Sluys v. Hand

Decision Date13 September 1993
Docket NumberNo. 92 Civ. 7972 (VLB).,92 Civ. 7972 (VLB).
Citation831 F. Supp. 321
PartiesPeter W. SLUYS, Plaintiff, v. Albert C. HAND, Defendant.
CourtU.S. District Court — Southern District of New York

Peter W. Sluys, pro se.

Veronica H. Mandel, Quirk & Bakalor, PC, New York City, for defendant.

MEMORANDUM ORDER

VINCENT L. BRODERICK, District Judge.

I

This case brought under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., presents questions of responsibility for improper mailing of dunning notices to debtors' employers, what constitute improper threats, the definition of debt collector, and issues relating to personal jurisdiction and venue in the district to which debt collection mail is sent. Subject matter jurisdiction is asserted based upon 28 U.S.C. §§ 1331, 1337 and 15 U.S.C. 1692k.

Defendant moves to dismiss for lack of personal jurisdiction and for failure to state a claim, supported by affidavits pursuant to Fed.R.Civ.P. 12(b)(6). I find that the complaint states a claim and that jurisdiction and venue are proper, deny the motion to dismiss, and grant leave to either party to move for summary judgment.

II

The Fair Debt Collection Practices Act, enacted by Public Law 95-109, 91 Stat. 880 (1977) as amended ("the Act"), protects only "consumers," not businesses as such. The statute defines "consumer" to include any natural person claimed to owe a debt:

The term "consumer" means any natural person obligated or allegedly obligated to pay any debt.

15 U.S.C. § 1692a(3). This definition covers business debts if incurred by a sole proprietor. The statute defines "debt collector" as one who regularly collects or attempts to collect debts.

Although creditors engage in unfair collection tactics as do independent debt collectors, the Act in the main does not apply to those who collect their own debts without pretending to utilize an independent collector:

The term "debt collector" means any person who ... regularly collects or attempts to collect ... debts owed or due or asserted to be owed or due another ...

15 U.S.C. § 1692a(6). This does not mean that creditors are free to use unfair tactics. They are subject to the Federal Trade Commission Act's prohibition against unfair or deceptive practices affecting commerce (15 U.S.C. § 45) and to its injunctive provision (15 U.S.C. § 53b), and implementing rules (16 C.F.R. § 444), upheld in American Financial Services Ass'n v. FTC, 767 F.2d 957 (D.C.Cir.1985), cert. denied 475 U.S. 1011, 106 S.Ct. 1185, 89 L.Ed.2d 301 (1986). They are also subject to federal antifraud provisions such as 18 U.S.C. §§ 1341 (mail fraud) and 1345 (injunctive relief against fraud), and to state law.1

The definition of debt collector formerly excluded attorneys, but Public Law 99-361 eliminated that exception in 1986 by deleting former 15 U.S.C. § 1692a(6)(F).

The Act also prohibits the sending of letters to a debtor's employer, as part of a more general restriction against communications with third parties in connection with the collection of a debt:

Except in seeking location information as provided in section 1692b of this title, without the prior consent of the consumer given directly to the debt collector ... a debt collector may not communicate, in connection with the collection of any debt, with any person other than the consumer, the consumer's attorney, a consumer reporting agency ..., the creditor, the attorney of the creditor, or the attorney of the debt collector. 15 U.S.C. § 1962c(b).2

The Act further prohibits any "threat to take any action that cannot legally be taken or that is not intended to be taken." 15 U.S.C. § 1692e(5).

A descriptive statement concerning the debt must be sent to the debtor within five days of the original communication to the debtor. 15 U.S.C. § 1692g. Where the Act is found to be violated with respect to a person, that person may obtain actual damages, such additional damages as the court may allow not exceeding $1,000, and reasonable attorney's fees as determined by the court. 15 U.S.C. § 1692k(a).

III

Plaintiff resides in New York. Defendant, a lawyer practicing in Indiana, mailed a letter to plaintiff seeking to collect a debt on behalf of a third party. Defendant also sent a copy of the debt collection letter to plaintiff's employer, postmarked September 28, 1993, and addressed as follows:

Our Town Publishers, Inc 3090 Central Pearl River, New York 10965 The letter sent to plaintiff stated in part:

... I will expect to receive a check from you ... within the next seventy-two hours so that legal action does not have to be instituted against you. Please be advised that if this matter is brought to Court there will be additional costs and legal fees.

The letter contained a notation at the bottom left as follows: "cc: Our Town Publishers, Inc."

The defendant has submitted affidavits arguing that the mailing of the letter to the employer was a secretarial error based on a business card listing plaintiffs business address, indicating that the secretary received no specific or background instructions on how to handle such matters. The defendant also disclaims engaging in regular debt collection practice and challenges the propriety of bringing this case in this district.

