Opinion ID: 572670
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Heading Rank: 3

Heading: issues

Text: 12 Graziano argues that Harrison's demand for payment within ten days, when read in conjunction with the statutory notice that Graziano had thirty days within which to dispute the debt, constituted a breach of section 1692g. 4 The district court was of the view that Harrison's inclusion of these inconsistent recitals violated section 1692e(10), which states that [a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt, and, by way of illustration, specifies, inter alia, [t]he use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer. The district court determined, however, that this violation was without consequence, because Graziano had not alleged a violation of section 1692e(10). The court went on to grant summary judgment to Harrison on the count alleging a violation of section 1692g, reasoning that, regardless of the inclusion of the demand for payment within ten days, the text of the statutory notice was adequate to advise Graziano of his rights under that section. 13 We agree with the district court that there was a violation of section 1692e(10). We feel, however, that the juxtaposition of two inconsistent statements also rendered the statutory notice invalid under section 1692g. Statutory notice under the Act is to be interpreted from the perspective of the least sophisticated debtor. 5 Baker v. G. C. Servs., 677 F.2d 775, 778 (9th Cir.1982). To comply with the terms of the Act, statutory notice must not only explicate a debtor's rights; it must do so effectively. Thus, for example, the notice must be in print sufficiently large to be read, and must be sufficiently prominent to be noticed. See Swanson v. Southern Oregon Credit Serv., 869 F.2d 1222, 1225 (9th Cir.1988). More importantly for present purposes, the notice must not be overshadowed or contradicted by accompanying messages from the debt collector. There is a reasonable probability that the least sophisticated debtor, faced with a demand for payment within ten days and a threat of immediate legal action if payment is not made in that time, would be induced to overlook his statutory right to dispute the debt within thirty days. See id. at 1225-26. A notice of rights, when presented in conjunction with such a contradictory demand, is not effectively communicated to the debtor. We conclude that the statutory notice provided by Harrison failed to meet the terms of section 1692g.
14 According to section 1692g(a)(3), a debt collection notice submitted under the Act must include 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. This statutory language does not expressly require that a debtor's dispute be in writing. 15 Graziano argues that, because the notice that Harrison sent to him required that any dispute of the debt be in writing, the notice failed to comply with the terms of section 1692g(a)(3). He notes that three courts that have addressed the issue have concluded that, under section 1692g(a)(3), a debtor may dispute a debt, with the consequence that the debt collector may not presume the debt to be valid, without submitting the dispute in writing. See Bailey v. TRW Receivables Mgmt. Servs., Inc., Civ. No. 90-192, Order at 5-6 (D.Haw. Aug. 16, 1990); Young v. Credit Bureau of Lockport, Civ. No. 86-1121, Memorandum and Order at 3-4, 1989 WL 79054 (W.D.N.Y. July 14, 1989); Harvey v. United Adjusters, 509 F.Supp. 1218, 1221 (D.Or.1981). 16 Harrison counters that, while section 1692g(a)(3) does not itself require that a dispute be in writing, the following two provisions of the Act--section 1692g(a)(4), which allows the debtor to obtain from the debt collector verification of the debt, 6 and section 1692g(a)(5), which allows the debtor to obtain the name and address of the original creditor 7 --expressly provide that the debtor communicate with the debt collector in writing. He argues that the requirement of a writing in subsections (a)(4) and (a)(5) of section 1692g reveals a congressional intent that disputes be in writing. 17 The opinions relied on by Graziano have reasoned that the statutory scheme teaches a different lesson. Since subsections (a)(4) and (a)(5) expressly call for written communications, the absence of such a requirement in subsection (a)(3) is strong evidence--so the opinions argue--that Congress advertently omitted an analogous requirement in subsection (a)(3). See Bailey at 5; Young at 3. Nevertheless, we are of the view that, given the entire structure of section 1692g, subsection (a)(3) must be read to require that a dispute, to be effective, must be in writing. 18 Subsection (a)(3) states that unless the debtor disputes the debt within thirty days of receipt of notice, the debt collector will assume the debt to be valid. 8 Subsection (a)(4) states that if the debtor disputes the debt in writing within thirty days, the debt collector must obtain verification of the debt and must send the debtor a copy of the verification. 9 Subsection (a)(5) states that, if the debtor makes a written request, the debt collector must provide the name and address of the original creditor. 10 Subsection (b) states that if the debtor disputes the debt in writing within thirty days, the debt collector must cease collection efforts until the debt collector has verified the debt. 11 Adopting Graziano's reading of the statute would thus create a situation in which, upon the debtor's non-written dispute, the debt collector would be without any statutory ground for assuming that the debt was valid, but nevertheless would not be required to verify the debt or to advise the debtor of the identity of the original creditor and would be permitted to continue debt collection efforts. We see no reason to attribute to Congress an intent to create so incoherent a system. We also note that there are strong reasons to prefer that a dispute of a debt collection be in writing: a writing creates a lasting record of the fact that the debt has been disputed, and thus avoids a source of potential conflicts. We therefore conclude that subsection (a)(3), like subsections (a)(4) and (a)(5), contemplates that any dispute, to be effective, must be in writing. The district court was not in error in determining that the requirement of a writing did not render the statutory notice invalid.
