Kharyn Ramsay v. Sawyer Property Management of Maryland , 593 F. App'x 204 ( 2014 )


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  •                                UNPUBLISHED
    UNITED STATES COURT OF APPEALS
    FOR THE FOURTH CIRCUIT
    No. 13-1795
    KHARYN RAMSAY,
    Plaintiff - Appellant,
    v.
    SAWYER PROPERTY MANAGEMENT OF MARYLAND LLC; JEFFREY TAPPER,
    Attorney-At-Law,
    Defendants - Appellees.
    Appeal from the United States District Court for the District of
    Maryland, at Baltimore.    Richard D. Bennett, District Judge.
    (1:12-cv-02741-RDB)
    Argued:   September 16, 2014                 Decided:   December 9, 2014
    Before WILKINSON, GREGORY, and KEENAN, Circuit Judges.
    Affirmed by unpublished opinion.       Judge Keenan wrote the
    opinion, in which Judge Wilkinson joined. Judge Gregory wrote a
    separate opinion dissenting in part.
    ARGUED: Max F. Brauer, LAW OFFICE OF E. DAVID HOSKINS, LLC,
    Baltimore, Maryland, for Appellant.    James Edward Dickerman,
    ECCLESTON & WOLF, PC, Hanover, Maryland; Donald A. Rea, SAUL
    EWING LLP, Baltimore, Maryland, for Appellees.    ON BRIEF: E.
    David Hoskins, THE LAW OFFICES OF E. DAVID HOSKINS, LLC,
    Baltimore, Maryland, for Appellant.   Geoffrey M. Gamble, SAUL
    EWING LLP, Baltimore, Maryland, for Appellee Sawyer Property
    Management of Maryland LLC. Lauren E. Marini, ECCLESTON & WOLF,
    PC, Hanover, Maryland, for Appellee Jeffrey Tapper, Attorney-at-
    Law.
    Unpublished opinions are not binding precedent in this circuit.
    2
    BARBARA MILANO KEENAN, Circuit Judge:
    Kharyn Ramsay appeals the district court’s dismissal of her
    claims asserted under the Fair Debt Collection Practices Act
    (FDCPA), 15 U.S.C. §§ 1692 through 1692p.                      Ramsay alleged that
    the    rental    agent   for   her       former    apartment       and   the    agent’s
    attorney violated the FDCPA by placing certain language on two
    court orders, thereby causing her to be confused regarding her
    obligation to appear at court proceedings.                     The district court
    dismissed Ramsay’s complaint, concluding under Federal Rule of
    Civil    Procedure   12(b)(6)       that       Ramsay    had   failed     to    state   a
    claim.    Upon our review, we hold that the rental agent was not a
    “debt collector” bound by the requirements of the FDCPA, and
    that    the   language   added      to    the    court    orders    by    the   agent’s
    attorney was not “false, deceptive, or misleading” within the
    meaning of the FDCPA.          We therefore affirm the district court’s
    judgment.
    I.
    Ramsay was a tenant of certain residential property owned
    by SRH Woodmoor LLC (Woodmoor).                   The property was managed by
    defendant Sawyer Property Management of Maryland, LLC (Sawyer).
    When    Ramsay   defaulted     on    her    rent    obligations,         Sawyer   later
    obtained a judgment against Ramsay in Maryland state court in
    the amount of $1,540.84.
    3
    Following      Ramsay’s    failure     to    pay   the    judgment     amount,
    Sawyer     hired     defendant       Jeffrey      Tapper,      an   attorney     and
    collection agent licensed by the state of Maryland, to collect
    the   debt    from    Ramsay.        Pursuant      to    Maryland    state     court
    procedures, Tapper served Ramsay with a “DC/CV 32” court order
    signed by a Maryland district court judge, which order directed
    Ramsay to appear in court for an oral examination regarding her
    assets and property.         See Md. Rule § 3-633(b).
