Marshall-Mosby v. Corporate Receivables Inc.

• Decision Date: 22 February 2000
• Docket Number: PLAINTIFF-APPELLANT,DEFENDANTS-APPELLEES,No. 99-1217,MARSHALL-MOSB,99-1217
• Citation: 205 F.3d 323
• Parties: (7th Cir. 2000) JEWEL, v. CORPORATE RECEIVABLES, INC., AND JOHN DOES 1-10,
• Court: U.S. Court of Appeals — Seventh Circuit

Page 323

205 F.3d 323 (7th Cir. 2000)

JEWEL MARSHALL-MOSBY, PLAINTIFF-APPELLANT, v. CORPORATE RECEIVABLES, INC., AND JOHN DOES 1-10, DEFENDANTS-APPELLEES.

No. 99-1217

In the United States Court of Appeals For the Seventh Circuit

Argued May 10, 1999

February 22, 2000^*

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 98 C 4430--Ann Claire Williams, Judge.

Daniel A. Edelman, Cathleen M. Combs (argued), Edelman, Combs, & Latturner, Chicago, IL, for plaintiff-appellant.

David J. Chizewer (argued), Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Chicago, IL, for defendant-appellee.

Bauer, Kanne and Evans, Circuit Judges.

Kanne, Circuit Judge.

The Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. sec. 1692-1692o, mandates that debt collectors send a written validation notice containing certain information to a consumer debtor within five days after initial communication. The notice must include the amount of the debt, the name of the creditor and a statement that, unless the debtor "disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector." 15 U.S.C. sec. 1692g(a)(1)-(3). In addition, the notice must disclose that the debt collector, upon written request by the debtor within thirty days, will provide verification of the debt and/or provide the name and address of the original creditor, if different from the current creditor. 15 U.S.C. sec. 1692g(a)(4)-(5). If the debtor notifies the debt collector that the debt is disputed, or requests the name and address of the original creditor, within the thirty-day period, then the debt collector "shall cease collection of the debt" until the debt collector obtains verification of the debt or the requested information is mailed to the debtor. 15 U.S.C. sec. 1692g(b).

On March 18, 1998, plaintiff Jewel Marshall-Mosby received a one-page form collection letter from defendant Corporate Receivables, Inc. ("CRI") that stated in pertinent part:

*** THIS HAS BEEN SENT TO YOU BY A COLLECTION AGENCY ***

THE ABOVE ACCOUNT HAS BEEN PLACED WITH THIS OFFICE FOR IMMEDIATE COLLECTION. IF WE DO NOT RECEIVE THE BALANCE IN FULL OR HEAR FROM YOU, WE WILL BEGIN AGGRESSIVE COLLECTION PROCEDURES TO RECOVER THIS DEBT. PROTECT YOUR CREDIT--YOUR MOST VALUABLE ASSET.

UNRESOLVED QUESTIONS REGARDING COLLECTION AGENCY LAW OR PRACTICE MAY BE SENT TO THE STATE BANKING DEPARTMENT, STATE OF ARIZONA, 2910 N. 44TH STREET STE. 310, PHOENIX, AZ 85018.

FOR EACH CHECK THAT IS RETURNED DUE TO NON-SUFFICIENT FUNDS, THERE WILL BE A $15.00 SERVICE CHARGE.

THIS IS AN ATTEMPT TO COLLECT A DEBT. ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE.

UNLESS YOU NOTIFY THIS OFFICE WITHIN THIRTY DAYS AFTER RECEIVING THIS NOTICE THAT YOU DISPUTE THE VALIDITY OF THE DEBT OR ANY PORTION THEREOF, THIS OFFICE WILL ASSUME THIS DEBT IS VALID. IF YOU NOTIFY THIS OFFICE WITHIN THIRTY DAYS FROM RECEIVING THIS NOTICE, THIS OFFICE WILL OBTAIN VERIFICATION OF THE DEBT OR OBTAIN A COPY OF A JUDGMENT AND MAIL YOU A COPY OF SUCH JUDGMENT OR VERIFICATION. IF YOU REQUEST THIS OFFICE WITHIN THIRTY DAYS AFTER RECEIVING THIS NOTICE, THIS OFFICE WILL PROVIDE YOU WITH THE NAME AND ADDRESS OF THE ORIGINAL CREDITOR, IF DIFFERENT FROM THE CURRENT CREDITOR.

