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20-1134

Cortez v. Forster & Garbus, LLP

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

August Term 2020

(Argued: January 28, 2021 Decided: June 4, 2021)

No. 20-1134

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CRISTIAN D. CORTEZ

Plaintiff-Appellee,

v.

FORSTER & GARBUS, LLP

Defendant-Appellant.

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Before: LIVINGSTON, Chief Judge, CABRANES, and LYNCH, Circuit Judges.

In Avila v. Riexinger & Associates, LLC, 817 F.3d 72, 76 (2d Cir. 2016), we 

held that the Fair Debt Collection Practices Act, 15 U.S.C. § 1692e, requires “debt 

collectors, when they notify consumers of their account balance, to disclose that 

the balance may increase due to interest and fees.” This appeal requires us to 

clarify whether Avila’s disclosure requirement applies to collection notices that 

extend offers to settle outstanding debt. We hold that it does not. 

Accordingly, the judgment of the United States District Court for the Eastern 

District of New York is REVERSED.
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FOR PLAINTIFF-APPELLEE: DAVID M. BARSHAY, Craig B. Sanders, on the 

brief, Barshay Sanders PLLC, Garden City, 

New York, for Cristian D. Cortez.

FOR DEFENDANT-APPELLANT: ROBERT L. ARLEO, New York, New York, for 

Forster & Garbus, LLP.

DEBRA ANN LIVINGSTON, Chief Judge:

The Fair Debt Collection Practices Act (“FDCPA”) prohibits debt collectors 

from using “any false, deceptive, or misleading representation or means in 

connection with the collection of any debt.” 15 U.S.C. § 1692e. In Avila v. 

Riexinger & Associates, LLC, 817 F.3d 72 (2d Cir. 2016), we held this provision to 

require “debt collectors, when they notify consumers of their account balance, to 

disclose that the balance may increase due to interest and fees.” Id. at 76. This 

appeal requires us to clarify whether this disclosure requirement applies to 

collection notices that extend offers to settle outstanding debt. We hold that it 

does not. Consequently, we REVERSE and REMAND with directions to enter 

summary judgment in favor of Defendant Forster & Garbus, LLP.

BACKGROUND

Plaintiff Cristian D. Cortez incurred credit card debt to Discover Bank. 

Discover Bank placed Cortez’s debt with Forster & Garbus for collection. In 
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2011, Forster & Garbus filed a collection action in New York state court and 

obtained a default judgment. Over the years, Forster & Garbus mailed Cortez a 

number of collection notices. 

In one such notice dated February 2, 2017, Forster & Garbus indicated that

Cortez’s debt balance at that time was $13,457.65 and stated in relevant part:

This office has been authorized to advise you that a 

settlement of the above account can be arranged. You 

are being offered a substantial discount off the current 

balance due. You may choose one of the three 

payment options as follows:

A. One payment of $5,383.06, which we shall expect by 

February 24, 2017.

B. Two payments of $3,364.42 each, totaling $6,728.84, 

which we shall expect by February 24, 2017, and 

March 24, 2017.

C. Three payments of $2,691.53 each, totaling $8,074.59, 

which we shall expect by February 24, 2017, March 

24, 2017, and April 24, 2017.

Please note that we are not obligated to repeat this offer.

Please return the bottom portion of this letter with your 

selection checked to confirm your settlement choice. If 

you are unable to take advantage of the above 

settlement opportunities, please contact this office so 

that we may arrange a payment plan on the account.
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Joint App’x at 19. Cortez sued Forster & Garbus, claiming that this notice, by 

failing to disclose that interest was continuing to accrue on his balance, violated 

the FDCPA as interpreted by Avila.

