Savino v. Computer Credit, Inc.

• Decision Date: 21 December 1998
• Docket Number: Docket No. 98-7179
• Citation: 1998 WL 887049,164 F.3d 81
• Parties: Frank SAVINO, on behalf of himself and all others similarly situated, Plaintiff-Appellant-Cross-Appellee, v. COMPUTER CREDIT, INC., Defendant-Appellee-Cross-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

Page 81

164 F.3d 81

Frank SAVINO, on behalf of himself and all others similarly situated, Plaintiff-Appellant-Cross-Appellee, v. COMPUTER CREDIT, INC., Defendant-Appellee-Cross-Appellant.

Docket No. 98-7179.

United States Court of Appeals Second Circuit.

Argued Sept. 17, 1998.

Decided Dec. 21, 1998.

Scott N. Gelfand, New York, NY, for Appellant

Robert L. Dougherty, Garden City, NJ, for Appellee.

Before: CABRANES and POOLER, Circuit Judges, and TRAGER, District Judge. ¹

POOLER, Circuit Judge:

In this action under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C § 1692 et seq., plaintiff Frank Savino appeals from two orders of the United States District Court for the Eastern District of New York (Spatt, Judge ) that, collectively, denied his motion for class certification and significantly reduced the amount of attorney's fees that he requested. Defendant Computer Credit, Inc. cross-appeals from the district court's grant of summary judgment to Savino on his FDCPA claim, award of statutory damages and attorneys fees, and denial of sanctions against Savino and his attorney. We vacate the judgment only insofar as it ordered the payment of reduced attorney's fees and remand the matter to the district court for reconsideration of that issue. We affirm in all other respects.

BACKGROUND

Appellant Frank Savino is a resident of Hauppage, New York. Computer Credit, Inc. ("CCI") is a debt collection agency with a principal place of business in Winston-Salem, North Carolina. On August 28, 1995, CCI sent Savino a letter regarding $153.00 he owed to North Shore Hospital in Manhasset, New York. The letter lacked the "validation notice" that Section 1692g of the FDCPA requires debt collectors to send to consumers within five days of an initial communication, advising the consumer of his rights under the statute. See 15 U.S.C. § 1692g(a).

In a complaint dated October 22, 1995, Savino alleged that CCI's August 28 letter--"the first and only letter" he claimed to have received from CCI regarding the alleged debt--violated the FDCPA because, among other things, it failed to contain the required debt validation notice. Savino brought the case as a class action, on behalf of "all consumers within the State of New York who within one year prior to the filing of this In its answer, CCI alleged that it mailed an initial debt collection letter to Savino dated August 14, 1995, which contained the debt validation notice required by the statute. The August 14 letter stated, in part:

action received letters from the Defendant regarding alleged delinquent debts for medical services in violation of the FDCPA."

This notice will serve to inform you that your overdue balance with North Shore Hospital has been referred to Computer Credit, Inc. The hospital insists on immediate payment or a valid reason for your failure to make payment.

Below the body of the letter, CCI advised Savino, "PLEASE SEE IMPORTANT NOTICE ON BACK." The validation information required by Section 1692g was set forth on the back of the notice.

In a letter dated March 28, 1996, counsel for CCI wrote to Savino's attorney, advising him that under New York law, because CCI mailed the August 14, 1995, letter in the regular course of business, Savino was presumed to have received it. On this basis, CCI sought Savino's discontinuance of the action and advised that if Savino pursued the action, CCI would seek attorney's fees under the FDCPA.

Although he continued to deny receipt of the August 14, 1995, letter, Savino sought leave to amend his complaint to allege that "[u]pon information and belief, CCI mailed an earlier letter to Savino, dated August 14, 1995, which was the first communication by CCI to Savino or, at least, CCI's first letter to Savino." Savino alleged that although this letter contained the requisite debt validation notice, it nevertheless violated the FDCPA because the letter's demand for "immediate payment" overshadowed the validation notice. The magistrate judge permitted the proposed amendment. Thereafter, at a conference with the magistrate judge, Savino agreed to voluntarily discontinue his claim regarding the August 28, 1995, letter.

