Taylor v. Fin. Recovery Servs., Inc.

252 F.Supp.3d 344

Christine TAYLOR, et al., Plaintiffs,

v.FINANCIAL RECOVERY SERVICES, INC., Defendant.

16 Civ. 4685 (LGS).

United States District Court, S.D. New York.

Signed May 18, 2017

David Michael Barshay, Baker Sanders, LLC, Jonathan Mark Cader, Craig B. Sanders, Sanders Law, PLLC, Garden City, NY, for Plaintiffs.

Michael Thomas Etmund, Moss & Barnett, Minneapoilis, MN, for Defendant.

OPINION AND ORDER

LORNA G. SCHOFIELD, District Judge:

Plaintiffs Christine Taylor and Christina Klein allege that Defendant Financial Recovery Services, Inc. ("FRS") violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. The parties cross-move for summary judgment. For the following reasons, summary judgment is granted in Defendant's favor.

I. BACKGROUND

The following uncontested facts are taken from the parties' 56.1 Statements and materials submitted on this motion.

A. Plaintiff Christine Taylor

In 2010, Taylor opened a credit card account, which she used to buy personal and household items. After she defaulted on her credit card payments in 2015, the balance due on her credit card statement increased each month due to interest and fees.

In March 2016, the First National Bank of Omaha, which owned Taylor's credit card debt, referred her account to FRS for collection. FRS sent Taylor three letters approximately a month apart regarding her credit card debt. None of the letters refers to interest or fees.

FRS's first letter to Taylor, dated March 8, 2016, states the amount $599.98 six times on the one-page document. The upper right hand corner contains information about the debt, including "AMOUNT DUE AS OF CHARGE–OFF: $599.98" and "BALANCE DUE: $599.98." The body of the letter states that Taylor's account has "been assigned to this agency for collection. We [FRS] are a professional collection agency attempting to collect a debt.... You owe $599.98." The bottom consists of three payment coupons, each of which states, "Current Balance: $599.98."

The second and third letters, dated April 12 and May 10, 2016, respectively, each state the amount $599.98 multiple times. Like the first letter, both again say in the upper right corner "BALANCE DUE: $599.98." Both contain three payment coupons, all of which again say "Current Balance $599.98." The second letter states, "As of the date of this notice you owe $599.98." It also provides that Taylor could "settle [her] account" for less than $599.98 by making one lump sum payment by a certain date or making installment payments on the timeline provided in the letter. The letter elaborates, "This settlement may have tax consequences. Please consult your tax advisor." The third letter also includes a settlement offer, providing that FRS could "accept a settlement on [Taylor's account] for $299.99." As with the April letter, it provides: "This settlement may have tax consequences. Please consult your tax advisor."

B. Plaintiff Christina Klein

Klein obtained a credit card from Barclays Bank ("Barclays"), which she used to make purchases for personal or household use. Around the beginning of 2014, she defaulted on her payments to Barclays. Klein attests that every month that she did not make a full payment, interest and late fees were added to the balance on her Barclays credit card statement.

In October 2015, Barclays referred Klein's account to FRS for collection. FRS sent Klein four letters approximately a month apart regarding her credit card debt. None of the letters refers to interest or fees.

FRS's first letter to Klein, dated October 2, 2015, states in the upper right corner, "AMOUNT DUE AS OF CHARGE OFF: $3171.12" and "BALANCE DUE: $3171.12." The body of the letter states that Klein's account has "been assigned to this agency for collection. We [FRS] are a professional collection agency attempting to collect a debt.... You owe $3171.12." The bottom of the letter consists of three payment coupons each of which says "Current Balance: $3171.12." FRS also sent Klein letters in November 2015, December 2015 and January 2016. These subsequent letters state in the upper right corner "BALANCE DUE: $3171.12," and each letter contains the three payment coupons, each stating "Current Balance: $3171.12." The January letter also states in the text, "As of the date of this notice you owe $3171.12. We are authorized to settle the above listed account(s) at a substantial reduction to you...."

In April 2016, Klein filed a voluntary petition for bankruptcy under Chapter 7 of the United States Bankruptcy Code. On Schedule A/B of the Form 106A/B, she listed "Possible FDCPA claims" in the amount of $1,000. The bankruptcy court discharged her debts in July 2016, which is one month after Plaintiffs filed the Complaint alleging claims under the FDCPA.

