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Author Topic: New motion to dismiss counterclaim from credigy  (Read 13410 times)
imnotpaying
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« on: October 16, 2006, 02:32:40 PM »

I just got a new "motion dismiss counterclaim" from credigy. I think I am making them sweat a little bit.

There are two things they are trying to get dismissed:

1. They claim they are not subject "the term of the FDCPA because Plaintiff owns the subject debt, and is not a debt collector as defined by the FDCPA".

I counterclaimed they violated the FDCPA because they knowingly sued on a debt past the statue of limitations. Seems really weak to me. You would think they would would be trying to show the debt is within the statue of limitations.


2. I counterclaimed they did not provide notice of assignment within 30 days per FS 559.715.

They claim they bought this debt in 2002 and they resently provided an "Acco8unt Verification and Disclossure  statment . (the law says they have to provide written notice 30 days from assignment, their disclosoure stantment was provided about 4 years after they got were assigned the debt.

Am I missing somethin or are they shooting themselves in the foot?
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rubyruby27
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« Reply #1 on: October 16, 2006, 02:54:35 PM »

I think I went through this at the very beginning of my case with the first Judge, she said they are the OC since they bought the account.

I think there was a discussion on this either on AoC or DB 9-10 months ago.

I think the argument on this is they don't extend credit, they just buy bad debts.  They only bought the right to sue to collect on bad debts, therefore they are a debt collector.  I think I would research on asking for sanctions for friviolous suit and wasting the courts time.
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« Reply #2 on: October 17, 2006, 09:28:20 AM »

I found this nice little FTC letter that covers the "not being a debt collector as definded by the FDCPA.




 
Quote

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580

Division of Credit Practices
Bureau of Consumer Protection
~
Clarke W. Brinckerhoff
Attorney
 

December 22, 1993

Ms. Kimberlee Arbuckle
MIDLAND CREDIT MANAGEMENT
500 West First Street
Post Office Box #576
Hutchinson, Kansas 67504

Dear Ms. Arbuckle:

This responds to your letter dated December 2, 1993, inquiring whether Midland Credit Management, Inc. ("MCM") is a debt collector under the Fair Debt Collection Practices Act ("FDCPA" or "Act"). You report that MCM "purchases portfolios of delinquent accounts receivable for the purpose of profitable recovery, resale and cure. These accounts are owned solely by MCM . . ."

Section 803(6) of the FDCPA defines the term "debt collector" as "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." In our view, a party that purchases delinquent accounts from the party to which the debts were originally owed and attempts to collect them from the consumer debtors fits clearly within that definition. The party is attempting to collect debts that were "owed or due another" and the fact that title to the accounts is passed to the collector in no way changes that fact.

In the leading case on point, involving a company whose business included the purchase of large volumes of checks that had been dishonored and subsequent collection of the checks from their makers (in the same manner as MCM buys defaulted accounts and thereafter attempts to collect from the account debtors), the court wrote persuasively that the purchaser is covered by the FDCPA. It gave short shrift to the fact that the party had actually purchased the checks in question:

By use of the language "owed or due another" Congress was attempting to exclude those entities that extend credit from the effects of the Act. Congress intended to protect borrowers from "third persons who regularly collect debts for others." (Italics by court; citation omitted). (The purchaser) is a third party collecting a debt originally owed to another. . . . It cannot escape the spirit of the Act by the technicality of purchasing the debt upon default so that title technically rests in itself.

Holmes v. Telecredit Service Corp., 736 F. Supp. 1289, 1293 (D. Del. 1990)

The only theory for exclusion of a party such as MCM from the "debt collector" definition (and thereby from coverage under the FDCPA) is that it is a "creditor."(1) Section 803(4) defines "creditor" as "any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or trans-fer of a debt in default solely for the purpose of facilitating collection of such debt for another." Since the accounts that MCM buys are delinquent when purchased and are being transferred for the purpose of collection, we believe that MCM is within the class that the "creditor" definition expressly "does not include."(2) The words "for another" at the end of the clause excepting assignees from the definition of creditor in no way changes this result:

(T)he excluding factors in the exception are that the debts are the result of an assignment or transfer and that the debts were already in default at the time of assignment or transfer. With the phrase "for another" at the end of the exception, Congress merely intended that the debts should have originally belonged to another and that the creditor was therefore in effect a third-party or independent creditor. (Italics by court)

Kimber v. Federal Financial Corp., 668 F. Supp. 1480, 1485 (M.D.Ala. 1987). Accord, Holmes, supra, at 1293.

In sum, it is our view that a party that obtains consumer obligations in default for the purpose of collection is a "debt collector" under the FDCPA, even if that party actually purchases the accounts from the original creditor.

The views set forth in this informal staff opinion letter are not binding on the Commission.

Sincerely yours,

Clarke W. Brinckerhoff


--------------------------------------------------------------------------------

1. Section 803(6)(A) only specifically exempts creditors' officers and employees. However, it "seems clear from the legislative history of the Act that Congress intended that this exclusion cover creditors themselves as well as their employees." Holmes v. Telecredit Service Corp., 736 F. Supp. 1289, 1291n.3 (D.Del. 1990), citing Kimber v. Federal Financial Corp., 668 F. Supp. 1480, 1484 (M.D.Ala. 1987).

2. See the comment on this subsection in our Staff Commentary on the Fair Debt Collection Practices Act. 53 Fed. Reg. 50097, 50101 (Dec. 13, 1988.)
 
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I am not a lawyer. It would not be wise to use anything I say as legal advise. Check for yourself.
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« Reply #3 on: October 17, 2006, 11:40:54 AM »

It's pretty well settled that buyers of bad debt are debt collectors under the federal law.

Maybe they aren't under a state law, but you aren't suing under a state law.

Look up some 1692(a)(6) caselaw and use that in your opposition.  Maybe sanctions are in order if Credigy has tried this before and lost.
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hannah
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« Reply #4 on: October 17, 2006, 02:58:45 PM »

Even if there is no Florida statute that says specifically that debt buyers are not debt collectors, they also do not fit the definetion of a creditor so they cannot be a creditor either. I'm sure there is Florida caselaw on this or you can rely on plain language. Additionally, as long as they fit the definition of a debt collector under the FDCPA (and I am posting some caselaw on this) a Florida court of competent jurisdiction has the capacity to hear the claim or counterclaim.

This is what Edelman and Combs say and it has caselaw in it:

Quote
WHO IS A "DEBT COLLECTOR" SUBJECT TO THE ACT

Generally, the FDCPA covers the activities of a "debt collector." There is a two-part definition of "debt collector": "any person [1] 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 [2] who regularly collect or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. 15 U.S.C.

1692a(6). The creditor itself is excluded from the definition of "debt collector", unless it uses a name which suggests that a third-party debt collector is involved in the collection process.

Also excluded from the definition of "debt collector" are the following:

Officers and employees of the creditor while collecting the debt in the creditor's name.

Affiliates of the creditor. Section 1692a(6)(B) creates an exemption for "any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts." Courts have disagreed as to whether the collector, the creditor, or both must not be principally engaged in the collection of debts.

Officers or employees of the United States or any state. Private debt collectors collecting student loans and other obligations which meet the definition of a "debt" and were originally owed to a governmental unit do not qualify for this exemption.

Process servers.

Bona fide non-profit debt counselors.

Persons who service debts which are not in default (e.g., services of mortgages and student loans). This exemption does not operate in favor of such entities when they acquire a loan after default. However, where a loan is restructured and the restructured loan is not in default, the fact that the loan was in default prior to being restructured does not make entities purchasing or servicing the loan FDCPA debt collectors.

"[A]ny person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity . . . is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement . . . ." The fiduciary relationship must exist for purposes other than debt collection. Thus, a receiver or trustee of a corporate creditor or the personal representative or trustee of an individual creditor are treated as if they were the original creditor. The fact that a collection attorney or agency is the agent, and therefore the fiduciary, of the creditor does not give rise to an exemption.

Persons who collect debts "originated by such persons". An "originator" is one who played a significant role in originating the obligation.

A secured party in a commercial credit transaction involving the creditor that takes possession of the creditor's receivables by enforcing its security interest. That is, if consumer lender ABC pledges its consumer receivables to commercial lender XYZ and XYZ, pursuant to its rights under the security agreement, directs the consumer to pay XYZ, XYZ is not a "debt collector".

CREDITOR WHO USES NAME INDICATING

THIRD PARTY INVOLVEMENT AS DEBT COLLECTOR

Creditors may become "debt collectors" by using names in collecting their debts which falsely suggest the involvement of third party debt collectors or attorneys. The simplest situation covered by the "other name" exception of 1692a(6) is that where creditor ABC sends its debtors letters which demand payment in the name of XYZ Collection Agency, XYZ either being a totally fictitious entity or a real entity which has no significant involvement in the actual collection of ABC's debts. On its face, such conduct makes ABC a "debt collector" under 1692a(6) and simultaneously violates the prohibition against deceptive collection practices, 1692e. Numerous pre-FDCPA cases held that this practice violated 5 of the FTC Act.

The FTC has stated that a creditor is using a name "other than [the creditor's] own" if the creditor is using a name which on its face it "would indicate that a third person is collecting or attempting to collect [the creditor's] debts" and no disclosure is made of the relationship between the name used in dealing with the consumer prior to default and the name used in attempting to collect after default, even if the creditor or an affiliate lawfully owns the name used to make collection.

In Maguire v. Citicorp Retail Services, Inc., the Second Circuit reversed a summary judgment for the defendant in a case where Citicorp Retail Services sent out letters under the letterhead of "Debtor Assistance" to collect private label credit card debts:

At the summary judgment stage, we can not find as a matter of law that a least sophisticated consumer would have known that the Debtor Assistance letter was from Citicorp. The letter Maguire received bore the letterhead "Debtor Assistance" creating the impression that a third party, Debtor Assistance, was collecting its debts. Citicorp had not consistently used the name Debtor Assistance from the beginning of the credit relationship so that the plaintiff could have known "at all times that [she was] dealing with the same entity." Dickenson, 770 F. Supp. at 1127 n.5 (no FDCPA liability because store used same name from the beginning of the credit relationship). To the contrary, plaintiff had never received correspondence from Debtor Assistance, nor has she ever been contacted by someone from Debtor Assistance. Maguire testified in her deposition that she had "no clue" as to the identity of Debtor Assistance and that she did not understand that the letter she received was from Citicorp.

