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INGRAM v. CORPORATE RECEIVABLES INC.

May 2, 2003

TERRENCE N. INGRAM, PLAINTIFF,
v.
CORPORATE RECEIVABLES, INC., AND OSI COLLECTION SERVICES, INC.



The opinion of the court was delivered by: Sidney I. Schenkier, United States Magistrate Judge

MEMORANDUM OPINION AND ORDER

Plaintiff, Terrance M. Ingram, brings this action pursuant to Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, et. seq., against defendants OSI Collection Services, Inc. ("OSI"), in Count I, and Corporate Receivables, Inc. ("CRI"), in Count II. This Court has jurisdiction pursuant to 28 U.S.C. § 1331 and 15 U.S.C. § 1692k(d). OSI has answered the claim by Mr. Ingram; CRI has filed a motion to dismiss Count II pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (doc. # 18).*fn1

In Count II, Mr. Ingram alleges alleges that; (i) CRI violated 15 U.S.C. § 1692g(a)(1) when it sent a collection letter that failed to clearly state the amount of the debt due (Compl. ¶¶ 30-31); and (ii) CRI violated 15 U.S.C. § 1692g(a)(3) when it sent Mr. Ingram a collection letter stating that CRI would consider the alleged debt valid unless Mr. Ingram notified CRI, in writing, within 30 days of receiving the collection letter that he disputed the debt or any portion of it (Compl. ¶ 32). For the reason given below, the Court denies CRI's motion to dismiss the "amount of debt" claim in Count I (Compl. ¶¶ 30-31), but grants the motion to dismiss the "writing requirement" claim in Count II (Compl. ¶ 32).

I.

The purpose of a motion to dismiss is to test the sufficiency of the complaint, not to decide the merits of the lawsuit. Triad Assocs. v. Chicago Housing Auth., 892 F.2d 583, 586 (7th Cir. 1990). For purposes of reviewing the motion, we must take all the plaintiff's well-pled allegations as true. Lucien v. Preiner, 967 F.2d 1166, 1168 (7th Cir. 1992). The court must also view the plaintiff's allegations in the light most favorable to the plaintiff, Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); the plaintiff is entitled to all reasonable inferences that can be drawn therefrom. Ellsworth v. Racine 774 F.2d 182, 184 (7th Cir. 1985), cert. denied, 475 U.S. 1047 (1986). "The issue is not whether a plaintiff will ultimately prevail, but whether the claimant is entitled to offer evidence to support the claims" Triad Assoc., 892 F.2d at 586. The allegations of the complaint, which we take as true for purposes of ruling on this motion, are as follows.

II.

Mr. Ingram alleges that CRI is engaged in the business of a collection agency and is a debt collector as defined in the FDCPA (Compl. ¶¶ 4-5). Mr. Ingram alleges that, on or about June 5, 2002, CRI mailed him a collection letter, which sought to collect an amount allegedly incurred by Mr. Ingram in connection with improvements made to his home (Compl. ¶ 12). The upper left hand portion of the collection letter bore the date June 5, 2002. The tear-away portion of the letter designated for return with Mr. Ingram's payment, located in the upper right hand portion of the letter, stated the "Amount; $1,622.43" (Compl., Ex. G). The body of the collection letter contained the following statement (in capital letters) regarding the amount of the alleged debt:

THE ABOVE ACCOUNT HAS BEEN PLACED WITH THIS OFFICE FOR COLLECTION. THE BALANCE INCLUDES THE PRINCIPAL AMOUNT DUE AND MAY INCLUDE INTEREST AND ALL LATE CHARGES OR OTHER PENALTIES, IF APPLICABLE, UNDER THE DEFAULT PROVISIONS OF YOUR CONTRACT WITH THE CREDITOR YOU MAY WISH TO CONSULT THE DEFAULT PROVISIONS OF YOUR CONTRACT TO CONFIRM THESE ADDITIONAL CHARGES, IF ANY.
(Compl., Ex. G). And, the body of the letter also contained the following statement (again, in all capital letters) concerning the alleged debt:
UNLESS YOU NOTIFY THIS OFFICE IN WRITING, WITHIN THIRTY DAYS AFTER RECEIVING THIS NOTICE THAT YOU DISPUTE THE VALIDITY OF THE DEBTOR ANY PORTION THEREOF, THIS OFFICE WILL ASSUME THIS DEBT IS VALID. IF YOU NOTIFY THIS OFFICE WITHIN THIRTY DAYS FROM RECEIVING THIS NOTICE THIS OFFICE WILL: OBTAIN VERIFICATION OF THE DEBT OR OBTAIN A COPY OF A JUDGEMENT AND MAIL YOU A COPY OF SUCH JUDGEMENT OR VERIFICATION. IF YOU REQUEST THIS OFFICE WITHIN THIRTY 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.
(Compl., Ex. G).

Mr. Ingram's claims against CRI arise out of the Foregoing statements in the collection letter. Mr. Ingram alleges that CRI's collection letter violates 15 U.S.C. § 1692 g(a)(1), because it failed to clearly describe the amount Mr. Ingram allegedly owed (Compl. ¶¶ 30, 31). Mr. Ingram also claims that CRI's collection letter violates 15 U.S.C. § 1692g(a)(3), because it told Mr. Ingram that, unless he notified CRI in writing that he disputed the validity of the debt, CRI would assume the debt was valid (Compl. ¶ 32). CRI argues that neither of these claims states a cause of action. We address each of CRI's arguments in the order that CRI presents them.

III.

CRI argues that the collection letter, taken as a whole, accurately states the amount allegedly due, and thus does not does not violate 15 U.S.C. § 1692g(a)(1). For the reasons that follow, we disagree. While we do not express an opinion as to whether Mr. Ingram will be able to prove his claim, we do find that Mr. Ingram's allegations in Count II concerning CRI's compliance with Section 1692g(a)(1) state a claim for relief.

To be sure, CRI's collection letter states an "amount" but, the letter does not expressly state as of what date that amount was due. Moreover, the letter states that the "balance (a different word than the word "amount" used in the letter to describe the $1,622.43 figure) includes the principal amount due and may include interest and all late charges or other penalties, if applicable under the default provisions of your contract with the creditor"-without squarely saying whether the "balance" or the "$1,622.43 amount" in fact included those charges.

In Miller v. McCalla Raymer, Padrick, Cobb, Nichols, and Clark, L.L.C., 214 F.3d 872 (7th Cir. 2000), the Seventh Circuit held that a collection letter that specified the amount of the unpaid principal balance, without stating how that amount was altered by unpaid interest, unpaid late charges, escrow advances or other charges, failed to comply with the FDCPA. In so holding, the Seventh Circuit recognized that it "might be impossible for the defendants to . . . determine what the amount of the debt might be at some future date if, for example, the interest rate in the loan ...


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