January 11, 2011
THE PEOPLE vs. CACH LLC IT IS OVER BOYS AND GIRLS , ROBERT PAISOLA REPORTS
MIAMI- HELP! I am being sued by Cach LLC for $20,541 that they say is from a credit card from Bank of America that I supposedly defaulted on.
HELP IS HERE! CACH LLC IS A CRIMINAL ORGANIZATION WITH ATTORNEYS SUCH AS MELISSA A FERRIS, RUNNING "CHURNING MILLS" for and on behalf of Cach LLC, causing consumers around the nation to be victims of this debt collector / buyer.
Western Capital is now in Court with ANOTHER CLIENT against CACH LLC in Florida. This is the case of Cach LLC v Scott Mitchell , Filed in Charlotte County Florida.
In this matter, Mitchell received dunning notices over and over again stating that he owed CACH LLC money, specifically to Bank of America. Mitchell has never has a card with Bank of America, so he sent in a DEBT VALIDATION LETTER to the attorney and the Honorable Court. In response to the demand for debt verification, Counsel for CACH LLC , Melissa A Ferris PA of Florida submitted the following documents to The Honorable Judge Richards of the Twentieth Judicial Circuit Court for Charlotte County Florida (Case 10-2341-CA )
a.Notice of Confidential Information within the Court Filing
b. Affidavit of Reasonable Attorneys Fees
c. Affidavit of Counsel of Record
d. Affidavit of Costs
e. Affidavit of Pre judgement Interest
f. UNSIGNED Cardholder Agreement
g. Charge off INTERNAL STATEMENT COMPUTER GENERATED BY BOA dated 12/2009
h. INTERNAL STATEMENTS GENERATED BY BANK OF AMERICA IN STATEMENT LOOKING FORM (Unsigned)
i. Business Records Affidavit with attached Assistant Secretary's Certificate
j. Affidavit of Claim (AKA Affidavit of Sale) UNSIGNED BY DEBTOR
k. Affidavit of Indebtedness and Certificate of Assignment (Unsigned by Debtor)
l. Motion for Summary Judgment
m. Proposed Summary Judgment
Not one single document in the "Discovery Package" has/ had Defendants Signature on ANY Document
Now Lets take a look at Counsel for CACH LLC who filed this suit Attorney Melissa A Ferris: She has a website that says:
The Law Office of Melissa A Ferris, P.A. is a full service Debt Collection Law Firm located in Orlando, FL. In addition to serving Central Florida our firm handles cases Statewide through an extensive attorney network.
Our firm’s exclusive practice is dedicated to consumer collection litigation. Our firm is staffed with experienced in-house Legal Collectors, Skiptracers and Paralegals who are equipped with the latest technology to locate debtors and assets. We are proficient in handling your case for the Pre-Legal stage to Post Judgment Remedies. Our office works on a contingency basis so we don’t get paid until you get paid.
Further, Melissa A Ferris completed her undergraduate degree in Criminal Justice from the University of Central Florida in 1994. Ms. Ferris later received her Juris Doctor from St. Thomas University-School of Law in 1999. She has been a sole practitioner specializing in Consumer Debt Collections since 2002. She is a proud member of the National Association of Retail Collection Attorney’s (NARCA) and serves on the membership board for the Florida Creditors Bar Association (FLCBA).
Now lets take a look at what the Georgia Court of Appeals has to say on this matter regarding these rogue collection practices by CACH LLC and their "LAWFIRMS":
WIRTH v. CACH LLC
WIRTH v. CACH, LLC.
No. A09A1270.
-- October 15, 2009
William R. Carlisle, Sugar Hill, for appellant.Fred J. Hanna, James T. Freaney, for appellee.
In this action on an open account, we granted Donald Wirth's application for an interlocutory appeal to review whether the trial court erred in granting summary judgment in favor of Cach, LLC (“Cach”) on its claim to recover past due sums under a credit card account agreement Wirth allegedly entered into with Providian National Bank (“Providian”). Wirth appeals, arguing that Cach was not entitled to summary judgment because the record failed to include or reference a written assignment proving that Cach was the real party in interest, as assignee of Providian. Finding that Cach failed to show that it was entitled to file suit to recover the outstanding debt against Wirth, we reverse.
“Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. OCGA § 9-11-56(c).” (Citation and punctuation omitted.) Rabun v. McCoy, 273 Ga.App. 311, 615 S.E.2d 131 (2005). “We review the grant or denial of summary judgment de novo, construing the evidence in favor of the nonmovant.” Id.
So viewed, the evidence shows that Cach, alleging it was the assignee of Providian, brought this suit to collect the principal amount of $2,310.72 owed on a credit card account agreement allegedly entered into by Wirth and Providian. Attached to the complaint was a standard cardmember agreement entitled “PROVIDIAN NATIONAL BANK VISA AND MASTERCARD ACCOUNT AGREEMENT.”
Wirth filed an answer to the complaint, in which he asserted that Cach was not the real party in interest (OCGA § 9-11-17(a)) and also filed a counterclaim under the Fair Debt Collection Practices Act. 15 USCS § 1692e. Thereafter, Cach filed a motion for summary judgment, arguing that it was entitled to judgment as a matter of law on its complaint.
Corrales, who identified herself as an authorized agent of Cach and business records custodian of its credit card accounts, including that belonging to Wirth. Corrales stated that Providian “assigned all rights and interests of [Wirth's account] to [Cach].” Cach also moved for partial summary judgment on Wirth's counterclaim, arguing that Wirth failed to prove any genuine issue of fact to support such claim.
Finding “no genuine issues of material fact and [that] Cach is entitled to judgment as a matter of law,” the trial court granted Cach's motion for summary judgment and entered judgment in its favor and against Wirth in the principal sum of $2,310.72, plus interest, attorney fees and court costs. The trial court also granted Cach's motion for partial summary judgment and dismissed Wirth's counterclaim with prejudice.
Wirth argues that the trial court's order was not supported by any evidence of a written assignment to prove that Cach was the real party in interest. We agree.
“The doctrine of privity of contract requires that only parties to a contract may bring suit to enforce it. [Cit.]” Scott v. Cushman & Wakefield of Ga., Inc., 249 Ga.App. 264, 265, 547 S.E.2d 794 (2001); OCGA § 9-2-20(a). “A party may assign to another a contractual right to collect payment, including the right to sue to enforce the right. But an assignment must be in writing in order for the contractual right to be enforceable by the assignee.” (Punctuation and footnote omitted.) Nyankojo v. North Star Capital Acquisition, 298 Ga.App. 6, 8, 679 S.E.2d 57 (2009).
Further, the writing “must identify the assignor and assignee.” (Footnote omitted.) Id. To prevail on its motion for summary judgment, Cach, as movant, has the burden of “establishing the non-existence of any genuine issue of fact,” including Wirth's assertion that Cach is not the real party in interest, and “all doubts are to be resolved against [Cach].” (Citation and punctuation omitted.) Sawgrass Builders v. Key, 212 Ga.App. 138(1), 441 S.E.2d 99 (1994).
Here, Cach relies on the Corrales affidavit to show that Providian assigned to it “all rights and interests [to Wirth's account].” The affidavit, however, fails to refer to or attach any written agreements which could complete the chain of assignment from Providian to Cach. Further, the account invoices upon which Corrales relies reflect that Wirth's account was with Washington Mutual Card Services (“Washington Mutual”), not Providian or Cach. And no competent evidence exists to establish the relationship between Washington Mutual and either Providian or Cach.
Although Cach contends that Wirth did not raise Cach's failure to present a valid assignment in the trial court, the record reflects that issue was squarely before the trial court. Cach directly addressed Wirth's defense under OCGA § 9-11-17 in its motion for summary judgment, referring to the Corrales affidavit to show that it was Providian's assignee. Further, in a motion to compel and for sanctions based on Cach's alleged failure to respond to his request for interrogatories and request for production of documents, Wirth argued that Cach had failed to provide documents and information relevant to show Cach's standing that would either contradict or confirm Corrales' affidavit.
For example, Wirth's discovery request sought, among other things, information as to the date of the assignment, parties to, and individuals executing the assignment, and the exact amount of monetary consideration paid for the assignment, and documents reflecting “[a]ll assignments and transfers of the debt complained of in [the] complaint” as well as those “under which [Cach] claim[s] standing as the plaintiff and real party in interest in this action.”
Thereafter, Cach filed a response to Wirth's discovery requests, referring to a Bill of Sale to show the “sale of accounts from Washington Mutual (who purchased Providian) to [Cach].” The Bill of Sale provides Washington Mutual Bank, for value received and in accordance with the terms of the Purchase and Sale Agreement by and between Washington Mutual Bank and CACH, LLC (“Purchaser”), dated as of August 25, 2006 (the “Agreement”), does hereby sell, assign, and transfer to Purchaser, its successors and assigns, all right, title, and interest in and to the Accounts listed in the Account Schedule attached (as may be amended in accordance with the Agreement) at Appendix A to the Agreement[.]
To the extent that the trial court may have relied on this document to find a valid assignment between Providian and Cach of the subject account, the Bill of Sale contradicts Corrales' affidavit in that it refers to accounts assigned from Washington Mutual to Cach while Corrales' affidavit alleges a valid assignment of Wirth's account from Providian to Cach. Moreover, there is no contract or Appendix A appended to the Bill of Sale which identifies Wirth's account number as one of the accounts Washington Mutual assigned to Cach. The record is also devoid of any evidence which reflects that Washington Mutual purchased Providian to support the chain of assignment to Cach. See Ponder v. CACV of Colorado, LLC, 289 Ga.App. 858, 859, 658 S.E.2d 469 (2008) (record was devoid of evidence supporting CACV's allegation that it was the successor in interest to Fleet Bank's right to recover any outstanding debt from Ponder).
Given the foregoing, we conclude that “[t]his evidence, even together with the reasonable inferences from it, was insufficient to establish all essential elements of [Cach's] case.” Nyankojo, supra, 298 Ga.App. at 10, 679 S.E.2d 57. We therefore reverse the trial court's order granting summary judgment in favor of Cach.
Judgment reversed.
ANDREWS, P.J., and BARNES, J., concur.
Back to Ferris....
"The Law Office of Melissa A Ferris, P.A. is a full service Debt Collection Law Firm located in Orlando, FL. In addition to serving Central Florida our firm handles cases Statewide through an extensive attorney network.
On her website, she states that her address is
Melissa A Ferris, P.A
1402 Edgewater Dr
Suite 101
407-428-1045 T
407-428-1044 F
joer@mferrislaw.com
But Listen to the Call!
However, Lets listen to a LIVE PHONE CALL THAT TOOK PLACE BETWEEN THE DEFENDANT, ROBERT PAISOLA OF WESTERN CAPITAL AND CACH LLC's LEGAL REPRESENTATIVE (NOTHING BUT A COLLECTOR FOR CACH LLC JUAN CORTEZ" Listen to how he answers the phone "LAW OFFICE, HOW CAN I HELP YOU?" RICO!
Let it load ... it is worth the wait!
If you are a Victim of CACH LLC , PLEASE VISIT
www.WesternCapitalVip.com and watch our videos at
www.NationwidecreditExposed.com to see how we operate. We are going to file a class action lawsuit against CACH LLC and their rogue Attorney Melissa A Ferris. We hope she has a large bond!
NOW FOR OUR FRIENDS AT GOOGLE------
NO. 09-35767
___________________
IN THE STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
___________________
TIMOTHY McCOLLOUGH,
Plaintiff/Appellee,
-vs.-
JOHNSON, RODENBURG & LAUINGER,
Defendant/Appellant.
___________________
On Appeal From The Billings Division Of The
United States District Court, District Of Montana
U.S. District Court Cause No. CV-07-166-BLG-CSO
___________________
BRIEF AMICI CURIAE OF AARP AND NATIONAL CONSUMER
LAW CENTER IN SUPPORT OF APPELLEES
___________________
Julie Nepveu
AARP Foundation Litigation
Michael Schuster
AARP
601 E Street, NW
Washington, DC 20049
(202) 434-2060
Attorneys for AARP And National
Consumer Law Center
TABLE OF CONTENTS
STATEMENT OF INTEREST .................................................................................. 1
SUMMARY OF ARGUMENT ................................................................................. 3
ARGUMENT ............................................................................................................. 4
I. COLLECTION ABUSES ABOUND AS COLLECTION
OF STALE DEBT INCREASES .......................................................... 4
A. Debt Collections Correspond To Increasing Debt
Load In A Deregulated Financial Landscape ............................... 6
II. DEBT BUYERS SEEK TO COLLECT STALE DEBT
PREVIOUSLY CONSIDERED UNCOLLECTIBLE .......................... 9
III. INADEQUATE DATA BEGETS ABUSIVE COLLECTION PRACTICES ....................................................................................... 15
IV. JUDICIAL COLLECTION OF STALE DEBT IS FRAUGHT
WITH PROBLEMS ............................................................................ 21
A. Collectors File Collection Cases Knowing Most Will
Result In Default Judgment ...................................................... 23
B. Statutes Of Limitations Are Not Simply Technicalities ........... 24
C. Courts Should Be Able To Rely On Representations
Of Attorneys .............................................................................. 28
CONCLUSION ........................................................................................................ 31
TABLE OF AUTHORITIES
Federal Cases
Basile v Blatt, Hasenmiller, Leibker & Moore, LLC
632 F. Supp 2d 842 (2009) ................................................................ 34
Bd. of Regents v Tomanio,
446 U.S. 478 (1980) ........................................................................... 33
Chaudhry v Gallerizzo,
174 F.3d 394 (4th Cir. 1999) ............................................................. 21
Garr v U.S. Healthcare, Inc.,
22 F.3d 1274 (3d Cir. 1994) .............................................................. 30
Herkert v MRC Receivables Corp., -- F. Supp. 2d --,
1:08-cv-00760, 2009 WL 2998557 (N.D. Ill. 2009) ......................... 35
Kimber v Fed. Fin. Corp.,
668 F. Supp. 1480 (M.D. Ala. 1987) ........................................... 33, 34
Marquette Nat'l. Bank of Minneapolis v First of Omaha Serv. Corp.,
439 U.S. 299 (1978).............................................................................. 7
McCollough v Johnson, Rodenberg & Lauinger
610 F. Supp. 2d 1247 (D. Mont. 2009) ....................................... 25, 26
Midland Funding LLC v Brent,
3:08-cv-1434, 2009 WL 2437243 (N.D. Ohio 2009) ................... 21, 30
R.R. Telegraphers v Ry. Express Agency,
321 U.S. 342 (1944) ........................................................................... 33
SEC v Merch. Capital, LLC
483 F.3d 747 (11th Cir. 2007) ............................................................. 9
Semper v JBC Legal Group,
No. C04-2240L, 2005 WL 2172377
(W.D.Wash. Sept. 6, 2005) ................................................................ 22
Smiley v Citibank (SD), N.A.,
517 U.S. 735 (1996).............................................................................. 9
United States v Kubrick,
444 U.S. 111 (1979) ...................................................................................... 33
State Cases
Asset Acceptance Corp., v Proctor,
804 N.E.2d 975 (Ohio Ct. App. 2004) .............................................. 19
Alt. Credit and Fin., Inc., v Giuliana,
829 A.2d 340 (Pa. Super. 2003) ........................................................ 19
Citibank (SD), N.A., v Whiteley,
149 S.W.3d 599 (Mo. Ct. App. 2004) ............................................... 19
Citibank (SD), N.A., v Martin,
NY Slip Op 25536, 11 Misc. 3d 219, 807 N.Y.S.2d 284
(N.Y. Civ Ct. 2005) .......................................................... 18, 19, 25, 28
DeVivo v Sparago,
287 A.D.2d 535 (2d Dep’t 2001) .................................................. 19, 31
Discover Bank v Owens, 822 N.E.2d 869,
(Ohio Mun. Ct. Clev. 2004) .................................................................. 9
First Selection Corp., v Grimes,
No. 2-01-257-cv, 2003 WL 151940 (Tex. App.