The prior correspondence between Citicorp and Maguire did not establish or even suggest, that Citicorp was affiliated with Debtor Assistance. Cf. Olga Button v. GTE Serv. Corp., 1996 U.S. Dist. LEXIS 16971 (W.D. Mich. 1996) (relatedness apparent from the course of communications because of stationery used, return address of the envelopes, address to which payment was to be returned, and text of correspondence). A consumer would not be aware that Debtor Assistance is a unit of Citicorp from the address on the letter because, although Debtor Assistance actually shares the same address as Citicorp, the monthly billing statements from Bradlees do not disclose Citicorp's address. Moreover, while the phone number listed in the Debtor Assistance letter is issued to Citicorp and Citicorp pays all bills and costs associated with the phone number, the letter does not reveal those facts and a consumer would not be aware that Citicorp operates the phone lines because all phone calls are answered by personnel who identify themselves as employees of Debtor Assistance.

Further, this is not a situation where the relatedness of the two entities would be apparent from the similarity of the creditor's and its affiliate's name. Cf. Young v. Lehigh Corp., No. 80C4376, 1989 WL 117960, at *22 [1989 U.S. Dist. LEXIS 11525, 1989-2 Trade Cas. P 68,790] (N.D. Ill. 1989) (finding that plaintiff could not have been "duped into believing that Lehigh Corporation was not affiliated with Lehigh Country Club, Inc.")

"[T]he scope of creditor liability under 1692a(6) goes beyond the creditor's use of aliases or pseudonyms to instances where the creditor merely implies that a third party is collecting a debt when in fact it is the creditor that is attempting to do so."

AFFILIATES OF CREDITORS

A number of cases address the situation where ABC incorporates a wholly-owned subsidiary, XYZ, and then has it engage in collection activities. This requires consideration of the "affiliate exemption" in 1692a(6)(B), and its relationship with the other provisions of 1692a(6).

Section 1692a(6) provides that the term "debt collector" does not include:

(B) any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts . . . .

If the affiliate's business consists primarily or solely of debt collection, the affiliate is subject to the FDCPA. The questions are then presented whether (i) it is deceptive for the affiliate to engage in debt collection activities without disclosure of the fact that it is an affiliate of the creditor and (ii) the creditor is liable for the affiliate's deceptive practices.

If the affiliate's business does not consist principally of debt collection (for example, if the affiliate services current accounts as well as those in default), the question is whether the provision in 1692a(6) that a creditor who uses the name of a third party in collecting its own debts is a debt collector is applicable to an affiliate of the creditor.

In Aubert v. American General Finance, Inc., the Seventh Circuit answered the last question in the negative. Aubert obtained a credit card from American General Financial Center. The account became delinquent. Aubert then received a letter from the "AGFC Collection Group." AGFC Collection Group is an internal corporate division of Service Bureau of Indiana, Inc. ("SBI"). SBI and AGFC, the company that issued Aubert's credit card, were both wholly owned subsidiaries of American General Finance, Inc. ("AGF"). SBI came within the affiliate exemption because (i) its principal business was not the collection of debts (it also performed various servicing functions for current AGFC credit card accounts) and (ii) it did not provide collection services to any non-affiliated corporate entities. The court concluded that SBI came within the affiliate exemption and that a disclosure obligation would not be superimposed on it:

SBI was collecting a debt "owed or due or asserted to be owed or due another." Therefore, when read alone, 1692a(6)'s definition of a "debt collector" indicates that SBI's collection activities on behalf of AGFC are covered by the Act. After defining "debt collector," however, the statute excludes from its definition any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts. 15 U.S.C. 1692a(6)(B). Thus, a corporate affiliate is excluded from the Act's coverage so long as it satisfies two conditions: (1) the affiliate collects debts only for entities with which it is affiliated or related; and (2) the principal business of the affiliate is not debt collection. [citations] As we indicated above, Aubert does not dispute that SBI, AGFC's corporate affiliate, satisfies both of these conditions.

In support of his claim against SBI, Aubert does not argue that the language of 1692a(6)(B) compels a contrary reading. Instead, he argues that a "plain meaning" interpretation of the affiliate exclusion would create a loophole that is inconsistent with the intent and purposes of the Act: While a creditor that collects its own debts under "any name other than [its] own" is considered a "debt collector" under 1692a(6), our reading of 1692a(6)(B) enables an affiliate of that creditor to collect debts under any name that it chooses, so long as the affiliate otherwise satisfies the conditions required for exclusion from the Act. Therefore, an affiliate could collect debts under an assumed name without regard for protecting corporate goodwill. Aubert argues that this loophole enables creditors, acting through their affiliates, to engage in the same abusive practices that Congress intended to eliminate by enacting the FDCPA. To avoid the loophole, Aubert asks us to read an additional condition into 1692a(6)(B): that corporate affiliates must collect debts in the name of the creditor.

While Aubert raises a strong policy argument in support of his position, our role, when the language of a statute is plain, is to enforce that statute according to its terms. [citation] Legislation is frequently the product of compromises that are not readily apparent to the judiciary. Therefore, "invocation of the 'plain purpose' of legislation at the expense of the terms of the statute itself takes no account of the processes of compromise and, in the end, prevents the effectuation of congressional intent." [citation] As this case demonstrates, many corporations operate under names that are not readily identifiable with those of their affiliates. Yet while Congress prescribed two conditions for the exclusion of corporate affiliates under 1692a(6)(B), it did not prescribe the third condition that Aubert asks us to read into the statute. Should Congress desire to eliminate this loophole, it is, of course, free to amend the FDCPA and add conditions to the 1692a(6)(B) exclusion. We, however, do not enjoy that freedom. "We are bound by the particular rules enacted by Congress and are not free to carve out our own exceptions merely because we believe that they would best serve Congress' policies and goals." [citation] We therefore hold that the district court appropriately granted summary judgment in favor of SBI.

Finally, the court held that no basis had been shown for disregarding the corporate formalities of the three defendants and holding them jointly responsible under the FDCPA because they engaged in a single economic enterprise.

Similarly, in Harrison v. NBD, Inc., the court held that a parent corporation that had a subsidiary collect its debts was not subject to the FDCPA unless it controlled the debt collector's activities:

ICS is the entity which extended the credit to the plaintiff and on whose behalf NBD attempted to collect the debt. Although a creditor is generally not covered by the FDCPA, the plaintiff reasons that ICS is subject to the FDCPA because it attempted to collect the debt under a different name, NBD, indicating that a third party was collecting the debt. The corporate affiliation between ICS and NBD is not disclosed in the letter. Therefore, the plaintiff maintains that ICS is a "debt collector" subject to the FDCPA. The court finds this argument unpersuasive.

In cases where a creditor collected its own debts by using a different name, thus implying that a third party was the debt collector, the creditor controlled almost all aspects of debt collection, or used an alias . . . .

The plaintiff alleges that NBD and ICS are subsidiaries of NEC. NBD and ICS are two distinct entities. Nowhere in the plaintiff's amended complaint is it alleged that the two corporations are, in reality, one single economic entity or that ICS controls NBD's collection process. The alleged "approval" by ICS of NBD's collection practices is insufficient as a matter of law, to convert ICS' status as creditor to that of "debt collector."

On the other hand, in order to prevent evasion of the law, the Federal Trade Commission and other courts have applied the "other name" proviso 1692a(6) to more complex situations where a creditor uses, or authorizes the use of, a name other than the one under which the creditor dealt with the consumer, and which is likely to lead the consumer to believe that a third party is attempting to collect the debt.

The FTC Staff Commentary expressly imposes this standard on "affiliates" of the creditor. The FTC Official Staff Commentary to the FDCPA, 53 Fed.Reg. 50097, 50102, states:

1. APPLICATION OF DEFINITION TO CREDITOR USING ANOTHER NAME

Creditors are generally excluded from the definition of "debt collector" to the extent that they collect their own debts in their own name. However the term specifically applies to "any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is" involved in the collection.

A creditor is a debt collector for purposes of this act if:

o He uses a name other than his own to collect his debts, including a fictitious name.

o His salaried attorney employees who collect debts use stationery that indicated that attorneys are employed by someone other than the creditor or are independent or separate from the creditor [the same should apply to salaried nonattorney employees, as herein]. . . .

o The creditor's collection division or related corporate collector is not clearly designated as being affiliated with the creditor; however, the creditor is not a debt collector if the creditor's correspondence is clearly labeled as being from the "collection unit of the (creditor's name)," since the creditor is not using a "name other than his own" in that instance. (Emphasis added.)

Some courts have similarly indicated, sometimes relying on 15 U.S.C. 1692j, that all of the 1692a(6) exceptions for persons associated with creditors and for services should be construed as subject to the restriction that there can be no use of a name which conveys the false impression that an independent third-party debt collector is involved or which dissociates the name used in dealing with the consumer prior to default with the name used in making collections.

An FTC opinion letter of Sept. 19, 1985 discusses a situation in which XYZ and ABC were two entities under common ownership, XYZ handled the collection of ABC's delinquent debts, XYZ's principal business was not debt collection, and XYZ failed to disclose its relationship with ABC in effecting collections. The FTC stated that these facts would result in an FDCPA violation:

[T]he [affiliate] exclusion does not necessarily apply if a creditor "in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is attempting to collect such debts." Strictly speaking, this provision does not make XYZ subject to the Act because XYZ is not the creditor. However, because the collection activity would assumably be conducted under the XYZ name, its debt collection activities may subject the creditor, ABC Corporation, to the Act. For example, if, as your letter suggests (and is necessary for XYZ to come within the 803(6)(B) [1692a(6)(B)] exception), XYZ is not fully independent of ABC Corporation but uses a name which conveys the impression that it is independent, the use of such name in collecting ABC Corporation's debts would (a) bring ABC Corporation within the scope of the Act and (2) violate the Act's Section 807(10) [1692e(10)] and 807(14) [1692e(14)]. [f.n.: Section 807(10) prohibits the use of false representations and deceptive collection means when collecting debts. Section 807(14) prohibits the use of any name other than the true name of the collector when the collector is engaged in collection activities.] The Commission staff has stated that it would generally be a violation of 807(10) for a creditor to use a controlled entity to collect its own debts under a name that conveys the impression that a third party is collecting the debts.

Under the circumstances outlined in your letter, and in view of the ownership overlap and on-going business connections, it appears that ABC Corporation could not successfully maintain that XYZ was an independent collection entity at the same time it sought 803(6)(B) exemption. . . .

In Grammatico v. Sterling, Inc., Sterling owned a jewelry store, Kay. Sterling collected Kay's accounts using the name "Sterling," without disclosure of any relationship between Sterling and Kay. Sterling claimed that it came within the "affiliated creditor" exemption, 1692a(6)(B). The court held that the various provisions of the FDCPA had to be read together and in light of the statutory purpose, and that the FDCPA applied where company A collected debts for related company B, without disclosure of the relationship, and under circumstances where a consumer would believe that a third party was collecting the debt. "t's the impact on the consumer, not the technical corporate realities of the situation, which govern the application of the second sentence." Neither the "own name" language in 1692a(6) nor the "affiliated creditor" exemption permitted such deception to be practiced on the consumer.

