Dunham v. Portfolio Recovery Assocs., LLC

• Decision Date: 15 December 2011
• Docket Number: No. 11–1553.,11–1553.
• Citation: Dunham v. Portfolio Recovery Assocs., LLC, 663 F.3d 997 (8th Cir. 2011)
• Parties: James DUNHAM, on behalf of himself and all others similarly situated, Appellant, v. PORTFOLIO RECOVERY ASSOCIATES, LLC, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

663 F.3d 997

James DUNHAM, on behalf of himself and all others similarly situated, Appellant,

v.PORTFOLIO RECOVERY ASSOCIATES, LLC, Appellee.

No. 11–1553.

United States Court of Appeals, Eighth Circuit.

Submitted: Sept. 20, 2011.Filed: Dec. 15, 2011.

Michael Joseph Wall, argued, Nashville, TN, Alexander Graham Streett, James Albert Streett, Russellville, AR, James Gerard Stranch, IV, Joey Paul Leniski, Jr., James G. Stranch, III, Nashville, TN, on the brief, for appellant.

Donald S. Maurice, Jr., argued, Flemington, NJ, Keith M. McPherson, Little Rock, AR, Thomas Robert Dominczyk, Rachel Marin, Flemington, NJ, on the brief, for appellee.

Before MELLOY, SMITH, and BENTON, Circuit Judges.

SMITH, Circuit Judge.

James Dunham, on behalf of himself and others similarly situated, sued Portfolio Recovery Associates, LLC (PRA), alleging claims under the Federal Debt Collection Practices Act (FDCPA). PRA filed a motion for summary judgment, arguing that Dunham lacked standing because he is not a “consumer” under the FDCPA. Agreeing, the district court ¹ granted PRA's motion for summary judgment. Dunham challenges this ruling on appeal. For the following reasons, we affirm the judgment on different grounds.

I. Background²

PRA is a debt collection agency that purchases debt portfolios—pools of commercial and non-commercial payment obligations that the original lenders have been unable to collect. Dunham practices law in Russellville, Arkansas. In January 2008, PRA purchased a debt portfolio, which included a payment obligation that a “James Dunham” owed, from Credigy Receivables, Inc. (“Credigy Receivables”).

On March 4, 2008, PRA sent a form notification letter requesting payment to Dunham. The letter advised, among other things, that “[u]nless you notify this office within 30 days after receiving this notice that you dispute the validity of this debt ... this office will assume this debt is valid.” Doubting that he owed this debt, and believing the letter to be a mistake, Dunham sent PRA a letter disputing this liability, and demanding validation of the payment obligation. On March 18, 2008, PRA transmitted a form validation letter, or “D4 letter,” to Dunham acknowledging its receipt of his dispute letter. This D4 letter provided Dunham additional information related to the payment obligation, including the debtor's name, address, and the last four digits of the debtor's social security number; the date of the payment obligation; the date PRA purchased the payment obligation; and the current outstanding balance on the payment obligation. Along with the D4 letter, PRA attached an affidavit of one of its employees averring that according to PRA's records, Dunham incurred a debt from Credigy Receivables that now totaled $2,906.55. The affidavit further stated that Credigy Receivables sold, assigned, and transferred that debt to PRA on January 31, 2008. In furnishing this information to Dunham, PRA examined only its own files and did not attempt to contact the original creditor. Moreover, as the district court observed, “[t]he affidavit did not purport to give the original amount of the debt, the date upon which the debt was incurred, or the goods or services for which it was incurred.”

Upon receiving PRA's D4 letter, Dunham concedes that he immediately recognized that the last four digits of the debtor's social security number did not match his own. At that point, he believed that PRA had erroneously contacted him about the payment obligation. Dunham never responded to the letter but instead, almost a year later, commenced the instant putative class action in district court. Dunham alleged that PRA's D4 letter violated 15 U.S.C. § 1692g, the FDCPA's debt-validation provision, because it failed to include information that PRA verified with the original creditor.

At Dunham's deposition, PRA discovered for the first time that Dunham's social security number does not match that of the actual debtor. PRA now concedes that Dunham does not owe the payment obligation. After discovery, Dunham and PRA filed cross-motions for summary judgment. Dunham also moved for discovery sanctions on the ground that PRA belatedly produced a “seller survey,” which, Dunham contends, indicates that the payment obligation at issue was a consumer debt. In addition, Dunham requested class certification.

On February 11, 2011, the district court granted PRA's motion for summary judgment. The district court concluded that § 1692g, confers a cause of action only to an aggrieved “consumer” and that Dunham is not a “consumer” under the FDCPA. Specifically, the district court concluded that because PRA never alleged that Dunham owed a payment obligation, but rather alleged that a different “James Dunham” owed the payment obligation, this “James Dunham” is not a “consumer” under the FDCPA's plain language—“any natural person obligated or allegedly obligated to pay any debt.” 15 U.S.C. § 1692a(3). According to the district court, Dunham was not obligated to pay what the other “James Dunham” owed and PRA alleged the other “James Dunham” owed the money. In other words, under the district court's reading of the statute, the FDCPA's debt-validation provisions do not provide a remedy to non-debtors mistakenly targeted by debt-collection efforts.

