GEORGE Z. SINGAL, District Judge.
Before the Court is the Motion for Summary Judgment (Docket # 36) filed by Defendant The Thomas Agency. As explained herein, the Court GRANTS Defendant's Motion.
Generally, a party is entitled to summary judgment if, on the record before the Court, it appears "that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c)(2). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248, 106 S.Ct. 2505. A "material fact" is one that has "the potential to affect the outcome of the suit under the applicable law." Nereida-Gonzalez v. Tirado-Delgado, 990 F.2d 701, 703 (1st Cir.1993) (citing Anderson, 477 U.S. at 248, 106 S.Ct. 2505) (additional citation omitted).
The party moving for summary judgment must demonstrate an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In determining whether this burden is met, the Court must view the record in the light most favorable to the nonmoving party and give that party the benefit of all reasonable inferences in its favor. Santoni v. Potter, 369 F.3d 594, 598 (1st Cir. 2004).
Once the moving party has made a preliminary showing that no genuine issue of material fact exists, the nonmoving party must "produce specific facts, in suitable evidentiary form, to establish the presence of a trialworthy issue." Triangle Trading Co. v. Robroy Indus., Inc., 200 F.3d 1, 2 (1st Cir.1999) (citation and internal punctuation omitted); Fed.R.Civ.P. 56(e). "As to any essential factual element of its claim on which the nonmovant would bear the burden of proof at trial, its failure to come
The parties have agreed to a joint statement of undisputed material facts.
The Thomas Agency ("Defendant" or "TA") is a debt collector licensed by the State of Maine. On or about September 29, 2008, John Hills, who does business as Glenwood Building and Remodeling ("Hills"), contacted TA to collect upon a debt of $500.00 allegedly owed to him by Frederick and Susan Poulin (hereinafter "Plaintiff" or "Dr. Poulin;" "Mrs. Poulin;" collectively the "Poulins"). The origin of this debt occurred several months earlier in the Spring of 2008 when Mrs. Poulin invited Hills to provide an estimate for replacing roof windows at the Poulin home on Two Lights Road in Cape Elizabeth, Maine. Hills accepted the invitation, making a number of visits to the Poulin home and conducting outside research as well. Ultimately, the Poulins were dissatisfied with Hills' efforts and informed him that they would not be hiring him to do the work; they did, however, offer to pay Hills something for his time and asked him to send a statement. Accordingly, Hills sent a non-itemized bill to Dr. Poulin for $500.00. After receiving this bill, Dr. Poulin was outraged, refused to pay the amount requested and threw the bill away. Sometime shortly thereafter, Mrs. Poulin called Hills and left the following message on his answering machine:
(S. Poulin Dep. Tr. (Docket # 37-13) at 14, Ex. 2.). Soon after Hills received this phone message from Mrs. Poulin, he sent another bill to Dr. Poulin—which the Poulins also did not pay.
TA agreed to take Hills on as a client and sent a form letter to Dr. Poulin demanding payment of the alleged debt on
On October 20, 2008, TA employee Eve Johnson, Collector 66, called Hills. During the course of this conversation, Hills informed Johnson that he would send TA a package of documents showing all the work he had done for the Poulins.
The next day, TA employee Hanna Onjea, Collector 172, called the Poulin home and spoke with Mrs. Poulin. In that phone call, Mrs. Poulin described their dispute with Hills as follows: she and her husband had asked Hills for an estimate for a window replacement job, but they had then decided to hire someone else; her husband had informed Hills that he would be happy to pay for his time, but they did not like the bill Hills ultimately sent to them. As a result, Mrs. Poulin informed Onjea, they were disputing the bill and would be securing legal counsel if the matter needed to be taken to the next step. Onjea responded that she would notify her manager and that TA would get back to them. Following this conversation with Mrs. Poulin, Onjea alerted Wescott that the Poulins were threatening to retain a lawyer.
On or about November 18, 2008, Johnson had another telephone conversation with Hills. During the course of this phone call, Hills indicated that he did not want any further phone or letter collection efforts directed to the Poulins. Additionally, it was agreed that TA would report the alleged debt to the consumer reporting agencies in the hope that this action would spur a payment from Dr. Poulin. Accordingly, on or about January 15, 2009, as part of a regular monthly process, TA "credit report[ed]" the debt allegedly owed to Hills by the Poulins. (USMF at ¶¶ 14-15.) In this report to the consumer reporting agencies, TA included specific coded notations to signal that this debt had been disputed by the alleged debtor. (See Ault Aff. (Docket # 37-1) ¶ 10; id. ¶ 18.)
