The opinion of the court was delivered by: Judge Vanaskie
At issue in this litigation is the propriety of a debt collection lawsuit initiated on May 20, 2005, by Defendant Palisades Collection, L.L.C. ("Palisades"), and its attorneys, Defendants Wolpoff & Abramson, L.L.P. ("W&A"), and Bruce H. Cherkis, Esquire, to collect a credit card debt allegedly owed to Palisades by Plaintiff Paulette B. Gigli. One month later -- June 22, 2005 -- Defendants dismissed the lawsuit voluntarily after receiving a request from Ms. Gigli's attorney for documents substantiating the alleged debt and Palisades's standing to collect the debt. Claiming that Defendants improperly attempted to collect a debt for which she was not liable, Ms. Gigli commenced this action, asserting violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692-1692p; the Pennsylvania Fair Credit Extension Uniformity Act ("FCEUA"), 73 Pa. Stat. Ann. §§ 2270.1 to .6; and the Pennsylvania Dragonetti Act. 42 Pa. Cons. Stat. Ann. §§ 8351-8355. Additionally, Ms. Gigli asserted a separate claim against W&A for negligent supervision of its employee, Atty. Cherkis.*fn1
Before the Court is Defendants' Motion for Summary Judgment. (Dkt. Entry 27.) For the reasons that follow, Defendants' motion will be granted in part and denied in part.
Palisades is a debt collector that acquires from other creditors or debt collectors delinquent consumer accounts hoping to realize a profit through the collection of the unpaid balances. In attempting to collect the debt underlying this litigation, Palisades employed W&A, a law firm specializing in debt collection. (Defs.' Statement of Material Facts ("DSMF"), Dkt. Entry 27-2, ¶ 3.) Affiliated with the National Collection Attorney Network, W&A operates from its main office in Rockville, Maryland, and from nine regional offices located predominantly in the Mid-Atlantic region of the United States. Mr. Cherkis is an attorney with W&A and was the attorney of record for Palisades in the underlying state court action. Employed by W&A since 1988, Mr. Cherkis received no formal training or instruction in debt collection practice or compliance at W&A, but learned informally and on the job under the tutelage of his predecessor and W&A senior partners. (Cherkis Dep., Ex. 1 to Pl.'s Br. Contra. Defs.' Mot. Summ. J., Dkt. Entry 29-2, at 24:21-25:8, 28:14-24.) W&A now requires its new attorneys attend a compliance course, which was unavailable to Mr. Cherkis at the inception of his employment. (Id. at 28:6-12.)
In this matter, Palisades and its attorneys were attempting to collect from Ms. Gigli the outstanding balance due on a credit card allegedly issued to her by First USA Bank, N.A. ("First USA"). There is no evidence that Ms. Gigli actually obtained a credit card from First USA. Nevertheless, Defendants allege that Palisades acquired her account from First USA through a series of transactions. According to Brett Hildebrand, a representative of Sherman Acquisition LLC, Sherman Financial Group LLC acquired an unspecified number of "accounts" from First USA. (Hildebrand Aff., Ex. A. to Berman Supp. Aff., Dkt. Entry 31-2, ¶ 2.) Sherman Financial immediately transferred those accounts to Sherman Acquisition. (Id.) Mr. Hildebrand did not indicate when those transfers occurred. Neither did he identify Ms. Gigli's credit card account among the "accounts" acquired from First USA. Palisades's general counsel, Seth Berman, however, stated that those transactions happened sometime prior to September 30, 2002, and that Ms. Gigli's account was purchased from First USA. (Berman Supp. Aff., Dkt. Entry 31-2, ¶ 5.) Notably, Mr. Berman bases his statement on Mr. Hildebrand's affidavit.
