# U ni te d S ta te s Co ur t of A pp ea ls

For the Eig hth Circu it

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No. 1 7- 28 26

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Dav id Co y ne , on be ha lf o f hi m se lf a nd all ot he rs si m il arl y si tu at ed

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el la nt

v.

Mi dl an d F un di ng LLC; Mi dl an d C red it Man ag em en t, In c.

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t s

Mes se rli & Kram er P.A.

ll ll ll ll ll ll ll ll ll ll l

Defe nd an t - Ap pe ll ee

__ __ __ __ __ __
App eal fro m

Uni te d S ta te s Di st ric t Co ur t fo r th e Dis tri ct of M in ne so ta - Mi nn eap ol is

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Su bm it te d: Ju ne 13 , 20 18
Fi le d: Ju ly 16, 2 01 8

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Befo re WOL LMAN, ARNOLD, and KELLY , Cir cu it Ju dg es

.

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ARNOLD, Circu it Ju dg e.

In 2 01 6, Mi nn es ot a res id en t Dav id Co y ne rece iv ed th ree co ll ect io n le tt ers
ab ou t a cred it -car d de bt in hi s na m e. The la w fir m of Mes se rli & Kram er P.A. se nthi m th e fir st le tt er, as se rti ng he owe d an "ac co un t ba la nc e of $1 7,2 30 .29 co ns is t[i ng ]

of th e pr in ci pa l ba la nc e of $1 3,2 05 .30 an d in te res t of $3 ,87 1.3 9 at th e rat e of 6.0 0%
plu s inc ur red co st s of $1 53 .60 ." Ano th er de bt co ll ect or , Mi dl an d Cred it Manage m en t,

In c., se nt hi m th e ot he r le tt ers on be ha lf of th e de bt 's cu rren t own er, Mi dl an d Fu nd in g LLC, bu t t ho se pa rti es an d l et te rs are n ot be fo re u s i n t hi s ap pe al

.

Co y ne fil ed a pu ta ti ve cl as s act io n ag ai ns t Mi dl an d Fu nd in g an d th e two de bt

co ll ect or s un de r th e Fai r Deb t Co ll ect io n Prac t i ces Act, se e 15 U.S.C. § 16 92 k( d)

, cl ai m in g th ey us ed a " f

a l s e , d ecep ti ve , o r m is le ad in g rep res en ta ti on or m ean s," se e
id

. § 16 92 e, an d an "u nf

ai r or un co ns ci on ab le m ean s," se e id

. § 16 92 f, in at te m pt in g

to co ll ect th e cred it -car d de bt whe n th ey to ld hi m , am on g ot he r th in gs , th at he owe d

in te res t on th e de bt 's pr in ci pa l ba la nc e. In hi s am en de d co m pl ai nt

, Co y ne al le ge s th at

th e pr in ci pa l ba la nc e in cl ud ed co nt ract ua l i n t e res t. He al so al le ge s th at si nc e th e

un de rlyin g cred it -car d ag reem en t do es no t au th or iz e th e ch arg in g of co m po un d

in te res t ( i.e. , in te res t o n th e co nt ract ua l in te res t), t he de fen da nt s fa ls el y rep res en te d

th e am ou nt of th e de bt an d im pe rm is si bl y tri ed to co ll ect in te res t th at th ey co ul d no t

ch arg e un de r Mi nn es ot a la w. Se e Mi nn

. St at

. § 33 4.0 1( 1) (s et ti ng fo rth th e ru le th at "[i ]n th e co m

pu ta ti on of in te res t up on an y

. . . in st ru m en t or ag reem en t, in te res t sh al l

not be co m

poun de d" un le ss th e pa rti es ha ve co nt ract ed fo r co m po un d in te re st)

. Co y

ne

at ta ch ed al l th ree co ll ect io n le tt ers to hi s am en d e d c om pl ai nt

. Se e Bro wn v. Gre en

Tr ee S er vi ci ng LLC , 82 0 F .3d 37 1, 3 73 (8t h C ir. 2 01 6)

.

