Lukawski v. Client Servs., Inc., 3:12-CV-02082

• Decision Date: 29 August 2013
• Docket Number: 3:12-CV-02082
• Parties: ZOFIA LUKAWSKI, Plaintiff v. CLIENT SERVICES, INC., Defendant
• Court: U.S. District Court — Middle District of Pennsylvania

ZOFIA LUKAWSKI, Plaintiff v. CLIENT SERVICES, INC., Defendant

3:12-CV-02082

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

Date: August 29, 2013

(JUDGE NEALON)

MEMORANDUM

On September 18, 2012, Plaintiff, Zofia Lukawski, commenced this action by filing a complaint in the Pennsylvania Court of Common Pleas of Lackawanna County alleging that Defendant, Client Services, Inc., violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq., ("FDCPA") by mailing a letter to Plaintiff in an attempt to collect a debt that violated the FDCPA. (Doc. 1-3). Defendant removed this matter to this Court pursuant to 28 U.S.C. §§ 1441(b) and 1331 on October 17, 2012. (Doc. 1). On January 25, 2013, the parties filed a stipulation that if Plaintiff demonstrates that Defendant violated the FDCPA then Defendant will pay statutory damages of $1,000.00, costs, and attorney's fees. (Doc. 6). On April, 30, 2013, Defendant filed a motion for summary judgment, statement of material facts, and brief in support thereof. (Docs. 7-8). On May 24, 2013, Plaintiff filed an answer to Defendant's statement of facts, a cross-motion for summary judgment, statement of facts, and brief in support of the cross-motion. (Docs. 9-12). On June 7, 2013, Defendant filed a brief in opposition and on June 24, 2013, Plaintiff filed a reply brief. (Docs. 13-14). The cross-motions are now ripe for disposition and, for the reasons that follow, summary judgment will be entered in favor ofPlaintiff.

I. Standard of Review

Summary judgment "should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c); Turner v. Schering-Plough Corp., 901 F.2d 335, 340 (3d Cir. 1990). The party moving for summary judgment bears the burden of showing the absence of a genuine issue as to any material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). Once such a showing has been made, the non-moving party must offer specific facts contradicting those averred by the movant to establish a genuine issue of material fact. Luian v. National Wildlife Federation, 497 U.S. 871. 888.110 S. Ct. 3177, 111 L. Ed. 2d 695 (1990). All inferences "should be drawn in the light most favorable to the nonmoving party, and where the nonmoving party's evidence contradicts the movant's, then the non-movant's must be taken as true." Pastore v. Bell Tel. Co., 24 F.3d 508, 512 (3d Cir. 1994) quoting Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d 1358,1363 (3d Cir. 1992), cert. denied, 507 U.S. 912, 113 S. Ct. 1262, 122 L. Ed. 2d 659 (1993).

II. Statement of Facts

Plaintiff contracted with Citibank, N.A., to open a MasterCard account and accrued debt on the account, and, in 2011, Plaintiff ceased making payments on her account causing it to become delinquent. (Doc. 7-1, ¶¶ 1-2) admitted in (Doc. 9, ¶¶ 1-2). On February 28, 2012, Defendant, being retained by Citibank, N.A., sent to Plaintiff and Plaintiff received a collection letter attempting to collect the debt on the account. (Doc. 7-1, ¶¶ 3-4) admitted in (Doc. 9, ¶¶ 3-4). The February 28, 2012 letter stated "as of the date of this letter your total balance due is $1,035.91" and stated that "because of interest, late fees, and other finance charges (if applicable to your account), your total balance might be greater on the date you make a payment." (Doc. 7-2, p. 1). On April 13, 2012, Defendant issued a second collection letter to Plaintiff indicating that the "Balance Due" was $1,096.75. (Doc. 7-1, ¶ 7) admitted in (Doc. 9, ¶ 7). The April 13, 2012 letter informed that the "creditor agreed to accept $493.54 as settlement in full" but nowhere informs that interest could accrue or the balance could increase. (Doc. 7-4).

At all relevant times, Defendant was acting as a "debt collector" as the term is defined under by the FDCPA and was attempting to collect a "debt" as the term is defined by the FDCPA. (Doc. 6).

III. Discussion

In the complaint, Plaintiff alleges that the April 13, 2012 collection letter was subject to two interpretations because it did not explain that interest would continue to accrue on the unpaid principal balance and, therefore, violated 15 U.S.C. §§ 1692e(2)(A) and 1692e(10). (Doc. 1-3, ¶¶ 12-17). Said sections prevent a debt collector from using any false, deceptive, or misleading representation or means to collect or attempt to collect a debt including false representation of the character, amount, or legal status of any debt. 15 U.S.C. §§ 1692e(2)(A) and 1692e(10). Also in the complaint, Plaintiff cites to Michalek v. ARS National Systems, Inc., 2011 U.S. Dist. LEXIS 142976 (M.D. Pa. 2011), which holds that four collection letters, which "did not state the date on which the amount due was calculated, and did not explain that interest would continue to accrue on the unpaid principal," were "subject to two different interpretations as to the accumulation of interest, rendering them deceptive under § 1692e(10)." 2011 U.S. Dist. LEXIS 142976, *11.

