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Norman v. Allied Interstate, LLC

United States District Court, E.D. Pennsylvania

May 25, 2018

DARLA NORMAN, Plaintiff,
v.
ALLIED INTERSTATE, LLC and LVNV FUNDING, LLC, Defendants.

          MEMORANDUM

          GERALD AUSTIN MCHUGH UNITED STATES DISTRICT JUDGE

         This case involves alleged violations of the Fair Debt Collection Practices Act by a debt buyer and the agency it hired to pursue collection. Plaintiff alleges that the collection letters she received from the defendants violated the FDCPA because they were misleading-specifically, that the letters implied the debts were legally enforceable, when in fact they were not, and that the letters failed to communicate effectively her right to dispute the validity of the debts. In a joint Motion to Dismiss, the defendants dispute that their letters violated the FDCPA, and assert that the debt buyer defendant cannot be liable as a matter of law. The threshold question is whether debt buyers which acquire defaulted (and often time-barred) debt in order to collect upon it qualify as “debt collectors” under the Act. I conclude that they do, and further conclude that Plaintiff has adequately alleged that the collection letters violated the Act. Accordingly, the Motion to Dismiss will be denied.

         I. Background

         In 2016, Plaintiff Darla Norman received two nearly identical letters from Defendant Allied Interstate, LLC, each attempting to collect on an alleged debt. In the letters, Allied stated that it was acting on behalf of Defendant LVNV Funding, LLC, to collect the debts. LVNV had not lent Norman any money-in fact, Defendants admit that the debts were incurred originally to two non-party creditors more than seven years earlier. But at some point after Norman allegedly defaulted on the debts, LVNV purchased them from the creditors (or from another debt buyer) and contracted with Allied to collect on them. By May 2016, when Allied sent the collection letters, the statute of limitations had run, rendering both debts legally unenforceable. The letters each listed the amount owed and the original creditor, and read in relevant part:

Our client [LVNV] is interested in resolving this Account and is willing to consider payment for less than the Amount Owed to satisfy your obligation. Although we are not obligated to accept any payment proposal, please telephone us to discuss potential settlement options.
To make a payment, please telephone us at 866-466-3142 or mail your payment . . . . [Y]our account will be debited on the day we receive your payment. Your check will not be returned.
Unless you notify us within 30 days after receiving this letter that you dispute the validity of this debt . . . we will assume that this debt is valid. If you notify us in writing within 30 days after receiving this letter that you dispute the validity of this debt, . . . we will obtain and mail to you a verification of the debt or a copy of a judgment. If you request of us in writing within 30 days after receiving this letter, we will provide you with the name and address of the original creditor, if different from the current creditor.
We look forward to receiving your payment.

         All text in the letter appeared in the same size and font.

         Based on these collection letters, Plaintiff Norman brings claims under the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692p. She alleges that Defendants Allied and LVNV violated Sections 1692e, which prohibits misleading representations, and 1692g, which establishes protections and notice procedures by which consumers can challenge and obtain validation of the alleged debt.[1] Compl., ECF No. 1. Together, Defendants LVNV and Allied move for dismissal. Defs.' Mot., ECF No. 7-1.

         II. Standard

         This motion is governed by the well-established standards of Rule 12(b)(6), as amplified by Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009).

         III. Discussion

         Congress passed the FDCPA in an effort to end abusive debt collection practices, acknowledging the “abundant evidence” of “abusive, deceptive, and unfair” practices. 15 U.S.C. § 1692(a), (e). The Third Circuit has emphasized that the FDCPA is a remedial statute that “must be broadly construed in order to give full effect to these purposes.” Caprio v. Healthcare Revenue Recovery Grp., LLC, 709 F.3d 142, 148 (3d Cir. 2013).

         To state a claim under the FDCPA, Plaintiff Norman must plausibly allege that (1) she is a consumer, (2) Defendants are debt collectors, (3) Defendants' challenged practice-the letters- involves an attempt to collect a debt as the Act defines it, and (4) that Defendants violated the FDCPA in attempting to collect the debt. See Tatis v. Allied Interstate, LLC, 882 F.3d 422, 427 (3d Cir. 2018). Defendants dispute only the second and fourth elements. Defs.' Mot. 6. LVNV disputes that it is a debt collector, and both Defendants dispute that the letters violated the Act. For the reasons that follow, I conclude that LVNV is a debt collector under the Act, and that Norman has adequately alleged two violations.

         A. LVNV as a “debt collector” under the FDCPA

         There are two ways in which a person or entity can qualify as a “debt collector” under the FDCPA. See § 1692a(6). The first definition encompasses “any business the principal purpose of which is the collection of any debts.” Id. The second reaches any entity that “regularly collects or attempts to collect, directly or indirectly, debts owed . . . [to] another.” § 1692a. Plaintiff initially alleged that LVNV satisfied both definitions, Compl. ¶¶ 5-6, but now argues only that LVNV falls within the “principal purpose” definition, Pl.'s Resp. 12. Defendant LVNV counters that, as a debt buyer, it cannot be a debt collector under either definition, and regardless, Plaintiff has not alleged facts in support of the “principal purpose” definition. Defs.' Mot. 7-8; Defs.' Reply 6, ECF No. 14. I disagree and, for the reasons set ...


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