Dorothy Allen v. LaSalle Bank , 629 F.3d 364 ( 2011 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
________
No. 09-1466
________
DOROTHY RHUE ALLEN,
by her Attorney in fact, James Martin,
Individually and as a class representative on behalf
of others similarly situated,
Appellant
v.
LASALLE BANK, N.A;
CENLAR FEDERAL SAVINGS BANK FSB;
FEIN, SUCH, KAHN AND SHEPARD, PC;
JOHN DOE SERVICERS 1-100;
JOHN DOE LAW FIRMS 1-100
________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 3-08-cv-02240)
District Judge: Honorable Anne E. Thompson
________
Argued September 14, 2010
Before: SLOVITER, BARRY, and SMITH
Circuit Judges
(Filed: January 12, 2011)
________
Lewis G. Adler (Argued)
Woodbury, N.J. 08096
Roger C. Mattson
Woodbury, N.J. 08096
Attorneys for Appellant
Andrew C. Sayles (Argued)
Gregory E. Peterson
Connell Foley
Roseland, N.J. 08068
Attorneys for Appellee Fein, Such, Kahn and Shepard,
P.C.
Daniel C. Green
Vedder Price
New York, N.Y. 10019
Chad A. Schiefelbein (Argued)
Vedder Price
Chicago, IL 60601
Attorneys for Appellee LaSalle Bank
Gregory A. Lomax
Christopher L. Soriano
Morgan J. Zucker
Duane Morris
Cherry Hill, N.J. 08003
Attorneys for Appellee Cenlar Federal Savings Bank
_______
OPINION OF THE COURT
_______
SLOVITER, Circuit Judge.
2
This appeal presents the question whether a
communication from a debt collector to a consumer‟s
attorney is actionable under the Federal Debt Collection
Practices Act (“FDCPA”), 15 U.S.C. § 1692f(1).
I.
Factual and Procedural History
In 1976, Dorothy Rhue Allen purchased her home with
a 30-year mortgage. After Allen failed to make the last
payment due, she was declared in default. On May 7, 2007,
Fein, Such, Kahn & Shepard, PC (“FSKS”), a law firm,
brought a mortgage foreclosure action against Allen on behalf
of LaSalle Bank. 1
At the request of Allen‟s attorney, FSKS sent a letter
to Allen‟s attorney on June 7, 2007 that set forth a payoff
quote for the principal balance remaining on the loan and
other charges due to the servicer of Allen‟s loan, Cenlar
Federal Savings Bank (“Cenlar”), as well as charges for
FSKS‟s attorney fees and costs. The same day, FSKS sent a
second letter to Allen‟s attorney itemizing the attorney fees
and costs referred to in its previous letter. Less than three
weeks later, Allen filed a class action counterclaim and third
party complaint in the foreclosure action, asserting that
FSKS‟s response violated the FDCPA and state law. LaSalle
and FSKS then released the mortgage and moved to dismiss
the foreclosure action, after which the New Jersey Superior
Court dismissed Allen‟s claims without prejudice.
Some time thereafter, Allen filed a class action against
FSKS, LaSalle, and Cenlar in the United States District Court
1
Although Allen alleged in her Complaint that LaSalle
Bank was her mortgage lender at the time of her default, she
also asserted that LaSalle took assignment of Allen‟s
mortgage from Security Pacific National Bank on June 12,
2007, after FSKS filed the mortgage foreclosure action.
3
for the District of New Jersey. In the Complaint, Allen
alleged that FSKS and LaSalle violated the FDCPA and state
law, and that Cenlar also violated state law. For example,
Allen alleged that FSKS demanded: $910 in attorney fees
when court rule permits only $15.43, $335 for searches when
court rule permits only $75, $160 for recording fees when the
actual fee was only $60, and $475 for service of process when
statute and court rule limit reimbursement to $175. Although
she made other specific and general FDCPA allegations in her
Complaint, Allen conceded at oral argument that her FDCPA
claims were predicated only upon alleged violations of 15
U.S.C. § 1692f(1).
FSKS moved to dismiss the complaint pursuant to
Federal Rule of Civil Procedure 12(b)(6), contending that
Allen had failed to state a claim upo n which relief could be
granted. FSKS asserted that a communication from a debt
collector to a consumer‟s attorney is not covered by the
FDCPA. 2
The District Court noted that the courts of appeals are
divided on this issue. The Fourth Circuit has held that a
communication with a debtor‟s attorney is to be treated as an
indirect communication with the debtor and therefore
actionable. Sayyed v. Wolfpoff & Abramson, 485 F.3d 226,
232-33 (4th Cir. 2007). In contrast, the Second Circuit has
stated in dicta and the Ninth Circuit has concluded that
because an attorney will protect a consumer from a debt
collector‟s behavior, statements made only to a consumer‟s
attorney are not actionable per se. Guerrero v. RJM
Acquisitions LLC, 499 F.3d 926, 934-39 (9th Cir. 2007);
Kropelnicki v. Siegel, 290 F.3d 118, 129-31 (2d Cir. 2002).
2
Cenlar and LaSalle independently moved to dismiss.
