Source: https://openjurist.org/115/f3d/892/buckman-v-american-bankers-insurance-company-of-florida
Timestamp: 2019-12-16 04:47:15
Document Index: 613496387

Matched Legal Cases: ['§ 1602', '§ 226', '§ 5', '§ 1692', '§ 1692', '§ 1692', '§ 1692']

115 F3d 892 Buckman v. American Bankers Insurance Company of Florida | OpenJurist
115 F. 3d 892 - Buckman v. American Bankers Insurance Company of Florida
115 F3d 892 Buckman v. American Bankers Insurance Company of Florida
115 F.3d 892
11 Fla. L. Weekly Fed. C 52
Anne S. BUCKMAN, on behalf of herself and all others
AMERICAN BANKERS INSURANCE COMPANY OF FLORIDA, Ace Bonding
No. 96-4124.
The Contingent Promissory Note provides that "[i]t is further agreed and specifically understood between the parties to this Note that there is presently no outstanding loan or debt represented by this Promissory Note," and that it is to secure advances "if and when there is a forfeiture or estreature of the Bond." The Mortgage Deed provides that it is "accepted as collateral for a bail bond." Several months later, Ace informed Plaintiff by letter that Smith had failed to appear for her scheduled court date and that the court had, accordingly, forfeited the bond. The letter also states that the "Surety hereby makes formal demand for payment" and that "Surety intends to pursue any and all remedies the law allows, including but not limited to, executing foreclosure proceedings...."
"Where the district court dismisses the plaintiff's complaint for failure to state a claim, we must determine whether, considering the facts in the light most favorable to the plaintiff, it appears beyond doubt that she can prove no set of facts that would entitle her to relief." Welch v. Laney, 57 F.3d 1004, 1008 (11th Cir.1995) (internal quotations marks and citations omitted).
TILA defines "credit" as "the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment." 15 U.S.C. § 1602(e). See also 12 C.F.R. § 226.2(a)(14). Plaintiff says that her execution of the contingent note and mortgage (as distinct from the bail bond indemnity agreement) constitute the relevant transaction and that the note and mortgage are an extension of "credit" as defined by TILA. Plaintiff further says the fact that there is a contingency to the note is irrelevant because she became legally obligated to ABIC when she executed the documents and, in any event, the contingency has occurred.
Plaintiff cites two district court decisions to support her position that the contingent note and mortgage constitute an extension of credit: Bryson v. Bank of New York, 584 F.Supp. 1306 (S.D.N.Y.1984); and Copley v. Rona Enterprises, Inc., 423 F.Supp. 979 (S.D.Ohio 1976). Both are readily distinguishable. In Bryson, the district court held that the extension of credit through credit cards and a home improvement loan was covered by TILA, although the pertinent bank eventually rejected the consumer's home loan application. In Copley, the district court held that an installment contract to purchase a mobile home on specific credit terms constituted the extension of credit, despite the fact that the agreement was contingent on the seller's approval of financing.
Plaintiff has pointed us to no case in which an analogous transaction has been held to constitute the extension of credit, and we are aware of none. More important, the Official Staff Interpretations to Regulation Z (12 C.F.R. Pt. 226) provide that "[t]he following situations are not considered credit for purposes of the regulation: ... Letters of credit." 12 C.F.R. Pt. 226, Supp. I. Under Plaintiff's theory, because letters of credit require payment on demand upon the existence of certain contingencies (the presentation of certain documents, the performance of a condition precedent), a letter of credit would constitute an extension of credit. See U.C.C. § 5-103(1)(a) (" 'Credit' or 'letter of credit' means an engagement by a bank or other person ... that the issuer will honor drafts or other demands for payment upon compliance with the conditions specified in the credit.") But the Division of Consumer and Community Affairs of the Federal Reserve Board has determined otherwise.
The FDCPA imposes liability on "debt collectors" who fail to comply with its provisions when collecting a "debt." 15 U.S.C. § 1692k. The FDCPA provides that the term "debt collector" does not include "any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity ... concerns a debt which was originated by such person; ..." 15 U.S.C. § 1692a(6)(F)(ii).
In addition to the fact that the indemnity agreement specifically states that Plaintiff is "mak[ing] application to Ace Bonding" and that the bond fee is paid to Ace "in consideration of Second Party [Ace] arranging for execution of this Bail Bond," the complaint alleges that "[t]hese [bail bond] transactions are originated for ABIC by Ace and other bonding companies, ..."
Plaintiff says that Ace is not entitled to the originator exception as it only applies where the lender later sells or assigns the debt, as to a purchaser on the secondary market, but maintains responsibility for its collection. The two published cases interpreting this exception have indicated otherwise. See Holmes v. Telecredit Service Corp., 736 F.Supp. 1289, 1293 (D.Del.1990) ("The original lender is covered by section 1692a(6)(A)'s exception for creditors. If the exception in section 1692a(6)(F)(ii) extended only to original lenders, it would be superfluous. The exception must therefore apply to entities besides the original lender that play a significant role in the transaction from its origination."); Games v. Cavazos, 737 F.Supp. 1368, 1386 (D.Del.1990) ("the exceptions for persons who 'originate' a debt refers to persons other than the original lender"). As Ace, the bail bondsman, played a significant role in originating the bail bond transaction--including the indemnification agreement and contingent note--we hold that it is covered by the originator exception to the FDCPA.2
As we hold that Ace is an "originator" under 15 U.S.C. § 1692a(6)(F)(ii), we do not address Ace's argument that the debt collection was "incidental to a bona fide fiduciary obligation" pursuant to 15 U.S.C. § 1692a(6)(F)(i)