Eventually, Sherman Acquisition transferred the First USA "accounts" to Palisades. (Hildebrand Aff. ¶ 3.) Again, Mr. Hildebrand did not indicate the date of the transaction or specify Ms. Gigli's account as among the accounts transferred, although Mr. Berman claimed her account was acquired from Sherman Acquisition. (Berman Supp. Aff. ¶ 6.) According to a Bill of Sale and Assignment dated August 13, 2004 -- cited by neither Mr. Hildebrand nor Mr. Berman -- Sherman Acquisition "assign[ed] [to Palisades] all rights, title and interest of [Sherman Acquisition] in and to those certain Charged-off Accounts described in Exhibit '1' attached hereto and made part hereof." (Bill of Sale & Assignment, Ex. 2 to Cherkis Dep., Dkt. Entry 29-3.) The Bill of Sale and Assignment itself provides no details about the "Charged-off Accounts." Moreover, "Exhibit 1" referred to in the Bill of Sale and Assignment is missing from the record. It is thus impossible to ascertain whether Ms. Gigli's account was one of the "Charged-off Accounts" assigned to Palisades.*fn2 Indeed, aside from Messrs. Hildebrand's and Berman's affidavits and the Bill of Sale and Assignment, there is nothing in the record to corroborate any of the aforesaid transactions.
Meanwhile, on September 30, 2002, First USA changed its name to Bank One, Delaware, National Association ("Bank One"). (DSMF ¶ 2.) During the debt collection process, Palisades identified itself as the assignee of Bank One and indicated the account at issue originated with Bank One.
Having purportedly acquired Ms. Gigli's credit card account, Palisades referred the account to W&A for collection. Palisades transmitted account information to W&A electronically, which W&A received November 12, 2004, and entered into its system November 19, 2004. (Cherkis Dep. 31:9-15; W&A Status Report of Collection Activity ("Collection Activity Report"), Ex. 1 to Cherkis Dep., Dkt. Entry 29-3, at 21.) Called "client information" by Mr. Cherkis, the account information apparently comprised the account number (5422702008393951), the unpaid balance ($4,705.14), and the annual interest rate (18%), along with evidence that Bank One issued to Ms. Gigli a revolving credit account subject to terms and conditions agreed to by Ms. Gigli. (Collection Activity Report 21; Cherkis Dep. 31:6-9, 21; 32:17-20; 70:17-21; 71:7-14.) Mr. Cherkis did not describe the client information in detail, nor is that information part of the record. Furthermore, when Mr. Cherkis was questioned at his deposition about the source of the client information, his attorney -- another W&A attorney -- interposed an objection on the ground that the question concerned matters protected by the attorney-client privilege and/or work-product doctrine. (Cherkis Dep. 33:2-17.)
Mr. Cherkis testified that he accepted "at face value" the information supplied by Palisades, but had no personal knowledge of its accuracy. (Id. at 31:22-32:2; 71:2-4.) Additionally, he reviewed information obtained from a "credit bureau" on November 20, 2004, that purportedly verified the original creditor, account number, and unpaid balance of Ms. Gigli's account.*fn3 (Id. 79:4-19; see also Collection Activity Report 20.) Based on his experience, Mr. Cherkis assumed this information to be accurate and relied on it, but he lacked personal knowledge about its source or accuracy. (Cherkis Dep. 79:24-80:14.)
After reviewing this information, Mr. Cherkis launched the collection process with a letter to Ms. Gigli dated November 23, 2004. (DSMF ¶ 4; Ex. 2 to DSMF, Dkt. Entry 27-4.) The letter constituted the "initial communication" to a consumer under the FDCPA, and thus contained certain FDCPA-required disclosures. Specifically, the letter disclosed the total balance due; identified Palisades as creditor and assignee of Bank One; advised Ms. Gigli of her right, within thirty days of receipt of the letter, to dispute the debt and/or to demand verification; and warned Ms. Gigli that unless she exercised this right within thirty days of receipt of the notice, the debt would be assumed valid.*fn4 (DSMF ¶ 4; Ex. 2 to DSMF.) It is undisputed that Ms. Gigli did not notify W&A within the thirty-day period to dispute the validity of the debt or demand its verification. (DSMF ¶ 6.)