Marshall-Mosby does not dispute that the collection letter which she received from CRI contained the validation notice required by the FDCPA.

On July 20, 1998, Marshall-Mosby filed her complaint in district court against CRI and John Does 1-10 claiming that the letter violated 15 U.S.C. sec. 1692g under the FDCPA because language in the letter contradicts and "overshadows" the disclosures required by the FDCPA. A copy of the CRI letter was appended to the complaint as the lone exhibit. The complaint identified defendants John Does 1-10 as unnamed officers, directors and employees of CRI personally involved in the execution of the letter. On November 6, 1998, CRI filed a motion to dismiss for failure to state a claim upon which relief can be granted under Rule 12(b)(6) of the Federal Rules of Civil Procedure.

On January 21, 1999, the district court granted CRI's motion to dismiss. It ruled that the CRI letter "does not create the confusion and contradiction that other collection letters struck down in this court have" and "even the most unsophisticated consumer would know that other options, besides immediate payment, exist." Plaintiff appealed the district court's Rule 12(b)(6) dismissal, and we affirmed the dismissal in Marshall-Mosby v. Corporate Receivables, Inc., 194 F.3d 830 (7th Cir. 1999).

A month later, the opinion in Walker v. National Recovery, Inc., 200 F.3d 500 (7th Cir. Dec. 21, 1999), was circulated to all judges of this court in regular active service pursuant to Circuit Rule 40(f). A majority did not favor a rehearing en banc on the question addressed in Walker, concerning the application of Rule 12(b)(6) of the Federal Rules of Civil Procedure in FDCPA cases.¹ As a result, the original decision in this case was rendered inconsistent with the approach approved by a majority of the court in the Rule 40(f) circulation of Walker. Therefore, on December 21, 1999, we vacated our original affirmance and granted rehearing in light of Walker. For the reasons presented in the following discussion, we reverse dismissal under Rule 12(b)(6) and remand to the district court.

I. Analysis

We review de novo a district court's decision to grant a motion to dismiss under Rule 12(b)(6), accepting the well-pleaded allegations in the complaint as true and drawing all reasonable inferences in favor of the plaintiff. See Porter v. DiBlasio, 93 F.3d 301, 305 (7th Cir. 1996). Dismissal under Rule 12(b)(6) is proper only where the plaintiff can prove no set of facts that would entitle him to relief. See Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Porter, 93 F.3d at 305.

Marshall-Mosby does not allege that the CRI letter omits the required validation notice. Instead, she claims that additional language in the letter contradicts and "overshadows" the validation notice and thus violates the FDCPA. Indeed, we have held that a violation of the FDCPA occurs when a dunning letter is confusing to the unsophisticated reader, even if the letter technically complies with the FDCPA by including the required validation notice. See Bartlett v. Heibl, 128 F.3d 497 (7th Cir. 1997); Chauncey v. JDR Recovery Corp., 118 F.3d 516 (7th Cir. 1997); Avila v. Rubin, 84 F.3d 222 (7th Cir. 1996). Debt collectors "may not defeat the statute's purpose by making the required disclosures in a form or within a context in which they are unlikely to be understood by the unsophisticated debtors who are the particular objects of the statute's solicitude." Bartlett, 128 F.3d at 500; see also Russell v. Equifax A.R.S., 74 F.3d 30, 34-35 (2d Cir. 1996); Graziano v. Harrison, 950 F.2d 107, 111 (3d Cir. 1991); Swanson v. Southern Or. Credit Serv., 869 F.2d 1222, 1225 (9th Cir. 1988). The key consideration is "that the unsophisticated consumer is to be protected against confusion whatever form it takes." Bartlett, 128 F.3d at 500; see also Gammon v. GC Servs. Ltd. Partnership, 27 F.3d 1254, 1257 (7th Cir. 1994). In analyzing dunning letters under the FDCPA, the critical question is "whether a dunning letter is confusing." See Johnson v. Revenue Management Corp., 169 F.3d 1057, 1060 (7th Cir. 1999).

Marshall-Mosby contends that dismissal was improper because a plaintiff alleging that a collection letter is confusing...