Tolentino v. Friedman
| Decision Date | 31 January 1995 |
| Docket Number | Nos. 94-1998,94-2103,s. 94-1998 |
| Parties | Arsenia TOLENTINO, Plaintiff-Appellee and Cross-Appellant, v. Lawrence FRIEDMAN, Defendant-Appellant and Cross-Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Daniel A. Edelman (argued), Cathleen M. Combs, Tara G. Redmond, J. Eric Vander Arend, Michelle A. Weinberg and O. Randolph Bragg, Edelman & Combs, Chicago, IL, for plaintiff.
Richard J. Sorman, Rieck & Crotty; Dennis A. Marks, Michael Resis, Michael S. Loeffler (argued), Thomas C. Kaufmann, and Andrew S. Nadolna, Querrey & Harrow, Chicago, IL, for defendant.
Before COFFEY, PRATT, * and FLAUM, Circuit Judges.
FACTS AND BACKGROUND
In this action under the Fair Debt Collection Practices Act, 15 U.S.C. Sec. 1692-1692o ("FDCPA"), the parties cross-appeal from a judgment entered in the United States District Court, Northern District of Illinois, Judge Charles R. Norgle, Sr. Friedman's appeal challenges the determination of liability and claims the attorney's fees awarded to plaintiff were excessive; Tolentino's cross-appeal claims that the attorney's fees awarded to her were inadequate.
Friedman is a practicing attorney in Chicago, Illinois; his practice involves debt collection on behalf of creditors. After a creditor hires him to collect a debt, Friedman begins pre-litigation communication with the debtor in an attempt to collect the sum owed. These attempts normally include written correspondence.
In 1992 Citicorp National Services ("Citibank") employed Friedman to collect an alleged deficiency on an auto loan owed by Tolentino. As part of his pre-litigation communication, Friedman sent a letter to Tolentino in the following form:
Amount claimed:
Account number:
Please be advised that I have been retained by the above named, to represent them in their claim against you.
Be further advised that I have been instructed to initiate all necessary action in the enforcement of this claim, but before doing so, I am giving you this opportunity to pay this indebtedness without the necessity of filing suit.
If, however, I do not hear from you I may have no alternative but to commence legal action against you, which will greatly increase the amount due thereunder, by the addition of court costs and attorney fees, where applicable.
Unless you the recipient of this notice, within thirty days after receipt dispute validity of this debt or any portion thereof, the debt will be assumed to be valid.
If you notify the office of the undersigned, in writing within the thirty day period of the debt, or any portion there is disputed, this office will obtain verification of the debt or a copy of a judgment against you and a copy of such verification of judgment will be mailed to you by the undersigned.
Upon your written request within the thirty day period, this office will provide you with the name and address of the original creditor if different from the current creditor.
This letter is an attempt to collect a debt and any information obtained may be used for that purpose.
Very Truly Yours,
Lawrence Friedman Written in at the beginning of the letter were the name of the creditor, Citibank; the amount of the debt; and the identity of the debtor Tolentino, and her account number.
When Tolentino still did not pay the debt, Friedman, on behalf of Citibank, filed a suit against her on September 4, 1992, in Cook County Circuit Court. After delivery of the summons and complaint to the sheriff, but before process had been served, Friedman mailed to Tolentino a "courtesy copy" of the documents in an envelope bearing the return address of Friedman's law firm. In the envelope, separately folded, he included an additional document. That document, which gives rise to this lawsuit, read as follows:
IMPORTANT NOTICE
In the next few days it is likely that you will receive mail from lawyers recommending that the only way you can clean up your financial affairs is to file BANKRUPTCY, and that you employ that lawyer to represent you.
As you know CREDIT is extremely important in this day and age. Filing bankruptcy is not necessarily the end to your financial problems. It might cause more problems than it solves. Bankruptcy may also involve COSTS to you such as filing, trustee and attorney fees.
Your failure to pay this indebtedness to this creditor has prompted the filing of this legal proceeding against you. Though this action is unfortunate, it does not hinder your ability to discuss the payment of this debt on terms that everyone can live with.
Please contact this office to discuss a repayment arrangement in line with your financial situation. Please note that this office only represents the creditor and we cannot represent your interests in this matter.
