White v. Universal Fid., LP
| Decision Date | 08 November 2019 |
| Docket Number | No. 18-6302,18-6302 |
| Parties | DANIEL WHITE, Plaintiff-Appellant, v. UNIVERSAL FIDELITY, LP; LINK REVENUE RESOURCES, LLC; JEWISH HOSPITAL & ST. MARY'S HEALTHCARE, INC., aka Jewish Hospital Shelbyville, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
NOT RECOMMENDED FOR PUBLICATION
File Name: 19a0565n.06
Daniel White received a collection letter saying that he owed $475 for his wife's medical debt. He filed this action against the debt collectors and the hospital that treated his wife, alleging violations of the Federal Debt Collection Practices Act (FDCPA) and seeking a declaration that he is not responsible for his wife's medical expenses because the Kentucky statute that makes him liable for the debt is unconstitutional. The district court dismissed his claims and White appeals. We affirm.
White's wife Tammy received medical treatment from Jewish Hospital & St. Mary's Healthcare, Inc. (Jewish Hospital) in August 2014. Several years later, White received a letter from Universal Fidelity, LP (Universal Fidelity), seeking $475 from White for Jewish Hospital's services to Tammy. Universal Fidelity's letter identified Link Revenue Resources, LLC (Link Revenue), as the "Master Servicer" of the debt; Jewish Hospital as the original creditor; Tammy as the patient; and White as the "Guarantor" of the debt. After White sent a letter to Universal Fidelity seeking additional information, Universal Fidelity provided an account itemization that again listed Tammy as the patient and White as the guarantor of the medical debt incurred by Tammy.
Kentucky Revised Statute § 404.040 provides:
The husband shall not be liable for any debt or responsibility of the wife contracted or incurred before or after marriage, except to the amount or value of the property he received from or by her by virtue of the marriage; but he shall be liable for necessaries furnished to her after marriage.
White alleges that Defendants relied on that statute as the basis for seeking payment from him for Tammy's medical debt. He filed this action seeking a declaratory judgment that § 404.040 discriminates on the basis of sex in violation of the Equal Protection Clause by imposing liability on husbands, but not wives, and thus White is not liable for the medical debt Tammy incurred. White also alleged violations of the FDCPA by Universal Fidelity and Link Revenue. Universal Fidelity and Link Revenue filed a motion to dismiss the FDCPA claim under Rule 12(b)(6), which the district court granted.
Jewish Hospital remained as a defendant and filed an answer to White's complaint, stating that it (R. 19, PID 169.) Based on this release, Jewish Hospital filed a motion for judgment on the pleadings, arguing that the case should be dismissed as moot. White argued in response that the case was not moot because Jewish Hospital's purported release did not impact whether White owed the debt and did not bind third-party debt collectors or preclude JewishHospital from selling the debt. He further argued that Jewish Hospital could seek to collect from White future medical debts that Tammy incurred. In its reply brief, Jewish Hospital stated:
Jewish Hospital hereby declares and covenants, on this Court's record, with the intent that these declarations and covenants be binding upon it, that (1) it will not sell the $475 debt underlying this case to anyone, and (2) in the future, Jewish Hospital will not attempt to use KRS 404.040 as a basis for holding Plaintiff responsible for any debt that his wife incurs with Jewish Hospital. These declarations and covenants are unconditional and irrevocable.
Based on these representations, the district court agreed that White's claims for declaratory relief were moot but found that White also pleaded a claim for damages, which was not moot. The district court later granted summary judgment to Jewish Hospital on White's damages claim. White now appeals the district court's order dismissing his FDCPA claim against Universal Fidelity and Link Revenue and its order dismissing his claims for declaratory relief against Jewish Hospital.
We review de novo the grant of a motion to dismiss for failure to state a claim, construing the complaint in the light most favorable to the plaintiff and accepting all well-pleaded factual allegations in the complaint as true. Dougherty v. Esperion Therapeutics, Inc., 905 F.3d 971, 978 (6th Cir. 2018). We apply the same standard of review to the grant of a motion for judgment on the pleadings. Fritz v. Charter Township of Comstock, 592 F.3d 718, 722 (6th Cir. 2010).
