card transaction equates to a loan by the credit card issuer to the credit card holder.

In In re Mercer, 246 F.3d 391, 406 (5th Cir.2001), a bankruptcy discharge case, the Court stated that "... by each card-use, [the debtor] requested a loan against that line; and by approving each card-use, and therefore reimbursing the merchant, including an ATM owner, USC [the credit card issuer] made a loan to her."

...

Defendants also cite May Co. v. Trusnick, 54 Ohio App.2d 71, 75, 375 N.E.2d 72 (1977), a statute of limitations case involving the failure of a debtor [Trusnik] to timely pay for purchases placed on an account at a retail store [The May Company]. The May Court cited Harris Trust and Savings Bank v. McCray (1974), 21 Ill.App.3d 605, 316 N.E.2d 209. In Harris Trust the issuer of a bank credit card sued the cardholder to recover the balance due on the cardholder's account. Harris Trust argued that the cause of action arose when the cardholder failed to repay the bank for funds advanced to the merchant. The Court agreed with Harris Trust and held "money advanced to a merchant in payment for merchandise received by the defendant constitutes a loan." Id. at 608, 316...