Two FDCPA Opinions From Judge Porter

Moyer v. Patenaude & Felix, A.P.C., ___ F.3d ___ (3d Cir. 2021); Klotz v. Celentano Stadtmauer and Walentowicz LLP, ___ F.3d ___ (3d Cir. 2021). These two opinions, both by Judge Porter, came from two different panels, of which Judge Porter was the only common member. But the issues in the two cases were very different. One thing was the same, though: creditors prevailed and debtors lost in both cases.

In Moyer, the question was whether defendant’s collection letter violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692 et seq. (“FDCPA”). The letter read:

“Please be advised that the above-referenced debt has been assigned to this firm to initiate collection efforts regarding your delinquent outstanding balance to our client. If you wish to eliminate further collection action, please contact us at 800-832-7675 ext. 8500.

Unless you notify this office within THIRTY (30) days of receiving this notice that you dispute the validity of this debt, or any portion thereof, this office will assume this debt is valid.

If you notify this office in writing within THIRTY (30) days of receiving this notice that this debt, or any portion thereof, is disputed, this office will obtain verification of the debt, or a copy of a judgment against you, and mail you a copy of such verification or judgment. Further, if you make a written request upon this office within THIRTY (30) days of receiving this notice, this office will provide you with the name and address of the original creditor, if different from the current creditor.

This is an attempt to collect a debt and any information obtained will be used for that purpose.”

Plaintiff claimed that the second sentence of the notice (“If you wish to eliminate further collection action, please contact us at 800-832-7675 ext. 8500”) violated the FDCPA in two ways. First, as Judge Porter put it, quoting plaintiff’s brief, plaintiff argued that the sentence “would lead a debtor to believe that a phone call is a ‘legally effective way to stop such collection action’ when, in reality, only written communication can legally stop collection activity.” Second, the sentence “would make a debtor uncertain about her right to dispute the debt in writing.”

The District Court granted summary judgment to defendant, rejecting both of plaintiff’s arguments. Today, the Third Circuit affirmed after applying the de novo standard of review to the legal questions presented on summary judgment.

After providing a useful description of the applicable FDCPA background law, Judge Porter addressed plaintiff’s arguments. Her first contention failed, he said, because defendant “never claimed the phone call was a ‘legally effective’ means of stopping collection efforts. Patenaude invited Moyer to call to ‘eliminate’ collection action, but never asserted, explicitly or implicitly, that the phone call would, by law, force Patenaude to cease its collection efforts. Moyer reads into the invitation an implication that it does not create.” The court distinguished District Court opinions that had stated that a phone call would legally require collection activity to cease.

Plaintiff’s second argument– that the sentence would create confusion about her right to dispute the debt in writing– fared no better. “Moyer sees confusion where none exists. The Validation Notice instructs the debtor to write to exercise their §1692g rights, leaving no suggestions that a phone call would suffice. Likewise, the Contact Sentence does not suggest that a debtor could exercise any §1692g rights over the phone. And the order of the paragraphs does not create confusion about what each one conveys.”

It is difficult to understand the ruling that a statement that a phone call would “eliminate further collection action” did not convey that plaintiff could halt collection by calling the number listed. The distinction that the court drew between “eliminating” collection efforts and being “legally effective” to do so seems, at best, elusive. That is especially so since, as Judge Porter correctly stated, the court’s review is based on the objective standard of the perspective of the “least sophisticated debtor.” Such a debtor seems unlikely to see the nuanced distinction on which the court relied here.

Klotz involved what Judge Porter rightly described as “New Jersey’s common-law doctrine of necessaries (where a spouse is jointly liable for necessary expenses incurred by the other spouse).” Plaintiff’s husband received medical services from a hospital, which billed $1,580 for those services. The husband died without paying the bill, and he left no estate. The hospital retained defendant to collect the debt from plaintiff.

Plaintiff alleged that she was not liable for the debt because the Equal Credit Opportunity Act, 15 U.S.C. 1691 et seq. (“ECOA”), preempted New Jersey’s doctrine of necessaries. That doctrine comes from Jersey Shore Med. Center v. Estate of Baum, 84 N.J. 137 (1980). She also claimed that, if that were not so, defendant failed to follow the procedural requirements of that doctrine. The District Court granted defendant’s motion to dismiss for failure to state a claim, and the Third Circuit today affirmed, applying de novo review.

Judge Porter rejected the argument that the ECOA preempted the doctrine of necessaries. Plaintiff had asserted that by pursuing her to collect on her husband’s debt, defendant violated a regulation that forbade requiring a spouse to be a co-signer on a credit instrument in certain circumstances.

But Judge Porter observed that the regulations contained an exception that made debts for “incidental credit” exempt from that prohibition on spousal signature. “Incidental credit refers to extensions of consumer credit . . . (i) [t]hat are not made pursuant to the terms of a credit card account; (ii) [t]hat are not subject to a finance charge . . . and (iii) [t]hat are not payable by agreement in more than four installments.” The debt here satisfied those criteria. Since that was so, that doomed plaintiff’s argument that federal law preempted the doctrine of necessaries.

Judge Porter made short work of plaintiff’s claim that defendant had not followed the required procedures under the doctrine of necessaries. The panel also affirmed the District Court’s decision to deny leave to amend the Complaint.