Simon v. FIA Card Services, N.A.
2013 U.S. App. LEXIS 20403
| 3rd Cir. | 2013Background
- Debtors Robert and Stacey Simon filed Chapter 7 bankruptcy; FIA Card Services (formerly Bank of America) retained Weinstein & Riley to pursue possible §523 adversary proceedings challenging dischargeability of a credit-card debt.
- Weinstein & Riley sent letters and attached Rule 2004 examination notices through the Simons’ bankruptcy counsel, offering to settle (including payment or stipulation of nondischargeability) or proceed with discovery and an adversary complaint.
- The attached “Notice of Examination” scheduled Rule 2004 sessions in New York, listed documents to bring, and contained a certificate claiming mailing to both the debtors’ home and counsel (debtors allege they did not receive the home-mailing).
- The Simons moved in bankruptcy court to quash the Rule 2004 notices, filed an adversary alleging FDCPA violations; the bankruptcy court quashed the subpoenas but dismissed FDCPA claims for lack of subject-matter jurisdiction.
- The Simons then sued in district court alleging violations of 15 U.S.C. §1692e(5), (11), and (13); the district court dismissed under Rule 12(b)(6), reasoning bankruptcy remedies precluded FDCPA claims and that certain claims failed to plead violations.
- The Third Circuit affirmed in part, reversed in part, and remanded: it upheld dismissal of some FDCPA theories but revived others, holding that FDCPA claims are not categorically precluded by the Bankruptcy Code and analyzing conflict between the statutes.
Issues
| Issue | Plaintiff's Argument (Simon) | Defendant's Argument (FIA/Weinstein & Riley) | Held |
|---|---|---|---|
| Whether letters/subpoenas were "communications" in connection with debt collection under FDCPA | Letters and subpoenas sought information and offered settlement — an attempt to collect even without explicit demand | Not an attempt to collect because no payment demand; purely litigation/ investigatory | Held: They were communications in connection with collection; FDCPA can apply (rejecting narrow demand-only view) |
| Whether subpoenas complied with Civil Rule 45/Bankruptcy Rule 9016 (recording method; issuing district) and thus violated §1692e(5)/(13) | Subpoenas failed to state recording method and improperly issued from another district | Subpoenas were sufficient and did not violate the Rules | Held: No Rule violation as to recording-method or issuing-district claims; those FDCPA theories dismissed (affirmed) |
| Whether subpoenas were improperly served (not served directly) and failed to include text of Rules 45(c)-(d), giving rise to §1692e(5)/(13) claims | Service on counsel only and omission of Rule text violated Civil Rule 45 and thus FDCPA | Bankruptcy remedies (quash, contempt) preclude FDCPA; Code is exclusive remedy | Held: Bankruptcy Code does not categorically preclude FDCPA here; dismissal reversed as to these remaining §1692e(5)/(13) claims and remanded for further proceedings |
| Whether failure to include FDCPA §1692e(11) "mini-Miranda" notice states a claim | Letters/subpoenas lacked required disclosure that communication was for debt-collection and information would be used to collect | Requiring §1692e(11) notice would conflict with the automatic stay (§362) and bankruptcy practice | Held: §1692e(11) claim dismissed (affirmed) because including the notice would conflict with the automatic stay and therefore is precluded |
Key Cases Cited
- Heintz v. Jenkins, 514 U.S. 291 (Sup. Ct.) (attorneys who regularly collect consumer debts are "debt collectors" under FDCPA)
- Allen ex rel. Martin v. LaSalle Bank, N.A., 629 F.3d 364 (3d Cir.) (broad definition of FDCPA "communication" includes communications to debtor's attorney)
- Gburek v. Litton Loan Servicing, L.P., 614 F.3d 380 (7th Cir.) (a communication can be "in connection with" collection even absent explicit demand)
- Grden v. Leikin Ingber & Winters P.C., 643 F.3d 169 (6th Cir.) (communication's animating purpose to induce payment is key; pre-litigation documents may give rise to FDCPA claim)
- Walls v. Wells Fargo Bank, N.A., 276 F.3d 502 (9th Cir.) (bankruptcy remedies and bankruptcy-specific determinations may preclude FDCPA claims in some contexts)
- Simmons v. Roundup Funding, LLC, 622 F.3d 93 (2d Cir.) (bankruptcy provides mechanisms to challenge proofs of claim; FDCPA claims based on bankruptcy filings may be inappropriate)
- Randolph v. IMBS, Inc., 368 F.3d 726 (7th Cir.) (statutory overlap does not imply repeal; FDCPA and Bankruptcy Code may coexist absent irreconcilable conflict)
- J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int'l, Inc., 534 U.S. 124 (Sup. Ct.) (presumption against implied repeal; statutes that can coexist should be given effect)