Welch v. Green Tree Servicing LLC (In re Runyan)

530 B.R. 801

In re: Jeffrey Adam Runyan and Rachel Ann Runyan, Debtors.

Angela Welch, as Chapter 7 Trustee, Plaintiff

v.Green Tree Servicing LLC, Defendant.

Case No. 8:11–bk–13090–MGW

Adv. No. 8:13–ap–00344–MGW

United States Bankruptcy Court, M.D. Florida, Tampa Division.

Signed May 08, 2015

Kenneth C. Grace, Esq., Lash Wilcox & Grace PL, Brian L. Shrader, Esq., Centrone & Shrader, PLLC, Counsel for Plaintiff

Ryan C. Reinert, Esq., Shutts & Bowen LLP, Counsel for Defendant

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Michael G. Williamson, United States Bankruptcy Judge

After the Debtors defaulted on their mortgage, Green Tree Servicing LLC—the loan servicer on the Debtors' mortgage—attempted to collect the outstanding balance by making collection calls and sending collection notices. But those collection attempts (the calls and notices) were made after the Debtors notified Green Tree they were represented by counsel. And the collection calls were made to the Debtors' cell phone using an autodialer. This Court must decide whether Green Tree's collection efforts violated the Florida Consumer Collections Practices Act (“FCCPA”) or the Telephone Consumer Protection Act (“TCPA”) and, if so, whether Green Tree is entitled to set off any damages it owes under the FCCPA and TCPA against any amounts the Debtors owe Green Tree on their mortgage.

The Court concludes Green Tree violated the FCCPA. The FCCPA expressly prohibits a creditor from contacting a debtor directly once the creditor knows the debtor is represented by counsel. At trial, Green Tree's corporate representative conceded that Green Tree contacted the Debtors after it knew they were represented by counsel. But Green Tree is not liable under the TCPA for contacting the Debtors on their cell phone using an autodialer because the Debtors consented to calls on their cell phone by listing that number on their mortgage application, and they never revoked that consent. So Green Tree is liable to the Debtors for $2,000 in statutory damages under the FCCPA. Green Tree, however, is not permitted to set off the $2,000 in statutory damages against the amounts the Debtors owe on their mortgage because allowing setoff here would thwart the FCCPA's goal of deterring abusive debt collection practices.

Findings of Fact

In March 2007, the Runyans (the Debtors in this bankruptcy case) obtained a loan that was secured by a home mortgage.¹ Toward the middle of 2010, Mrs. Runyan's health declined, and the Runyans fell into financial difficulty.² By the end of the year, they could no longer make payments on the loan.³ Seeing trouble on the horizon, the Runyans hired an attorney in February 2011 to assist with the potential foreclosure of their home and a possible bankruptcy filing.⁴ The following month, Green Tree began efforts to collect the outstanding loan balance: $39,814.38.⁵ Having no success, Green Tree wrote off the debt within weeks and transferred the account from loan servicing to the recovery department.⁶

When the Runyans began getting calls from Green Tree's recovery department, Mr. Runyan explained that he and his wife would not be able to settle the debt and provided Green Tree with the name and contact information for an attorney they hired to file for bankruptcy.⁷ In fact, Green Tree concedes that Mr. Runyan had provided Green Tree with their attorney's name and the name of the law firm he worked for, along with the firm's telephone number and street address, by no later than April 8, 2011.⁸ Still, contrary to company policy, Green Tree continually attempted to contact the Runyans directly by phone and by mail after it knew they were represented by counsel.⁹

Three months later, in July 2011, the Runyans filed for chapter 7 bankruptcy.¹⁰ The chapter 7 Trustee thereafter filed a two-count adversary complaint for damages under the FCCPA¹¹ (Count I) and the TCPA¹² (Count II). Green Tree, of course, denied violating the FCCPA and TCPA. And even if it did violate either statute, Green Tree contends it should be entitled to set off any damages recoverable under either statute against any amounts the Runyans owe on their mortgage. On May 5, 2014, the parties tried the Trustee's FCCPA and TCPA claims.

