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Schweer v. Hovg, LLC

United States District Court, M.D. Pennsylvania

July 7, 2017

LORI SCHWEER, Plaintiff,
HOVG, LLC, et al., Defendants.


          KAROLINE MEHALCHICK United States Magistrate Judge

         A ruling upon the present dueling motions for summary judgment requires an answer to the question of when are words in a letter from a debt collector deceptive enough to cause injury to a plaintiff, rather than bare violation of federal statute. Particularly, this dispute between the parties hinges upon whether a Defendant's encouragement of a debtor to call to dispute a debt was deceptive in light of the Third Circuit's requirement that objections to a debt be made in writing. For the reasons set forth below, Defendants' motion for summary judgment will be denied in its entirety, and Plaintiff's cross motion for summary judgment granted.

         I. Background

         On August 28, 2015, Defendant HOVG, LLC, a collection agency acting on behalf of Defendant Pendrick Capital Partners, LLC, mailed a letter to the Plainiff, Lori Schweer. (Doc. 1-1, at 8). HOVG, identified in the letter as Bay Area Credit Service, advised Schweer that it was attempting to collect a debt owed to Pendrick Capital Partners, LLC (“Pendrick”) after Pendrick purchased Schweer's debt owed to “Broad Mountain Emerg Phys PLLC.” (Doc. 1-1, at 8). The letter further advised that Schweer should contact HOVG at the telephone number provided should she have any questions, was unable to pay the balance in full, or if Schweer disputed the debt. (Doc. 1-1, at 8). At the bottom of the letter, HOVG directed Schweer to “see reverse side for important consumer information.” (Doc. 1-1, at 8). On the reverse side under a heading of “consumer rights, ” the letter contained a statement reading:

Unless you notify this office within 30 days after receiving this notice that you dispute the validity of the debt or any portion thereof, this office will assume this debt is valid. If you notify this office in writing within 30 days from receiving this notice that you dispute the validity of this debt or any portion thereof, this office will obtain verification of the debt or obtain a copy of the judgment and mail you a copy of such judgment or verification. If you request this office in writing within 30 days after receiving this notice, this office will provide you with the name and address of the original creditor if different from the current creditor.

(Doc. 1-1, at 9).

         II. Procedural History

         On June 22, 2016, Schweer filed suit against HOVG and Pendrick in the Court of Common Pleas of Lackawanna County, alleging the letter violated multiple provisions of the Fair Debt Collection Practices Act (“FDCPA”). (Doc. 1-1, at 3). In her complaint, Schweer states that the language of the letter advising her to call in order to dispute any debt owed violated 15 U.S.C. § 1692g and Third Circuit case law requiring disputes to be made in writing. (Doc. 1-1, at 4-5). See Graziano v. Harrison, 950 F.2d 107, 112 (3d Cir. 1991). She further states that HOVG's letter violated 15 U.S.C. § 1692e(14) for a failure to use its true name when collecting a debt by using the name “Bay Area Credit Service” instead of “Bay Area Credit Service, LLC.” (Doc. 1-1, at 5). Defendants were served on July 5, 2016, and on August 3rd removed the case to the Middle District, stating this Court has original jurisdiction over FDCPA actions. (Doc. 1, at 1-2). On August 10, 2016, the Defendants filed their answer to Schweer's complaint. (Doc. 2).

         On August 23, 2016, the parties filed the joint case management plan, wherein the Court was advised that Schweer had withdrawn her challenge to the use of the “Bay Area Credit Service” moniker and would proceed only on the claim predicated upon the deceptive language encouraging her to call to dispute the debt. (Doc. 8; Doc. 9). The parties consented to proceed before the undersigned on March 2, 2017, with both parties filing their respective motions for summary judgment that same day.

