Smith v. Financial Collection Agencies

• Decision Date: 10 April 1991
• Docket Number: Civ. A. No. 90-120 LON.
• Citation: 770 F. Supp. 232
• Parties: Joseph D. SMITH and Deborah E. Smith, Plaintiffs, v. FINANCIAL COLLECTION AGENCIES, Defendant.
• Court: U.S. District Court — District of Delaware

770 F. Supp. 232

Joseph D. SMITH and Deborah E. Smith, Plaintiffs, v. FINANCIAL COLLECTION AGENCIES, Defendant.

Civ. A. No. 90-120 LON.

United States District Court, D. Delaware.

April 10, 1991.

O. Randolph Bragg, of UAW-GM Legal Services Plan, Newark, Del., for plaintiffs.

Phebe S. Young of Bayard, Handelman & Murdoch, Wilmington, Del., for defendant.

LONGOBARDI, Chief Judge.

This is an action for actual and statutory damages brought by Plaintiffs Joseph and Deborah Smith against Defendant Financial Collection Agencies ("FCA") alleging various violations of the Fair Debt Collections Practices Act (the "FDCPA"), 15 U.S.C. § 1692. Defendant has moved for partial summary judgment on the question of whether two letters sent to the Plaintiffs by the Defendant are in conformance with the validation notice and debt collection warning provisions of the FDCPA. The Court has jurisdiction pursuant to 15 U.S.C. § 1692k(d) and 28 U.S.C. § 1331.

I. FACTS

By correspondence dated March 4, 1989, Defendant FCA sent a letter to Plaintiffs demanding payment of a $206.45 debt allegedly due to J.C. Penney Co. Docket Item ("D.I.") 1, Exhibit ("Ex.") A. Three weeks later, by correspondence dated March 25, 1985, Defendant sent a second letter demanding payment of the alleged debt. Id., Ex. B. Defendant's employees are also alleged to have made several harassing telephone calls to the Plaintiffs. Id. at 2. During the purported telephone calls, it is alleged that Plaintiff Deborah Smith requested that Defendant cease further telephone communication but that Defendant failed to do so. Id. Defendant denies that such phone calls occurred. D.I. 14 at 3.

II. LEGAL STANDARD

Defendant has moved for partial summary judgment on the issue of whether certain language included in the letters sent by the Defendant was in conformance with 15 U.S.C. §§ 1692g and 1692e(11). Summary judgment is appropriate under Federal Rule of Civil Procedure 56(c) when the moving party establishes that there is no genuine issue of material fact that can be resolved at trial and that the moving party is entitled to a judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Materiality is determined by the substantive law which governs the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). In this inquiry, "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id. Following a determination that no disputes of material facts exist, the moving party must demonstrate that it is entitled to judgment as a matter of law. Celotex, 477 U.S. at 322, 106 S.Ct. at 2552.

Once the moving party has made and supported their motion, the "adverse party may not rest upon mere allegations or denials of the adverse party's pleading, but ... must set forth specific facts showing that there is a genuine issue for trial." Fed. R.Civ.P. 56(e). Any doubts as to the existence of genuine issues of fact will be resolved against the moving party and all inferences to be drawn from the material it submits will be viewed in the light most favorable to the party opposing the motion. Norfolk Southern Corp. v. Oberly, 632 F.Supp. 1225, 1231 (D.Del.1986) (citing Adickes v. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970)), aff'd, 822 F.2d 388 (3rd Cir.1987). If the evidentiary record supports a reasonable inference that the ultimate facts may be drawn in favor of the responding party, then the moving party cannot obtain summary judgment. In re Japanese Electronic Products Antitrust Litigation, 723 F.2d 238, 258 (3rd Cir.1983), rev'd on other grounds, 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

III. DISCUSSION

In response to Defendant's motion for partial summary judgment, Plaintiffs propound three arguments as to why partial summary judgment for the Defendant is inappropriate. Plaintiffs' first contention is that there is a genuine issue of material fact which precludes summary judgment. Plaintiffs' second contention is that the demand for payment in Defendant's correspondence impermissibly overshadows the disclosure of Plaintiffs' consumer rights in violation of section 1692g. Plaintiffs' third argument is that the demand for payment in Defendant's correspondence impermissibly overshadows the debt collection warning in violation of section 1692e(11). Plaintiffs have also asserted a cross-motion for summary judgment on the above issues as well as on the ground that Defendant used false representations or deceptive means in its correspondence in violation of section 1692e(10). The Court will address each of these contentions in turn.

