Garcia–contreras v. Scott, 1:09–CV–761.

• Decision Date: 31 March 2011
• Docket Number: No. 1:09–CV–761.,1:09–CV–761.
• Citation: 775 F.Supp.2d 808
• Court: U.S. District Court — Middle District of North Carolina
• Parties: Crystal GARCIA–CONTRERAS, Plaintiff,v.BROCK & SCOTT, PLLC and Bullhead Investments, LLC, Defendants.

775 F.Supp.2d 808

Crystal GARCIA–CONTRERAS, Plaintiff,

v.BROCK & SCOTT, PLLC and Bullhead Investments, LLC, Defendants.

No. 1:09–CV–761.

United States District Court, M.D. North Carolina.

March 31, 2011.

M. Lynette Hartsell, Attorney at Law, Cedar Grove, NC, David B. Levin, Luxenburg & Levin, LLC, Beachwood, OH, for Plaintiff.Richard Lynn Jackson, Brock and Scott, LLP, Winston–Salem, NC, for Defendants.

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, District Judge.

This is an action by Plaintiff Crystal Garcia–Contreras (“Garcia–Contreras”) against Defendants Brock & Scott, PLLC (“Brock & Scott”) and Bullhead Investments, LLC (“Bullhead”) (collectively “Defendants”) alleging violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. On various cross-motions of the parties, the United States Magistrate Judge issued a Memorandum Opinion, Order, and Recommendation (“Recommendation”) on November 30, 2010, 2010 WL 4962940, which recommended dismissal of some but not all claims. (Doc. 35.) Within the time limits prescribed by 28 U.S.C. § 636(b)(1), the parties filed objections (Docs. 38, 39), and the matter is now ripe for resolution. For the reasons that follow, Defendants' motions will be denied, and Garcia–Contreras' motion for summary judgment on liability will be granted.

I. BACKGROUND

The essential facts of this case are not in dispute: Brock & Scott, representing Bullhead, mailed a letter dated April 15, 2009, to Garcia–Contreras in an effort to collect a debt she allegedly owed. (Doc. 1 ¶ 8; Doc. 4 at 9–10, ¶¶ 8, 12; Doc. 35 at 6.) The letter, which Garcia–Contreras has attached to her complaint, reads as follows:

Re: Your CITIFINANCIAL ASSOCIATES Account, Now OwnedBy BULLHEAD INVESTMENTS, LLCAccount number: [omitted]Our file number: [omitted]Amount Owed: $3,132.17, with interest at 0% annum

April 15, 2009

Dear: CRYSTAL G GARCIA,

This law firm has been retained by the above-referenced creditor to file a lawsuit against you immediately for the collection of the debt referenced above. However, you can make arrangements to satisfy the balance shown above by contacting our office. If you do not make payment upon this debt in an amount acceptable to our client, we will instruct the Sheriff of your county to serve you with a Court-issued summons at your home, your work, or wherever else you may be found by him. We will then apply to the Court for a Judgment against you, and if Judgment is granted, we will request that the Sheriff enforce the Judgment by levying an execution upon your property not exempt from Judgment.

You may contact our office at BROCK & SCOTT PLLC, Attn: Collections, at [address], or by telephone at either [telephone number] or [telephone number]. We will assume this debt is valid unless you dispute the validity of all or part within 30 days of receipt of this letter. If you notify us in writing that you dispute all or a portion of this debt, we will send you verification of the debt or a copy of the judgment against you. Upon written request within 30 days after receipt of this notice, we will provide you with the name and address of the original creditor if different from the creditor named above. For further information on this urgent matter, please contact our office at [telephone number] or [telephone number].

Cordially,Philip Young

This letter is an attempt to collect a debt, and any information obtained will be used for that purpose.

(Doc. 1, Ex. 1 (emphases in original); see Doc. 4 at 9, ¶ 8; Doc. 35 at 6–7.)

On April 21, 2009, Garcia–Contreras wrote Brock & Scott to dispute the debt and request verification. (Doc. 1 ¶ 10; Doc. 1, Ex. 2; Doc. 4 at 9, ¶ 10; Doc. 35 at 7.) Instead of responding to Garcia–Contreras, on May 15, 2009, Brock & Scott filed a lawsuit against her on behalf of Bullhead in the General Court of Justice, District Court Division, for Guilford County (North Carolina) to recover the amount allegedly owed. (Doc. 1 ¶ 11; Doc. 4 at 9–10, ¶ 11; Doc. 35 at 7–8.) Attached to the state court complaint was an affidavit of a Bullhead employee in support of the alleged debt.¹ Garcia–Contreras was subsequently served with the complaint and attachment by the Guilford County Sheriff or his deputy. ( See Doc. 26 at 2, 9–10; Doc. 29 at 6–7; Doc. 38 at 17 n. 3; Doc. 38, Ex. 1; Doc. 39 at 5–6, 6 n. 2.)

