Stephen Holzman v. Malcolm S. Gerald & Associates, Inc.
920 F.3d 1264
| 11th Cir. | 2019Background
- Plaintiff received a 2015 collection letter from Malcolm S. Gerald & Associates on behalf of LVNV seeking payment on a credit-card debt charged off in 2007; LVNV purchased the debt and knew it was time-barred.
- The letter offered a reduced payment (30% of balance) with a deadline and stated the communication was from a debt collector; it did not disclose the debt was time‑barred or unenforceable.
- Plaintiff sued under the FDCPA (15 U.S.C. § 1692 et seq.), alleging the letter was false, deceptive, or misleading in violation of § 1692e and that collecting on time‑barred debt is unfair under § 1692f; he also asserted a state-law Florida Consumer Collection Practices Act claim.
- The district court dismissed the FDCPA claims with prejudice, relying on precedent permitting collection of time‑barred debts so long as litigation is not threatened, and declined supplemental jurisdiction over the Florida claim.
- The Eleventh Circuit reversed dismissal of the § 1692e claim (letter plausibly misleading to the least‑sophisticated consumer) but affirmed dismissal of the § 1692f claim (no per se rule that collecting time‑barred debt is unfair), and remanded with the Florida claim reinstated.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a collection letter seeking payment on a time‑barred debt can violate § 1692e without an express threat of litigation | The letter (offer to “resolve” with deadline) plausibly misleads the least‑sophisticated consumer into believing the debt is legally enforceable | Debt collectors may seek voluntary repayment of time‑barred debts so long as they do not threaten or initiate litigation; no threat here so no § 1692e violation | Reversed: § 1692e claim survives pleading stage — an express threat is not required if the letter could reasonably mislead as to legal enforceability |
| Whether attempting to collect on time‑barred debt is per se "unfair or unconscionable" under § 1692f | Such collection practice is inherently unfair and should violate § 1692f | There is no bright‑line prohibition; seeking voluntary payment is permissible absent other unfair means | Affirmed: no per se § 1692f violation; claim properly dismissed |
| Whether the district court should have retained supplemental jurisdiction over the Florida Act claim | If federal claims are revived, the Florida claim should proceed in federal court | N/A (defendants argued federal claims fail) | Remanded: because § 1692e claim reinstated, Florida claim reinstated for merits consideration |
| Pleading standard applicable on § 1692e challenge | Plaintiff met Rule 12(b)(6) plausibility standard under the least‑sophisticated consumer test | Defendants contended no reasonable jury could find the letter misleading | Court applied Iqbal/Twombly and least‑sophisticated‑consumer standard and found Plaintiff stated a plausible § 1692e claim |
Key Cases Cited
- Freyermuth v. Credit Bureau Servs., Inc., 248 F.3d 767 (8th Cir. 2001) (collection of time‑barred debt lawful absent threat of litigation)
- Huertas v. Galaxy Asset Mgmt., 641 F.3d 28 (3d Cir. 2011) (no § 1692e violation where no threat of legal action in letter seeking voluntary payment)
- McMahon v. LVNV Funding, LLC, 744 F.3d 1010 (7th Cir. 2014) (offer to "settle" time‑barred debt can mislead and support § 1692e claim)
- Buchanan v. Northland Group, Inc., 776 F.3d 393 (6th Cir. 2015) (collection letters offering to settle time‑barred debts may mislead absent disclosure)
- Daugherty v. Convergent Outsourcing, Inc., 836 F.3d 507 (5th Cir. 2016) (holding similar to McMahon/Buchanan: misleading offers to settle time‑barred debt can violate § 1692e)
- Tatis v. Allied Interstate, LLC, 882 F.3d 422 (3d Cir. 2018) (adopting Daugherty rationale: letters offering to settle time‑barred debts may mislead even without threat of litigation)
- Crawford v. LVNV Funding LLC, 758 F.3d 1254 (11th Cir. 2014) (overview of FDCPA purpose and private right of action)
- LeBlanc v. Unifund CCR Partners, 601 F.3d 1185 (11th Cir. 2010) (articulating the least‑sophisticated consumer standard for §§ 1692e and 1692f)
- Pantoja v. Portfolio Recovery Assocs., 852 F.3d 679 (7th Cir. 2017) (discussing potential mischief in collecting time‑barred debts; not adopting a per se § 1692f rule)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading plausibility standard under Rule 12(b)(6))