Jan. 23, 2003) ..................................................................................... 19
Foreman v PRA III, LLC,
05 C 3372, 2007 U.S. Dist. LEXIS 15640, 2007 WL 704478,
(N.D .Ill. March 5, 2007) .................................................................. 17
Joosten v Gale,
129 A.D.2d 531, 514 N.Y.S.2d 729 (1st Dep’t 1987) ........................ 27
Levi v Oberlander,
144 A.D.2d 546, 547, 535 N.Y.S.2d (2d Dep’t 1988) ....................... 29
LVNV Funding, LLC v Moehrlin,
No. 2006-10917-CODL (Order Denying Plaintiff Final
Judgment and Closing the Court’s File, 7th Judicial Cir.
Ct., Volusia Co., FL Aug. __, 2006) .................................................. 18
MBNA America Bank, N.A., v Nelson,
15 Misc. 3d 1148A, 841 N.Y.S.2d 826 (N.Y. Civ
Ct. 2007) .................................................................................. 5, 11, 22
Miller v Upton, Cohen & Slamowitz -- F. Supp. 2d --,
1:01-cv-01126-RRM-RML, 2009 WL 3212556,
(E.D.N.Y. 2009) ...................................................................... 26, 27, 31
MRC Receivables Corp., v Zion,
No. 60926-2-I, 2009 WL 3418132 (Wash.App.
Div 1 2009) ......................................................................................... 25
Nelson v First Nat’l. Bank Omaha,
A04-579, 2004 WL 2711032 (Minn. Ct. App.
Nov 30, 2004) ..................................................................................... 18
Nielson v Dickerson,
307 F.3d 623 (7th Cir. 2002) .............................................................. 31
Norton v Wilshire Credit Corp.,
Civ No. 95-3223, 1997 U.S. Dist. LEXIS 23360,
(D.N.J. Jul. 14, 1997) ......................................................................... 22
Palisades Collection, LLC v Gonzalez, No. 58564 CV 2004,
2005 N.Y. Misc. LEXIS 2774 (Civ. Ct. N.Y. County,
Dec. 12, 2005), available at http://www.courts.state.ny.us/ reporter/3dseries/2005/2005_52015.htm (accessed Nov. 18, 2009) .. 32
Palisades Collection, LLC v Kedik, -- N.Y.S.2d--, 67 A.D.3d 1329,
2009 WL 3790408, 2009 N.Y. Slip Op. 08259
(N.Y.A.D. 4 Dept. 2009) ............................................................. 32, 33
People v Kennedy,
68 N.Y.2d 569 (2002) ......................................................................... 35
Portfolio Acquisitions, LLC v Feltman,
391 Ill.App.3d 642, 909 N.E.2d 876 (2009) ................................ 34, 35
Portfolio Recovery Associates, LLC v Ginn
No. 2008-941 QC, 2009 WL 2170564
(N.Y.Sup.App.Term 2009) ................................................................ 25
PRS Assets, a/o Jack LaLanne v Rodriguez,
12 Misc. 3d 1172A; 820 N.Y.S.2d 845 2006
NY Slip Op 51148(U) (Dist. Ct. of N.Y.,
3d Dist. Nassau County, June 21, 2006)) ........................................... 28
Resurgence Financial, LLC v Taylor,
05-07-01492-cv, 2009 WL 2712387,
(Tex.App.--Dallas 2009) ..................................................................... 25
West Val. Fire Dist. No. 1 v Village of Springville,
294 A.D.2d 949 (2002) ....................................................................... 31
Worldwide Asset Purchasing v Stern,
Civ Div No. AR04-4429 (Pa. Ct. Common Pleas Dec. 29, 2004),
reprinted in 153 Pittsburgh Legal J. 111 (2005) ............................... 19
Wirth v Cach, LLC, -- S.E.2d --, A09A1270, 2009 WL 3417915
(Ga.App. 2009)) .................................................................................. 28
Legislative History
Consumer Credit Protection Act, S. Rep. No. 95-382 (1977) ....................... 7
Federal Regulations
49 Fed. Reg. 7740 (Mar. 1, 1984) .................................................................. 7
Rules
CPLR § 202 ............................................................................................... 4, 14
CPLR § 3215(a) ............................................................................................ 27
Other Authorities
Eileen Ambrose, Debt That Won’t Die, Baltimore Sun (May 6, 2007), available at http://www.baltimoresun.com/business /investing/balbz.ambrose06 may06,0,5473187.column
(accessed Nov. 18, 2009) .................................................................... 23
Asset Acceptance Capital Corp., 2008 Annual Report to SEC
Form 10-K, (Mar. 5, 2009), available at http://www.sec.gov/Archives/edgar/ data/1264707/ 000119312509046364/d10k.htm (accessed Nov. 18, 2009) ...................................................................................................... 12, 13
Center For Responsible Lending, The Plastic Safety Net:
The Reality Behind Debt In America: Findings From
A National Household Survey Of Credit Card Debt
AmongLow- And Middle-Income Households
(2005), available at http://www.responsiblelending.
org/credit-cards/research-analysis/DEMOS-101205.
pdf (accessed Nov. 18, 2009) ............................................................... 8
Comment of Nat'l. Consumer Law Cntr. Submitted to FTC
(June 6, 2007) available at http://www.ftc.gov/os/comments/
debtcollectionworkshop/529233-00018.pdf
(accessed Nov. 18, 2009) ........................................................ 18, 22, 23
Comment of New York City Department of Consumer Affairs
Submitted to FTC, available at http://www.ftc.gov/os/
comments/debtcollectionworkshop/529233-00055.
pdf (accessed Nov. 18, 2009) ............................................................... 5
Comment of Portfolio Recovery Associates, LLC Submitted to FTC,
(June 5, 2007), available at http://www.ftc.gov/os/comments/
debt collectionworkshop/529233-00022.pdf
(accessed Nov. 18, 2009) ........................................................ 14, 20, 21
Council of Better Business Bureaus and Javelin Strategy & Research,
2006 Identity Fraud Survey Report, (Jan. 31, 2006),
available in part at http://www.bbb.org/alerts/article.
asp?ID=651 (accessed Nov. 18, 2009) ............................................... 23
Tamara Draut & Heather McGhee, Demos, Retiring in the Red:
The Growth of Debt Among Older Americans (Feb. 2004),
available at http://www.demos.org/pubs/ Retiring_
2ed.pdf (accessed Nov. 18, 2009)......................................................... 3
Charles Duhigg, Bilking the Elderly with a Corporate Assist,
New York Times, A1 (May 20, 2007) ............................................... 12
Employee Benefit Research Institute, Notes, Debt of the Elderly
and Near Elderly, 1992–2007, Vol. 30, No. 10., (Oct. 2009)
available at http://www.ebri.org/pdf/notespdf/
EBRI_Notes_10-Oct09.DebtEldly.pdf (accessed
Nov. 18, 2009) ...................................................................................... 2
Fair Debt Collection (6th ed. 2008 & 2009 Supp.) ........................................ 3
Federal Reserve Board, Statistical Release - Consumer Credit Historical Data (Revolving), available at www.federalreserve.gov/releases/
g19/hist/cc_hist_mt.txt (accessed Nov. 18, 2009) ............................ 7, 8
Federal Trade Commission Annual Report 2009: Fair Debt Collection Practices Act, available at http://www.ftc.gov/
os/2009/02/P094804fdcpareport.pdf (accessed Nov. 18, 2009) .. 15, 16
Federal Trade Commission, Collecting Consumer Debts:
The Challenges of Change, A Workshop Report
(Feb. 2009), available at http://www.ftc.gov/bcp/
workshops/debtcollection/dcwr.pdf
(accessed Nov. 18, 2009) .......................................... 4, 9, 10, 16, 17, 23
Government Accountability Office, Credit Cards: Increased
Complexity in Rates and Fees Heightens Need for More
Effective Disclosures to Consumers, GAO-06-929, at 20-21
(Sept. 2006), available at www.gao.gov/new.items/d06929.
pdf (accessed Nov. 18, 2009) ............................................................... 9
Donna S. Harkness, When Over-The-Limit is Over The Top:
Addressing The Adverse Impact of Unconscionable
Consumer-Credit Practices on the Elderly, 16 Elder
L.J. 1 (2008) .......................................................................................... 1
Suein Hwang, Small Claims: Once-Ignored Consumer Debts
Are Focus of Booming Industry, Wall St. J., A4,
(Oct. 25, 2004) .................................................................................... 10
Matthew W. Ludwig, Abuse, Harassment, and Deception: How
the FDCPA is Failing America’s Elderly Debtors,
1 Elder L.J. 135 (2008) ......................................................................... 1
Caroline Mayer, New Breed Of Collectors Has Debtors
Seeing Red, Washington Post (May 28, 2005) ................................... 24
News Release, Historic Lawsuit Settlement for New Mexico...AG's
Pursuit Means Good News for Consumers (August 28, 2008),
available at http://www.nmag.gov/Articles/newsArticle.aspx?
ArticleID=484 .................................................................................... 16
News Release: ID Analytics Research Shows Highest Rates of
U.S. Identity Fraud in New York and the Western States,
ID Analytics, (February 14, 2007), available at http://www.
idanalytics.com/news_and_events/20070214a.html
(accessed Nov. 18, 2009) .................................................................... 23
News Release, Top 10 List of Consumer Complaints for 2008,
(Aug 31, 2009), http://www.naag.org/top-10-list-of-
consumer-complaints-for-2008-aug.-31-2009.php (accessed Nov. 18, 2009) ............................................................................................................ 15
News Release, Top Debt Buyers, http://www.creditcollectionsworld.com/pagedisplay.html? pagename=topdebtbuyers (accessed Nov. 18, 2009) ......................... 10
Corinna C. Petry, Do Your Homework; Dangers often lay hidden
in secondary market debt portfolio offerings. Here are lessons
from the market pros that novices can use to avoid nasty
surprises, Collections & Credit Risk, March 2007, pg. 24,
Vol. 12, No. 3) .................................................................................... 29
Portfolio Recovery Associates LLC, 2008 Annual Report to
SEC Form 10-K (Feb. 27, 2009), available at http://www.
sec.gov/Archives/edgar/data/1185348/000095013309000517/
w72980e10vk.htm (accessed Nov. 18, 2009) .............................. passim
Press Release, Attorney General Cuomo Launches Inquiry Into
Debt Collectors Across New York State, Cuomo Shuts Down
NY Collection Agencies That Threatened and Intimidated
Consumers Into Paying Debts They Didn't Owe, Sends
Subpoenas to Nearly 20 Debt Collectors Statewide
(May 27, 2009), http://www.oag.state.ny.us/media_
center/ 2009/may/may27a_09.html (accessed Nov. 18, 2009) .......... 16
Press Release, Attorney General Cuomo Sues To Throw Out
Over 100,000 Faulty Judgments Entered Against
New York Consumers In Next Stage Of Debt Collection
Investigation, 37 Law Firms and Collectors Named in
Lawsuit for Failing to Properly Notify New Yorkers Being
Sued for Owing Debt, Cuomo Seeks to Vacate Over
100,000 Faulty Judgments Statewide and Provide
Restitution to Victims, (July 22, 2009), http://www.
nydebthelp.com/ (accessed Nov. 18, 2009) ........................................ 16
Press Release, Illinois Attorney General Madigan Files Suit
Against Deceptive Debt Collection Agency Illinoisans
Allegedly Harassed For Payment On Uncollectible Debt,
May 18, 2006), http://www.illinoisattorneygeneral.gov/pressroom/
2006_05/ 20060518.html (accessed Nov. 18, 2009) ......................... 16
Press Release, Federal Trade Commission, Subprime Credit
Card Marketer to Provide At Least $114 Million in
Consumer Redress to Settle FTC Charges of Deceptive
Conduct (Dec. 19, 2008), http://www.ftc.gov/ opa/ 2008/12/compucredit.shtm (accessed Nov. 18, 2009) ....................... 16
Press Release, Federal Trade Commission, Nationwide Debt
Collector Will Pay $2.25 Million to Settle FTC Charges
(Nov 21, 2008), http://www.ftc.gov/opa/ 2008/11/academy.
