Source: https://askalawyer.com/debt-collections-case-law-cindy-ann-kimber-vs-federal-financial-corporation-united-states-court-of-appeals/
Timestamp: 2019-10-23 21:58:54
Document Index: 315403403

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

Debt & Collections Case Law Cindy Ann KIMBER vs. FEDERAL FINANCIAL CORPORATION – United States Court of Appeals | Ask A Lawyer
Debt & Collections Case Law Cindy Ann KIMBER vs. FEDERAL FINANCIAL CORPORATION – United States Court of Appeals
William Z. Messer, Legal Services Corp. of Alabama, Phenix City, Ala., and James Opp Smith, and David S. Yen, Legal Services Corp. of Alabama, Opelika, Ala., for plaintiff.
In this class-action lawsuit, plaintiff Cindy Ann Kimber charges defendant Federal Financial Corporation (FFC) with violating the Fair Debt Collection Practices Act, 15 U.S.C.A. §§ 1692-1692o, in the following ways: by attempting to collect debts from her and other Alabama residents without first giving the debtors the notice required by the Act; and by threatening to sue, and suing, Kimber and others to collect on some of these debts even though, as far as FFC knew, it was not entitled to recover in the suits because the debts were stale. This court has jurisdiction over this case pursuant to 15 U.S.C.A. § 1692k(d). This lawsuit is now before the court on Kimber’s and FFC’s cross-motions for summary judgment on the sole issue of FFC’s liability to Kimber. For reasons that follow, the court concludes that Kimber’s motion should be granted in part and denied in part, and that FFC’s motion should be denied in full.
Congress passed the Fair Debt Collection Practices Act for the purpose of eliminating “the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.” 15 U.S.C.A. § 1692(a). As previously stated, Kimber maintains that FFC has violated this Act. First, she claims that FFC has threatened to file, and has filed, legal proceedings against her to collect on a stale debt, in violation §§ 1692e and 1692f; and, second, she charges that the corporation has attempted to collect a debt from her without first giving her the notice required under the Act, in violation of § 1692g(a).
FFC contends that it does not fall within the Act’s definition of debt collector, and, to support this contention, the corporation makes essentially two interrelated arguments. First, FFC observes that the Act offers a general definition of debt collector as any person whose “principal purpose … 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.A. § 1692a(6).[1] FFC’s first argument is that § 1692a(6) limits a debt collector to one who collects or attempts to collect debts “owed or due another,” and that, because FFC does not collect debts for another but for itself, it does not fall within the general definition.
Similarly, the definition given for creditor in the Act does not on first blush offer clear guidance on whether FFC falls within the assignee exception to the definition. The exception clearly appears to apply to a person to whom a debt in default has been assigned. Since an assignment is generally defined as the “transfer by a party of all of its rights to some kind of property, usually intangible,” Black’s Law Dictionary, 5th Ed., p. 109, any collection of a debt by the assignee would generally be for itself. And yet, the assignee exception refers to the assignee’s collection as being for another.
S. Report No. 95-382, 95th Cong., 1st Sess., reprinted in 1977 U.S.Code Cong. & Admin.News 1695, 1697 (emphasis added). The Committee explained that it limited the Act’s coverage to third-party collectors of past due debts because,
Having found that FFC is covered by the Fair Debt Collection Practices Act, the court now turns to Kimber’s claims that the corporation violated the Act. In the Act, Congress set out several specific practices as impermissible, as well as generally proscribing harassing, oppressive or abusive conduct, 15 U.S.C.A. § 1692d, false, deceptive, or misleading representations, § 1692e, and unfair or unconscionable collection methods, § 1692f. To help ensure the most complete protection possible, determinations as to whether conduct violates the Act are made in keeping with the standard of the “least sophisticated consumer.” Jeter v. Credit Bureau, Inc., 760 F.2d 1168, 1172-75, 1179 (11th Cir.1985). Thus, in applying the law to this case, the court must decide whether FFC’s actions were unfair or unconscionable, or whether the least sophisticated of consumers would have been deceived, misled, or harassed by such practices.
FFC asserts, nevertheless, that because a statute of limitations is an affirmative defense which is waived if not raised, a plaintiff may not be penalized for knowingly filing a time-barred suit; indeed, according to FFC, its attorney was ethically authorized, if not bound, to pursue such a suit in light of the defensive posture of the limitations statute. Although the staleness issue has not been previously considered in relation to unfairness under the Fair Debt Collection Practices Act, the propriety of bringing a lawsuit to which there appears to exist a complete defense, without first making a reasonable inquiry as to whether the defense is in fact not complete, has been discredited elsewhere. Rule 11 of the Federal Rules of Civil Procedure demands that an attorney conduct a reasonable investigation into whether a claim is well grounded in law and fact, and not inspired by an improper purpose, before signing a pleading. Sanctions against attorney and client under the rule have been imposed where the attorney knew or should have known a claim was time-barred. Steinle v. Warren, 765 F.2d 95 (7th Cir.1985); Van Berkel v. Fox Farm and Road Machinery, 581 F.Supp. 1248 (D.Minn.1984). Further, the fact that a defense is affirmative has not relieved counsel of their Rule 11 responsibilities in other contexts. See, e.g., Southern Leasing Partners, Ltd. v. Bludworth, 109 F.R.D. 643 (S.D.Miss.1986) (suit barred by res judicata); Hasty v. Paccar, Inc., 583 F.Supp. 1577 (E.D.Mo.1984) (lack of personal jurisdiction.) In view of these holdings, FFC’s argument that its attorney was ethically authorized to pursue the collections in case the debtors failed to raise the statute of limitations defense lacks authority.
Kimber claims that when viewed through the eyes of the least sophisticated consumer, FFC’s practices were false, deceptive, and misleading, in violation of the above provisions. She alleges that by threatening her with a lawsuit which the corporation knew or reasonably should have known was time-barred, the corporation falsely represented the legal status of her debt, misled her as to what action might be legally taken against her, and deceptively used this threat in attempting to collect on her alleged debt. In so doing, Kimber argues, FFC preyed upon the ignorance of an unsophisticated consumer. Threats to sue communicated through an attorney would only naturally represent to the least sophisticated consumer that a lawsuit was viable, even when in fact it was not, Kimber contends.
Lastly, Kimber charges that FFC violated § 1692g(a) of the Fair Debt Collection Practices Act by failing to notify her of, among other things, her right to dispute the validity of the debt at issue and to obtain verification thereof. This section requires that within five days of a debt collector’s initial contact with a debtor, the debt collector must send written notice to the debtor identifying the amount of the debt and the original creditor’s name, and providing a statement of the debtor’s rights to challenge and request verification of the debt.[2] The evidence is disputed as to whether FFC provided this notice to Kimber as required. Therefore, neither Kimber nor FFC is entitled to summary judgment on this claim.
m8tech	2017-02-12T13:38:20+00:00