TA had no contact with the Poulins between the October 21, 2008 phone call with Mrs. Poulin and mid-August 2009. On or about August 17, 2009, Dr. Poulin and his daughter, MP, applied via computer for loans from the Maine Educational Loan Authority ("MELA") to cover the expenses of MP's next year of college.
Within seconds of the submission—at 11:04 am on August 17, 2009—Dr. Poulin and MP received denials of their loan applications. In each instance, the loan rejection letter stated that the request was denied due to "charge off or collections accounts" found on Dr. Poulin's credit report. (See Erickson Dep. Tr. (Docket #37-10) at 8-9 (Ex. 2A at Bates MES0009-MES0010).) MELA's loan criteria requires denial of a loan application if there was an account in collection of $250.00 or greater. The alleged debt to Hills and the fact that it was disputed was reflected on the credit report submitted to MELA with Dr. Poulin and MP's loan applications. (See id. at 7 (Ex. 2A at Bates MES0004) (Trans Union Credit Report listing, under "Collections," a balance of $500.00 to Creditor "Glennwood Builders (sic)" with the notation "account information dispute").) The credit report also indicated a "serious delinquency." (See id.) As of the date of the loan denials and continuing until August 18, 2009, Dr. Poulin's credit score was 673.
The rejection letters also indicated that if there were "extenuating circumstances" the applicant could contact MES to discuss the denial. (See id.) Immediately after finding out that the loan applications he had filed had been rejected, Dr. Poulin contacted MES to discuss the denial. Shortly after calling MES, at 12:29 pm on August 17, 2009, Dr. Poulin—who was now "angry"—called TA and spoke first with Amberlee Edgerton-Moriarity, Collector 147, and then with Wescott. (See USMF ¶ 35A.) In both of these conversations, Dr. Poulin indicated that he had just learned that the alleged debt to Hills had been credit reported and that he was retaining counsel.
The next day—on or about August 18, 2009—TA employee Johnson spoke with Hills and advised him of the conversations that had transpired with Dr. Poulin. After hearing this information, Hills indicated that he wanted to close the account and abandon efforts to collect through TA. That same day, TA closed the Poulin account and returned the file to Hills. TA also contacted the consumer reporting agencies by email to delete the entry reflecting the alleged debt owed by the Poulins to Hills which Dr. Poulin had disputed. That same day, Edgerton-Moriarity telephoned Dr. Poulin to advise him the account had been closed and a deletion request had been sent to the consumer reporting agencies.
That deletion on Dr. Poulin's credit report occurred in due course, thereby allowing MP and Dr. Poulin to obtain a loan without going through the formal appeal process at MELA. Rather, on the following day—August 19, 2009—Dr. Poulin was able to call MES to inform them that an error on his credit report had been corrected. The loan was approved on August 20, 2009 after Dr. Poulin renewed the applications. At the time the loan applications were approved, Dr. Poulin's credit score was 733; his credit report, though still showing "serious delinquencies," no longer showed the Hills collection item. (See Erickson Dep. Tr. at 10 (Ex. 2A at Bates MES0013).) Dr. Poulin paid the same interest rate and guarantee fee for the approved loan as he would have paid had the initial applications on August 17, 2009 been approved rather than denied.
To date, TA collects debts for Maine Cardiology Associates, Dr. Poulin's employer. In doing so, TA follows the same procedures as it followed in attempting to collect upon the Hills account from the Poulins. TA credit reports consumers who owe Maine Cardiology Associates
Based on these facts, Plaintiff Dr. Poulin filed this lawsuit on November 16, 2009, bringing a single claim against Hills for violating the Maine Unfair Trade Practices Act (Count III) as well as five claims against TA under the federal Fair Debt Collection Practices Act (Count I), the Maine Fair Debt Collection Practices Act (Count II), the Maine Fair Credit Reporting Act (Count IV), and state law tort claims of interference with a prospective economic advantage and invasion of privacy (Counts V-VI). (See Compl. (Docket # 1).) On April 27, 2010, the Court granted TA's motion to dismiss the state law claims contained in Counts IV through VI for failure to state a claim. (See Order on Mots. to Dismiss (Docket #12).)
TA now moves for summary judgment on the two remaining counts of Plaintiff's original Complaint, the claims brought under the federal Fair Debt Collection Practices Act ("FDCPA" or "Act"), 15 U.S.C. § 1692 et. seq., and its state law counterpart, the Maine Fair Debt Collection Practices Act ("MFDCPA"), 32 M.R.S.A. § 11013 et seq. (Counts I & II).