    After Ramsay failed to appear, Tapper obtained and served
    on her a “DC/CV 33” order from the court requiring that she
    appear in court for a show cause hearing.                   Because Ramsay did
    not appear for the show cause hearing as ordered, the court
    found her in contempt of court.                Ramsay later was arrested and
    released on her own recognizance.
    On     the   portion      of   both      orders    completed     by     Tapper
    requesting court action, Tapper had used an “ink stamp” to add
    certain language (the stamped language).                 The stamped language,
    which is at issue in this case, stated that:
    THIS COMMUNICATION IS FROM A DEBT COLLECTOR. IT IS AN
    ATTEMPT TO COLLECT A DEBT AND ANY INFORMATION OBTAINED
    WILL BE USED FOR THAT PURPOSE.
    Ramsay argued in the district court: (1) that the stamped
    language was deceptive, causing her to ignore both court orders,
    see 15 U.S.C. § 1692e; and (2) that Sawyer improperly collected
    debts without obtaining a collection agency license as required
    4
    by Maryland law, see 15 U.S.C. § 1692f.                   Ramsay also brought
    state law claims under the Maryland Consumer Debt Collection Act
    and the Maryland Consumer Protection Act.
    The district court dismissed Ramsay’s FDCPA claims under
    Federal Rule of Civil Procedure 12(b)(6).                The court declined to
    exercise supplemental jurisdiction over the state law claims,
    and   dismissed      those    claims     without   prejudice.      This    appeal
    followed.
    II.
    Ramsay argues that the district court erred in dismissing
    her claims against Sawyer based on the court’s conclusion that
    Sawyer was not a “debt collector” under the FDCPA.                 According to
    Ramsay, Sawyer’s status as a debt collector was established by
    the fact that Sawyer was Woodmoor’s agent, and regularly acted
    in that capacity collecting money owed to its principal.                         We
    disagree    with     Ramsay’s    argument,      which    is   precluded    by   the
    FDCPA’s definition of “debt collector.”
    In    enacting    the     FDCPA,     Congress     sought   “to    eliminate
    abusive    debt    collection     practices       by   debt   collectors.”       15
    U.S.C.     § 1692.       Section        1692e   generally      prohibits     “debt
    collectors”    from    using     “any    false,    deceptive,    or    misleading
    representation or means in connection with the collection of any
    debt.”      Additionally, Section 1692f forbids “debt collectors”
    5
    from using “unfair or unconscionable means to collect or attempt
    to collect any debt.”
    The FDCPA defines a “debt collector” as (1) “any person who
    uses any instrumentality of interstate commerce or the mails in
    any business the principal purpose of which is the collection of
    any   debts,”     or   (2)     any   person    “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. § 1692a(6).
    Critically,      the   FDCPA    excludes     from   the     definition    of   “debt
    collector” “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 not in
    default at the time it was obtained by such person.”                     15 U.S.C.
    § 1692a(6)(F)(iii).
    A rental agent generally “obtains” a debt when a lease is
    executed, which necessarily predates a default under the lease,
    unless the agent’s relationship with its principal begins at
    some later date. 1       Carter v. AMC, LLC, 
    645 F.3d 840
    , 843 (7th
    Cir. 2011).      In the present case, Ramsay entered into her lease
    agreement with Sawyer, which was acting as the rental agent of
    the   property    owner,     Woodmoor.        In   this    capacity,    Sawyer    was
    1
    A rental agent “‘obtains’ a debt in the sense that it
    acquires the authority to collect the money on behalf of
    another.” 
    Carter, 645 F.3d at 844
    .
    6
    listed on the lease as Ramsay’s landlord and, under the terms of
    the    lease,      Ramsay     was   obligated        to      remit    her    monthly       rental
    payments to Sawyer.
    In    her    complaint,         Ramsay    offers       no     contrary      allegations
    that       undermine       the   facts     plain        on    the     face    of     the    lease
    document, namely, that Sawyer “obtained” Ramsay’s debt when she
    first signed the lease.                  Because Sawyer obtained Ramsay’s debt
    before       the    debt     was    in    default,           Sawyer    was    not     a     “debt
    collector”         bound    by   the     requirements         of     the    FDCPA.         See    15
    U.S.C. § 1692a(6)(F)(iii).                 Accordingly, the district court did
    not err in dismissing Ramsay’s FDCPA claims against Sawyer.
