Schroyer v. Frankel

• Decision Date: 24 September 1999
• Docket Number: No. 98-4114,98-4114
• Citation: 197 F.3d 1170
• Parties: (6th Cir. 1999) Michael G. Schroyer; Gail R. Schroyer, Plaintiffs-Appellants, v. Kenneth P. Frankel; Gerald M. Smith Company, L.P.A., d/b/a Smith & Smith, Defendants-Appellees. Submitted:
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1170

197 F.3d 1170 (6th Cir. 1999)

Michael G. Schroyer; Gail R. Schroyer, Plaintiffs-Appellants, v. Kenneth P. Frankel; Gerald M. Smith Company, L.P.A., d/b/a Smith & Smith, Defendants-Appellees.

No. 98-4114

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Submitted: September 24, 1999

Decided and Filed: December 2, 1999

Appeal from the United States District Court for the Northern District of Ohio at Cleveland, Nos. 97-01627; 97-01628--Jack B. Streepy, Magistrate Judge. [Copyrighted Material Omitted] Keith M. Herbers, Middleburg Heights, Ohio, for Appellants.

Kenneth P. Frankel, Timothy T. Smith, SMITH & SMITH, Avon Lake, Ohio, for Appellees.

Before: MERRITT and CLAY, Circuit Judges; WISEMAN, District Judge. ^*

OPINION

CLAY, Circuit Judge.

Plaintiffs Michael G. Schroyer and Gail R. Schroyer appeal an order entered by the district court on August 18, 1998, entering judgment after a trial in favor of Defendants Kenneth P. Frankel and Gerald M. Smith Co., L.P.A., in this case alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"), and the Ohio Consumer Sales Practices Act, Ohio Rev. Code § 1345.01 et seq. ("OCSPA"). For the reasons set forth below, we AFFIRM.

I.

Plaintiff Gail Schroyer ("Gail"), owned and lived in a home in Elyria, Ohio, with her son, Plaintiff Michael Schroyer ("Michael"). In June of 1996, Gail discovered a leak in her water line, and contacted Michael Williams of Alexander's Sewer & Plumbing Company ("ASAP") for repairs. ASAP workers arrived at the Schroyer residence later that month to repair the leak. Because Gail was away, Michael signed the ASAP contract on her behalf. After ASAP finished installing a new water line, Gail, who had returned by the time the work was finished, wrote a check to ASAP for the contract price of $1,004.60, which covered a charge of $950.00 plus tax. Afterwards, Gail discovered damage to her new vinyl floor covering and to the sidewalk. Additionally, a city inspector found that ASAP had done the job improperly, and ordered ASAP to dig up the water line and place it deeper. Based on this, Gail stopped payment on the check to ASAP.

In accordance with the city inspector's instructions, ASAP installed a new water line at the Schroyer residence. After it completed this work, ASAP left a second invoice for Gail in the amount of $1,954.60, representing the unpaid balance of $1,004.60, a charge of $50 for the stop payment order on Gail's check, and an additional charge of $900 for labor, materials, and equipment costs relating to work performed on the second visit. When Gail refused to pay the second invoice, Williams, proceeding pro se on behalf of ASAP, filed a small claims petition seeking $1,954.60 in damages in Elyria Municipal Court. Gail retained an attorney who filed a motion to transfer the small claims petition to the regular docket of the Elyria Municipal Court. Williams retained Defendant Kenneth Frankel, an attorney who has practiced law for twenty-two years and who is employed by Defendant Gerald M. Smith Co., L.P.A., a professional corporation engaged in the practice of law under the fictitious name of "Smith & Smith." In the fall of 1996, Frankel obtained an order dismissing Williams' complaint without prejudice.

Defendants filed suit in the Elyria Municipal Court on behalf of ASAP against Michael, and amended their complaint to add Gail as a defendant. This complaint sought damages in the amount of $1,954.60 for breach of contract or, in the alternative, unjust enrichment. Michael filed an answer raising various defenses but alleging no violations of the OCSPA. Gail filed an answer and a counterclaim, raising various defenses and alleging violations of the OCSPA. The Elyria Municipal Court granted judgment in favor of ASAP and against Gail in the amount of $1,054.00 and on the counterclaim. The court granted judgment in favor of Michael and against ASAP on the grounds that he had merely acted as an agent for Gail.

During the municipal court litigation, Michael and Gail filed separate suits against Defendants in the United States District Court; these complaints alleged numerous violations of the FDCPA and the OCSPA. The district court consolidated the cases. Plaintiffs filed a motion for partial summary judgment, but the district court denied the motion for partial summary judgment on the grounds that there was a genuine issue of material fact as to whether Defendants were "debt collectors" under the FDCPA. After a bench trial, the district court ruled in favor of Defendants and dismissed Plaintiffs' claims.