Forster & Garbus moved for summary judgment, which the United States 

District Court for the Eastern District of New York (Block, J.) denied in a 

memorandum and order dated June 12, 2019. See Cortez v. Forster & Garbus, 

LLP, 382 F. Supp. 3d 259 (E.D.N.Y. 2019). The district court observed that the 

February 2 notice did not state whether interest and fees were accruing on 

Cortez’s account even though Avila mandated that “debt collectors, when they 

notify consumers of their account balance,” must “disclose that the balance may 

increase due to interest and fees.” Id. at 261 (quoting Avila, 817 F.3d at 76). 

Forster & Garbus argued that the notice did not violate Section 1692e because 

under Avila, “a debt collector will not be subject to liability” under the FDCPA if 

it makes a settlement offer “clearly stat[ing] that the holder of the debt will 

accept payment of the amount set forth in full satisfaction of the debt if payment 

is made by a specified date,” 817 F.3d at 77; the district court read Avila to require 

that such a settlement offer must nevertheless be accompanied by a disclosure of 

whether interest would continue to accrue if the debtor “do[es] not make the 
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payment by the specified date.” Cortez, 382 F. Supp. 3d at 261. In any event, 

the district court found it “debatable” whether the February 2 notice clearly 

stated that the specified amounts in the notice would fully satisfy Cortez’s debt if 

made by the specified date. Id. at 262. The district court further decided that 

“because there are no genuine issues of material fact and [Forster & Garbus] has 

had adequate opportunity to develop and present its case,” it would enter 

“summary judgment on the issue of liability in favor of [Cortez].” Id. (internal 

quotation marks omitted).

Forster & Garbus unsuccessfully moved for reconsideration, Cortez v. 

Forster & Garbus, LLP, No. 17-cv-06501, 2020 WL 1083680, at *1 (E.D.N.Y. Mar. 6, 

2020), judgment in favor of Cortez entered March 6, 2020, and Forster & Garbus 

timely appealed the district court’s grant of summary judgment for Cortez.

DISCUSSION

“We review a grant of summary judgment de novo, examining the evidence 

in the light most favorable to, and drawing all inferences in favor of, the 

non-movant.” Huebner v. Midland Credit Mgmt., Inc., 897 F.3d 42, 50 (2d Cir. 

2018) (quoting Blackman v. N.Y.C. Transit Auth., 491 F.3d 95, 98 (2d Cir. 2007) (per 

curiam)). Summary judgment is appropriate only when “there is no genuine 
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dispute as to any material fact and the movant is entitled to judgment as a matter 

of law.” Fed. R. Civ. P. 56(a).

I

The FDCPA provides that “[a] debt collector may not use any false, 

deceptive, or misleading representation or means in connection with the 

collection of any debt,” 15 U.S.C. § 1692e, and, among other things, prohibits

debt collectors from making any “false representation of the character, amount, 

or legal status of any debt,” id. § 1692e(2)(A). To determine whether a debt 

collection notice violates these provisions, we employ the least sophisticated

consumer standard, according to which a notice is deceptive or misleading if it is 

“open to more than one reasonable interpretation, at least one of which is 

inaccurate.” Clomon v. Jackson, 988 F.2d 1314, 1319 (2d Cir. 1993).1

In Avila, we held that a collection notice that states a debtor’s current 

balance but does not disclose whether interest and fees are accruing is 

1 “This objective standard is designed to protect all consumers, ‘the gullible as 

well as the shrewd,’ while at the same time protecting debt collectors from liability for 

‘bizarre or idiosyncratic interpretations of collection notices.’” Maguire v. Citicorp Retail

Servs., Inc., 147 F.3d 232, 236 (2d Cir. 1998) (quoting Clomon, 988 F.2d at 1318, 1320); see 

also Clomon, 988 F.2d at 1319 (“[C]ourts have consistently applied the 

least-sophisticated-consumer standard in a manner that protects debt collectors against 

liability for unreasonable misinterpretations of collection notices.”).
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“misleading within the meaning of Section 1692e” because “[a] reasonable 

consumer could read the notice and be misled into believing that she could pay 

her debt in full by paying the amount listed on the notice” when, in fact, “if 

interest is accruing daily, or if there are undisclosed late fees, a consumer who 

pays the ‘current balance’ stated on the notice will not know whether the debt 

has been paid in full.” 817 F.3d at 76. Consequently, we held “that the FDCPA 

requires debt collectors, when they notify consumers of their account balance, to

disclose that the balance may increase due to interest and fees.” Id.