    III.
    Ramsay next argues that Tapper violated the FDCPA by adding
    the stamped language to the DC/CV 32 and 33 court orders.                                         As
    noted above, the stamped language stated:
    THIS COMMUNICATION IS FROM A DEBT COLLECTOR. IT IS AN
    ATTEMPT TO COLLECT A DEBT AND ANY INFORMATION OBTAINED
    WILL BE USED FOR THAT PURPOSE.
    Ramsay contends that the stamped language was false, because the
    “communication” was an order from the court rather than from a
    debt collector. 2           She further argues that the stamp deceptively
    implied that the DC/CV 32 and DC/CV 33 documents were not court
    2
    Tapper indisputably                was      a    debt       collector      within        the
    meaning of the FDCPA.
    7
    orders      requiring     a    response.               We    disagree     with       Ramsay’s
    arguments.
    To    effectuate       its      goal       of     eliminating          abusive     debt
    collection      practices,       the    FDCPA          imposes     certain      affirmative
    requirements on debt collectors and prohibits a wide range of
    conduct.      See Russell v. Absolute Collection Servs., 
    763 F.3d 385
    ,   388-89    (4th     Cir.      2014).         In       addition     to    the    general
    prohibition     that    “[a]     debt    collector           may   not   use    any     false,
    deceptive, or misleading representation or means in connection
    with the collection of any debt,” Section 1692e also specifies a
    non-exhaustive list of prohibited conduct, including:
    The use of any false representation or deceptive means
    to collect or attempt to collect any debt or to obtain
    information concerning a consumer.
    § 1692e(10),
    The failure to disclose in the initial written
    communication with the consumer . . . that the debt
    collector is attempting to collect a debt and that any
    information obtained will be used for that purpose,
    and   the    failure   to   disclose   in   subsequent
    communications that the communication is from a debt
    collector, except that this paragraph shall not apply
    to a formal pleading made in connection with a legal
    action.
    § 1692e(11), and
    The false representation or implication that documents
    are not legal process forms or do not require action
    by the consumer.
    § 1692e(15).
    8
    In evaluating claims under Section 1692e, we must determine
    whether    a    “least    sophisticated          consumer”       would    be   misled     or
    deceived by the communication.                   Absolute Collection 
    Servs., 763 F.3d at 394
    .        The question whether a communication is deceptive
    or     misleading    to    such    a     consumer        “does    not     turn    on     the
    credibility of extrinsic evidence.”                     Terran v. Kaplan, 
    109 F.3d 1428
    , 1432 (9th Cir. 1997) (discussing debtor’s assertion that
    certain language in a collection letter rendered confusing the
    notice provision in the letter required by Section 1692g of the
    FDCPA).          Instead,     a      court        must     consider        whether       the
    communication       in    question      reasonably       can     be   viewed     as    being
    deceptive or misleading.           See Russell v. Equifax A.R.S., 
    74 F.3d 30
    , 35 (2d Cir. 1996) (holding that a collection notice violated
    § 1692e when it “was reasonably susceptible to an inaccurate
    reading”).