In its motion for summary judgment, Defendant argues that even the least sophisticated debtor¹, having been informed by Defendant in the prior February 28, 2012 letter that the balance was subject to accrual of interest, would be put on notice and could not perceive the balance listed in the April 13, 2012 letter to be "static." (Doc. 8, pp. 10-12). Defendant states that it is not arguing against the logic in Michalek, but contends that because its initial collection letter disclosed that interest was accruing, its April 13, 2012 letter could not be construed as deceptive or misleading. (Doc. 8, p. 13).

In her brief in support of her motion for summary judgment, Plaintiff argues that the Michalek Court viewed each letter in isolation and argues the same should be done here. (Doc. 12, p. 12). Plaintiff argues that non-sophisticated consumers could be receiving a voluminous amount of messages and calls from debt collectors and it would be an unreasonable burden to expect consumers to recall prior communications. (Doc. 12, p. 12). Plaintiff cites multiple cases in which courts found that consumers should not be expected to draw connections between separate communications. (Doc. 12, p. 13), citing Foti v. NCQ Fin. Svs., Inc., 424 F. Supp. 2d 643 (S.D.N.Y. 2006), Drossin v. Nat'l Action Fin. Servs., Inc., 641 F. Supp. 2d 1314 (S.D. Fl. 2009), Kimball v. Frederick J. Hanna & Associates, P.C., No. 10-130, 2011 WL 3610129, at *4 (D.C. Minn. Aug. 15, 2011), Fields v. Wilber Law Firm, P.C., 383 F.3d 562, 566 (7th Cir. 2004), Smith v. Am. Rev. Corp., No. 2:04-CV-00199-PRC, 2005 WL 1162906 (N.D. Ind. May 16, 2005). Plaintiff also highlights that the boilerplate language used by Defendant inthe first letter includes the language, "(if applicable to your account)," and argues that this language is "far from a concrete statement that interest will accrue," and eliminates the effectiveness of this disclosure. (Doc. 12, pp. 15-16) (emphasis in original). Plaintiff also argues that Defendant's letter did not explain that interest would accrue until further notice and when reading the second letter the consumer has no way of knowing if the interest is still accruing. (Doc. 12, p. 16). Lastly, Plaintiff argues that if the consumer remembers the initial disclosure regarding accruing interest, the removal of the disclosure in the latter letter might create the impression that it was no longer applicable. (Doc. 12, p. 17).

In reply, Defendant again distinguishes the factual scenario sub judice from that in Michalek noting that nowhere in the four Michalek letters was the interest disclosure made. (Doc. 13, pp. 3-4). Defendant also distinguishes between Foti arguing that the disclosure in Foti is specifically required to be in every communication by the FDCPA under Section 1692e(l1). (Doc. 13, p.5). Defendant argues that there is no statutory justification for requiring debt collectors to add the interest disclosure to every communication. (Doc. 13, p. 6). Defendant also argues that even if the representation was deceptive or misleading it must also be material, and because Defendant was offering to settle the matter for less that 50% of what she owed, it was not material. (Doc. 13, p. 7), citing Rogozinski v. NCO Fin. Svs., 2012 U.S. Dist. LEXIS 153894 (E.D. Pa. 2012). In reply, Defendant also raises concerns that Plaintiff is now raising a new claim that the first February 28, 2012 letter also is a violation of the FDCPA.²

In reply, Plaintiff again argues that the Michalek Court considered each letter individually. Plaintiff states that the FDCPA does not require a debt collector to make an interest disclosure in every communication but the FDCPA does prevent a debt collector from mischaracterizing the amount of a debt in any communication. (Doc. 14, p. 3). Plaintiff again argues that a consumer should not be required to remember a disclosure made weeks earlier. (Doc. 14, p. 4). Defendant maintains that the misrepresentation is material, and in response to Defendant's argument that the letter was an offer to settle the debt at less than 50%, points out the Michalek Court addressed that argument and determined that the misrepresentation was material. (Doc. 14, p. 5).

The decision in Michalek is controlling in this matter.³ Both parties agree that the April 13, 2012 letter, by itself without the initial interest disclosure contained in the February 28, 2012 letter, is a violation of the FDCPA based on the Michalek decision. See (Doc. 8, p. 13). However, Defendant makes two arguments: 1) the prior letter placed Plaintiff on notice of the accumulation of interest; and 2) any deception is immaterial as the April 13, 2012 letter was an effort to settle for less than 50% of the amount owed. The Michalek decision is controlling on this Court for both...