Likewise, in Little v. World Financial Network, Inc., a corporate affiliate was held to be a debt collector because a debt to Lane Bryant was being collected by World Financial without disclosure of the corporate relationship between the two. Similarly, in Vernon v. BWS Credit Services, Inc., Beneficial had its debt collected by wholly-owned subsidiary, BWS, which did not disclose relationship with Beneficial; the court found the FDCPA applicable.

Also instructive is Britton v. Weiss, Britton received a collection letter purporting to emanate from an independent law office of Weiss. Weiss was actually employed by the creditor, New York Telephone. While employees of creditors, like affiliates of the creditor, are normally not "debt collectors," the letter conveyed the false impression that it came from an independent law office:

Plaintiff claims here that the March 6, 1988 letter from defendant was deceptive, that defendant clearly represented himself as an independent attorney not collecting debts in the name of the creditor, and that defendant is therefore covered by the terms of the FDCPA. Plaintiff points out that the letter was not written on NYT stationery which bears the well-known "blue bell" logo. While the letter does refer to New York Telephone in the street address, it is printed in small, lower case type. On the other hand, plaintiff states, the designation "attorney" below defendant's signature is in upper-case letters. Indeed, as plaintiff asserts, it might appear to a debtor that defendant was an independent attorney who had offices in a New York Telephone building, since there is no other representation that he is an employee or otherwise affiliated with the telephone company. The letter, plaintiff maintains, was an attempt to deceive the plaintiff into believing that this was not merely a communication from the collection department of NYT, but a more serious step in the collection process: the intervention of a private attorney.

The court, citing the FTC materials referred to above, agreed that the letter conveyed the false impression that it came from an independent attorney:

A plain reading of the March 6, 1988 letter from defendant to plaintiff is indicative of defendant's intent to deceive plaintiff into believing he was an independent attorney. The letter is not written on stationery bearing the logo of NYT. Defendant is identified at the bottom of the letter simply as an "attorney," and he in no way indicates that he is an employee of NYT. Several passages in the letter indicate that defendant intends the plaintiff to believe he is acting on his own, and not on behalf of NYT: "Your former telephone account has been referred to me for collection"; "I am writing to permit you to pay this debt at a reasonable rate per month"; "All payments must be made directly to my office"; "So long as you abide by the above terms and conditions, I shall take no further action"; "However, should you fail to make any monthly payment, I shall immediately commence a lawsuit against you for the recovery of the full balance. . . ." While the words "New York Telephone" appear in small print, it is clear that the "least sophisticated consumer" could believe that the account was being handled by an independent collection agency, with all the attendant serious consequences for the consumer.

On the other hand, a court held that a creditor which consistently used its assumed business name in dealing with customers, rather than its incorporated name, did not thereby become a "debt collector," and that corporate affiliates with similar names could take advantage of the "affiliate" exception.

Where, however the "debt collector," although separately licensed and incorporated, is "dominated" by the creditor, there is a violation.

Finally, there is no reason that an affiliate of a creditor cannot be liable under 1692j if the provisions of that section are satisfied. Section 1692j is not dependent on meeting the definition of "debt collector". Indeed, "Courts have found that both creditor-defendants and the 'flat-rater' who furnishes the collection letters may be liable for violations of 1692j."

WHAT CONSTITUTES "USE" OF THIRD PARTY'S NAME

Several decisions reach opposite conclusions as to whether a creditor which causes letters to be sent on the letterhead of an attorney or collection agency "uses" the name of the attorney or agency. In Villareal v. Snow, the court answered the question in the negative where the letters were sent out by the attorney, even though the attorney did not have any of the contract documents or statements of account necessary to determine whether the debt was owed, was paid on a per-letter basis, and did not exercise any professional judgment with respect to the debt. In Fratto v. Citibank (South Dakota), N.A., the court held that the question was one for the jury, where the letters were placed in the mail by a third party functioning essentially as a mailing service. In both cases, the principal purpose of the letters was to induce the debtor to telephone the creditor's in-house collection department.

Logically, if the actual sender of the letter does not act as an attorney or collection agency, and the purpose of the communication is to induce contact with or payment to the creditor, the creditor is "using" the name of the third party in the ordinary dictionary meaning of "use", making the creditor a statutory "debt collector" under 1692a(6). The intended distinction is that between contracting for the professional services of a third party and borrowing a name to make one's own collection efforts more effective.

In Sokolski v. Trans Union Corp., the court held that where Trans Union merely sent letters to a list of debtors furnished by the creditor and provided no meaningful debt collection services, it violated the FDCPA:

. . . While it is true that Bank One identifies itself in the body of the June 15 Letter as the destination for the 800 telephone call, the letter conveys the impression that Bank One is using Trans Union as a collection agency. Trans Union's activities, however, are limited to the furnishing of collection letters. Trans Union does not received the files of the debtors and any correspondence received by Trans Union is sent directly to Bank One. Trans Union has no authority to negotiate collection of debts and is not paid a percentage of debts collected. Instead, Trans Union receives a flat fee based upon the number of letters sent. These circumstances fall squarely into the definition of flat rating as described by Congress.

This case falls in sharp contrast with cases where courts have refused to find that a creditor is debt collector. In Scrimpsher v. Wegmans Food Markets, Inc., 17 B.R. 999 (N.D.N.Y 1982), for example, in addition to sending dunning letters, the collection agency offered a "complete range of collection services," including direct contract with debtors, the location of debtor assets and referrals to collection attorneys. Scrimpsher, 17 B.R. at 1007-08. Similarly, in Epps v. Etan Industries Inc., 1998 U.S. Dist. LEXIS 19120, 1998 WL 851488 at *2-4 (N.D.Ill. December 1, 1998) no flat rating arrangement was found where the collection agencies activities included active communication and negotiation with debtors.

Here, the activities of Trans Union never went beyond coordinating the mailing of letters and forwarding responses to Bank One. This

arrangement allowed Bank One to be involved in the collection of its own debts while also appearing to use the services of a collection agency. Under these circumstance, Bank One is properly held liable as a debt collector under 15 U.S.C. 1692a(6).

On the other hand, Epps v. Etan Industries Inc., no flat rating arrangement was found where the collection agencies' activities included active communication and negotiation with debtors.

The undisputed evidence demonstrates that CPA drafted and mailed the collection letters, consulted with Blockbuster regarding debtor payment, was available to field inquiries from debtors, and recommended a course of action for Blockbuster with regard to stubborn debtors. . . . [T]he facts in the instant case demonstrate that CPA performed traditional debt collection services for Blockbuster.

In Larson v. Evanston Northwestern Healthcare Corp., the court stated

the pertinent considerations as follows:

Evidence that indicates that the collection agency's participation is so minimal that the creditor should be deemed the actual debt collector, and therefore subject to liability, includes: (1) the collection agency is a mere mailing service or performs only ministerial functions; (2) the letters state if the debtor does not pay, the debt "will be referred for collection"; (3) the collection agency is paid merely for sending letters rather than on the percentage of debts collected; (4) the collection agency does not receive any payments or forwards payments to creditor; (5) if the debtor fails to respond to the letter(s), the collection agency has no further contact with the debtor or the creditor decides whether to pursue collection; (6) the collection agency does not receive the files of the debtors; (7) the collection agency never discussed with the creditor the collection process or what steps should be taken with certain debtors; (Cool the collection agency cannot initiate phone calls to debtors; (9) any correspondence received by the collection agency is forwarded to the creditor; (10) the collection agency has no authority to negotiate collection of debts; (11) the letters do not state the collection agency's address or phone number; (12) the letter directs questions or payments to the creditor; and (13) the creditor has substantial control over the content of the letters. . . .

On the other hand, evidence that indicates that a creditor is not acting as a debt collector includes: (1) the collection agency provides traditional debt collection services for the creditor such as direct contact with debtors, locating debtors' assets, and referrals to collection attorneys; (2) accounts remain with collection agency if debtor does not pay after receipt of a letter; (3) the collection agency has authority to decide to pursue debts that remain unpaid after letters are sent; (4) the collection agency provides follow-up services; (5) the creditor pays only for successful collection efforts; (6) the creditor exercises only limited control over the collection agency; (7) the collection agency retains information about the debtors; (Cool the letters state collection agency's telephone number or address; (9) the collection agency drafts the letters; (10) the collection agency collects debts for others; (11) the collection agency answers debtors' inquiries; and (12) the collection agency recommends how to pursue stubborn debtors.

Decisions in this area tend to be very fact-specific.

PURCHASERS OF LOAN PORTFOLIOS

INCLUDING DEFAULTED DEBTS

Recently, it has become common for banks, credit card companies and other creditors to sell their delinquent debts to companies which specialize in the purchase and liquidation of bad debts.

A financial institution which purchases delinquent debts is a "debt collector" within the meaning of the FDCPA with respect to the delinquent debts.

"The legislative history of section 1692a(6) [which defines 'debt collector'] indicates conclusively that a debt collector does not include . . . an assignee of a debt, as long as the debt was not in default at the time it was assigned." Conversely, the assignee of a debt which is in default at the time of the assignment is a "debt collector," if the assignee's principal purpose is the collection of debts, or the assignee regularly engages in the collection of debts. "For instance, a mortgage servicing company is not considered a debt collector when it acquires loans originated by others and not in default at the time acquired. However, to the extent the mortgage servicing company receives delinquent accounts for collection it is a debt collector with respect to those accounts."

Under this test, a company which acquires a block of receivables is a "debt collector" with respect to those receivables in default at the time of acquisition. The leading case is Kimber v. Federal Financial Corp., where the purchaser of credit card receivables from W.T. Grant, which had gone bankrupt, was held to be a "debt collector" with respect to those receivables which were delinquent at the time they were acquired. The court stated:

The first part of 1692a(4) defined the universe of creditors as either those who originate a debt or those to whom a debt is owed; in either case, the creditors are not collecting the debts for others. The second part of 1692a(4), the assignee exception, then purports to exclude from this universe those persons who collect assigned or transferred debts that are already in default when assigned or transferred. To say that this exception applies only to those who collect debts for others would be to render the exception superfluous and meaningless; those who collect debts for others are not in the original definitional universe, and there is therefore no need to exclude them. Rather, the excluding factors in the exception are that the debts are the result of an assignment or transfer and that the debts were already in default at the time of assignment or transfer. With the phrase `for another' at the end of the exception, Congress merely intended that the debts should have originally belonged to another and that the creditor was therefore in effect a third-party or independent creditor.

