Thomas v. Law Firm of Simpson & Cybak, 02-1113.

• Decision Date: 20 December 2004
• Docket Number: No. 02-1113.,02-1113.
• Parties: Frank THOMAS, Plaintiff-Appellant, v. LAW FIRM OF SIMPSON & CYBAK, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

392 F.3d 914

Frank THOMAS, Plaintiff-Appellant, v. LAW FIRM OF SIMPSON & CYBAK, et al., Defendants-Appellees.

No. 02-1113.

United States Court of Appeals, Seventh Circuit.

Reargued En Banc June 2, 2004.

Decided December 20, 2004^*.

Frank Thomas, Matteson, IL, pro se.

Jessica E. Price (argued), Milwaukee, WI, for Plaintiff-Appellant.

Peter A. Monahan (argued), Alholm, Monahan, Keefe & Klauke, for Defendants-Appellees Law Firm of Simpson Cybak, Attorneys at Law and Kathleen M. Haggerty.

Linda B. Dubnow (argued), McGuirewoods, Ross & Hardies, Chicago, IL, for Defendants-Appellees General Motors Acceptance Corp., Kay Candiano, and Donald Houck.

Jessica E. Price, Milwaukee, WI, for Amicus Curiae.

Before POSNER, COFFEY, EASTERBROOK, RIPPLE, MANION, KANNE, ROVNER, WOOD, EVANS, and WILLIAMS, Circuit Judges.^**

WILLIAMS, Circuit Judge.

Frank Thomas appeals from the district court's dismissal of his suit which alleged that General Motors Acceptance Corporation ("GMAC"), the law firm Simpson & Cybak ("Simpson"), and their employees failed to send him a debt validation notice advising him of his rights as a debtor within five days of their initial communication with him, as is required by the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692-1692o. Two principal questions are raised in this appeal: whether a creditor's letter to a debtor and whether a debt collector's initiation of a lawsuit in state court constitute "initial communications" within the meaning of the FDCPA. In dismissing Thomas's case for failure to state a claim, the district court determined that the creditor's letter to the debtor constituted an "initial communication," while the debt collector's initiation of the lawsuit did not. We disagree with both conclusions. Accordingly, we reverse the district court's decision to dismiss Thomas's claim against Simpson, and we remand for further proceedings.

I. BACKGROUND

In January 1998, Frank Thomas purchased a Chevrolet Blazer from Apple Chevrolet under an installment contract immediately assigned to GMAC. Around January 20, 2000, shortly after Thomas lost his job with GMAC, he received a default letter from GMAC operations manager Kay Candiano on GMAC letterhead informing him that his payment on the vehicle was past due.

On March 27, 2000, GMAC, through its attorneys, Simpson & Cybak, sued Thomas in Illinois state court to recover the vehicle. Kathleen Haggerty, a Simpson lawyer, signed the complaint. The complaint included a statement that, "[p]ursuant to the [FDCPA], you are advised that this law firm is a debt collector attempting to collect a debt, and any information obtained will be used for that purpose." The summons included similar language.

Thomas filed suit against GMAC and Simpson under the FDCPA, claiming that neither party sent him a debt validation notice advising him of his rights as a debtor. See 15 U.S.C. § 1692g(a). The district court granted both defendants' motions to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Thomas now appeals.

II. ANALYSIS

We review de novo the district court's dismissal of Thomas's complaint for failure to state a claim, accepting as true the well-pleaded allegations in Thomas's complaint and drawing all reasonable inferences in his favor. Porter v. DiBlasio, 93 F.3d 301, 305 (7th Cir.1996).

The FDCPA requires that "within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector" must send the debtor a written validation notice containing certain information. 15 U.S.C. § 1692g(a). The notice must inform the debtor of the amount of the debt, the name of the creditor, and state that the debt will be assumed valid if the debtor does not dispute its validity within 30 days of the receipt of the notice. Id. § 1692g(a)(1)-(3). Furthermore, the notice must include a statement that if the debtor disputes the debt within 30 days of the notice, the debt collector will obtain and send the debtor verification of the debt and, upon written request, send the debtor the name and address of the current creditor, if different from the original creditor. Id. § 1692g(a)(4)-(5).

Thomas argues that neither GMAC nor Simpson notified him of these debt validation rights. Thomas primarily contends that the summons and complaint Simpson filed initiating state court litigation against him constituted an "initial communication" under the FDCPA, and Simpson was therefore required to notify him of his validation rights within five days of the service of that communication.

