Source: https://law.justia.com/cases/federal/appellate-courts/F3/197/1170/546438/
Timestamp: 2019-03-25 23:46:52
Document Index: 706987643

Matched Legal Cases: ['§1692', '§ 1692', '§803', '§1345', '§1345', '§ 1345']

Michael G. Schroyer; Gail R. Schroyer, Plaintiffs-appellants, v. Kenneth P. Frankel; Gerald M. Smith Company, L.p.a., D/b/a Smith & Smith, Defendants-appellees, 197 F.3d 1170 (6th Cir. 1999) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Sixth Circuit › 1999 › Michael G. Schroyer; Gail R. Schroyer, Plaintiffs-appellants, v. Kenneth P. Frankel; Gerald M. Smith...
Michael G. Schroyer; Gail R. Schroyer, Plaintiffs-appellants, v. Kenneth P. Frankel; Gerald M. Smith Company, L.p.a., D/b/a Smith & Smith, Defendants-appellees, 197 F.3d 1170 (6th Cir. 1999)
US Court of Appeals for the Sixth Circuit - 197 F.3d 1170 (6th Cir. 1999)
Submitted: September 24, 1999Decided and Filed: December 2, 1999
Appeal from the United States District Court for the Northern District of Ohio at Cleveland, Nos. 97-01627; 97-01628--Jack B. Streepy, Magistrate Judge. [Copyrighted Material Omitted]
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 (1994). The statute defines "debt collector" as "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6) (1994). Construing these provisions, the Supreme Court has held that attorneys can qualify as "debt collectors" under the FDCPA, and held that FDCPA requirements apply to "attorneys who 'regularly' engage in consumer-debt-collection activity, even when that activity consists of litigation." Heintz v. Jenkins, 514 U.S. 291, 298 (1995). This Court has acknowledged that the FDCPA can apply to attorneys who file lawsuits on behalf of clients to collect debts allegedly owed by consumers, see Wadlington v. Credit Acceptance Corp., 76 F.3d 103,106 (6th Cir. 1996), but it has not fully analyzed what constitutes "regularly" collecting or attempting to collect debts in the context of an attorney or law firm. In ruling against Plaintiffs, the district court found that Defendants were not "debt collectors" under the FDCPA because Plaintiffs failed to meet their burden of proving that Defendants "regularly" engage in debt collection activities. We apply traditional principles of statutory construction to determine that the district court ruled correctly in this matter.
When interpreting the FDCPA, we begin with the language of the statute itself, see Consumer Prod. Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980), since the intent of Congress is "best determined by the statutory language it chooses." Sedima, S.P.R.L. v. Imrex, 473 U.S. 479, 495 n.13 (1985). In so doing, this Court must consider the language and design of the statute as a whole as well as the specific provision at issue. See K-Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291 (1988). The term "regularly" means " [a]t fixed and certain intervals, regular in point of time. In accordance with some consistent or periodical rule of practice." Black's Law Dictionary 1286 (6th ed. 1990). The term "regular" means " [u]sual, customary, normal or general . . . . Antonym of 'casual' or 'occasional.'" Id. at 1285. These definitions suggest that an individual or entity must have more than an "occasional" involvement with debt collection activities to qualify as a "debt collector" under the FDCPA. See Mertes v. Devitt, 734 F. Supp. 872, 874-75 (W.D. Wis. 1990); see also Nance v. Petty, Livingston, Dawson & Devening, 881 F. Supp. 223, 225 (W.D. Va. 1994).
Ordinary interpretations of the words "regular" and "regularly" fail to delineate the amount of debt collection activity required for this Court to find an attorney a "debt collector" under the FDCPA. See White v. Simonson & Cohen, P.C., 23 F. Supp. 2d 273, 278 (E.D.N.Y. 1998). When the language of a provision is ambiguous, we look to the legislative history of the statute in question to ascertain its confines. See Blum v. Stenson, 465 U.S. 886, 896 (1984). In its enactment of the FDCPA, Congress intended that " [t]he requirement that debt collection be done 'regularly' would exclude a person who collects a debt for another in an isolated instance, but would include those who collect for others in the regular course of business." S. Rep. No. 95-382, reprinted in 1977 U.S.C.C.A.N. 1695, 1697-98. Assuming "that attorneys were only incidentally involved in debt collection activities," H.R. Rep. No. 99-405, reprinted in 1986 U.S.C.C.A.N. 1752, 1759, Congress originally retained in the statute an exception for attorneys collecting debts on behalf of clients. See Fair Debt Collection Practices Act of 1977, Pub. L. No. 95-109, §803, 91 Stat. 874 (1977).
