Cirkot v. Diversified Financial Systems, Inc., Civ. A. No. 3:92-379

• Decision Date: 30 November 1993
• Docket Number: 3:92-380.,Civ. A. No. 3:92-379
• Citation: 839 F. Supp. 941
• Parties: Evelyn CIRKOT v. DIVERSIFIED FINANCIAL SYSTEMS, INC., and Louis Haddad. Evelyn CIRKOT v. DIVERSIFIED FINANCIAL SYSTEMS, INC., and Scott E. Beatty.
• Court: U.S. District Court — District of Connecticut

839 F. Supp. 941

Evelyn CIRKOT v. DIVERSIFIED FINANCIAL SYSTEMS, INC., and Louis Haddad.

Evelyn CIRKOT v. DIVERSIFIED FINANCIAL SYSTEMS, INC., and Scott E. Beatty.

Civ. A. Nos. 3:92-379, 3:92-380.

United States District Court, D. Connecticut.

November 30, 1993.

Joanne S. Faulkner, New Haven, CT, for plaintiff.

Kevin J. Burns, (Cohen, Hoheb and Auger) Hartford, CT, for defendants.

RULING ON PLAINTIFF'S MOTIONS FOR SUMMARY JUDGMENT

JOSÉ A. CABRANES, Chief Judge:

These are consolidated actions¹ for violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"), and parallel provisions of state law. Pending before the court are the plaintiff's motions for summary judgment.

BACKGROUND

The following facts are not disputed by the parties. On January 22, 1991, the plaintiff, a Connecticut resident, entered into a loan for personal purposes with Housatonic Bank & Trust Company. On or about May 29, 1992, the Federal Deposit Insurance Corporation ("FDIC"), after having taken over the bank and coming into possession of the plaintiff's loan, assigned the loan to Diversified Financial Systems, Limited Partnership of Indiana ("Diversified, L.P."). The FDIC notified the plaintiff of this assignment in a letter dated June 25, 1992.² The plaintiff's loan was in default at the time it was acquired by Diversified, L.P.³

The principal business purpose of Diversified, L.P., which purchases loan portfolios from the FDIC, is the liquidation of these loans.⁴ The defendant Diversified Financial Systems, Inc. ("DFSI") is the "sole general partner" of Diversified, L.P.,⁵ and regularly collects the debts owed to Diversified, L.P.⁶ DFSI does not collect solely for Diversified, L.P.⁷ and "is engaged primarily in the business of providing collection services for companies who have acquired loan portfolios from the FDIC, RTC and other sources."⁸

DFSI mailed two letters to the plaintiff, dated July 9, 1992 and August 14, 1992, both of which contained the name of the defendant Scott E. Beatty, an Account Manager for DFSI. The August 14 letter, signed by Beatty, reads in relevant part:

You are further notified that if you are a "consumer" and this is a "debt" as defined by Title 15, United States Code 1692G, unless you dispute the validity of this debt, or any portion thereof, within thirty (30) days after receipt of this notice, we will assume the debt to be valid. If you are a "consumer" and this is a "debt", as above defined, and you notify us in writing within the said thirty (30) day period, that the debt, or any portion thereof, is disputed, we will then obtain verification of the debt or a copy of the judgment against you and we will mail you a copy of such verification or judgment.⁹

On August 6, 1992, the defendant Louis Haddad, a Special Investigator for DFSI, placed a handwritten note in the plaintiff's mail box, without postage. The envelope states: "Urgent — Open Immediately" and the handwritten portion of the letter reads as follows:

Read my card — I will be handling your case & this area. If you wish not to, call 1-800-851-4863 Scott Beatty to settle. My special agents will remain in your area to collect. Believe me. Call within 24 hours.¹⁰

In No. 379, the plaintiff alleges that Haddad's letter violates 15 U.S.C. § 1692d. That section provides:

A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.

The plaintiff also maintains that the defendant Haddad falsely misrepresented that he intended to remain in the area to collect the debt, a violation of § 1692e(10), which forbids the use of any false representation or deceptive means in connection with the collection of a debt. The plaintiff emphasizes that Haddad was in Connecticut — where the plaintiff resides — only three days out of the entire month of August 1992 and that his office is located in Massachusetts.¹¹ Finally, the plaintiff alleges violations of § 1692e(11) (which requires disclosure in all communications made to collect a debt) and 1692f (which prohibits unfair or unconscionable debt collection practices).