C. The Statements at Issue

Count One alleges that the letters sent to Plaintiffs violated 15 U.S.C. § 1692e on the grounds that they were misleading as to whether or not each Plaintiff's debt was accruing interest or fees. Count Two claims that the letter sent to Taylor violated 15 U.S.C. § 1692e, § 1692e(2)(A), § 1692e(5) and § 1692e(10) based on the sentence, "This settlement may have tax consequences," alleging that it gives the misimpression that FRS would report the settlement to the IRS. The parties cross-move for summary judgment on both counts.

II. STANDARD

Summary judgment is appropriate where the record before the court establishes that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A genuine dispute as to a material fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; accord Apotex Inc. v Acorda Therapeutics, Inc. , 823 F.3d 51, 59 (2d Cir. 2016). The moving party bears the initial burden of informing the court of the basis for the summary judgment motion and identifying those portions of the record that demonstrate the absence of a genuine dispute as to any material fact. Fed. R. Civ. P. 56(c)(1) ; see, e.g. , Celotex Corp. v. Catrett , 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Courts must construe the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in the non-moving party's favor. Young v. United Parcel Serv., Inc. , ––– U.S. ––––, 135 S.Ct. 1338, 1347, 191 L.Ed.2d 279 (2015). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson , 477 U.S. at 248, 106 S.Ct. 2505.

III. DISCUSSION

A. Standing

FRS first argues that Plaintiffs lack standing because they did not suffer an injury in fact. This argument is rejected. "[S]tanding is a federal jurisdictional question determining the power of the court to entertain the suit." Cacchillo v. Insmed, Inc. , 638 F.3d 401, 404 (2d Cir. 2011) (internal quotation marks omitted). To satisfy this jurisdictional requirement, "[t]he plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S.Ct. 1540, 1547, 194 L.Ed.2d 635 (2016).

An injury in fact must be "concrete and particularized" and "actual or imminent, not conjectural or hypothetical." Id. at 1548. "For an injury to be particularized, it must affect the plaintiff in a personal and individual way." Id. (internal quotation marks omitted); see Strubel v. Comenity Bank , 842 F.3d 181, 188 (2d Cir. 2016) (noting that the particularity requirement is satisfied if the plaintiff shows the defendant "injured her in a way distinct from the body politic"). To be concrete, an injury may be either tangible or intangible so long as it "actually exist[s]." Spokeo , 136 S.Ct. at 1548–49. In examining whether an intangible harm is concrete, a court should consider whether Congress has "identif[ied] and elevat[ed]" the intangible harm alleged. Id. at 1549. "Congress has the power to define injuries and articulate chains of causation that will give rise to a case or controversy where none existed before." Id. However, "a bare procedural violation, divorced from any concrete harm," does not satisfy Article III's injury-in-fact requirement. Id.

Since the Supreme Court's decision in Spokeo , courts within and outside this Circuit have consistently held that a violation of 15 U.S.C. § 1692e can give rise to an injury in fact. See, e.g. , Church v. Accretive Health, Inc. , 654 Fed.Appx. 990, 994–95 (11th Cir. 2016) ; Fuentes v. AR Res., Inc. , No. 15 Civ. 7988, 2017 WL 1197814, at *5 (D.N.J. Mar. 31, 2017) (collecting cases and joining the "overwhelming majority of courts that have determined that FDCPA violations under [ § 1692e ] ... give rise to concrete, substantive injuries sufficient to establish Article III standing" (internal quotation marks omitted)); Garcia v. Law Offices Howard Lee Schiff P.C. , No. 16 Civ. 791, 2017 WL 1230847, at *4 (D. Conn. Mar. 30, 2017) ; Bautz v. ARS Nat'l Servs., Inc. , No. 16 Civ. 768, 226 F.Supp.3d 131, 144-45, 2016 WL 7422301, at *10 (E.D.N.Y. Dec. 23, 2016). These courts reason that a materially false or misleading statement is not a "bare procedural violation" but rather an infringement on an individual's substantive right conferred by Congress to receive truthful information in debt collection communications. See, e.g. , Garcia , 2017 WL 1230847, at *3 ; Bautz , 226 F.Supp.3d at 141-42, 2016 WL 7422301, at *8 ("[T]hrough Section 1692e of the FDCPA, Congress established ‘an enforceable right to truthful information concerning’ debt collection practices....") (quoting Havens Realty Corp. v. Coleman , 455 U.S. 363, 373, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982) ).

Plaintiffs adduce sufficient evidence to confer standing. As to particularity, FRS sent...