MEMORANDUM in Support re [7] MOTION to Dismiss filed by Defendants Law Offices of Gerald E. Moore & Associates, P.C., National Asset Management Enterprises, Inc.. (Attachments: # (1) Exhibit to Memorandum in Support of Defendants' Motion to Dismiss)(Ziebert, Paul)
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E-FILED
Wednesday, 20 October, 2004 02:03:47 PM Clerk, U.S. District Court, ILCD IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF ILLINOIS PEORIA DIVISION KAY F. MANN, Plaintiff, v.
NATIONAL ASSET MANAGEMENT
ENTERPRISES, INC.;
LAW OFFICES OF GERALD E. MOORE
& ASSOCIATES, P.C.,
Defendants.
No. 1:04-CV-01304-JBM-JAG
DEFENDANTS’ MEMORANDUM
IN SUPPORT OF MOTION TO DISMISS
NOW COME defendants National Asset Management Enterprises, Inc. (“NAM”) and Law Offices of Gerald E. Moore & Associates, P.C. (“Moore”), by and through their undersigned attorneys, and in support of their motion to dismiss, and their motion for fees and costs, state as follows:
FACTS
Plaintiff Kay Mann ran up an $800 balance on her Capital One credit card, and then defaulted. (Complaint, Exhibit A.) In December 2003, Capital One placed the account for collection with National Asset Management Enterprises, Inc. (“NAM”), a collection agency located in Marietta, Georgia. (Complaint, paras. 5-7.) NAM sent two collection letters to plaintiff, the second of which is dated February 6, 2004 (attached to the complaint as Exhibit A). When plaintiff did not respond, NAM referred the account to Gerald E. Moore & Associates, P.C., a collection law firm located in Marietta,
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Georgia. (Complaint, paras. 8, 10-11.) Moore then sent three collection letters to plaintiff, the third of which is dated May 9, 2004 (attached to the complaint as Exhibit B). The February 6, 2004 letter sent by NAM offered plaintiff “the opportunity to settle your account for less than the balance listed above” or, in the alternative, the opportunity to begin making monthly payments. Likewise, the May 9, 2004 letter sent by Moore offered plaintiff the opportunity to begin making monthly payments. Both letters further advised that if plaintiff elected to make “payments by phone,”1 that defendants would charge “a processing and handling fee of $7.50 for this service.” The letters specifically note that the fee would be “in addition to your actual payment” and “will not be credited against your outstanding balance.” (Complaint, Exhibits A and B.) To date, plaintiff has neither disputed nor paid her debt. She did not take advantage of the settlement offers, made no payments, and never used the “payments by phone” option. Instead, she and her attorneys filed this putative class action alleging that an offer to provide a voluntary payment option, in exchange for a nominal processing and handling fee, violates the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §1692 et seq.2 The complaint should be dismissed in its entirety and plaintiff’s attorneys sanctioned for bringing a frivolous and baseless lawsuit.
1
“Payment by phone” refers to the commonly accepted practice whereby the consumer may authorize the collector, over the telephone, to create a demand draft against the consumer’s checking account. See generally Complaint, para. 30.
2
Plaintiff’s attorneys have filed a virtually identical lawsuit against Moore and another of his clients in the United States District Court for the Northern District of Illinois, entitled Longo v.Law Offices of Gerald E. Moore & Associates, P.C., et al., Case No. 04-C-5799.
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ARGUMENT
In ruling on a motion to dismiss pursuant to Fed.R.Civ. P. 12(b)(6), the court must draw all reasonable inferences that favor the plaintiff, construe the allegations of the complaint in the light most favorable to the plaintiff, and accept as true all well-pleaded facts and allegations in the complaint. Thompson v. Illinois Dep't of Prof'l Regulation, 300 F.3d 750, 753 (7th Cir.2002); Perkins v. Silverstein, 939 F.2d 463, 466 (7th Cir.1991). Nonetheless, in order to withstand a motion to dismiss, a complaint must allege the "operative facts" upon which each claim is based. Kyle v. Morton High School, 144 F.3d 448, 454-55 (7th Cir.1998); Lucien v. Preiner, 967 F.2d 1166, 1168 (7th Cir.1992). Where it "appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief," the complaint must be dismissed. Conley v. Gibson, 355 U.S. 41, 45- 46 (1957).