shtm (accessed Nov. 18, 2009) ........................................................... 16
Press Release, Federal Trade Commission, Bear Stearns and
EMC Mortgage to Pay $28 Million to Settle FTC
Charges of Unlawful Mortgage Servicing and Debt
Collection Practices (Sept. 9, 2008), http://www2.
ftc.gov/opa/2008/09/emc.shtm (accessed Nov. 18, 2009) .................. 16
Press Release, Federal Trade Commission, Nationwide Debt
Collector Will Pay $1.3 Million to Settle FTC Charges
(Nov. 6, 2007), http://www2.ftc.gov/opa/2007/11/
debtcol.shtm (accessed Nov. 18, 2009) .............................................. 16
Michael Rezendes, Beth Healy, Francie Latour, Heather Allen,
and Walter V. Robinson (ed.), Debtor’s Hell, IV Part Series,
the Boston Globe, (July 30, 2006), available at http://www. boston.com/news /specials/debt (accessed Nov. 18, 2009) ................ 23
Report of the Civil Court of the City of New York, January 1, 1997 – December 31, 2006, A Decade of Change and Challenge in
“The People’s Court” 1997 – 2006 ................................................. 5, 6
Statement of Professor Elizabeth Warren, Senate Comm. On Banking, Housing & Urban Affairs, Examining The Billing, Marketing, And Disclosure Practices Of The Credit Card Industry And Their Impact On Consumers 3 (Jan. 25, 2007), http://www.banking.senate. gov/_files/warren.pdf (accessed Nov. 18, 2009) ..................................................................................................... 8
Truth in Lending (6th ed. 2007 & 2008) .......................................................... 3
Urban Justice Center, Debt Weight: The Consumer Credit Crisis
in New York City and its Impact on the Working Poor,
(Oct. 2007), available at http://www.urbanjustice.
org/pdf/publications/CDP_Debt_Weight.pdf
(accessed Nov. 18, 2009) .................................................. 13, 14, 29, 32
Liz Pulliam Weston, The Basics: ‘Zombie Debt’ is Hard to Kill, MSN Money (c. May 18, 2006), available at http://articles.moneycentral. msn.com/SavingandDebt/ManageDebt/ZombieDebtIsHardTo Kill.aspx ............................................................................................................ 24
STATEMENT OF INTEREST
Debt collections have increased across the county, corresponding to rapidly rising debt loads occasioned by growth and punitive practices in the credit card industry. Out of necessity and in rapidly increasing numbers, older people are using credit to pay for necessities like groceries, prescription drugs, and urgent house repairs. Deanne Loonin, Life and Debt Cycle Part 1, 3 (2006), available at http://www.nclc.org/issues/seniors_ initiative/content/rising_debt.pdf. Despite the convenience credit cards provide, problems occur for too many people when they cannot pay off the full amount due, carry forward a balance, and get caught in a downward spiral of exorbitant interest rates, fees and penalties, and other billing practices that quickly drive them hopelessly further into debt. This downward spiral worsens and traps even more households in recessionary periods. Numerous unfair practices by credit card lenders increase outstanding balances by millions of dollars, which can then become the subject of questionable debt collections.
Not only do people carry more credit card debt than before, but more are being buried in what may be considered unaffordable debt. An increasing number of older people -- from 7.3% in 2004 to 9.9% in 2007 -- have debt payments that exceed 40% of their income, and this increase is especially acute for older age groups. Employee Benefit Research Institute Notes, Debt of the Elderly and Near Elderly, 1992–2007, Vol. 30, No. 10. p.9 (Oct. 2009), available at
http://www.ebri.org/pdf/notes pdf/EBRI_Notes _10-Oct09.DebtEldly.pdf (accessed Nov. 18, 2009). The consequences of unaffordable debt can be devastating, especially at a time in one’s life when income typically decreases and remaining working years are limited. In addition, the more money devoted to servicing debt, the less there is available for savings and other resources to preserve income security and financial independence, and even the basic necessities of life.
AARP is a non-partisan, non-profit membership organization. As the leading organization representing the interests of people aged 50 and older, AARP is greatly concerned about the growing level of debt, including credit card debt, being incurred by older people, many of whom are especially vulnerable to debt collection abuses. See Matthew W. Ludwig, Abuse, Harassment, and Deception: How the FDCPA is Failing America’s Elderly Debtors, 1 Elder L.J. 135, 135-37, 151-56 (2008).
The National Consumer Law Center, Inc., (hereinafter “NCLC”) is a non-profit corporation. NCLC was organized in 1969 to conduct research, education and litigation to promote consumer justice. One of the NCLC's primary objectives is to provide assistance to attorneys advancing the interests of their low-income and elderly clients in the area of consumer law. Accordingly NCLC has focused considerable attention on laws to prevent abusive debt collection and unreliable
disclosure of the terms of consumer credit transactions. The Fair Debt Collection Practices Act and the Truth in Lending Act have been a major focus of the work of NCLC. NCLC publishes Fair Debt Collection (6th ed. 2008 & 2009 Supp.) and Truth in Lending (6th ed. 2007 & 2008), comprehensive treatises, each over 1000 pages, to assist attorneys, creditors and debt collectors in complying with the law.
SUMMARY OF ARGUMENT
Debt collectors aggressively pursue judicial collection of debts previously considered to be worthless and uncollectible. The evolution of the debt buying industry, particularly involving credit card debt, presents significant challenges for consumers and courts. The inherent difficulties in collection of stale debt in court often results in violation of the Fair Debt Collection Practices Act.
Despite efforts by legislatures, state Attorneys General, and the Federal Trade Commission (hereinafter “FTC”) to protect consumers, abuses abound, particularly with respect to judicial collections. The collection of stale debt increases the likelihood that errors in collection will occur because debt buyers refuse to purchase the evidence necessary to verify the validity of the debt and alleged debtors may lose important evidence over time. Debt collectors gain a litigation advantage as a result of this information gap, because the information necessary to verify disputes raised by alleged debtors is unavailable. Collection of time-barred and/or unverifiable debt plagues judicial collections where debtors are typically unrepresented. Abuses should be discouraged through strict adherence to pleading and evidentiary standards, as well as the strict application of statutes of limitations.
ARGUMENT
I. COLLECTION ABUSES ABOUND AS COLLECTION OF STALE DEBT INCREASES
Congress enacted the Fair Debt Collections Practices Act (hereinafter “FDCPA”) in 1977 to combat the “widespread and serious national problem” of debt collection abuse. Consumer Credit Protection Act, S. Rep. No. 95-382, at 2 (1977). At that time, Congress found:
While unscrupulous debt collectors comprise only a small segment of the industry, the suffering and anguish which they regularly inflict is substantial.
Id. Congress hoped that the FDCPA would provide a national framework within which honest collectors could effectively ply their trade. Consumers could rest easier, knowing that the rampant abuses that had characterized the collection industry would be halted. Specifically, the FDCPA was designed to “prohibit in general terms any harassing, unfair, or deceptive collection practice,” as well as to place restrictions on the manner in which debt collectors could contact debtors. Id. at 4. The authors of the Act also sought to curb “forum abuse,” in which “collectors would file suit against consumers in courts which are so distant or inconvenient that consumers are unable to appear. As a result, the debt collector obtains a default judgment and the consumer is denied his day in court.” Id. at 5. The Fair Debt Collection Practices Act was subsequently amended in 1986 to remove the exemption for attorneys collecting debts on behalf of the client. Pub. L. No. 99-361, 100 Stat. 768 (effective July 9, 1986). The sponsor of the bill explained that the legislation was “a direct response to the explosive growth in the number of law firms that had entered the debt collection business and were abusing the exemption.” Statement of Congressman Frank Annunizzo, 132 Cong. Rec. H10031 (Daily Ed. October 14, 1986); see Heintz v. Jenkins, 514 U.S. 291__ (1995) (holding ‘‘[t]he Act does apply to lawyers engaged in litigation”).
Despite legal protection from abusive debt collections, consumer complaints to state Attorneys General and the Federal Trade Commission about debt collection practices have exceeded those for any other specific industry for over 10 years.1 Complaints about third-party debt collectors and in-house collectors in 2008 totaled 104,661 complaints and accounted for 25.2% of all complaints the FTC received. Federal Trade Commission, Annual Report 2009 at 4, supra n.1.
1 News Release, Top 10 List of Consumer Complaints for 2008, (Aug. 31, 2009), http://www.naag.org/top-10-list-of-consumer-complaints-for-2008-aug.-31-2009.php (accessed Nov. 18, 2009); Federal Trade Commission, Annual Report 2009: Fair Debt Collection Practices Act 4, available at http://www.ftc.gov/os/ 2009/02/P094804fdcpareport.pdf (accessed Nov. 18, 2009).
Despite targeted enforcement actions by state Attorneys GeneralDespite targeted enforcement actions by state Attorneys GeneralDespite targeted enforcement actions by state Attorneys GeneralDespite targeted enforcement actions by state Attorneys GeneralDespite targeted enforcement actions by state Attorneys General
2 See Press Release, Attorney General Cuomo Launches Inquiry Into Debt Collectors Across New York State, Cuomo Shuts Down NY Collection Agencies That Threatened and Intimidated Consumers Into Paying Debts They Didn't Owe, Sends Subpoenas to Nearly 20 Debt Collectors Statewide (May 27, 2009), http://www.oag.state.ny.us/media_center/2009/may/ may27a_09.html (accessed Nov. 18, 2009); Press Release, Attorney General Cuomo Sues To Throw Out Over 100,000 Faulty Judgments Entered Against New York Consumers In Next Stage Of Debt Collection Investigation, 37 Law Firms and Collectors Named in Lawsuit for Failing to Properly Notify New Yorkers Being Sued for Owing Debt, Cuomo Seeks to Vacate Over 100,000 Faulty Judgments Statewide and Provide Restitution to Victims, (July 22, 2009), http://www.nydebthelp.com/ (accessed Nov. 18, 2009); Press Release, Illinois Attorney General Madigan Files Suit Against Deceptive Debt Collection Agency Illinoisans Allegedly Harassed For Payment On Uncollectible Debt, (May 18, 2006), http://www.illinoisattorneygeneral.gov/ pressroom/ 2006_05/ 20060518.html (accessed Nov. 18, 2009); News Release, Historic Lawsuit Settlement for New Mexico...AG's Pursuit Means Good News for Consumers (August 28, 2008), http://www.nmag.gov/Articles/newsArticle.aspx? ArticleID=484 (accessed Nov. 18, 2009).
3 For a list of cases, see Federal Trade Commission, Annual Report 2009: Fair Debt Collection Practices Act at 4.
4 Kathleen W. Johnson, Recent Developments in the Credit Card Market and the Financial Obligations Ratio, Fed. Res. Bulletin, Autumn 2005, at 474, available at
A. Debt Collections Correspond To Increasing Debt Load In A Deregulated Financial Landscape
Debt collection begins with credit, which has changed dramatically since 1977. Now, debt is pushed with little regard for ability to pay onto consumers who are already in a stressed financial condition.4 Frequently, creditors make their
http://www.federalreserve.gov/pubs/bulletin/2005/autumn05_ lead.pdf. (attributing increase in cardholding to the expansion of credit to riskier households--those that would not have previously qualified for a card).
5 Federal Reserve Board, Statistical Release - Consumer Credit Historical Data (Revolving), available at www.federalreserve.gov/releases/g19/hist/ cc_hist_mt.txt (accessed Nov. 18. 2009).
profits not from the regular repayment of the debt, but from the piling on of disproportionate fees and penalties. Id. From the lack of underwriting to creditor practices that encourage default, debt collection becomes inevitable.
The changes in the financial landscape since the FDCPA was passed have been dramatic. At the beginning of 1977, consumers carried revolving debt worth approximately $32 billion; by 2007 it had increased more than 27 times to $880 billion.5 In 1977, there was no interstate banking, and credit card companies had to obey the laws of the borrower’s home state. Federal Trade Commission, Statement of Basis and Purpose for the Credit Practices Rule, 49 Fed. Reg. 7740, 7747 (Mar. 1, 1984). Credit card deregulation, and the concomitant spiraling credit card debt began in 1978 with a Supreme Court decision allowing banks to locate in states with lax or no usury caps and to take the lax states’ interest limits across state lines. Marquette Nat’l. Bank of Minneapolis v First of Omaha Service Corp, 439 U.S. 299 (1978). Deregulation was furthered in 1996, with a Supreme Court ruling permitting credit card companies to avoid laws of the borrower’s home state governing a wide variety of fees. Smiley v. Citibank (SD), N.A., 517 U.S. 735 (1996).
A significant amount of debt load is increasingly exacerbated by punitive tactics of the credit card industry which keep consumers on a treadmill of spiraling debt, fees, and charges for as long as possible.6 Credit card lenders no longer impose high penalties in order to curb undesirable behavior by consumers.7 Industry tactics have intentionally trapped consumers into incurring added fees, practices which have been described as “widespread financial exploitation of the [ ] poor by overbearing credit card companies.” Discover Bank v. Owens, 822 N.E.2d 869, 875 (Ohio Mun. Ct. Clev. 2004). Indeed, “[a] debtor could pay nearly 100% of what she owed every year for the rest of her life, and thanks to the traps built in to her credit card, she would keep paying until she died—and still not pay off her card.” Statement of Prof. Elizabeth Warren, Senate Comm. On Banking, Housing & Urban Affairs, Examining The Billing, Marketing, And Disclosure Practices Of The Credit Card Industry And Their Impact On Consumers 3 (Jan. 25, 2007),
6 Center For Responsible Lending, The Plastic Safety Net: The Reality Behind Debt In America: Findings From A National Household Survey Of Credit Card Debt Among Low-And Middle-Income Households 20-21 (2005), available at http://www.responsiblelending.org/credit-cards/ research-analysis/ DEMOS-101205.pdf (accessed Nov. 18, 2009).
