Source: http://updates.mwbllp.com/2014_07_20_archive.html
Timestamp: 2019-05-23 07:18:19
Document Index: 228475740

Matched Legal Cases: ['§ 227', '§ 305', '§ 292', '§ 305', '§ 1681', '§ 1681', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692']

Financial Services Law Developments: 7/20/14 - 7/27/14
FYI: SD Texas Rules in TCPA Cell Phone Case that Self-Serving Testimony by Borrower Is Not Sufficient to Oppose MSJ on Consent Issue
The U.S. District Court for the Southern District of Texas recently granted summary judgment in favor of a lender (“Lender”) and against a borrower (“Borrower”) as to the Borrower’s claims under the federal Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. (“TCPA”), and the Texas Telephone Consumer Protection Act, Tex. Bus. And Comm. Code § 305.053 (“Texas TCPA”).
In so ruling, the Court held that the Borrower provided his prior express consent to be called on his cell phone using an automatic telephone dialing system by including his cell phone number on a credit application, and that this prior express consent was never revoked.
The Borrower argued that he revoked consent, but the Court rejected the Borrower’s self-serving testimony, as the Lender’s records showed that no such revocation had occurred. Additionally, the Court held that if there was no TCPA violation, there could be no Texas TCPA violation.
1. The Lender was entitled to summary judgment as to the Borrower’s Texas Debt Collection Act, Tex. Fin. Code § 292.001, et seq. (“TDCA”) claim because the Lender’s attempts to communicate were not harassing, abusive or unconscionable;
2. The Lender did not intentionally intrude upon the Borrower’s seclusion because the Lender had a bona fide business purpose for its administration of the loan and communications with the Borrower; and
3. Summary judgment in favor of the Lender as to the Lender’s breach of contract claim was appropriate, because the Lender performed its obligations under the contract, and the Lender suffered damages in the amount of the unpaid balance on the loan.
A copy of the Court’s ruling is attached.
The Borrower applied for an auto loan with the Lender for the purchase of a vehicle. On his credit application, the Borrower provided his cell phone number. Subsequently, the Borrower and Lender entered into a retail installment contract (“Contract”) to finance the purchase of the vehicle. In October of 2009, the Borrower defaulted on the loan. The Lender provided a total of eight months of payment deferments, waived certain fees and extended payment due dates. The Borrower failed to make any payment after December 2012.
The Lender placed calls to the Borrower’s cell phone. Over 99% of the calls placed by the Lender to the Borrower went unanswered or otherwise did not result in a conversation. The Borrower placed almost 50 calls to the Lender.
The Lender’s records showed that Borrower never communicated any written or oral request for the Lender to stop calling his cell phone. Instead, the Lender’s records showed that he repeatedly verified that his cell phone number was an acceptable contact number.
Based upon this record, the Court found that the Lender’s actions were consistent with “industry standards and practices under the circumstances” and demonstrated intent to provide the Borrower with an opportunity to become current on the loan. Additionally, the Court found that the Lender did not act with any intent to harass or abuse the Borrower. It never used any profanity or abusive or harassing language towards the Borrower and only communicated with the Borrower for the purpose of obtaining the payments due.
The Court further concluded that by providing his cell phone number in his initial credit application, the Borrower provided prior express consent to be called at that number. In Re Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 23 F.C.C.R. 559, 564 (2008); Cunningham v. Credit Mgmt., L.P., 3:09-CV-1497-GB(BF), 2010 WL 3791104 at *4-5 (N.D. Tex. Aug. 30, 2010) report and recommendation adopted, 3:09-CV-1497-G(BF), 2010 WL 3791049 (N.D. Tex. Sept. 27, 2010). The Court further found that the Borrower never “effectively communicated any revocation of his prior express consent to be called on his cell phone using an automated telephone dialing system.”
Additionally, the Court found Borrower’s “self-serving and uncorroborated contention that he revoked consent is contradicted by the overwhelming evidence in the record.” Because the Borrower failed to raise a genuine dispute of material fact as to whether he revoked prior express consent, the Lender did not violate the TCPA’s restriction on placing calls to the Borrower’s cell phone using an automatic telephone dialing system without his prior express consent.
The Court next addressed the Borrower’s Texas TCPA claim. Because the Lender did not violate the TCPA, it did not violate state law claims arising under the Texas TCPA. As you may recall, the Texas TCPA proscribes only that conduct which is also prohibited by the TCPA. If there is no violation of the TCPA, there is no violation of the Texas TCPA. Tex. Bus. & Com. Code Ann. § 305.053; Shields v. Americor Lending Grp., Inc., 01-06-00475-CV, 2007 WL 2005079 at *3 n.8 (Tex. App. July 12, 2007).
The Court also found that the Lender could not have violated the TDCA because the Lender’s communications did not constitute harassment. The volume or number of calls alone was insufficient to establish intent to harass, and the records did not show any intent to harass. Accordingly, the Lender’s administration of the loan and interactions with the Borrower were not harassing, abusive, or unconscionable under the TDCA.
Next, the Court held that the Lender did not intentionally intrude upon the Borrower’s seclusion that would be highly offensive to a reasonable person. As you may recall, in order to be actionable, the intrusion must be highly offensive, meaning that it must be unreasonable, unjustified, or unwarranted. The Court concluded that the Lender had a bona fide business purpose for its administration of the loan and communications with the Borrower.
Additionally, the Court concluded that the Lender had a permissible purpose for obtaining the Borrower’s credit report. As you may recall, under the federal Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. (“FCRA”), one permissible purpose for obtaining credit information is in connection with a credit transaction. A business may permissibly obtain credit information when it obtains such information in connection with a business transaction that is initiated by the consumer or to review an account to determine whether the consumer continues to meet the terms of the contract. 15 U.S.C. § 1681(a)(3)(A), (F). Accordingly, the Court granted summary judgment in the Lender’s favor as to the invasion of privacy claim.