I.
Plaintiff Fails to State a Claim under Section 1692f(1).
In this case, plaintiff alleges that defendants’offer to provide a voluntary payment
option (i.e., “payment by phone”) violates Section 1692f(1), which prohibits “[t]he collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.” (Complaint, paras. 31-35.) Such claims have been soundly, and repeatedly, rejected by the courts. In Lee v. Main Accounts, Inc., 125 F.3d 855 (6th Cir. 1997), the debt collector presented the consumer with several payment options, including payment by credit card. If the consumer elected to pay by credit card, the collector imposed a five-percent charge (intended to allow the collector to recoup the transaction charge imposed by the credit card company). In dismissing the claim the
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court reasoned that the five-percent charge was a voluntary payment that did not violate or even implicate the FDCPA.
Similarly, in Lewis v. ABC Business Serv., 911 F.Supp. 290, 292-293 (S.D. Ohio 1996), the collector offered payment by credit card but with an additional processing fee added on. In dismissing the complaint, the court reasoned that the payment was voluntary and did not implicate the FDCPA and that it was a standard charge for this payment method. Lewis, 911 F.Supp. at 293.
In DuBois v. Ford Motor Credit Co., 276 F.3d 1019 (8th Cir. 2002), the plaintiff fell behind on lease payments. As a part of the settlement of that account with the debt collector, the plaintiff entered into a second lease and rolled the interest on the first lease into the second. The plaintiff argued that the rolled-up fees from the first lease constituted a violation of 15 U.S.C. § 1692f(1). The district court held that § 1692f(1) was not implicated by a voluntary transaction, which was affirmed on appeal. DuBois, 276 F.3d at 1024 (“because [the plaintiff] voluntarily entered into the second lease and voluntarily agreed to pay the excess fees… [the defendant] did not violate the FDCPA”). In the instant case, as in Lee, Lewis, and DuBois, the “check by phone” payment option was entirely voluntary. It was an offer made by the collector to perform a service in exchange for a nominal fee, which the consumer is free to accept or reject. It has nothing to do with the debt itself, as is made clear by the letter. The Federal Trade Commission, charged with administrative enforcement of the FDCPA, notes in its Commentary on Section 1692f that a collection action “may be unfair” if it is “not reasonably avoidable by the consumer.” 53 Fed. Reg. 50108. Here, because the processing fee would only be imposed if the consumer elected to incur it; the
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fee was entirely voluntary and was easily “avoidable” by simply utilizing another form of payment.
This is not a case where the collector unilaterally added some impermissible fee or “service charge” to the underlying debt. See, e.g., Ballard v. Equifax Check Services, Inc., 158 F.Supp.2d 1163, 1176 (E.D. Cal. 2001) (defendant violated § 1692f by demanding payment of service charge misrepresented to be authorized under California law); Patzka v. Viterbo College, 917 F.Supp 654, 659 (E.D. Wis. 1996) (debt collector violated § 1692f by charging a collection fee and interest not allowed by contract or state law). Rather, defendants simply offered the consumer a service, in exchange for a fee. The consumer is free to accept or reject that service – it is entirely a voluntary bargainedfor-exchange between the collector and the consumer. If the consumer does not value the telephone payment option at $7.50, they can make payment by some other method and avoid the fee.3 In short, Section 1692f(1) is not even implicated by the “payment by phone” charge. Even if it were, Section 1692f(1) does not prohibit charges that are “permitted by law.” Certainly, Illinois law allows two parties, in this case the consumer and the debt collector, to voluntarily contract for a service in exchange for a fee. A contract, to be valid, must contain offer, acceptance, and consideration; to be enforceable, the agreement must also be sufficiently definite so that its terms are reasonably certain and able to be 3
It is important to note that every form of payment has some cost associated with it. If the consumer elects to pay by money order, she will have to purchase one from her bank or other financial institution, usually at a cost of one or two dollars. If she elects to pay by Western Union wire transfer, she is going to pay a fee. If the consumer elects to pay by credit card, she is only able to do so because she is paying an annual fee or other service/interest charges for the privilege of having the card. If the consumer elects to pay by personal check, she may incur monthly charges from her bank (unless she has free checking). Even mailing in a check requires an envelope and a 37-cent stamp. So if the consumer chooses to pay a $7.50 charge for the convenience and quickness of “payment by phone,” why should she not be able to do so? Plaintiff’s attorneys fashion themselves as “consumer advocates” but in reality seek to reduce the consumer’s choices, and make a quick buck for themselves in the process.