7 Government Accountability Office, Credit Cards: Increased Complexity in Rates and Fees Heightens Need for More Effective Disclosures to Consumers, GAO-06-929, at 20-21 (Sept. 2006), available at www.gao.gov/new.items/d06929.pdf (accessed Nov. 18, 2009). http://www.banking.senate.gov/_files/warren.pdf (accessed Jan 4, 2010). While the CARD Act may limit some such practices, the debt accumulated prior to the effective date will continue to be subject to collection. CITE
II. DEBT BUYERS SEEK TO COLLECT STALE DEBT PREVIOUSLY CONSIDERED UNCOLLECTIBLE
The debt collection industry has also evolved substantially, especially in the past decade. “The most significant change . . . has been the advent and growth of debt buying (i.e., the purchasing, collecting, and reselling of debts in default).” Federal Trade Commission, Collecting Consumer Debts: The Challenges of Change, A Workshop Report, iv, (Feb. 2009), available at http://www.ftc.gov/bcp/ workshops/debtcollection/dcwr.pdf (accessed Nov. 18, 2009) (hereinafter “Challenges of Change”). Greater efficiencies in the collection of debts, fed by technological and communications advances, have spawned the debt buying industry. See Robert M. Hunt, Collecting Consumer Debt in America, Fed. Res. Bank Phila. Bus. Rev., 15-16 (Q2 2007), available at http://philadelphiafed.org/files/br/2007/q2/hunt collecting-consumer-debt.pdf (describing the advent of WATS lines, predictive dialing, and computer software spurring debt collections); Challenges of Change at 13. These and other advances and practices significantly reduce transaction costs which traditionally hampered collections of small value and stale debts. Id. at 17 n.121. The debt buying industry focuses its collections on debts previously considered by creditors to be worthless. Stale debt is now a commodity that is parsed, sold, and often resold numerous times at auction to the highest bidder. See SEC v Merchant Capital, LLC, 483 F.3d 747, 750-51 (11th Cir. 2007); Suein Hwang, Small Claims: Once-Ignored Consumer Debts Are Focus of Booming Industry, Wall St. J., A4 (Oct. 25, 2004). Most stale debt is purchased for minimal cost, between 2 and 4 cents on the dollar and eventually for less than a penny on the dollar as it ages. See e.g., Hunt,
Collecting Consumer Debt at 15 (estimating the average price for the purchase of old debt at $0.045 per dollar); Cynthia Wilson, “Asset Acceptance to Post 15 Million in Revenue Impairments,” Oct. 26, 2007, available at http://www.insidearm.com (reporting debt buyer spent 1.9 cents on the dollar to acquire charged off debt in the third quarter of 2007).
The combination of low acquisition and transaction costs result in enormous profit margins on collection of defaulted debt. Indeed, the industry has been described as “‘one of the sexiest, one of the most financially lucrative businesses you can get into.’” Walter V. Robinson & Beth Healy, Regulators, Policy Makers Seldom Intervene, Boston Globe, Aug. 2, 2006, at A1 (quoting Donald Friedman, the chief operating officer of debt buyer Liberty Point Corporation). It is anticipated the collection industry will hold ___ worth of defaulted consumer debt by __ and have annual revenues worth $11.6 billion by 2011. Challenges of Change at 13. The estimated share of annual revenues that collection law firms will reap pursuing judicial collections on behalf of debt buyers is $2.3 billion by 2011. Id.
While the promise of greater profit margins may encourage aggressive collection of increasingly stale debt, the “inverse relationship between the age of a portfolio and the price at which [debt buyers] will purchase the portfolio . . . is due to the fact that older receivables typically are more difficult to collect.” Portfolio Recovery Associates LLC, 2008 Annual Report to SEC Form 10-K, 8 (Feb. 27, 2009), available at http://www. sec.gov/Archives/edgar/data/1185348/000095013309000517/w72980e10vk.htm (accessed Nov. 18, 2009) (hereinafter “Portfolio 10-K”).8 Judicial collection is used increasingly by debt buyers to collect and re-age stale debt.9 An exposé of
8 Portfolio Acquisitions is one of 5 publicly traded debt buyers. Others include Asset Acceptance Corp., Encore, and ____. CACV is one of an estimated 6000 privately held debt buyers. CITE
9 Obtaining a judgment permits collectors in nearly every state to pursue debt collection indefinitely. See 1 William Houston Brown, The Law of Debtors and Creditors § 6:79 (rev. ed. Supp. 2007). A few states prohibit plaintiffs from pursuing judgments indefinitely. See, e.g., N.D. Cent. Code § 28-20-35 (2007) (requiring the cancellation of all judgments or renewals after twenty years); Or. Rev. Stat. § 18.194 (2005) (limiting a judgment lien to ten years with one renewal permitted); Wash. Rev. Code § 4.56.210 (2006) (limiting a judgment lien to ten years with one renewal permitted).
The need to free the debtor from this cloud of liability is the primary justification for bankruptcy's "fresh start." 60 Fla. L. Rev. 1 (quoting Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934) ("[Bankruptcy] gives to the honest but unfortunate debtor who surrenders for distribution the property which he owns at the time of bankruptcy, a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of pre-existing debt.")). It is largely unavailable to a large number of debtors, however, following passage of the Bankruptcy Reform Act of 2005, which had an immediate and dramatic effect on reducing the number of bankruptcy filings.
debt collectors in the Massachusetts trial courts illustrated the enhanced role of the debt collector in shaping the court’s mostly debt collection docket. Michael Rezendes, Beth Healy, Francie Latour, Heather Allen, and Walter V. Robinson (ed.), Debtor’s Hell, IV Part Series, Boston Globe (July 30, 2006), available at http://www.boston.com/ news/specials/debt/ (accessed Nov. 18, 2009) (hereinafter “Debtor’s Hell”). In Virginia state courts, 90% of the cases filed are collection cases. 60 Fla. L. Rev. 1
Collectors use sophisticated computer models that predict which collection methods are most likely to achieve results with a particular debtor. See Hunt, Collecting Consumer Debt, at 15-16. Debt collectors review for legal action “[a]ccounts for which the consumer has the likely ability, but not the willingness, to resolve their obligations.” Portfolio 10-K at 8. Logically, therefore, the judicial environment itself is critical to a debt buyers’ ability to collect stale debts. Debt buyers therefore look beyond the attributes of the debts and debtors to determine the distribution in states with collection-friendly laws and procedures. They “review the geographic distribution of accounts within a portfolio because [they] have found that certain states have more debtor-friendly laws than others and, therefore, are less desirable from a collectibility perspective.” Id. at 8. Moreover, changes in the collection law may prompt debt buyers to “pursue selective expansion into different geographic regions if analysis indicates it is favorable to do so.” Asset Acceptance Capital Corp., 2008 Annual Report to SEC Form 10-K, 10 (Mar. 5, 2009), available at
Courts should anticipate that the total number of collections will continue to increase, particularly as unemployment and debt load rises and debt portfolios becomes more stale and difficult to collect by means other than judicial proceedings.10 According to one debt collector, “[a]s our portfolio matures, a
10 According to the FTC, “with the recent economic downturn, there has been an increase in consumer delinquency levels. For example, in January 2009, late payments on U.S. credit cards topped record levels, and defaults rose sharply to just below all-time highs. Charge-offs on prime, general-purpose credit cards reached 7.5% in December 2008, 40% higher than in December 2007. Charge-offs on retail store credit cards were at 10.51% in December 2008, up 44% from a year before.” Challenges of Change at 12
larger number of accounts will be directed to our outsourced collections department for judicial collection; consequently, we anticipate that legal collections will grow commensurately and comprise a larger percentage of our total cash collections.” Portfolio 10-K at 8.
In light of the increasing reliance by debt buyers on judicial collections, “[t]he judiciary continues to provide an important role in safeguarding consumer rights and in overseeing the fairness of the debt collection process.” MBNA America Bank, N.A., v. Nelson, 15 Misc. 3d 1148[A], *1, 841 N.Y.S.2d 826 (Table N.Y. Civ Ct. 2007). The MBNA court warned that:
The entire [debt buying] industry is a game of odds, and in the end as long as enough awards are confirmed to make up for the initial sale and costs of operation the purchase is deemed a successful business venture. However, during this process mistakes are made, mistakes that may seriously impact consumers and their credit.
Id. The court aptly observed that debt is sold at such a cheap price for “the simple fact that the proof required to obtain a judgment in the creditor’s favor is lacking, usually as a result of poor record keeping on the part of the creditor.” MBNA at *2 (emphasis added). This problem is compounded by multiple re-sales of debt. For example, according to an officer of an Illinois debt buyer who had purchased, or ostensibly purchased, bad paper, “[t]he same portfolio is sold to multiple buyers; the seller doesn't actually own the portfolio put up for sale; half the accounts are out of statute; accounts are rife with erroneous information; access to documentation is limited or nonexistent.” Corinna C. Petry, Do Your Homework; Dangers often lay hidden in secondary market debt portfolio offerings. Here are lessons from the market pros that novices can use to avoid nasty surprises, Collections & Credit Risk, (March 2007), pg. 24, Vol. 12, No. 3.
III. INADEQUATE DATA BEGETS ABUSIVE COLLECTION PRACTICES
Inherent failures of the debt buying industry create an information gap that makes both consumers and the courts vulnerable to manipulation and abuse. According to the FTC,
The first major problem is that debt collectors have inadequate information when they seek to collect from consumers. This increases the likelihood that collectors will reach the incorrect consumer, try to collect the wrong amount, or both. . . A related information problem is that the limited information debt collectors obtain in verifying debts is unlikely to dissuade them from continuing their attempts to collect from the wrong consumer or the wrong amount.
Challenges of Change at iv-v.
In most debt buyer transactions, only small portions of electronic information regarding the alleged account is provided or available to the first debt buyer, despite the fact that original “[c]reditors typically store itemized data for all of their accounts in large electronic databases during the entire time they own the accounts.” Challenges of Change at 31. Typically, “the initial data provided by the seller [ ] includes information such as the date of delinquency, the date of last payment, last known address, balance due, the debtor’s personal identification information, and the history of the account.” DBA Comments at 8.
11 Comment of Nat’l. Consumer Law Cntr. Submitted to FTC, 12-13, (June 6, 2007), available at http://www.ftc.gov/os/comments/debtcollection workshop/529233-00018.pdf (accessed Nov. 18, 2009) (hereinafter “NCLC Comments”).
• consumer complaints about billing errors
• payments not credited
• settlement agreements not honored
• identity theft
• mistaken listing of an account user as an account holder responsible for the whole account balance
• the consumer’s representation by an attorney
• the contract, or
• payment history.
The limited data that is purchased often provides an inadequate basis on which to seek a judgment. The FTC concluded that “[w]hen accounts are transferred to debt collectors, the accompanying information often is so deficient that the collectors seek payment from the wrong consumer or demand the wrong amount from the correct consumer.” Challenges of Change at 25. As a result, debtors seeking validation of a debt typically are unable to gain access to any information about the account being collected. Debt buyers do not pay for – and have very limited or no access to – documentation which would constitute admissible evidence to prove the debtor in fact opened the account, used the credit card, or agreed to the terms, interest rates, or attorneys fees imposed and added to the purported principal amount. Lack of information also deprives the consumer of the ability to challenge erroneous transactions or demonstrate how much of their debt is due to purchases versus questionable finance charges and junk fees. See Amended Order Overruling Objection to Claims, In re Blair, Civ. No. 02-1140 (W.D.N.C. Feb. 10, 2004) (finding claims against 31 different individuals in bankruptcy court by major credit card company revealed that on average, 57% of the debts consisted of interest and fees).
Debt buyers do not deny that lack of information provided to the assignee about the debt they have purchased is a significant problem inherent to the industry as a whole. They concede that “(t)he lack of such records fail to serve the interests of consumers in obtaining documentation of disputed accounts or the legitimate interests of credit grantors and debt collectors in collecting debts that are genuinely owed.” Portfolio Comment at 2. They also acknowledge that lack of information masks valid defenses: “[i]f the credit originator fails to comply with applicable statutes, rules and regulations, it could create claims and rights for consumers that could reduce or eliminate their obligations to repay the account and have a possible material adverse effect on us.” Portfolio 10-K at 18. Debt buyers nevertheless defend the industry practice, claiming that “[t]he due diligence process and representations and warranties in the purchase agreement help ensure the accuracy and integrity of the debts sold.” CITE ACA Comments Id at 13. To hedge against such risks, debt buyers “contractually require credit originators to indemnify [buyers] against any losses caused by their failure to comply with applicable statutes, rules and regulations relating to the receivables before they are sold to us.” Portfolio 10-K at 18.
While such warranties may protect the first debt buyer, they do not protect subsequent purchasers when debt is resold, nor do they protect the debtor. For example, CACV specifically disclaimed the accuracy of the data provided in the underlying suit, and the law firm acknowledged that the data was a “problem batch”. Moreover, as the facts in this case clearly demonstrate, regardless of the accuracy of the data, collection abuses result when collectors fail to evaluate even the limited data that is available and ignore obvious legal impediments to pursuing a collection. Despite industry-wide recognition of the information problems, collectors unfairly and inaccurately portray alleged debtors as “deadbeats” and seek to excuse their own role in and responsibility for ignoring such defenses. Such arguments in this case were rejected by the jury below, and by the court which found as a matter of law that JRL violated the FDCPA by seeking attorneys fees to which was not entitled pursuant to the underlying contract, which it had never read and could not produce. Debtors with valid disputes face significant frustration as a result of the inadequate information purchased by debt buyers generally. “It is unsurprising when a consumer/debtor contacted by a collection agency about a seven-year-old debt would question whether it was a valid obligation.” Midland Funding LLC v. Brent, 3:08-cv-1434, 2009 WL 2437243, *8 (N.D. Ohio 2009). The FDCPA imposes two specific verification requirements on debt collectors: obtaining verification from the creditor and mailing that verification to the debtor. 15 U.S.C. § 1692g(b). These requirements are designed to prevent debt collectors from “dunning the wrong person or attempting to collect debts which the consumer has already paid.” Chaudhry v. Gallerizzo, 174 F.3d 394, 406 (4th Cir. 1999); accord Clark v. Capital Credit & Collection Servs., 460 F.3d 1162, 1173-1174 (9th Cir. Or. 2006). The verification requirement demands more than that the debt collector merely repeat its assertion that a debt is due. Id. at __; Norton v. Wilshire Credit Corp., Civ No. 95-3223, 1997 U.S. Dist. LEXIS 23360, *22 (D.N.J. Jul. 14, 1997); Semper v. JBC Legal Group, No. C04-2240L, 2005 WL 2172377, *14 (W.D. Wash. Sept. 6, 2005) (finding “[s]imply repeating second-or third-hand information in the debt collector’s file ... is insufficient under the statute.”).