IV

Personal jurisdiction may be found in this case based on New York's "long arm" statute, N.Y.Civ.Prac. Law & Rules § 302(a)(1), made applicable by Fed.R.Civ.P. 4(c)(2)(C)(i). This statute, which is similar to those in other states, is based on impact within New York of activities generated by an out-of-state party. See generally United States v. Goldberg, 830 F.2d 459, 463 (3d Cir.1987); Karmel, "The Second Circuit's Role in Expanding the SEC's Jurisdiction Abroad," 65 St. John's L.Rev. No. 3 at 743 (Summer 1991); see also Alesayi Beverage Corp. v. Canada Dry Corp., 797 F.Supp. 320 (S.D.N.Y.1992).

By sending the letters in dispute from Indiana into New York, defendant caused an impact in New York, and plaintiff's claim is predicated upon the act of sending the letters and their impact in New York. Smith v. Kelly, 664 F.Supp. 131 (S.D.N.Y.1987). Defendant performed purposeful acts in Indiana causing consequences in New York in connection with efforts to collect the alleged debt. See Sterling National Bank & Trust Co. v. Fidelity Mortgage Investors, 510 F.2d 870 (2d Cir.1975).

Since any exercise of personal jurisdiction must satisfy the constitutional due process standard established by International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), "`it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state', thus invoking the benefits and protections of its laws...." George Reiner & Co. v. Schwartz, 41 N.Y.2d 648, 651, 394 N.Y.S.2d 844, 363 N.E.2d 551 (1977), quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958). This test is met here. See Bastille Properties v. Hometels of America, 476 F.Supp. 175, 177 (S.D.N.Y.1979).

Where an alleged debtor is located in a jurisdiction and receives documents from a person purporting to be a debt collector located elsewhere, and the transmittal of those documents is claimed to have violated the Act, suits may be brought where the debtor — and in this action the employer — receive the communications. Otherwise, one could invoke the protection of distance and send violative letters with relative impunity, at least so far as less well-funded parties are concerned. See generally Aldens, Inc. v. Miller, 610 F.2d 538, 539 (8th Cir.1979), cert. denied 446 U.S. 919, 100 S.Ct. 1853, 64 L.Ed.2d 273 (1980); Aldens, Inc. v. Ryan, 571 F.2d 1159 (10th Cir.), cert. denied 439 U.S. 860, 99 S.Ct. 180, 58 L.Ed.2d 169 (1978); Aldens, Inc. v. LaFollette, 552 F.2d 745 (7th Cir.), cert. denied 434 U.S. 880, 98 S.Ct. 236, 54 L.Ed.2d 161 (1977); see also In re Estate of Clark, 21 N.Y.2d 478, 486, 288 N.Y.S.2d 993, 998, 236 N.E.2d 152, 157 (1968).

The concept that consumer-business disputes should be judicially resolved where the consumer's part in the events occurs is reflected in New York law, which bars suits against consumers in connection with debts, other than where they live or signed the alleged contract. See N.Y.Civ.Prac.L. & R. Rule 305; All State Credit Corp. v. 669 Defendants (Reiss), 61 Misc.2d 677, 306 N.Y.S.2d 596 (App. Term, 2d Dept.1970). New York law in this area is consonant with federal law:

Any debt collector who brings any legal action on a debt against any consumer shall except in real property mortgage cases bring such action only in the judicial district ... (A) in which such consumer signed the contract sued upon; or (B) in which such consumer resides at the commencement of the action.

15 U.S.C. § 1692i(a); see Spiegel, Inc. v. FTC, 540 F.2d 287 (7th Cir.1976) (suits to collect debts at forum distant from consumer constituted unfair practice under 15 U.S.C. § 45); Chen, "Due Process as Consumer Protection: State Remedies for Distant Forum Abuse," 20 Alb.L.Rev. 9 (1986).

A non-restrictive approach toward forum determination under the Act is set forth in 15 U.S.C. § 1692k(d), which does not expand personal jurisdiction parameters but indicates that they should not be construed in an unduly restrictive way in cases under the Act. It provides:

An action to enforce any liability created by this Act may be brought in any appropriate United States district court without regard to the amount in controversy, or in any other court of competent jurisdiction ...

See also Lachman v. Bank of Louisiana, 510 F.Supp. 753 (N.D.Ohio 1981) (credit card issuer continued to do business with cardmember who moved; can be sued at later residence in case under the Act).

Here, the distant forum imposed upon defendant is triggered by his own action in projecting his allegedly improper debt collection effort into New York. Venue is proper in the location into which the allegedly improper mailing...

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