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determined. Halloran v. Dickerson, 287 Ill.App.3d 857, 867-68 (1997), citing Ogle v. Hotto, 273 Ill.App.3d 313, 319, 210 (1995). Defendants’ letters state the essential terms of the offer, and any debtor who responds with telephonic payment supplies the requested performance. When an offer requires acceptance by performance, a contract is created by the offeree’s performance. Restatement (Second) of Contracts § 50. As such, nothing in Section 1692f(1) prohibits the voluntary fee at issue in this case.
II.
Plaintiff Fails to State a Claim under Section 1692e(10).
Plaintiff also claims that defendants violated Section 1692e, which states that a
debt collector “may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt,” and Section 1692e(10), which prohibits “the use of any false representation or deceptive means to collect or attempt to collect any debt.” (Complaint, paras. 36-37.) This claim is outright frivolous. How can it possibly be “deceptive” or “misleading” to offer the consumer the voluntary option of payment by phone, making clear at the same time that (1) a $7.50 processing and handling fee would be imposed, (2) that the fee would “be in addition to your actual payment,” and (3) would “not be credited against your outstanding balance.” Nothing in the letter suggests that “payment by phone” is the only payment option available, or that other forms of payment are unacceptable. To the contrary, the letter specifically notes that the processing and handling fee would be charged only “[i]f you have elected to make payments by phone.” (Emphasis added).
Whether a collection letter violates Section 1692e is determined with reference to the “unsophisticated consumer” standard. Pettit v. Retrieval Masters Creditors Bureau, 211 F.3d 1057, 1060 (7th Cir. 2000). The “unsophisticated consumer” is someone who
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“possesses rudimentary knowledge about the financial world, is wise enough to read collection notices with added care, possesses ‘reasonable intelligence,’and is capable of making basic logical deduction and inferences. Pettit, 211 F.3d at 1060; Gammon v. GC Services Limited Partnership, 27 F.3d 1254, 1257 (7th Cir. 1994). Here, the reader could not possibly have been mislead or deceived by being offered a voluntary payment option in exchange for a nominal processing and handling fee. Plaintiff’s complaint should be dismissed.
III.
Defendants are Entitled to Fees and Costs.
Section 1692k(a)(3) provides that the Court may award attorneys fees and costs to
the defendant if it finds that the action was brought “in bad faith and for the purposes of harassment.” Similarly, 28 U.S.C. §1927 provides that any attorney who “unreasonably and vexatiously” multiplies the proceedings may be required to pay the defendant’s costs and attorneys fees. Finally, Fed.R.Civ.P. 11(b) requires that every claim, defense or other legal contention contained in any pleading must be warranted by existing law (or a nonfrivolous argument for the extension, modification or reversal of existing law), and not be brought for any improper purpose, such as to harass or cause needless expense. As established above, there was simply no basis in law or fact for bringing this lawsuit. On the face of the letters themselves, the fee was entirely voluntary, and the case law is clear that voluntary fees do not implicate the FDCPA. Counsel as experienced as plaintiff’s counsel purport to be should know better, although this would not be the first time that they have been caught trying to “extort” money out of a defendant on the basis of a meritless claim. See Riddle & Associates, P.C. v. Kelly, Case No. 00 C 6435 (August 12, 2002, N.D. Ill) (attached here as Exhibit A), motion for reconsideration denied
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(February 20, 2004 N.D. Ill) (attached here as Exhibit B) (plaintiff’s counsel ordered to pay $18,000 in fees and costs for threatening defendant with a bogus FDCPA claim). In an effort to avoid having to file this motion, defendants’counsel voluntarily provided plaintiff’s counsel, by letter and by telephone, with the case citations contained herein. (See Exhibit C, attached hereto.) Although plaintiff’s counsel promised to review those authorities, instead he served defendants with interrogatories and requests to admit, all in violation of Rule 26(f) and before defendants had even formally appeared in the case. This sort of bold disregard for the law and the facts should not be tolerated.