    This     determination      requires        an    objective       inquiry,      which
    involves application of a less demanding standard than that of a
    “reasonable” consumer.            Gonzales v. Arrow Fin. Servs., LLC, 
    660 F.3d 1055
    ,    1061-62    (9th     Cir.    2011);       see    Absolute      Collection
    
    Servs., 763 F.3d at 394
    -95 (discussing objective nature of the
    standard); United States v. Nat’l Fin. Servs., Inc., 
    98 F.3d 131
    , 135-36 (4th Cir. 1996) (explaining the standard and citing
    cases).       Given the objective nature of this inquiry, a district
    court’s    application      of    the    least      sophisticated         consumer      test
    9
    ordinarily presents a question of law, which we review on appeal
    de novo. 3
    The use of a test evaluating the understanding of a least
    sophisticated consumer is intended to ensure that “the gullible
    as well as the shrewd” are not deceived by communications from a
    debt       collector.    Nat’l    Fin.    Servs.,    
    Inc., 98 F.3d at 136
    (citation      omitted).       Although   the   FDCPA    protects    uninformed
    consumers, the standard employed nevertheless protects creditors
    from “liability for bizarre or idiosyncratic interpretations of
    collection notices by preserving a quotient of reasonableness
    and presuming a basic level of understanding and willingness to
    read with care.”         
    Id. Accordingly, courts
    must remain mindful
    not to “conflate lack of sophistication with unreasonableness.”
    Ellis v. Solomon & Solomon, P.C., 
    591 F.3d 130
    , 135 (2d Cir.
    2010) (discussing standard of the least sophisticated consumer
    in the context of Section 1692g).
    To     evaluate   Ramsay’s    claim    that   a   least    sophisticated
    consumer reasonably would have been misled or deceived by the
    stamped language, we consider that language in the context of
    3
    We recognize that some cases may involve disputed factual
    issues that must be resolved before the court makes the legal
    determination whether a communication is false, deceptive, or
    misleading to the least sophisticated consumer.   The enumerated
    violations in Section 1692e may depend on factual questions such
    as, for example, whether a debt collector in fact intended to
    take threatened action under Section 1692e(5).    See Nat’l Fin.
    
    Servs., 98 F.3d at 136-39
    .
    10
    the entirety of the documents on which the language appeared.
    The first line of the DC/CV 32 was captioned, “District Court of
    Maryland for Baltimore County,” and was followed by the court’s
    address and a case number.           The top half of the document was
    entitled “Request for Order Directing Defendant to Appear for
    Examination    in   Aid    of   Enforcement     of    Judgment,”     and   listed
    Sawyer as the “plaintiff/judgment creditor” and Ramsay as the
    “defendant/judgment debtor.”          The bottom half of the document
    prominently was labeled, “Order of Court.”               This portion of the
    document stated that Ramsay was “subpoenaed to appear in person
    before a judge of this Court . . . to be examined under oath
    concerning    any   assets,     property   or   credits,”      on    a   specified
    date.
    The bottom portion of the document further warned:
    NOTICE TO PERSON SERVED:    If you refuse or without
    sufficient excuse neglect to obey this Order, you may
    be punished for contempt.
    This portion of the document also stated, in boldface, upper-
    case letters, “YOU ARE ORDERED TO APPEAR IN PERSON,” and bore
    the signature of a judge.
    The DC/CV 33 document similarly listed the court’s name and
    address, the case number, and the parties’ names at the top of
    the   document.      The   middle    portion     of    the    form   was   titled
    “Request for Show Cause Order for Contempt.”                 The bottom portion
    of the document prominently was labeled, “Show Cause Order for
    11
    Contempt,” and stated that Ramsay was “ordered . . . [to] appear
    in person before this Court . . . to show cause why this Court
    should not find [her] in contempt for refusing or failing to
    respond.”    This portion of the document also bore the signature
    of a judge, and warned the recipient that “[i]f you fail to
    appear, an order may be issued resulting in your arrest and you
    may be found in contempt of court.”
    Upon consideration of all the language on each of these two
    documents,    we    conclude     that   the    stamped    language   did   not
    reasonably    render    either     document     deceptive    or   misleading,
    within the meaning of Section 1692e, to a least sophisticated
    consumer.    As noted above, both documents plainly stated that
    they were orders of the court, and set forth both the name of
    the court and the signature of a judge.                  The orders directed
    Ramsay to appear in court in person on a specified date, and
    explicitly stated the potential penalties for failing to do so,
    including being held in contempt of court and being subject to
    arrest.     Thus, such a consumer would not reasonably have been
    deceived regarding the fact that the documents were court orders
    requiring the consumer to appear in court.