White first argues that the district court erred in dismissing his FDCPA claim alleging that Universal Fidelity and Link Revenue engaged in false, deceptive, misleading, unfair, or unconscionable acts under 15 U.S.C. §§ 1692e and 1692f. To prevail on his FDCPA claim, White must establish that (1) he is a "consumer" under the FDCPA, (2) the "debt" arises out oftransactions entered primarily for personal, family or household purposes, (3) Universal Fidelity and Link Revenue are "debt collectors" as defined by the FDCPA, and (4) the debt collectors violated a provision of the FDCPA in attempting to collect a debt. See Bauman v. Bank of Am., N.A., 808 F.3d 1097, 1100 (6th Cir. 2015) (quoting Wallace v. Wash. Mut. Bank, F.A., 683 F.3d 323, 326 (6th Cir. 2012)). The district court addressed only the last element, and the parties confine their arguments to that element on appeal.
The FDCPA prohibits debt collectors from using "any false, deceptive, or misleading representation or means in connection with the collection of any debt," 15 U.S.C. § 1692e, including a false representation of "the character, amount, or legal status of any debt," id. § 1692e(2)(A), or using "unfair or unconscionable means to collect or attempt to collect any debt," id. § 1692f. Because it is a remedial statute, we construe the FDCPA broadly and determine whether a statement violates the FDCPA by applying the least-sophisticated-consumer standard. See Stratton v. Portfolio Recovery Assocs., LLC, 770 F.3d 443, 448-50 (6th Cir. 2014). "This standard recognizes that the FDCPA protects the gullible and the shrewd alike while simultaneously presuming a basic level of reasonableness and understanding on the part of the debtor, thus preventing liability for bizarre or idiosyncratic interpretations of debt collection notices." Currier v. First Resolution Inv. Corp., 762 F.3d 529, 533 (6th Cir. 2014). Further, "[t]he FDCPA is a strict-liability statute," meaning "[a] plaintiff does not need to prove knowledge or intent, and does not have to have suffered actual damages." Stratton, 770 F.3d at 448-49 (internal citations omitted).
White argues that Universal Fidelity and Link Revenue violated the FDCPA in two ways: (1) they attempted to collect a debt based on a facially unconstitutional statute, which constitutesunfair or unconscionable means under 15 U.S.C. § 1692f; and (2) they falsely listed White as a guarantor of the debt, in violation of § 1692e. We address each argument in turn.
"The FDCPA does not define an 'unfair or unconscionable' practice under § 1692f, but, with the caveat that it is not limiting the general application of the term, it sets forth a non-exhaustive list of conduct that rises to that level." Currier, 762 F.3d at 534 (citations omitted). The list includes collecting any amount unless "expressly authorized by the agreement creating the debt or permitted by law," 15 U.S.C. § 1692f(1), "acceptance or solicitation of a postdated check absent certain circumstances, charging any person for communications by concealing the true purpose of the communication, [or] taking or threatening to take an action to dispossess or disable property when there is no present right in the property," Currier, 762 F.3d at 534 (citing 15 U.S.C. § 1692f). White does not argue that attempting to collect a debt based on a facially unconstitutional statute falls within any of the subsections of § 1692f; rather, he relies on the general prohibition against "unfair or unconscionable" means.
[A]ctions that courts have determined to be potentially "unfair" under § 1692f include attaching law-firm generated documents resembling credit card statements to a state collection complaint, sending a collection letter that questioned the debtor's honesty and good intentions, filing for a writ of garnishment against a debtor who was current in payments, and collecting 33% of a debt balance as a collection fee.
Currier, 762 F.3d at 534 (citations omitted).
The district court rejected White's argument, reasoning that because no court has held that Kentucky Revised Statute § 404.040 is unconstitutional, Universal Fidelity and Link Revenue cannot be liable under the FDCPA for engaging in unfair or unconscionable acts by seeking payment of a debt pursuant to the statute:
Universal Fidelity and Link Re[venue] attempted to collect a debt from Mr. White, incurred by Mrs. White, based on state statutes allowing them to do so. The onlyreason Mr. White claims this practice is false, deceptive, misleading, unfair, or unconscionable is because KRS 404.040 is unconstitutional. However, no court has yet found the statute unconstitutional, and thus, the statute still requires Mr. White to be legally responsible for all Mrs. White's debt. Any determination of unconstitutionality would not apply retroactively to the behaviors of Universal Fidelity and Link Revenue's behavior.
(R. 17, PID 152 (internal citation omitted).)
We agree with the district court that attempting to collect a debt pursuant to this statute, which has...
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