CONCLUSION
For the foregoing reasons, defendants respectfully request that his Court enter an order dismissing the complaint with prejudice, awarding defendants their costs and fees incurred herein, and awarding such further relief as the Court deems just, necessary and proper.
Respectfully submitted, NATIONAL ASSET MANAGEMENT ENTERPRISES, INC. and LAW OFFICES OF GERALD E. MOORE & ASSOCIATES, P.C.
By:
s/ One of Their Attorneys
David L. Hartsell* (6192380) Paul C. Ziebert (6204619) Attorneys for Defendants McGUIREWOODS LLP 77 West Wacker Dr., Ste. 4100 Chicago, Illinois 60601-1815
11778 S. Election Dr., Ste. 240 Draper, Utah 84092
(801) 569-3100
(801) 569-8700 (fax)
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CERTIFICATE OF SERVICE
I, Paul C. Ziebert, certify that on October 20, 2004, I electronically filed the foregoing Motion to Dismiss with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following: aburke@edcombs.com; ccombs@edcombs.com; and edcombs@aol.com.
______/s/___________ Paul C. Ziebert (6204619) Attorney for Defendants McGuireWoods LLP 77 W. Wacker Dr.
Suite 4100 Chicago, IL 60601
(312) 849-8100
(312) 849-3690 pziebert@mcguirewoods.com
\\COM\448056.1
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PlainSite Cover Page
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E-FILED
Wednesday, 20 October, 2004 02:03:47 PM
Clerk, U.S. District Court, ILCD
IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS
PEORIA DIVISION
KAY F. MANN,
Plaintiff,
v.
NATIONAL ASSET MANAGEMENT
ENTERPRISES, INC.;
LAW OFFICES OF GERALD E. MOORE
& ASSOCIATES, P.C.,
Defendants.
)
)
)
)
)
)
)
)
)
)
)
)
No. 1:04-CV-01304-JBM-JAG
DEFENDANTS’ MEMORANDUM
IN SUPPORT OF MOTION TO DISMISS
NOW COME defendants National Asset Management Enterprises, Inc. (“NAM”)
and Law Offices of Gerald E. Moore & Associates, P.C. (“Moore”), by and through their
undersigned attorneys, and in support of their motion to dismiss, and their motion for fees
and costs, state as follows:
FACTS
Plaintiff Kay Mann ran up an $800 balance on her Capital One credit card, and
then defaulted. (Complaint, Exhibit A.) In December 2003, Capital One placed the
account for collection with National Asset Management Enterprises, Inc. (“NAM”), a
collection agency located in Marietta, Georgia. (Complaint, paras. 5-7.) NAM sent two
collection letters to plaintiff, the second of which is dated February 6, 2004 (attached to
the complaint as Exhibit A). When plaintiff did not respond, NAM referred the account
to Gerald E. Moore & Associates, P.C., a collection law firm located in Marietta,
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Georgia. (Complaint, paras. 8, 10-11.) Moore then sent three collection letters to
plaintiff, the third of which is dated May 9, 2004 (attached to the complaint as Exhibit B).
The February 6, 2004 letter sent by NAM offered plaintiff “the opportunity to
settle your account for less than the balance listed above” or, in the alternative, the
opportunity to begin making monthly payments. Likewise, the May 9, 2004 letter sent by
Moore offered plaintiff the opportunity to begin making monthly payments. Both letters
further advised that if plaintiff elected to make “payments by phone,”1 that defendants
would charge “a processing and handling fee of $7.50 for this service.” The letters
specifically note that the fee would be “in addition to your actual payment” and “will not
be credited against your outstanding balance.” (Complaint, Exhibits A and B.)
