Vicki FREY, Plaintiff-Appellant, v. Richard J. GANGWISH II, Defendant-Appellee.
No. 91-5616.
United States Court of Appeals, Sixth Circuit.
Decided July 21, 1992.
Argued Feb. 19, 1992.
David S. Sprawls (argued and briefed), Louisville, Ky., for plaintiff-appellant.
Richard J. Gangwish, II (argued and briefed), Erlanger, Ky., for defendant-appellee.
Before: RYAN and SUHRHEINRICH, Circuit Judges; and CHURCHILL, Senior District Judge.*
JAMES L. RYAN, Circuit Judge.
This is a debt collection dispute which has become a federal case. The plaintiff, Vicki Frey, appeals from the district court‘s order of summary judgment for the defendant, Richard J. Gangwish, II. Frey, the original debtor, alleges that Gangwish, the creditor‘s attorney, violated the Fair Debt Collection Practices Act (FDCPA),
We are required to decide whether the notice and disclosure requirements of
I.
Frey incurred a consumer debt to J.C. Penney Company, which she failed to pay. Through its attorney, Richard J. Gangwish, who is the defendant in this case, J.C. Penney initiated a suit to collect the debt. Frey retained the services of an attorney, who negotiated an agreed judgment with J.C. Penney. That judgment was entered in the Jefferson District Court in Kentucky and provided for satisfaction of the debt through monthly payments of twenty dollars.
Frey made regular payments under the judgment from August 1988 until May 1989. She made no further payments in 1989, however, and made only two in 1990. In response to Frey‘s failure to comply with the terms of the judgment, Gangwish sent her the following letter, advising her of the legal action that could be taken against her:
Even though this office obtained a Judgment in favor of J.C. Penney Company, Inc. against you in the JEFFERSON DISTRICT Court on June 28, 1988, our records show that you still owe $354.84 on that judgment, plus court costs, and interest which is added every day at 12% per year. At that rate, $500 would grow to $800 in a little less than five years. Under Kentucky law, a judgment is good for up to fifteen years. That means that we have up to fifteen years from June 28, 1988 to garnish wages from any job you have, to attach any monies you might have in any bank account, or to file a foreclosure on any real estate you might own. Needless to say, fifteen years is a long time.
Our office practice is to re-check employment every year to see if we can issue a garnishment. Even though you may not be working now, we will re-check every year for fifteen years after June 28, 1988 to find out if we can issue a garnishment. Naturally, it is in your best interest, and ours, to pay this judgment off as soon as possible. If you would like to make periodic payment arrangements, please call us immediately.
Frey ultimately responded to this letter by filing this lawsuit, alleging that Gangwish‘s letter violated sections
II.
Our review of a grant of summary judgment is de novo. EEOC v. University of Detroit, 904 F.2d 331, 334 (6th Cir.1990). We therefore apply the same standard as applied by the district court. Under
The Fair Debt Collection Practices Act was enacted in 1977 in response to public perception of the use of unfair and abusive debt collection practices by many debt collectors. The statutory purpose of the act is set forth in
It is the purpose of this subchapter to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.
To achieve this broad remedial purpose, the statute makes violators of its provisions liable for actual damages, statutory damages, costs, and attorney‘s fees.
Frey argues that Gangwish‘s post-judgment letter violated two sections of the FDCPA,
A.
Section 1692g(a)
The language of Section 1692g(a) provides in relevant part:
Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing....
* * * * * *
(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector....
Although Gangwish had prior communications with Frey‘s attorney, his post-judgment letter was his first communication with Frey. In addition, the letter was “in connection with the collection of [a] debt.” Although the letter was sent to collect on a judgment, the act defines debt to include any obligation, “whether or not such obligation has been reduced to judgment.”
Gangwish offers three reasons why this section should not be applied to his post-judgment letter. First, he suggests that this section does not apply to post-judgment communications with the debtor. Second, he contends that even if the literal language of this section can be construed to apply to his post-judgment letter, the purpose of the section is not furthered by its application to these facts. Finally, he maintains that application of the statute in this case would work a severe injustice upon him. Although there is much common-sense appeal in what Gangwish argues, we, like Gangwish, are bound by the plain language of the act.