In Counts I and II of his Complaint, Plaintiff alleges that Defendant violated federal and state law when it reported the $500.00 Hills debt to various consumer reporting agencies despite the fact that Plaintiff informed Defendant that the debt had no legal basis. (See Compl. at 4-5.) Plaintiff asks this Court to declare that his rights were violated and award actual damages plus such additional damages as the Court may allow, not exceeding $1,000 per violation, pursuant to 15 U.S.C. § 1692k and 32 M.R.S.A. § 11054. (Id.) In response, Defendant contends that Plaintiff's
All of the facts before the Court have been established by stipulation. As such, the Court readily finds that there are no genuine issues of material fact to prevent judgment from entering for one of the parties on the basis of the pending motion. See, e.g., Young v. Wall, C.A. No. 07-034, 2010 WL 2541053, at *3 (D.R.I. Jan. 28, 2010) ("Here, the parties have submitted... a joint statement of material facts. As there are no genuine issues of material fact, this matter is ripe for decision on summary judgment.") Plaintiff has not filed a cross motion for summary judgment.
The Court addresses each of Defendant's arguments, in turn, below.
The FDCPA has a one year statute of limitations. See 15 U.S.C. § 1692k(d). Defendant asserts that Plaintiff's cause of action accrued when he first informed Defendant that the debt was disputed—that is, in early October 2008. As Plaintiff did not file this cause of action until November 16, 2009, Defendant insists that the statute of limitations period had already lapsed for all of Plaintiff's claims. Alternatively, Defendant argues that the Court should limit its examination only to events occurring after November 16, 2008. Plaintiff counters that he only became aware of Defendant's allegedly illegal actions on or about August 17, 2009, when the loan applications were first denied, and that accordingly, all of his claims were filed well within the statutorily-allowed time period.
Plaintiff has the better of the argument. Once a debt has been disputed by a consumer, the FDCPA prohibits any debt collection activity until verification occurs. See 15 U.S.C. § 1692g(b) "Thus, a cause of action under the FDCPA does not arise until the illegal debt collection activity occurs and the statute of limitations does not begin to run until that time." Bond v. U.S. Bank Nat'l Ass'n, No. 09-14541, 2010 WL 1265852, at *3 (E.D.Mich. March 29, 2010); see also, e.g., McGee v. Moon, 685 F.Supp.2d 737, 745 (N.D.Ohio 2010) (plaintiff's cause of action under the FDCPA accrued, and statute of limitations began to run, on the date defendants engaged in the allegedly illegal debt collection practices).
All of Plaintiff's FDCPA claims are premised on the notion that Defendant had some sort of obligation to verify the legal status of the alleged debt prior to taking any sort of affirmative collection action. The record establishes that Defendant sent a collection letter to Plaintiff in early October, 2008, and shortly thereafter, Plaintiff contacted Defendant to dispute that debt. After learning that Plaintiff disputed the debt, the first discernable collection action taken by Defendant was its decision to report the Hills' debt to the
Indeed, the Court finds no reason to doubt that Plaintiff only first became aware that this debt appeared on his credit report in August of 2009—just a few short months before this suit was filed. See e.g., Akalwadi v. Risk Mgmt. Alts., Inc., 336 F.Supp.2d 492, 501 (D.Md.2004) (FDCPA's one-year statute of limitations for debt collector's inaccurate credit reporting began to run only when the consumer obtained credit report evidencing possible FDCPA violations, not when debt collector first reported the debt to credit reporting agency unbeknownst to consumer); Flores v. Millennium Interests, Ltd., 273 F.Supp.2d 899, 901 (S.D.Tex.2003) (debtor's claim against the collection agency under FDCPA arising from its provision of allegedly erroneous negative creditor report accrued at the time the bank denied debtors' application to refinance loan).
In short, the Court concludes that Plaintiff's suit is not time-barred. The Court, therefore, now turns to the substantive FDCPA arguments.
Plaintiff claims Defendant violated the FDCPA when it credit reported the alleged $500.00 debt to Hills despite the fact that Plaintiff challenged the validity of that debt. The FDCPA "imposes civil liability on `debt collector[s]' for certain prohibited debt collection practices." Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, ___ U.S. ___, ___, 130 S.Ct. 1605, 1608, 176 L.Ed.2d 519 (2010). "The FDCPA is not intended to stifle all debt collection practices." Russell v. Absolute Collection Serv., Inc., No. 1:09CV515, 2010 WL 4363393, at *3 (M.D.N.C. Oct. 27, 2010). Rather, "[t]he FDCPA was enacted to protect debtors from abusive debt collection practices." Chiang v. Verizon New Eng. Inc., 595 F.3d 26, 41 (1st Cir.2010) (emphasis supplied) (citing 15 U.S.C. § 1692(e)) (additional citations omitted). "To that end, it regulates debt collectors' tactics and, inter alia, creates a private cause of action for victims of `oppressive or offensive collection agency behavior.'" Id. (citation omitted); see also Jerman, 130 S.Ct. at 1608.