Based on its conclusion that Dunham is not a “consumer” and thus lacked standing to sue under the FDCPA, the district court denied Dunham's discovery-sanctions motion as moot. Finally, the district court denied Dunham's motion for class certification on the ground that Dunham “ ‘is not a proper representative of the class where he himself lacks standing to pursue the claim.’ ” (quoting Hall v. Lhaco, Inc., 140 F.3d 1190, 1196–97 (8th Cir.1998)). Dunham appeals.

II. Discussion

“ ‘We review de novo the district court's grant of summary judgment, as well as the district court's interpretation of ... a federal statute.’ ” Owner–Operator Indep. Drivers Ass'n v. Supervalu, Inc., 651 F.3d 857, 862 (8th Cir.2011) (quoting Jessep v. Jacobson Transp. Co., 350 F.3d 739, 741–42 (8th Cir.2003)).

“The purpose of the FDCPA is to ‘eliminate abusive debt collection practices by debt collectors,’ ... and debt collectors are liable for failure to comply with ‘any provision’ of the Act.” Richmond v. Higgins, 435 F.3d 825, 828 (8th Cir.2006) (quoting 15 U.S.C. §§ 1692(e), 1692k(a)) (internal citations omitted). Section 1692g “requires debt collectors to notify debtors within five days of the initial communication with the debtor of the debtor's right to dispute the debt.” Id. at 828–29 (citing 15 U.S.C. § 1692g(a)(3)). “If the debtor disputes the debt” within 30 days of receiving the notice, then “the debt collector must ‘cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt....’ ” Id. at 829 (alteration in original) (quoting 15 U.S.C. § 1692g(b)).

“Several sections of the FDCPA,” including § 1692g, “restrict the scope of [the FDCPA's] application by including the word ‘consumer’ in the text.” Id. at 828 (citing, inter alia, 15 U.S.C. § 1692g). The FDCPA defines “consumer” as “any natural person obligated or allegedly obligated to pay any debt.” 15 U.S.C. § 1692a(3). In contrast, the Act uses the phrase “any person” rather than “consumer” in other parts of the Act. See 15 U.S.C. § 1692d (“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.”). “Thus, at least in [some] sections, the FDCPA specifies the actors to which the section applies.” Richmond, 435 F.3d at 828. Therefore, to withstand summary judgment on a claim of inadequate debt validation under § 1692g(b) of the FDCPA, Dunham must create genuine issues of material fact as to the following elements: (1) that he is a consumer; (2) that PRA is a debt collector who contacted him in an attempt to collect a debt ³; (3) that he duly notified PRA in writing that he disputed the debt; and (4) that PRA resumed or failed to cease debt-collection efforts without first (a) obtaining verification of the debt or a copy of a judgment and (b) mailing a copy of the verification or judgment to the consumer.

In its brief, PRA concedes that it is a debt collector under the FDCPA and that Dunham timely notified it in writing that he disputed the debt. But PRA disputes that Dunham has produced sufficient evidence to create fact issues regarding (1) whether he is a “consumer” as defined by the FDCPA; (2) whether the payment obligation that PRA sought to recoup was actually a “debt” as defined by the FDCPA (a determination that also turns on whether Dunham is a “consumer”); and (3) whether the PRA properly “obtained verification of the debt.”

A. Whether Dunham Is a “Consumer” Under the FDCPA

On appeal, Dunham argues that the district court erred in finding that he was not a “consumer” under the FDCPA because Dunham was not the intended recipient of PRA's communications. Whether § 1692a(3)'s definition of “consumer” includes Dunham is a question of statutory interpretation. We review such questions de novo, “which requires us to examine the text of the statute as a whole by considering its context, object, and policy.” Mader v. United States, 654 F.3d 794, 800 (8th Cir.2011) (en banc). “Ultimately, ‘[o]ur objective in interpreting a federal statute is to give effect to the intent of Congress.’ ” Id. (quoting United States v. Vig, 167 F.3d 443, 447 (8th Cir.1999)).

We first look at the ordinary meaning of the FDCPA's plain language to determine the meaning of “consumer.” See United States v. I.L., 614 F.3d 817, 820 (8th Cir.2010). Section 1692a(3) provides that “[t]he term ‘consumer’ means any natural person obligated or allegedly obligated to pay any debt.” 15 U.S.C. § 1692a(3). As both parties correctly note, resolution of whether the plain language of § 1692a(3)'s “consumer” definition encompasses Dunham,...