Allen ex rel. Martin v. LaSalle Bank, N.A.

• Citation: 629 F.3d 364
• Decision Date: 12 January 2011
• Docket Number: No. 09-1466,09-1466
• Parties: Dorothy Rhue ALLEN, by her Attorney in fact, James MARTIN, Individually and as a class representative on behalf of others similarly situated, Appellant v. LASALLE BANK, N.A.; Cenlar Federal Savings Bank FSB; Fein, Such, Kahn and Shepard, PC; John Doe Servicers 1-100; John Doe Law Firms 1-100.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

629 F.3d 364

Dorothy Rhue ALLEN, by her Attorney in fact, James MARTIN, Individually and as a class representative on behalf of others similarly situated, Appellant

v.LASALLE BANK, N.A.; Cenlar Federal Savings Bank FSB; Fein, Such, Kahn and Shepard, PC; John Doe Servicers 1-100; John Doe Law Firms 1-100.

No. 09-1466.

United States Court of Appeals, Third Circuit.

Argued Sept. 14, 2010.

Filed: Jan. 12, 2011.

Lewis G. Adler (Argued), Roger C. Mattson, Woodbury, N.J., for Appellant.

Andrew C. Sayles (Argued), Gregory E. Peterson, Connell Foley, Roseland, N.J., for Appellee Fein, Such, Kahn and Shepard, P.C.

Daniel C. Green, Vedder Price, New York, N.Y., Chad A. Schiefelbein (Argued), Vedder Price, Chicago, IL, for Appellee LaSalle Bank.

Gregory A. Lomax, Christopher L. Soriano, Morgan J. Zucker, Duane Morris, Cherry Hill, N.J., for Appellee Cenlar Federal Savings Bank.

Before: SLOVITER, BARRY, and SMITH, Circuit Judges.

OPINION OF THE COURT

SLOVITER, Circuit Judge.

This appeal presents the question whether a communication from a debt collector to a consumer's attorney is actionable under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692f(1).

IFactual and Procedural History

In 1976, Dorothy Rhue Allen purchased her home with a 30-year mortgage. After Allen failed to make the last payment due, she was declared in default. On May 7, 2007, Fein, Such, Kahn & Shepard, PC ("FSKS"), a law firm, brought a mortgage foreclosure action against Allen on behalf of LaSalle Bank.¹

At the request of Allen's attorney, FSKS sent a letter to Allen's attorney on June 7, 2007 that set forth a payoff quote for the principal balance remaining on the loan and other charges due to the servicer of Allen's loan, Cenlar Federal Savings Bank ("Cenlar"), as well as charges for FSKS's attorney fees and costs. Thesame day, FSKS sent a second letter to Allen's attorney itemizing the attorney fees and costs referred to in its previous letter. Less than three weeks later, Allen filed a class action counterclaim and third party complaint in the foreclosure action, asserting that FSKS's response violated the FDCPA and state law. LaSalle and FSKS then released the mortgage and moved to dismiss the foreclosure action, after which the New Jersey Superior Court dismissed Allen's claims without prejudice.

Some time thereafter, Allen filed a class action against FSKS, LaSalle, and Cenlar in the United States District Court for the District of New Jersey. In the Complaint, Allen alleged that FSKS and LaSalle violated the FDCPA and state law, and that Cenlar also violated state law. For example, Allen alleged that FSKS demanded: $910 in attorney fees when court rule permits only $15.43, $335 for searches when court rule permits only $75, $160 for recording fees when the actual fee was only $60, and $475 for service of process when statute and court rule limit reimbursement to $175. Although she made other specific and general FDCPA allegations in her Complaint, Allen conceded at oral argument that her FDCPA claims were predicated only upon alleged violations of 15 U.S.C. § 1692f(1).

FSKS moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), contending that Allen had failed to state a claim upon which relief could be granted. FSKS asserted that a communication from a debt collector to a consumer's attorney is not covered by the FDCPA.²

The District Court noted that the courts of appeals are divided on this issue. The Fourth Circuit has held that a communication with a debtor's attorney is to be treated as an indirect communication with the debtor and therefore actionable. Sayyed v. Wolpoff & Abramson, 485 F.3d 226, 232-33 (4th Cir.2007). In contrast, the Second Circuit has stated in dicta and the Ninth Circuit has concluded that because an attorney will protect a consumer from a debt collector's behavior, statements made only to a consumer's attorney are not actionable per se. Guerrero v. RJM Acquisitions LLC, 499 F.3d 926, 934-39 (9th Cir.2007); Kropelnicki v. Siegel, 290 F.3d 118, 129-31 (2d Cir.2002).