Garcia–Contreras commenced the present action on October 1, 2009, alleging that Defendants violated the FDCPA in one or more of the following ways: (1) “[p]articipating in collection activities which overshadowed and/or were inconsistent with Plaintiff's right to dispute the debt or to request the name and address of the original creditor, in violation of 15 U.S.C. § 1692g(b),” (2) “[f]ailing to cease collection activities prior to providing verification of the alleged debt, where Plaintiff notified Defendants in writing within the applicable 30 day period that the debt was disputed, in violation of 15 U.S.C. § 1692g(b),” and (3) “acting in an otherwise deceptive, unfair and unconscionable manner and failing to comply with the FDCPA.” (Doc. 1 ¶ 13.)

Defendants moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) (Doc. 4 at 1–7) ² and simultaneously filed an answer ³ containing a counterclaim seeking a declaratory judgment that the conduct complained of does not violate the FDCPA ( id. at 12, ¶ 21). The counterclaim alleges that Garcia–Contreras filed her action “in bad faith and for purposes of harassing” Defendants, thereby entitling them to attorneys' fees under 15 U.S.C. § 1692k(a)(3). ( Id. at 12, ¶ 20; see id. at 12, ¶ 5.)

Garcia–Contreras answered Defendants' counterclaim (Doc. 8) and moved for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) (Doc. 9). The United States Magistrate Judge ordered that rulings on both pending motions be deferred until the time of trial or a ruling on any motion for summary judgment by any party. (Doc. 12.) Subsequently, each party moved for summary judgment,⁴ and the motions were fully briefed. (Docs. 25, 26, 29.)

The Magistrate Judge's Recommendation concluded generally that (1) Garcia–Contreras' claims of “overshadowing” and “otherwise deceptive, unfair and unconscionable” conduct by Defendants should be dismissed for failure to state a claim; (2) her “failure to cease collection” claim, which is plausibly alleged, should proceed because a genuine issue of material fact remained due to the parties' failure to provide an exhibit (which they have now remedied); (3) Defendants' counterclaim that Garcia–Contreras brought this action in bad faith and for the purpose of harassing Defendants should be dismissed pursuant to Garcia–Contreras' summary judgment motion; and (4) Defendants' counterclaim for a declaratory judgment should proceed insofar as Garcia–Contreras' “failure to cease collection” claim remains unresolved. (Doc. 35 at 37–39.)

Each party raises several objections to the Magistrate Judge's Recommendation. (Docs. 38, 39.) The court will “make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.” 28 U.S.C. § 636(b)(1); see Diamond v. Colonial Life & Accident Ins. Co., 416 F.3d 310, 315–16 (4th Cir.2005).

II. ANALYSISA. Overshadowing Claim

Garcia–Contreras first objects to the recommendation that her “overshadowing” claim be dismissed. (Doc. 38 at 2–11.) The Magistrate Judge concluded that this claim fails as a matter of law under subsection (b) of 15 U.S.C. § 1692g, because that subsection is limited to the thirty-day period after Garcia–Contreras' receipt of the April 15, 2009, letter and consequently does not cover the letter. (Doc. 35 at 12.) Garcia–Contreras, noting that the “overshadowing” prohibition is not codified elsewhere in § 1692g and concerned that the Magistrate Judge's ruling would eliminate “overshadowing” claims involving initial communications, argues that § 1692g(b) is the proper subsection under which to bring such a claim. (Doc. 38 at 3, 6, 8–11.) The first question before the court, therefore, is whether Garcia–Contreras has stated an “overshadowing” claim on this record.

1. Construction of 15 U.S.C. § 1692g

Section 1692g(a) provides that within five days of a debt collector's initial communication with a consumer in connection with the collection of a debt,⁵ the debt collector must (unless the following information was contained in the initial communication or the consumer has paid the debt) send the consumer written notice of the following:

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

15 U.S.C. § 1692g(a). This required notice is often referred to as the “validation notice.” Under § 1692g(b), “[i]f the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a)” that the debt is disputed or requests the name and address of the original creditor, the debt collector

shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a...