Similarly, in Cirkot v. Diversified Systems, the Connecticut District Court held that an entity which attempted to collect delinquent debts in loan portfolios acquired (through the FDIC) from defunct banks is a "debt collector" covered by the FDCPA with respect to the delinquent debts.

The Federal Trade Commission has expressed agreement that under the current language of the FDCPA the test of whether an assignee is a "debt collector" is whether the debt was assertedly in default at the time of its acquisition. In late 1993 the FTC proposed amending the FDCPA so that whether an assignee is a "debt collector" "will depend upon the nature of the overall business conducted by the party to be exempted rather than the status of individual obligations when the party obtained them." However, the proposal was not adopted, and the test of whether an assignee is a "debt collector" subject to the FDCPA remains "the status of individual obligations when the party obtained them." "Banks are not debt collectors if they service debts that they originated or debts that were not in default when obtained by the bank. However, if a bank services a loan portfolio, it is a debt collector for those loans in the portfolio that it did not originate and which were in default when obtained."

The successor in interest to a creditor's business or line of business, openly identified as such, has been held not to be a "debt collector."

LAWYERS AS "DEBT COLLECTORS"

Lawyers were originally excluded from the definition of "debt collector." In 1986, Congress removed the attorney exemption. Now, the "FDCPA does apply to a lawyer . . . with a general practice including a minor but regular practice in debt collection." The legislative history of the amendment states that collection attorneys were not being effectively policed by the legal profession and courts, and that the removal of the exemption was necessary to "put a stop to the abusive and harassing tactics of attorney debt collectors."

In Heintz v. Jenkins, the United States Supreme Court held that litigation conduct of attorneys in collecting consumer debts is not exempt from the FDCPA, rejecting the arguments of the collection bar to the contrary. Unlawful conduct by collection attorneys in court proceedings is now covered. However, some judges are nevertheless still reluctant to find violations based on the contents of pleadings.

The amount of collection activity necessary to make a lawyer a "debt collector" -- one who "regularly" collects consumer debts -- is minimal. A law firm's debt collection work which amounted to less than 4% of its total business brought it within the definition. "While the ratio of debt collection to other efforts may be small, the actual volume is sufficient to bring defendant under the Act's definition of 'debt collector.'" An attorney who represented four collection agencies, filed over 150 collection suits in a two-year period, and sent one particular collection letter over 125 times in a 14-month period was a debt collector even though debt collection was merely incidental to his primary law practice. Another decision holds that sending 60 collection letters during a period of several weeks is sufficient. On the other hand, an attorney who collected less than 20 consumer debts in a 10-year period was not a debt collector.

In two questionable decisions, courts held that a nascent collection lawyer who sent out about two dozen or three dozen letters at one time was not engaged in regular debt collection.

A lawyer should be classified as a "debt collector" if either a volume threshold or a percentage-of-time threshold is met, or if the lawyer holds himself out as engaging in consumer debt collection. A volume threshold is necessary because a law firm that handles a modest number of consumer collection matters as part of providing a full range of services to its clients should be required to comply with the FDCPA. One court has held that "It is the volume of the attorney's debt collection efforts that is dispositive, not the percentage such efforts amount to in the attorney's practice." The Fifth Circuit has held that a law firm that sent out 600 demand letters was a "debt collector" notwithstanding the fact that only a small fraction of its time was spent in that activity.

A percentage threshold and a "holding out" test are also necessary because the FDCPA should apply to (i) a lawyer with a nascent collection practice and (ii) a lawyer who attempts to obtain collection business, even if he is not successful in obtaining very much of it.



Additionally, here is a Michigan case where Asset Acceptance was found to be a debt collector subject to the FDCPA.

-1-
S T A T E O F M I C H I G A N
C O U R T O F A P P E A L S
ASSET ACCEPTANCE CORPORATION,
Plaintiff-Appellee,
FOR PUBLICATION
March 2, 2001
9:05 a.m.
v No. 215158
Wayne Circuit Court
OTHELL ROBINSON, LC No. 97-731706-CK
Defendant-Appellant.
Before: Markey, P.J., and McDonald and K. F. Kelly, JJ.
PER CURIAM.
Defendant appeals as of right from an order granting plaintiff’s motion for summary
disposition in this debt collection action. We affirm in part and remand.
On appeal, a trial court’s grant of summary disposition is reviewed de novo. Spiek v
Dep’t of Transportation, 456 Mich 331, 337; 572 NW2d 201 (1998). This Court must review
the record to determine whether the moving party was entitled to judgment as a matter of law.
Morales v Auto-Owners Ins, 458 Mich 288, 294; 582 NW2d 776 (1998); Phillips v Deihm, 213
Mich App 389, 398; 541 NW2d 566 (1995). A motion for summary disposition under MCR
2.116(C)(10) tests whether there is factual support for a claim. Spiek, supra, 456 Mich 337;
Radke v Everett, 442 Mich 368, 374; 501 NW2d 155 (1993). A court must rely on affidavits,
pleadings, depositions, or any other documentary evidence in deciding whether a genuine issue of
material fact exists. Rollert v Dep’t of Civil Service, 228 Mich App 534, 536; 579 NW2d 118
(1998). If the opposing party fails to present documentary evidence establishing the existence of
a material factual dispute, the motion is properly granted. Smith v Globe Life Ins Co, 460 Mich
446, 455-456 n 2; 597 NW2d 28 (1999).
Defendant first contends that plaintiff did not have standing to bring this suit under the
Michigan Collection Practices Act (MCPA) based on the following provisions:
(b) Furnishing legal advice, or otherwise engaging in the practice of law,
or representing that the person is competent to do so, or to institute a judicial
proceeding on behalf of another.
* * *
-2-
(d) Employing or retaining an attorney to collect a claim. A licensee may
exercise authority on behalf of a creditor to employ the service of an attorney if
the creditor has specifically authorized the collection agency in writing to do so
and the licensee's course of conduct is at all times consistent with a true
relationship of attorney and client between the attorney and the creditor. After
referral to an attorney, the creditor shall be the client of the attorney, and the
licensee shall not represent the client in court. The licensee may act as an agent of
the creditor in dealing with the attorney only if the creditor has specifically
authorized the licensee to do so in writing.
* * *
(f) Soliciting, purchasing, or receiving an assignment of a claim for the
sole purpose of instituting an action on the claim in a court. [MCL 339.915a(b),
(d) & (f); MSA 18.425(915a)(b), (d) & (f).]
Defendant maintains that plaintiff is a collection agency under the Act and has thus violated the
above provisions. Plaintiff, on the other hand, contends that it is not a collection agency and
purchased the debt in question outright and is not acting on behalf of a creditor.
A collection agency is defined as:
[a] person directly or indirectly engaged in soliciting a claim for collection or
collecting or attempting to collect a claim owed or due or asserted to be owed or
due another, or repossessing or attempting to repossess a thing of value owed or
due or asserted to be owed or due another arising out of an expressed or implied
agreement. . . . [MCL 339.901(b); MSA 18.425(901)(b).]
In the instant case, defendant purchased the vehicle from Repo Depo West, Inc. Repo Depo
West, Inc. immediately sold defendant’s account to Guardian National Acceptance Corporation.
On June 27, 1997, plaintiff purchased defendant’s account from GNA. The purchase agreement
states that GNA conveyed all of its interests in the accounts to plaintiff for value.
This Court holds that plaintiff is not a collection agency as defined by the Act. The
purchase agreement states that GNA conveyed all of its interest in defendant’s account for
valuable consideration. Moreover, the provisions of the Act clearly attempt to protect the debtor
and the creditor from the potentially improper acts of a third-party collection agency.1 Here,
plaintiff is not acting for the benefit of GNA, or any other party, in its suit to collect on the debt.
Therefore, plaintiff has standing to sue defendant on the outstanding debt.
1 The article provides that a person shall not operate a collection agency without first obtaining a
license, MCL 339.904; MSA 18.425(904), and maintaining a separate trust account, MCL
339.909; MSA 18.425(909). The article also provides that the collection agency must maintain
records or books of accounts outlining each client and the debtors’ accounts for which the agency
is attempting to collect. MCL 339.910; MSA 18.425(910).
-3-
Defendant next contends that despite plaintiff’s stance that it is not a collection agency
under Michigan law, its actions are clearly prohibited by the MCPA, MCL 339.901 et seq.; MSA
18.425(901) et seq. Specifically, as stated above, MCL 339.915a(f); MSA 18.425(915a)(f)
provides that a licensee under the Act is prohibited from “soliciting, purchasing, or receiving an
assignment of a claim for the sole purpose of instituting an action on the claim in a court.”
Defendant argues that because plaintiff purchased a delinquent account from GNA, and filed suit
on the account, it must be subject to the Act. In support of this contention, defendant refers to
the definition of creditor under the Act. Creditor is defined as:
[a] person who offers or extends credit creating a debt or a person to whom a debt
is owed or due or asserted to be owed or due. Creditor or principal shall not
include a person who receives an assignment or transfer of a debt solely for the
purpose of facilitating collection of the debt for the assignor or transferor. In
those instances, the assignor or transferor of the debt shall continue to be
considered the creditor or the principal for purposes of this article. [MCL
339.901(e); MSA 18.425(901)(e) (emphasis supplied).]
Thus, defendant argues that “an entity that receives a debt in default for the purpose of collecting
the debt is not a creditor and is therefore a debt collector/collection agency subject to the act.”
However, this Court holds that, although plaintiff received an assignment or transfer of a debt,
there is no evidence that plaintiff was “facilitating collection of the debt for the assignor or
transferor” (GNA). MCL 339.901(e); MSA 18.425(901)(e). As noted, plaintiff purchased all
interest in the account from GNA and cannot be acting on GNA’s behalf in collecting the debt.
Defendant also argues that, under the Fair Debt Collection Practices Act, 15 USC 1692 et
seq. (FDCPA), plaintiff is a debt collector and is prohibited from suing on accounts it purchased
after the debt was in default. Plaintiff concedes that it is a debt collector under the FDCPA.
Defendant relies on the following provisions to support his argument:
The term “creditor” means any person who offers or extends credit creating a debt
or to whom a debt is owed, but such term does not include any person to the
extent that he receives an assignment or transfer of a debt in default solely for the
purpose of facilitating collection of such debt for another. [15 USC 1692a(4).]
* * *
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.
[15 USC 1692a(6).]
As noted, GNA sold all of its rights and interests in defendant’s debt and thus plaintiff cannot
collect the debt on behalf of GNA. In Kimber v Federal Financial Corp, 668 F Supp 1480 (MD
Ala, 1987), the United States District Court addressed the issue of whether an entity that
purchases a debt in default is a debt collector or a creditor under the Act. The court held, under
analogous facts, that despite the defendant’s argument that it was not collecting the debt for
-4-
another, “Congress merely intended that the debts should have originally belonged to another
and that the creditor was therefore in effect a third-party or independent creditor.” Kimber,
supra, 668 F Supp 1485 (emphasis in original). The court held that:
even though FCC collects debts for itself, it is still a debt collector within the
meaning of § § 1692a(4) and 1692a(6) of the Act, because the corporation
regularly collects debts and debt collection is the principal purpose, and because
the debts the corporation collects were already in default when they were assigned
to the corporation and thus the corporation falls within the assignee exception to
the definition of creditor. [Kimber, supra, 668 F Supp 1485.]
The Kimber court went on to hold that as the defendant was subject to the Act as a debt collector,
it had violated several of the protective provisions under the Act. Kimber, supra, 668 F Supp
1488-1489.
In the instant case, plaintiff concedes, and we agree, that it is a debt collector under the
Act. However, defendant does not allege how, if at all, plaintiff has violated any of the
protective provisions of the Act. 15 USC 1692i provides:
(a) Venue
Any debt collector who brings any legal action on a debt against any
consumer shall—
(1) in the case of an action to enforce an interest in real property securing
the consumer’s obligation, bring such action only in a judicial district or similar
legal entity in which such real property is located; or
(2) in the case of an action not described in paragraph (1), bring such
action only in the judicial district or similar legal entity—
(A) in which such consumer signed the contract sued upon; or
(B) in which such consumer resides at the commencement of the
action.
(b) Authorization of Actions
Nothing in this subchapter shall be construed to authorize the bringing of
legal actions by debt collectors.
Although not the model of legislative clarity, this Court holds that the statute allows the filing of
suit on an outstanding debt. In fact, the Kimber court never held that the defendant’s act of
bringing suit itself violated any provisions of the Act. Accordingly, we hold that the trial court
did not err in determining that plaintiff could sue on the debt.
Defendant argues that under the Michigan Supreme Court’s holding in Bay Co Bar Ass’n
v Finance System, Inc, 345 Mich 434; 76 NW2d 23 (1956), plaintiff’s filing of suit constituted
-5-
the unauthorized practice of law. In Bay Co, the defendant was engaged in the collection of
debts as its business. The creditors would assign the defendant an interest in the debt for the
purposes of collection only. Accordingly, the original creditors retained substantial interest in
the debt. Id., 436-437. The Court held that:
[w]e cannot escape the conclusion that engaging in the business of representing
the interests of assignors and controlling the proceedings to be taken in suits on
assigned claims in which assignors retain an interest, as done by defendants, is
engaging in the practice of law. When this is done by one not licensed as an
attorney it constitutes the unauthorized practice of law whether done by him in
person or through his agent, regardless of whether the latter be a layman or a
licensed attorney. [Id., 447 (citations omitted).]
In Bay Co, the Court emphasized that the assignor retained an interest in the debt and was to
receive a share of the proceeds. Thus, the defendant was merely managing the lawsuit on behalf
of the original creditor. Here, defendant hired an attorney to represent its exclusive interest in
collecting on the debt. Defendant argues that plaintiff’s office staff controlled the litigation.
Defendant did not, however, offer any evidence that an employee of plaintiff did anything other
than the routine tasks of a legal support staff or that legal documents were not signed by an
attorney. This Court holds that plaintiff’s actions did not constitute the unauthorized practice of
law.
Defendant next contends that the trial court erred in making the factual determination that
defendant received notice of the impending sale and by noting that, even if there was a genuine
issue of material fact with respect to the notice issue, defendant failed to produce evidence that
the sale of the vehicle was commercially unreasonable. MCL 440.9504(3); MSA 19.9504(3)
outlines the notice required to be given to the debtor and states that the sale of the collateral must
be commercially reasonable. It provides:
Disposition of the collateral may be by public or private proceedings and may be
made by way of 1 or more contracts. Sale or other disposition may be as a unit or
in parcels and at any time and place and on any terms but every aspect of the
disposition including the method, manner, time, place, and terms must be
commercially reasonable. Unless collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
reasonable notification of the time and place of any public sale or reasonable
notification of the time after which any private sale or other intended disposition
is to be made shall be sent by the secured party to the debtor, if he has not signed
after default a statement renouncing or modifying his right to notification of sale.
In the case of consumer goods no other notification need be sent. In other cases
notification shall be sent to any other secured party from whom the secured party
has received (before sending his notification to the debtor or before the debtor's
renunciation of his rights) written notice of a claim of an interest in the collateral.
The secured party may buy at any public sale and if the collateral is of a type
customarily sold in a recognized market or is of a type which is the subject of
widely distributed standard price quotations he may buy at private sale.
-6-
In Honor State Bank v Timber Wolf Construction Co, 151 Mich App 681, 687; 391
NW2d 422 (1986), this Court concluded that failure to provide notice to the debtor of the sale of
collateral absolutely bars recovery of any deficiency. In the instant case, the trial court held that
it was unclear whether defendant had notice of the impending sale. Defendant stated in his
affidavit that he did not have knowledge of the sale, and plaintiff’s employee provided an
affidavit that the information contained in plaintiff’s first letter to defendant did not contain the
information referenced in defendant’s letter to plaintiff. According to plaintiff, defendant must
have received notice about the sale of the vehicle from the prior creditor. A letter from the prior
creditor indicating the date of the sale was produced below2. However, defendant expressly
contends that he did not receive any notice of the proposed sale.
The trial court, however, held that the issue of notice was irrelevant in that defendant
failed to present any evidence that the sale was commercially unreasonable. Specifically,
defendant failed to provide any foundation for his valuation of the vehicle, and failed to indicate
the manner in which he surrendered the car to the original creditor. The court noted that
documentary evidence had been presented by plaintiff which demonstrated that the vehicle had
been abandoned and not surrendered as alleged by defendant. This Court holds that the trial
court’s determination that defendant failed to demonstrate that the sale was commercially
unreasonable does not overcome the potential lack of notice. As noted by the Honor State Bank
court, the notice provisions are in place to protect the debtor. The creditor, on the other hand, is
in a position to exercise a high degree of control over the relationship. Honor State Bank, supra,
151 Mich App 687-688. Thus, we hold that the case should be remanded for trial on the issue of
whether defendant received the statutorily required notice of sale.
Affirmed in part and remanded. We do not retain jurisdiction.
/s/ Jane E. Markey
/s/ Gary R. McDonald
/s/ Kirsten Frank Kelly
2 The letter referred to listed April 22, 1996 as the sale date. The actual sale date was May 15,
1996. Asset produced no documents to show that Plaintiff received any notice of the May 15,
1996 sale date.
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« Reply #5 on: October 17, 2006, 03:46:30 PM »