"In order to prevail on a[] FDCPA claim, a plaintiff must prove that (1) he was the object of collection activity arising from consumer debt, (2) the defendant is a debt collector within the meaning of the statute, and (3) the defendant engaged in a prohibited act or omission under the FDCPA." Krasnor v. Spaulding Law Office, 675 F.Supp.2d 208, 211 (D.Mass.2009) (citation omitted). The parties do not dispute that Plaintiff is a consumer and that TA is a "debt collector" as defined by the FDCPA. See 15 U.S.C. § 1692a(6). With regard to the critical third-prong—whether Defendant engaged in a prohibited act or omission—Plaintiff contends that Defendant violated the FDCPA in two ways: by "reporting an account as in collection when no such account was legally owed" and "failing to investigate the legality of the account." (Compl. ¶¶ 22, 26.)
Plaintiff's primary argument is that under these provisions of the FDCPA, Defendant was obligated to investigate whether the debt was valid prior to taking any sort of affirmative collection action on behalf of its client, Hills. When a consumer notifies a debt collector in writing of a dispute over a debt, as Plaintiff did, the FDCPA requires the debt collector to:
Id. § 1692g(b). As the Plaintiff points out, the FDCPA does not explicitly define what constitutes proper debt "verification." Nor has the First Circuit specifically addressed what constitutes appropriate verification under the FDCPA. Plaintiff, therefore, encourages the Court to turn to carefully selected portions of the Act's legislative history. (See Resp. to Mot. for Summ. J. at 2, 9.)
The Court declines this invitation. Other courts in examining the language and legislative history of the FDCPA uniformly have held that a "debt collector need not do much to verify a debt." Forman v. Lauinger, No. 06-40-M-DWM, 2007 WL 1580082, at *6 (D.Mont. May 31, 2007). Indeed, from this Court's research, it appears as though every court to have examined the issue has held that the verification provided here—confirmation of the amount of the debt and the identity of the creditor, which is then relayed to the debtor—is sufficient. In the case of Clark v. Capital Credit & Collection Services, Inc., 460 F.3d 1162 (9th Cir.2006), the Ninth Circuit articulated the baseline standard for a verification of a debt. In that case, the Ninth Circuit adopted the standard as articulated by the Fourth Circuit, holding that "[a]t the minimum, `verification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed.'" Id. at 1173-74 (quoting Chaudhry v. Gallerizzo, 174 F.3d 394,
Here, the Court agrees with Defendant that it complied with FDCPA's verification requirement by providing Plaintiff with the identity of the original creditor, Hills, and informing Plaintiff that its client had verified the balance to be true, correct and still owing. More specifically, upon Plaintiff's request for verification in mid-October 2008 (i.e., Plaintiff's phone call and subsequent letter to TA in which he disputed the validity of the debt), Defendant examined its own records and discovered the recording of the voicemail in which Plaintiff's wife confirmed that they had received a $500.00 bill from Hills. Next, on October 13, 2008, Defendant provided Plaintiff with a copy of the $500.00 bill statement from Hills. Defendant confirmed the account with its own client on October 20, 2008 and November 18, 2008. Finally, Defendant made an additional phone call to the Poulin home, during which Mrs. Poulin—in her effort to explain the dispute between Hills and Plaintiff—again verified the existence of the $500.00 debt. It was only after Defendant took these steps that it reported Plaintiff's delinquency to the various consumer reporting agencies. Applying the standard set out by Clark and Chaudhry, Defendant adequately verified the debt to Plaintiff prior to its January 2009 credit report. See, e.g., Clark, 460 F.3d at 1174 (noting that an itemized statement was sufficient to verify a past consumer debt); Chaudhry, 174 F.3d at 406 ("There is no concomitant obligation to forward copies of bills or other detailed evidence of the debt.").
Despite acknowledging this overwhelming weight of authority, Plaintiff argues that simply confirming the amount due on a debt is insufficient when the consumer explicitly relays that there is no legal basis for the debt. Plaintiff insists that because Defendant was informed that the debt alleged by Hills was invalid, its decision to "credit report" this debt amounted to a violation of various provisions of Section 1692e, which prohibits the false representation of the legal status of the debt and communicating information known to be false. While Plaintiff may wish this to be a true statement of the law, he unfortunately can cite to no legal authority to support his argument.