However, we proceeded to explain that

a debt collector will not be subject to liability under 

Section 1692e for failing to disclose that the consumer’s 

balance may increase due to interest and fees if the 

collection notice either [1] accurately informs the 

consumer that the amount of the debt stated in the letter 

will increase over time, or [2] clearly states that the 

holder of the debt will accept payment in the amount 

set forth in full satisfaction of the debt if payment is 

made by a specified date. 

Id. at 77. Together, these two disclosure options, or safe harbors, fully address 

the concern we articulated in Avila that a debtor might remit the listed balance

without realizing that she has not fully paid off her debt. The first disclosure 

option contemplates debt collectors informing debtors that paying the specified
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amount will not satisfy the debt. See, e.g., Kolbasyuk v. Capital Mgmt. Servs., LP, 

918 F.3d 236, 242 (2d Cir. 2019). The second disclosure option contemplates

collectors informing debtors that paying the specified amount will satisfy the 

debt. When apprised of either of these two disclosures, no debtor reasonably 

could be unaware of the effect payment of the balance specified in the notice

would have on her outstanding debt.

II

We reaffirm Avila’s holding that a debt collector “will not be subject to 

liability under Section 1692e for failing to disclose” in a collection notice whether 

an account is accruing interest and fees so long as the notice “clearly states that 

the holder of the debt will accept payment of the amount set forth in full 

satisfaction of the debt if payment is made by a specified date.” 817 F.3d at 77. 

Such collection notices do not present the risk that a debtor might pay the listed 

balance only to find herself still owing more. Payment of an amount that the 

collector indicates will fully satisfy a debt excludes the possibility of further debt

to pay. 

Our decision in Taylor v. Financial Recovery Services, Inc., 886 F.3d 212 (2d 

Cir. 2018), is instructive. There, debtors whose balances were static sued their
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debt collector, Financial Recovery Services (“FRS”), under the FDCPA for failing 

to disclose that interest and fees were not accruing on their accounts. They 

argued that under Avila, “a debt collector commits a per se violation of Section 

1692e whenever it fails to disclose whether interest or fees are accruing on a 

debt.” Id. at 214. We disagreed. While in Avila the collection notice’s 

implication that payment of the outstanding balance would fully satisfy the debt 

was “prejudicially misleading,” in Taylor “prompt payment of the amounts 

stated in [plaintiffs’] notices would have satisfied their debts.” Id. (emphasis in 

original). For this reason, we held that FRS’s notices to plaintiffs, which stated 

their respective balances without disclosing that interest and fees were not 

accruing on their accounts, did not violate the FDCPA. Id.; see also Chuway v. 

Nat’l Action Fin. Servs., Inc., 362 F.3d 944, 949 (7th Cir. 2004) (Posner, J.) (“If the 

debt collector is trying to collect only the amount due on the date the letter is 

sent, then he complies with the Act by stating the ‘balance’ due . . . and asking 

the recipient to remit the balance listed — and stopping there[.]”). This

reasoning extends to a collection notice proposing to accept a specified amount 

in full satisfaction of a debt. As with debtors faced with a collection notice for a 

static debt, who are not prejudicially misled by the collector’s failure to disclose 
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that interest is not accruing, debtors faced with a settlement offer are not misled 

by the failure to disclose that interest is accruing because in both situations, 

payment of the amount indicated in a collection notice would extinguish the 

debt.

Nevertheless, here the district court held that debt collectors extending 

offers of full satisfaction must also “advise consumers that their debt [is] still 

accruing interest and/or fees.” Cortez, 382 F. Supp. 3d at 261. In doing so, the 

court was drawn to our suggestion in Avila that 

a debt collector who is willing to accept a specified 

amount in full satisfaction of the debt if payment is 

made by a specific date could considerably simplify the 

consumer’s understanding by so stating, while advising 

that the amount due would increase by the accrual of 

additional interest or fees if payment is not received by 

that date.