As a preliminary matter, we observe that the question of whether the defendant "regularly" collected debts was not actually before the Crossley court.1 See White, 23 F. Supp. 2d at 277. Setting that aside, the legislative history hardly makes clear that attorneys who collect debts occasionally and small firms that collect debts incidentally to their general law practices are "debt collectors" under the FDCPA.2 The House Report accompanying the 1986 amendment to the FDCPA explained that Congress revoked the attorney exemption because its assumption that attorneys were only incidentally involved in debt collection no longer rang true, stating: " [i]n recent years, a large number of law firms have gone into specialized debt collection, and many of these firms use persons full time to collect debts. Repeal of the exemption will require these firms to comply with the same standards of conduct as lay debt collection firms." H.R. Rep. No. 99-405, reprinted in 1986 U.S.C.C.A.N. 1752, 1759. Elsewhere the House Report expresses its concern about the entry of attorneys into the "debt collection industry," and "the proliferation of attorney debt-collection firms." Id. at 1754, 1756. Moreover, the House Report repeatedlyidentifies attorneys "in the business of" collecting debts as the target of its legislation.(3 See id. at 1753, 1754.
Drawing from this legislative history, we believe it reveals that for a court to find that an attorney or law firm "regularly" collects debts for purposes of the FDCPA, a plaintiff must show that the attorney or law firm collects debts as a matter of course for its clients or for some clients, or collects debts as a substantial, but not principal, part of his or its general law practice. Such an interpretation actuates the apparent purpose of Congress in creating attorney liability under the FDCPA: " [w]hile attorneys who are considered competitors of traditional debt collection companies should be covered under the Act, a firm whose debt collection activity does not approximate that of a traditional collection agency should not be suable under the act." White, 23 F. Supp. 2d at 276. In identifying such attorneys, other courts have relied upon a variety of factors, including the volume of the attorney's collection activities, the frequent use of a particular debt collection document or letter, and whether there exists a steady relationship between the attorney and the collection agency or creditor he represented. See, e.g., Cacace v. Lucas, 775 F. Supp. 502, 504 (D. Conn. 1990). Courts have considered what portion of the overall caseload debt collection cases constitute, and what percentage of revenues derive from debt collection activities. See, e.g., Von Schmidt v. Kratter, 9 F. Supp. 2d 100, 102 (D. Conn. 1997); Nance, 881 F. Supp. at 224. Some have maintained that even where debt collection takes up a minor portion of a law practice, "debt collector" liability may lie where the defendant has an "ongoing relationship" with a client whose activities substantially involve debt collection. See Stojanovski, 783 F. Supp. at 322.
The OCSPA provides that " [n]o supplier shall commit an unfair or deceptive act or practice in connection with a consumer transaction. Such an unfair or deceptive act or practice by a supplier violates this section whether it occurs before, during, or after the transaction." Ohio Rev. Code §1345.02(A) (Banks-Baldwin 1994). The statute further defines a "consumer transaction" to include a transfer of a service "to an individual for purposes that are primarily personal, family, or household," Ohio Rev. Code §1345.01(A) (Banks-Baldwin 1994), and a "supplier" to include any "person engaged in the business of effecting or soliciting consumer transactions, whether or not he deals directly with the consumer." Ohio Rev. Code § 1345.01(B) (Banks-Baldwin 1994). Ohio courts have read these provisions to hold that the collection of debts associated with consumer transactions, including those involving repairs to realty, falls within the purview of the OCSPA because such debt collection covers acts that occur before, during, or after the transaction. See Broadnax v. Greene Credit Serv., 694 N.E.2d 167, 174 (Ohio Ct. App. 1997); Celebrezze v. United Research, Inc., 482 N.E.2d 1260, 1262 (Ohio Ct. App. 1984); see also Keiber v. Spicer Constr. Co., 619 N.E.2d 1105, 1109 (Ohio Ct. App. 1993).