Here is yet another case defining the term debt collector that involves a law firm. This was in my District.

Quote

KAREN WILSON, Plaintiff-Appellant, v. DRAPER & GOLDBERG, P.L.L.C.; L. DARREN GOLDBERG, Defendants-Appellees.

No. 05-1392

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

443 F.3d 373; 2006 U.S. App. LEXIS 8243

 
December 1, 2005, Argued  
April 5, 2006, Decided

PRIOR HISTORY:  [**1]  Appeal from the United States District Court for the District of Maryland, at Baltimore. (CA-04-2917-WDQ). William D. Quarles, Jr., District Judge.

DISPOSITION: REVERSED AND REMANDED.
Available Briefs and Other Documents Related to this Case:

  U.S. Circuit Court Brief(s)
 


COUNSEL: ARGUED: Howard Robert Erwin, Jr., Baltimore, Maryland, for Appellant.
 
Rita Ting-Hopper, DRAPER & GOLDBERG, P.L.L.C., Leesburg, Virginia, for Appellees.
 
ON BRIEF: Scott R. Grigsby, DRAPER & GOLDBERG, P.L.L.C., Leesburg, Virginia, for Appellees.

JUDGES: Before WIDENER, WILKINSON, and TRAXLER, Circuit Judges. Judge Traxler wrote the majority opinion, in which Judge Wilkinson joined. Judge Widener wrote a dissenting opinion.

OPINION BY: TRAXLER

OPINION:
 
 [*374]  TRAXLER, Circuit Judge:


Karen Wilson brought this action against the law firm of Draper & Goldberg, P.L.L.C., and one of its lawyers, L. Darren Goldberg (collectively, "Defendants"), for violation of the Fair Debt Collection Practices Act (the "Act") in connection with Defendants' initiation of foreclosure proceedings against her. Defendants filed a motion to dismiss for failure to state a claim, arguing that they were not covered by the Act. The district court treated the motion as one for summary judgment, and granted it in favor of Defendants. The district court [**2]  concluded that, because Defendants were acting as substitute trustees foreclosing on a deed of trust, they could not be "debt collectors" under the Act and that any actions they took in connection with the foreclosure could not be challenged as violations of the Act. Wilson appeals, and we reverse and remand.

I.

We review a district court's grant of summary judgment de novo, viewing any facts and inferences drawn from them in the light most favorable to Wilson, the nonmoving party. See Evans v. Technologies Applications & Serv. Co., 80 F.3d 954, 958 (4th Cir. 1996). The questions we address in this case are matters of statutory interpretation based on essentially undisputed facts. As a result, our review is plenary. See United Energy Servs. v. Federal Mine Safety & Health Admin., 35 F.3d 971, 974 (4th Cir. 1994).

Chase Manhattan Mortgage Corporation ("Chase") retained Defendants to foreclose on Wilson's property due to her alleged failure to make mortgage payments. Defendants wrote Wilson on September 2, 2003, to announce that she was in default on her loan and that they were preparing foreclosure papers. Defendants' letter stated that "federal [**3]  law requires us to advise you that this letter is written pursuant to the provisions of the Fair Debt Collection Practices Act ... This letter is an attempt to collect a debt." J.A. 43. Defendants also sent Wilson a "VALIDATION  [*375]  OF DEBT NOTICE" pursuant to the Act, which gave specific information concerning "the amount of the debt," the "creditor to whom the debt is owed," and the procedure for validating the debt. J.A. 44. The notice, however, expressly stated that Defendants were not "debt collectors" or acting in connection with the collection of a "debt." J.A. 44. Shortly after receiving the letter, Wilson wrote Defendants to dispute the debt and to request that they verify it with Chase.

