Riveria v. MAB Collections, Inc.

• Decision Date: 21 March 1988
• Docket Number: No. Civ. 87-1017L.,Civ. 87-1017L.
• Citation: 682 F. Supp. 174
• Parties: Cirila C. RIVERIA, as Administratrix of the Estate of Victor Riveria, deceased, Plaintiff, v. MAB COLLECTIONS, INC., d/b/a Mercantile Adjustment Bureau, Defendant.
• Court: U.S. District Court — Western District of New York

682 F. Supp. 174

Cirila C. RIVERIA, as Administratrix of the Estate of Victor Riveria, deceased, Plaintiff, v. MAB COLLECTIONS, INC., d/b/a Mercantile Adjustment Bureau, Defendant.

No. Civ. 87-1017L.

United States District Court, W.D. New York.

March 21, 1988.

Ruhi Maker, UAW, Legal Services Plan, Rochester, N.Y., for plaintiff.

Scott C. Smith, Weinstein, Vullo & Miller, Rochester, N.Y., for defendant.

DECISION AND ORDER

LARIMER, District Judge.

Defendant MAB Collections, Inc., d/b/a Mercantile Adjustment Bureau ("MAB"), was engaged by the Radiologists of the University of Rochester ("Radiologists") to collect a debt for medical services rendered to Victor Riveria, now deceased. Plaintiff, Cirila C. Riveria, Victor Riveria's widow, was appointed administratrix of the estate on July 20, 1987. According to the records of Radiologists, services were rendered to decedent on October 16, 1985 and November 4, 1985 having a value of $168.00. After certain payments were made, a balance of $80.20 remained. Services were also rendered on August 21, 1985, October 16 and 18, 1985, and November 3, 1985 in the amount of $198.00 to which certain payments were applied leaving a balance of $31.96. On or about June 12, 1986, plaintiff received the first of fifteen communications from MAB concerning the collection of these debts. All notices were in writing and addressed to "VICTOR EST RIVERA (sic)."

Plaintiff's contention in this action is that MAB's communications constitute two violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et. seq. First, plaintiff alleges that letters sent by MAB did not contain a proper validation notice as required by 15 U.S.C. § 1692g. Second, plaintiff claims that defendant's letter of December 11, 1986 "threatened the possibility of legal action," a claimed violation of 15 U.S.C. § 1692e(2)(A), (5), and (10). Plaintiff seeks statutory damages in the amount of $1000 per violation, plus attorney's fees and costs. This matter is before the court on the parties' cross motions for summary judgment.

One defense set forth by MAB is that plaintiff does not have standing to bring this action because all of the letters were mailed to the estate prior to her appointment as administratrix. MAB claims its communications were intended solely for the estate of Victor Riveria. Hence, only an administratrix, properly appointed at the time the alleged violations occurred, may bring suit. Accordingly, before discussing the merits of this case, the court must address the issue of standing.

Civil liability arises under FDCPA whenever "any debt collector who fails to comply with any provision of this subchapter with respect to any person is liable to such person...." 15 U.S.C. § 1692k (emphasis added). The liability section is couched in the broadest possible language. Recovery is not limited to "consumers" as defined at 15 U.S.C. § 1692a(3) as "any natural person obligated or allegedly obligated to pay any debt." Any person who comes in contact with proscribed debt collection practices may bring a claim. Whatley v. Universal Collection Bureau, Inc., 525 F.Supp. 1204, 1206 (N.D.Ga.1981). Therefore, plaintiff, who as administratrix of the estate of Victor Riveria received MAB's collection letters, has standing to bring an action under any provision of 15 U.S.C. § 1692.

Violation of § 1692g

Plaintiff's first claim is that the letters MAB sent to the estate of Victor Riveria did not contain a legally sufficient validation notice as required by 15 U.S.C. § 1692g. Section 1692g states:

"a debt collector shall ... send the consumer a written notice containing ... (3) a statement that unless the consumer, within 30 days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector...."

Both parties agree that there is no question of fact relative to the "validation notice" provided in MAB's letters. MAB's notice is found on the reverse side of their computer generated letters. The typeset of the lettering is smaller than that on the face of the form. The validation notice is printed with gray ink as opposed to the blue and black ink utilized on the front. Also, there is no reference on the front of the letter that the "validation notice" appears on the rear.