To date, plaintiff has neither disputed nor paid her debt. She did not take
advantage of the settlement offers, made no payments, and never used the “payments by
phone” option. Instead, she and her attorneys filed this putative class action alleging that
an offer to provide a voluntary payment option, in exchange for a nominal processing and
handling fee, violates the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §1692
et seq.2 The complaint should be dismissed in its entirety and plaintiff’s attorneys
sanctioned for bringing a frivolous and baseless lawsuit.
1
“Payment by phone” refers to the commonly accepted practice whereby the consumer may authorize the
collector, over the telephone, to create a demand draft against the consumer’s checking account. See
generally Complaint, para. 30.
2
Plaintiff’s attorneys have filed a virtually identical lawsuit against Moore and another of his clients in the
United States District Court for the Northern District of Illinois, entitled Longo v.Law Offices of Gerald E.
Moore & Associates, P.C., et al., Case No. 04-C-5799.
2
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ARGUMENT
In ruling on a motion to dismiss pursuant to Fed.R.Civ. P. 12(b)(6), the court must
draw all reasonable inferences that favor the plaintiff, construe the allegations of the
complaint in the light most favorable to the plaintiff, and accept as true all well-pleaded
facts and allegations in the complaint. Thompson v. Illinois Dep't of Prof'l Regulation,
300 F.3d 750, 753 (7th Cir.2002); Perkins v. Silverstein, 939 F.2d 463, 466 (7th
Cir.1991). Nonetheless, in order to withstand a motion to dismiss, a complaint must
allege the "operative facts" upon which each claim is based. Kyle v. Morton High School,
144 F.3d 448, 454-55 (7th Cir.1998); Lucien v. Preiner, 967 F.2d 1166, 1168 (7th
Cir.1992). Where it "appears beyond doubt that the plaintiff can prove no set of facts in
support of his claim which would entitle him to relief," the complaint must be dismissed.
Conley v. Gibson, 355 U.S. 41, 45- 46 (1957).
I.
Plaintiff Fails to State a Claim under Section 1692f(1).
In this case, plaintiff alleges that defendants’offer to provide a voluntary payment
option (i.e., “payment by phone”) violates Section 1692f(1), which prohibits “[t]he
collection of any amount (including any interest, fee, charge, or expense incidental to the
principal obligation) unless such amount is expressly authorized by the agreement
creating the debt or permitted by law.” (Complaint, paras. 31-35.) Such claims have
been soundly, and repeatedly, rejected by the courts. In Lee v. Main Accounts, Inc., 125
F.3d 855 (6th Cir. 1997), the debt collector presented the consumer with several payment
options, including payment by credit card. If the consumer elected to pay by credit card,
the collector imposed a five-percent charge (intended to allow the collector to recoup the
transaction charge imposed by the credit card company). In dismissing the claim the
3
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court reasoned that the five-percent charge was a voluntary payment that did not violate
or even implicate the FDCPA.
Similarly, in Lewis v. ABC Business Serv., 911 F.Supp. 290, 292-293 (S.D. Ohio
1996), the collector offered payment by credit card but with an additional processing fee
added on. In dismissing the complaint, the court reasoned that the payment was
voluntary and did not implicate the FDCPA and that it was a standard charge for this
payment method. Lewis, 911 F.Supp. at 293.
In DuBois v. Ford Motor Credit Co., 276 F.3d 1019 (8th Cir. 2002), the plaintiff fell
behind on lease payments. As a part of the settlement of that account with the debt
collector, the plaintiff entered into a second lease and rolled the interest on the first lease
into the second. The plaintiff argued that the rolled-up fees from the first lease
constituted a violation of 15 U.S.C. § 1692f(1). The district court held that § 1692f(1)
was not implicated by a voluntary transaction, which was affirmed on appeal. DuBois,
276 F.3d at 1024 (“because [the plaintiff] voluntarily entered into the second lease and
voluntarily agreed to pay the excess fees… [the defendant] did not violate the FDCPA”).
In the instant case, as in Lee, Lewis, and DuBois, the “check by phone” payment
option was entirely voluntary. It was an offer made by the collector to perform a service
in exchange for a nominal fee, which the consumer is free to accept or reject. It has
nothing to do with the debt itself, as is made clear by the letter.