Id. (quoting Avila, 817 F.3d at 77). 

However, Avila held only that a debt collector must “either” disclose that 

interest and fees continue to accrue “or” offer to extinguish the debt in exchange 

for a specified payment. 817 F.3d at 77 (emphasis added). Avila’s use of a 

precatory word to suggest that a debt collector “could” simultaneously avail 

itself of both safe harbors is consistent with the conclusion, explained above, that 
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either disclosure option alone dispels the risk of a collection notice misleading a 

debtor about the effect paying the specified amount would have on the 

outstanding debt.

The district court was concerned that a settlement offer from a debt 

collector could mislead the debtor if the offer set forth a payment deadline but 

failed to disclose whether interest or fees would accrue if payment were tendered 

after the deadline. The least sophisticated consumer, it reasoned, could interpret 

such an offer “as implying either that interest and/or fees would accrue after that 

date or that the balance will stay the same after that date.” Cortez, 382 F. Supp. 

3d at 262 (emphasis in original). We disagree that, to the extent such a 

settlement offer is ambiguous along the lines suggested by the district court, a 

collection notice containing it would be rendered misleading under Section 

1692e. For one thing, as we have already explained, Avila expressly held that a 

debt collector clearly extending an offer of full satisfaction if payment is made by 

a specified date is not “subject to liability under Section 1692e for failing to 

disclose that the consumer’s balance may increase due to interest and fees[.]” 

817 F.3d at 77. But more generally, Section 1692e does not require that a

collection notice anticipate every potential collateral consequence that could arise
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in connection with the payment or nonpayment of a debt. See, e.g., Altman v. 

J.C. Christensen & Assocs., Inc., 786 F.3d 191, 194 (2d Cir. 2015) (settlement offer 

that did not factor potential tax liability into stated discount was not misleading); 

Taylor, 886 F.3d at 215 (“[C]ollection notice that fails to disclose that interest and 

fees are not currently accruing on a debt is not misleading[.]”). Instead, the 

FDCPA merely requires that a collection notice, by its terms, not be susceptible of 

a reasonable but inaccurate interpretation. See Clomon, 988 F.2d at 1319. 

Therefore, a settlement offer need not enumerate the consequences of failing to 

meet its deadline or rejecting it outright so long as it clearly and accurately 

informs a debtor that payment of a specified sum by a specified date will satisfy 

the debt. 

III

With these principles in mind, we hold that Forster & Garbus’s February 2 

notice to Cortez did not violate Section 1692e because it extended a settlement 

offer that, if accepted through payment of the specified amount(s) by the 

specified date(s), would have cleared Cortez’s account. The district court found 

it “debatable” that the notice “‘clearly state[d] that [the defendant would] accept 

payment of the amount set forth in full satisfaction of the debt if payment is 
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made by a specific date’” because the notice “[did] not state explicitly that the 

debt will be discharged fully upon receipt of payment.” Cortez, 382 F. Supp. 3d 

at 262 (alterations and emphasis in original) (quoting Avila, 817 F.3d at 77). 

However, the notice extended three “settlement choice[s],” each affording a 

“substantial discount off the current balance due,” Joint App’x at 19, 

unmistakably communicating that acceptance of one of the options would 

extinguish Cortez’s debt. We therefore conclude that, even when viewed from 

the perspective of the least sophisticated consumer, the February 2 notice could

only reasonably be read one way: as extending an offer to clear the outstanding 

debt upon payment of the specified amount(s) by the specified date(s). Since 

this sole reasonable interpretation was accurate, the notice did not violate the 

FDCPA. 

CONCLUSION

For these reasons, we REVERSE and REMAND with directions to enter 

judgment in favor of Defendant Forster & Garbus, LLP.