CCI moved for summary judgment dismissal of the complaint, and Savino cross-moved for partial summary judgment. After CCI served its motion papers, the magistrate judge granted Savino's motion for leave to amend his complaint a second time, this time to include a statement that he "received a letter from the defendant dated August 14, 1995" (emphasis added). The second amended complaint alleged that "[w]hile Savino, initially, did not recall receiving the letter, he has accepted CCI's repeated representations that such letter was, in fact, sent, and, as well, admits that he is presumed to have received the letter as a matter of law."

This second amendment apparently came shortly after Savino's deposition, at which he testified that he did receive the August 14 letter. Savino testified, in part:

Q: Is it fair to say that in your prior testimony that you believe that you received an August 14, 1995 letter from CCI, addressed to you?

A: Yes, I believe, yes....

Q: Any statement that you did not receive the August 14, 1995 letter from CCI would be false, according to your recollection, your best recollection?

A: Yes.

On April 11, 1997, the district court denied CCI's motion for summary judgment and granted Savino's cross-motion for partial summary judgment, finding that the August 14, 1995, letter violated the FDCPA because the language in the letter demanding "immediate payment" contradicted the language of the 30-day debt validation notice and thus was misleading to consumers. See Savino v. Computer Credit, Inc., 960 F.Supp. 599, 604 (E.D.N.Y.1997).

In May 1997, Savino moved for class certification. CCI opposed the motion, arguing that plaintiff's counsel's "egregious misrepresentations" to the court regarding receipt of the August 14 letter and his failure to conduct appropriate discovery made Savino an inadequate class representative. The district court concluded that Savino was an inappropriate class representative and denied his motion for class certification. See Savino v. Computer Credit, Inc., 173 F.R.D. 346, 357 (E.D.N.Y.1997).

Thereafter, Savino moved for an award of statutory damages under the FDCPA; $39,265.49 in attorney's fees; and $316.74 in disbursements. CCI cross-moved for sanctions Savino appeals from the district court's orders denying his motion for class certification and substantially reducing the amount of attorney's fees requested. CCI cross-appeals from the orders denying its motion for summary judgment; granting Savino's motions for summary judgment, statutory damages, and attorney's fees; and denying its requests for sanctions and attorney's fees.

and attorney's fees. The district court awarded Savino $500.00 in statutory damages, $3,675.00 in attorney's fees, and $120.00 in costs and denied CI's cross-motion for sanctions and attorney's fees. See Savino v. Computer Credit, Inc., 990 F.Supp. 159, 170-71 (E.D.N.Y.1998).

DISCUSSION

I. Summary judgment on FDCPA claim

When an independent debt collector solicits payment from a consumer, it must--within five days of the initial communication--provide the consumer with a detailed validation notice which includes the following information:

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty 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;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

15 U.S.C. § 1692g(a). When determining whether Section 1962g has been violated, courts use "an objective standard, measured by how the 'least sophisticated consumer' would interpret the notice received from the debt collector." Russell v. Equifax A.R.S., 74 F.3d 30, 34 (2d Cir.1996) (citing, inter alia, Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir.1993)). "When a notice contains language that 'overshadows or contradicts' other language informing a consumer of her rights, it violates the Act." Id. (citing Graziano v. Harrison, 950 F.2d 107, 111 (3d Cir.1991)). "[T]he juxtaposition of two inconsistent statements renders the notice invalid under § 1692g." Id. A debt collection notice is overshadowing or contradictory if it fails to convey the validation information clearly and effectively and thereby makes the least sophisticated consumer uncertain as to her rights. See id. at 35.

The district court concluded that CCI's claim that "the hospital demands immediate payment" contradicted the validation notice on the reverse. Savino, 960 F.Supp. at 604. CCI argues that the district court erred in failing to construe the language in its proper context as part of a larger sentence that read, "The hospital insists on immediate payment or a valid reason for your failure to make payment " (emphasis added). CCI argues that because this sentence allowed the consumer to tender a reasonable excuse as an alternative to immediate payment, the notice did not violate the statute.

In light of this Court's precedent, including Russell, we conclude that CCI's payment notice violates the FDCPA because the language on the front of the notice, when read in conjunction with the statutory debt validation on the reverse side, would "make the least...