Unfortunately, problem data begets and perpetuates problem collections. Even if a particular collector agrees to cease collection following the validation process, it may nevertheless sell the debt to another debt buyer, who will in turn have inadequate or erroneous information about the disputed debt. Debt buyers are also known to sell debt which is ostensibly the result of identity theft,have inadequate or erroneous information about the disputed debt. Debt buyers are also known to sell debt which is ostensibly the result of identity theft,have inadequate or erroneous information about the disputed debt. Debt buyers are also known to sell debt which is ostensibly the result of identity theft,have inadequate or erroneous information about the disputed debt. Debt buyers are also known to sell debt which is ostensibly the result of identity theft,have inadequate or erroneous information about the disputed debt. Debt buyers are also known to sell debt which is ostensibly the result of identity theft,have inadequate or erroneous information about the disputed debt. Debt buyers are also known to sell debt which is ostensibly the result of identity theft,have inadequate or erroneous information about the disputed debt. Debt buyers are also known to sell debt which is ostensibly the result of identity theft,
12 Almost nine million people, or four percent of the United States population, were victims of identity fraud in 2006. Council of Better Business Bureaus and Javelin Strategy & Research, 2006 Identity Fraud Survey Report, (Jan. 31, 2006), available in part at http://www.bbb.org/ alerts/article.asp?ID=651 (accessed Nov. 18, 2009).
13 See, e.g., Turner v. J.V.D.B. & Assocs., Inc., 330 F.3d 991 (7th Cir. 2003) (collector’s ignorance of the consumer’s bankruptcy did not excuse its post-discharge violation of 15 U.S.C. § 1692e by seeking payment of a discharged debt).
14 There are numerous accounts of such collections. See, e.g., Eileen Ambrose, “Debt That Won’t Die,” Baltimore Sun (May 6, 20070, available at http://www.baltimoresun.com/business/investing/balbz.ambrose06may 06,0,5473187.column (accessed Nov. 18, 2009); Michael Rezendes, Beth Healy, Francie Latour, Heather Allen, and Walter V. Robinson (ed.), Debtor’s Hell, IV Part Series, Boston Globe (July 30, 2006), available at http://www.boston.com/news/specials/debt/ (accessed Nov. 18, 2009); Liz Pulliam Weston, The Basics: ‘Zombie Debt’ is Hard to Kill, MSN Money (c. May 18, 2006), available at http://articles.moneycentral.msn.com/Saving andDebt/ManageDebt/Zombie DebtIsHardToKill.aspx (accessed Nov. 18, 2009); Caroline Mayer, New Breed Of Collectors Has Debtors Seeing Red,” Washington Post (May 28, 2005).
IV. JUDICIAL COLLECTION OF STALE DEBT IS FRAUGHT WITH PROBLEMS
Courts operate at ground zero of the debt collection explosion. While the FTC acknowledges the persistence and increasing incidence of abusive debt collection complaints, it notes that “[v]irtually all collection proceedings are decided in state court through the application of state substantive and procedural law.” Challenges of Change at 65. Accordingly, the FTC believes that “states should take primary responsibility to address abuses in the debt collection process.” Id. But burgeoning dockets of collections cases are presenting challenges to courts across the country. “Judges have expressed concern that the burden of handling the number of debt collection lawsuits on their dockets is making it difficult for them to handle other cases in an expeditious manner.” Challenges of Change at 56.
One significant concern is that “debt collection efforts are initiated and proceed through the court process despite insufficient proof demonstrating that a debt is actually due and owing.” Comment of New York City Department of Consumer Affairs Submitted to FTC, at 2 (Nov. 9, 2007), available at http://www.ftc.gov/os/comments/debtcollection workshop/ 529233-0055.pdf (accessed Nov. 18, 2009); Debtor’s Hell. Lacking adequate proof, debt buyers nevertheless pursue purported debtors by simply offering up an affidavit from an employee in their loss recovery department and/or suing on an account-stated theory. See, e.g., Citibank (SD) N.A., v. Whiteley, 149 S.W.3d 599 (Mo. Ct. App. 2004); Asset Acceptance Corp. v. Proctor, 804 N.E.2d 975 (Ohio Ct. App. 2004). Collectors fully understand that some courts reject such shortcuts. “When we collect accounts judicially, courts in certain jurisdictions require that a copy of the account statements or applications be attached to the pleadings in order to obtain a judgment against the account debtors. If we are unable to produce account documents, these courts will deny our claims.” Portfolio 10-K at 19.
Nevertheless, debt collectors in general, and debt buyers in particular, frequently file lawsuits that may not be factually valid and which they are not prepared to litigate, with the expectation that a large number of consumers will default or be unable to defend themselves. Even when a debt collector violates the law, the chances of being caught are minimal and the consequences are cheap. Collectors routinely seek a continuance or drop a claim if a debtor shows up to contest. CITE But as demonstrated in this case, when a debtor is able to defend himself, debt collection law firms may be left scrambling, because their practices fail to ensure the availability of data and documents necessary to prove a claim. CITE TO PANICKED EMAIL As this Court has “oft repeated, it does not seem ‘unfair to require that one who deliberately goes perilously close to an area of proscribed conduct shall take the risk that he may cross the line.’” Clark v. Capital Credit & Collection Servs., 460 F.3d 1162, 1171-1172 (9th Cir. Or. 2006) (quoting FTC v. Colgate-Palmolive Co., 380 U.S. 374, 393 (1965).
A. Collectors File Collection Cases Knowing Most Will Result In Default Judgments
Because most debt buyer lawsuits result in victory by default, collectors benefit from the probability that debtors will not be able to defend themselves. A recent report found that in 2006, collectors in New York City were able to obtain default judgments in 80% of cases filed, and ninety percent of those cases were brought by debt buyers, similar to experiences in other jurisdictions. Urban Justice Center, Debt Weight: The Consumer Credit Crisis in New York City and its Impact on the Working Poor, Oct. 2007, p. 1. Even more startling, debt buyers have learned to work the system to win judgments and coerce payments even when they have the wrong person, or lack any evidence that the consumer owes the debt. As in this case, they may even ignore evidence that affirmatively demonstrates the statute of limitations has run on the debt, hoping to induce payment of the debt. See Avila v. Rubin, 84 F.3d 222, 229 (7th Cir. 1996) (noting “[a]n unsophisticated consumer, getting a letter from an ‘attorney,’ knows the price of poker has just gone up.”). Collectors know that filing a lawsuit further raises the “price of poker” because
[T]he judgment will impose costs on the consumer by damaging the consumer's credit rating. Note that a damaged credit rating does more than merely raise the consumer's cost of credit. A damaged credit score can make it difficult to rent an apartment, find a job, or even purchase automobile insurance. . . . credit reports typically do not record the filing of the lawsuit, but they do record judgments. Therefore, a civil filing serves as a credible threat to inflict harm on the defendant and may induce the defendant to pay.
60 Fla. L. Rev 1 at (n121). Thus, the credible threat of a lawsuit is often enough to make an alleged debtor fold his hand, even if he has an iron-clad defense.
Moreover, the typical alleged debtor faced with a court summons may believe that a collector would not be able to bring a case that could not be proven in court and that he has no choice but to make payments if he wishes to avoid a judgment. See Kimber v. Federal Financial Corp., 668 F. Supp. 1480, 1489 (M.D. Ala. 1987) (reasoning that unsophisticated "consumers would unwittingly acquiesce" to a time-barred lawsuit instead of defending against it). Indeed, many older people believe they will have to go to jail if they are summonsed to court. See Donna S. Harkness, When Over-The-Limit is Over The Top: Addressing The Adverse Impact of Unconscionable Consumer-Credit Practices on the Elderly, 16 Elder L.J. 1, 3-4 (2008). Debtors do not understand that statistically, debt buyers have no possible way of obtaining evidence in the vast majority of cases they file.
B. Statutes Of Limitations Are Not Simply Technicalities
The United States Supreme Court repeatedly has pointed out that “[s]tatutes of limitations are not simply technicalities. On the contrary, they have been long respected as fundamental to a well-ordered judicial system.” Bd. of Regents v Tomanio, 446 U.S. 478, 487 (1980). When a collector pursues a stale claim, “the search for truth may be seriously impaired by the loss of evidence, whether by death or disappearance of witnesses, fading memories, disappearance of documents, or otherwise.” United States v. Kubrick, 444 U.S. 111, 117 (1979) (quoting R.R. Telegraphers v Ry. Express Agency, 321 U.S. 342, 349 (1944)); Kimber v Federal Fin. Corp., 668 F. Supp. 1480, 1487 (M.D.Ala. 1987). Indeed, “it is unjust to fail to put the adversary on notice to defend within a specified period of time and that the right to be free of stale claims in time comes to prevail over the right to prosecute them.” Kubrick, 444 U.S. at 117.
This recognition is especially critical in cases involving primarily pro se debtors. Kimber explained that
“[T]he unfairness of [filing suit on a time-barred debt] is particularly clear in the consumer context where courts have imposed a heightened standard of care -- that sufficient to protect the least sophisticated consumer. Because few unsophisticated consumers would be aware that a statute of limitations could be used to defend against lawsuits based on stale debts, such consumers would unwittingly acquiesce to such lawsuits.”
Id. Despite the fundamental unfairness, collectors nevertheless sue on time-barred debt to coerce debtors to pay. In Miller, the Court noted that
even if the consumer realizes that she can use time as a defense, she will more than likely still give in rather than fight the lawsuit because she must still expend energy and resources and subject herself to the embarrassment of going into court to present the defense; this is particularly true in light of the costs of attorneys today.”
Miller v. Upton, Cohen & Slamowitz -- F. Supp. 2d --, 1:01-cv-01126-RRM-RML, 2009 U.S. Dist. LEXIS 92414 21-22, 2009 WL 3212556, (E.D.N.Y. Sept. 30, 2009).
Numerous courts similarly have held that bringing legal action to collect a debt that is time-barred is an abusive debt collection practice under the FDCPA. See Castro v. Collecto, Inc., No. EP-08-CA-215-FM, 2009 U.S. Dist. LEXIS 99703, 2009 WL 3617557, at *8 & n.52 (W.D. Tex. Oct. 27, 2009) (collecting cases). Johnson v. Bullhead Invs., LLC, Civ. NO , 2010 U.S. Dist. LEXIS 2382 (M.D.N.C. Jan. 11, 2010). A debt collector may not file time-barred lawsuits against a debtor where it knows or reasonably should have known it was time-barred. Ramirez v. Palisades Collection LLC, Civ. NO . 2008 U.S. Dist. LEXIS 48722 (N.D. Ill. June 23, 2008); Stepney v. Outsourcing Solutions, Inc., No. 97 C 5288, 1997 U.S. Dist. LEXIS 18264, 1997 WL 722972, at *4 (N.D. Ill. Nov. 13, 1997) (Conlon, J.); Parkis, Civ. NO , 2008 U.S. Dist. LEXIS 1212, 2008 WL 94798, at *7 (filing of a suit that appears time-barred and where plaintiff knew or should have known that the claim was time-barred violated §§ 1692e & 1692f); Baptist v. Global Holding & Inv. Co., No. 04 C 2365, 2007 U.S. Dist. LEXIS 49476, 2007 WL 1989450, at *5 (E.D.N.Y. July 9, 2007) (where statute of limitations undeniably barred claim, threat of litigation violated § 1692e); Goins v. JBC & Assocs., P.C., 352 F. Supp. 2d 262, 272 (D. Conn. 2005); Beattie v. D.M. Collections, Inc., 754 F.Supp. 383, 393 (D. Del. 1991).
In addition to viewing the FDCPA claims through the eyes of an “unsophisticated debtor,” courts justifiably require of attorneys a basic level of professionalism and independent judgment when they file litigation and do not tolerate excuses for failure to exercise professional care. As this Court held in Reichert v. National Credit Systems, Inc., 531 F.3d 1002 (9th Cir. 2008), a collector cannot rely on its referring client even when the client had provided accurate information in the past. See also Turner v. J.V.D.B. & Assocs., Inc. 318 F. Supp. 2d 681 (N.D. Ill. 2004) (granting summary judgment for consumer on bona fide error defense, finding collector’s procedures inadequate; passive reliance on creditor or debtor for information regarding bankruptcy not enough, and; collector’s contract with creditor did not spell out creditor’s duties in case of bankruptcy; bankruptcy appeared on debtor’s credit reports;).
In Miller, the court criticized attorney reliance on the evaluation of governing law made by previous collectors and the failure to undertake any independent review as being “a naked attempt to substitute their judgment for his own in derogation of his professional duties and his obligations under the FDCPA.” Miller at *10. Failure to evaluate core issues of the case, even if it may not go to the validity of the alleged debt, implicates basic concerns of attorney competence and speaks directly to an appreciable lack of professional care in preparing the matter for debt collection and/or legal action. The Miller court concluded:
in cases such as here, where an attorney commences suit in so uninformed a manner that he is ignorant even as to what law governs his suit, it cannot be said that he has undertaken a level of review sufficient to satisfy even the most general requirements applicable to attorney conduct, let alone the more focused review requirements established by the FDCPA.
Id. at *13.
In this case, JRL similarly seeks to avoid the consequences for its failure to exercise sufficient judgment before filing litigation on a debt it knew or should have known was time barred, even considering the limited information it had. As in Reichert, this court should reject JRL’s contention that it is entitled to a bona fide error defense, particularly where its practices and procedures "amounted to no more than a veneer of compliance with the FDCPA." Nielson v Dickerson. at 638; Miller; Turner.
