Cross v. Roundup Funding Llc.
Decision Date | 05 October 2010 |
Docket Number | Docket No. 09-4984-cv. |
Citation | 622 F.3d 93 |
Parties | Lamont B. SIMMONS, Melissa R. Simmons, on behalf of themselves and all others similarly situated, Plaintiffs-Cross-Defendants-Appellants, v. ROUNDUP FUNDING, LLC, Defendant-Counter-Claimant-Appellee, Malen & Associates, P.C., Defendant-Appellee. * |
Court | U.S. Court of Appeals — Second Circuit |
OPINION TEXT STARTS HERE
Joshua N. Bleichman, Law Offices of Joshua N. Bleichman, Spring Valley, NY, for Plaintiffs-Cross-Defendants-Appellants.
Paul William Mahler, Malen & Associates, P.C., Westbury, NY, for Defendant-Appellee Malen & Associates.
Linh K. Tran, Seattle, WA, for Defendant-Counter-Claimant-Appellee Roundup Funding, LLC.
Before: JACOBS, Chief Judge, WINTER and McLAUGHLIN, Circuit Judges.
Lamont and Melissa Simmons (“the Simmons”) allege that an inflated proof of claim filed by a creditor in their bankruptcy proceeding constituted a violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. They appeal from a judgment of the United States District Court for the Southern District of New York (Sweet, J.), dismissing their complaint on the pleadings. We hold that such a proof of claim cannot form the basis for a claim under the FDCPA, and therefore we affirm.
The Simmons sought protection in bankruptcy in October 2007. In December 2007, Roundup Funding, LLC (“Roundup”) filed a proof of claim for a debt in the claimed amount of $2,039.21. The Simmons filed an objection, and Roundup's counsel, Malen & Associates (“Malen”), filed a response (which, it is alleged, included no relevant information). At a hearing on April 17, 2008, the bankruptcy court reduced the Roundup claim to $1,100, the amount the Simmons conceded they owed.
On July 10, 2008, the Simmons brought a putative class action against Roundup and Malen, alleging that they had violated the FDCPA by misrepresenting the amount of the Simmons's debt. An amended complaint reflected the same underlying theory.
Malen and Roundup moved to dismiss under Rule 12(b)(6) on the ground that an inflated proof of claim in bankruptcy court cannot form the basis for an FDCPA action as a matter of law, and also sought costs and attorneys' fees pursuant to 15 U.S.C. § 1692k(a)(3). Their motions to dismiss and their requests for attorneys' fees and costs were granted by the district court, Simmons v. Roundup Funding, LLC, No. 08-CV-6263, 2009 WL 3049586, 2009 U.S. Dist. LEXIS 87383 (S.D.N.Y. Sept. 22, 2009), and the Simmons's appeal followed. 1
“We review a district court's grant of a motion to dismiss under Rule 12(b)(6) de novo.” Vietnam Assn. for Victims of Agent Orange v. Dow Chem. Co., 517 F.3d 104, 115 (2d Cir.2008) (internal quotation marks omitted).
“A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. Among other things, the FDCPA bars misrepresentation of “the character, amount, or legal status of any debt.” Id. § 1692e(2)(A).
Jacobson v. Healthcare Fin. Servs., 516 F.3d 85, 89 (2d Cir.2008) (internal quotation marks omitted) (citing 15 U.S.C. § 1692(e) ()).
Federal courts have consistently ruled that filing a proof of claim in bankruptcy court (even one that is somehow invalid) cannot constitute the sort of abusive debt collection practice proscribed by the FDCPA, and that such a filing therefore cannot serve as the basis for an FDCPA action. See, e.g., B-Real, LLC v. Rogers, 405 B.R. 428, 431-32 (M.D.La.2009) () ; Middlebrooks v. Interstate Credit Control, Inc., 391 B.R. 434, 437 (D.Minn.2008) ( ); Gray-Mapp v. Sherman, 100 F.Supp.2d 810, 813-14 (N.D.Ill.1999) (same); Baldwin v. McCalla, No. 98-C-4280, 1999 WL 284788, at *3-4, 1999 U.S. Dist. LEXIS 6933, at *10-11 (N.D.III. Apr. 19, 1999) (same).
We join these courts. The FDCPA is designed to protect defenseless debtors and to give them remedies against abuse by creditors. There is no need to protect debtors who are already under the protection of the bankruptcy court, and there is no need to supplement the remedies afforded by bankruptcy itself.
“The FDCPA ... was designed to protect against the abusive debt collection practices likely to disrupt a debtor's life.” Mace v. Van Ru Credit Corp., 109 F.3d 338, 343 (7th Cir.1997). B-Real, 405 B.R. at 432 (footnote omitted)(internal quotation marks omitted). Thus debtors are protected in bankruptcy proceedings-and by discharge afterward.
Bankruptcy provides remedies for wrongfully filed proofs of claim. “It is beyond cavil that past bankruptcy practice, as well as explicit Bankruptcy Code provisions, have left the remedy for fraudulent and otherwise defective proofs of claim to the Bankruptcy Code.” Baldwin, 1999 WL 284788, at *4, 1999 U.S. Dist. LEXIS 6933, at *14 (referencing 11 U.S.C. §§ 105, 1330); see also Walls v. Wells Fargo Bank, N.A., 276 F.3d 502, 510 (9th Cir.2002) ( ) . These remedies include revocation of fraudulent proofs of claim and the court's contempt power. See Baldwin, 1999 WL 284788, at *4, 1999 U.S. Dist. LEXIS 6933, at *14. Without seeking these remedies, the Simmons filed suit under the FDCPA. Gray-Mapp, 100 F.Supp.2d at 814.
As the district court held, the filing a proof of claim in bankruptcy court cannot form the basis for an FDCPA claim. 2
“On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney's fees reasonable in relation to the work expended and costs.” 15 U.S.C. § 1692k(a)(3). “[W]e review for abuse of discretion a district court's decision to award attorneys' fees to a defendant pursuant to the FDCPA.” Jacobson, 516 F.3d at 96. The district court granted motions by Roundup and Malen for costs and attorneys' fees related to the motions to dismiss. The finding that this action was brought “in bad faith and for the purpose of harassment,” see 15 U.S.C. § 1692k(a)(3), seems to have been premised upon the conclusion that this action was meritless and properly dismissed on the pleadings. While we agree with the district court's ruling on the merits of the claim, see supra Part II, the merits turned on a question of law that was, until this opinion, undecided in...
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