Landes v. CAVALRY PORTFOLIO SERVICES, LLC
2011 U.S. Dist. LEXIS 35467
| E.D. Va. | 2011Background
- Landes, Virginia consumer, sues Cavalry Portfolio Services under the FDCPA.
- Cavalry is a New York debt-collection entity sending dunning letters by mail in April 2010.
- Letter offers a 20% discount for a lump-sum or a 10% discount in five installments; mentions tax refund timing as a context.
- Plaintiff alleges Cavalry failed to disclose potential tax consequences of the discount, violating FDCPA provisions.
- Plaintiff seeks statutory damages, attorneys' fees, declaratory judgment, and an injunction against future letters without tax disclosures.
- Court grants Cavalry’s Rule 12(b)(6) motion and dismisses the complaint with prejudice for failure to state a claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Cavalry’s letter violates the FDCPA by omitting tax consequences. | Landes contends the letter misleads about benefits without tax info. | Cavalry did not provide tax advice; FDCPA does not require such disclosures. | No FDCPA violation; no requirement to disclose tax consequences. |
| Whether offering debt discounts constitutes false, misleading, or unconscionable conduct under the FDCPA. | Discount offer is deceptive without tax-related disclosures. | Discount offers are permissible debt-resolving options. | Allowed; not false or deceptive. |
| Whether Cavalry, as a debt collector, may give tax/legal advice, implicating unauthorized practice of law. | Cavalry should inform about tax consequences; otherwise misleads. | Debt collectors are not licensed to give legal/tax advice; would violate law. | Plaintiff cannot compel legal/tax advice; dismissal warranted. |
| Whether the complaint states a plausible FDCPA claim under Iqbal/Twombly standards. | Complaint supports misrepresentation/tax-consequences claims. | No plausible claim; no false statement or unlawful practice. | Plaintiff fails to state a plausible FDCPA claim; dismissal with prejudice. |
Key Cases Cited
- Lewis v. ACB Bus. Servs., Inc., 135 F.3d 389 (6th Cir. 1998) (discounts to settle debts permissible under FDCPA)
- Ellis v. Cohen & Slamowitz, 701 F. Supp. 2d 215 (N.D.N.Y. 2010) (distinguishable; law firm context; not controlling authority here)
- Kimber v. Federal Financial Corp., 668 F. Supp. 1480 (M.D. Ala. 1987) (cannot misrepresent debt; not about debt-collection as practice of law)
- West v. Costen, 558 F. Supp. 564 (W.D. Va. 1983) (recovery for misrepresentation; limits on improper practices)
- United States v. Nat'l Financial Servs., Inc., 98 F.3d 131 (4th Cir. 1996) (least sophisticated debtor standard; reading of letter)