Kimber v. Federal Financial Corp., Civ. A. No. 86-T-023-E.

• Citation: 668 F. Supp. 1480
• Decision Date: 18 August 1987
• Docket Number: Civ. A. No. 86-T-023-E.
• Parties: Cindy Ann KIMBER, individually and on Behalf of all other persons similarly situated, Plaintiff, v. FEDERAL FINANCIAL CORPORATION, d/b/a Regional Accounts Corporation, Defendant.
• Court: United States District Courts. 11th Circuit. Middle District of Alabama

668 F. Supp. 1480

Cindy Ann KIMBER, individually and on Behalf of all other persons similarly situated, Plaintiff, v. FEDERAL FINANCIAL CORPORATION, d/b/a Regional Accounts Corporation, Defendant.

Civ. A. No. 86-T-023-E.

United States District Court, M.D. Alabama, E.D.

August 18, 1987.

William Z. Messer, Legal Services Corp. of Alabama, Phenix City, Ala., and James Opp Smith, and David S. Yen, Legal Services Corp. of Alabama, Opelika, Ala., for plaintiff.

Steven K. Champlin, Dorsey & Whitney, Minneapolis, Minn., and Richard H. Gill, Copeland, Franco, Screws & Gill, Montgomery, Ala., for defendant.

MEMORANDUM OPINION

MYRON H. THOMPSON, District Judge.

In this class-action lawsuit, plaintiff Cindy Ann Kimber charges defendant Federal Financial Corporation (FFC) with violating the Fair Debt Collection Practices Act, 15 U.S.C.A. §§ 1692-1692o, in the following ways: by attempting to collect debts from her and other Alabama residents without first giving the debtors the notice required by the Act; and by threatening to sue, and suing, Kimber and others to collect on some of these debts even though, as far as FFC knew, it was not entitled to recover in the suits because the debts were stale. This court has jurisdiction over this case pursuant to 15 U.S.C.A. § 1692k(d).

This lawsuit is now before the court on Kimber's and FFC's cross-motions for summary judgment on the sole issue of FFC's liability to Kimber. For reasons that follow, the court concludes that Kimber's motion should be granted in part and denied in part, and that FFC's motion should be denied in full.

I.

In 1976, W.T. Grant Company filed for bankruptcy and sold its accounts receivable to defendant FFC, a corporation formed for the sole purpose of collecting on these accounts. About 8,000 of the accounts sold were personal charge accounts held by Alabama residents with W.T. Grant. Kimber alleges that the Alabama accounts, including hers, were already delinquent or in default when W.T. Grant assigned them to FFC. According to FFC's records, Kimber's account with W.T. Grant was "seriously delinquent" as of September 1975, with no payments received since May 3, 1975, and with a balance due of $150.70. Upon assignment of Kimber's debt, according to FFC, it notified her that the account had been transferred and the payment was overdue; other reminders that payment was due then followed, but by 1979 all such contact between FFC and Kimber ceased.

Five years later, in March 1984, FFC referred the account to an Alabama attorney for collection. The attorney did not contact Kimber, however, until early 1985, when someone in his office telephoned Kimber's grandmother and left a number for Kimber to call. When Kimber returned the call, she was told by a woman there that her bill must be paid or she would be sued. Kimber told the woman that she believed the account had been paid years ago. Kimber admits today that, because the debt is so old, she cannot now remember whether she in fact paid the debt, and she has no documents indicating one way or the other.

On January 24, 1985, FFC's attorney filed suit against Kimber in the Small Claims Court for Russell County, Alabama; the judge dismissed the suit. FFC then appealed the case to the Russell County Circuit Court for a trial de novo, where Kimber—this time represented by counsel —raised the statute of limitations defense. The action was dismissed with prejudice as untimely. FFC's attorney has filed about 200 similar suits.

Kimber, on behalf of herself and all other Alabama residents similarly situated, has now brought this federal lawsuit against FFC charging that its attempts to collect stale debts from them violated the Fair Debt Collection Practices Act. Kimber and FFC have, however, agreed that, before the court determines whether a plaintiff class should be certified pursuant to Fed.R.Civ.P. 23 and whether the class should recover, the court should first decide whether Kimber's individual claims have merit.