Conclusions of Law¹³

By its own admission, Green Tree violated the FCCPA

The Florida Legislature enacted the FCCPA to protect the consuming public from abusive debt collectors.¹⁴ The FCCPA identifies nineteen prohibited practices.¹⁵ Here, the Trustee believes that Green Tree engaged in two of them: (1) communicating with the Runyans so frequently so as to harass or abuse them; and (2) communicating with the Runyans while knowing that they were represented by an attorney.¹⁶ In considering FCCPA claims, the Court must view such claims “from the perspective of a consumer whose circumstances makes him relatively more susceptible to harassment, oppression, or abuse.”¹⁷

While determining whether a debt collector communicated with a debtor too frequently or too aggressively is a fact-intensive inquiry that is dependent on many factors (such as the timing of phone calls or the debt collector's tone or demeanor),¹⁸ determining whether a debt collector impermissibly communicated with a represented debtor is more easily discernable: either it did or it did not. And here, we know that Green Tree did, primarily because its litigation representative, Peter Dalpiaz, admitted as much. During trial, Mr. Dalpiaz confirmed that Green Tree was aware by April 8, 2011, that the Runyans were represented by counsel.¹⁹ Yet, as he explained at trial, Green Tree continued to communicate directly with the Runyans—through repeated phone calls and routine mailings—which Mr. Dalpiaz openly recognized was wrong.

On cross-examination, the Trustee's counsel asked Mr. Dalpiaz, “Isn't it true that [Green Tree violated] the Florida Consumer Collections Practices Act on at least some of the phone calls made on this particular account?”²⁰ “I suppose, yes, that would be my opinion,” Mr. Dalpiaz conceded.²¹ In fact, Mr. Dalpiaz admitted that Green Tree's policy regarding contacting represented debtors is facially unlawful. The FCCPA provides that a debt collector can contact a represented debtor if the debtor's attorney fails to respond within thirty days of the debt collector's attempt to contact the debtor's attorney.²² But according to Mr. Dalpiaz, Green Tree's policy affords a debtor's attorney only ten days to respond.²³ Other evidence corroborates Mr. Dalpiaz's admission that Green Tree violated the FCCPA.

For instance, Green Tree's call logs showed that Green Tree called the Runyans thirty times—seven times in May, nineteen times in June, and four times in July—all while knowing that the Runyans were represented.²⁴ On seven of those dates, Green Tree placed multiple calls.²⁵ The call logs similarly show that Green Tree called the Runyans' attorney eleven times over the same period—yet further evidence that Green Tree knew exactly how to reach the Runyans' attorney.²⁶ Leaving nothing to chance, Green Tree also sent the Runyans (jointly and individually) billing statements and collection notices on a near monthly basis.²⁷

When Green Tree should have immediately ceased attempting to communicate directly with the Runyans, it carried on without restraint. In doing so, it definitively violated the FCCPA's prohibition against communicating with represented debtors—something that Green Tree cannot even contest. The FCCPA provides for $1,000 in statutory damages on a perplaintiff basis.²⁸ Each independent violation, however, does not give rise to an additional penalty.²⁹ Because the Trustee is limited to $2,000 in statutory damages if Green Tree violated the FCCPA, and the Court has already concluded Green Tree did by contacting the Runyans once it knew they were represented by counsel, the Court need not decide if Green Tree's conduct was also abusive or harassing.

Green Tree did not violate the TCPA

“In 1991, Congress enacted the TCPA in an effort to address a growing number of telephone marketing calls and certain practices thought to be an invasion of consumer privacy and a risk to public safety.”³⁰ To that end, § 227(b)(1)(A)(iii) of the TCPA prohibits placing automatic calls to cell phones without the “prior express consent of the called party.”³¹ At trial, Green Tree stipulated that it placed eleven autodialed calls to Mr. Runyan's cell phone between June 2, 2011 and July 8, 2011.³²

Because the Runyans voluntarily listed Mr. Runyan's cell phone number (and no other number) on the loan application,³³ however, Green Tree contends that Mr. Runyan consented to the autodialed calls. In this regard, Green Tree is correct. The Federal Communications Commission has explained that “autodialed and prerecorded message calls to wireless numbers that are provided by the called party to a creditor in connection with an existing debt are permissible as calls made with the ‘prior express consent’ of the called party.”³⁴ The Runyans accept this but believe that Mr. Runyan later revoked his consent.

On this point, the Eleventh Circuit recently explained, in Osorio v. State Farm Bank, F.S.B., that “Congress intended for the TCPA to incorporate the common-law meaning of consent, including its revocation.”³⁵ In reaching this conclusion, the Eleventh Circuit relied on a Fourth Circuit decision that explains that the TCPA serves the government's interest in protecting residential privacy by enabling recipients of autodialed calls “to contact the caller to stop future calls.”³⁶ The Eleventh Circuit also relied on a FCC declaratory ruling wherein the FCC noted that consumers can end incoming voice calls by simply “express[ing] a desire to opt out.” So under Eleventh Circuit precedent, the TCPA requires—at a minimum—express and clear revocation of consent; implicit revocation will not do.

At best, the Runyans implicitly revoked their consent here. Mr. Runyan testified at trial that he told Green Tree it could contact his attorney with any further...