Sayyed v. Wolpoff & Abramson

• Decision Date: 09 May 2007
• Docket Number: No. 06-1458.,06-1458.
• Citation: 485 F.3d 226
• Parties: Farid M. SAYYED, Plaintiff-Appellant, v. WOLPOFF & ABRAMSON, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

485 F.3d 226

Farid M. SAYYED, Plaintiff-Appellant, v. WOLPOFF & ABRAMSON, Defendant-Appellee.

No. 06-1458.

United States Court of Appeals, Fourth Circuit.

Argued March 15, 2007.

Decided May 9, 2007.

ARGUED: Ernest Paul Francis, Arlington, Virginia, for Appellant. Ronald Scott Canter, Wolpoff & Abramson, Rockville, Maryland, for Appellee. ON BRIEF: Anne S. Cruz, Wolpoff & Abramson, Rockville, Maryland, for Appellee.

Before WILKINS, Chief Judge, and WILKINSON and MOTZ, Circuit Judges.

Reversed and remanded by published opinion. Judge WILKINSON wrote the opinion, in which Chief Judge WILKINS and Judge MOTZ joined.

OPINION

WILKINSON, Circuit Judge.

This case involves claims under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. (2000). Farid Sayyed sued the law firm Wolpoff & Abramson ("W & A") under the FDCPA for actions taken in W & A's effort to collect a debt from Sayyed by means of a suit in Maryland state court. Defendant W & A moved to dismiss for failure to state a claim, arguing that it enjoyed common law litigation immunity from the FDCPA. The district court agreed and dismissed Sayyed's suit on the ground that absolute immunity protected W & A. Sayyed appealed. Because the FDCPA, not common law, must govern the disposition of this action, we reverse the district court's judgment and remand the case for further consideration.

I.

W & A is a law firm regularly practicing in the field of consumer debt collection. Discover Bank, the issuer of the Discover Credit Card, retained W & A to pursue an action against Sayyed for defaulted credit card debt. On behalf of Discover Bank, W & A sued Sayyed in Maryland state court to collect the balance due.

After W & A moved for summary judgment in the state collection suit, Sayyed sued W & A in federal court, alleging that W & A violated the FDCPA in pursuing the state action.¹ Sayyed alleged FDCPA violations arising from W & A's interrogatories to Sayyed and its summary judgment motion.

Sayyed alleged that the interrogatories failed to state that they were a communication from a debt collector, in violation of 15 U.S.C. § 1692e(11). He also alleged that the interrogatories violated § 1692e(10)'s prohibition against false representations and § 1692f's prohibition against unfair or unconscionable collection attempts by making three false statements: (1) that the trial date for the Maryland case was June 11, 2004; (2) that Sayyed had to state his grounds of refusal to answer the interrogatories under oath; and (3) that the state court could enter a default judgment against Sayyed if he did not mail answers to W & A within thirty days after the date of service.

Sayyed alleged that W & A's motion for summary judgment contravened the FDCPA in that its false statement of the amount of Sayyed's debt violated § 1692e(2)(A), and its statement that Sayyed was liable for attorney's fees of fifteen percent of the principal balance violated § 1692e(2)(B) as a false representation and § 1692f(1) as the collection of an amount not permitted by law or expressly authorized by the agreement creating the debt.

W & A filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). W & A argued, first, that attorneys enjoy absolute common law immunity from claims based on statements made in the course of judicial proceedings. W & A also contended that, even if it was not entitled to immunity, the interrogatories and summary judgment motion were served upon Sayyed's counsel rather than Sayyed, and thus could not give rise to violations of the FDCPA. Finally, W & A argued that Sayyed's claims relating to the summary judgment motion should be dismissed because the allegedly false statements were based upon information furnished to W & A by its client, Discover Bank, and W & A as counsel had the right to rely upon that information.

The District Court orally granted W & A's motion to dismiss. It concluded that W & A enjoyed absolute immunity from the FDCPA for its interrogatories and summary judgment motion. The district court spoke at times in terms of "witness immunity," although W & A's interrogatories involved no witnesses. But the court also spoke more broadly in terms of litigation immunity, "a common law immunity from claims based on statements made in the course of judicial proceedings." J.A. at 78. It finally held that "absolute immunity obtains with regard to these statements." Id. at 82. The court alternatively dismissed Sayyed's claims relating to the summary judgment motion because of W & A's reliance on the statements of its client, Discover Bank. Finally, the court determined that attorney's fees equal to fifteen percent of the debt represented a per se reasonable fee.