LaSalle moved to dismiss on the ground that Allen had failed
to state an agency relationship between it and FSKS because
LaSalle took assignment of Allen‟s mortgage only after FSKS
sent the letters to Allen‟s attorney. Cenlar moved to dismiss
the state law claims because of the lack of contract between
Allen and Cenlar and because Allen alleged no damages.
4
Eschewing either approach, the District Court found
persuasive the Seventh Circuit‟s analysis in Evory v. RJM
Acquisitions Funding L.L.C., 505 F.3d 769 (7th Cir. 2007),
where the court held that although a communication from a
debt collector to a consumer‟s attorney is governed by the
FDCPA, it is to be analyzed from the perspective of a
competent attorney. Using that reasoning, the District Court
held that a competent attorney would have readily recognized
the overcharges that FSKS sought. The Court concluded that
because Allen‟s attorney protected her from any unfair or
unconscionable means used to collect the debt, Allen had
failed to state viable FDCPA claims. The Court thus
dismissed those claims and abstained from passing on the
alternative arguments set forth by FSKS and LaSalle in
support of their motions to dismiss. With no federal claims
remaining, the Court declined to exercise supplemental
jurisdiction over Allen‟s state law claims. Allen appeals. 3
II.
Jurisdiction and Standard of Review
We conduct a plenary review of the District Court‟s
order granting a motion to dismiss for failure to state a claim.
Gelman v. State Farm Mut. Auto. Ins. Co., 583 F.3d 187, 190
(3d Cir. 2009). We accept all factual allegations in the
Complaint as true, construe it in the light most favorable to
Allen, and determine whether, under any reasonable reading
of the Complaint, Allen may be entitled to relief. See id.Because this case requires us to construe a
congressional statute, principles of statutory construction
apply. To discern Congress‟ intent we begin with the text. In
re Lord Abbett Mut. Funds Fee Litig., 553 F.3d 248, 254 (3d
Cir. 2009). If the statute‟s plain language is unambiguous
3
The District Court had jurisdiction under 28 U.S.C. §
1331, and we have jurisdiction under 28 U.S.C. § 1291.
5
and expresses that intent with sufficient precision, we need
not look further. Id. If the plain language fails to express
Congress‟ intent unequivocally, however, we will examine
the surrounding words and provisions in their context.
Tavarez v. Klingensmith, 372 F.3d 188, 190 (3d Cir. 2004).
Assuming that every word in a statute has meaning, we avoid
interpreting part of a statute so as to render another part
superfluous. Rosenberg v. XM Ventures, 274 F.3d 137, 141
(3d Cir. 2001).
III.
Analysis
Congress made its purpose in enacting the FDCPA
explicit: “to eliminate abusive debt collection practices by
debt collectors, to insure that those debt collectors who
refrain from using abusive debt collection practices are not
competitively disadvantaged, and to promote consistent State
action to protect consumers against debt collection abuses.”
15 U.S.C. § 1692(e). Section 1692f(1) on which Allen relies
provides:
A debt collector may not use unfair or unconscionable
means to collect or attempt to collect any debt.
Without limiting the general application of the
foregoing, the following conduct is a violation of this
section:
(1) The collection of any amount (including any
interest, fee, charge, or expense incidental to the
principal obligation) unless such amount is expressly
authorized by the agreement creating the debt or
permitted by law.
15 U.S.C. § 1692f.4
4
Notably, § 1692f(1) specifically prohibits the
“collection” of any unauthorized amount and Allen alleges
only that FSKS and LaSalle attempted to collect such
6
Attorneys, such as FSKS, are regarded as debt
collectors, and their conduct as such is regulated by the
FDCPA. See Heintz v. Jenkins, 514 U.S. 291, 292 (1995)
(“the term „debt collector‟ . . . applies to [attorneys] who
„regularly,‟ through litigation, tr[y] to collect consumer
debts”). The Act entitles consumers to certain information
regarding the nature of their debts, § 1692g, and prohibits
debt collectors from engaging in certain conduct, see §§
1692c-1692f, 1692j-1692k. The FDCPA is a remedial
statute, and we construe its language broadly so as to effect
its purposes. Brown v. Card Serv. Ctr., 464 F.3d 450, 453 (3d
Cir. 2006). Section 1692e proscribes “any false, deceptive or
misleading representation,” (emphasis added), and § 1692d
similarly condemns “any conduct the natural consequence of
which is to harass, oppress, or abuse any person,” (emphasis
added).
A “consumer” includes “any natural person obligated
or allegedly obligated to pay any debt.” § 1692a(3). A
“communication” constitutes “the conveying of information
regarding a debt directly or indirectly to any person through
any medium.” 5 § 1692a(2) (emphasis added). The focus of §
1692f is on the conduct of the debt collector.
amounts from her. Section 1692f, however, broadly prohibits
improper means “to collect or attempt to collect” any debt,
and its list of violative conduct in § 1692f is not exhaustive.
Thus, “collection” in § 1692f(1) includes attempted collection
as well as actual collection.