    The presence of the stamped language did not alter these
    clear representations that the documents were issued by a court
    and   required     compliance    with    the   court’s    directives.      The
    stamped language appeared on the form below the name of the
    12
    court, the case number, and the parties, and did not conceal or
    obscure any text of either document or suggest that Ramsay could
    ignore the remainder of the documents and their contents.                               Nor
    did the stamped language offer any information contrary to that
    contained in the documents.               In fact, the stamped language was
    consistent with the overall message of the court orders, namely,
    that Sawyer and Tapper sought to compel Ramsay’s attendance at a
    debt    collection     proceeding.          While         the    FDCPA      protects    the
    uninformed      consumer,     courts      nevertheless           “presum[e]      a    basic
    level   of    understanding        and    willingness           to   read    with    care.”
    Nat’l Fin. 
    Servs., 98 F.3d at 136
    (citation omitted).
    We also disagree with Ramsay’s alternative contention that
    the stamped language employed by Tapper was “false” because the
    documents were court orders, rather than communications from a
    debt collector.        Maryland district court procedures require that
    a    creditor,    as   the    plaintiff          in   a    collection        proceeding,
    complete the top portion of the DC/CV 32 and 33 forms, including
    listing the creditor and debtor, before submitting the document
    for entry as a court order.               Tapper placed the stamped language
    on   the     portion   of    the    documents         that      he   was     required    to
    complete, and served Ramsay with a copy of each court order.
    Tapper’s     representation        that    the    orders        were   “communications
    from a debt collector” was not false because he originated the
    communications by supplying the necessary information and taking
    13
    steps to ensure that the orders were entered by the court. 4     We
    therefore hold that the district court properly dismissed the
    Section 1692e claim against Tapper under Rule 12(b)(6). 5
    IV.
    For these reasons, we affirm the district court’s judgment
    dismissing Ramsay’s complaint. 6
    AFFIRMED
    4
    We find no merit in Ramsay’s contention that the court
    orders were “formal pleadings” exempt from the disclosure
    requirement of Section 1692e(11) and that, therefore, the
    disclosure   requirement   was   inapplicable on this   basis.
    Additionally, to the extent that Ramsay argues that Tapper
    disclosed more than was required by the statute for subsequent
    communications with a consumer, we conclude that any extra
    language was mere surplusage that did not render the court
    orders false, deceptive, or misleading.
    5
    Ramsay also asserts that Tapper violated Section 1692f of
    the FDCPA, which prohibits a debt collector from “us[ing] unfair
    or unconscionable means to collect or attempt to collect any
    debt.”    She maintains that Tapper’s collection efforts were
    unconscionable because they are contrary to the “strong public
    policy against imprisonment for debt.”      However, Ramsay has
    forfeited this claim by failing to raise it in her complaint in
    the district court.   See Wood v. Crane Co., 
    764 F.3d 316
    , 326
    (4th Cir. 2014).
    6
    In light of our decision affirming the district court’s
    dismissal of Ramsay’s federal claims, we conclude that the court
    did   not   abuse  its  discretion  in  declining   to  exercise
    supplemental jurisdiction over the remaining state law claims.
    See 28 U.S.C. § 1367(c)(3); Shanaghan v. Cahill, 
    58 F.3d 106
    ,
    110 (4th Cir. 1995). We therefore affirm the court’s dismissal
    of those claims without prejudice.
    14
    GREGORY, Circuit Judge, dissenting in part:
    I    agree    with    the   majority     that    Sawyer    cannot    be    liable
    under the FDCPA because the debt it obtained was not yet in
    default.          But   I    believe    that    Ramsay’s       complaint       plausibly
    alleges that the language stamped by Tapper on the court orders
    was false, misleading, or deceptive.                   See 15 U.S.C. § 1692e.           I
    therefore respectfully dissent in part.
    The material facts are these:
    1) The underlying document in question was a court
    order, representing a direct communication from the
    court to a debtor.
