In re Martinez
| Decision Date | 22 August 2001 |
| Docket Number | Adversary No. 00-1118-BKC-RAM-A.,Bankruptcy No. 99-42274-BKC-RAM |
| Parties | In re Pablo MARTINEZ, Debtor. Pablo Martinez, Plaintiff, v. Law Offices of David J. Stern, P.A., Defendant. |
| Court | United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Southern District of Florida |
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Lawrence Shoot, Miami, Florida, for debtor.
Becket and Lee LLP, Newark, NJ, Arthur E. Lewis, Plantation, FL, Andrew D. Zaron, Ft. Flauderdale, FL, for creditor.
The cross-motions for summary judgment filed in this proceeding raise an issue of law under § 1692g of the Fair Debt Collection Practices Act ("FDCPA"). The issue is whether the defendant/ debt collector provided effective notice to the plaintiff/ consumer of the consumer's rights under 15 U.S.C. § 1692g pursuant to the hypothetical least sophisticated consumer standard. For the reasons set forth below, the plaintiff's motion will be granted and the defendant's motion denied.
The material facts are undisputed. On June 30, 1992, the plaintiff, Pablo Martinez ("Plaintiff" or "Debtor"), his wife Anna Martinez and Eduardo Martinez executed a mortgage in the amount of $70,791.00 in favor of American Trust Mortgage Corporation. Union Planters Bank, N.A. ("Union Planters"), by virtue of a series of assignments, became the owner and holder of the mortgage. On September 16, 1999, the defendant, the Law Offices of David J. Stern, P.A. (the "Defendant"), as counsel for Union Planters, prepared, filed and caused to be served a foreclosure action against the Debtor and the other individuals who executed the mortgage (the "Foreclosure Action"). The Defendant had no prior contact or communication with the Debtor and the service of the foreclosure summons, complaint and items contained therewith was the initial communication between the parties (the "Initial Communication").
The Initial Communication contained 16 pages of documents. In sequence, the package began with the summons (two pages), a lis pendens (two pages) and a Complaint to Foreclose Mortgage (three pages). The eighth page of the package was the document which constitutes the focus of this proceeding, entitled Notice Required By The Fair Debt Collection Practice Act (the "FDCPA Notice") (one page), followed by a copy of the note, mortgage and attachments (eight pages). On the first page of the summons, which was the first page of the Initial Communication, was the following statement: "IF YOU DO NOT FILE YOUR RESPONSE ON TIME, YOU MAY LOSE THE CASE, AND YOUR WAGES, MONEY AND PROPERTY MAY THEREAFTER BE TAKEN WITHOUT FURTHER WARNING FROM THE COURT."
The FDCPA Notice (eighth page) consisted of seven numbered paragraphs which contained the statutory language, including the following:
On December 15, 1999, the Debtor filed a chapter 13 bankruptcy petition in this Court and the following day filed a suggestion of bankruptcy in the Foreclosure Action. On March 23, 2000, the Debtor filed this adversary proceeding. Count I alleged that the Defendant, as a debt collector, violated 15 U.S.C. § 1692g by not conveying effective notice of the Plaintiff's rights as required under the FDCPA. Count II alleged that the Defendant violated § 1692f, claiming it was an abusive debt collection practice to file a foreclosure complaint without first advising the Debtor that such a complaint was imminent. In a May 30, 2000 Order which granted in part Defendant's Motion to Dismiss, the Court dismissed the § 1692f claim, leaving only the § 1692g claim at issue in this proceeding.
The parties filed cross-motions for summary judgment which were argued on January 8, 2001. In addition to the memoranda and oral arguments presented by the parties, the Court considered the amicus brief and oral argument presented by Wells Fargo Mortgage, Inc. ("Wells Fargo") in support of the Defendant's Motion. After further briefing, the Court conducted a second hearing on the cross motions for summary judgment on February 12, 2001. The Court has now fully considered the record including the memoranda and supplemental memoranda submitted by the parties and by Wells Fargo, the oral arguments presented at the two hearings and applicable law.
