Emanuel v. American Credit Exchange

• Decision Date: 16 March 1989
• Docket Number: Nos. 534,666,D,s. 534
• Citation: 870 F.2d 805
• Parties: Samuel L. EMANUEL, Plaintiff-Appellant, Cross-Appellee, v. AMERICAN CREDIT EXCHANGE, Defendant-Appellee, Cross-Appellant. ockets 88-7717, 88-7757.
• Court: U.S. Court of Appeals — Second Circuit

Page 805

870 F.2d 805

57 USLW 2553

Samuel L. EMANUEL, Plaintiff-Appellant, Cross-Appellee, v. AMERICAN CREDIT EXCHANGE, Defendant-Appellee, Cross-Appellant.

Nos. 534, 666, Dockets 88-7717, 88-7757.

United States Court of Appeals, Second Circuit.

Argued Jan. 12, 1989.

Decided March 16, 1989.

Clifford Forstadt, UAW-Chrysler Legal Services Plan, Syracuse, N.Y. (O. Randolph Bragg, UAW-GM Legal Services Plan, Newark, DE, of counsel), for plaintiff-appellant, cross-appellee.

Sidney P. Cominsky, Syracuse, N.Y. (Joel N. Melnicoff, Syracuse, N.Y., of counsel), for defendant-appellee, cross-appellant.

Before KAUFMAN, VAN GRAAFEILAND and MINER, Circuit Judges.

MINER, Circuit Judge:

This is an appeal from a summary judgment of the United States District Court for the Northern District of New York (Cholakis, J.) dismissing the claim asserted by plaintiff-appellant Samuel L. Emanuel under the Fair Debt Collection Practices Act ("FDCPA" or the "Act"), 15 U.S.C. Secs. 1692-1692o (1982 & Supp. IV 1986), and the counterclaims of defendant-appellee American Credit Exchange ("American Credit") for malicious prosecution. Emanuel claimed that a letter he received from American Credit in connection with a debt he allegedly owed his landlord violated 15 U.S.C. Sec. 1692e(11) because it failed to disclose that it was a communication made to collect a debt and that any information obtained would be used for that purpose.

The district court held that the letter indicated clearly that it was intended to collect a debt, and that because no information was requested, the letter did not have

to advise Emanuel that any information obtained would be used. It seems clear to us, however, that the language of section 1692e(11) requires that a debt collection letter disclose that any information provided by the letter's recipient will be used to collect the debt, even when no specific information is requested. Accordingly, we reverse the judgment dismissing Emanuel's claim and remand the matter to the district court to calculate costs and attorney's fees, to which Emanuel is entitled under 15 U.S.C. Sec. 1692k(a)(3). We affirm the dismissal of the counterclaims as well as the denial of the Rule 11 sanctions sought by American Credit.

BACKGROUND

American Credit, a debt collection agency, sent Emanuel a letter in January 1987 demanding payment of the sum of $534.49 owed to Tudor Townhouses. The collection letter stated merely that Emanuel's "past due account" in the amount of $534.49 had been referred to the agency "for immediate collection," and advised Emanuel that "to insure proper credit all payments must be made to" American Credit's Syracuse office. The sum demanded represented the amount allegedly owed by Emanuel to his landlord, Tudor Townhouses, for past-due rent and damage to property.

Emanuel refused to pay and, on January 20, 1988, commenced this action, alleging a violation of 15 U.S.C. Sec. 1692e(11). In the district court, Emanuel claimed that the letter failed to disclose clearly that it was a communication to collect a debt and that any information obtained from Emanuel would be used to collect that debt. Emanuel sought statutory damages of $1,000, costs and reasonable attorney's fees. See 15 U.S.C. Sec. 1692k. American Credit counterclaimed, citing the willful, malicious and frivolous nature of Emanuel's suit and seeking $10,000 damages, $30,000 in "treble punitive damages," costs, and reasonable attorney's fees.

