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CHUWAY v. NATIONAL ACTION FINANCIAL SERVICES

March 6, 2003

CALDEAN M. CHUWAY, PLAINTIFF, VS. NATIONAL ACTION FINANCIAL SERVICES, INC., A GEORGIA CORPORATION, DEFENDANT.


The opinion of the court was delivered by: Joan Humphrey Lefkow, United States District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff, Caldean M. Chuway ("Chuway"), brings this putative class action against defendant, National Action Financial Services, Inc., a Georgia Corporation ("NAFS"), pursuant to the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"). Before the court are cross motions for summary judgment. The court has jurisdiction over the claims pursuant to 15 U.S.C. § 1692k(d) and 28 U.S.C. § 1331. For the reasons set forth below, NAFS's motion is granted while Chuway's motion is denied.

SUMMARY JUDGMENT STANDARDS

Summary judgment obviates the need for a trial where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). To determine whether any genuine fact exists, the court must pierce the pleadings and assess the proof as presented in depositions, answers to interrogatories, admissions, and affidavits that are part of the record. Fed.R.Civ.P. 56(c) Advisory Committee's notes. The party seeking summary judgment bears the initial burden of proving there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). In response, the non-moving party cannot rest on bare pleadings alone but must use the evidentiary tools listed above to designate specific material facts showing that there is a genuine issue for trial. Id. at 324; Insolia v. Philip Morris Inc., 216 F.3d 596, 598 (7th Cir. 2000). A material fact must be outcome determinative under the governing law. Insolia, 216 F.3d at 598-99. Although a bare contention that an issue of fact exists is insufficient to create a factual dispute, Bellaver v. Quanex Corp., 200 F.3d 485, 492 (7th Cir. 2000), the court must construe all facts in a light most favorable to the non-moving party as well as view all reasonable inferences in that party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). On cross-motions for summary judgment, the court must consider the merits of each motion and assess the burden of proof that each party would bear on an issue at trial. Santaella v. Metro. Life Ins. Co., 123 F.3d 456, 461 (7th Cir. 1997).

FACTS*fn1

On November 12, 2001, NAFS, in an attempt to collect a debt that Chuway is alleged to have owed to Capital One Services, Inc., ("Capital One"), sent Chuway a letter containing the following language,

Creditor: Capital One Services, Inc. Reference: XXXXXXXXXXX Balance: $367.42
CAPITAL ONE SERVICES, INC. HAS ASSIGNED YOUR DELINQUENT ACCOUNT TO OUR AGENCY FOR COLLECTION
PLEASE REMIT THE BALANCE LISTED ABOVE IN THE RETURN ENVELOPE PROVIDED.
TO OBTAIN YOUR MOST CURRENT BALANCE INFORMATION, PLEASE CALL 1-800-XXX-XXXX. OUR FRIENDLY AND EXPERIENCED REPRESENTATIVES WILL BE GLAD TO ASSIST YOU AND ANSWER ANY QUESTIONS YOU MAY HAVE.
(Compl. ¶ Ex. A.) Chuway stated that when she received this letter, she read it and was unable to determine what amount NAFS was trying to collect from her and she did not know if it was the "BALANCE" or a different "MOST CURRENT BALANCE" that could only be determined by calling NAFS's 1-800 number. (Pl. L.R. 56.1 ¶ 8.)

DISCUSSION

Under 15 U.S.C. § 1692g(a)(1), within five days after an initial communication with a consumer, a debt collector must send the consumer a written notice containing (1) the amount of the debt; (2) the name of the creditor; (3) a statement that, unless disputed within thirty days, the debt will be assumed to be valid; (4) a statement that if the consumer notifies the debtor in writing that the debt is disputed, the debt collector will obtain verification of the debt; and (5) a statement, on the consumer's request, that the debt collector will provide the consumer with the name and address of the original creditor if different from the current creditor. A debt collector must present these disclosures in a manner in which they are likely to be understood by an "unsophisticated consumer." Bartlett v. Heibl, 128 F.3d 497, 500 (7th Cir. 1997) ("it is implicit that the debt collector may not defeat the statute's purpose by making the required disclosures in a form or within a context in which they are unlikely to be understood by the unsophisticated debtors who are the particular objects of the statute's solicitude.").

Solely at issue in this case is the requirement that a debt collector give a debtor notice of the amount of a debt. Chuway maintains the letter NAFS sent did not give the amount of the debt or at least did not present it in a way that could be understood. NAFS maintains the letter complied with the FDCPA. Both sides rely on Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, and Clark, L.L.C., 214 F.3d 872 (7th Cir. 2000), where the Seventh Circuit addressed the "amount of debt" requirement and went so far as to create safe harbor language to ensure that debt collectors could be confident that their obligations under the FDCPA are met. Id. at 875-76.

In Miller, the debt collector sent the debtor a letter stating the loan's "unpaid principal balance" was $178,844.65, but added

[T]his amount does not include accrued but unpaid interest, unpaid late charges, escrow advances or other charges for preservation and protection of the lender's interest in the property, as authorized by your loan agreement. The amount to reinstate or pay off your loan changes daily. You may call our office for complete reinstatement and payoff figures.
214 F.3d at 875. The letter also listed a 1-800 number the debtor could call to find the amount of the unpaid interest, late charges and other fees. Id. In addressing whether the letter properly gave the debtor notice of the full amount of the debt, the court singled out the letter's deficiency in failing to include other fees outside of the unpaid principal that were part of the debt: "The unpaid principal balance is not the debt; it is only a part of the debt; the Act requires statement of the debt." Id. The court held that the proper way to include such other charges, including unpaid interest, was to "state the total amount due — interest and other charges as well as principal — on the date the dunning letter was sent." Id.

The court also went to lengths to avoid future disputes on this issue by presenting a "safe harbor." The court formulated the following language and assured debt collectors it would satisfy their duty to state the amount of the debt when this amount would vary from day to day:

As of the date of this letter, you owe $_____[the exact amount due]. Because of interest, late charges, and other charges that may vary from day to day, the amount due on the day you pay may be greater. Hence, if you pay the amount shown above, an adjustment may be necessary after we receive your check, in which event we will inform you before depositing the check for ...

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