5
The two letters FSKS sent on June 7, 2007 undoubtedl y
fall within this definition. FSKS disputes in a footnote the
characterization of the third letter, which was sent the next
day and itemized FSKS‟s fees and costs, as a communication
within the meaning of the FDCPA because it “does not make
any specific request for payment.” Br. of Appellee FSKS at
26 n.9. A communication, however, is “the conveying of
information regarding a debt” and is not limited to specific
requests for payment. § 1692a(2).
7
As noted above, the issue here is whether § 1692f(1)
governs communications from a debt collector to a
consumer‟s attorney, such as FSKS‟s letters to Allen‟s
attorney. The attorney for FSKS conceded at oral argument
that there is nothing in the FDCPA that explicitly exempts
communications to an attorney. Unquestionably, the scope of
the FDCPA is broad. Indeed, § 1692f(1) prohibits “unfair or
unconscionable means,” regardless of the person to whom the
communication was directed. The FDCPA similarly defines a
“communication” expansively. A communication to a
consumer‟s attorney is undoubtedly an indirect
communication to the consumer. Evory, 505 F.3d at 773(quoting § 1692a(2)); see also Sayyed, 485 F.3d at 232-33.6
The FDCPA is a strict liability statute to the extent it
imposes liability without proof of an intentional violation. 7
6
We depart from the reasoning of the Fourth Circuit in
Sayyed that the Supreme Court‟s decision in Heintz supported
its conclusion that communications from a debt collector to a
consumer‟s attorney are governed by the FDCPA. See
Sayyed, 485 F.3d at 230. The Court in Heintz addressed the
narrow issue of whether the term “debt collector” in the
FDCPA applies to attorneys who regularly, through litigation,
try to collect consumer debts. Heintz, 514 U.S. at 292.
Although the Heintz opinion referred to the fact that the
communication there had been sent to the consumer‟s
attorney, the Court did not pass on the precise question before
us. See Guerrero, 499 F.3d at 937-38 (criticizing Sayyed‟s
use of Heintz).
7
The characterization of the FDCPA as a strict liability
statute is generally accepted. See, e.g., LeBlanc v. Unifund
CCR Partners, 601 F.3d 1185, 1190 (11th Cir. 2010);
Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1030 (9th Cir.
2010); Ellis v. Solomon and Solomon, P.C., 591 F.3d 130,
135 (2d Cir. 2010); Ruth v. Triumph P’ships, 577 F.3d 790,
805 (7th Cir. 2009).
8
See § 1692k. If an otherwise improper communication would
escape FDCPA liability simply because that communication
was directed to a consumer‟s attorney, it would undermine
the deterrent effect of strict liability.
In this case, the District Court sub silentio concluded
that a communication from a debt collector to a consumer‟s
attorney was generally covered by the FDCPA but that it is to
be analyzed from the perspective of a competent attorney.
The District Court, however, did not have the benefit of
Allen‟s concession that her claims were predicated only upon
§ 1692f(1), which defines the collection of an unauthorized
debt as a per se “unfair or unconscionable” debt collection
method. The only inquiry under § 1692f(1) is whether the
amount collected was expressly authorized by the agreement
creating the debt or permitted by law, an issue we leave for
the District Court.
Given the nature of its disposition, the District Court
did not address any of the other issues raised by the parties,
including whether New Jersey‟s litigation privilege creates an
exemption to FDCPA liability, an issue raised by FSKS. We
address this argument briefly because it raises an issue of law
which is likely to arise on remand.
New Jersey‟s litigation privilege applies to “any
communication (1) made in judicial or quasi-judicial
proceedings; (2) by litigants or other participants authorized
by law; (3) to achieve the objects of the litigation; and (4) that
have some connection or logical relation to the action.”
Hawkins v. Harris, 661 A.2d 284, 289 (N.J. 1995) (internal
quotations and citations omitted). FSKS‟s letters here
undoubtedly fall within this definition. Nonetheless, the
FDCPA does not contain an exemption from liability for
common law privileges. “[C]ommon law immunities cannot
trump the [FDCPA]‟s clear application to the litigating
activities of attorneys,” Sayyed, 485 F.3d at 231, and, like the
Fourth Circuit, we will not “disregard the statutory text in
order to imply some sort of common law privilege,” id. at
229; see also Hartman v. Great Seneca Fin. Corp., 569 F.3d
9
606, 615-17 (6th Cir. 2009). The application of the New
Jersey litigation privilege does not absolve a debt collector
from liability under the FDCPA.
Although we remand this case to the District Court, we
reiterate that we express no opinion as to whether Allen has
alleged a viable claim. If the agreement does not expressly
authorize or state law does not permit the amounts sought,
Allen has stated a viable claim under § 1692f(1).
In light of our disposition, on remand the District
Court should reconsider whether to exercise supplemental
jurisdiction over Allen‟s state law claims, whether to consider
the alternative grounds for dismissal set forth in the motions
to dismiss, and whether to certify a class, as requested by
Allen.
IV.
Conclusion
For the foregoing reasons, we will vacate the judgment
of the District Court and remand for proceedings consistent
with this decision.
10