Fields v. Wilber Law Firm, P.C.

Citation383 F.3d 562
Decision Date02 September 2004
Docket NumberNo. 03-4108.,03-4108.
PartiesJodi FIELDS, Plaintiff-Appellant, v. WILBER LAW FIRM, P.C., a dissolved corporation, and Donald L. Wilber and Kenneth Wilber, doing business as Wilber Law Firm, P.C., a dissolved corporation, Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

Appeal from the United States District Court for the Central District of Illinois, Michael M. Mihm, J Daniel A. Edelman (argued), Edelman, Combs & Latturner, Chicago, IL, for Plaintiff-Appellant.

Christine Olson McTigue (argued), Hinshaw & Culbertson, Chicago, IL, for Defendants-Appellees.

Before FLAUM, Chief Judge, and MANION and KANNE, Circuit Judges.

KANNE, Circuit Judge.

On March 16, 2002, Jodi Fields incurred $122.06 in charges at Kruger Animal Hospital in Bloomington, Illinois. Despite signing an agreement promising to pay the bill at a later time, Fields had not yet paid any of the debt by November of 2002. Kruger hired the Wilber Law Firm to collect the debt. On November 6, a dunning letter, signed by Donald Wilber of the Wilber Law Firm (collectively "Wilber"), was sent to Fields; it stated that the "ACCOUNT BALANCE" was $388.54. The account balance reflected the original $122.06, plus interest and service charges assessed pursuant to the contract signed by Fields, plus $250 in attorneys' fees for the collection of the debt by Wilber. Three more letters followed, each letter including a slightly higher "ACCOUNT BALANCE" to reflect the accumulation of interest. The subsequent letters were sent on December 11, 2002 ($391.34), December 27, 2002 ($392.30), and February 7, 2003 ($395.30). No additional attorneys' fees were sought in the later letters.

Wilber included the $250 in fees pursuant to a clause in the contract that stated "I understand that if collection action should become necessary for recovery of any monies due under this contract, I agree to pay any and all collection costs and attorney fees." The collection letters did not itemize the expenses or explain the amount of the debt in any way.

On March 25, 2003, Fields filed an action in federal court, alleging that Wilber violated the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692, et seq. ("FDCPA"). Specifically, Fields asserted that the collection letters failed to accurately state the amount of the debt under § 1692g(a)(1), were misleading under § 1692e, and unfairly attempted to collect unauthorized fees under § 1692f(1). The district court dismissed Fields's FDCPA claims for failure to state a claim and held that $250 in attorneys' fees was reasonable as a matter of law. For the reasons that follow, we affirm in part and reverse in part.

I. Analysis

We review the district court's decision to dismiss Fields's claims de novo, "accepting the well-pleaded allegations in the complaint as true and drawing all reasonable inferences in favor of the plaintiff." Marshall-Mosby v. Corporate Receivables, Inc., 205 F.3d 323, 326 (7th Cir.2000).

In deciding whether the collection letters violate the FDCPA, we examine them from the standpoint of an unsophisticated consumer. See Veach v. Sheeks, 316 F.3d 690, 692 (7th Cir.2003); Bartlett v. Heibl, 128 F.3d 497, 500 (7th Cir.1997). "This assumes that the debtor is uninformed, naive, or trusting[.]" Veach, 316 F.3d at 693 (internal quotations omitted). However, an unsophisticated consumer possesses "rudimentary knowledge about the financial world" and is "capable of making basic logical deductions and inferences." Pettit v. Retrieval Masters Creditors Bureau, Inc., 211 F.3d 1057, 1060 (7th Cir.2000).

A. The Amount of the Debt under 15 U.S.C. § 1692g(a)

Under the FDCPA, "[w]ithin five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall ... send the consumer a written notice containing — (1) the amount of the debt[.]" 15 U.S.C. § 1692g(a). Fields first contends that Wilber, by unilaterally determining $250 to be the amount of attorneys' fees charged, misstated the actual amount of the debt. Fields does not deny that she owes some reasonable attorneys' fees under the contract. But barring a stipulation to a specific liquidated amount in the original debtor-creditor contract, Fields proposes debt collectors should be required to seek court approval for a specific amount of attorneys' fees before including them in the account balance.

Essentially, Fields asks us to endorse an approach that would require every debt collector under the FDCPA to go to court every time it sought to enforce a provision in a payment agreement signed by the debtor that allows reimbursement of attorneys' fees and collection costs. Plainly stated, the statute does not require such an extraordinary result.

Nor, contrary to Fields's protestations, does our case law. In Veach, an individual (Veach) who had no contractual relationship with the creditor attempted to prevent the repossession of his debtor-friend's automobile by sending a check for $350 to the creditor. 316 F.3d at 691. The creditor repossessed the auto despite this payment, and Veach responded by stopping payment on the check. Id. The creditor responded to Veach's action by hiring an attorney to file suit. The attorney sent Veach a written notice that listed the remaining principal balance as $1050 (reflecting treble damages under an Indiana statute), "plus reasonable attorney fees as permitted by law, and costs if allowed by the court." Id. at 692.

We held that the attorney violated § 1692g(a)(1) by stating the amount of the debt as an estimate of future potential liability in a court action rather than as a statement of the current amount of the debt. Id. at 692-93. The debt collector "took it upon himself to hold Veach liable for [statutory] penalties that had not yet been awarded, penalties that for FDCPA purposes should have been separated from the amount of the debt." Id. at 692. "[T]he `amount of the debt' provision is designed to inform the debtor (who, remember, has a low level of sophistication) of what the obligation is, not what the final, worst-case scenario could be." Id. at 693 (emphasis in original).

The case before us today differs significantly from Veach. Here, based on a written, signed contract, Wilber attempted to collect an undisputed debt amount, an undisputed amount in interest, and an amount in attorneys' fees (incurred in the initiation of Wilber's collection attempts), disputed for its reasonableness only. Some attorneys' fees have already been incurred in this case and are contractually owed to Kruger, the hospital that provided unpaid veterinary services to Fields. Whereas in Veach, the attorneys' fees (along with the treble damages and court costs also included in the dunning letter) could only be determined in litigation pursuant to a state statute.

To collect attorneys' fees from Fields, Wilber necessarily had to specify an amount that it intended to charge (or had already charged) for its services. Fields, of course, could negotiate this payment or contest the reasonableness of the fees through a lawsuit. But when a debtor has contractually agreed to pay attorneys' fees and collection costs, a debt collector may, without a court's permission, state those fees and costs and include that amount in the dunning letter. Doing so does not violate the FDCPA. Indeed, refusing to quantify an amount that the debt collector is trying to collect could be construed as falsely stating the amount of debt. See Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, and Clark, L.L.C., 214 F.3d 872, 875-76 (7th Cir.2000) (letter required the consumer to call a toll-free number to determine the full amount of the debt). The district court correctly determined that no claim for relief was stated under 15 U.S.C. § 1692g(a).

B. 15 U.S.C. § 1692e and 15 U.S.C. § 1692f

Even if attorneys' fees are authorized by contract, as in this case, and even if the fees are reasonable, debt collectors must still clearly and fairly communicate information...

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