Finally, the Court concluded that the Lender was entitled to damages from the Borrower for its breach of contract counterclaims because the Lender performed its obligations under the contract and it suffered damages as a result of the Borrower’s breach in the amount of the unpaid balance on the loan.
FYI: 11th Cir Rules Statement in 1692g Notice That "Creditor" Would Assume Debt Valid Absent Dispute Did Not Violate FDCPA
The U.S. Court of Appeals for the Eleventh Circuit recently held that a letter to a borrower stating that the “creditor” would assume the validity of a debt (if not disputed within thirty days) – rather than the “debt collector” -- was not misleading, did not violate the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. (“FDCPA”).
According to the Court, even if borrowers would be deterred from disputing the debt by the language of the letter, they would have been so deterred if the statutory language were used.
A copy of the opinion is available at: http://media.ca11.uscourts.gov/opinions/pub/files/201312450.pdf
Borrower received a letter (the “Letter”) from her lender’s law firm (“Law Firm”), which indicated that it was a communication for the purpose of collecting a debt. The Letter stated that Law Firm represented the interests of the lender and that Borrower could dispute the validity of the debt within thirty days of receipt of receipt of the Letter.
Although the Letter included several indications that a lawsuit was forthcoming, it was not accompanied by the service of any papers initiating a lawsuit. Nor did it provide any information pertaining to a legal matter, other than referring to the creditor and Borrower as plaintiff and defendant, respectively, in the subject line. Also, the Letter stated, “[e]ven though you are required to file a response to the lawsuit prior to the thirty (30) days, your validation rights, as set forth in this notice, shall not expire for thirty (30) days.” Nevertheless, a foreclosure action was filed three days later.
Borrower brought a class action suit under 15 U.S.C. § 1692e, which prohibits debt collectors from using false or deceptive means to collect a debt. Borrower claimed that the Letter was inconsistent with those disclosure required for an “initial communication” under 15 U.S.C. § 1692g(a)(3). Specifically, the Letter stated that failure to dispute within thirty days would result in the debt being assumed valid by the creditor, whereas the FDCPA requires a statement that the debt collector – not the creditor – will assume the debt’s validity in the case of a failure to dispute within thirty days.
However, the district court dismissed the action, determining that the Letter was not an “initial communication” as defined by the FDCPA because it concerned a foreclosure action and fell into the exception for formal pleadings in a civil action. Alternatively, the district court determined that, even if the Letter were an initial communication, the technical violation of the statute would not mislead Borrower regarding the nature of her rights. The present appeal followed.
As you may recall, the 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. Also, the FDCPA requires a debt collector to send the debtor certain required information with or within 5 days of the initial communications. However, the FDCPA expressly excludes from the category of “initial communication” any communication “in the form of a formal pleading in a civil action.” 15 U.S.C. § 1692g(d).
Along with the amount of the debt, the name of the creditor to whom the debt is owed, and information about disputing the debt, see 15 U.S.C. § 1692g(a), the debt collector must provide “a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector.” 15 U.S.C. § 1692g(a)(3).
Considering the “initial communication” issue first, the Eleventh Circuit held that the Letter was an attempt to collect a debt, and that the exception for “formal pleadings” does not apply. Turning the language of the FDCPA, the Court noted that, although the FDCPA provides no definition of an “initial communication,” it does define “communication” broadly. See 15 U.S.C. § 1692a(2) (“[T]he conveying of information regarding a debt directly or indirectly to any person through any medium.”). Moreover, the Court observed that “[t]he fact that the letter and documents relate to the enforcement of a security interest does not prevent them from also relating to the collection of a debt within the meaning of § 1692e.” Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1218 (11th Cir. 2012).
Analyzing the language of the Letter, the Court was persuaded that the Letter was not a formal pleading. Among other facts cited as supporting the Court’s position was that the Letter stated it was for the purpose of collecting a debt, referring to such collection efforts; stated the amount of the debt and indicated that it must be paid in certified funds; was on the Law Firm’s letterhead, not any court’s; and gave the name of the creditor where it discussed payments. Further, the only references to a lawsuit were “fleeting.”
However, as to whether the Letter violated the FDCPA, the Eleventh Circuit held that “substitut[ing] ‘creditor’ for ‘debt collector’ when informing the consumer of who would assume that the debt was valid if the debt was not contested within thirty days” did not violate 15 U.S.C. § 1692e.
Notably, the Court assumed, without deciding, that using such language might deter the “least sophisticated consumer. . . from pursuing his or her rights to dispute the debt. . . if he or she failed to dispute the debt within the thirty-day period.” See Slip. Op. at p. 8-9; Iyamu v. Clarfield, Okon, Salomone, & Pincus, P.L., 950 F. Supp. 2d 1271, 1274 (S.D. Fla. 2013). Nevertheless, “because the debt collector is obviously the agent of the creditor, the same implication arises from the notice required by § 1692g(a)(3) as from [Law Firm’s] erroneous statement. In other words, the least sophisticated consumer would think that if the debt collector was entitled to assume that the debt is valid, the creditor would have the same right.” Slip. Op. at p. 9. Thus, as the same implication arose under either the language of the FDCPA or the language of the Letter, the Letter itself did not mislead Borrower.
Accordingly, the Eleventh Circuit affirmed the dismissal of Borrower’s class action lawsuit.
Posted by Ralph T. Wutscher at 10:19 PM