         In their motion for summary judgment and brief in support, Defendants argue first that, to the extent the language violated the FDCPA, Schweer does not have standing to bring suit as she has not suffered any injury. (Doc. 33; Doc. 37). They argue that Schweer has never challenged the validity of the debt by phone or in writing and therefore could not have been deceived by the language in the letter. (Doc. 33). Second, the Defendants argue that Pendrick should be dismissed from the action, as they have never contacted Schweer in attempting to collect the debt since assigning it to HOVG, and should not be held liable for the language contained in HOVG's collection attempts. (Doc. 33). In her brief in opposition, Schweer countered that intangible harm may still satisfy the injury in fact requirement for standing. (Doc. 40, at 3). She further argued that the purpose of the FDCPA is to protect consumers, and that “deprivation of legally required information can be sufficient to confer standing.” (Doc. 40, at 8-9).

         In her counter motion for summary judgment and in support, Schweer argues that the language in HOVG's letter clearly overshadowed the notice requirements of the FDCPA and, under the least sophisticated debtor standard, Schweer is entitled to statutory damages for this breach. (Doc. 35; Doc. 38). The Defendants' brief in opposition reiterates that Schweer has alleged “no more than a hypothetical, procedural violation of a federal statute without any showing the alleged violation caused Plaintiff harm or any material risk of harm.” (Doc. 41, at 12).

         On June 12, 2017, the Supreme Court issued an opinion in Henson v. Santander Consumer USA Inc., 137 S.Ct. 1718 (2017), where the Court resolved a split between Courts of Appeals on whether purchasers of delinquent accounts, who then attempt to collect the defaulted debts, are considered debt collectors under the FDCPA. The Court ruled that Congress did not intend for debt buyers to be considered debt collectors for the purposes of the Act, where the debt buyer attempted to collect debts for which the debt buyer now owned. Henson, 137 S.Ct. at 1724.

         As a ruling upon the instant motions for summary judgment requires a finding that Pendrick qualifies as a debt collector for the purposes of the FDCPA, this Court ordered supplemental briefing on the applicability of Henson on June 22, 2017. (Doc. 48). On June 29, 2017, both parties filed their briefs in accordance with this Court's Order. The Defendants argue that the ruling in Henson specifically encapsulates Pendrick, shielding them from liability for the actions of HOVG. (Doc. 49). Schweer argues that the FDCPA provides two definitions of a debt collector. (Doc. 50). She states that while Henson addressed the second scenario-a debt buyer attempting to collect a debt it owns-that the Supreme Court did not address the other enumerated circumstance in 1692a(6): “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[.]” (Doc. 50).

         Both motions having been fully briefed, they are now ripe for resolution.

         III. Standard of Review

         Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment should be granted only if “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A fact is “material” only if it might affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute of material fact is “genuine” only if the evidence “is such that a reasonable jury could return a verdict for the non-moving party.” Anderson, 477 U.S. at 248. In deciding a summary judgment motion, all inferences “should be drawn in the light most favorable to the non-moving party, and where the non-moving party's evidence contradicts the movant's, then the non-movant's must be taken as true.” Pastore v. Bell Tel. Co. of Pa., 24 F.3d 508, 512 (3d Cir. 1994).

         A federal court should grant summary judgment “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Farrell v. Planters Lifesavers Co., 206 F.3d 271, 278 (3d Cir. 2000). In making this determination, “a court must view the facts in the light most favorable to the nonmoving party and draw all inferences in that party's favor.” Armbruster v. Unisys Corp., 32 F.3d 768, 777 (3d Cir. 1994). The Court need not accept mere conclusory allegations, whether they are made in the complaint or a sworn statement. Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888 (1990). In deciding a motion for summary judgment, the court's function is not to make credibility determinations, weigh evidence, or draw inferences from the facts. Anderson, 477 U.S. at 249. Rather, the court must simply “determine whether there is a genuine issue for trial.” Anderson, 477 U.S. at 249.