19 Graziano argues that Harrison failed to provide adequate verification of the debts that Harrison sought to collect. The district court concluded that the materials provided to Graziano were sufficient to verify the debts. We agree with the district court. The computer printouts provided to Graziano were sufficient to inform him of the amounts of his debts, the services provided, and the dates on which the debts were incurred. Summary judgment was appropriate for Harrison on this issue. 20
21 After Graziano had retained counsel for the purpose of helping him to dispute the initial debt that Harrison tried to collect, Harrison communicated directly with Graziano concerning two additional debts. Graziano argues that this conduct violated section 1692c(a)(2), which prohibits a debt collector from communicating directly with a debtor who is represented by counsel. 12 However, on the record before the district court, there was no basis for a finding that Harrison breached the statutory mandate. Section 1692c(a)(2) precludes communication by a debt collector with a debtor where the debt collector knows that the debtor is represented by counsel with respect to such debt. At the time Harrison communicated with Graziano concerning the two additional debts, Harrison had not been informed that Graziano was represented by counsel with respect to those debts. The district court's grant of summary judgment on this claim was proper.
22 We have concluded that, on the undisputed facts, Graziano has demonstrated two violations of the Act: the threat to take legal action within ten days represented an action that legally could not be taken or that was not intended to be taken in violation of section 1692e(5), and also rendered the statutory notice invalid under section 1692g. Because the district court premised its award of nominal statutory damages on its conclusion that Graziano had demonstrated only one violation of the Act, we vacate the damages award and remand for reconsideration in accordance with the standards set forth in section 1692k(b)(1).
23 Section 1692k(a)(3) allows a prevailing plaintiff to recover the costs of the action, together with a reasonable attorney's fee as determined by the court. The district court declined to award an attorney's fee, stating that Graziano does not appear to have been subjected to any egregious conduct which calls for a special, discretionary remedy. 763 F.Supp. at 1282. Because we have determined that Graziano has demonstrated two violations of the Act, rather than the one identified by the district court, we vacate the denial of attorney's fees and remand for reconsideration. 24 In so remanding, we think it may be helpful to address the standards to be applied in determining an appropriate attorney's fee. Section 1692k(a) sets forth the three standard components of liability for violations of the Act: it states that a debt collector who violates the act is liable for actual damages, statutory damages as determined by the court, and a reasonable attorney's fee. Given the structure of the section, attorney's fees should not be construed as a special or discretionary remedy; rather, the Act mandates an award of attorney's fees as a means of fulfilling Congress's intent that the Act should be enforced by debtors acting as private attorneys general. See de Jesus v. Banco Popular de Puerto Rico, 918 F.2d 232, 235 (1st Cir.1990). Indeed, several courts have required an award of attorney's fees even where violations were so minimal that statutory damages were not warranted. See Pipiles v. Credit Bureau of Lockport, 886 F.2d 22, 28 (2d Cir.1989); Emanuel v. American Credit Exchange, 870 F.2d 805, 809 (2d Cir.1989); cf. de Jesus, 918 F.2d at 233-34 (construing the parallel provision of the Truth in Lending Act to mandate a fee award to a prevailing plaintiff). 25 The conclusion that an award of attorney's fees is mandated is further supported by section 1692k(b). That section specifies that, in determining the amount of statutory damages to be awarded, the court must consider, among other relevant factors, the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional. Cases interpreting this section have made clear that in the instance of a single, trivial, and unintentional violation of the Act, it is within the court's discretion to decline to award statutory damages at all. See, e.g., Pipiles, 886 F.2d at 28; Emanuel, 870 F.2d at 809. However, section 1692k contains no parallel language directing the court to consider particular factors in determining a reasonable attorney's fee. In light of the explicit listing of factors to be considered in the award of statutory damages, and the absence of such a list for attorney's fees, we think it inappropriate to read such factors into the word reasonable in section 1692k(a)(3). 26 We conclude that, in a typical case under the Act, the court should determine what constitutes a reasonable fee in accordance with the substantial Supreme Court precedent pertaining to the calculation of reasonable attorney's fees. See Texas State Teachers Assoc. v. Garland Indep. School Dist., 489 U.S. 782, 109 S.Ct. 1486, 1492, 103 L.Ed.2d 866 (1989); Hensley v. Eckerhart, 461 U.S. 424, 433-37, 103 S.Ct. 1933, 1939-41, 76 L.Ed.2d 40 (1983). Among the factors the court may consider in determining the appropriate amount of the fee is the degree of success obtained by the prevailing plaintiff; if the plaintiff has only partial or limited success, a reduction in the award of attorney's fees may be appropriate. See Hensley, 461 U.S. at 434-37, 103 S.Ct. at 1939-41. The court should also assess the reasonableness of the hours expended by counsel for the prevailing party. See Id. at 433-34, 103 S.Ct. at 1939-40. Only in unusual circumstances, however, may the court decline to award a fee; in such circumstances, it should formulate particularized findings of fact and conclusions of law explaining its decision. 13 See de Jesus, 918 F.2d at 234 & n. 4.