Carlin v. Davidson Fink LLP, 852 F.3d 207

Background

Davidson Fink LLP, a law firm and FDCPA debt collector, filed a mortgage foreclosure complaint against Andrew Carlin in state court; the complaint attached a FDCPA notice that (contrary to its text) did not state the amount of the debt.
Carlin sent a July 12, 2013 letter disputing the debt and requesting verification. Davidson Fink replied on August 9, 2013 with a cover letter and a Payoff Statement showing a “Total Amount Due” of $205,261.79.
The Payoff Statement included small-print language that the Total Amount Due "may include estimated fees, costs, additional payments and/or escrow disbursements" that were not yet due and gave no breakdown or explanation of those items.
Carlin sued under the FDCPA, 15 U.S.C. § 1692g(a), alleging the collector failed to provide the required “amount of the debt” within five days of an initial communication. The district court dismissed; Carlin appealed.
The Second Circuit treated the motion to dismiss de novo, accepted the complaint’s factual allegations, and examined (1) what qualifies as an "initial communication," (2) whether the communication was "in connection with the collection of any debt," and (3) whether the amount was adequately stated.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a foreclosure complaint (and its attached FDCPA notice) is an “initial communication” under § 1692g	Carlin: the foreclosure complaint and attached notice were initial communications triggering § 1692g	Davidson Fink: formal pleadings are excluded; attachments to pleadings are not initial communications	Held: Formal pleadings and exhibits attached to them are excluded by § 1692g(d); the attached FDCPA notice was not an initial communication.
Whether a debtor-initiated letter can be an “initial communication”	Carlin: his July letter disputing the debt was an initial communication	Davidson Fink: initial communications arise from the collector, not the debtor	Held: A communication initiated by the debtor is not an initial communication under § 1692g.
Whether the August letter/Payoff Statement was an initial communication made in connection with collection	Carlin: the August letter was a collector communication seeking payment and thus an initial communication	Davidson Fink: protections not implicated because of ongoing litigation or procedural protections	Held: The August letter was an initial communication in connection with collection (sent to debtor, not counsel, and plainly an attempt to collect).
Whether the Payoff Statement adequately stated the “amount of the debt” under § 1692g(a)	Carlin: the Total Amount Due was ambiguous because it may include unspecified, unaccrued fees and costs, so it failed to state the amount	Davidson Fink: the Payoff Statement stated a total and used language about possible future fees (relying on industry practice and prior decisions)	Held: The Payoff Statement was insufficient at this stage because it may have included unspecified unaccrued fees/costs and thus could leave the least sophisticated consumer uncertain about the actual amount owed; claim survives.

Key Cases Cited

Goldman v. Cohen, 445 F.3d 152 (2d Cir.) (prior Second Circuit holding that initiating suit could be an initial communication) (overruled in part by statutory amendment discussed in opinion)
Ellis v. Solomon & Solomon, P.C., 591 F.3d 130 (2d Cir. 2010) (recognized that the 2006 FDCPA amendment supersedes Goldman)
Hart v. FCI Lender Servs., Inc., 797 F.3d 219 (2d Cir. 2015) (framework for assessing whether a communication is ‘‘in connection with the collection of a debt’’ and identification of key indicia of collection activity)
Avila v. Riexinger & Assocs., LLC, 817 F.3d 72 (2d Cir. 2016) (explained safe-harbor language that can avoid liability for notices that may increase due to fees/interest)
Russell v. Equifax A.R.S., 74 F.3d 30 (2d Cir. 1996) (adopting the least sophisticated consumer standard for FDCPA notice interpretation)