Owen v. I.C. System, Inc.
2011 U.S. App. LEXIS 330
| 11th Cir. | 2011Background
- Owen incurred a veterinary bill at AAA; her 1.5% monthly interest and collection fees were in dispute.
- ICS referred the debt to its collection; AAA provided a breakdown (principal, collection charge, interest) that misrepresented the amount.
- ICS’s March 28, 2007 letter to Owen relied on AAA’s figures and stated 7% interest; May 9, 2007 letter invited continued dispute and warned of credit reporting.
- Owen disputed the debt; ICS later forwarded AAA documents to Owen; despite disputes, ICS continued to demand payment and reported to credit agencies.
- District court granted ICS summary judgment on the bona fide error defense; court found ICS’s procedures reasonably adapted to avoid errors.
- Owen appeals arguing that (a) Jerman forecloses the defense or (b) ICS failed the “procedures reasonably adapted” element; this court reverses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Jerman foreclose the bona fide error defense here? | Owen—Jerman bars the defense for mistakes of law. | ICS—Jerman does not apply because errors were clerical/factual, not legal. | Jerman does not bar the defense; errors were not mistakes of law. |
| Did ICS maintain procedures reasonably adapted to avoid the errors? | Owen—ICS failed to show procedures reasonably adapted to avoid errors. | ICS—maintained contract-based and post-dispute steps; these were reasonably adapted. | ICS did not meet the third element; procedures were not reasonably adapted to avoid the errors. |
| Do ICS’s identified procedures suffice to support the bona fide error defense given the record? | Owen—no sufficient internal controls to avoid error; reliance on AAA is insufficient. | ICS relied on AAA; contract allowed limiting improper charges; post-dispute steps exist. | No; the procedures are insufficient to qualify for § 1692k(c) in this record. |
Key Cases Cited
- Edwards v. Niagara Credit Solutions, Inc., 584 F.3d 1350 (11th Cir.2009) (establishes the basic framework for the bona fide error defense)
- LeBlanc v. Unifund CCR Partners, 601 F.3d 1185 (11th Cir.2010) (issues with procedural viability of the defense and deference to district court record)
- Johnson v. Riddle, 443 F.3d 723 (10th Cir.2006) (two-step inquiry for determining maintained and reasonably adapted procedures)
- Reichert v. Nat'l Credit Sys., Inc., 531 F.3d 1002 (9th Cir.2008) (procedure adequacy in avoiding errors; case-specific test)
- Wilhelm v. Credico, Inc., 519 F.3d 416 (8th Cir.2008) (training and procedural controls can support bona fide defense)
- Hyman v. Tate, 362 F.3d 965 (7th Cir.2004) (balancing cost of procedures against need to avoid FDCPA violations)
- Smith v. Transworld Sys., Inc., 953 F.2d 1025 (6th Cir.1992) (example where reliance on creditor’s accuracy aided defense; fact-pattern-specific)