C. Courts Should Be Able To Rely On Representations Of Attorneys
Because of the high rate of default judgments entered in debt collection cases, courts are forced to rely primarily on affidavits and representations of collectors. Courts should be able to, but currently cannot, rely on the collector and attorney to supply adequate documentation of the defendant’s obligation in each case. The Court in Midland explained: Considering public policy, it is also worth noting many debt collection cases of these types place courts in the position of evaluating the validity of the plaintiff's claim without any response from the defendant. Thus, in general terms, courts rely on the assertions in an affidavit to determine, among other things, whether the debt is valid and judgment, usually default judgment, should be granted. . . The contents of the affidavit itself, and in particular the fact that the affiant allegedly had personal knowledge that the debt was valid, would effectively serve to validate the debt to the reader, whether that was [a debtor] or a court.
Id. at __. Thus, “[a]s in the analogous Rule 11 context, an attorney responsible for issuing and executing a legal document ‘must make a reasonable inquiry personally.’” Miller at *8. Requiring strict adherence to legal standards deters collection law firms from merely “review[ ] the collection files with such speed that no independent judgment could be found to have been exercised, and then issue[ ] form collection letters with the push of a button.” Id. (quoting Garr v U.S. Healthcare, Inc., 22 F.3d 1274, 1280 (3d Cir.1994)). Miller?
The fact that judgment is often entered on default does not excuse making assertions which are known to be untrue in order to obtain a judgment or other attorney conduct which clearly violates the FDCPA. Courts justifiably are frustrated by the lack of professionalism and noncompliance with legal standards by debt collectors. Seipel v. Olympic Coast Investments, 2008 MT 237, ¶¶ 26-27, 344 Mont. 415, 188 P.3d 1027 (2008) (“use of the courts to file a baseless legal claim”). One court lamented, “With great frequency, courts are presented with summary judgment motions by credit card issuers seeking a balance due from credit card holders which motions fail to meet essential standards of proof and form in one or more particulars.” Citibank (SD), N.A. v. Martin, CIV NO 2005 NY Slip Op 25536, 11 Misc. 3d 219, 807 N.Y.S.2d 284 (Civ Ct., New York Co. Dec. 16, 2005). See also, MRC Receivables Corp. v. Zion, No. 60926-2-I, 2009 WL 3418132, *3 (Wash. App. Div 1 2009) (finding even if collector established delinquent account beyond question, it provided “no direct or even indirect proof of any written assignment” and “failed to meet its burden of establishing that it was entitled to judgment as a matter of law”); Resurgence Financial, LLC v. Taylor, 05-07-01492-cv, 2009 WL 2712387, *4 (Tex.App.Dallas 2009) (affirming dismissal where evidence reflected a variety of conflicting rates and requirements and was insufficient to support the default judgment requested); Nelson v. First Nat’l Bank Omaha, 2004 WL 2711032 (Minn. Ct. App. Nov. 30, 2004) (no signed credit card application); Asset Acceptance Corp. v. Proctor, 804 N.E.2d 975 (Ohio Ct. App. 2004) (debt buyer failed to provide documentation of the charges, debits, and credits to permit court to calculate the balance claimed to be due).
The attorney conduct in this case was particularly egregious. Far from being an innocent mistake, the trial court found that JRL served requests for admissions which asserted facts the collection law firm knew to be untrue. The court found this tactic, which “appear[ed] to be designed to conclusively establish each element of [the] case and to use the power of the judicial process against a pro se defendant to collect a time-barred debt . . . is abusive, unfair and unconscionable.” McCollough v. Johnson, Rodenberg & Lauinger, 610 F. Supp. 2d 1247, 1256 (D. Mont. 2009). This finding is consistent with that of other courts rebuking conduct which not only harms debtors, but which also implicate the validity of the court’s judgments. See, e.g., Harrington v. CACV of Colo., LLC, 508 F. Supp. 2d 128, 139 (D. Mass. 2007) (finding "[i]f Defendants intentionally moved for default when they knew that Harrington was not in default, lying to the state court in order to harass or trick Harrington, there is no doubt that that would involve "unfair surprise," and would be unconscionable by any definition.”); Midland at 969 (noting “[i]t is unclear to this Court why such a patently false affidavit would be the standard form used at a business that specialized in the legal ramifications of debt collection.”). CITE E Case from NY
CONCLUSION
The Court should affirm the judgment of the lower court.
Respectfully Submitted,
____________________________
Julie Nepveu
AARP Foundation Litigation
Michael Schuster
AARP
601 E Street, NW
Washington, DC 20049
(202) 434-2060 CERTIFICATION OF COMPLIANCE PURSUANT TO
FED. R. APP. P. 32(a)(7)(C) AND CIRCUIT RULE 32-1
FOR CASE NUMBER 09-35767
I certify pursuant to Fed. R. App. P. 32(a)(7)(C) and Ninth Circuit Rule 32-1 that the attached Brief of Appellee complies with the type-volume limitation of Fed. R. App. P. 32(a)(5)and (6) as it is proportionately spaced, has a typeface of 14 points, and contains 6,622 words, excluding the portions exempted by Fed. R. App. P. 32(a)(7)(B)(iii).
Date: April 5, 2010 ________________________
Julie Nepveu
CERTIFICATE OF SERVICE
I hereby certify that on this 5th day of April, 2010, I electronically filed the foregoing Brief Amicus Curiae of AARP and National Consumer Law Center with the Clerk of the Court for the United States Court of Appeals for the Ninth Circuit, with service of copies to the following counsel using the appellate CM/ECF system,
John C. Heenan, Esq. John E. Bohyer, Esq.
HEENAN LAW FIRM Fred Simpson, Esq.
2602 1st Ave. N., Suite 305 Jessie Lundberg, Esq.
PO Box 2278 BOHYER, SIMPSON & TRANEL, PC
Billings, MT 59103 P.O. Box 7729
Telephone: (406) 839-9091 Missoula, Montana 59807-7729
Facsimile: (406) 839-9092 Telephone: (406) 532-7800
Email: john@heenanlawfirm.com Facsimile: (406) 549-2253
Attorneys for Plaintiff/Appellee Email: mail@bstlawfirm.com
By:___/s/_______________
Got a letter from an attorney office yesterday that their is a class action law suit against CACH LLC and that my name is involved in it because of their shady practice and violation of laws of debt collection, This is only for accounts that was through Providian.
Has anyone else gotten this letter and a claim form. I am going to read it over more thoroughly this weekend and send the claim form in. They have agreed to settle.
My question is, since They sued me and it has just been laying stale for 3 years, they more or less just filed the paperwork and never moved on it. I answered so not to let them get a default judgement. If they are settling this matter does this make them suing me null and void, can I produce this documentation as evidence?
_________________
Goodnatured,
http://cashinpocket.synthasite.com/
for all the ways I make $$ online
http://www.crazymonkeygold.com/members/register.php?ref=fedupinpa |
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cinnamngrl
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fireyone
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|  Thu Feb 18, 2010 3:16 am |
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| I remember you mentioning this quite a while ago and coming back and asking about what to do. I would send in the letter to the atty office and be a part of the lawsuit. Maybe Cinnamon can tell you how to get this lawsuit advanced and dismissed. I know it has been a burden on you. I have dealt with Cach in the past but never replied to any of thier letters. They ended up selling my account. |
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cinnamngrl
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Aaron
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| Subject: class action lawsuit and settlement |
| Thu Feb 18, 2010 12:43 pm |
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Hi goodnatured,
If the collection company wants to settle, and if you really owe the debt, you can go in for the settlement. However you should get a written copy of the settlement. As far as I understand, while agreeing for the settlement, you can ask the company to remove the collections from your report. This may help to get it removed from your report.
If the judgment had been filed against you, you can try for the vacate judgment option. That may get rendered.
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| Fri Feb 19, 2010 1:35 am |
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| the collection doesn't want to settle. they file a civil suit and it is just sitting there. I would ask to advance and dismiss it, then collect on the class action against Cash |
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Aaron
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| Subject: reply |
| Fri Feb 19, 2010 12:26 pm |
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Hi,
You can advance the case, and then file a motion with the court to dismiss the lawsuit, mentioning the details of your original contract. As far as I understand, your case will get stronger if you will be able to provide with the copy of the class action filed against the company.
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goodnatured
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| Mon Feb 22, 2010 11:47 am |
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cinnamngrl
Can you provide detail on how to advance a case please, I am not real sure how to do this? |
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cinnamngrl
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goodnatured
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| Tue Feb 23, 2010 12:18 pm |
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| I am in Pennsylvania and it is the court of common pleas, civil case. The clerk there has been real helpful through out all of this so she may be a good source, thank you, I will contact them some time next week. |
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fireyone
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| Wed Feb 24, 2010 9:54 pm |
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Wow after all the time asking what can be done FINALLY an answer. I would go to the courthouse since they have been really helpful and let them know about the lawsuit pending against CACH and ask them how you can include this information in with your request to dismiss.
Does anyone know how the actual dismissal works? Is there a hearing or is it simply done by mail?How long does it usually take to get results? |
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Aaron
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| Subject: dismisaal of a lawsuit |
| Thu Feb 25, 2010 6:06 am |
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Hi,
As far as I understand, when a lawsuit gets dismissed, there is a hearing on the case. I don't know exactly anything about the time taken to dismiss a lawsuit. I think it depends according to the situation.
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Keefe
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| Subject: CACH LLC |
| Thu Mar 11, 2010 1:15 am |
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| What attorneys ofice filed the suit against CACH LLC and how can i contact them? |
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PJ
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| Subject: CACH LLC |
| Thu Mar 11, 2010 1:42 am |
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Hi all...FYI, CACH proceeded with the lawsuit against me, and a judgment was actually granted in their favor. They placed a levy against my checking account and were about to garnish my wages. I didn't want that, so I ended up having to come up with the money and paying them. Just be aware that a judgment may still be brought against you.
Keefe...I got the same letter too. The attorney's office is John Heenan, Esq. Heenan Law Firm P.O. Box 2278 Billings, MT 59103 (406) 839-9091 |
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LL
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| Subject: CACH, LLC |
| Mon Mar 22, 2010 6:48 pm |
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| I'm right there with you, they filed against me in 2006 the case is still pending. I sent a letter of dispute. I received the civil lawsuit too. I sent a copy to the judge, nothing has been done with it yet. I'm still receiving calls from this collection place. I'm ignoring them now. I've told the collection company that this was a fraud case, they don't care. I even filed a police report on it. I figure if it's not dismissed with a year or two, I will go into the court house and find out from the clerk what to do. This fraud credit card was from 1999. Crazy! | | | |
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Alabama Consumer Sues CACH, LLC For False Credit Reporting After Defeating CACH, LLC In Collection Suit
We recently sued CACH, LLC (a debt buyer), Equifax, Experian, and Trans Union for false credit reporting in violation of the Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), and state law. This false credit reporting was done
after a judge ruled that our client did not owe CACH any money on the alleged debt that CACH sued our client on. Pentagroup Financial was also sued as this debt collector started collection activities against our client who does not owe CACH any money.
We have previously blogged about how debt buyers and consumer reporting agencies (CRAs)
refuse to delete accounts after an Alabama state court judge has ruled that our consumer does not owe the debt buyer. The debt buyer sues our client and loses. Our client disputes in writing with the CRAs. Pretty simple, right? Apparently not so simple. In this case CACH out of Colorado and Equifax, Experian, and Trans Union verified (kept) the false account with a balance on our client's credit reports.
CACH also sent the account out to Pentagroup to start collecting against our client for this same debt.
This seems to be a widespread problem in Alabama among debt buyers - when they lose they think they can ignore our state court judges. Of course, when they win the collection cases (as most
consumers sued don't defend the case) they are big believers in the power of the state court judgments.... Ironic, isn't it?
If you are sued and win, then you may also face this problem of having false information on your credit reports or dealing with collection agencies hounding you for money after a judge said you don't owe it. Regarding the problem of credit reporting errors, The solution is to
pull your credit reports,
review them,
then dispute any false information, and
finally sue if the false information is not corrected. Please feel free to
contact us if you live in Alabama and have questions about your credit reports or any collection activities you are facing.
___
Here goes….Going to court for the second time for a different CC debt. Really got my feet wet on my first try. Will see how this one goes...
I am located in Florida. Received summons last week with a pre-trial scheduled in a couple of months. I knew this one was coming as I have gotten into the habit of monitoring the clerk of court site.
Being sued by Rubin and Debski and plaintiff is CACH LLC (as an assignee of Household Bank). They apparently bought this debt back in 2006. It is a defaulted CC for HSBC out of Nevada. I believe credit card was defaulted on in either 2003 or 2004, not sure which as I lost a large amount of records during hurricanes of 2004. I will have to check any older bank statements I still have left. First late payments were most likely mid 2004.
Here is the complaint:
*******************************************************
CACH, LLC,
ASSIGNEE OF HOUSEHOLD BANK, a corporation, Plaintiff,
vs.
ME, Defendant.
COMPLAINT
The Plaintiff, CACH, LLC, sues the Defendant, ME, and alleges:
1. This is an action for damages that do not exceed $5,000.00, exclusive of interest, court costs and attorney's fees.
2.The original credit grantor established a credit card account, bearing the number xxxxxxxx, in the name of the Defendant and issued a credit card to the Defendant.
3.The credit card and the original credit card agreement (the "Agreement") were sent to the Defendant. Upon information and belief, Defendant is in possession of the original Agreement. A copy of the Agreement is attached and incorporated herein by reference.
4.Defendant, or other authorized by the Defendant, used the account to incur charges, thus accepting the terms ofthe Agreement and agreeing to be bound thereunder.
5. Defendant breached the Agreement by failing to make payment when due.
6. Plaintiff purchased and owns the Defendant's defaulted credit card account and succeeded to all the rights of the original credit grantor.
7.Defendant owes Plaintiff $XXX.XX plus interest on the credit card account.
8. All conditions precedent to bringing this action have occurred or have been waived.
9.Plaintiff is obligated to pay its attorneys a reasonable fee for their services. The Agreement provides for the
recovery of attorney's fees. In the event of a default, a reasonable attorney fee would be $400.00. WHEREFORE, Plaintiff demands judgment for damages, plus interest, costs and attorney's fees.