In doing so, the district court found that Smith & Smith handled fifty to seventy-five debt collection cases annually, that debt collection comprised less than two percent of the firm's overall practice, and that the firm did not hire any paralegals or other non-attorneys nor use any computer programs for debt collection purposes. The district court further found that Frankel handled 389 cases in one year, that twenty-nine, or 7.4%, of these cases were debt collection cases, and that his debt collection cases came from business clients he represented in matters not involving debt collection. The district court further noted the absence of evidence that Defendants handled debt collection for a major client on an ongoing basis, and the absence of evidence as to the total fees collected by Defendants in debt collection cases. On the basis of these findings, the district court determined that Defendants were neither "debt collectors" under the FDCPA or "suppliers" under the OCSPA, and concluded that defensive collateral estoppel partially precluded Gail's claims. Plaintiffs filed timely notice of appeal to this Court.

II.

We review legal conclusions of the district court de novo, see Kuper v. Iovenko, 66 F.3d 1447, 1453 (6th Cir. 1995), but review the factual findings of a district court following a bench trial for clear error. See American Postal Workers Union v. United States Postal Serv., 871 F.2d 556, 561 (6th Cir. 1989). When factual findings rest upon credibility determinations, this Court affords great deference to the findings of the district court. See Bartling v. Fruehauf Corp., 29 F.3d 1062, 1067 (6th Cir. 1994).

The FDCPA provides that "[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. §1692e (1994). The statute defines "debt collector" as "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) (1994). Construing these provisions, the Supreme Court has held that attorneys can qualify as "debt collectors" under the FDCPA, and held that FDCPA requirements apply to "attorneys who 'regularly' engage in consumer-debt-collection activity, even when that activity consists of litigation." Heintz v. Jenkins, 514 U.S. 291, 298 (1995). This Court has acknowledged that the FDCPA can apply to attorneys who file lawsuits on behalf of clients to collect debts allegedly owed by consumers, see Wadlington v. Credit Acceptance Corp., 76 F.3d 103 106 (6th Cir. 1996), but it has not fully analyzed what constitutes "regularly" collecting or attempting to collect debts in the context of an attorney or law firm. In ruling against Plaintiffs, the district court found that Defendants were not "debt collectors" under the FDCPA because Plaintiffs failed to meet their burden of proving that Defendants "regularly" engage in debt collection activities. We apply traditional principles of statutory construction to determine that the district court ruled correctly in this matter.

When interpreting the FDCPA, we begin with the language of the statute itself, see Consumer Prod. Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980), since the intent of Congress is "best determined by the statutory language it chooses." Sedima, S.P.R.L. v. Imrex, 473 U.S. 479, 495 n.13 (1985). In so doing, this Court must consider the language and design of the statute as a whole as well as the specific provision at issue. See K-Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291 (1988). The term "regularly" means "[a]t fixed and certain intervals, regular in point of time. In accordance with some consistent or periodical rule of practice." Black's Law Dictionary 1286 (6th ed. 1990). The term "regular" means "[u]sual, customary, normal or general . . . . Antonym of 'casual' or 'occasional.'" Id. at 1285. These definitions suggest that an individual or entity must have more than an "occasional" involvement with debt collection activities to qualify as a "debt collector" under the FDCPA. See Mertes v. Devitt, 734 F. Supp. 872, 874-75 (W.D. Wis. 1990); see also Nance v. Petty, Livingston, Dawson & Devening, 881 F. Supp. 223, 225 (W.D. Va. 1994).

Furthermore, considering § 1692a(6) as a whole, it is clear that Congress intended the "principal purpose" prong to differ from the "regularly" prong of its definition of "debt collector." See Garrett v. Derbes, 110 F.3d 317, 318 (5th Cir. 1997) (per curiam). Thus, one "may regularly render debt collection services, even if these services are not a principal purpose of his business." Id. As another court has explained, "the word 'regular' is not synonymous with the word 'substantial.' Debt collection services may be rendered 'regularly' even though these services may amount to a small fraction of the firm's total activity." Stojanovski v. Strobl & Manoogian, P.C., 783 F. Supp. 319, 322 (E.D. Mich. 1992). Under this interpretation of "regular" or "regularly," an attorney may be a "debt collector" under the FDCPA even when the ratio of his debt collection efforts to other legal efforts is small. Id.

Ordinary interpretations of the...