On September 11, 2003, Defendants commenced foreclosure proceedings. One week later, Wilson's attorney advised Defendants that he represented Wilson and that Defendants should only communicate with him regarding the dispute. Nevertheless, on October 6, 2003, Defendants' "Sales Department" wrote directly to Wilson, not her attorney, to inform her that the foreclosure sale of her home would go forward on October 17, 2003. The letter again stated that it was an attempt to collect a debt. J.A. 45.  [**4]

On October 9, 2003, Wilson's attorney requested a complete statement of Wilson's account indicating all interest, late charges and other charges, the interest rate, and all payments since the inception of the mortgage. In what Defendants claim was a response to Wilson's attorney, Defendants wrote directly to Wilson on October 15, 2003, providing the "amount to reinstate the above account," a balance of payments due, and instructions that any funds paid should be by cashiers check made payable to Chase and sent to Defendants. J.A. 47. As with previous letters, the letter stated "This notice is an attempt to collect a debt." J.A. 47. Prior to completing the foreclosure, Chase and Wilson resolved their dispute.

In 2004, Wilson commenced this action, alleging that Defendants violated the Act by failing to verify the debt, by continuing collection efforts after she had contested the debt, and by communicating directly with her when they knew she was represented by counsel. Defendants moved to dismiss the complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief could be granted, arguing [**5]  that they were not acting in connection with a "debt" and that they were not "debt collectors" as those terms are defined by the Act.

The district court treated the motion as one for summary judgment because, in addition to the pleadings, it considered an affidavit and exhibit submitted by Defendants showing that the law firm was acting as a substitute trustee on a deed of trust when it communicated with Wilson. The district court granted summary judgment in favor of Defendants, ruling that "trustees foreclosing on a property pursuant to a deed of trust are not 'debt collectors' under the [Act]," J.A. 153, and that "actions taken by a trustee in foreclosing on a property pursuant to a deed of trust may not be challenged as [Act] violations," J.A. 154.

II.

Because we believe the district court misinterpreted the scope of the Act, and conclude that trustees, including attorneys, acting in connection with a foreclosure can be "debt collectors" under the Act, we reverse and remand.

A.

To be a "debt collector," there must first be a "debt." The Act defines a "debt" as:

    any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which [**6]  the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes,  [*376]  whether or not such obligation has been reduced to judgment.


 
15 U.S.C.A. § 1692a(5) (West 1998).

We disagree with Defendants' argument that they were not acting in connection with a "debt." Defendants notified Wilson that she was in "default in [her] Deed of Trust Note payable to the Lender ... [and] that the Lender [had] accelerated the debt." J.A. 43 (emphasis added). Defendants informed Wilson that her failure to make mortgage payments entitled Chase to immediate payment of the balance of her loan, as well as fees, penalties, and interest due. These amounts are all "debts" under the Act, because they were "obligations ... to pay money arising out of a transaction in which the ... property ... which [is] the subject of the transaction [is] primarily for personal, family, or household purposes." 15 U.S.C.A. § 1692a(5).

Defendants contend that foreclosure by a trustee under a deed of trust is not the enforcement of an obligation to pay money or a "debt," but is a termination [**7]  of the debtor's equity of redemption relating to the debtor's property. In essence, Defendants argue that Wilson's "debt" ceased to be a "debt" once foreclosure proceedings began. Defendants rely on reported and unreported district court decisions, including Hulse v. Ocwen Federal Bank, FSB, 195 F. Supp. 2d 1188 (D. Ore. 2002), which reasoned that "foreclosing on a deed of trust is an entirely different path [than collecting funds from a debtor]. Payment of funds is not the object of the foreclosure action. Rather, the lender is foreclosing its interest in the property." Id. at 1204; see also Heinemann v. Jim Walter Homes, Inc., 47 F. Supp. 2d 716, 722 (N.D. W. Va. 1998) (stating that, to the extent the pro se complaint could be read to allege violation of the Act within the statute of limitations, the Act would not apply "since the trustees were not collecting on the debt at that time but merely foreclosing on the property pursuant to the deed of trust"), aff'd, 173 F.3d 850 (4th Cir. 1999) (unpublished table decision).

We disagree. Wilson's "debt" remained a "debt" even after foreclosure proceedings commenced.  [**8]  See Piper v. Portnoff Law Assocs., 396 F.3d 227, 234 (3d Cir. 2005) ("The fact that the [Pennsylvania Municipal Claims and Tax Liens Act] provided a lien to secure the Pipers' debt does not change its character as a debt or turn PLA's communications to the Pipers into something other than an effort to collect that debt."). Furthermore, Defendants' actions surrounding the foreclosure proceeding were attempts to collect that debt. See Romea v. Heiberger & Assocs., 163 F.3d 111, 116 (2d Cir. 1998) (concluding that an eviction notice required by statute could also be an attempt to collect a debt); Shapiro & Meinhold v. Zartman, 823 P.2d 120, 124 (Colo. 1992) ("[A] foreclosure is a method of collecting a debt by acquiring and selling secured property to satisfy a debt.").

Defendants' argument, if accepted, would create an enormous loophole in the Act immunizing any debt from coverage if that debt happened to be secured by a real property interest and foreclosure proceedings were used to collect the debt. We see no reason to make an exception to the Act when the debt collector uses foreclosure instead of other methods. See Piper, 396 F.3d at 236 [**9]  ("We agree with the District Court that if a collector were able to avoid liability under the [Act] simply by choosing to proceed in rem rather than in personam, it would undermine the purpose of the [Act].")(internal quotation marks omitted).

Furthermore, in this case, Defendants' October 15 letter to Wilson contained a specific request for money to "reinstate the above account" even after the foreclosure  [*377]  proceedings began. J.A. 47. The letter instructed Wilson to pay the amount, over half of which was for foreclosure fees, by cashiers check made payable to Chase and to send it to Defendants. By sending a letter seeking payment of an amount to "reinstate the above account" and directing Wilson to pay that amount by cashiers check, Defendants sought to collect an "obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes." 15 U.S.C.A. § 1692a(5); cf. Crossley v. Lieberman, 868 F.2d 566, 570 (3d Cir. 1989) ("The letter unequivocally states that [the [**10]  attorney] himself is collecting the money. Nowhere is it intimated that [the debtor] was to send money to [the lender] directly. Thus [the attorney] is a debt collector."). n1

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n1 We cannot accept Defendants' argument that the letter was in response to a request by Wilson's lawyer. Defendants' letter was sent to Wilson and not her attorney, made no reference to her attorney's request, was not signed by anyone, and failed to provide much of the information her lawyer requested.
 

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Thus, Defendants attempted to collect a "debt."

B.

We now turn to Defendants' argument that, even if they were acting in connection with a debt, they fall under an exception from the general definition of "debt collector." The Act generally defines a "debt collector" as

    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 [**11]  to be owed or due another.


 
15 U.S.C.A. § 1692a(6) (West 1998).

Defendants argue they fall under the exception to "debt collector" that covers "any person collecting or attempting to collect any debt ... due another to the extent such activity ... is incidental to a bona fide fiduciary obligation." 15 U.S.C.A. § 1692a(6)(F)(i) (West 1998). Defendants claim that, because they were acting as trustees foreclosing on a property pursuant to a deed of trust, they were fiduciaries benefitting from the exception of § 1692a(6)(F)(i).

We disagree. The fact that trustees foreclosing on a deed of trust are fiduciaries only partially answers the question. Rather, the critical inquiry is whether a trustee's actions are "incidental to a bona fide fiduciary obligation." Id. We conclude that a trustee's actions to foreclose on a property pursuant to a deed of trust are not "incidental" to its fiduciary obligation. Rather, they are central to it. Thus, to the extent Defendants used the foreclosure process to collect Wilson's alleged debt, they cannot benefit from the exemption contained in § 1692a(6)(F)(i). Cf. FTC Official Staff Commentary [**12]  On the Fair Debt Collection Practices Act, 53 Fed. Reg. 50097, 50103 (Fed. Trade Comm'n Dec. 13, 1988) ("The exemption (i) for bona fide fiduciary obligations or escrow arrangements applies to entities such as trust departments of banks, and escrow companies. It does not include a party who is named as a debtor's trustee solely for the purpose of conducting a foreclosure sale (i.e., exercising a power of sale in the event of default on a loan).").

Nor is it relevant that Defendants were attorneys. Generally speaking, all lawyers are fiduciaries for their clients. As discussed above, however, the more important  [*378]  question is whether Defendants' actions were "incidental" to their fiduciary obligation. We conclude that they are not. Furthermore, it is well-established that lawyers can be "debt collectors" even if conducting litigation. See Heintz v. Jenkins, 514 U.S. 291, 299, 115 S. Ct. 1489, 131 L. Ed. 2d 395 (1995) ("The Act applies to attorneys who 'regularly' engage in consumer-debt-collection activity, even when that activity consists of litigation."). In fact, the Act as originally enacted exempted attorneys from its coverage, but Congress amended the Act in 1986 "to [**13]  provide that any attorney who collects debts on behalf of a client shall be subject to the provisions of [the] Act." Pub. L. No. 99-361, 100 Stat. 768 (codified at 15 U.S.C.A. 1692a); see also Carroll v. Wolpoff & Abramson, 961 F.2d 459, 461 (4th Cir. 1992) (discussing repeal of the attorney exemption). If the principal purpose of a lawyer's work is the collection of debts, he is a "debt collector" under the Act. See Scott v. Jones, 964 F.2d 314, 316-17 (4th Cir. 1992).

Thus, Defendants cannot benefit from § 1692a(6)(F)(i)'s exception to the definition of "debt collector" merely because they were trustees foreclosing on a property pursuant to a deed of trust.

C.

Defendants also allege that they cannot be held liable as charged in the complaint because Wilson has only alleged violations of portions of the Act that do not apply to them. They refer to a portion of the definition of "debt collector" that states, "for the purpose of section § 1692f(6) of this title, such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement [**14]  of security interests." 15 U.S.C.A. § 1692a(6). According to Defendants, because they are engaged in a business "the principal purpose of which is the enforcement of security interests," they can only be a "debt collector" under the one section expressly provided, 15 U.S.C.A. § 1692f(6). Because Wilson alleged no violation of § 1692f(6), Defendants argue that they cannot be liable under the Act.

We disagree. This provision applies to those whose only role in the debt collection process is the enforcement of a security interest. See Jordan v. Kent Recovery Servs., Inc., 731 F. Supp. 652, 657 (D. Del. 1990)("It thus appears that Congress intended an enforcer of a security interest, such as a repossession agency, to fall outside the ambit of the FDCPA except for the provisions of § 1692f(6)."). In other words, this provision is not an exception to the definition of debt collector, it is an inclusion to the term debt collector. It serves to include as debt collectors, for the purposes of § 1692f(6), those who only enforce security interests. It does not exclude those who enforce security interests but who also fall [**15]  under the general definition of "debt collector." See Piper, 396 F.3d at 236 ("Section 1692a(6) thus recognizes that there are people who engage in the business of repossessing property, whose business does not primarily involve communicating with debtors in an effort to secure payment of debts.").