A. Genuine Issue of Material Fact

In support of their argument that partial summary judgment is inappropriate based on a disputed issue of material fact, Plaintiffs assert that in addition to mailing the two letters, Defendant also placed several harassing phone calls. D.I. 16 at 6. Because the making of the telephone calls is disputed and will require an adjudication by the jury, Plaintiffs conclude that it is appropriate for the jury to also determine the propriety of the contents of Defendant's correspondence. Id.

Plaintiffs' argument demonstrates a fundamental misunderstanding of the summary judgment standard. As stated previously, "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Liberty Lobby, 477 U.S. at 248, 106 S.Ct. at 2510 (emphasis added). Thus, it is not simply whether there is a disputed material fact with regard to any issue but rather whether there is a disputed fact in connection with law to be applied to a given issue. As there is no factual dispute in connection with the sending of the letters and the language that they contain, the Court concludes that the denial of partial summary judgment on this ground is inappropriate.

B. Section 1692g

Section 1692g(a) of the FDCPA provides that within five days after an initial communication in connection with the collection of any debt, a debt collector must send the debtor a written notice containing certain information regarding debtor rights.¹ The notice is not required to be sent in a subsequent communication if it is contained in the initial communication or if the consumer has already paid the debt.

The stated purpose behind the debt validation provisions 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. 382, 95th Cong.2d Sess. 4, reprinted in 1977 U.S.Code Cong. & Admin.News 1695, 1699. The validation provision, considered by the drafters to be a "significant feature of the legislation", grants debtors the right to obtain verification of a debt from the collector of that debt and thus minimize instances of mistaken identity or mistakes as to amount or existence of a debt. Id. In the instant case, the three validation notice provisions are section 1692g(a)(3)-(5) which notify the debtor of his right to dispute the debt, his right to obtain written validation of the debt and his right to obtain the name and address of the original creditor if different from that of the current creditor.

Generally, a validation notice will comport with section 1692g if the "content" of the notice complies with the literal terms of the statute. At a minimum, this requires that the validation notice is actually included with either the initial communication or within five days of the initial communication, Carrigan v. Central Adjustment Bureau, Inc., 494 F.Supp. 824, 827 (N.D.Ga.1980); Wright v. Credit Bureau of Georgia, Inc., 548 F.Supp. 591, 596-97 (N.D.Ga.1982); West v. Costen, 558 F.Supp. 564, 580 (W.D.Va.1983), and if included, that it contains all the information dictated by the statute. Baker v. G.C. Services Corp., 677 F.2d 775, 778 (9th Cir.1982); In re Scrimpsher, 17 B.R. 999, 1004 (Bkrtcy. N.D.N.Y.1982). See also Harvey v. United Adjusters, 509 F.Supp. 1218, 1221 (D.Or. 1981) (defendant's choice of validation notice language cannot impose additional burdens on the debtor).

In addition to the above "content" requirements, almost all courts addressing this issue also require that the "form" of the notice not be "inconspicuous." Riveria v. MAB Collections, Inc., 682 F.Supp. 174, 177 (W.D.N.Y.1988) (if notice is required, "it cannot be so hidden as to preclude all but the most persistent or lucky from finding it"); Ost v. Collection Bur., Inc., 493 F.Supp. 701, 703 (D.N.D.1980) (no reference to notice on face of form when combined with small, onerous to read, print size "pointed to a deliberate policy on the part of the collector to evade the spirit of the notice statute, and mislead the debtor into disregarding the notice"); but cf., Blackwell v. Professional Business Services, 526 F.Supp. 535, 538 (N.D.Ga.1981) (statute looks only to the content of the notice and not to the format, type size, location or "conspicuous" position). Under this line of cases, a validation notice satisfies the statute if the information given in the notice is large enough to be easily read and sufficiently prominent to be noticed, even by the least sophisticated debtor. Baker, 677 F.2d at 778.

Besides looking at the sufficiency of the notice language, some courts have recently begun to examine the form and content of the surrounding demand language. The primary focus of this inquiry is to determine whether the substance and form of the surrounding language stands in "threatening contradiction" to the notice and thus "grossly overshadows" the notice language. See, e.g., Swanson v. Southern Oregon Credit Service, Inc., 869 F.2d 1222, 1225-26 (9th Cir.1988).

In Swanson, the leading case utilizing this analysis, the plaintiff received a dunning letter containing, in bold faced type...