Piper v. Portnoff Law Associates, Ltd.

• Decision Date: 31 January 2005
• Docket Number: No. 03-4399.,03-4399.
• Citation: 396 F.3d 227
• Parties: Bridget A. PIPER, on behalf of herself and all others similarly situated v. PORTNOFF LAW ASSOCIATES, LTD.; Michelle R. Portnoff, Esq.; Dawn M. Schmidt, Esq., Appellants.
• Court: U.S. Court of Appeals — Third Circuit

396 F.3d 227

Bridget A. PIPER, on behalf of herself and all others similarly situated v. PORTNOFF LAW ASSOCIATES, LTD.; Michelle R. Portnoff, Esq.; Dawn M. Schmidt, Esq., Appellants.

No. 03-4399.

United States Court of Appeals, Third Circuit.

Argued October 5, 2004.

Opinion Filed January 31, 2005.

COPYRIGHT MATERIAL OMITTED

James W. Christie (Argued), William F. McDevitt, Christie, Pabarue, Mortensen & Young, Philadelphia, PA, for Appellants.

David A. Searles (Argued), Michael D. Donovan, Donovan Searles, Philadelphia, PA, for Appellee.

Before SLOVITER, BECKER and STAPLETON, Circuit Judges.

OPINION OF THE COURT

STAPLETON, Circuit Judge.

This appeal presents the certified question of whether the requirements of the Fair Debt Collections Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"), apply to the defendants' efforts to collect municipal water obligations of the plaintiff, Bridget Piper. We hold that they do.

I.

Until 2002, the City of Bethlehem ("City") contractually retained the private law firm of Portnoff Law Associates, Ltd. ("PLA") to collect payment for overdue water and sewer obligations. The City notified PLA of delinquent water and sewer assessments, and PLA then contacted homeowners in attempts to collect on those claims.

On February 20, 2002, the City notified PLA of a delinquent water service obligation of Bridget and Michael Piper at 828 Kossuth Street, Bethlehem, Pennsylvania, in the amount of $252.71. PLA then sent Mr. and Mrs. Piper the following correspondence:

a. On February 21, 2002, PLA mailed a letter on City stationery and addressed to Mr. and Mrs. Piper personally, advising them that they were delinquent in water fees owed to the City in the sum of $252.75. The letter stated: "you are urged to make your payment to [PLA]," and was signed "Very truly yours, City of Bethlehem." App. at R105a; R267a-268a.

b. On April 4, 2002, PLA mailed a second letter — this time on PLA letterhead — directly to Mr. and Mrs. Piper. This letter advised them that they were "delinquent in the payment of [their] water fees," and that they owed the City $404.37, which included the delinquent water bill, interest, penalties and attorneys' fees. The letter stated "[u]nless payment of the above amount is received by [PLA] within ten (10) days of the date of this letter, a lien will be filed against your property."¹ It further advised as follows: "You are hereby advised that City of Bethlehem will avail itself of all legal remedies until it receives payment in full. Legal recourse will result in substantial additional cost to you and may result in the Sheriff's sale of your property.... Payment must be made in full." App. at R108a (emphasis in original).

c. On May 9, 2002, PLA mailed a third letter to Mr. and Mrs. Piper. Enclosed with the letter was a copy of a municipal lien "for non-payment of water fees ... assessed against the [Pipers] and described properties ..." The letter advised Mr. and Mrs. Piper that the sum of $567.07 was due to clear the lien (this sum included additional attorneys' fees and a filing fee), and warned that "unless your check in that amount is received by [PLA] within fifteen (15) days," PLA would initiate a Sheriff's Sale of the Pipers' home. The letter concluded by urging Mr. and Mrs. Piper to "pay the full amount above to this office within the time period specified." App. at R109a.

d. PLA sent three more letters addressed personally to Mr. and Mrs. Piper, dated September 16, 2002, October 3, 2002 and November 8, 2002. Each letter demanded payment of a balance due. The October 3, 2002 letter stated "I wanted to afford you a final opportunity to pay the balance before further legal action occurs with additional charges assessed. This balance must be paid within ten days of the date of this letter..." The November 8 letter stated that PLA had been directed to file a writ of execution against the Pipers' home and that they would be given "one final opportunity to make arrangements for payment" during the ensuing thirty days. See App. at R201a; R204a; R213a.

PLA also made a number of telephone calls to the Piper residence in an effort to secure payment of the delinquent water service fees.

PLA has never disputed that the letters it sent to Mr. and Mrs. Piper failed to include the debt verification language required by § 1692(g) of the FDCPA.² App. at R33a. PLA has likewise never disputed that its letters did not state that they were sent by a debt collector, that the debt collector was attempting to collect a debt, and that any information obtained by PLA would be used for that purpose, as required by § 1692(e)(11) of the FDCPA.³ Id.