As an initial matter, we must decide whether GMAC's January 20, 2000 default letter to Thomas constitutes an "initial communication" for purposes of the FDCPA. Despite the district court's finding to the contrary, all parties to this appeal now concede that the letter does not constitute an "initial communication" regarding a debt under the FDCPA.

The FDCPA defines a "communication" broadly: "the conveying of information regarding a debt directly or indirectly to any person through any medium." 15 U.S.C. § 1692a(2). But, because the Act regulates debt collectors rather than creditors, Schlosser v. Fairbanks Capital Corp., 323 F.3d 534, 536 (7th Cir.2003), GMAC's letter to Thomas — a letter from a creditor¹ — does not qualify as an "initial communication" under the Act. Because the FDCPA makes debt collectors, but not creditors, responsible for notifying debtors of their validation rights, see 15 U.S.C. § 1692g(a), finding that a letter from a creditor constitutes an "initial communication" could create significant unintended obligations for debt collectors. For example, if a letter from a creditor constitutes an "initial communication," debt collectors would be responsible for notifying debtors of their debt validation rights within five days of an "initial communication" that the debt collector did not send, or for one communicated even before the creditor retained the debt collector. Nothing in the FDCPA suggests that Congress intended creditors' unilateral actions to obligate debt collectors to inform debtors of their rights; rather, the Act is intended to deter debt collectors from employing their own abusive tactics. Because we decide that GMAC's letter to Thomas does not constitute an initial communication for FDCPA purposes, no obligation to inform Thomas of his validation rights arose upon the sending of the letter.

The principal question remains, whether Simpson's service of a summons and complaint, filed in state court, was an "initial communication" within the meaning of the FDCPA, such that its service triggered an obligation to notify Thomas of his validation rights within five days. Simpson concedes that it is a debt collector as defined in § 1692a(6), but argues that pleadings do not constitute "communications." The courts that have addressed this issue are divided in their analyses. Compare, e.g., Vega v. McKay, 351 F.3d 1334, 1337 (11th Cir.2003) (holding that a summons and complaint do not constitute "initial communications" triggering the debt validation notice requirements of § 1692g), and McKnight v. Benitez, 176 F.Supp.2d 1301, 1306-08 (M.D.Fla.2001) (same), with Sprouse v. City Credits Co., 126 F.Supp.2d 1083, 1089 n. 8 (S.D.Ohio 2000) (finding that a summons and complaint served in a state court action constitute "initial communications" under the FDCPA).

By its terms, as stated above, the FDCPA's broad definition of a "communication" encompasses the service of a summons and complaint. When Simpson served the summons and complaint, it conveyed information regarding Thomas's debt. The plain language of a statute "should be conclusive `except in the rare cases [in which] the literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters.'" Castellon-Contreras v. INS, 45 F.3d 149, 153 (7th Cir.1995) (quoting United States v. Ron Pair Enter., Inc., 489 U.S. 235, 242, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989)). This is not such a case; rather, viewing the service of a summons and a complaint as an "initial communication" is consistent with the drafters' intent.

The statute was intended to "protect consumers from a host of unfair, harassing, and deceptive debt collection practices...." S.Rep. No. 382, 95th Cong.2d. Sess. 4, 1, U.S.Code Cong. & Admin.News 1977 at pp. 1695, 1696. Our interpretation of the statute furthers this objective because it helps ensure that debtors will be informed about their validation rights and that debt collectors knowing that they are obliged to advise debtors of these rights, will investigate claims before initiating litigation to collect debts. Defendants' argument that state courts offer sufficient protections to guard against abusive debt collection tactics during litigation is unpersuasive. The FDCPA affords different protections than state court; debt collectors who violate its provisions may be subject to civil liability. See 15 U.S.C. § 1692k.

Furthermore, to except the service of pleadings from the definition of "communication" would erode the § 1692g requirement to inform debtors of their validation rights; debt collectors could avoid their obligation to advise debtors of their validation rights altogether by initiating litigation. Such a loophole, creating an end-run around the validation notice requirement, is inconsistent with the drafters' intention of protecting debtors from "unfair, harassing, and deceptive" collection tactics, especially because many debtors cannot afford to hire attorneys to represent them in collection actions. Congress was careful to except pleadings from the definition of "communication" where it so intended. Section 1692e(11) provides that a debt collector must disclose in its initial communication with the debtor that "the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose," except that the provision...