On January 12, 2005, Mr. Cherkis sent Ms. Gigli another letter offering to settle the debt at a discount to the total amount due. (Id. ¶ 5.) Receiving no response, Mr. Cherkis wrote to Ms. Gigli on March 21, 2005, "that as a result of your failure to resolve this matter, we have made the decision to initiate litigation against you." (Ex. 4-D to Cherkis Dep., Dkt. Entry 29-3.) Ms. Gigli did not respond to this missive either.
On May 20, 2005, Mr. Cherkis filed a complaint on behalf of Palisades against Ms. Gigli in the Magisterial District Court in Tamaqua, Pennsylvania. (DSMF ¶ 7.)*fn5 In part, the complaint alleged that Palisades's assignor, Bank One, "issued a revolving credit account to [Ms. Gigli] which was subject to terms an [sic] conditions as outlined and agreed upon by Defendant, which included [payment of] interest"; that Ms. Gigli "utilized said revolving credit account . . . for the purchase of product goods and/or for obtaining services"; that the current unpaid balance on the account was $4,705.14; that Ms. Gigli refused reasonable and repeated demands for payment; and that Palisades was entitled to, among other things, "interest at the rate of 18.00% from 08/31/01 in the amount of $3127.82." (Ex. 3-A to Cherkis Dep., Dkt. Entry 29-3.) The complaint, which was not reviewed by Palisades prior to its filing, (see Defs.' Resp. to Request for Admissions, Dkt. Entry 29-4, ¶ 14), was signed by Mr. Cherkis, who "verif[ied] that the facts set forth in this complaint are true and correct to the best of my knowledge . . . based upon information provided by the Plaintiff [Palisades]." (Ex. 3-A to Cherkis Dep..)
In drafting the complaint, Mr. Cherkis relied on the "client information" for the allegations that the unpaid principal balance due was $4,705.14 and that Bank One issued Ms. Gigli a "revolving credit account" subject to terms and conditions agreed to by Ms. Gigli. (Cherkis Dep. 70:8-12, 17-21; 71:7-14.) But he had not reviewed, prior to preparing the complaint, the alleged credit card account agreement, the "Exhibit 1" referenced in the Bill of Sale and Assignment, or any account statements or credit receipts establishing Ms. Gigli's use of the credit card to purchase goods or services. (Id. at 47:8-11; 48:5-20; 67:2-68:5; 71:20-72:3.) Mr. Cherkis was not alone: none of Defendants possessed, at the time the state court complaint was filed, a revolving credit card account agreement signed by Ms. Gigli, nor did Palisades or W&A possess account records verifying the unpaid amount due or evidencing actual use of the credit card by Ms. Gigli. (Defs.' Resp. to Request for Admissions ¶¶ 6, 11-12.) And despite his representation that the complaint was based on information provided by Palisades, Mr. Cherkis testified that the allegation Palisades was entitled to eighteen-percent interest was based on the determination by Amy Doyle, the managing partner of W&A's Pennsylvania office. (Cherkis Dep. 72:17-73:4; 73:19-24.)
After being served with Palisades's complaint, Ms. Gigli retained counsel to defend against the lawsuit. Ms. Gigli explained to counsel that she did not recall opening a credit card account with Bank One or having any dealings with Palisades. (Letter from Atty DiBernardino to Atty Cherkis, June 6, 2005, Ex. 3-B to Cherkis Dep., Dkt. Entry 29-3.) In light of these discussions, and to prepare for an upcoming hearing, counsel wrote to Mr. Cherkis on June 6, 2005, requesting documentation substantiating the allegations in the complaint. (Id.) Specifically, counsel sought a copy of the credit card agreement between Ms. Gigli and the original lender; copies of assignments or other instruments to evidence the transfer of the account from the original lender to Palisades and to establish Palisades's standing to assert the claim; and an itemized account history to show how the unpaid amount alleged in the complaint was computed. (Id.) Mr. Cherkis did not respond to this request. Instead, on June 22, 2005, Philip C. Warholic, an attorney in W&A's Camp Hill office, notified the state court that Palisades was voluntarily dismissing without prejudice its action against Ms. Gigli. (Letter from Atty Warholic to Judge Zelonis, June 22, 2005, Dkt. Entry 29-3.) Judge Zelonis issued a formal order of dismissal later that day. (See Ex. D to Compl., Dkt,. Entry 1-5.) Following dismissal, neither Palisades nor W&A made any further attempts to collect on Ms. Gigli's alleged delinquent credit card account.