Thus, if Defendants meet the statutory definition of "debt collector," they can be covered by all sections of the Act, not just § 1692f(6), regardless of whether they also enforce security interests.

III.

The district court incorrectly concluded that Defendants could not be held liable under the Act. We hold that Defendants' foreclosure action was an attempt to collect a "debt," Defendants are not excluded  [*379]  from the definition of "debt collector" under 15 U.S.C.A. § 1692a(6)(F)(i) merely because they were acting as trustees foreclosing on a property pursuant to a deed of trust, and Defendants can still be "debt collectors" even if they were also enforcing a security interest. As a result, we reverse and remand.

On remand, Wilson can show that Defendants meet the definition of "debt collector" by demonstrating that they use "any instrumentality [**16]  of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or ...regularly collect[]or attempt[]to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C.A. § 1692a(6); see also Heintz, 514 U.S. at 294 ("[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."); Crossley, 868 F.2d at 569-70 (relying on volume of attorney's mortgage foreclosure actions to show he was a debt collector); Shapiro, 823 P.2d at 124 (" Since a foreclosure is a method of collecting a debt by acquiring and selling secured property to satisfy a debt, those who engage in such foreclosures are included within the definition of debt collectors if they otherwise fit the statutory definition.").

Our decision is not intended to bring every law firm engaging in foreclosure proceedings under the ambit of the Act. Nevertheless, it is well-established that the Act applies to lawyers "who 'regularly' engage in consumer-debt-collection [**17]  activity, even when that activity consists of litigation." Heintz, 514 U.S. at 299. Congress enacted the Act to "eliminate abusive debt collection practices by debt collectors." 15 U.S.C.A. 1692(e) (West 1998); see also Carroll, 961 F.2d at 460. As such, lawyers who regularly engage in consumer-debt-collection activity should not be allowed to thwart this purpose merely because they proceed in the context of a foreclosure. n2

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n2 Of course, whether a law firm or not, a company's own efforts to collect overdue payments from its own delinquent clients would not ordinarily make it a "debt collector" under the Act, which specifically refers to those who collect debts "owed or due or asserted to be owed or due another." 15 U.S.C.A. § 1692a(6) (emphasis added); see also Nielsen v. Dickerson, 307 F.3d 623, 634 (7th Cir. 2002) ("Creditors who are attempting to collect their own debts generally are not considered debt collectors under the statute.").
 

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Moreover, Defendants allegedly initiated over 2300 foreclosure actions in Maryland in 2003. There is no reason that a law firm handling this volume of foreclosures would be any more ill-equipped to comply with the Act than a more "traditional" debt collection agency. Defendants appear to have been aware that the Act could apply to their conduct, as their letters to Wilson contained clear references to the Act, including the notice "this is an attempt to collect a debt." See 15 U.S.C.A. § 1692e(11) (West 1998).

We reverse the district court's grant of summary judgment to Defendants and remand for proceedings consistent with this opinion.

REVERSED AND REMANDED

DISSENT BY: WIDENER

DISSENT:
 
WIDENER, Circuit Judge, dissenting:

I respectfully dissent.

I begin with the full text of the fiduciary exception to the statutory definition of "debt collector":



    The term [debt collector] does not include--

    (F) any person collecting or attempting to collect any debt owed or due or  [*380]  asserted to be owed or due another to the extent such activity (I) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement.


 
15 U.S.C. 1692a(6) [**19]  . It is undisputed that defendants were trustees on the deed of trust. (JA 22, 41.) This means that they were fiduciaries as a matter of law. See Bunn v. Kuta, 109 Md. App. 53, 674 A.2d 26, 32 (Md. Ct. Spec. App. 1996); Whitlow v. Mountain Trust Bank, 215 Va. 149, 207 S.E. 2d 837, 840 (Va. 1974). n1 And there is no reason to doubt their bona fides. But the majority offers a different reason to avoid the exception: defendants' actions were "central" to their fiduciary duties, not "incidental" as the statute provides. Slip op. 7.

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n1 The offices of Draper & Goldberg are in Virginia, the deed of trust in question is in Maryland.
 

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Such a construction of the statute is not logical, I suggest. "Incidental" means "occurring merely by chance or without intention or calculation" or "being likely to ensue as a chance or minor consequence." Merriam-Webster Collegiate Dictionary 586 (10th ed. 2000). And "central" is defined as "of cardinal importance: essential, principal." Id. at 185.  [**20]  Even assuming that a foreclosure is "central" to the defendants' duties, the majority conclusion that a central task incident to the duty is not exempted does not follow from the premise. If the exception covers the minor unintended acts relating to incidental fiduciary duties, it must cover the principal acts as well. Otherwise the exception would accomplish very little, for the majority definition excludes "other bona fide fiduciaries" which are included in the Senate Report, infra. n2

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n2 The appellate cases mentioning the exception do not bear upon this case. See Pelfrey v. Educ. Credit Mgmt. Corp., 208 F.3d 945 (11th Cir. 2000) (per curiam), aff'g 71 F. Supp. 2d 1161 (N.D. Ala. 1999) (applying exception to assignee of guarantor of defaulted student loan); Buckman v. Am. Bankers Ins. Co. of Fla., 115 F.3d 892, 895 (11th Cir. 1997) (not considering exception).
 

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The legislative history of the fiduciary exception further erodes the majority reasoning. It shows that [**21]  the original House version of the bill did not include the exception for fiduciaries. See H.R. Rep. No. 95-131, at 4, 11, 17-18 (Mar. 29, 1977). Only later did the Senate add it. See 123 Cong. Rec. at 27384 (Aug. 5, 1977) (text of Senate version); see also id. at 28109-13 (House adopting Senate amendments). So including the exception within the statute was a deliberate act. Moreover, the Senate committee report explained the purpose of the amendment:

    The committee does not intend the definition [of debt collector] to cover the activities of trust departments, escrow companies, or other bona fide fiduciaries. (Italics added.)


 
S. Rep. No. 95-382, at 3, reprinted at 1977 U.S.C.C.A.N. 1695, 1698; see also id. at 1701. This explanation is on point and unambiguous. We should not ignore such unambiguous text, especially when it is augmented by the balance of the legislative history referred to.

Yet the FTC Staff Commentary, which is the only authority particular to the fiduciary exception cited by the majority, does just that. The Commentary provides that the exception does not apply to trustees named "solely for the purpose of conducting a foreclosure sale. [**22]  " n3 This innovation conflicts not only with the statutory text but also with the Senate report set forth  [*381]  above. We have declined to follow the Commentary in past FDCPA cases upon discerning such a conflict, see Scott v. Jones, 964 F.2d 314, 317 (4th Cir. 1992), and we should do so again here. Our obligation not to follow the FTC Commentary is reinforced by the Commentary's self-doubt which appears at the beginning of the Commentary. Reciting that the Supreme Court has held that the Commentary was not binding and not entitled to deference when it conflicted with the plain language of the statute, the Commentary continued:


     
    "It is not clear whether the FTC has the authority to issue the Commentary [and] courts have little difficulty disregarding Commentary positions [viewed] as incorrect." JA 129, see Heintz v. Jenkins, 514 U.S. 291, 115 S. Ct. 1489, 131 L. Ed. 2d 395 (1995).


 
Tellingly, even this self-abnegation overstates the FTC's authority under the Act which the statute itself limits:

    Neither the [Federal Trade] Commission nor any other agency referred to in subsection (b) of this section may promulgate trade regulation rules or other [**23]  regulations with respect to the collection of debts by debt collectors as defined in this subchapter.


 
15 U.S.C. § 1692l(d). This provision, like the fiduciary exception, is unambiguous. So is its legislative history:


     
    "I want to make a special point: No Federal agency will write regulations for this legislation." 123 Cong. Rec. 10241 (Apr. 4, 1977) (statement of Rep. Annunzio).



 
And § 1692l(d) too, was itself an amendment. See id. at 10255 (statement of Rep. Rousselot noting amendment); see also the Senate Report, 1977 U.S.C.C.A.N. at 1703, which describes making of the FTC regulations as "prohibited." For various reasons given by courts which have cited the FTC Commentary, they decline to give it Chevron deference, n4 instead analyzing it as contrary to the statute or in terms of power to persuade, or lack thereof. See, e.g., Goswami v. Am. Collections Enter., Inc., 377 F.3d 488, 493 n. 1 (5th Cir. 2004); Scott, supra, 964 F.2d at 317. But the majority relies upon the FTC Commentary. This, despite the fact that the single sentence deemed dispositive does not explain, or pretend to explain,  [**24]  the legislative history including the Senate Report, rather it contradicts the statutory text and the Senate report as if Congress were not the principal instrument of public policy.


     
    "... it is equally--and emphatically--the exclusive province of the Congress not only to formulate legislative policies and mandate programs and projects, but also to establish their relative priority for the Nation." Tenn. Valley Authority v. Hill, 437 U.S. 153, 194, 98 S. Ct. 2279, 57 L. Ed. 2d 117 (1978).





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n3 Limiting by their appointment the duty of the trustees to be "solely for the purpose of conducting a foreclosure sale" is not shown in the record in this case. (Italics added.)


n4 Chevron USA v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984).
 

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Even setting aside our duty to look first to Congress, I can think of no rationale for the agency's position other than a Shakespearean distrust of lawyers. And the Commentary's other policy flaws are plain: for [**25]  instance, it fails to recognize that the duty of a lawyer-trustee under such a deed of trust runs to the property and, as well, to the borrower and the lender. See, e.g., White v. Simard, 152 Md. App. 229, 831 A.2d 517, 524-25 (Md. Ct. App. 2003); Powell v. Adams, 179 Va. 170, 18 S.E. 2d 261, 262-63 (Va. 1942). This difference between a lawyer-trustee and a lawyer who is merely a debt collector,  [*382]  although patent, is not explained. n5

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n5 The trustee, for example, must publicly account for the distribution of the proceeds of the sale. See generally In re Trustee's Sale, 67 Va. Cir. 204 (Circuit Court of the City of Norfolk, 2005).
 

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Accordingly, I would affirm.



If you need these as pdf's, email me at sosueme2006@yahoo.com and I'll send them to you.
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« Reply #6 on: October 18, 2006, 05:02:23 PM »

your thoughts?

