Warren v. Sessoms & Rogers, P.A.

• Decision Date: 01 February 2012
• Docket Number: Nos. 10–2105,10–2155.,s. 10–2105
• Citation: 676 F.3d 365
• Parties: Margaret Gayle Herring WARREN, Plaintiff–Appellant, v. SESSOMS & ROGERS, P.A.; Lee C. Rogers, Defendants–Appellees.Margaret Gayle Herring Warren, Plaintiff–Appellee, v. Sessoms & Rogers, P.A.; Lee C. Rogers, Defendants–Appellants.
• Court: U.S. Court of Appeals — Fourth Circuit

676 F.3d 365

Margaret Gayle Herring WARREN, Plaintiff–Appellant,

v.SESSOMS & ROGERS, P.A.; Lee C. Rogers, Defendants–Appellees.Margaret Gayle Herring Warren, Plaintiff–Appellee,

v.Sessoms & Rogers, P.A.; Lee C. Rogers, Defendants–Appellants.

Nos. 10–2105

10–2155.

United States Court of Appeals, Fourth Circuit.

Argued: Dec. 6, 2011.Decided: Jan. 11, 2012.As Amended Feb. 1, 2012.

ARGUED: Anthony J. Majestro, Powell & Majestro, PLLC, Charleston, West Virginia, for Appellant/Cross–Appellee. Dauna L. Bartley, Ellis & Winters, LLP, Raleigh, North Carolina, for Appellees/Cross–Appellants. ON BRIEF: Angela Orso Martin, Martin Attorney at Law, PLLC, Sanford, North Carolina, for Appellant/Cross–Appellee.

Before MOTZ, GREGORY, and FLOYD, Circuit Judges.

Reversed and remanded by published opinion. Judge MOTZ wrote the opinion, in which Judge GREGORY and Judge FLOYD joined.

OPINION

DIANA GRIBBON MOTZ, Circuit Judge:

Margaret Warren sued the law firm of Sessoms & Rogers, P.A. (“S & R”) and attorney Lee C. Rogers (collectively “the defendants”), alleging that they violated the Fair Debt Collection Practices Act (“FDCPA” or the “Act”), 15 U.S.C. § 1692 et seq. Prior to any discovery, the defendants made Warren an offer of judgment pursuant to Rule 68 of the Federal Rules of Civil Procedure. When Warren did not accept the offer, the defendants then moved to dismiss this action. They contended that the offer of judgment mooted Warren's case and, in the alternative, that her complaint failed to state a claim upon which relief could be granted. The district court dismissed Warren's complaint, concluding that her allegations failed to “show a material violation” of the Act or that the defendants “knowingly and willfully violated the Act.” Warren appeals. For the reasons set forth below, we reverse the judgment of the district court and remand for further proceedings consistent with this opinion.

I.

We first set forth the facts alleged in Warren's amended complaint.

Shortly after Warren's husband, Robert Warren, died in March 2006, she learned of the debt at issue in this case: an overdue personal VISA credit card account at Branch Banking & Trust Co. (“BB & T”). When Warren's own attempts to obtain the signature card on the account failed, she enlisted the help of her son-in-law, Russ Gerald, to access the account via online banking. Gerald discovered that the BB & T account listed only Robert Warren's name. However, at some point, BB & T had begun sending Warren statements bearing both her and her husband's names. Under an assertedly mistaken belief that she was obligated to make payments on the account after her husband's death, Warren had begun to make such payments.¹ She eventually ceased these payments.

In February 2009, Warren began to receive communications from S & R, a law firm “engaged in the collection of debts,” regarding the BB & T debt. S & R sent her an initial collection letter dated February 24, 2009, which stated that BB & T retained the firm “to assist them in the recovery of the debt that you owe them.” The letter informed Warren that she was “in default under the terms of [her] credit agreement,” and that the “entire balance [was] due and payable.” Additionally, the letter stated that Warren could “dispute this debt” within thirty days of receipt of the letter. The letter advised Warren that it was “an attempt to collect a debt” and that S & R was a “debt collector.” Defendant Rogers signed the letter on behalf of S & R.

Warren also alleges that she began to receive phone calls from S & R in regard to the debt in February 2009. Specifically, she alleges that S & R representative, John Harden, left her the following telephone message: “Yes this call is for a Mr. or Mrs. Warren. This is John Harden with Sessoms & Rogers law firm. If you would, please give me a return call as soon as possible.” The message provided a call back number but did not identify S & R as a debt collector. At this time, Warren “became afraid to answer her phone, her door or collect the mail.”

Warren disputed the debt in a March 7, 2009 letter to S & R. In the letter, she requested verification of the debt. Warren also requested that S & R “[p]lease send all future correspondence, including the verification [that she had] requested directly to [her] attorney” and provided the name and mailing address of her retained counsel. Thereafter, Rogers, on behalf of S & R, sent another collection letter directly to Warren, dated March 17, 2009. This letter began by thanking Warren “for [her] recent letter concerning this account.” Upon receipt of this letter, Warren alleges that she “became highly upset, angry, confused, irritated and worried.”