W he n Mi dl an d Fu nd in g an d th e de b t co ll ect or s m ov ed th e di st ric t co ur t to

di sm is s th e am en de d com pl ai nt fo r fai li ng to st at e a cl ai m , th e di st ric t co ur t gr an te d

th e m ot io n an d di sm is se d th e act io n on th e gr ou nd th at Co y ne fai le d to al le ge th at an y

st at em en t in th e co ll ect io n le tt ers "was no t on ly fal se bu t m at eri al ly so ." The di st ric t

co ur t ex pl ai ne d why so m e of th e st at em en ts Co y ne ha d co nt es te d di d no t vi ol at e th e FDCPA, bu t it di d no t di sc us s whe th er he ha d pl ead ed a cl ai m ba se d on th e ch arg in g

an d at te m pt ed co ll ect io n o f c o m

po un d in te res t th at st at e la w di d no t al lo w. Co y ne

m ov ed th e di st ric t co ur t fo r le av e to fil e a m ot io n to reco ns id er, bu t th e di st ric t co ur t

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-de ni ed hi m le av e si nc e it ha d d e t e r m in ed th at th e rep res en ta ti on s in th e le tt ers

"re ga rd in g in te res t wer e e i t he r no t m at eri al or di d no t vi ol at e th e FDCPA." Co y ne

ap pe al s fr om

th e jud gm en t d is m is si ng hi s co m pl ai nt , and we rev ers e.

W e rev ie w de no vo a di st ric t co ur t's di sm is sa l of a co m pl ai nt fo r fai li ng to st at e

a cl ai m , "ac cep ti ng th e fact ua l al le ga ti on s in th e co m pl ai nt as tru e an d vi ewin g th em

in th e li gh t m os t fav or ab le to th e pl ai nt iff ." Uni te d St at es ex re l. Am b r o s e cch ia v.
Pad do ck La bs

., LLC

, 85 5 F.3d 94 9, 95 4 (8t h Cir. 20 17 ). The on ly cl ai m th at Co y ne

se ek s to res us ci ta te ag ai ns t Mes se rli is th at it vi ol at ed 15 U.S.C. §§ 16 92 e an d 16 92 f
by at te m pt in g to co ll ect , a nd rep res en ti ng he owe d, co m po un d i n t e res t on th e de bt

. The am en de d co m

pl ai nt

, m or eo ve r, al le ge s fact s ag ai ns t Mes se rli on ly in rel at io n to

it s le tt er to Co y

ne

. So as Co y ne co nc ed ed at or al arg um en t, we no w ha ve o n l y on e
is su e to rev ie w: W he th er Co y ne st at ed a FDCPA cl ai m whe n he al le ge d th at si nc e th e
de bt 's pr in ci pa l ba la nc e in cl ud ed co nt ract ua l in te res t an d si nc e "co m po un de d in te res t

up on in te res t" was "n ot ex pr es sl y au th or iz ed by th e ag reem en t crea ti ng th e de bt ," th e

in te res t on th e pr in ci pa l ba la nc e th at Mes se rli 's le tt er tri ed to co ll ect

, an d sa id th at he

owe d, was co m

po un d i nt eres t " in vi ol at io n o f Mi nn . Sta t. § 33 4.0 1."

The FDCPA is a co ns um er-p ro te ct io n st at ut e au th or iz in g pr iv at e la wsu it s an d
weig ht y fin es to de te r way ward co ll ect io n pr act ic es

. Hen so n v. Sa nt an de r Co ns ume r

USA In c. , 1 37 S. Ct . 1 71 8, 17 20 (2 01 7) . Th e st at ut e pr oh ib it s a de bt co ll ect or fro m

as se rti ng an y "fa ls e, de cep ti ve , or m is le ad in g rep res en ta ti on ," or us in g an y "u nf ai r or

un co ns ci on ab le m ean s," to at te m pt to co ll ect a de bt

. Se e 15 U.S.C. §§ 16 92 e, 16 92 f.

In de te rm in in g whet he r a col le ct io n let te r se nt di rect ly to a de bt or us es a pr oh ib it ed

rep res en ta ti on or m ean s, we no rm al ly vi ew it "t hr ou gh th e ey es of th e un so ph is ti cat ed

co ns um er." Frey er mut h v. Cr ed it Bur ea u Se rv s., In c. , 24 8 F.3 d 76 7

, 7 71 (8 th Ci r.