The FDCPA was enacted to eliminate unscrupulous debt collection practices of consumer debts. See 15 U.S.C. § 1692; Russell v. Equifax A.R.S., 74 F.3d 30, 33 (2d Cir.1996); see generally O. Randolph Bragg, The Fair Debt Collection Practices Act, 1172 PLI/ Corp 917 (April, 2000). Quoting the applicable legislative history, the Eleventh Circuit has stated that in establishing the FDCPA, Congress recognized "the serious and widespread abuses in the debt collection area . . . which make this legislation necessary and appropriate." Jeter v. Credit Bureau, Inc., 760 F.2d 1168, 1173 (11th Cir.1985) quoting S.Rep. No. 95-382, 95th Cong., 1st Sess., reprinted in 1977 U.S.Code Cong. & Ad.News 1695, 1697. Consistent with this goal, § 1692g obligates a debt collector, upon solicitation of payment on a consumer debt or within five days thereof, to provide a detailed validation notice ("Validation Notice") to the consumer. See 15 U.S.C. § 1692g.1 The Validation Notice must include, inter alia, a statement that the debt's validity will be assumed unless it is disputed by the consumer within 30 days of receipt of the notice and an offer by the debt collector to provide information regarding the details and verification of the debt. See id. The ease of obtaining this information allows a consumer to arm himself to challenge the claimed amount or entirety of the debt prior to making payment. The notice provisions of § 1692g do not require any specific statement of the legal consequences of requesting such notice, namely, the obligation of a debt collector to cease collection efforts until the requested information is provided. This "cease and desist" charge is in the statute, but notice of the obligation is not explicitly required. See 15 U.S.C. § 1692g(b).
A debt collector must ensure that notice of the right to dispute the debt is actually conveyed to the consumer, and that the notice is conveyed effectively. See Wilson v. Quadramed Corp., 225 F.3d 350, 354 (3d Cir.2000); Russell, 74 F.3d at 35; Graziano v. Harrison, 950 F.2d 107, 111 (3d Cir.1991); Swanson v. Southern Oregon Credit Service, Inc., 869 F.2d 1222, 1225 (9th Cir.1988); Rabideau v. Management Adjustment Bureau, 805 F.Supp. 1086, 1093 (W.D.N.Y.1992). The effectiveness of the notice is based on an objective standard of the manner in which a "least sophisticated consumer" would interpret the notice. See Jeter, 760 F.2d at 1175; Russell, 74 F.3d at 34 (). This standard allows for the protection of all consumers, the gullible and the shrewd. See Wilson v. Quadramed Corp., 225 F.3d at 354. As described by the Seventh Circuit, this standard presumes a level of sophistication that "is low, close to the bottom of the sophistication meter." Avila v. Rubin, 84 F.3d 222, 226 (7th Cir.1996).
The least sophisticated consumer standard does contemplate a minimum level of sophistication which "prevents liability for bizarre or idiosyncratic interpretations of collection notices by preserving a quotient of reasonableness and presuming a basic level of understanding and willingness to read with care." Wilson, 225 F.3d at 354-55 (internal quotation marks and citations omitted); see also Jang v. A.M. Miller & Assoc., 122 F.3d 480, 483-84 (7th Cir.1997). Moreover, in applying this objective standard, courts assume that the entire content of the notice was read by the consumer. See Cavallaro v. Law Office of Shapiro & Kreisman, 933 F.Supp. 1148, 1153 (E.D.N.Y.1996); Clomon v. Jackson, 988 F.2d 1314, 1319 (2d Cir.1993) (). Therefore, although the applicable standard is that of a consumer with a minimum level of sophistication, it assumes that a Validation Notice is read in its entirety, carefully and with some elementary level of understanding.
Numerous courts in various circuits have held that the mere inclusion of a Validation Notice within the first communication between a debt collector and a consumer does not necessarily satisfy the notice requirement of § 1692g. See Rabideau, 805 F.Supp. 1086; see also Bartlett v. Heibl, 128 F.3d 497, 500 (7th Cir.1997); Graziano, 950 F.2d at 111; Miller v. Payco-General American Credits, Inc., 943 F.2d 482 (4th Cir.1991); Swanson, 869 F.2d at 1225. These courts have reasoned that even where the bare bones of the required notice is present, § 1692g is nonetheless violated where the notice is "overshadowed or contradicted by accompanying messages from the debt collector." Graziano, 950 F.2d at 111; Bartlett, 128 F.3d at 500 (citing...
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