On May 17, 2006, Ms. Gigli commenced this action against Defendants by filing a writ of summons in the Court of Common Pleas of Schuylkill County, Pennsylvania. (Notice of Removal, Dkt. Entry 1, ¶ 1.) On June 30, 2006, she filed in that court a ten-count complaint asserting FDCPA, FCEUA, Dragonetti Act, and common law negligence claims. (Id. ¶ 3; see also Compl., Ex. C to Notice of Removal, Dkt. Entry 1-5.) Because some of Ms. Gigli's claims were brought under federal law, Defendants removed the entire action to this Court on July 21, 2006. See 28 U.S.C. § 1441(a), (c).
Ms. Gigli's ten-count complaint is predicated on the state court debt collection action filed by Defendants. Ms. Gigli asserts that Palisades (Count One), W&A (Count Six), and Mr. Cherkis (Count Nine) are liable under the FDCPA for filing a lawsuit that falsely represented the character, amount, or legal status of the debt allegedly owed by Ms. Gigli, in violation of 15 U.S.C. § 1692e(2)(A), and attempting to collect from Ms. Gigli amounts, including interest, not authorized by an agreement or state law, in violation of 15 U.S.C. § 1692f(1). She also asserts parallel claims under the FCEUA against Palisades (Counts Two and Four) and W&A (Count Seven) based on the same conduct. Ms. Gigli further avers that Palisades (Count Three), W&A (Count Eight), and Mr. Cherkis (Ten) violated the Dragonetti Act by initiating a civil proceeding, without probable cause and for an improper purpose, that terminated in her favor. Finally, Ms. Gigli alleges that W&A (Count Five) negligently supervised its employee Mr. Cherkis.
On July 24, 2007, Defendants filed a Motion for Summary Judgment, (Dkt. Entry 27), statement of material facts, (Dkt. Entry 27-2), supporting exhibits and affidavits, (Dkt. Entries 27-3, 27-4, 27-5, 27-6, 27-7, 27-8), and supporting brief. (Dkt. Entry 28.) Ms. Gigli filed her opposition papers August 8, 2007. (Dkt. Entries 29 & 30.) Defendants filed a reply brief and affidavits August 20, 2007. (Dkt. Entry 31.) The motion is ripe for disposition.
A. Summary Judgment Standard
Summary judgment should be granted when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). A fact is "material" if proof of its existence or nonexistence might affect the outcome of the suit under the applicable law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.
All doubts as to the existence of a genuine issue of material fact must be resolved against the moving party, and the entire record must be examined in the light most favorable to the nonmoving party. Cont'l Ins. Co. v. Bodie, 682 F.2d 436, 438 (3d Cir. 1982). The moving party has the burden of showing the absence of a genuine issue of material fact, but the nonmoving party must present affirmative evidence from which a jury might return a verdict in the nonmoving party's favor. Anderson, 477 U.S. at 256-57. Mere conclusory allegations taken from the pleadings are insufficient to withstand a motion for summary judgment. Schoch v. First Fid. Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990). Summary judgment is to be entered "after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
After finding "abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors," which it viewed as inimical to societal well-being and economic and familial stability, Congress enacted the FDCPA to eliminate and protect consumers from those practices. 15 U.S.C. § 1692(a), (e). To achieve that purpose, the ...