    2) A debt collector affixed the following statement
    near the top of the order:   THIS COMMUNICATION IS
    FROM A DEBT COLLECTOR. IT IS AN ATTEMPT TO COLLECT
    A DEBT AND ANY INFORMATION OBTAINED WILL BE USED
    FOR THAT PURPOSE.
    Under      the    FDCPA,     Ramsay    need    not     prove    “an    intentional     or
    knowing violation on the part of the debt collector to recover
    damages[.]”          Russell v. Absolute Collection Servs., Inc., 
    763 F.3d 385
    , 389 (4th Cir. 2014).                   She need only show that the
    message misstated or at the very least sowed confusion about the
    nature and/or source of the document.
    To that end, Sawyer has plausibly alleged that the stamp
    was deceptive or misleading to the least sophisticated consumer.
    See United States v. Nat’l Fin. Servs., Inc., 
    98 F.3d 131
    , 136
    (4th       Cir.     1996)    (observing       that     the     “least-sophisticated-
    consumer         standard”    protects    “the       gullible     as    well     as   the
    15
    shrewd”) (quoting Clomon v. Jackson, 
    988 F.2d 1314
    , 1318 (2d
    Cir.   1993)).         The   least   sophisticated           consumer       is    not    well-
    versed    in   legal     language,     forms,         and     formalities.           When   a
    conspicuous      statement       appears    on       the    top   of    a     document     and
    declares it is “from a debt collector,” a gullible consumer will
    likely believe the message, or at least be puzzled by it.                                   As
    this case demonstrates, the costs of resulting consumer inaction
    are    severe,    including      arrest,     detention,           and    the      collateral
    consequences that follow.
    Tapper’s    stamped       language       is    also     plainly        false.       The
    majority opinion avers that the stamp is accurate because Tapper
    “originated       the    communications          by        supplying        the    necessary
    information      and    taking    steps    to    ensure       that      the    orders     were
    entered by the court.”           Regardless of whether Tapper had to fill
    out information on the forms, a court order signed by a judge is
    not a communication between a debt collector and consumer as
    understood by the FDCPA.             Instead, a court order is expressly a
    communication between the court and debtor, directing the debtor
    to appear or perform some action.                     See Black’s Law Dictionary
    1123 (7th ed. 1999) (defining “order” as “[a] written direction
    or command delivered by a court or judge”); Sayyed v. Wolpoff &
    Abramson, 
    485 F.3d 226
    , 229-30 (4th Cir. 2007) (relying on the
    plain meaning of the FDCPA to interpret its terms).                                     Tapper
    16
    cites nothing in the statutory text or legislative history to
    suggest otherwise.
    It   is   true    that    this   Court    has     left   open   the       question
    whether certain types of legal forms like interrogatories served
    by debt collectors are communications that require disclosure
    language similar to Tapper’s stamp under 15 U.S.C. § 1692e(11).
    See 
    Sayyed, 485 F.3d at 235
    n.2.                 An interrogatory, however, is
    a different legal species than a court order.                      An interrogatory
    is a set of written questions prepared by a party and submitted
    to any opposing party in a lawsuit as part of discovery.                             See
    Fed.   R.   Civ.    P.    33.     An    order,    by     contrast,     is   a    command
    directly from the court.            Nothing in the statutory text of the
    FDCPA, or legislative history cited by the parties, suggests
    that an order could be considered a communication from a debt
    collector triggering the disclosure requirement.
    A debt collector who violates the Act’s terms in good faith
    can nonetheless prevail, but it bears the burden to prove the
    affirmative defense that “(1) it unintentionally violated the
    FDCPA; (2) the violation resulted from a bona fide error; and
    (3) it maintained procedures reasonably adapted to avoid the
    violation.”         
    Russell, 763 F.3d at 389
       (citing     15    U.S.C.
    § 1692k(c)).        Had    the    district       court    denied     the    motion    to
    dismiss, as I believe was the proper course of action, such a
    defense would have remained available to Tapper.
    17
    For these reasons, I respectfully dissent.
    18