Azar v. Hayter

• Decision Date: 23 January 1995
• Docket Number: No. GCA 94-10028-MMP.,GCA 94-10028-MMP.
• Citation: 874 F. Supp. 1314
• Parties: Si AZAR, Plaintiff, v. John HAYTER, et al., Defendants.
• Court: U.S. District Court — Northern District of Florida

874 F. Supp. 1314

Si AZAR, Plaintiff, v. John HAYTER, et al., Defendants.

No. GCA 94-10028-MMP.

United States District Court, N.D. Florida, Gainesville Division.

January 23, 1995.

ORDER AND FINAL JUDGMENT

PAUL, Chief Judge.

This cause is before the Court upon the magistrate judge's report and recommendation dated December 9, 1994. All parties have been furnished copies of the report and recommendation and have been afforded an opportunity to file objections pursuant to 28 U.S.C. § 636(b)(1). Having considered the report and recommendation and all objections thereto timely filed by the parties, the Court has determined that the recommendation should be adopted.

Accordingly, it is

ORDERED:

1. The magistrate judge's report and recommendation is adopted and incorporated by reference in this order of the Court.

2. The motions to dismiss, docs. 3 and 9, are GRANTED and the complaint DISMISSED with prejudice.

DONE AND ORDERED.

REPORT AND RECOMMENDATION

SHERRILL, United States Magistrate Judge.

This cause is before the court for ruling on motions to dismiss filed by Defendants Hayter, Armstrong and Papendick. Docs. 3 and 9. Plaintiff filed a response pro se. Doc. 13. An attorney sought leave to appear for Plaintiff pro hac vice. Doc. 15. Since the attorney resides in Gainesville, leave was granted until September 13, 1994, when the next test for admission to the local bar of this court was to be held. Doc. 16. That attorney has filed nothing further on behalf of Plaintiff, and has not entered an appearance as a member of the bar of the court. Thus, it is concluded that this is still a pro se case assigned to the undersigned for a report and recommendation.

ALLEGATIONS OF THE COMPLAINT

The complaint is filed under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq. Doc. 1. Plaintiff Si Azar sues Fran Armstrong, Rebecca Papendick, and an attorney, John Hayter. Plaintiff alleges that Armstrong is the president of Alliance Realty Services, Inc. (Alliance), and Papendick is an officer of Pickwick Park Condominium Association (Pickwick Park). He alleges that Armstrong and Papendick sent him a letter, attached as Exhibit A to the complaint (hereafter all references to exhibits are to those attached to the complaint).

The letter is actually sent to Azar by Alliance as Manager of Pickwick Park. It was to be signed by Francis Armstrong on behalf of Alliance as president. The letter is dated July 23, 1993. It begins "Dear Owner" and encloses a statement of past due fees and a ledger outlining charges and payments to the account. The statement attached to the letter bears the Alliance name and address at the top left corner, and the Pickwick Park name at the bottom left corner. The statement reflects a beginning balance, an entry for fees, two entries for late fees, and a total amount due of $4,025.00. The letter makes no specific demand for payment but a demand is implied by the reference to the fees as "past due."

On July 28, 1993, a complaint was filed in County Court against Plaintiff for the past due amounts, and summons was issued. Exhibit C. The complaint was filed by attorney Hayter as counsel for Pickwick Park, plaintiff in that suit. On August 1, 1993, Plaintiff sent a request for official records to Alliance by certified mail, asking for information on Pickwick Park. Exhibit B. On or about August 13, 1993, he filed a counterclaim against Pickwick Park, claiming that the allegations against him "were based on unacceptable accounting practices and are not credible." Exhibit D. Plaintiff does not indicate the ultimate outcome of the county court proceedings, but he was unsuccessful on the counterclaim. Exhibit G.

ARGUMENTS OF THE PARTIES

Plaintiff contends that the FDCPA requires an attorney acting as a debt collector to provide a validation right notice, to investigate the merit of the claim before demanding payment, and to satisfy himself that it is appropriate to send the dunning letter.¹ Plaintiff asserts that the FDCPA requires the debt collector to maintain detailed files and to notify the debtor of his right to inspect the files. Plaintiff claims that collection charges are only allowed where there is a bilateral contract. Plaintiff seeks actual damages, costs, and damages under 15 U.S.C. § 1692k of $1000 per statutory violation.