Emanuel moved to dismiss the counterclaims pursuant to Fed.R.Civ.P. 12(b)(6) or, alternatively, for summary judgment pursuant to Fed.R.Civ.P. 56(b) dismissing the counterclaims. Emanuel also moved for summary judgment on the claim set forth in the complaint. In addition, he sought Rule 11 sanctions, contending that American Credit was guilty of bad faith in filing its answer and counterclaims. See Fed.R.Civ.P. 11. American Credit cross-moved to dismiss the complaint and for summary judgment on its malicious prosecution claims. In addition, American Credit sought attorney's fees pursuant to 15 U.S.C. Sec. 1692k(a)(3) and Fed.R.Civ.P. 56(g), costs, a contempt order pursuant to Fed.R.Civ.P. 56(g), and compensatory and punitive damages for the "intentional commencement of a frivolous and worthless lawsuit, maliciously commenced."

The district court granted summary judgment dismissing the complaint and the counterclaims; it denied all other relief sought by the parties. Ruling from the bench, the court noted that the letter clearly revealed the sender's intention to collect a debt. It observed also that, because the letter sought no information concerning the debt, section 1692e's requirement that the letter disclose that any information provided would be used for purposes of collecting the debt did not apply. In concluding Emanuel's claim was "without merit," the court held "that the statute was not intended to cover a situation such as the one that is currently before the Court and it surely was not intended ... to place a sword in the hands of a debtor. It was intended to give him a shield against false, deceptive or misleading representation." The determination to dismiss American Credit's malicious prosecution counterclaims was based on a finding "that there have been no decisions directly on point interpreting the sections involved and the Court cannot say as a matter of law that the action was brought in bad faith."

On appeal, Emanuel argues that the district court failed to construe strictly the language of section 1692e when it held that the collection letter need not refer to the potential use of any information obtained from Emanuel; he also requests sanctions under Fed.R.Civ.P. 11 and Fed.R.App.P. 38. American Credit cross-appeals, again seeking

attorney's fees, costs, a contempt order and compensatory as well as punitive damages.

DISCUSSION

1. The Collection Letter

The FDCPA provides that "[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. Sec. 1692e. "[T]he failure to disclose clearly in all communications made to collect a debt or to obtain information about a consumer, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose," constitutes a violation of the Act. Id. Sec. 1692e(11) (emphasis added).

Emanuel argues that the letter sent by American Credit was deficient because it stated neither that it was a collection letter nor that any information obtained by American Credit would be used to collect the debt. American Credit, on the other hand, claims that it is clear from the face of the letter that it was intended to obtain payment of a debt, and that because no information was sought from Emanuel, it was not required to disclose that any such information, if furnished, would be used for debt collection purposes. We believe that the letter disclosed clearly that it was a communication to collect a debt. Indeed, the letter not only stated that Emanuel's account had been turned over to American Credit "for immediate collection," but it actually told Emanuel how and where to make payment so as to satisfy the indebtedness. Despite Emanuel's assertion to the contrary, there simply is no requirement that the letter quote verbatim the language of the statute.

We think it clear from the plain language of section 1692e(11) that the debt collector must comply with both disclosure requirements, regardless of whether any information is requested. Congress employed the disjunctive "or" when it described the types of communications covered by section 1692e(11), and the conjunctive "and" when it described the contents required for inclusion in the communications. The Ninth Circuit's decision in Pressley v. Capital Credit & Collection Service, Inc., 760 F.2d 922 (9th Cir.1985) (per curiam), cited by American Credit, is not in point. There, the court held that strict compliance with the statute was not required for a follow-up collection letter that did not require any information from its recipient; the court did not consider such a letter a "communication" within the meaning of section 1692e. Id. at 925. In the case at bar, we are presented with a different situation: The January 1987 letter was the first and only collection letter sent by American Credit to Emanuel. As a result, Emanuel had no prior notice of American Credit's interest in collecting a debt. The court in Pres...