Seabrook v. Onondaga Bur. of Medical Economics

• Decision Date: 31 January 1989
• Docket Number: No. 88-CV-546.,88-CV-546.
• Citation: 705 F. Supp. 81
• Parties: Michael SEABROOK, Plaintiff, v. ONONDAGA BUREAU OF MEDICAL ECONOMICS, INC., Defendant.
• Court: U.S. District Court — Northern District of New York

705 F. Supp. 81

Michael SEABROOK, Plaintiff, v. ONONDAGA BUREAU OF MEDICAL ECONOMICS, INC., Defendant.

No. 88-CV-546.

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

January 31, 1989.

UAW-GM Legal Services Plan, UAW-Chrysler Legal Services Plan, Syracuse, N.Y., for plaintiff; Clifford Forstadt, of counsel.

Lombardi Devorsetz Stinziano & Smith, Syracuse, N.Y. for defendant; Bruce E. Wood, of counsel.

MEMORANDUM-DECISION AND ORDER

McCURN, Chief Judge.

Background

On approximately May 20, 1987, plaintiff, Michael Seabrook, received a letter from defendant, Onondaga Bureau of Medical Economics, Inc. ("OMBE"), a collection agency for physicians. That letter dated May 18, 1987, stated:

You have ignored our demands for payment of this account. If legal action is started by our client and judgment is obtained against you, 10% of your gross weekly wages can be deducted in satisfaction of the judgment. PLEASE DO NOT MAKE THIS ACTION NECESSARY. PAY THIS CLAIM DIRECTLY TO THIS OFFICE WITHIN FIVE (5) DAYS.

Plaintiff's Exhibit 1 (emphasis in original). The purpose of that letter was to collect a debt of $198.00, which plaintiff owed Dr. Scheider. That debt has been outstanding from 1985 to the present time.

In an effort to collect that debt, OMBE claims that it sent plaintiff two other letters demanding payment of the debt before the May 18, 1987, letter which is the subject of this litigation.¹ Plaintiff avers, however, that the May 18, 1987, letter was his only communication from OMBE either prior to or since May 20, 1987. Seabrook Affidavit (12/22/88) at par. 4.

On May 17, 1988, plaintiff commenced the present action seeking statutory damages for OMBE's alleged violations of the Fair Debt Collection Practices Act ("FDCPA"). Specifically plaintiff claims that the May 18th letter did not give him the notice required by the FDCPA and that it threatened legal action in violation of the Act. OMBE is now moving for summary judgment on several grounds. First, OMBE claims that the letter fully complied with the FDCPA. Second, OMBE contends that summary judgment is proper because plaintiff's action is time barred. Third, OMBE asserts that even if the court finds that it did somehow violate the FDCPA, it should not be held liable because such noncompliance was unintentional and resulted from bona fide error. Plaintiff has cross-moved for summary judgment basically claiming that the letter violated the FDCPA.

Discussion

I. Statute of Limitations

Plaintiff is claiming that OMBE violated § 1692e(5); § 1692e(11) and § 1692g of the FDCPA. Section 1692e(5) states that it is a violation of the FDCPA to "threaten to take any action that cannot legally be taken or that is not intended to be taken." 15 U.S.C. § 1692e(5) (West 1982). The latter two sections pertain to the content of communications from debt collectors and essentially require that debtors be given certain notification in those communications. With respect to the alleged violations of §§ 1692e(5) and 1692e(11), OMBE is contending that the violations of those sections are governed by the one year statute of limitations set forth in § 1692k(d).² Section 1692k(d) does not specifically define the date on which the violation occurs; nor did research reveal any published decisions construing this statute of limitations. There are arguably two possibilities. The violation could occur on the date the letter was sent; or, more likely, the violation could occur on the date the debtor received the communication which supposedly violated the FDCPA. Here, whichever date the violation is deemed to have occurred — May 18th when the letter was sent or May 20th when plaintiff received it — plaintiff's action was timely filed in that he filed the complaint on May 17, 1988. Thus, plaintiff's action for alleged violations of §§ 1692e(5) and (11) is not time barred by § 1692k(d).

