Poirier v. Alco Collections, Inc.
| Decision Date | 17 March 1997 |
| Docket Number | No. 95-31237,95-31237 |
| Citation | 107 F.3d 347 |
| Parties | Dixie Vidrine POIRIER, Plaintiff-Appellant, v. ALCO COLLECTIONS, INC. and James Allen, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Garth Jonathan Ridge, Baton Rouge, LA, Richard John Rubin, Santa Fe, NM, Joanne S. Faulkner, New Haven, CT, for Plaintiff-Appellant.
Charles Eugene Daspit, Shoemaker, Lazarre, Daspit & Blackwell, Baton Rouge, LA, for Defendants-Appellees.
Appeal from the United States District Court for the Middle District of Louisiana.
Before HIGGINBOTHAM, DUHE and BENAVIDES, Circuit Judges.
Dixie Vidrine Poirier sued Alco Collections, Inc., and Alco's president, James Allen, for violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. The district court granted summary judgment in favor of Alco and Allen, and Poirier appealed. Because of an intervening Louisiana Court of Appeals decision, we reverse the district court and remand.
Poirier allegedly owed Savoy Plaza Apartments $1655.00 for three months' unpaid rent and late fees on her lease. Savoy Plaza assigned Poirier's debt to Alco Collections, Inc., a collection agency. Alco promised to make a good faith effort to collect the debt, and agreed to pay Savoy Plaza fifty percent of any sum it collected from Poirier.
Alco mailed a demand to Poirier demanding payment for three months' rent and late fees, plus an additional $68 for the court costs of an eviction proceeding brought earlier by Savoy Plaza. Poirier did not pay and Alco, through its president, James Allen, filed suit against Poirier in Baton Rouge City Court. Neither Allen nor Alco is an attorney at law. The complaint against Poirier claimed $1655.00, and did not include the additional $68 in court costs Alco had initially demanded. Allen later claimed it inadvertently omitted the $68 fee from its complaint.
Poirier answered Alco's petition, denying she was indebted to Savoy Plaza and contending that Savoy Plaza's assignment to Alco was invalid. She then filed a peremptory exception of no cause of action, arguing that Savoy Plaza's assignment was void as it purported to authorize Alco, a lay entity, to take legal action against her. The city court denied the motion, and Poirier applied for supervisory writs with the Louisiana Court of Appeals, alleging the city court erred in denying the exception.
While the state court case proceeded, Poirier filed this suit in federal district court against Alco and Allen, alleging violations of the FDCPA. She claimed Alco and Allen had engaged in the unauthorized practice of law by filing suit against her. She also contended Alco and Allen misrepresented the amount of her alleged debt when they demanded one sum in the demand letter and another in the complaint.
Poirier moved for partial summary judgment against both defendants, and Alco and Allen responded with a cross motion for summary judgment. The district court held in Poirier now appeals the judgement of the district court.
favor of Alco and Allen. It found the assignment of a debt to a collection agency, and the collection agency's subsequent lawsuit on that debt, was not against the law or public policy of Louisiana. The court then found Poirier failed to establish Alco and Allen made a false representation. It stated that even if the defendants misrepresented the amount of the debt by inadvertently omitting the $68 eviction fee from the petition, 15 U.S.C. § 1692k(c) provides debt collectors with a "bona fide error" defense.
Poirier first contends the district court erred in holding the assignment of a debt to a collection agency on a contingency fee basis is not against public policy and therefore void. Next, she claims the district court erred in finding the Collection Agency Regulation Act ("CARA"), LSA-R.S. 9:3576.1 et seq., supported its holding that the assignment of debts to collection agencies on a contingency fee basis is not against public policy. Her third claim is that the district court incorrectly found the omission of the $68 eviction fee from the state court petition was not a misrepresentation under the FDCPA. Finally, she argues this error was not protected by the "bona fide error" defense of 15 U.S.C. § 1692k(c).
Congress passed the FDCPA to eliminate abusive debt collection practices by debt collectors. 15 U.S.C. § 1692. As such, the FDCPA enumerates several practices considered contrary to that goal, and forbids debt collectors from taking such action. Poirier alleges that Alco and Allen violated both 15 U.S.C. § 1692e(5) and 15 U.S.C. § 1692e(2)(A).
Congress provided in § 1692e that:
A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:
* * * * * *
(5) The threat to take any action that cannot legally be taken....
15 U.S.C. § 1692e. Any debt collector who fails to comply with a provision of the FDCPA, with respect to any person, is liable to such person for civil damages. 15 U.S.C. § 1692k(a).
To violate § 1692e(5), Alco and Allen must have threatened to take action which they were in fact prohibited by law from taking. Poirier claims the assignment from Savoy Plaza to Alco, allowing Alco a 50% contingency fee, had an unlawful purpose under Louisiana law and was null and void. She argues that non-lawyer debt collectors who attempt to collect for clients in this manner are engaged in the unauthorized practice of law. Since Louisiana law prohibits non-lawyers from practicing law, LSA-R.S. 37:213; Duncan v. Gordon, 476 So.2d 896, 897 (La.App. 2nd Cir.1985), Alco and Allen threatened to take, and actually took, action they were not legally permitted to take.
When it granted summary judgment for Alco and Allen, the district court focused on the validity of the assignment itself under CARA. The court found CARA created a presumption that a claim assigned to a collection agency is conclusively presumed valid as long as a copy of the assignment is filed with the petition when the collector files suit, and the debtor does not object. The court reasoned that the fact that a presumption of validity of an assignment can arise, even if a non-lawyer collection agency is the party to file suit, showed that non-lawyer collection agencies filing suit to collect on debts are not against the law or public policy of Louisiana. Alco's suit therefore did not constitute the unauthorized practice of law. The district court then declined to address whether CARA infringes upon the judicial function of regulating the practice of law.
While Poirier's federal action has proceeded through the courts, her state court appeal in the original action has continued. 1 The Louisiana Court of Appeals for the First Circuit granted Poirier's application for writ of certiorari, and issued a thorough opinion which now guides our decision. Alco Collections, Inc. v. Poirier, 680 So.2d 735 (La.App. 1 Cir.1996), writ denied, --- So.2d ----, No. 96-CC-2628 (La., Dec. 13, 1996).
In its opinion, issued after briefs were filed and argument heard in this federal action, the Court of Appeals held that the act of assignment from Savoy Plaza to Alco did not convey an ownership interest in Poirier's debt. The court first stated Savoy's Act of Assignment 2 did not...
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