The Federal Trade Commission, charged with administrative enforcement of the
FDCPA, notes in its Commentary on Section 1692f that a collection action “may be
unfair” if it is “not reasonably avoidable by the consumer.” 53 Fed. Reg. 50108. Here,
because the processing fee would only be imposed if the consumer elected to incur it; the
4
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fee was entirely voluntary and was easily “avoidable” by simply utilizing another form of
payment.
This is not a case where the collector unilaterally added some impermissible fee
or “service charge” to the underlying debt. See, e.g., Ballard v. Equifax Check Services,
Inc., 158 F.Supp.2d 1163, 1176 (E.D. Cal. 2001) (defendant violated § 1692f by
demanding payment of service charge misrepresented to be authorized under California
law); Patzka v. Viterbo College, 917 F.Supp 654, 659 (E.D. Wis. 1996) (debt collector
violated § 1692f by charging a collection fee and interest not allowed by contract or state
law). Rather, defendants simply offered the consumer a service, in exchange for a fee.
The consumer is free to accept or reject that service – it is entirely a voluntary bargainedfor-exchange between the collector and the consumer. If the consumer does not value the
telephone payment option at $7.50, they can make payment by some other method and
avoid the fee.3
In short, Section 1692f(1) is not even implicated by the “payment by phone”
charge. Even if it were, Section 1692f(1) does not prohibit charges that are “permitted by
law.” Certainly, Illinois law allows two parties, in this case the consumer and the debt
collector, to voluntarily contract for a service in exchange for a fee. A contract, to be
valid, must contain offer, acceptance, and consideration; to be enforceable, the agreement
must also be sufficiently definite so that its terms are reasonably certain and able to be
3
It is important to note that every form of payment has some cost associated with it. If the consumer elects
to pay by money order, she will have to purchase one from her bank or other financial institution, usually at
a cost of one or two dollars. If she elects to pay by Western Union wire transfer, she is going to pay a fee.
If the consumer elects to pay by credit card, she is only able to do so because she is paying an annual fee or
other service/interest charges for the privilege of having the card. If the consumer elects to pay by personal
check, she may incur monthly charges from her bank (unless she has free checking). Even mailing in a
check requires an envelope and a 37-cent stamp. So if the consumer chooses to pay a $7.50 charge for the
convenience and quickness of “payment by phone,” why should she not be able to do so? Plaintiff’s
attorneys fashion themselves as “consumer advocates” but in reality seek to reduce the consumer’s choices,
and make a quick buck for themselves in the process.
5
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determined. Halloran v. Dickerson, 287 Ill.App.3d 857, 867-68 (1997), citing Ogle v.
Hotto, 273 Ill.App.3d 313, 319, 210 (1995). Defendants’ letters state the essential terms
of the offer, and any debtor who responds with telephonic payment supplies the requested
performance. When an offer requires acceptance by performance, a contract is created by
the offeree’s performance. Restatement (Second) of Contracts § 50. As such, nothing in
Section 1692f(1) prohibits the voluntary fee at issue in this case.
II.
Plaintiff Fails to State a Claim under Section 1692e(10).
Plaintiff also claims that defendants violated Section 1692e, which states that a
debt collector “may not use any false, deceptive, or misleading representation or means in
connection with the collection of any debt,” and Section 1692e(10), which prohibits “the
use of any false representation or deceptive means to collect or attempt to collect any
debt.” (Complaint, paras. 36-37.) This claim is outright frivolous. How can it possibly
be “deceptive” or “misleading” to offer the consumer the voluntary option of payment by
phone, making clear at the same time that (1) a $7.50 processing and handling fee would
be imposed, (2) that the fee would “be in addition to your actual payment,” and (3) would
“not be credited against your outstanding balance.” Nothing in the letter suggests that
“payment by phone” is the only payment option available, or that other forms of payment
are unacceptable. To the contrary, the letter specifically notes that the processing and
handling fee would be charged only “[i]f you have elected to make payments by phone.”
(Emphasis added).