OMBE also argues that plaintiff's claimed violation of § 1692g is governed by the one year statute of limitations just discussed, as well as by § 1692g itself, which provides:

(a) Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing

(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)(1)-(5) (West 1982) (emphasis added). Relying upon that language, OMBE asserts that because the initial communication was May 8, 1987, the violation would have occurred May 13, 1987; and because plaintiff did not file this action until May 17, 1987, plaintiff's cause of action based upon an alleged violation of § 1692g is time barred.

Plaintiff did not address this argument. The court assumes, however, that plaintiff's position is that the May 18th letter was the "initial communication," and thus this action was timely commenced. As will be discussed herein, because there is a genuine issue of material fact concerning whether the May 18th letter was an initial communication for purposes of § 1692g, OMBE's motion for summary judgment based on the statute of limitations for this claimed violation is denied.

II. Claimed Violation of § 1692e(5)

Section 1692e(5) states, in relevant part:

The following conduct is a violation of this section: ...

(5) The threat to take any action that cannot legally be taken or that is not intended to be taken.

15 U.S.C. § 1692e(5) (West 1982) (emphasis added). It is OMBE's position that because garnishment is a lawful remedy under § 5231 of the New York Civil Practice Law and Rules, and because OMBE intended to recommend such action to its client, Dr. Scheider, it did not violate § 1692e(5) as a matter of law; thus summary judgment is proper on this issue. Plaintiff contends, on the other hand, that OMBE could not legally take the garnishment action referred to in the May 18th letter, and hence that letter amounts to a per se violation of the FDCPA. Therefore, plaintiff asserts that summary judgment should be granted in his favor on this issue.

In support of its position OMBE quoted a portion of section 5231(b), which states, in part:

Where a judgment debtor is receiving or will receive earnings from any person, an income execution for installments therefrom of not more than ten percent thereof may be issued and delivered to the sheriff of the county in which the judgment debtor resides or, where the judgment debtor is a non-resident, the county in which he is employed; ....

N.Y.Civ.Prac. Law and R. § 5231(b) (McKinney Supp.1988). OMBE improperly relies upon the quoted language, however, because that statute as recited by OMBE, did not become effective until August 7, 1987 — after the letter at issue was sent to plaintiff. See, N.Y.Civ.Prac. Law & R. 5231 (McKinney Supp.1988).

In addition and more importantly, on March 27, 1987, in Follette v. Cooper, 658 F.Supp. 492 (N.D.N.Y.1987), Judge Munson declared that plaintiffs' due process rights therein were violated by the service of income executions upon judgment debtors without notice of the exemptions from garnishment under federal law and without notice of the procedures for challenging income executions provided by New York's Civil Practice Law and Rules.

On April 24, 1987, Judge Munson issued a second decision in Follette, inter alia, clarifying the notice requirements which must be given to debtors in income executions. See, Follette v. Cooper, 658 F.Supp. 514 (N.D.N.Y.1987) ("Follette II"). In defining the notice requirements for income executions in New York State, Judge Munson also delineated the amount which could legally be garnished in the event a judgment was obtained. Specifically, after April 24, 1987, a debt collector would only be entitled to garnish a debtor's gross income in accordance with the following limitations:

A. An income execution for installments from a judgment debtor's gross income cannot exceed ten percent (10%) of the judgment debtor's gross income.

B. If a judgment debtor's weekly disposable earnings are less than thirty (30) times the current federal minimum wage ($3.35 an hour), or $100.50, no deduction can be made under this income execution.

C. A judgment debtor's weekly disposable earnings cannot be reduced below the amount arrived at by multiplying thirty (30) times the current federal minimum wage ($3.35 an hour), or $100.50, under this income execution.

D. If deductions are being made from a judgment debtor's gross income under any orders for alimony, support or maintenance for family members or former spouses, and those deductions equal or exceed twenty-five percent (25%) of the judgment debtor's disposable earnings, no deduction can be made under this income execution.

E. If deductions are being made from a judgment debtor's gross income under any orders for alimony, support or maintenance for family members or former spouses, and those deductions are less than twenty-five percent (25%) of the judgment debtor's disposable earnings, deductions may be made under the income execution. However, the amount arrived at by adding the deductions

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