Plaintiff does not specify which sections of the FDCPA have been violated. Since he refers to a validation notice, it is presumed the alleged violation is of § 1692g. That section requires a "debt collector" to send a written notice of the debt either with its initial communication or within five days thereof to the debtor. The written notice must contain the debt amount, the creditor's name, a statement that if the consumer does not dispute the debt within 30 days it will be presumed valid, and a statement that if written notice is provided that the debt is disputed, the debt collector will obtain verification of the debt or a copy of the judgment. § 1692g(a)(1)-(4). Collection of the disputed debt must cease until the debt collector obtains verification or a copy of the judgment and mails it to the consumer. § 1692g(b). No provision of the FDCPA has been found which would require a debt collector independently to investigate the merit of the debt, except to obtain verification, or to investigate the accounting principles of the creditor, or to keep detailed files.

Defendant Hayter asserts that condominium association dues are not debts covered by the Act, that his client is not a debt collector under the Act, and that damages are not recoverable for the filing of a lawsuit without any prior communication with the debtor. Hayter also asserts that, since the claims should have been raised by compulsory counterclaim in the county court case, and since they were not, are barred by res judicata. Finally, he argues that Pickwick Park is an indispensable party.

Defendants Armstrong and Papendick seek to quash service of process because the summons listed Alliance and Pickwick Park as Defendants, rather than individually as alleged in the complaint. They also seek dismissal for failure to state a claim upon which relief can be granted. They argue Plaintiff has failed to state a claim because he has failed to allege a personal debt encompassed by the Act, failed to allege that they are debt collectors under the Act, and failed to allege any actions taken in violation of the Act.

LEGAL ANALYSIS

The FDCPA

A purpose of the FDCPA, 15 U.S.C. § 1692 et seq, is to protect consumers by eliminating abusive debt collection practices by debt collectors. 15 U.S.C. § 1692(e). The Act prohibits conduct meant to harass or making deceptive representations in collection of a debt. §§ 1692d and 1692e. A debt collector who fails violates the FDCPA is liable for actual damages and additional damages up to $1000 per action. § 1692k. The additional damage amount is per action, not per violation as asserted by Plaintiff, however. Harper v. Better Business Services, Inc., 961 F.2d 1561, 1563 (11th Cir.1992).

Res judicata, indispensable parties, and sufficiency of service of process

Hayter's argument that Plaintiff is barred by res judicata is unpersuasive. The case cited by Defendant Hayter² stands for the proposition that failure to assert a compulsory counterclaim, which is a claim against an opposing party arising out of the same transaction or occurrence which is the subject of the opposing party's claim, results in waiver or estoppel. Plaintiff's FDCPA claim has nothing to do with whether the underlying debt is valid. An FDCPA claim concerns the method of collecting the debt. It does not arise out of the transaction creating the debt, and thus was not a compulsory counterclaim under state law in the action to collect the debt.

Hayter's argument that Pickwick Park is an indispensable party is unsupported by citation to authority and appears frivolous. The undersigned sees no reason why suit under the FDCPA need join the original creditor. The issue concerns debt collection methods, not the debt.

The contention that process was insufficient as to Armstrong and Papendick is persuasive. The complaint sued these persons individually. It did not sue Alliance or Pickwick Park, both of which are alleged to be separate legal entities. But since the complaint fails to state a claim at all, in the interest judicial economy the court should reach that issue.

The dispositive arguments before the court are whether the amount owed by Plaintiff is a "debt" as defined in the FDCPA, and whether each Defendant is a "debt collector" as defined at 15 U.S.C. § 1692a(6). Each Defendant has raised these defenses.

Whether Plaintiff has alleged a "debt" as defined by the Act

Plaintiff does not allege in the complaint that the amount sought to be collected by Defendants was an "obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes." That is how a "debt" is defined by the Act. § 1692a(5).

Plaintiff states in his reply memorandum that he purchased the condominium for his daughters, all students of the University of Florida. Doc. 13. He does not state whether his daughters were living there at the time the amounts came due, or that the fees and late fees (as opposed to the unit itself) were for property, insurance or services primarily for personal, family, or household purposes. The complaint against him in county court refers to "unpaid condominium assessments and related charges," and Plaintiff's counterclaim refers to the "monthly $70.00 management fees." Exhibits C and D.

The case law interpreting the meaning of debt under § 1692a(5) "is sparse." Mabe v. G.C. Services Limited Partnership, 32 F.3d 86, 88 (4th Cir.1994) (finding two circuit court cases on the subject, both from the Third Circuit). In...