Whether a collection letter violates Section 1692e is determined with reference to
the “unsophisticated consumer” standard. Pettit v. Retrieval Masters Creditors Bureau,
211 F.3d 1057, 1060 (7th Cir. 2000). The “unsophisticated consumer” is someone who
6
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“possesses rudimentary knowledge about the financial world, is wise enough to read
collection notices with added care, possesses ‘reasonable intelligence,’and is capable of
making basic logical deduction and inferences. Pettit, 211 F.3d at 1060; Gammon v. GC
Services Limited Partnership, 27 F.3d 1254, 1257 (7th Cir. 1994). Here, the reader could
not possibly have been mislead or deceived by being offered a voluntary payment option
in exchange for a nominal processing and handling fee. Plaintiff’s complaint should be
dismissed.
III.
Defendants are Entitled to Fees and Costs.
Section 1692k(a)(3) provides that the Court may award attorneys fees and costs to
the defendant if it finds that the action was brought “in bad faith and for the purposes of
harassment.” Similarly, 28 U.S.C. §1927 provides that any attorney who “unreasonably
and vexatiously” multiplies the proceedings may be required to pay the defendant’s costs
and attorneys fees. Finally, Fed.R.Civ.P. 11(b) requires that every claim, defense or other
legal contention contained in any pleading must be warranted by existing law (or a nonfrivolous argument for the extension, modification or reversal of existing law), and not be
brought for any improper purpose, such as to harass or cause needless expense.
As established above, there was simply no basis in law or fact for bringing this
lawsuit. On the face of the letters themselves, the fee was entirely voluntary, and the case
law is clear that voluntary fees do not implicate the FDCPA. Counsel as experienced as
plaintiff’s counsel purport to be should know better, although this would not be the first
time that they have been caught trying to “extort” money out of a defendant on the basis
of a meritless claim. See Riddle & Associates, P.C. v. Kelly, Case No. 00 C 6435 (August
12, 2002, N.D. Ill) (attached here as Exhibit A), motion for reconsideration denied
7
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(February 20, 2004 N.D. Ill) (attached here as Exhibit B) (plaintiff’s counsel ordered to
pay $18,000 in fees and costs for threatening defendant with a bogus FDCPA claim). In
an effort to avoid having to file this motion, defendants’counsel voluntarily provided
plaintiff’s counsel, by letter and by telephone, with the case citations contained herein.
(See Exhibit C, attached hereto.) Although plaintiff’s counsel promised to review those
authorities, instead he served defendants with interrogatories and requests to admit, all in
violation of Rule 26(f) and before defendants had even formally appeared in the case.
This sort of bold disregard for the law and the facts should not be tolerated.
CONCLUSION
For the foregoing reasons, defendants respectfully request that his Court enter an
order dismissing the complaint with prejudice, awarding defendants their costs and fees
incurred herein, and awarding such further relief as the Court deems just, necessary and
proper.
Respectfully submitted,
NATIONAL ASSET
MANAGEMENT ENTERPRISES,
INC. and LAW OFFICES OF
GERALD E. MOORE &
ASSOCIATES, P.C.
By:
s/
One of Their Attorneys
David L. Hartsell* (6192380)
Paul C. Ziebert (6204619)
Attorneys for Defendants
McGUIREWOODS LLP
77 West Wacker Dr., Ste. 4100
Chicago, Illinois 60601-1815
(312) 849-8100
(312) 849-3690 (fax)
8
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dhartsell@mcguirewoods.com
pziebert@mcguirewoods.com
* Lead Counsel
Of Counsel:
Jesse L. Riddle
RIDDLE & ASSOCIATES, P.C.
11778 S. Election Dr., Ste. 240
Draper, Utah 84092
(801) 569-3100
(801) 569-8700 (fax)
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1:04-cv-01304-JBM-JAG
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CERTIFICATE OF SERVICE
I, Paul C. Ziebert, certify that on October 20, 2004, I electronically filed the
foregoing Motion to Dismiss with the Clerk of the Court using the CM/ECF system
which will send notification of such filing to the following: aburke@edcombs.com;
ccombs@edcombs.com; and edcombs@aol.com.
______/s/___________
Paul C. Ziebert (6204619)
Attorney for Defendants
McGuireWoods LLP
77 W. Wacker Dr.
Suite 4100
Chicago, IL 60601
(312) 849-8100
(312) 849-3690
pziebert@mcguirewoods.com
\\COM\448056.1
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