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Ehsanuddin v. Wolpoff & Abramson

January 22, 2007

SALMA EHSANUDDIN, PLAINTIFF,
v.
WOLPOFF & ABRAMSON, DEFENDANT



The opinion of the court was delivered by: Hay, Magistrate J.

REPORT AND RECOMMENDATION

I. RECOMMENDATION

It is respectfully recommended that the motion to dismiss submitted on behalf of defendant (Dkt. No. 6) be denied.

II. REPORT

Plaintiff, Salma Ehsanuddin ("Ehsanuddin"), filed a complaint against Wolpoff & Abramson, L.L.P., ("W & A"), on May 30, 2006, bringing two claims under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 ("FDCPA"). Plaintiff alleges that W & A filed a lawsuit against her that was barred by a four year statute of limitations and, thus, legally unenforceable. As such, plaintiff contends that W & A made a false representation as to "the character, amount or legal status" of the debt and engaged in an "unfair or unconscionable" means to collect the debt in violation of the FDCPA.

Presently before the Court is defendant's motion to dismiss in which it argues that the filing of a lawsuit in an attempt to collect a debt allegedly barred by the statute of limitations does not give rise to a cause of action under the FDCPA.

In reviewing a motion to dismiss under Rule 12(b)(6), all well pleaded allegations of the complaint must be accepted as true and viewed in a light most favorable to the non-movant. Brader v. Allegheny General Hospital, 64 F.3d 869, 873 (3d Cir.1995); Scrob v. Patterson, 948 F.2d 1402, 1405 (3d Cir.1991). The Court is not, however, required to accept as true unsupported conclusions and unwarranted inferences. Schuylkill Energy Resources v. PP & L, 113 F.3d 405, 417 (3d Cir.1997). Thus, "if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief," the motion to dismiss is properly granted. Haines v. Kerner, 404 U.S. 519, 520-21, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972), quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). The issue is not whether the plaintiff will prevail in the end but only whether he should be entitled to offer evidence in support of his claim. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974).

It is undisputed that Congress enacted the FDCPA to eliminate "the use of abusive, deceptive, and unfair debt collection practices by many debt collectors." 15 U.S.C. § 1692(a). To that end, the FDCPA prohibits debt collectors from, inter alia, falsely representing the "character, amount or legal status of any debt," 15 U.S.C. § 1692e(2)(A), and from using "unfair or unconscionable means to collect or attempt to collect any debt." 15 U.S.C. § 1692f. See Freyermuth v. Credit Bureau Services, Inc., 248 F.3d 767, 771 (8 Cir.2001); Aronson v. Commercial Financial Services, Inc., 1997 WL 1038818 *2 (W.D.Pa. Dec.22, 1997). When evaluating whether the means employed by a debt collector run afoul of the FDCPA a court must view them from the perspective of the "least sophisticated consumer." Id. The test is an objective one thereby protecting the consumer who is "uninformed, naive, or trusting," while shielding compliant debt collectors from liability for "unrealistic or peculiar interpretations" of collection tactics. Canterbury v. Columbia Gas of Ohio, 2001 WL 1681132 *6 (S.D.Ohio Sept.25, 2001), quoting Gammon v. GC Services Ltd. Partnership, 27 F.3d 1254, 1257 (7 Cir.1994). See Beattie v. D.M. Collections, Inc. ., 754 F.Supp. 383, 392 (D.Del.1991). Thus, the question that must be resolved is whether W & A's act of filing a lawsuit in an effort to collect the debt at issue after the statute of limitations had run was unfair or unconscionable or whether the filing of a lawsuit would deceive or mislead the least sophisticated consumer. See Kimber v. Federal Financial Corp., 668 F.Supp. 1480, 1487 (M.D.Ala.1987) ( "Kimber" ).

These precise questions were first addressed by the United States District Court for the Middle District of Alabama in Kimber. Therein, noting that statutes of limitations are "not simply technicalities," but are an integral part of our judicial system reflecting a strong public policy that claims are to be brought within a reasonable period of time so as to protect defendants from having to defend cases in which evidence has been lost, the Court concluded, as has virtually every court to address the issue since, that "a debt collector's filing of a lawsuit on a debt that appears to be time-barred, without the debt collector having first determined after a reasonable inquiry that that limitations period has been or should be tolled, is an unfair and unconscionable means of collecting the debt," and violates § 1692f. Id. at 1487. In so finding the Court opined that:

time-barred lawsuits are, absent tolling, unjust and unfair as a matter of public policy, and this is no less true in the consumer context. As with any defendant sued on a stale claim, the passage of time not only dulls the consumer's memory of the circumstances and validity of the debt, but heightens the probability that she will no longer have personal records detailing the status of the debt. Indeed, the unfairness of such conduct is particularly clear in the consumer context where courts have imposed a heightened standard of care-that sufficient to protect the least sophisticated consumer. Because few unsophisticated consumers would be aware that a statute of limitations could be used to defend against lawsuits based on stale debts, such consumers would unwittingly acquiesce to such lawsuits. And, even if the consumer realizes that she can use time as a defense, she will more than likely still give in rather than fight the lawsuit because she must still expend energy and resources and subject herself to the embarrassment of going into court to present the defense; this is particularly true in light of the costs of attorneys today.

Id. at 1487.

Here, Ehsanuddin has alleged that her debt was subject to and barred by a four year statute of limitations and that W & A nevertheless filed suit to collect the debt knowing that it was not legally enforceable. Under Kimber, such acts are violative of § 1692f and plaintiff, therefore, has properly stated a claim. See Walker v. Cash Flow Consultants, Inc., 200 F.R.D. 613, 616 (N.D.Ill.2001) ("[I]n order to survive a motion to dismiss, a defendant's attempt to collect on a time-barred debt must be accompanied by actual litigation or a threat, either explicit or implicit, of future litigation."); Canterbury v. Columbia Gas of Ohio, 2001 WL 1681132 *8 (S.D.Ohio Sept.25, 2001) (Finding that the plaintiff had properly stated a claim under § 1692f having alleged that the defendant threatened litigation in an attempt to collect on a time-barred debt.)

Similarly, the Kimber Court found that bringing suit to recover a debt that the debt collector knew was time barred is also fraudulent and, thus, violative of § 1692e(2)(A) as well. Kimber, 668 F.Supp. 1489. In so finding, the Court reasoned that the act of filing a lawsuit in order to recover a debt implies that the debt is viable and that recovery is proper and, thus, has the "tendency or capacity to deceive," when the debt is, in fact, time barred. Id., quoting Jeter v. Credit Bureau, Inc., 760 F.2d 1168, 1172 (11 Cir.1985).

In the instant case, Ehsanuddin has asserted that W & A knew that the statute of limitations had run on Ehsanuddin's debt when it filed the lawsuit. Under Kimber, these facts, if proven, suggests that W & A acted fraudulently by implicitly representing to Ehsanuddin that the debt was viable and legally enforceable when, in fact, it was not. Thus, it appears that Ehsanuddin has properly stated a claim under ยง 1692e as well. Id. See Goins v. JBC & Associates, P.C., 352 F.Supp.2d 262, 272 (D.Conn.2005) ("As the statute of limitations would be a complete defense to any suit ...


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