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FRANCIS v. SNYDER

September 30, 2005.

DEBRA FRANCIS, Plaintiff,
v.
TIMOTHY SNYDER, Defendant.



The opinion of the court was delivered by: JOHN GRADY, District Judge

MEMORANDUM OPINION

Before the court are the parties' cross-motions for summary judgment. For the reasons stated below, plaintiff's motion is granted and defendant's motion is denied.

BACKGROUND

  Plaintiff Debra Francis brings this action alleging that a debt collection letter she received from defendant Timothy Snyder violates the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692, et seq. ("FDCPA" or "the Act"). The material facts are not disputed. Snyder, an attorney, is a debt collector for Quik Cash Loans. Quik Cash makes short-term, or "pay day," loans (usually for a term of 30 days or less) to individuals who can show proof of steady income. The security for the loan, and repayment with interest, is provided for by a check drawn on the debtor's account and dated for the end of the loan period. The debtor may prepay the loan at any time during the loan period to avoid prorated interest charges. If prepayment is not made, Quik Cash deposits the check at the end of the loan period, thus concluding the transaction.

  In March 2000, Francis obtained a two-week loan from Quik Cash in the amount of $180. However, when the two weeks passed and Quik Cash attempted to deposit Francis's repayment check, it was dishonored because Francis had placed a "stop payment" on the check. Quik Cash's demands for payment went unheeded, so it referred the debt to two separate collection agencies. The agencies sent Francis debt collection letters but those also went unanswered. Quik Cash then referred the file to Snyder, who sent Francis the collection letter that is the subject of this lawsuit.

  The letter, dated June 11, 2004 (hereafter, "the letter"), has a header which reads "Law Offices of Snyder & Associates" and provides an address and telephone number. The body of the letter begins with the statement "Final Notice" in large, bold, capital letters. The text of the letter is as follows:
This notice has been sent by a law firm. This is an attempt to collect a debt. Any information obtained will be used for that purpose. If paid in full to this office, all collection activity will be stopped.
Unless you notify this office within thirty (30) days after receiving this notice that you dispute the validity of this debt or any portion thereof, this office will assume [the] debt is valid. If you notify this office in writing thirty (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 a judgment and mail you a copy of such judgment or verification. If you request in writing within 30 days after receiving this notice this off[ice] will provide you with the name and address of the original creditor, if different from the current creditor.
If you have questions please contact paralegal Leroy Buth at this office, otherwise please make all Money Orders payable to SNYDER & ASSOCIATES, and send them to the address on this letterhead.
The letter continues in larger print:
A bad check can be considered a violation of Illinois Statutes! (see attached)
If you contact this office on receipt of this letter you may qualify for a payment plan. If you do not call, the balance will be pursued in full, including collection costs.
The letter is signed above a signature block stating "Timothy Snyder, Attorney at Law." (Compl., Ex. A.)*fn1

  Francis has filed a complaint alleging that the letter violates the FDCPA in two ways: (i) its statutorily-required notice granting her 30 days to dispute the debt is "overshadowed" by other language in violation of 15 U.S.C. § 1692g, and (ii) it contains a false and misleading threat of litigation in violation of 15 U.S.C. §§ 1692e. Both parties have moved for summary judgment on liability.

  DISCUSSION

  Summary judgment "shall be rendered forthwith 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." Fed.R.Civ.P. 56(c). In considering such a motion, the court construes the evidence and all inferences that reasonably can be drawn therefrom in the light most favorable to the nonmoving party. See Pitasi v. Gartner Group, Inc., 184 F.3d 709, 714 (7th Cir. 1999). "Summary judgment should be denied if the dispute is `genuine': `if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Talanda v. KFC Nat'l Mgmt. Co., 140 F.3d 1090, 1095 (7th Cir. 1998) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). The court will enter summary judgment against a party who does not "come forward with evidence that would reasonably permit the finder of fact to find in [its] favor on a material question." McGrath v. Gillis, 44 F.3d 567, 569 (7th Cir. 1995). When there are cross-motions for summary judgment, the court is not obligated to grant judgment as a matter of law for one side or the other. The court must evaluate each party's motion on its own merits, resolving all factual uncertainties and drawing all reasonable inferences against the party whose motion is under consideration. See Gazarkiewicz v. Town of Kingsford Heights, 359 F.3d 933, 939 (7th Cir. 2004).

  The FDCPA

  The FDCPA was enacted "to eliminate abusive debt collection practices by debt collectors." 15 U.S.C. § 1692(e). The Act establishes certain standards for debt collectors' communications with debtors, including, inter alia, a requirement that collectors advise debtors of their rights to dispute and demand verification of the debt, id. § 1692g, and a prohibition against "false, deceptive or misleading" statements in collection letters. Id. § 1692e.

  Courts in the Seventh Circuit evaluate whether a communication from a debt collector violates the Act "through the eyes of an unsophisticated consumer." Jang v. A.M. Miller & Assocs., 122 F.3d 480, 483-84 (7th Cir. 1997). The unsophisticated consumer is a "hypothetical consumer whose reasonable perceptions will be used to determine if collection messages are deceptive or misleading." Gammon v. GC Servs. Ltd. Partnership, 27 F.3d 1254, 1257 (7th Cir. 1994). The level of sophistication of the "unsophisticated consumer" is "low, close to the bottom of the sophistication meter." Avila v. Rubin, 84 F.3d 222, 226 (7th Cir. 1996). "This assumes that the debtor is uninformed, naive, or trusting[.]" Fields v. Wilber Law Firm, 383 F.3d 562, 564 (7th Cir. 2004) (citation omitted.) Still, an unsophisticated consumer possesses "rudimentary knowledge about the financial world," and is "capable of making basic logical deductions and inferences." Id. (citation omitted.)

  The "Overshadowing" Claim

  Francis's first claim is that the letter violates 15 U.S.C. § 1692g. That section requires debt collectors to include in collection letters a "validation notice" telling the recipient that she has 30 days to dispute the validity of the debt. See 15 U.S.C. § 1692g(a)(4). The notice must also explain that (i) if the debtor disputes the debt, the collector must stop collection efforts until it sends information verifying the debt, id. § 1692g(b), and (ii) if the debtor does not dispute the debt, the collector may assume it is valid. Id. § 1692g(a)(3). Reciting this language in a collection letter does not by itself guarantee compliance with § 1692g; the debt collector must also refrain from including other language that "overshadows" or contradicts the validation notice. Chauncey v. JDR ...


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