         IV. Discussion

         Three distinct issues arise upon consideration of the parties' motions for summary judgment. The first, raised by the Defendants, challenges Schweer's standing to bring suit. Second, the Defendants argue that even if Schweer does have standing that Pendrick should be dismissed as the actions causing the instant lawsuit are solely attributable to HOVG. Lastly, Schweer argues that no material fact exists disputing a breach of the FDCPA by the Defendants, and she is entitled to summary judgment on her claim.

         A. Schweer Has Standing to Bring Suit Under the FDCPA

         In order to establish standing to bring suit, a plaintiff “must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016) (citing Lujan, 504 U.S. at 560-61). “To establish injury in fact, a plaintiff must show that he or she suffered ‘an invasion of a legally protected interest' that is ‘concrete and particularized' and ‘actual or imminent, not conjectural or hypothetical.'” Spokeo, 136 S.Ct. at 1548 (quoting Lujan, 504 U.S. at 560). For the injury to be “concrete, ” it must be “real, ” and not “abstract”; however it need not be traditionally “tangible” in the sense of personal injury or economic harm. Spokeo, 136 S.Ct. at 1548-49. “For an injury to be particularized, it must affect the plaintiff in a personal and individual way.” Spokeo, 136 S.Ct. at 1548 (internal quotations omitted).

         Even a de facto violation of the FDCPA confers Article III standing upon an aggrieved debtor. “Congress has the power to define injuries and articulate chains of causation that will give rise to a case or controversy where none existed before.” Spokeo, 136 S.Ct. at 1549. An injury-in-fact “may exist solely by virtue of statutes creating legal rights, the invasion of which creates standing.” Havens Realty Corp. v. Coleman, 455 U.S. 363, 373 (1982) (citing Warth v. Seldin, 422 U.S. 490, 500 (1975)). The FDCPA allows a debtor to pursue damages from “any debt collector who fails to comply with any provision of this subchapter” without alleging harm beyond that outlined by the Act. 15 U.S.C. § 1692k(a). See In re Horizon Healthcare Serv's Inc. Data Breach Lit., 846 F.3d 625, 640 n. 24 (3d Cir. 2017) (de facto injury of debtor for debt collector violation of FDCPA satisfies Article III standing requirement); Church v. Accretive Health, Inc., 654 F.App'x 990, 994 (11th Cir. 2016) (“The FDCPA authorizes an aggrieved debtor to file suit for a debt collector's failure to comply with the Act.”); Reed v. IC System, Inc., No. 3:15-279, 2017 WL 89047, *3 (W.D. Pa. Jan. 10, 2017) (“When someone is subjected to . . . practices [in violation of the FDCPA], she has suffered a concrete injury and need not allege[] any additional harm beyond the one Congress has identified.”) (internal quotations omitted); Hartman v. Medicredit, Inc., No. 15-1596, 2016 WL 7669858, *3 (W.D. Pa. Dec. 20, 2016) (“Plantiff has a statutory right to be free from [unfair practices identified by the FDCPA] and the alleged violation of that right constitutes a concrete injury” conferring standing.); Sullivan v. Allied Interstate, LLC, No. 16-203, 2016 WL 7187507, *5 (W.D. Pa. Oct. 18, 2016) (“[A] defendant who violates a plaintiff's rights under the FDCPA inflicts an actual, concrete harm for Article III standing purposes.”) (internal quotations omitted).

         Schweer's suit centers upon the provisions outlined in § 1692g, the requirements of which she argues were overshadowed by the language of the letter sent to her. Congress' intent in creating the FDCPA was 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). By providing relief to a debtor for any violation of the statute, Congress demonstrated its intent to shield debtors from abusive and deceptive practices under the Act. See 15 U.S.C. § 1692k. Schweer's allegation of debt collection practices in violation of § 1692g of the FDCPA therefore are sufficient to confer standing, even absent allegations of harm in excess of the statutory provisions. Thus, the Defendants' motion for summary judgment on grounds that Schweer does not have standing are DENIED.

         B. Defendant Pendrick ...

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