On November 16, 2009, Warren filed a one-count amended complaint in federal district court, alleging numerous violations of the Act and seeking a jury trial.² Specifically, and most relevant to this appeal, she alleges that the defendants violated 15 U.S.C. § 1692c(a)(2) by “communicating with [her] when they knew she was represented by an attorney and had actual knowledge of her attorney's name and address” and violated § 1692e(11) “by failing to notify [her] in subsequent communications that the communication was from a debt collector.” Warren also alleges several other violations of § 1692e based on her contention that S & R used “false, deceptive, or misleading representations or means in connection with the collection of any debt.” In her prayer for relief, Warren seeks an award of unspecified actual damages, statutory damages of $1,000, costs, and reasonable attorney's fees.

On December 4, 2009, the defendants filed an Offer of Judgment pursuant to Federal Rule of Civil Procedure 68. The offer provides for “judgment to be taken against” the defendants for the following amounts:

(1) Actual damages in the amount of $250.00, or an amount determined by the Court upon Plaintiff's submission of affidavits or other evidence of actual damage;

(2) Statutory additional damages in the amount of $1,001.00;

(3) Costs of this action accrued to date; and

(4) A reasonable attorney's fee to date as determined by the Court.

In accordance with Rule 68, the offer provided Warren fourteen days to accept these terms. Warren did not accept the offer.

Thereafter, on December 24, 2009, the defendants moved to dismiss the amended complaint on two grounds. First, they invoked Rule 12(b)(1), contending that Warren's case had “been mooted and must be dismissed for lack of subject matter jurisdiction” because they offered her, pursuant to Rule 68, “all the relief to which” she was entitled. In the alternative, the defendants invoked Rule 12(b)(6), arguing that the court should dismiss Warren's complaint because, since it “adequately alleged only two minor technical violations,” both of which resulted from defendants' “bona fide error,” it failed to state a claim upon which relief can be granted.

Warren opposed the defendants' motion to dismiss. She maintained that the offer of judgment left “open the amount of actual damages” and “did not offer [her] all she may have been entitled” including her “right to a jury trial for a determination of her actual damages.” Warren further argued that the defendants' claim of “bona fide error” was an “affirmative defense” for which they “bear[ ] the burden of pleading” and proof “by a preponderance of the evidence,” and thus provided no proper basis for dismissal under Rule 12(b)(6). Warren attached to her opposition memorandum her own affidavit and those of her daughter and son-in-law attesting to the stress that she endured from the defendants' assertedly illegal debt-collection efforts.

The district court granted the defendants' motion to dismiss in a two-paragraph order, concluding Warren's “allegations do not show a material violation of [the] Act, nor that the defendants knowingly and willfully violated the Act.” Warren timely noted this appeal.

II.

Although the district court did not rule on the defendants' Rule 12(b)(1) motion to dismiss on mootness grounds, we must address this question at the outset, for if Warren's case is moot, we lack subject-matter jurisdiction. See Iron Arrow Honor Soc'y v. Heckler, 464 U.S. 67, 70, 104 S.Ct. 373, 78 L.Ed.2d 58 (1983); S–1 v. Spangler, 832 F.2d 294, 297 (4th Cir.1987). This is so because mootness principles derive from Article III of the Constitution, which mandates that federal courts adjudicate only disputes involving “a case or controversy.” DeFunis v. Odegaard, 416 U.S. 312, 316, 94 S.Ct. 1704, 40 L.Ed.2d 164 (1974) (internal quotation omitted). As a federal court, we must investigate the limits of our subject-matter jurisdiction whenever that jurisdiction is “fairly in doubt.” See Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1945, 173 L.Ed.2d 868 (2009); see also Arbaugh v. Y & H Corp., 546 U.S. 500, 514, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006).

A case becomes moot “when the issues presented are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome.” Simmons v. United Mortg. & Loan Inv., LLC, 634 F.3d 754, 763 (4th Cir.2011) (internal quotation omitted). A change in the law can render a case moot. Id. Or, a change in factual circumstances can moot a case; for example, “when the claimant receives the relief ... she sought to obtain through [her] claim,” her case becomes moot. Id. (quoting Friedman's, Inc. v. Dunlap, 290 F.3d 191, 197 (4th Cir.2002)). Accordingly, we have found “there was no longer any case or controversy” when “defendants had offered [a plaintiff] the full amount of damages” to which the plaintiff claimed entitlement. Zimmerman v. Bell, 800 F.2d 386, 390 (4th Cir.1986).

Thus, the initial question in this appeal is whether the defendants' Rule 68 offer of judgment mooted Warren's case. Rule 68 provides that, at least fourteen days before trial begins, “a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the...