While the statute sets forth the necessary content of the validation notice, it does not state the specific form that the notice shall take. MAB's position is that absent a specific statutory requirement, notice on the reverse of the document in the manner set out on MAB's form letter is sufficient and proper notice. MAB relies upon a Federal Trade Commission ("FTC") "proposed commentary" to the FDCPA. This document states that: "The FDCPA imposes no requirements as to the form, sequence, location, or typesize of the notice. However, an illegible notice does not comply with this provision." 51 Fed.Reg. 8019, 8028 (1986).

This "proposed commentary" is clearly not dispositive of the issue at hand. It merely states that the statute does not address the form of the notice and notes that illegible notices are unacceptable. This commentary does not deal with the effect of "notices" on the reverse side of a debt collection communication. Furthermore, this commentary is merely a proposal. There is no indication that it has ever been released as a final commentary. Also, the commentary itself states that its contents are "only interpretations ... they are not trade rules or regulations, and therefore have no binding effect." 51 Fed. Reg. at 8020. Reliance by a party on this commentary does not prevent civil liability. 51 Fed.Reg. at 8029. Moreover, the FDCPA states: "neither the FTC nor any other agency referred to in subsection (b) of this section may promulgate trade regulation rules or other regulations with respect to the collection of debts by debt collectors as defined in this subchapter." 15 U.S.C. § 1692l(d). Thus, without clear guidance from the statute or the official regulations, we must turn to legislative intent to determine if defendant's notice violates the Act.

Congress' general intent in enacting the FDCPA was to protect consumers from a host of unfair, harassing, and deceptive debt collection practices without imposing unnecessary restrictions on ethical debt collectors. S.Rep. No. 95-382, 95th Cong., 1st Sess. 1 (1977). The legislation was necessary because debt collection abuse by third party debt collectors has become a widespread and serious national problem. Id. Collection abuse has taken many forms, including obscene or profane language, threats of violence, telephone calls at unreasonable hours, misrepresentation of a consumer's legal rights, disclosing a consumer's personal affairs to friends, neighbors, or an employer, obtaining information about a consumer through false pretense, impersonating public officials and attorneys, and simulating legal process. Congress noted that unlike creditors, who generally are restrained by the desire to protect their good will when collecting past due accounts, independent collectors are likely to have no future contact with the consumer and often are unconcerned with the consumer's opinion of them. Id.

Referring specifically to the validation notice, Congress has stated that the consumer has a right to dispute as well as obtain verification of their debts. The intent here is to eliminate the recurring problem of debt collectors dunning the wrong person or attempting to collect debts which the consumer has already paid. S.Rep. No. 95-382, 95th Cong., 1st Sess. 4 (1977). The FDCPA requires debt collectors to include the validation notice in their initial communication with consumers. 15 U.S.C. § 1692g.

The issue is whether MAB complied with the intent of the Act when it placed a required validation notice on the reverse side of its form letter without any reference to the notice on the front of the letter. In my view, this strategic placement of the notice was such that, in effect, no notice was given at all.

When MAB placed the statutorily mandated language on the reverse side of its form, it frustrated Congressional intent. Without some clearly visible reference on the front of the form to the information that appears on the rear, the consumer is denied proper notice of his right to challenge the validity of the debt. Ost v. Collection Bureau, Inc., 493 F.Supp. 701, 702-03 (D.N.D.1980).

For a notice to be sufficient it must be placed in such a way that a reasonable consumer would be aware of its message. Here, not only was the so-called notice placed on the back of the form, but there is no reference whatsoever on the front of the form to the notice. Furthermore, even if one by chance turned the form over, there is no language on the back to suggest that the printing on the reverse was a message directed to the debtor or recipient of the document. In addition, the smaller print size and the different color ink further diminish and weaken the effect of the "notice."

In an analogous case concerning the Truth and Lending Act, the Second Circuit has held that if a consumer notice is contained on the reverse side of a document, its existence must be clearly and concisely referenced on the front. Gambardella v. G. Fox & Co., 716 F.2d 104, 111 (1983) (Consumer Credit-Truth and Lending Regulations require the producer of a document to state on its front: "Notice: See Reverse Side For Important Information").

In light of the rationale of the Second Circuit's Gambardella decision and the Ost case, supra, which I find persuasive, I decline to follow the decision in Blackwell v. Professional Business Servers of Georgia, Inc., 526 F.Supp. 535 (N.D.Ga.1981), relied on by MAB, which held that a validation notice printed on the reverse side of a document was sufficient under § 1692g.

Other cases concerning the Truth and Lending Act clearly support my holding here that if a "notice" is required, it...