LAWRENCE FRIEDMAN--03532
19 S. LaSalle Street
10th Floor
Chicago, IL 60603
(312) 977-8000
No other documents were included in the envelope.
Tolentino brought this action against Friedman seeking damages in the United States District Court for the Northern District of Illinois, for violations of the Fair Debt Collection Practice Act, 15 U.S.C. Sec. 1692. Both Tolentino and Friedman moved for summary judgment. Tolentino claimed that Friedman, acting as a debt collector, violated the FDCPA, specifically 15 U.S.C. Sec. 1692e, by mailing to her the "IMPORTANT NOTICE". Friedman claimed that the "IMPORTANT NOTICE" was part of his litigation efforts and therefore not covered by the FDCPA, but that in any event he had not violated the act.
The district court rejected his litigation-effort defense and ruled that the "notice" had violated subsections (9), (10), (11), and (13) of Sec. 1692e, which read in relevant part:
A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt * * * The following conduct is a violation of this section:
(9) The use or distribution of any written communication which simulates or is falsely represented to be a document authorized, issued or approved by any court, official, or agency of the United States, or which creates a false impression as to its source, authorization or approval.
(10) The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.
(11) [T]he failure to disclose clearly in all communications made to collect a debt ... that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose.
* * * * * *
(13) The false representation that documents are legal process.
The district court found that the "IMPORTANT NOTICE" had violated all of these provisions, because:
Friedman's Notice deceptively and misleadingly impresses upon its readers the belief that, because a lawsuit has been Tolentino v. Friedman, 833 F.Supp. 697, 700-01 (N.D.Ill.1993).
filed, they are now in a dire situation in which bankruptcy may appear to be the only available option. * * * Last, the Notice fails to disclose clearly that Friedman is attempting to collect a debt by this mailing and does not state that the information obtained will be used for that purpose. See 15 U.S.C. Sec. 1692e(11).
The district court entered judgment in favor of Tolentino for $1,000, the maximum amount of individual damages permitted by the statute, under Sec. 1692k(a)(3), as well as $553.43 costs, and $10,132.50 attorney's fees.
Friedman appeals and Tolentino cross-appeals.
This court reviews a district court's grant of summary judgment de novo. Cincinnati Ins. Co. v. Flanders Elec. Motor Serv., 40 F.3d 146, 150 (7th Cir.1994). In determining whether summary judgment is appropriate, all evidence and all inferences that can be drawn from the evidence are viewed in a light most favorable to the nonmoving party. Id. Summary judgment is not granted unless there are no triable issues. Bechtold v. Physicians Health Plan of Northern Indiana, Inc., 28 F.3d 666, 671 (7th Cir.1994).
On the main appeal, Friedman claims (1) that the FDCPA is not applicable to his "Important Notice", because he sent it as an attorney involved in the litigation phase of collecting debts for Citibank; (2) that his status as a lawyer distinguishes him from a debt-collector, who is always subject to the provisions of the FDCPA; (3) that the "IMPORTANT NOTICE" was simply a "follow-up" letter to which the disclosure requirements of Sec. 1692e(11) do not apply; and (4) that an average consumer would have no difficulty recognizing that the "IMPORTANT NOTICE" is not a court document but simply a communication from Citibank's counsel. See Green v. Hocking, 9 F.3d 18 (6th Cir.1993); Pressley v. Capital Credit & Collection Service, 760 F.2d 922 (9th Cir.1985).
Friedman also contends that the attorney's fees awarded by the district court were duplicative and excessive and that the district court, in awarding them, abused its discretion. Tolentino argues on the cross-appeal that the district court abused its discretion by awarding attorney's fees at less than the prevailing market rate.
Friedman has stipulated that he is a debt collector within the meaning of the FDCPA. His principal contention is that once he started the litigation, the act no longer applied to him. Our review, therefore, hinges, in large measure, on whether or not Friedman, in his capacity as lawyer involved in debt collection, is subject to the FDCPA after litigation has commenced. Jenkins v. Heintz, 25 F.3d 536 (7th Cir.1994), cert. granted, --- U.S. ----, 115 S.Ct. 416, 130 L.Ed.2d 332 (1994), specifically addressed this question. There, the district court held that congress did not intend to regulate normal legal proceedings under the FDCPA; however, we reversed. We noted that the FDCPA in Sec. 1692a(6) regulates the activities of...
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