********************************************************************
All that is attached to complaint is a card member agreement that that actually says GENERIC AG1138V across the top. No statements or agreement signature card. The agreement states that Neveada law is applicable and the SOL in Nevada is 6 years.
My initial thoughts:
I am not sure that this account is outside the Florida SOL of 4 years or 5 years, though I may argue if they cannot prove otherwise with statements.
I am contemplating on filing an MTD based upon failure to attach and failure to allege all the necessary elements of a valid cause of action. I know that it will probably fail due to the procedural vs. substantive view of rule 1.130(a), but I am going to be a pain in the ass as long as I can.
I will file my answers after and IF I file the MTD and use SOL and Failure to state a cause as affirmative defenses along with any other ones I can incorporate…. Counterclaims? Maybe...
I will then see what is offered at mediation during the pre-trial.
Not overly worried about a judgment as I am judgment proof and the amount is not too large, just looking to give a fight and get into a better position.
Any thoughts?
Thanks!!
Hmmm...generic card agreement. Does our generic "card agreement" actually have a choice of law provision that states NV law is operable, and therefore NV SOL applies? You are rather close on the timing to argue SOL, even in FL, but it might be worth a shot. Keep in mind that SOL is procedural, not substantive, law and that "choice of law" provisions normally attach to substantive law only. In other words, the NV "choice of law" provision would not apply to a SOL argument since SOL is procedural law.
Even if that argument--SOL--fails, did the card agreement state it was for HSBC? If not, or it's unclear? CACH is being "cute"...but the judge won't think so. The fact that the agreement is "generic" rather than for a specific card/cards indicates they really have little proof in hand (if any) and might not be able to prove that the alleged debt is yours, if it exists at all. That is another defense for you.
Just wanted to provide an update on my case, and hopefully some encouragement for other facing JDBs in court.
I filed my answer and affirmative defenses (SOL and failure to state a claim) within the time limit.
Went to the pre-trial in April and met with the mediator and JDB attorney (via phone). Mediation was a joke. I offered ~1/3 of what they were seeking. The attorney said no way. The mediator then suggested to me to offer ~ 2/3 and I said no way. I told the JDB attorney I will see you in court.
Judge set trial date for June and issued an order for both sides to submit any evidence they wished to use in court no later than 15 days prior to court date. JDB attorney filed nothing by that date. I thought about filing some evidence in support of my SOL defense but decided I would wait to see what happened at trial since they had nothing more than a generic CC agreement as their case. I was hoping they would show up and judge would rule in my favor.
I also prepared a Motion to Strike the CC agreement just in case I needed it at trial.
1 day before trial and JDB submitted a
voluntary dismissal. Hope I have seen the last of them, but we will see….
Thanks to DebtorBoards.com, FloridaDebtor, Fraudfighter, RubyRuby27 and all others who have made this possible by sharing your experience and advice.
Voluntary dismissal WITH prejudice, right?
Now that they admit that they don't have a case, how about you fire back with a FDCPA case for false/misleading representations for filing suit when they knew they couldn't prove anything?
No, it was a voluntary dismissal without prejudice on their part.
I can live with that at this point, though I have thought about an FDCPA suit. They are the 3rd CA to have this account and I don't believe I will hear from them again.
I do have a good strong case aginst them if they do come back at me, AND they falsely claimed to be an assignee of the OC when they initially sued me.
Any thoughts on an FDCPA violation for that?
I am not seeing how any of this translates into an FDCPA suit......
I never went through or requested validation from them. The account may or may not be SOL, though I was prepared to argue it was. It will definitley be SOL very shortly if they don't come back at me fairly quickly.
The only evidence they have is the account total sheet they got from either the previous JDB or from the OC through the previous JDB. I learned this at mediation and they never submitted it as evidence, only a generic CC agreement.
How does any of this or misrepresenting themselves as an assignee of the OC translate into an FDCPA suit?
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« Reply #7 on: June 03, 2008 03:42:30 PM »
How does any of this or misrepresenting themselves as an assignee of the OC translate into an FDCPA suit?
I'm not saying that they misrepresented themselves as an assignee. I am saying they made false or misleading representations in an attempt to collect a debt.
If they sued you while knowing that they didn't have anything to substantiate the account, I'd chalk that up as false or misleading or taking action they legally can't.
Pick something out of the complaint such as alleging that you owed a debt. False or misleading.
Defendant breached the Agreement by failing to make payment when due.
False or misleading.
Defendant owes Plaintiff $XXX.XX plus interest on the credit card account.
False or misleading.
All conditions precedent to bringing this action have occurred or have been waived.
False or misleading.
Logged
Lets do this
« Reply #8 on: June 03, 2008 05:27:22 PM »
OK, I am beginning to see your thinking now. Thanks.
I will have to give this some thought. This was not a slam dunk case for them or me.
Let sleeping dogs lie and all.
I am just wondering how slam dunk a federal FDCPA case would be for me.....sounds kinds sketchy....
Thanks for the advice.
Logged
« Reply #9 on: June 03, 2008 06:00:59 PM »
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
FARID M. SAYYED,
Plaintiff-Appellant,
v. No. 06-1458WOLPOFF & ABRAMSON,
Defendant-Appellee.
Appeal from the United States District Court for the District of Maryland, at Greenbelt. Peter J. Messitte, District Judge. (8:05-cv-01104-PJM)
Argued: March 15, 2007
Decided: May 9, 2007
Before WILKINS, Chief Judge, and WILKINSON and MOTZ, Circuit Judges.
Reversed and remanded by published opinion. Judge Wilkinson wrote the opinion, in which Chief Judge Wilkins and Judge Motz joined.
COUNSEL
ARGUED: Ernest Paul Francis, Arlington, Virginia, for Appellant. Ronald Scott Canter, WOLPOFF & ABRAMSON, Rockville, Maryland, for Appellee. ON BRIEF: Anne S. Cruz, WOLPOFF & ABRAMSON, Rockville, Maryland, for Appellee.
OPINION
WILKINSON, Circuit Judge:
This case involves claims under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. (2000). Farid Sayyed sued the law firm Wolpoff & Abramson ("W&A") under the FDCPA for actions taken in W&A’s effort to collect a debt from Sayyed by means of a suit in Maryland state court. Defendant W&A moved to dismiss for failure to state a claim, arguing that it enjoyed common law litigation immunity from the FDCPA. The district court agreed and dismissed Sayyed’s suit on the ground that absolute immunity protected W&A. Sayyed appealed. Because the FDCPA, not common law, must govern the disposition of this action, we reverse the district court’s judgment and remand the case for further consideration.
I.
W&A is a law firm regularly practicing in the field of consumer debt collection. Discover Bank, the issuer of the Discover Credit Card, retained W&A to pursue an action against Sayyed for defaulted credit card debt. On behalf of Discover Bank, W&A sued Sayyed in Maryland state court to collect the balance due.
After W&A moved for summary judgment in the state collection suit, Sayyed sued W&A in federal court, alleging that W&A violated the FDCPA in pursuing the state action.1 Sayyed alleged FDCPA violations arising from W&A’s interrogatories to Sayyed and its summary judgment motion.
Sayyed alleged that the interrogatories failed to state that they were a communication from a debt collector, in violation of 15 U.S.C. § 1692e(11). He also alleged that the interrogatories violated § 1692e(10)’s prohibition against false representations and § 1692f’s prohibition against unfair or unconscionable collection attempts by making three false statements: (1) that the trial date for the Maryland
1As to the outcome of the state collection suit, W&A states that, after Sayyed filed a counterclaim in state court, Discover Bank obtained new counsel, from whom W&A has learned that the case ultimately settled.
case was June 11, 2004; (2) that Sayyed had to state his grounds of refusal to answer the interrogatories under oath; and (3) that the state court could enter a default judgment against Sayyed if he did not mail answers to W&A within thirty days after the date of service.
Sayyed alleged that W&A’s motion for summary judgment contravened the FDCPA in that its false statement of the amount of Sayyed’s debt violated § 1692e(2)(A), and its statement that Sayyed was liable for attorney’s fees of fifteen percent of the principal balance violated § 1692e(2)(B) as a false representation and § 1692f(1) as the collection of an amount not permitted by law or expressly authorized by the agreement creating the debt.
W&A filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). W&A argued, first, that attorneys enjoy absolute common law immunity from claims based on statements made in the course of judicial proceedings. W&A also contended that, even if it was not entitled to immunity, the interrogatories and summary judgment motion were served upon Sayyed’s counsel rather than Sayyed, and thus could not give rise to violations of the FDCPA. Finally, W&A argued that Sayyed’s claims relating to the summary judgment motion should be dismissed because the allegedly false statements were based upon information furnished to W&A by its client, Discover Bank, and W&A as counsel had the right to rely upon that information.
The District Court orally granted W&A’s motion to dismiss. It concluded that W&A enjoyed absolute immunity from the FDCPA for its interrogatories and summary judgment motion. The district court spoke at times in terms of "witness immunity," although W&A’s interrogatories involved no witnesses. But the court also spoke more broadly in terms of litigation immunity, "a common law immunity from claims based on statements made in the course of judicial proceedings." J.A. at 78. It finally held that "absolute immunity obtains with regard to these statements." Id. at 82. The court alternatively dismissed Sayyed’s claims relating to the summary judgment motion because of W&A’s reliance on the statements of its client, Discover Bank. Finally, the court determined that attorney’s fees equal to fifteen percent of the debt represented a per se reasonable fee.
Sayyed appeals. We review a dismissal for failure to state a claim de novo. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993).
II.
W&A argues that it cannot be subject to claims under the FDCPA because an absolute common law immunity attaches to "any statements made during the course of judicial proceedings." In W&A’s view, the allegedly false statements in W&A’s interrogatories and summary judgment motion thus cannot constitute FDCPA violations.
We cannot accept this conclusion. The FDCPA clearly defines the parties and activities it regulates. The Act applies to law firms that constitute debt collectors, even where their debt-collecting activity is litigation. W&A asks that we disregard the statutory text in order to imply some sort of common law litigation immunity. We decline to do so. Rather, "where, as here, the statute’s language is plain, the sole function of the courts is to enforce it according to its terms." United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241 (1989) (internal quotation marks omitted).
A.
The statutory text makes clear that there is no blanket common law litigation immunity from the requirements of the FDCPA. First and foremost, the plain meaning of the Act’s definition of "debt collector" encompasses attorneys. Section 1692a(6) of the FDCPA provides:
The term "debt collector" means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.
The provision goes on to state six specific exceptions to this definition, none of which cover attorneys, much less attorneys specifically engaged in litigation. The exceptions cover (1) any officer or employee of a creditor collecting debts in the name of the creditor;
(2) any person whose principal business is not collecting debts but who is collecting debts for another person, both of whom are related by common ownership or affiliated by corporate control; (3) any officer or employee of the United States or any state performing official duties; (4) any person attempting to serve legal process in connection with the judicial enforcement of a debt; (5) any nonprofit organization performing bona fide consumer credit counseling at the request of consumers; and (6) any person whose activity is "incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement; concerns a debt which was originated by such person; concerns a debt which was not in default at the time it was obtained by such person; or concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor." See 15 U.S.C. § 1692a(6). If Congress had wished to exempt the litigating activities of attorneys from the definition of "debt collector," it could easily have drafted a seventh exception to this effect.
W&A does not dispute that it is a law firm regularly practicing in the field of consumer debt collection, and that it fails to fit into any of the statutorily provided exceptions. Therefore, according to the plain text of the statute, W&A is a debt collector subject to the FDCPA’s provisions.
The Supreme Court has expressly confirmed this reading of the FDCPA. Heintz v. Jenkins, 514 U.S. 291, 293 (1995), involved a collection suit brought by a bank’s law firm against Darlene Jenkins to recover on an automobile loan. George Heintz, a lawyer with the bank’s firm, sent Jenkins’s lawyer a letter in an attempt to settle the suit. Id. The letter gave what Jenkins claimed was a false statement of the amount she owed the bank. Id. She sued Heintz and his firm under the FDCPA, and the district court dismissed her suit for failure to state a claim, on the ground that the FDCPA did not apply to litigating lawyers. Id. at 294.
The Seventh Circuit reversed, 25 F.3d 536, 540 (7th Cir. 1994), and the Supreme Court upheld its view that "[t]he Act does apply to lawyers engaged in litigation." 514 U.S. at 294. The Court grounded this conclusion in the FDCPA’s definition of "debt collector" at § 1692a(6). The Court recognized that Heintz and his firm fell under the § 1692a(6) definition: "In ordinary English, a lawyer who regularly tries to obtain payment of consumer debts through legal proceedings is a lawyer who regularly ‘attempts’ to ‘collect’ those consumer debts." Id.
The Court further recognized that an earlier version of § 1692(a)(6) had provided an express exception for lawyers, which stated that the term "debt collector" did not include "any attorney-at-law collecting a debt as an attorney on behalf of and in the name of a client." Id. (citing Pub. L. 95-109, § 803(6)(F), 91 Stat. 874, 875 (1977)). In 1986, however, Congress repealed the attorney exemption. Id. (citing Pub.
L. No. 99-361, 100 Stat. 768 (1986) ("[A]ny attorney who collects debts on behalf of a client shall be subject to the provisions of [the Act].")). The Court recognized the significance of Congress having repealed the attorney exemption "in its entirety, without creating a narrower, litigation-related exemption to fill the void." Id. at 294-95. The Court declined to imply such a litigation-related exception, holding that such an exception "falls outside the range of reasonable interpretations of the Act’s express language." Id. at 298. Thus the Court confirmed that there is no implied exemption to the statute’s definition of debt collector: as is clear from its face, the FDCPA "applies to the litigating activities of lawyers." Id. at 294.
After Heintz, Congress passed an amendment to the statute that provides further confirmation that the FDCPA applies to conduct like that at issue here. It amended § 1692e(11), which prohibits communications that fail to disclose that they are from a debt collector, to state that the provision "shall not apply to a formal pleading made in connection with a legal action." 15 U.S.C. § 1692e(11), as amended Pub.
L. 104-208, § 2305(A), 110 Stat. 3009, 3009-425 (1996). This provision expressly exempts formal pleadings from a sole, particularized requirement of the FDCPA: the requirement that all communications state that they come from a debt collector.