20 01 ). Tha t st an da rd is de si gn ed to pr ot ect co ns um ers of be lo w av erag e in te ll ig en ce

or so ph is ti cat io n. St ra nd v. Dive rs if ie d Co ll ect io n Se rv
., In c. , 38 0 F.3 d 31 6, 31 7 (8 th

Ci r. 20 04 ). Co y ne m ay well be so ph is ti cat ed si nc e he is a li cen se d at to rn ey , an d if he

were "i nt erp os ed as an in te rm ed ia ry " be twee n a de bt co ll ect or an d a de bt or in an ot he r

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-cas e, we wou ld ap pl y th e "co m pe te nt la wy er" st an da rd to co ll ect io n le tt ers se nt to hi m

in hi s cap aci ty as th e de bt or 's cou ns el

. Se e Pow er s v. Cr ed it Mgmt

. Se rv s., In c. , 77 6

F.3 d 56 7, 57 4 (8 th Ci r. 20 15 ). Tho ug h th e pa rti es be lo w di sp ut ed whi ch s t a nd ard

sh ou ld ap pl y to a co ll ect io n le tt er se nt to a de bt or who is a la wy er, Mes se rli do es no t

co nte st the distr ic t co ur t's ho ld in g th at th e un so ph is ti cat ed -c onsu m er sta nda rd ap pli es

. So we as su m e fo r pu rp os es of th e ap pe al th at Mes se rli 's le tt er m us t be ev al ua te d fro m

th e p ers pe ct iv e o f an un so ph is ti cat ed co ns um er.

It is un di sp ut ed th at Mi nn es ot a la w go ve rn s Co y ne 's al le ge d cred it -car d de bt

. Mi nn

. St at

. § 33 4.0 1( 1) pr ov id es th at "[i ]n th e co m pu ta ti on of in te res t up on an y

. . . in st ru m en t or ag reem en t, in te res t sh al l no t be co m po un de d" un le ss th ere is a "co nt ract

to pa y [s uc h] in te res t." Se e La m pe rt Lu mbe r Co

. v. Ram Co ns tr

. , 41 3 N.W .2d 87 8,

88 3 (Mi nn

. Ct

. App

. 19 87 ). Co y ne al le ge s he di d no t ag ree to pa y co m po un d in te res t

on th e d e b t

, a n d at th is st ag e we m us t acce pt th at al le ga ti on as tru e. Se e Pad do ck

La bs

. , 8 5 5 F

. 3 d at 95 4. He fu rth er al le ge s th at th e de bt 's pr in ci pa l ba la nc e al read y

co nt ai ne d co nt ract ua l in te res t. The di st ric t co ur t ag reed th at an un pa id cred it -car d

de bt so ld to an ot he r pa rty wou ld in cl ud e "t he i n t e r e s t an d fees [th e cred it -car d

co m pa ny] or ig in al ly ch arg ed ." Neit he r pa rty co nt es ts th at ru li ng on ap pe al

, an d so we
ho ld th at Co y ne ha s pl au si bl y al le ge d th at th e pr in ci pa l ba la nc e th at Mes se rli 's le tt er

m en ti on s co nt ai ne d co nt r a c tu al in te res t. Cf

. Han ey v. Por tf

ol io Reco ver

y Ass oc s.,

L.L.C. , 83 7 F .3d 91 8, 9 21 , 92 4 (8 th Cir . 20 16 ) (p er cu ria m ).

It i s al so pl au si bl e th at th e in te res t ch arg ed on th e p rin ci pa l b al an ce i nc lu de d

in te res t on th e co nt ract ua l in te res t: Mes se rli 's le tt er to Co y ne was da te d Feb ru ary 26

, 20 16

, an d it as se rte d th at he owe d "i nt eres t of $3 ,87 1.3 9 at th e rat e of 6.0 0%" on "t he

pr in ci pa l ba la nc e of $1 3,2 05 .30 ." Thi s am ou nt of in te re s t i s a p pr ox im at el y wha t

wou ld accr ue on th e pr in ci pa l ba la nc e un de r an an nu al rat e of 6.0 0% si m pl e in te res t

fro m th e da te th e cred it -car d co m pa ny so ld th e de bt

—Ap ril 14

, 20 11

, acco rd in g to th e

fin al de bt -co ll ect io n le tt er— to th e da te of Mes se rli 's le tt er. So if th e pr in ci pa l ba la nc e

ha s co nt ract ua l in te res t in it

, th e in te res t so ug ht in Mes se rli 's le tt er wou l d in cl ud e

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-in te res t on th at co nt ract ua l in te res t. W e th us ho l d t h a t C oyne ha s pl au si bl y al le ge d

th at M es se rli tri ed to co ll ect

, an d to ld hi m th at he owe d, an am ou nt an d a type of

in te res t t ha t s ta te law p ro hi bi te d i n t he cir cu m st an ces

.