In May of 2002, PLA secured the issuance of a Writ of Scira Facias to Mr. and Mrs. Piper by the Court of Common Pleas for Northampton County, Pennsylvania. The Writ advised them of "a municipal claim for the sum of $576.03 for water fees due the City of Bethlehem" and warned that if an Affidavit of Defense were not filed in 15 days, "judgment may be entered against you for the whole claim." App. at R189a; R195a; R196a. In July and August 2002, Mr. and Mrs. Piper made two payments to PLA, totaling $553.60. PLA applied the payments to its own fees and to costs. On October 24, 2002, Mr. and Mrs. Piper received a notice from the Court that a judgment had been entered against them in the amount of $465.77. The caption on the notice included the words "Civil Action — In Rem" without further explanation. App. at R211a. PLA filed a "Praecipe For Writ of Execution (Money Judgment)" on February 7, 2003. The Pipers' home was scheduled for a Sheriff's Sale on May 9, 2003.

On March 31, 2003, Bridget Piper filed this suit against PLA and two of its attorneys, Michelle R. Portnoff, Esq. and Dawn M. Schmidt, Esq., in the United States District Court for the Eastern District of Pennsylvania. The Complaint alleged that PLA's attempts to collect payment of water and sewer bills owed to the City violated the FDCPA and the Pennsylvania Fair Credit Extension Uniformity Act, 73 P.S. § 2270.1 et seq. ("FCEUA").⁴ The Complaint alleged that PLA violated these statutes by failing to include statutory disclosures required for communications sent to consumers, by falsely representing or implying that the letters were from an attorney, and by collecting and attempting to collect fees that were not permitted by the agreement creating the debt nor permitted by law. The Complaint sought class certification, declaratory and injunctive relief, and damages under the relevant statutes.

The District Court issued a preliminary injunction foreclosing PLA from taking any action to facilitate the Sheriff's Sale of Mrs. Piper's home, see Piper v. Portnoff Law Assoc's, 262 F.Supp.2d 520, 527-30 (E.D.Pa.2003), and certified a class under both the FDCPA and the FCEUA/CPL. Piper v. Portnoff Law Assoc's., Ltd., 215 F.R.D. 495 (E.D.Pa.2003); Piper v. Portnoff Law Assoc's, 216 F.R.D. 325 (E.D.Pa.2003).

Mrs. Piper moved for partial summary judgment on the issue of PLA's liability as a debt collector under the FDCPA. The Plaintiffs argued that the delinquent water and sewer bills qualified as debt under the FDCPA, and, therefore, PLA's attempts to collect those debts are governed by the requirements of the FDCPA. PLA argued that its decision to execute on the municipal lien rather than proceed in personam against the individuals removed its collection efforts from the purview of the FDCPA. The District Court granted Mrs. Piper's motion by order dated July 31, 2003,⁵ but certified for interlocutory appeal the issue of "whether the FDCPA applies to defendants' practice." App. at R41a. We granted petitions for permission to appeal.⁶

II.

The District Court had jurisdiction over this action pursuant to 28 U.S.C. §§ 1331 and 1367. We have jurisdiction over this appeal pursuant to 28 U.S.C. 1292(b). Our review is plenary. Suders v. Easton, 325 F.3d 432, 441 (3d Cir.2003); Lauderbaugh v. Hopewell Twp., 319 F.3d 568, 573 (3d Cir.2003).

III.

The FDCPA provides a remedy for consumers who have been subjected to abusive, deceptive or unfair debt collection practices by debt collectors. Pollice v. Nat'l Tax Funding, L.P., 225 F.3d 379, 400 (3d Cir.2000) (citing Zimmerman v. HBO Affiliate Group, 834 F.2d 1163, 1167 (3d Cir.1987)). The "threshold requirement of the FDCPA is that the prohibited practices are used in an attempt to collect a `debt.'" Id.; see 15 U.S.C. §§ 1692e-f. The FDCPA defines "debt" as "any obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment." 15 U.S.C. § 1692a(5). "The term `consumer' means any natural person obligated or allegedly obligated to pay any debt." 15 U.S.C. § 1692a(3).

A "debt collector" under the statute is "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6). Attorneys who regularly engage in debt collection or debt collection litigation are covered by the FDCPA, and their litigation activities must comply with the requirements of that Act. Heintz v. Jenkins, 514 U.S. 291, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995).

The provisions of the FDCPA that Piper relied upon in her motion for partial summary judgment require the inclusion of certain information in early communications "with a consumer in connection with the collection of any debt." 15 U.S.C. §§ 1692g and e.⁷ Given PLA's concession that it did not provide the information required by these sections of the FDCPA, the issue for decision is whether PLA's communications to Piper were communications by a "debt collector" with a "consumer" i...