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1:04-cv-01304-JBM-JAG # 17 Page 1 of 6 E-FILED Thursday, 24 February, 2005 04:14:26 PM Clerk, U.S. District Court, ILCD UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF ILLINOIS PEORIA DIVISION KAY MANN, Plaintiff, v.
NATIONAL ASSET MANAGEMENT
ENTERPRISES, INC.,
LAW OFFICES OF GERALD E.
MOORE & ASSOCIATES, P.C.,
Defendants.
No. 04-1304 ORDER Plaintiff Kay Mann has filed a complaint against National Asset Management Enterprises (National) and the Law Offices of General E. Moore & Associates (Moore) based on the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 to 1692o. National and Moore have filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Mann's complaint sets forth the facts.
National sent her a debt collection letter dated February 6, 2004, inviting her to offer to settle her then $806 credit-card debt for one payment of some lesser amount, or, alternatively, to propose a monthly payment plan.
Moore sent a similar letter of May 9, 2004, inviting Mann to propose monthly payments on her then $854 account balance. Both letters contained the following paragraph:
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1:04-cv-01304-JBM-JAG # 17 Page 2 of 6 If you have elected to make payments via our "check phone" system, our office charges a convenience fee $7.50 per transaction for this service. This fee is addition to your actual payment and the fee will not credited to your outstanding balance.
by of in be Mann claims that by including this paragraph in their debt collection letters, National and Moore violated § 1692f and § 1692e of the FDCPA.
National and Moore move to dismiss for failure to state a claim and for sanctions, attorney's fees, and costs. Section 1692f's first sentence prohibits debt collectors from using unfair or unconscionable means to collect or attempt to collect a debt.
A "debt collector's act in collecting a debt may be <unfair' if it causes injury to the consumer that is (1) substantial, (2) not outweighed by countervailing benefits to consumers or competition, and (3) not reasonably avoidable by the consumer."
Federal Trade Commission, Statements of General Policy or Interpretation, Staff Commentary on the Fair Debt Collection Practices Act, 53 Fed. Reg. 50097, 50107 (1988). The perspective is that of the unsophisticated but reasonable consumer. Turner v.
J.V.D.B. & Assoc., Inc., 330 F.3d 991, 997 (7th Cir. 2003). National and Moore did not violate § 1692f's first sentence. The check-by-phone method of payment is presented as an option and the amount of the fee for the service is disclosed. It is explained that the fee does not go towards payment of the account balance.
And both letters contemplate payment through the mail. So the consumer harm seems nonexistent.
clearly given a choice.
The consumer is pretty And he might actually want to pay for the
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1:04-cv-01304-JBM-JAG # 17 Page 3 of 6 check-by-phone option.
This is not unfair collection activity.
That leaves § 1692f's subsections.
The bulk of Mann's argument relies on the first of these--§ 1692f(1)--which forbids "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."
The FDCPA does not define "collection."
But "to collect" in this context is commonly understood to mean "to present as due and receive payment for," Webster's Third New International Dictionary 444 (1986), and cases recognize potential § 1692f(1) liability for claiming a consumer owes--and demanding-amounts not "expressly authorized by the agreement creating the debt or permitted by law" regardless of whether the attempt at collection succeeded. Shula v. Lawent, 359 F.3d 489, 492 (7th Cir. 2004); Johnson v. Riddle, 305 F.3d 1107, 1120 (10th Cir. 2002). Mann, however, wants to take matters a step further by arguing that offering a service for a price is also "collection" within the meaning of § 1692f(1).
But that is far from clear, given that neither National nor Moore ever told Mann she owed the $7.50 or demanded that she pay it.
The only cases in point which have been found involve a debt collector offering an option to pay by credit card for a fee, Lee v. Main Accounts, Inc., 125 F.3d 855 (6th Cir. 1997)(unpublished, per curiam); Lewis v. ACB Business Serv's, Inc., 911 F.Supp. 290, 292-93 (S.D. Ohio 1996), and both summarily reject
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1:04-cv-01304-JBM-JAG # 17 Page 4 of 6 § 1692f(1) claims because the fee was optional and the debt collector was passing the fee along to the consumer. Granted, these cases are far from authoritative, but the point remains that Mann has offered no support for her interpretation and it is not at all obvious that it is correct.
The Court declines to adopt it and Mann's § 1692f(1) claim is dismissed. Mann has one other claim which is based on § 1692e and § 1692e(10) of the FDCPA, which prohibit a debt collector from using false or deceptive representations or means in connection with debt collection, and § 1692e(2)(B), which prohibits a debt collector from falsely representing the compensation he may lawfully receive for the collection of a debt.
Mann's theory is that National and Moore implied they could lawfully receive the $7.50 fee for the check-by-phone option as compensation for their debt collection efforts although they could not in fact lawfully receive it. In support of this contention Mann simply refers back to her earlier discussion.
relevant.
debt There she mentions two laws that might be One is § 1692f(1), which (once again) is directed to collectors and prohibits the "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." The other is a similar state law prohibiting "[c]ollecting or attempting to collect any interest or other charge or fee in excess of the actual
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1:04-cv-01304-JBM-JAG # 17 Page 5 of 6 debt or claim unless [it is] expressly authorized by the agreement creating the debt or claim [or] unless [it is] expressly authorized by law or unless in a commercial transaction [it is] expressly authorized in a subsequent agreement."
225 ILCS 425/9(a)(29).
This raises essentially the same question as before, namely whether National or Moore would have "collect[ed]" a fee or charge if Mann had opted to use the check-by-phone system and tendered her $7.50.
This is doubtful.
"Collection" in the debt collection context is commonly understood as being preceded by a demand for a fee allegedly owed.
These are the facts of the typical case.
E.g., Tuttle v. Equifax Check, 190 F.3d 9, 11 (2d Cir. 1999). But these would not be the facts of the hypothetical transaction in which Mann opts to pay for using a check-by-phone. The Court declines to interpret "collection" in this manner. Both FDCPA claims will be dismissed for failure to state a claim. This leaves National and Moore's requests for sanctions, attorney's fees, and costs. They rely on Rule 11(b) of the Federal Rules of Civil Procedure:
By presenting to the court . . . a pleading . . . an attorney . . . is certifying that . . . (1) it is not being presented for any improper purpose . . . ;(2) the claims . . . are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law . . . .
They rely on Section 1927 of Title 28 of the U.S. Code: Any attorney . . . who so multiplies the proceedings in any case unreasonably and vexatiously may be required .
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1:04-cv-01304-JBM-JAG # 17 Page 6 of 6 . . to satisfy personally the excess costs, expenses, and attorneys' fees . . . incurred because of such conduct. They also rely on Section 1692k(a)(3) of the FDCPA: On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney's fees . . . and costs.
The defendants claim that the cases clearly establish that voluntary fees do not implicate the FDCPA. But this overstates the persuasiveness of a few summary jurisdictions.
The applicability of the FDCPA to these facts has yet to be authoritatively decided.
dispositions additional authority other These requests will be denied.
IT IS THEREFORE ORDERED as follows.
file from (docket no.
Plaintiff's motion to 14) is GRANTED.
The defendants' motion to dismiss for failure to state a claim (docket no. 11) is GRANTED.
prejudice.
The plaintiff's claims are dismissed with The pending motion to compel discovery (docket no. 15) is DENIED as moot.
CASE TERMINATED.
Signed this 23d day of February 2005.
s/ Joe B. McDade JOE BILLY McDADE United States District Judge
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