Sayyed appeals. We review a dismissal for failure to state a claim de novo. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993).

II.

W & A argues that it cannot be subject to claims under the FDCPA because an absolute common law immunity attaches to "any statements made during the course of judicial proceedings." In W & A's view, the allegedly false statements in W & A's interrogatories and summary judgment motion thus cannot constitute FDCPA violations.

We cannot accept this conclusion. The FDCPA clearly defines the parties and activities it regulates. The Act applies to law firms that constitute debt collectors, even where their debt-collecting activity is litigation. W & A asks that we disregard the statutory text in order to imply some sort of common law litigation immunity. We decline to do so. Rather, "where, as here, the statute's language is plain, the sole function of the courts is to enforce it according to its terms." United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989) (internal quotation marks omitted).

A.

The statutory text makes clear that there is no blanket common law litigation immunity from the requirements of the FDCPA. First and foremost, the plain meaning of the Act's definition of "debt collector" encompasses attorneys. Section 1692a(6) of the FDCPA provides:

The term "debt collector" means 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.

The provision goes on to state six specific exceptions to this definition, none of which cover attorneys, much less attorneys specifically engaged in litigation. The exceptions cover (1) any officer or employee of a creditor collecting debts in the name of the creditor; (2) any person whose principal business is not collecting debts but who is collecting debts for another person, both of whom are related by common ownership or affiliated by corporate control; (3) any officer or employee of the United States or any state performing official duties; (4) any person attempting to serve legal process in connection with the judicial enforcement of a debt; (5) any nonprofit organization performing bona fide consumer credit counseling at the request of consumers; and (6) any person whose activity is "incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement; concerns a debt which was originated by such person; concerns a debt which was not in default at the time it was obtained by such person; or concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor." See 15 U.S.C. § 1692a(6). If Congress had wished to exempt the litigating activities of attorneys from the definition of "debt collector," it could easily have drafted a seventh exception to this effect.

W & A does not dispute that it is a law firm regularly practicing in the field of consumer debt collection, and that it fails to fit into any of the statutorily provided exceptions. Therefore, according to the plain text of the statute, W & A is a debt collector subject to the FDCPA's provisions.

The Supreme Court has expressly confirmed this reading of the FDCPA. Heintz v. Jenkins, 514 U.S. 291, 293, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995), involved a collection suit brought by a bank's law firm against Darlene Jenkins to recover on an automobile loan. George Heintz, a lawyer with the bank's firm, sent Jenkins's lawyer a letter in an attempt to settle the suit. Id. The letter gave what Jenkins claimed was a false statement of the amount she owed the bank. Id. She sued Heintz and his firm under the FDCPA, and the district court dismissed her suit for failure to state a claim, on the ground that the FDCPA did not apply to litigating lawyers. Id. at 294, 115 S.Ct. 1489.

The Seventh Circuit reversed, 25 F.3d 536, 540 (7th Cir.1994), and the Supreme Court upheld its view that "[t]he Act does apply to lawyers engaged in litigation." 514 U.S. at 294, 115 S.Ct. 1489. The Court grounded this conclusion in the FDCPA's definition of "debt collector" at § 1692a(6). The Court recognized that Heintz and his firm fell under the § 1692a(6) definition: "In ordinary English, a lawyer who regularly tries to obtain payment of consumer debts through legal proceedings is a lawyer who regularly `attempts' to `collect' those consumer debts." Id.

The Court further recognized that an earlier version of § 1692(a)(6) had provided an express exception for lawyers, which stated that the term "debt collector" did not include "any attorney-at-law collecting a debt as an attorney on behalf of and in the name of a client." Id. (citing Pub.L. 95-109, § 803(6)(F), 91 Stat. 874, 875 (1977)). In 1986, however, Congress repealed the attorney exemption. Id. (citing Pub.L. No. 99-361, 100 Stat. 768 (1986) ("[A]ny attorney who collects debts on behalf of a client shall be subject to the provisions of [the Act].")). The Court recognized the significance of Congress having repealed the attorney exemption "in its entirety,...