By its terms, section 1692g applies to “the initial communication with a consumer in connection with the collection of any debt.” It does not distinguish between initial communications that precede judgments and those that follow judgments. Indeed, in spelling out the notice requirements for initial communications, it assumes that an initial communication may follow the entry of a judgment by requir
a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector....
Gangwish‘s second argument is that application of this section to the facts of this case does not further the section‘s purpose of providing validation notice of a debt. The apparent purpose of providing validation notice is to inform the consumer debtor that he is entitled to verification of a debt‘s validity. In this case, Frey obviously knew that her debt to J.C. Penney was valid. Through her attorney, she negotiated and entered an agreed judgment. She even made payments to the creditor under the terms of that judgment. Gangwish concludes that at this stage of their transactions, there was simply no need for validation notice.
We find this argument unavailing for two reasons. First, the statute requires validation notice in an initial communication with the debtor, regardless of whether validation notice is needed or not. Second, even if Frey knew that the debt was valid, she may have disputed the balance of the debt still owing as represented by Gangwish in his post-judgment letter. She was entitled to receive notice of her right to obtain verification of the balance of her debt, and failure by Gangwish to provide such notice within five days of this initial communication violated
Gangwish‘s final argument is that strict enforcement of the statute in this case will work an injustice on him because Frey was not injured by his failure to provide validation notice. We disagree. Upon remand, Frey will be entitled to recover only her actual damages, if any, and those statutory damages that the district court, in its discretion, finds appropriate. If Gangwish is correct that Frey was not injured by the “technical” violation of the statute, the district court will undoubtedly consider that in the exercise of its discretion. Until the court has exercised its discretion in this regard, however, we are not in a position to review the issue.
B.
Section 1692e(11)
Frey also complains that Gangwish‘s post-judgment letter violated section 1692e(11). That section states broadly that “[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.”
the failure to disclose clearly in all communications made to collect a debt or to obtain information about a consumer, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose.
Gangwish‘s letter was a communication made to collect a debt and therefore violated this subsection because it did not disclose that any information obtained would be used to collect the debt.
Gangwish again argues that this section should not be construed to apply to a post-judgment communication such as his letter, and we must again reject this argument because the plain language of the statute does not allow it. This section applies to “all communications made to collect a debt.” As noted,
Gangwish maintains, however, that his letter was really a form of follow-up notice and this section should not be construed to apply to a follow-up notice. In this regard, he relies on the Ninth Circuit case of Pressley v. Capital Credit & Collection Serv., 760 F.2d 922 (9th Cir.1985) (per curiam). In Pressley, the Ninth Circuit held that a follow-up notice was “not a ‘communication’ within which the disclosure required by
Where the debtor has already received proper notification of the debt as required by Section 809 of the Act [
15 U.S.C. § 1692g ] or has been negotiating with debt collector over the terms of the repayment, ... no purpose is served by requiring that every subsequent communication with that debtor contain these disclosures.
Id. The court further observed that the legislative history of the FDCPA indicated that its purpose was to protect consumers from abusive practices without imposing unnecessary restrictions on ethical debt collectors. Id. The court concluded that requiring a debt collector to make affirmative disclosures in every form of follow-up notice would serve no purpose of the act and would ignore the legislative intent that protection of consumers be balanced against imposing unnecessary restraints on ethical debt collectors. Id.
We decline to apply this analysis to the case before us for two reasons. First, we conclude that Gangwish‘s post-judgment letter was not a form of follow-up notice. In Pressley, the court considered a follow-up notice that only demanded a payment as earlier requested. Here, by contrast, Gangwish‘s letter was his first communication with Frey to collect on the judgment. It did not follow a previous request for payment of the judgment. Indeed, the only thing that it followed was the judgment itself. As a result, the reasoning of the Pressley court for not requiring the disclosures of
But even if the Pressley reasoning applied, we would reject it as unsound. We agree with the Second Circuit, which has expressly declined to follow the holding of Pressley. In Pipiles v. Credit Bureau of Lockport, Inc., 886 F.2d 22, 26-27 (2d Cir.1989), the Second Circuit held that follow-up communications are subject to the disclosure requirements of section 1692e(11).1 In rejecting the reasoning of Pressley, the court noted first that the plain language of the statute applies to “all communications.” Id. at 27. The court also observed that requiring that all communications include the disclosures furthered the purpose of the statute by ensuring “that even if the first notice is not received by the consumer, ... subsequent notices will nonetheless provide the consumer with the requisite disclosures.” Id. Finally, the court concluded that “even if there were little discernible purpose in repetition, Congress could exercise its legislative judgment to adopt a reasonable margin of safety to insure its remedial goal.” Id.