Apparently, identifying each member of the putative plaintiff class and determining whether the member's circumstances are sufficiently similar to Kimber's to warrant redress should Kimber prevail, could be a very expensive and time-consuming project; Kimber and FFC have therefore agreed that it would be much more efficient for the court to determine first whether Kimber herself is entitled to prevail. If the court should decide that Kimber is not entitled to prevail, the case would be over; but, if the court should decide that she should prevail, the court would then later determine, after appropriate additional discovery, what relief Kimber should receive; whether a plaintiff class should be certified; whether the class, if certified, should recover; and what relief, if any, the class should receive. The parties have also agreed that, if a plaintiff class is later certified, the class should not be in any manner prejudiced by the delay in certification.

In accordance with these agreements, Kimber and FFC have each filed a motion for summary judgment addressing only whether Kimber herself should prevail.

II.

Congress passed the Fair Debt Collection Practices Act for the purpose of eliminating "the use of abusive, deceptive, and unfair debt collection practices by many debt collectors." 15 U.S.C.A. § 1692(a). As previously stated, Kimber maintains that FFC has violated this Act. First, she claims that FFC has threatened to file, and has filed, legal proceedings against her to collect on a stale debt, in violation §§ 1692e and 1692f; and, second, she charges that the corporation has attempted to collect a debt from her without first giving her the notice required under the Act, in violation of § 1692g(a).

A lawsuit may be resolved on summary judgment only if "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In deciding whether summary judgment is appropriate, a court must liberally construe all evidence and the inferences to be drawn therefrom in favor of the party against whom the judgment is sought. As demonstrated below, the undisputed material facts reveal that Kimber is entitled to prevail as a matter of law on her `stale debt' claims. However, neither Kimber nor FFC is entitled to prevail on Kimber's `notice' claim, because the claim presents disputed issues of fact.

A.

The first matter the court must address in considering Kimber's claims is FFC's argument that it is not a "debt collector" subject to the Fair Debt Collection Practices Act; the parties agree that, as far as this case is concerned, the statute's coverage is limited to activities of debt collectors.

i.

FFC contends that it does not fall within the Act's definition of debt collector, and, to support this contention, the corporation makes essentially two interrelated arguments. First, FFC observes that the Act offers a general definition of debt collector as any person whose "principal purpose ... is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C.A. § 1692a(6).¹ FFC's first argument is that § 1692a(6) limits a debt collector to one who collects or attempts to collect debts "owed or due another," and that, because FFC does not collect debts for another but for itself, it does not fall within the general definition.

FFC's second argument is a bit more complex, but nonetheless related to its first. The corporation correctly points out that, after offering a general definition of debt collector, § 1692a(6) expressly excludes several types of persons or transactions from the definition. The section provides that a debt collector does not include "any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor." § 1692a(6)(A). Kimber and the corporation agree that it is apparent from the statute's legislative history that Congress intended the creditor exclusion to cover not only officers and employees of creditors but creditors themselves. See S.Rep. No. 95-382, 95th Cong., 1st Sess., reprinted in 1977 U.S.Code Cong. & Admin.News 1695. A creditor is defined by § 1692a(4) of the Act as

any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.

FFC's second argument is that it is an excluded creditor within § 1692a(4)'s definition because it is a person "to whom a debt is owed."

Kimber counters that FFC is not a creditor, because it falls within the `assignee exception' to the definition of creditor— that is, it is a person who received "an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another." Kimber argues that FFC falls within this exception because when the company received her debt, the debt was already in default. The corporation re-counters that it does not fall within the assignee exception because the exception applies only when the purpose of the debt assignment is to collect the debt "for another." FFC's two arguments therefore both whittle down to the contention that the Act's coverage is limited to instances where a person is collecting a debt "for another," which FFC says it is not doing.

Whether the Act's coverage is limited to instances where a person is collecting a debt for another may not be determined solely from the face of the statute; the statute is far from a model of drafting clarity. On the one hand it could be argued, as indeed Kimber does, that a "debt collector" is defined in § 1692a(6) with alternative phrasing, as a business that either has as its principal purpose debt collection or that regularly collects debts for another. Since it is undisputed...