Quote


OPPOSITION TO PLAINTIFFS' MOTION TO DISMISS COUNTERCLAIM

 The Defendant, appearing pro se, responds to the Plaintiffs’ Motion to Dismiss Counterclaim as follows:

It is well established that debt buyers are bound by the FDCPA. Plaintiff is a debt collector as defined by the FDCPA.
a.   “In our view, a party that purchases delinquent accounts from the party to which the debts were originally owed and attempts to collect them from the consumer debtors fits clearly within that definition [of the FDCPA].” FDCPA Staff Opinion: Brinckerhoff-Arbuckle – dated December 22,1993

b.   “In sum, it is our view that a party that obtains consumer obligations in default for the purpose of collection is a "debt collector" under the FDCPA, even if that party actually purchases the accounts from the original creditor.” Kimber v. Federal Financial Corp., 668 F. Supp. 1480, 1485 (M.D.Ala. 1987). Accord, Holmes, supra, at 1293.

c.   “Credigy’s collections operations and collection strategies are organized and managed to maximize the recovery of accounts in the most cost effective manner, either for external clients or for its own purchased portfolios.” Credigy’s web site - http://www.credigy.net


2.   Florida Statue 559.715 states in part; “the assignee must give the debtor written notice of such assignment within 30 days after the assignment.” Plaintiff alleges to have bought the debt on Dec 30, 2002. This would make the 30-day window from about Dec xx, 2002 to January xx, 2003. Plaintiff’s “Account Verification Statement” was provided on August xxth, 2006. The “multiple monthly billing statements” are all dated before Dec xx, 2002 and, are represented by the Plaintiff as alleged business records of “First Select”, not the Plaintiff. These alleged business records do not satisfy the requirements of Florida Statue 559.715 even if taken at face value.

For the foregoing reasons, Plaintiff’s Motion to Dismiss Counterclaim should be denied. Plaintiffs attempt to state they are “not a debt collector” appears frivolous to the Defendant. Should the court find that Plaintiffs motion is frivolous, the defendant asks that the Plaintiff be found guilty of contempt, and that sanctions, costs, and attorney fees be levied against the Plaintiff as the court deems fit.  
(Case Law supporting pro se attorney fees) Pickholtz v. Rainbow Technologies 284 F.3d 1365; 2002
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« Reply #7 on: October 18, 2006, 09:31:55 PM »

You should include the definition of a debt collector as defined by the FDCPA in your opposition and cite the relevant caselaw:

(4) The term "creditor" means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.

When a JDB purchases a debt from another, then they are facilitating the collection of said debt owed to the OC, so they are collecting a debt due another.

(6) 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.

Not withstanding the exclusion provided by clause (F) of the last sentence of this next paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. For the purpose of section 808(6), such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests. The term does not include --

(A) any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor; (any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts;
(C) any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties;
(D) any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt;
(E) any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquidation of their debts by receiving payments from such consumers and distributing such amounts to creditors; and
(F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity
(i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement;
(ii)concerns a debt which was originated by such person;
(iii) concerns a debt which was not in default at the time it was obtained by such person; or
(iv) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor.

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.

So they are not a creditor. And the first sentence of that last statute section describes them exactly. They are not subject to the exclusions under A because they are not a creditor, B doesn't apply either since their purpose is the principal collection of debts, C doesn't apply because they are not gov't employees, D neither because they are not process servers, E cause they are not credit counselors, F doesn't apply because the account was in default when they aquired it.

Use the definitions in the FDCPA to nail them and provide caselaw where it was ruled so.
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« Reply #8 on: October 19, 2006, 11:56:34 AM »

Going through FL case law on LN today, I found this little gem:

In order to prevail on a FDCPA claim, a Plaintiff must prove that: "(1) the plaintiff has been the object of collection activity arising from consumer debt, (2) the defendant is a debtor collector as defined by the FDCPA, and (3) the defendant has engaged in an act or omission prohibited by the FDCPA." Kaplan v. Assetcare, Inc., 88 F. Supp.2d 1355, 1360-1361 (S.D. Fla. 2000) (quoting Sibley v. Firstcollect, Inc., 913 F. Supp. 469, 470 (M.D. La. 1995)).

I also found some Florida caselaw that is applicable. Send me your email for pdf's of the cases. They include:

DORIS WILLIAMS, Plaintiff, vs. HEATHER J. EDELMAN; KATZMAN & KORR, P.A., a Florida corporation;  FOXCROFT CONDOMINIUM APARTMENTS, INC., a Florida corporation; and GOLDMAN, JUDA & MARTIN, P.A., a  Florida corporation, Defendants. Case No. 05-60653-CIV-ALTONAGA/Turnoff  UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA, MIAMI DIVISION

GLENN A. FULLER, VERA J. FULLER, CHARLES F. CURRY, and NORMA CURRY, on behalf of themselves and  others similarly situated, Plaintiffs, v. BECKER & POLIAKOFF, P.A., and CHRIS ALAN DRAPER, Defendants. CASE NO. 8:00-CV-341-T-17TGW UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDA, TAMPA DIVISION 192 F. Supp. 2d 1361; 2002 U.S. Dist. LEXIS 5269; 15 Fla. L. Weekly Fed. D 229

Also in the Rawson v Credigy case out of IL, Credigy admitted being a debt collector subject to the FDCPA.

I also have a copy of the complaint in the Fuller case if you'd like to take a look at it.
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« Reply #9 on: October 19, 2006, 04:33:58 PM »

OK, thanks for everyones help. I have submitted an opposistion to their motion to dismiss with a memo including case law and even pages from their website clearly showing that they are debt collector and are bound by the FDCPA -  even if they bought the debt.

I believe at this point they kmow they cant win and are tring to minimize their losses.

I got a reply to my motion to comple discovery today. They resent the exact documents they sent in ther notice of filing:

6 bogus invoices from "First Select", an Account verification statment they made up on their computer and a bill of sale with no information on what they bought.

I asked quite clearly for anything from Associates National Bank (the alleged OC) and anything with my signature and anything showing any proof I owed the debt . They dont have any real proof connecting me to this debt. I have been in front of the judge twice in this case and have figured out that is all the judge real cares about.

I know they dont have it, they know they dont have it, and they  know  I know they dont have it :-) I think it is pretty close to game over for them.

Surprisingly they have not yet motioned to appear telephonicly at the new motions hearings they have set. I plan to object if they do. Last hearing they called in 45 minutes late and they hung up before the hearing was over (the judge still did my motion to compel exparte anyway).

I am not sure if I should do another MSJ or not or just wait untill trail.

any thoughs?
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« Reply #10 on: October 19, 2006, 05:22:05 PM »

I would file the MSJ.
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ell-Behaved Women Seldom Make History...
imnotpaying
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« Reply #11 on: October 28, 2006, 09:21:30 AM »

I had a great day in motions court. Learned some stuff too.


The lawyers for the JDB forgot to file a motion to appear telephonicly so I objected when they called in. It was fun to watch them try to weasel out by saying it did not matter becasue there is no penalty for not filing and the Judge is required to anyway. The Judge said "well, I wonder why everyone files those funny telephonc motions then?" The Judge asked them to look that up and show it to him. I could hear them typing away on a computer looking it up.  The Judge upheld my motion but said, "All this will do is force them to file a motion and reschedule the hearing in a few days."

I then went ahead and let them have their motion hearing. Damage done. The lawyer made a complete idiot out of himself.  It was pretty obvous the attorny thought the Judge was a stupid country judge. (he does have a thick draw). The Judge played the "stupid country judge" for the rest of the hearing. The 10 minute motion hearing took over an hour.

Credigies lawyers filed a motion to dismiss 2 counterclaims.

The first one was "Credigy bought the debt and is not a debt collector according to the FDCPA." They tried to argue that "that they. the lawyers, were the debt collectors, credigy just buys the debt. The judge did not buy it.
Dismissed

The other disputed counterclaim was "credigy did not give notice of assignment per FS 559.715. "

This got real interesting. They claimed that the stuff they sent in their notice of filing satisfied the requirement, and that it did not matter because the law had no penalty. The judge said "It looks to me like if you  dont give notice of assignment you dont have the right to collect the debt."

The judge then made them look up the rule and read it to them.  

"This part does not prohibit the assignment, by a creditor, of the right to bill and collect a consumer debt. However, the assignee must give the debtor written notice of such assignment within 30 days after the assignment. "

The way they read it was classic. They read the whole thing slowly until they got to the word "must". Then they read the rest real fast. It took everything I had to keep from laughing.

The lawyer then said "well it is an affirmative defense not a counter claim"


The Judge said "well lets see, read me the "Florida Consumer Collection Practices Act" and we will see if it violates any thing." He made them read  F.S. 559.72 (Prohibited practices) in its entirty. I tried to hand the Judge a copy of the "Florida Consumer Collection Practices Act" but he stopped me and gave me the "shhhh" sign. He was having way to much fun messing with them.

Then the Judge took 5 minutes to review his list and said "It looks like #9 applies so it is both a countercllaim and an affirmative defense. [#9 Claim, attempt, or threaten to enforce a debt when such person knows that the debt is not legitimate or assert the existence of some other legal right when such person knows that the right does not exist]

The Judge then told me very directly "You need to have proper caselaw for 559.715 when you come to trial.

The other side then asked if they could just motion verbaly to appear telephonicly at the trial. The judge said, No, you need to be here in person, this trial is way to complicated to do on those new fangled phones, ..... and I am not convined this person really owes you any money.

The lawyer was so pissed you could hear his voice trembling on the phone.

Thanks to fraudfighter, ruby, hannah for all of your help.
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rubyruby27
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« Reply #12 on: October 28, 2006, 10:40:55 AM »

Cheesy Thats Great-Glad your day went well.
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VexatiousLitigant
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« Reply #13 on: October 30, 2006, 08:31:41 AM »

Quote from: "imnotpaying"

The Judge said "well lets see, read me the "Florida Consumer Collection Practices Act" and we will see if it violates any thing." He made them read  F.S. 559.72 (Prohibited practices) in its entirty. I tried to hand the Judge a copy of the "Florida Consumer Collection Practices Act" but he stopped me and gave me the "shhhh" sign. He was having way to much fun messing with them.

I've mentioned this once before.  This is the exact reason why some lawyers I know will NOT appear telephonically if the other lawyer will be there personally.  You get to see all the facial expressions and mannerisms while he just gets a voice.

Don't get scared on those motions to appear telephonically

I love the "dumb judge, please read me the statutes" shtick.  Looks like you found a winner.

At any rate, looks like you're doing well.
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fraudfighter
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« Reply #14 on: October 30, 2006, 10:12:26 AM »

Quote from: "imnotpaying"


The Judge then told me very directly "You need to have proper caselaw for 559.715 when you come to trial.

.


Mr. VL, could you look for case law to help with this, please.

I think the judge made the right deduction; whether there is any case law to support it is another matter.

It may be necessary to look for case law from other states, if there is something similar elsewhere.
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