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Beler v. Blatt

July 20, 2006


The opinion of the court was delivered by: Jeanne E. Scott, U.S. District Judge


This matter comes before the Court on Defendant's Motion for Sanctions (d/e 27). Defendant Blatt, Hasenmiller, Leibsker and Moore, LLC, moves for an award of sanctions against Plaintiff Ella M. Beler and her attorney Stephen F. Hedinger, pursuant to 28 U.S.C. § 1927 and 15 U.S.C. § 1692k(a)(3). For the reasons set forth below, the Motion for Sanctions is denied.

Beler filed her one-count Complaint (d/e 1) on March 17, 2005. On October 4, 2005, with leave of Court, Beler filed a one-count First Amended Complaint (d/e 9). Beler alleged that Defendant violated the Fair Debt Collection Practices Act (FDCPA) in its efforts to collect her unpaid charge account bill at J. C. Penney Co. Specifically, Beler claimed that: (1) Defendant violated 15 U.S.C. § 1692e by making false, deceptive or misleading representations in its Collection Complaint and attached affidavit, (2) Defendant engaged in unfair and unconscionable collection efforts, in violation of 15 U.S.C. § 1692f, by serving the Citation on the Bank and freezing Beler's bank account when the funds in the bank account were exempt from collection efforts, and (3) Defendant failed to send Beler the required initial notification regarding validation of the debt as required under 15 U.S.C. § 1692g. Beler informed the Court that she conceded the validation notification claim in her Motion for Summary Judgment (d/e 19). Plaintiff's Motion for Summary Judgment, p. 3 n. 1. On May 18, 2006, this Court granted summary judgment in favor of Defendant on Beler's remaining two claims. Opinion, May 18, 2006 (d/e 25).

Defendant's Motion for Sanctions relates to Beler's validation notification claim under § 1692g and her false, deceptive or misleading representations claim under § 1692e. Defendant asserts that Beler and her attorney should not have filed the validation notice claim and should not have pursued it through discovery to the brink of summary judgment.

Defendant further asserts that Beler should not have pursued a specious § 1692e(14) claim through summary judgment. According to Defendant, this conduct warrants sanctions under 28 U.S.C. § 1927 and 15 U.S.C. § 1692k(a)(3). This Court, in its discretion, declines to impose sanctions on Plaintiff or her counsel.

The FDCPA requires a debt collector to send the consumer a written notice containing specific validation information within five days after the initial communication with the consumer in connection with the collection of any debt. 15 U.S.C. § 1692g(a). Beler claimed that Defendant had failed to comply with these validation notification requirements. The validation notification claim was included in Beler's original Complaint filed in March 2005. Defendant's Motion for Sanctions represents that "[i]n August 2005, defendant's counsel advised plaintiff's counsel that, according to defendant's files, a form demand letter with the requisite validation notice was sent to the plaintiff in October 2003." Motion for Sanctions, p. 2. On September 7, 2005, Defendant provided Plaintiff with its initial Fed. R. Civ. P. 26(a)(1) disclosures. See Motion for Sanctions, Ex. A. The cover letter states "we are enclosing a pro forma copy of the initial collection letter sent to Ms. Beler on or about October 28, 2003. The letter, as you can see, clearly contains the requisite validation notice." Id., p. 2. Attached was a copy of Defendant's form validation notice letter. Id., p. 3. The letter continues, "we demand that you immediately withdraw the allegations contained at Paragraphs 18-19 of your complaint. If you fail to do so, we will seek the appropriate remedies under Rule 11, 28 U.S.C. § 1927, and 15 U.S.C. § 1692k(a)(3)." Id., p. 2.

Plaintiff's counsel responded by letter dated September 14, 2005, as follows:

Your September 7 letter also suggested that grounds exist for my client to drop her claims that the complaint served upon her was the first notice of this debt received by her from your client. In support, you attached a "pro forma" letter that could have been used to contact her in advance of the complaint. The obvious problem I have with this "proof" is that it does nothing to establish that any such letter was actually printed or sent to her. I am sure you will agree that the mere availability of such a letter on your client's word processing system does not mean that it was ever sent to my client. I had anticipated, based on our prior phone conversations, that you would submit to me some proof that the letter had indeed been sent, but so far you have provided none. I leave that opportunity open to you, though, and promise to give it careful consideration when it arrives. Meantime, as I told you before, several other of my clients all have informed me that, consistent with Ms. Beler's claim, the first notice they ever received from your client was the complaint served upon them.

Motion for Sanctions, Ex. B, p. 2.

Beler's First Amended Complaint was filed, with leave of Court, on October 4, 2005. The First Amended Complaint again alleged that Defendant had failed to provide the requisite validation notification under § 1692g. The First Amended Complaint also added allegations that Defendant "violated 15 U.S.C. 1692e, including 15 U.S.C. 1692e(14) of the FDCPA, by serving a pleading and an affidavit that are false or misleading and inconsistent, as to whom Plaintiff allegedly owed the debt to, and as to whom [Defendant] represented as creditor in the collection action." First Amended Complaint, ¶ 22. The First Amended Complaint went on to quote 15 U.S.C. § 1692e(14). Id., ¶ 23.

On October 20, 2005, Defendant served Plaintiff's counsel with its Responses to Plaintiff's First Request for Production of Documents. See Motion for Sanctions, Ex. C. Defendant's Responses included another pro forma copy of Defendant's validation notice, as well as computerized case management records relating to Beler. Id., p. 7-17. The computerized records include an entry as follows: "*(009) 09:30 10-28-03 SNT NTC BLD1S; (010) 15:38 10-28-03 ATTORNEY REVIEW, LETTER SENT WB/IFL" Id., p. 8. According to Defendant, these entries establish that the initial demand letter was sent on October 28, 2003. Plaintiff, however, continued to pursue her validation notice claim under § 1692g.

On January 31, 2006, Plaintiff's counsel deposed one of Defendant's principals, Ken Wake. Wake testified that the requisite validation notice had been sent to Beler on October 28, 2003. In a letter dated February 9, 2006, to Plaintiff's counsel, Defendant's counsel wrote:

As you know, dispositive motions are due on February 28, 2006. In light of the testimony given last week by Ken Wake regarding the sending of the initial demand letter, you have no conceivable basis on which to maintain that the letter was not sent. If we are forced to file a summary judgment motion on this claim, we will most assuredly seek sanctions against you personally, pursuant to 28 U.S.C. § 1927, for unreasonably and vexatiously prolonging the litigation. See Riddle & Associates, P.C. v. Kelly, 414 F.3d 832 (7th Cir. 2005). ...

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