Freyermuth v. Credit Bureau Services

• Decision Date: 15 February 2001
• Docket Number: No. 00-2661,00-2661
• Citation: Freyermuth v. Credit Bureau Services, 248 F.3d 767, 2001 WL 428233 (8th Cir. 2001)
• Parties: (8th Cir. 2001) TROY L. FREYERMUTH APPELLANT, v. CREDIT BUREAU SERVICES, INC, D/B/A CHECKMATE OF FREMONT APPELLEES. Submitted:
• Court: U.S. Court of Appeals — Eighth Circuit

Page 767

248 F.3d 767 (8th Cir. 2001)

TROY L. FREYERMUTHAPPELLANT, v.CREDIT BUREAU SERVICES, INC, D/B/A CHECKMATE OF FREMONTAPPELLEES.

No. 00-2661

UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

Submitted: February 15, 2001

Filed: April 27, 2001

Appeal from the United States District Court for the District of Nebraska.[Copyrighted Material Omitted]Before Richard S. Arnold, and Hansen, Circuit Judges, and Davis, ¹District Judge.

Davis, District Judge

Troy L. Freyermuth(Freyermuth) appeals the district court's entry of summary judgment in favor of Credit Bureau Services, Inc., d/b/a/ Checkmate of Fremont (Checkmate).Freyermuth commenced this action pursuant to the Fair Debt Collection Practices Act (FDCPA), for abusive practices in seeking to collect payment for dishonored checks.15 U.S.C. 1692 et seq.The District Court² granted summary judgment for defendant.We affirm.

I.

Between May 11, 1990, and April 8, 1998, Freyermuth wrote fourteen checks which were returned for insufficient funds (NSF) to various merchants in Fremont, West Point, and Wisner, Nebraska.The merchants referred the NSF checks to Checkmate, a check authorization service, for collection.Six of the checks were referred to Checkmate in 1990; two checks were then referred in 1994, five in 1995, and one in 1998.Checkmate sent individual notices ("Initial Notices") to Freyermuth within two business days after receiving each of the referred checks.Each Initial Notice was sent to Freyermuth at his last known address.The Initial Notices indicated that Freyermuth had an amount due on Checkmate's permanent bad check data file, and listed the outstanding balance and applicable service charges.Freyermuth paid the principal balance on seven of the fourteen checks; he did not pay service charges on any of the fourteen checks.On May 6, 1998, Checkmate sent Freyermuth two follow-up notices ("Subsequent Notices") regarding the NSF checks identified in the fourteen Initial Notices.

The language of the Subsequent Notices reads: "Our records show the amount due indicated below remains in our CHECKMATE PERMANENT BAD CHECK DATA FILE.TO PROTECT YOUR CHECK-WRITING PRIVILEGES, REMIT THE BALANCE DUE IMMEDIATELY (CASH OR MONEY ORDER ONLY)...To be sure of proper credit and to stop further procedure[sic], make your payment in full."³

On May 20, 1998, Freyermuth, through his counsel, wrote Checkmate requesting the names and addresses of the original creditors and the amount in controversy concerning each check.On June 2, 1998, Checkmate replied in writing with a list of 11 creditors, and a principal amount for each creditor.Freyermuth filed this lawsuit against Checkmate on May 5, 1999, for abusive debt collection practices in violation of the FDCPA.He alleged that Checkmate unlawfully attempted to collect a service charge in violation of 15 U.S.C. 1692f(1).

Checkmate brought a motion for summary judgment.In his response to Checkmate's motion, Freyermuth raised the new claim that Checkmate had further violated the FDCPA by attempting to collect on debts that were probably time-barred, and moved for partial summary judgment in his favor.The district court granted summary judgment to Checkmate, holding that the entire claim was barred by the FDCPA's one year statute of limitation.Furthermore, the court held, Nebraska law did not prohibit the collection of a service fee for a bad check, and thus no violation of the FDCPA had occurred.

II.

This court reviews a grant of summary judgment de novo.Thus, summary judgment is appropriate when the evidence, viewed in the light most favorable to the nonmoving party, demonstrates that there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law.SeeHill v. St. Louis Univ., 123 F.3d 1114, 1118-19(8th Cir.1997);Duffy v. Wolle, 123 F.3d 1026, 1033(8th Cir.1997).

The Fair Debt Collection Practices Act (FDCPA) makes it unlawful for debt collectors to use "any false, deceptive, or misleading representation or means in connection with the collection of any debt."15 U.S.C. 1692e.The Act prohibits a debt collector from collecting any service charge "unless such amount is expressly authorized by the agreement creating the debt or permitted by law."15 U.S.C. 1692f(1).In addition, it is a violation of the Act to threaten to take "any action that cannot legally be taken."15 U.S.C. 1692e(5).

The FDCPA states that any action to enforce any liability created by the Act must be brought "...within one year from the day on which the violation occurs."15 U.S.C. 1692k(d).This Court has previously held that in cases regarding abusive debt collection letters, the date of the violation of the FDCPA occurs on the date the letter that allegedly does not comply with the FDCPA's requirements is sent to the debtor.SeeMattson v. U.S. West Communications, Inc., 967 F.2d 259, 261(8 th Cir. 1997).This action was filed on May 5, 1999, more than one year after the last of the Initial Notices was mailed, on or about April 10, 1998.To the extent the complaint rests on an alleged violation of the Act committed when Checkmate sent the Initial Notices, this action is time-barred.

Freyermuth argues that his Complaint concerns alleged violations of the Act by the Subsequent Notices, not the Initial Notices.Even if we were to find that the Subsequent Notices form the basis of the Complaint and therefore it is not time barred, the claim would nonetheless fail on the merits.Checkmate did not violate the FDCPA when it attempted to collect service fees, nor when it attempted to collect on a debt that was potentially time-barred.

Under the FDCPA, a debt collector may not impose a service charge unless (i) the agreement creating the debt expressly authorizes the charge, or (ii) the charge is permitted by law.See15 U.S.C.A.1692f(1).Neither party has argued that the charge was expressly authorized, and so we must look to applicable state law.Nebraska law authorizes reimbursement to the seller for incidental damages incurred as a result of the buyer's breach.Such incidental damages may include any commercially reasonable charges.Neb. Rev. Stat. U.C.C. 2-710(1963).A person "in the position of a seller" can also recover incidental damages.In Nebraska, a "person in the position of a seller" is one who "who has ... become responsible for the price of goods on behalf of his principal...."Neb.Rev. Stat. U.C.C. 2-707(1)(1963).

In this case, various merchants referred the checks to Checkmate for collection.The merchants retained ownership of the debt, but enlisted the services of Checkmate to collect on the amount due.In this way, Checkmate "became responsible for" the debts, and thus stands in the position of the merchants for purposes of collecting incidental damages, in the form of a commercially reasonable charge.SeeTuttle v. Equifax Check, 190 F.3d 9, 14-15(2d Cir.1999).Checkmate therefore did not violate Nebraska law when it imposed the service fees, and did not violate the FDCPA when it attempted to collect them.

The question of whether a debt collector violates the FDCPA when it attempts to collect on a potentially...