In Han ey , we he ld un de r th e un so ph is ti cat ed -co ns um er st an da rd th at a de bt or

st at ed a cl ai m un de r 15 U.S.C. §§ 16 92 e an d 16 92 f(1 ) whe n he al le ge d th at a de bt

co ll ect io n l et te r ha d so ug ht to co ll ect

, an d in fo rm ed hi m he owe d, "an in te res t-o nin te res t am ou nt no t al lo wed as a m at te r of st at e la w." Id

. at 93 1– 32

. W e reas on ed th at

,

un de r th e un so ph is ti cat ed -co ns um er st an da rd

, de m an ds to pa y a n am ou nt of de bt

"u na ut ho riz ed

. . . or ev en 'sl ig ht ly ov ers ta te d'" un de r st at e la w is act io na bl e as a fal se

st at em en t or un fai r co ll ect io n at te m pt

. Se e id

. at 93 2. Bu t in Han ey we di d no t ad dr es s
whe th er att em

pt s to co ll ect a de bt am ou nt th at th e de bt or do es no t le ga ll y owe are a

m at eri al vi ol at io n of §§ 16 92 e an d 16 92 f. W e ha ve si nc e es ta bl is he d th at a m at eri al it y

st an da rd ap pl ie s to § 16 92 e. Hil l v. Acco un ts Recei va bl e Se rv s., LLC

, 88 8 F.3 d 34 3,

34 6 (8 th Ci r. 2 0 1 8 )

. W e ha ve no t y et st at ed whe th er th e st an da rd al so ap pl ie s to §

16 92 f, bu t we ne ed no t de ci de th at is su e to da y si nc e "an at te m pt to co ll ect a de bt no t

owe d i s a m at eri al vi ol at io n of § 16 92 f(1 )." Demar ai s v. Gu rs te l Ch ar go , P.A. , 86 9

F.3 d 6 85 , 69 9 (8 th Cir . 20 17 ).

W e no w ho ld th at a fal se rep res en ta ti on of th e am ou nt of a de bt th at ov ers ta te s
wha t is owe d un de r st at e la w m at eri al ly vi ol at es 15 U.S.C. § 16 92 e(2 )(A) as well

. It

is mat e r ia l no t on ly be cau se th e rep res en ta ti on vi ol at es th e pl ai n la ng ua ge of th at

su bs ect io n pro hi bi ti ng th e "fa ls e rep res en ta ti on " of th e "a m ou nt " o f "an y de bt ," b ut

al so be cau se an ov ers ta te m en t of th e de bt 's am ou nt ne ces sa ril y m is le ad s th e de bt or
ab ou t th e am ou nt he owe s un de r hi s agre em en t with th e cred it or

. Se e Hil l

, 88 8 F.3 d

at 34 5– 46 ; cf

. Demar ai s , 86 9 F.3d at 69 9. So th e d is tri ct co ur t er red in ho ld in g t ha t

th e al le ga ti on un de r rev ie w—t ha t Mes se rli 's le tt er to Co y ne at te m pt ed to co ll ect

, an d

as se rte d h e owe d, co m

po un d in te res t in vi ol at io n of Mi nn

. St at

. § 33 4.0 1— di d no t

st at e a p la us ib le cla im

un de r §§ 16 92 e an d 1 69 2f

.

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-Mes se rli arg ue s no ne th el es s th at it di d no t vi ol at e th e FDCPA si nc e th e am ou nt

of in te res t st at ed in it s le tt er to Co y ne was co nt ract ua ll y au th or iz ed

. Tha t m ay pr ov e

to be tru e. Bu t at th e pl ead in g st ag e we m us t acce pt Co y ne 's al le ga ti on th at he di d no t

ag ree to be ch arg ed co m

po un d in te res t an d so m ay no t be ch arg ed it

. Se e Mi nn

. St at

. § 33 4.0 1( 1)