Eschewing either approach, the District Court found persuasive the Seventh Circuit's analysis in Evory v. RJM Acquisitions Funding L.L.C., 505 F.3d 769 (7th Cir.2007), where the court held that although a communication from a debt collector to a consumer's attorney is governed by the FDCPA, it is to be analyzed from the perspective of a competent attorney. Using that reasoning, the District Court held that a competent attorney would have readily recognized the overcharges that FSKS sought. The Court concluded that because Allen's attorney protected her from any unfair or unconscionable means used to collect the debt, Allen had failed to state viable FDCPA claims. The Court thus dismissed those claims and abstained from passing on the alternative arguments set forth by FSKS and LaSalle in support of their motions to dismiss. With no federal claims remaining, the Court declined to exercise supplemental jurisdiction over Allen's state law claims. Allen appeals. ³

II.Jurisdiction and Standard of Review

We conduct a plenary review of the District Court's order granting a motion to dismiss for failure to state a claim. Gelman v. State Farm Mut. Auto. Ins. Co., 583 F.3d 187, 190 (3d Cir.2009). We accept all factual allegations in the Complaint as true, construe it in the light most favorable to Allen, and determine whether, under any reasonable reading of the Complaint, Allen may be entitled to relief. See id.

Because this case requires us to construe a congressional statute, principles of statutory construction apply. To discern Congress' intent we begin with the text. In re Lord Abbett Mut. Funds Fee Litig., 553 F.3d 248, 254 (3d Cir.2009). If the statute's plain language is unambiguous and expresses that intent with sufficient precision, we need not look further. Id. If the plain language fails to express Congress' intent unequivocally, however, we will examine the surrounding words and provisions in their context. Tavarez v. Klingensmith, 372 F.3d 188, 190 (3d Cir.2004). Assuming that every word in a statute has meaning, we avoid interpreting part of a statute so as to render another part superfluous. Rosenberg v. XM Ventures, 274 F.3d 137, 141 (3d Cir.2001).

III.Analysis

Congress made its purpose in enacting the FDCPA explicit: "to eliminate abusive debt collection practices by debt collectors, to insure that those debt 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). Section 1692f(1) on which Allen relies provides:

A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.

15 U.S.C. § 1692f.⁴

Attorneys, such as FSKS, are regarded as debt collectors, and their conduct as such is regulated by the FDCPA. See Heintz v. Jenkins, 514 U.S. 291, 292, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995) ("the term 'debt collector' ... applies to [attorneys] who 'regularly,' through litigation, tr [y] to collect consumer debts"). The Act entitles consumers to certain information regarding the nature of their debts, § 1692g, and prohibits debt collectors from engaging in certain conduct, see §§ 1692c-1692f, 1692j-1692k. The FDCPA is a remedial statute, and we construe its language broadly so as to effect its purposes. Brown v. Card Serv. Ctr., 464 F.3d 450, 453 (3d Cir.2006). Section 1692e proscribes " any false, deceptive or misleading representation," (emphasis added), and § 1692d similarly condemns " any conduct the natural consequence of which is to harass, oppress, or abuse any person," (emphasis added).

A "consumer" includes "any natural person obligated or allegedly obligated to pay any debt." § 1692a(3). A "communication" constitutes "the conveying of information regarding a debt directly or indirectly to any person through any medium." ⁵ § 1692a(2) (emphasis added). The focus of § 1692f is on the conduct of the debt collector.

As noted above, the issue here is whether § 1692f(1) governs communications from a debt collector to a consumer's attorney, such as FSKS's letters to Allen's attorney. The attorney for FSKS conceded at oral argument that there is nothing in the FDCPA that explicitly exempts communications to an attorney. Unquestionably, the scope of the FDCPA is broad. Indeed, § 1692f(1) prohibits "unfair or unconscionable means," regardless of the person to whom the communication was directed. The FDCPA similarly defines a "communication" expansively. A communication to a consumer's attorney is undoubtedly an indirect communication to the consumer. Evory, 505 F.3d at 773 (quoting § 1692a(2)); see also Sayyed, 485 F.3d at 232-33.⁶

The FDCPA is a strict liability statute to the extent it imposes liability without proof of an intentional violation.⁷ See § 1692k. If an otherwise improper communication would escape FDCPA liability simply because that communication was directed to a consumer's attorney, it would undermine the deterrent effect of strict liability.

In this case, the District Court sub silentio concluded that a communication from a debt collector to a consumer's attorney was generally covered by the FDCPA but that it is to be analyzed from the perspective of a competent attorney. The District Court, however, did not have the benefit of Allen's concession that her claims were predicated only upon § 1692f(1), which defines the collection of an unauthorized debt as a per se "unfair or unconscionable" debt collection method. The only inquiry under § 1692f(1) is whether the amount...