David Coyne v. Messerli & Kramer P.A.
895 F.3d 1035
8th Cir.2018Background
- In 2016 David Coyne (Minnesota resident) received collection letters about a credit-card debt; Messerli & Kramer P.A. sent one letter asserting a principal of $13,205.30 and interest of $3,871.39 at 6.00%.
- Coyne sued under the Fair Debt Collection Practices Act (FDCPA), alleging the collectors falsely represented and attempted to collect compound interest that the underlying contract did not authorize and that Minnesota law forbids compounding interest absent an agreement.
- The district court dismissed Coyne’s amended complaint for failure to state a claim, finding the challenged statements were not materially false under the FDCPA; it did not address whether the complaint plausibly alleged attempted collection of unlawful compound interest.
- Coyne appealed only Messerli’s letter; he alleged the principal included contractual interest and Messerli sought interest on that principal (i.e., interest-on-interest), which Minnesota law (Minn. Stat. § 334.01) prohibits without an express contract.
- The Eighth Circuit accepted Coyne’s allegations as true at the pleading stage, found it plausible Messerli sought compound interest, and concluded that attempting to collect interest barred by state law can state FDCPA claims under §§ 1692e and 1692f.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether pleading that a collector attempted to collect compound interest (not authorized by state law) states an FDCPA claim | Coyne: Messerli’s letter sought interest-on-interest prohibited by Minnesota law, thus misstates amount owed and violates §§ 1692e and 1692f | Messerli: The interest sought was contractually authorized; alternative terms attached to dismissal motion show no unlawful compounding | Court: Plausible allegation that Messerli attempted to collect compound interest states a claim under §§ 1692e and 1692f; reverse and remand |
| Whether overstating a debt’s amount is a material FDCPA violation under § 1692e | Coyne: Overstatement of legally unauthorized amounts is materially misleading | Messerli: (Implicit) Minor or non-material inaccuracies should not defeat dismissal | Court: A false overstatement of amount materially violates § 1692e(2)(A) because it misleads the debtor about what is owed |
| Whether courts may consider contract terms appended to a motion to dismiss when authenticity/applicability is disputed | Coyne: Messerli’s proffered terms were unauthenticated and not shown to apply to him | Messerli: District court treated those terms as governing | Court: If plaintiff contests applicability/authenticity, the court may not treat attached terms as governing at pleading stage; cannot rely on them to resolve the motion |
| Whether the unsophisticated-consumer standard applies when the debtor is a lawyer | Coyne: As debtor, unsophisticated-consumer standard applies here | Messerli: Might argue higher competence standard because Coyne is an attorney | Court: Messerli did not contest district court’s use of unsophisticated-consumer standard; court assumed that standard for this appeal |
Key Cases Cited
- Haney v. Portfolio Recovery Assocs., L.L.C., 837 F.3d 918 (8th Cir.) (debt-collection letter seeking interest-on-interest actionable under FDCPA)
- Hill v. Accounts Receivable Servs., LLC, 888 F.3d 343 (8th Cir.) (materiality standard applies to § 1692e)
- Demarais v. Gurstel Chargo, P.A., 869 F.3d 685 (8th Cir.) (attempt to collect debt not owed is a material § 1692f(1) violation)
- Henson v. Santander Consumer USA Inc., 137 S. Ct. 1718 (Sup. Ct.) (FDCPA is a consumer-protection statute authorizing private suits)
- Brown v. Green Tree Servicing LLC, 820 F.3d 371 (8th Cir.) (attachments to complaint may be considered when integral to the claim)
- United States ex rel. Ambrosecchia v. Paddock Labs., LLC, 855 F.3d 949 (8th Cir.) (de novo review of Rule 12(b)(6) dismissal)
- Ryan v. Ryan, 889 F.3d 499 (8th Cir.) (court may not consider disputed external documents on a motion to dismiss)
- Lampert Lumber Co. v. Ram Constr., 413 N.W.2d 878 (Minn. Ct. App.) (Minnesota rule that interest shall not be compounded absent contract)