. Mes se rli m ai nt ai ns we m us t cal cu la te th e in te res t Co y ne m ay be ch arg ed

un de r so m e cred it -car d te rm s it at ta ch ed to it s m ot io n to di sm is s, as se rti ng th e di st ric t

co ur t co ns id ered th em "g ov ern in g" an d Co y ne di d no t ob

ject to th ei r au th en ti ci ty. Bu t

Mes se rli is wro ng

. In hi s op po si ti on to th e m ot io n, Co y ne sp eci fic al ly co nt es te d th e

te rm s as "u na ut he nt ic at ed ," no ti ng th ey were "b oi le rp la te " an d di d no t "i de nt ify [h im ]

as a pa rty" to th em

. He al so no te d th at Mes se rli pr ov id ed no r e a s o n to be li ev e th e

te rm s were in an y

way rel at ed to th e u nd erl y in g c red it card "as id e fro m [a Mes se rli

at to rn ey ] jus t un il at eral ly st at in g th at th os e are th e te rms

. . . th at ap pl ie d." Si nc e

Co y ne qu es ti on ed t he ap pl ic ab il it y of th e te rm s, we m ay no t co ns id er th em in

rev ie win g th e su ffi ci en cy of hi s co m pl ai nt

. Rya n v. Rya n , 88 9 F.3 d 49 9, 50 5 (8 th Ci r.

20 18 ). The di st ric t co ur t, m or eo ve r, di d no t co ns id er th os e te rm s whe n it gr an te d th e

m ot io n: In st ead of lo ok in g to th e in te res t pr ov is io ns in th e te rm s Mes se rli pr of fere d,

th e d is tri ct co ur t si m

pl y no ti ced th at a cred it card 's t erm s " al way s i nc lu de in te res t."

W e ex p r e s s n o vi ew on th e pr op rie ty of th at no ti ce. Se e Fed

. R. Evi d. 20 1( b)

. The

no ti ce di d no t he lp Mes se rli in an y ev en t si nc e th e no ti ce ta ke n sa id no t h i n g a b o u t

te rm s au th or iz in g c om

po un d i nt eres t.

Si nc e th e am en de d co m

pl ai nt an d th e docum en ts it ne ces sa ril y em br aces do no t

in di cat e t h e i n t e r e s t rat es th at ap pl y to th e de bt

, we ha ve no oc cas io n to co ns id er

Mes se rli 's arg um en t th at a de bt co ll ect or m ay try to co ll ect co m po un d in te res t (wh ic h

st at e la w do es no t al lo w) wit ho ut m at eri al ly vi ol at in g th e FDCPA so lo ng as th e to ta l

am ou nt of in te res t so ug ht do es no t ex ceed th e m ax im um am ou nt pe rm it te d un de r th e
de bt or 's co nt ract

. Mes se rli co nt en ds th e di st ric t co ur t he ld th at req ue st in g le ss in te res t

th an th e am ou nt owe d do es no t m at eri al ly vi ol at e th e FDCPA, bu t th at is si m pl y no t

co rrec t. Not hi ng in th e di st ri c t c ou rt' s or de rs gr an ti ng th e m ot io n to di sm is s an d

de nyin g Co y ne le av e to fil e a m ot io n to reco ns id er su pp or ts Mes se rli 's rep resen ta ti on

.

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-At or al arg um en t, Mes se rli fu rth er as se rte d th at th e di st ric t co ur t ha d co rrec tl y no te d

th at it s le tt er to Co y ne "was no t a co ll ect io n le tt er , " b u t Mes se rli errs ag ai n: The

di st ric t co ur t d id no t m ak e th at ob se rv at io n, an d it was no t ev en in a po si ti on at t he
pl ead in g st ag e to do so si nc e th at ob se rv at io n wou ld ha ve co nf li ct ed no t on ly wit h th e

al le ga ti on s in th e am en de d co m pl ai nt

, bu t al so wit h th e de cl arat io n pr in te d on th e
le tt er's face th at it "i s fr om a de bt co ll ect or an d i s an att em pt to co ll ect a de bt ."

W e rev ers e th e jud gm en t of th e di st ric t co ur t on ly as to Co y ne 's cl ai m ag ai ns t

Mes se rli th at it vi ol at ed 15 U.S.C. §§ 16 92 e an d 16 92 f whe n it at te m pt ed to co ll ect

,

an d rep res en te d he owe d, co m po un d in te res t on th e d e b t i n vi ol at io n of Mi nn es ot a

la w. W e rem an d t he cas e fo r fu rth er p ro ceed in gs on th at cla im

.

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