If W&A were correct that conduct in the course of litigation, or even formal pleadings more specifically, were entirely exempt from the FDCPA, § 1692e(11)’s express exemption of formal pleadings would be unnecessary. "[C]ourts should disfavor interpretations of statutes that render language superfluous." Conn. Nat’l Bank v. Germain, 503 U.S. 249, 253 (1992). The amendment by its terms in fact suggests that all litigation activities, including formal pleadings, are subject to the FDCPA, except to the limited extent that Congress exempted formal pleadings from the particular requirements of § 1692e(11). Furthermore, because Congress is presumed to act with awareness of a judicial interpretation of a statute, the fact that the amendment occurred after Heintz further indicates that Congress was aware of the Court’s interpretation of the FDCPA and accepted it, except for the narrow exemption it provided for formal pleadings from the requirements of § 1692e(11). See, e.g., Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U.S. 353, 381-82 (1982) (Congress presumed to be aware of prior judicial interpretation in amending statute). Thus, under multiple precepts of statutory interpretation, Congress’ amendment of § 1692e(11) provides clear evidence that litigation activity is subject to the FDCPA, except to the limited extent that Congress exempted formal pleadings from the requirements of that particular subsection.
Our view that common law immunities cannot trump the Act’s clear application to the litigating activities of attorneys is fortified by its bona fide error defense provision. Section 1692k(c) provides:
A debt collector may not be held liable in any action brought under this subchapter if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.
15 U.S.C. § 1692k(c). This provision offers a kind of qualified immunity to debt collectors, protecting actions which otherwise are covered by the statute but arose from bona fide error and were not intentional violations. Such a provision supplies an additional argument against implying immunities as to which the statute is silent: Congress addressed the issue of immunity expressly and extended it only as far as § 1692k(c) provides. To insist that some unarticulated, common law immunity survived the creation of the FDCPA would be to fail to give effect to the scope of the immunity articulated in the text.
What we hold is nothing new. Even before the Supreme Court decided Heintz, we stated that, under the plain meaning of the FDCPA, a litigating attorney fell under the statute’s definition of "debt collector." See Scott v. Jones, 964 F.2d 314, 318 (4th Cir. 1992). We rejected the contention that attorney Jones was "engaged in the practice of law, not the collection of debts" as an "artificial distinction:" "No matter what name is applied to Jones’ activities, it is clear that the ‘principal purpose’ of his work was the collection of debt." Id. at 316. After Heintz, this court has recognized that "it is well-established that lawyers can be ‘debt collectors’ even if conducting litigation." Wilson v. Draper & Goldberg, 443 F.3d 373, 378 (4th Cir. 2006) (citing Heintz, 514 U.S. at 299) (emphasis added); see also Carroll v. Wolpoff & Abramson, 961 F.2d 459, 461 (4th Cir. 1992) (applying FDCPA to law firm’s post-litigation follow-up letter to debtor).
All circuits to consider the issue, except for the Eleventh, have recognized the general principle that the FDCPA applies to the litigation activities of attorneys who qualify as debt collectors under the statutory definition. See, e.g., Goldman v. Cohen, 445 F.3d 152, 155 (2nd Cir. 2006); Todd v. Weltman, Weinberg & Reis Co., L.P.A., 434 F.3d 432, 446 (6th Cir. 2006); Piper v. Portnoff Law Assocs., Ltd., 396 F.3d 227, 232 (3d Cir. 2005); Thomas v. Law Firm of Simpson & Cybak, 392 F.3d 914, 917 (7th Cir. 2004) (en banc); Johnson v. Riddle, 305 F.3d 1107, 1117 (10th Cir. 2002); Addison v. Braud, 105 F.3d 223, 224 n.1 (5th Cir. 1997); but see Vega v. McKay, 351 F.3d 1334, 1337 (11th Cir. 2003) (relying on superseded FTC commentary to hold complaint did not constitute initial communication under FDCPA).
B.
Despite all this, W&A makes a number of specific arguments that the district court was correct to dismiss this case on the basis of immunity for the firm’s litigating activities. While it should be clear from the statute that these arguments are foreclosed, we shall nevertheless address them briefly.
First, W&A argues that FDCPA liability cannot attach to communications made by a debt collection attorney to a debtor’s counsel, rather than to the debtor. But the statute defines "communication" broadly as "the conveying of information regarding a debt directly or indirectly to any person through any medium." 15 U.S.C. § 1692a(2). A communication to debtor’s counsel, regarding a debt collection lawsuit in which counsel is representing the debtor, plainly qualifies as an indirect communication to the debtor. Furthermore, in a section entitled "Communication in connection with debt collection," the statute provides that, if the debt collector knows the debtor is represented by an attorney in connection with the debt, and if the debt collector can readily ascertain the attorney’s contact information, the debt collector may not communicate directly with the debtor, unless the debtor’s attorney does not respond to a communication in a reasonable amount of time. See id. § 1692c(a)(2). This provision is but another indication that communications with a debtor’s attorney with regard to the debt are "communications" as defined and regulated by the FDCPA — and that such communications must in fact be directed to the attorney under the terms of the statute.
If the statute left any room for doubt about this issue, Heintz resolved it. Heintz itself involved a communication from a debt collection attorney to debtor Darlene Jenkins’ counsel, not to Jenkins herself. See 514 U.S. at 293. The Supreme Court held that Jenkins had a cause of action under the FDCPA on the basis of statements contained within the letter to her counsel. See id. at 294. Thus, plainly, the FDCPA covers communications to a debtor’s attorney.
Second, W&A argues by analogy to case law under 42 U.S.C. § 1983. It contends that, because the Supreme Court has recognized common law immunities under 42 U.S.C. § 1983, some such immunity must necessarily exist under the FDCPA. This argument fails as well. The cases cited by W&A involve the preservation of state common law immunities for public officials under § 1983. W&A identifies no state common law litigation immunity that would protect the actions of a private attorney in this case.
A bigger flaw in W&A’s argument is its faulty premise: in analogizing to § 1983, W&A overlooks the FDCPA’s statutory framework. The FDCPA in form and structure is a far cry from a Reconstruction-era civil rights statute. It is instead a "comprehensive and reticulated" statutory scheme, involving clear definitions, precise requirements, and particularized remedies. Cf. Nachman Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359, 361 (1980) (describing ERISA). The statute contains more words in its first section, the "Congressional findings and declaration of purpose," than the entirety of § 1983. It is clear that Congress meant not to incorporate common law immunities in this area, such as they may be, but to overwrite them, defining the scope of liability and immunity entirely by statute. Where the intent of Congress is so clearly expressed in the text of one statute (the FDCPA), it may not be turned aside by comparison to an entirely different statute (Section 1983). See, e.g., Nix v. O’Malley, 160 F.3d 343, 352-53 (6th Cir. 1998) (no common law "attorney immunity" under federal wiretap statute); Steffes v. Stepan Co., 144 F.3d 1070, 1074-75 (7th Cir. 1998) (no common law litigation immunity under Title VII and ADA); Blevins v. Hudson & Keyse, Inc., 395 F. Supp. 2d 662, 667-68 (S.D. Ohio 2004) (no common law litigation immunity under FDCPA); Irwin v. Mascott, 112 F. Supp. 2d 937, 963 (N.D. Cal. 2000) (same).
Ultimately, W&A’s specific arguments are manifestations of the same general claim: that it simply cannot be the case that the FDCPA covers litigation, the entire purpose of which is to arrive at the truth through the clash of the adversarial process. This argument may have some intuitive appeal, but the fact that an interpretation may seem appealing does not mean that it is correct. While the district court stated, "I cannot see how commercial litigation could proceed" if the statements at issue in this case were subject to the FDCPA, the FDCPA does not apply to commercial litigation: it covers debt collection where "debt" is defined as an obligation of a "consumer," defined as a "natural person," for "personal, family, or household purposes." 15 U.S.C. § 1692a(3), (5). And, in any event, "[i]n the ordinary case, absent any indication that doing so would frustrate Congress’s clear intention or yield patent absurdity, our obligation is to apply the statute as Congress wrote it." Hubbard v. United States, 514 U.S. 695, 703 (1995) (internal quotation marks omitted). Operating from "the understanding that Congress says in a statute what it means and means in a statute what it says there," Hartford Underwriters Ins. Co.
v. Union Planters Bank, N.A., 530 U.S. 1, 6 (2000), we reverse the district court’s dismissal of the action.
III.
For the sake of clarity on remand, we must address some final arguments advanced by W&A.
W&A argues that, even if no absolute litigation immunity applies, Sayyed’s claims arising from W&A’s summary judgment motion must still be dismissed due to "witness immunity." W&A argues that Sayyed’s allegations fail to state a claim, because they take issue with statements made by witnesses in affidavits attached to the summary judgment motion. In support of this proposition, W&A invokes a line of cases discussing the scope of immunity for witnesses under the common law. See, e.g., Malley v. Briggs, 475 U.S. 335, 340 (1986) (finding no common law immunity for a "complaining witness"); Briscoe v. LaHue, 460 U.S. 325, 330-31 (1983)(finding common law immunity for trial witnesses against defamation suits).
We need not explore the scope of witness immunity because, contrary to W&A’s contention, Sayyed’s suit does not raise this issue. W&A claims that "Sayyed’s suit asserts W&A is liable for purported false statements contained in affidavits signed by Discover and W&A." This is not the case. Sayyed’s complaint alleges that the summary judgment motion itself contained false statements. Sayyed claims that the summary judgment motion (1) falsely represented the amount of Sayyed’s debt, in violation of § 1692e(2)(A); (2) sought attorney’s fees not expressly authorized by the credit card agreement or permitted by law, in violation of § 1692f(1); and (3) in seeking unauthorized attorney’s fees, falsely represented the compensation which the debt collector could lawfully receive, in violation of § 1692e(2)(B).
The summary judgment motion contained these statements. The affidavits attached to the motion repeated these statements: the affidavit of a Discover Bank account manager stated the amount of Sayyed’s debt and asserted that Sayyed was liable for attorney’s fees "as allowed by the credit card agreement," while the affidavit of W&A attorney Ronald S. Canter asserted that W&A’s agreement with Discover Bank allowed it to seek fees of fifteen percent. J.A. at 30. But Sayyed is not seeking to hold W&A liable for the affidavits; his cause of action is based upon the summary judgment motion itself. Compare Todd v. Weltman, Weinberg & Reis Co., L.P.A., 434 F.3d 432, 444 (6th Cir. 2006) (law firm as complaining witness enjoyed no witness immunity from FDCPA for affidavit commencing garnishment proceeding). For reasons we have discussed at length, the motion is subject to the provisions of FDCPA under which Sayyed seeks relief.
We express no opinion on whether witness immunity would apply to affidavits executed by a debt collector, because that issue is not raised by this case.
In the alternative, W&A argues that it should not be held liable for the statements in the summary judgment motion, because it reasonably relied upon the affidavit of its client for those statements. The district court agreed with W&A and noted this circumstance as an alternative ground for dismissing Sayyed’s claims relating to the summary judgment motion. The court stated, "[T]he fact that the lawyer . . . relies on the client’s representation and then makes the statement in my view would be another reason why the lawyer could not be individually liable under the act." J.A. at 82-83.
In this, the district court was in error. The district court treated W&A’s alleged reliance as another reason to dismiss for failure to state a claim, but its proper role is as a defense against legally cognizable claims under the FDCPA. It is uncontestable that the FDCPA creates a cause of action against attorneys who act as debt collectors for their false statements about the debt. The Act also provides the exclusive method of considering whether the attorney’s false statements were the product of reasonable reliance upon another party: the bona fide error defense of § 1692k(c). Thus, for example, in Heintz
v. Jenkins, the circuit court reversed the district court’s dismissal for failure to state a claim. See Jenkins v. Heintz, 25 F.3d 536, 540 (7th Cir. 1994), aff’d, 514 U.S. 291 (1995). On remand, the district court applied the bona fide error defense of § 1692k(c) and granted summary judgment to attorney Heintz, and the Seventh Circuit affirmed. See Jenkins v. Heintz, 1996 WL 535167 (N.D. Ill. 1996), aff’d, 124 F.3d 824 (7th Cir. 1997).
On remand, W&A may of course (1) contend that there were no statutory violations, or (2) avail itself of the § 1692k(c) defense by showing by a preponderance of the evidence that any violations were not intentional and "resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error." 15 U.S.C. § 1692k(c). W&A’s reliance on its client may well be relevant to that inquiry. But the district court erred in dismissing Sayyed’s claims outright on the basis of this concern. The statutory
framework establishes that the proper place for the inquiry is not at the Rule 12(b)(6) stage.2
IV.
The FDCPA aims "to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." 15 U.S.C. § 1692(e). Adopting the sweeping immunities urged by appellee would stop the statute in its tracks. We must therefore reverse the district court and remand so that the case may be decided in accordance with the statutory framework that Congress has set forth.
REVERSED AND REMANDED
2In a similar vein, the district court erred in dismissing two of Sayyed’s claims on grounds that were not briefed by the litigants or fully addressed by the court. First, the district court dismissed Sayyed’s claim under § 1692e(11) that the interrogatories failed to disclose that they were from a debt collector, on the ground that the interrogatories fell into § 1692e(11)’s exemption for a "formal pleading made in connection with a legal action." Second, the district court dismissed Sayyed’s claim under § 1692f(1) on the ground that attorney’s fees of fifteen percent were per se reasonable. At the Rule 12(b)(6) stage, these issues had not been fully briefed by the parties; indeed, W&A, in asserting both grounds in its motion to dismiss, cited no legal authority for either. Moreover, the district court’s rulings on these issues were secondary to its holding that all of the defendant’s activity was protected by common law immunity. See
J.A. at 83 ("But in any event, it’s still all protected by the absolute[ ] immunity that exists in connection with these papers filed in this case."). Now that it is clear that no such immunity exists, the application of specific FDCPA provisions may be thoroughly addressed below with the aid of briefing by the parties. For these reasons, we express no opinion upon these issues and remand for further consideration.
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