In No. 380, the plaintiff alleges that the letters of July 9 and August 14 sent by Scott Beatty violate § 1692e(11) in failing to provide the required disclosure. The plaintiff further alleges that the notice of the debt contained in the August 14 letter fails to satisfy § 1692g, which requires written notice of the debt within five days after the initial communication by a debt collector to a consumer.

The plaintiff filed a motion for summary judgment as to liability only in No. 379 on February 8, 1993 and in No. 380 on February 23, 1993. After full briefing, the court heard oral argument on July 19, 1993 on both motions and reserved decision.

DISCUSSION

I.

Summary judgment shall be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits ... show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). "The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986) (emphasis in the original). While the court must view the inferences to be drawn from the facts in the light most favorable to the party opposing the motion, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986), a party may not "rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment." Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 12 (2d Cir.1986) (Feinberg, C.J.), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987). The non-moving party may defeat the summary judgment motion by producing sufficient specific facts to establish that there is a genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Finally, "`mere conclusory allegations or denials'" in legal memoranda or oral argument are not evidence and cannot by themselves create a genuine issue of material fact where none would otherwise exist. Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d Cir.1980) (quoting S.E.C. v. Research Automation Corp., 585 F.2d 31, 33 (2d Cir.1978)).

Although the plaintiff has alleged that the defendant has violated several provisions of the FDCPA, the plaintiff need only show one violation in order to recover under the statute. Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir.1993); Rosa v. Gaynor, 784 F.Supp. 1, 3 (D.Conn.1989); see also 15 U.S.C. § 1692k (establishing liability for "any debt collector who fails to comply with any provision of this subchapter").

II.

The threshold question is whether DFSI is a "debt collector" as that term is defined under the FDCPA. The plaintiff argues that DFSI is indeed a debt collector and is therefore subject to the FDCPA's requirements and prohibitions. The defendants, on the other hand, maintain that DFSI falls within the definition of "creditor" in § 1692a(4) or, alternatively, within the exception to the definition of "debt collector" in § 1692a(6)(B). As a result, the defendants maintain that DFSI is not covered by any provisions of the FDCPA.

As an initial matter, it should be noted that the FDCPA is remedial in nature and should be liberally construed.

The Consumer Credit Protection Act of which the FDCPA is a part is remedial in nature, designed to remedy what Congressional hearings revealed to be unscrupulous and predatory creditor practices throughout the nation. Since the statute is remedial in nature, its terms must be construed in liberal fashion if the underlying Congressional purpose is to be effectuated.

N.C. Freed Co. v. Bd. of Governors, 473 F.2d 1210, 1214 (2d Cir.), cert. denied, 414 U.S. 827, 94 S.Ct. 48, 38 L.Ed.2d 61 (1973). Troubled by "the serious and widespread abuses in this area and the inadequacy of existing State and Federal laws," see S.Rep. No. 95-382, 95th Cong., 1st Sess., reprinted in 1977 U.S. Code Cong. & Admin. News, 1695, 1697, "Congress painted with a broad brush in the FDCPA to protect consumers from abusive and deceptive collection practices." Pipiles v. Credit Bureau of Lockport, Inc., 886 F.2d 22, 27 (2d Cir.1989). The FDCPA is based on the premise "that every individual, whether or not he owes a debt, has a right to be treated in a reasonable and civil manner." 123 Cong.Rec. 10241 (1977) (remarks of Rep. Frank Annunzio).

Section 1692a(6) contains alternative definitions of the term "debt collector." First, a debt collector is one who conducts "any business the principal purpose of which is the collection of any debts." A debt collector is also one who "regularly collects or attempts to collect ... debts ... due another." The term "debt collector" does not include one whose principal business is not debt collection and who collects debts only for related or affiliated entities. 15 U.S.C. § 1692a(6)(B). A "creditor" is one either who offers or extends credit or to whom a debt is owed, but does not include one who receives an assignment or a transfer of a debt in default solely for the purpose of facilitating its collection for another. 15 U.S.C. § 1692a(4).

A brief examination of some of the case law regarding these definitions sheds some light on the issue of whether DFSI is a debt collector for purposes of the FDCPA. In Little v. World Financial Network, Inc., Civil Action No. N-89-346 (TFGD) (D.Conn. July 15, 1990), Judge T.F. Gilroy Daly held that the defendant — which had purchased the plaintiff's account after it was in default and whose principal...