In fact, numerous courts have held to the contrary that the FDCPA does not require a debt collector to independently investigate the merit of the debt and that a debt collector can rely on its clients' representations regarding the validity of the debt. See e.g., Clark, 460 F.3d at 1174 ("Within reasonable limits, [Defendants] were entitled to rely on their client's statements to verify the debt. Moreover, the FDCPA did not impose upon them any duty to investigate independently the claims presented[.]") (internal citations omitted); Rudek v. Frederick J. Hanna & Assoc., P.C., No. 1:08-cv-288, 2009 WL 385804, at *2 (E.D.Tenn. Feb. 17, 2009)
In any event, the final, fatal blow to all of Plaintiff's arguments is the fact that Defendant in no way falsely represented the legal status of the debt. The FDCPA prohibits the use of any false, deceptive or misleading means to collect a debt, see 15 U.S.C. § 1692e, including "[c]ommunicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed." 15 U.S.C. § 1692e(8). Thus, the FDCPA specifically contemplates the circumstances presented here, and obligates only that a debt collector must "communicate" the disputed nature of the debt. See, e.g., Brady, 160 F.3d at 67 (Section "1692e(8) merely requires a debt collector who knows or should know that a given debt is disputed to disclose its disputed status to persons inquiring about a consumer's credit history."); Wilhelm v. Credico, Inc., 519 F.3d 416, 418 (8th Cir.2008) ("[I]f a debt collector elects to communicate `credit information' about a consumer, it must not omit a piece of information that is always material, namely, that the consumer has disputed a particular debt."). The Act in no way gives consumers some sort of veto power over collection agencies. The evidence before the Court firmly establishes that, in reporting the debt to the credit reporting agencies, Defendant specifically flagged the debt as disputed. (See USMF ¶¶ 15-16.)
In sum, the Court concludes that Defendant satisfied all of its legal obligations under the FDCPA. Upon receiving notification from Plaintiff that the debt was disputed, Defendant obtained verification of the debt and mailed such verification—a copy of the $500.00 statement from Hills—to Plaintiff. In obtaining verification of the debt, Defendant appropriately relied upon its client's representation that the debt was valid. It was only after mailing verification of the debt to Plaintiff that Defendant took any sort of affirmative collection action against Plaintiff by credit reporting the debt. And, in taking this
Thus, while the Court "can understand, and indeed, sympathize with the frustration experienced by" Plaintiff, Bleich, 233 F.Supp.2d at 500, the facts simply do not establish that Defendant violated either the FDCPA or the MFDCPA. Therefore, his remedy is with the legislature—not with this Court. Defendant the Thomas Agency is entitled to summary judgment on both Counts I and II.
For the reasons explained herein, the Court GRANTS Defendant the Thomas Agency's Motion for Summary Judgment (Docket # 36) and orders that judgment enter in favor of Defendant The Thomas Agency on Counts I and II of the Complaint (Docket # 1).
What remains in this case are the four state contract law claims—for breach of contract, unjust enrichment, quantum meruit and violations of the Maine Construction Contracts Act, 10 M.R.S.A. § 1111 et seq.—asserted in Defendant Hills' Third Party Complaint and Counterclaim. The Court declines to exercise its discretion to invoke supplemental jurisdiction over these counts pursuant to 28 U.S.C. § 1367. Counts I-IV of the Counterclaim and Third Party Claim filed by John Hills d/b/a Glenwood Building & Remodeling (Docket # 13) are hereby DISMISSED WITHOUT PREJUDICE to Defendant Hills filing these same claims in state court.
SO ORDERED.
Plaintiff's wife, Susan Poulin, was then brought into this lawsuit by Hills vis-à-vis his May 13, 2010 Answer to Count III, in which he also asserted—as a Third Party Complaint against Mrs. Poulin and as Counterclaims against Dr. Poulin—state law claims for breach of contract (Count I), unjust enrichment (Count II), quantum meruit (Count III) and violations of the Maine Construction Contracts Act ("CCA"), 10 M.R.S.A. § 1111 et seq. (Count IV). (Def. Hills' Answer, Counterclaim & Third Party Claim ("Hills' Answer") (Docket # 13) at 8-9 ¶¶ 10-23.). On June 3, 2010, Mrs. Poulin filed her Answer to Hills' Third Party Complaint, and asserted a Counterclaim against Mr. Hills for violations of the Maine Unfair Trade Practices Act—the same allegations made in Count III of the original Complaint. (See S. Poulin Answer & Counterclaim (Docket #19) at 6 ¶¶ 1-5.)