We agree with the reasoning of the Second Circuit in Pipiles and therefore reject the defendant‘s argument that the disclosure requirements of
C.
The Defendant‘s Remaining Arguments
In addition to his argument that the disputed sections of the FDCPA do not apply to his post-judgment letter to Frey, Gangwish raises two additional arguments. First, he contends that under
Both of these issues involve questions of fact that the district court never reached because it granted summary judgment. As a result, we leave these issues for the district court to address on remand.
III.
The Fair Debt Collection Practices Act is an extraordinarily broad statute. Congress addressed itself to what it considered to be a widespread problem, and to remedy that problem it crafted a broad statute. Gangwish would have us ignore this fact and read an exception into the statute that is nowhere to be found in its text. This we cannot do, even though the exception he would have us adopt may be an eminently sensible one. We must enforce this statute as Congress has written it.
As written, sections
We therefore REVERSE the judgment of the district court and REMAND the case for further proceedings consistent with this opinion.
SUHRHEINRICH, Circuit Judge, dissenting.
Congress enacted the Fair Debt Collection Practices (“FDCPA“),
The majority first turns its plain meaning analysis on the FDCPA‘s validation notice requirement,
The majority attempts to circumvent this dilemma by observing that, “[a]lthough Gangwish had prior communications with Frey‘s attorney, his post-judgment letter was his first communication with Frey.” In fact, the record is silent as to whether this letter was the initial communication with Frey. Presumably, Frey was prompted to seek and secure counsel for her 1987 debt to J.C. Penny Co. by some notice that she was in arrears. Thus, it stands to reason that there is a prior communication in this case between Gangwish and Frey than the one presently subject to judicial scrutiny. Frey has failed to establish the content of this communication.
More importantly, even if we assume that Frey sought counsel without prompting, Gangwish‘s prior communications with Frey‘s attorney preclude a finding that the post-judgment letter was an initial communication. An attorney is both a fiduciary to and an agent of his client. As a result, conveying notice or knowledge to an attorney is regarded as equivalent to conveying notice or knowledge to the client. The Supreme Court has long held that “each party is deemed bound by the acts of his lawyer-agent and is considered to have ‘notice of all facts, notice of which can be charged upon the attorney.‘” Link v. Wabash R.R. Co., 370 U.S. 626, 634 (1962) (quoting, Smith v. Ayer, 101 U.S. 320, 326 (1879)). The plain language of the FDCPA expresses no intention to abrogate this general rule, and I believe that the majority‘s, at least implicit, decision to do so is unwise.
The facts of this case, which the majority largely ignores, further compel this conclu
The majority also believes that Gangwish‘s letter violated the FDCPA‘s disclosure requirement,
Further, the facts clearly reveal that even if there were a technical violation of the statute, the case should never have been brought. Frey does not dispute the debt that Gangwish is seeking to collect, does not assert that the letter was harassing, misleading, or abusive, and does not claim to have been harmed in any way by the letter. Moreover, at oral argument, Frey‘s attorney was unable to articulate any damage to Frey as a result of the violation. The only injury which flows from the alleged violation here is the waste of valuable, finite judicial resources. The pointless exercise of such litigation may also have a damaging secondary effect on debtors. In order to avoid technical noncompliance with statutory requirements, creditors may well decide to withhold necessary informative communication.
The suspicion raised in my mind is whether the UAW Legal Services Plan, of whom this statute seems to be a favorite,2 is more interested in the mandatory statutory award of attorney‘s fees than they are in protecting the rights of debtors against dishonest debt collectors. Were I the district judge in this matter, I would contemplate imposing Rule 11 sanctions. Since I am not, I can only advise that on remand, the district judge remain cognizant of the absence of damages and of the true tenor of the longstanding relationship between these parties when statutory damages are sought. See Pipiles, 886 F.2d at 28; Emanuel, 870 F.2d at 809. Finally, I caution the UAW Legal Services Plan to choose battles worth fighting.