C.D. of California Rules Law Firm’s Debt Collection Letter Did Not Misrepresent Attorney Involvement or Threaten Legal Action

On January 23, 2014 the U.S. District Court for the Central District of California issued an order granting Defendants’ motion to dismiss  in an FDCPA case captioned John Kermani v. Law Office of Joe Pezzuto, LLC; Joseph James Pezzuto II.  Importantly, the court dismissed Plaintiff’s claim with prejudice.  Nicole Strickler of Messer Strickler, Ltd. represented the Defendants.

The following facts were taken from Plaintiff’s complaint which the Court accepted as true for purposes of deciding the motion to dismiss.  Plaintiff’s complaint arose out of his alleged receipt of a single dunning notice sent by a Law Office on a debt incurred by Plaintiff to Bank of America, N.A.  Allegedly, the Law Office sent a dunning letter stating that Bank of America was the creditor and included the account number and current balance of the debt.  The Plaintiff alleged that the dunning letter was printed on the Law Office’s letterhead and contained the following disclaimers: “At this time no attorney with our law firm has personally reviewed the particular circumstances of your account”, and “BE ADVISED THIS IS AN ATTEMPT TO COLLECT A DEBT BY A DEBT COLLECTOR.”  In addition, Plaintiff alleged that the Law Office twice obtained Plaintiff’s consumer report from TransUnion, a consumer reporting agency.

Plaintiff alleged that Defendants violated (1) the Fair Credit Reporting Act (“FCRA”) and the Consumer Credit Reporting Agencies Act (“CCRAA”) by obtaining Plaintiff’s report without a permissible purpose, and (2) the Fair Debt Collections Practices Act (“FDCPA”) and Rosenthal Fair Debt Collection Practices Act (“Rosenthal Act”) by falsely implying the dunning letter came from an attorney, thus misleading Plaintiff to believe Defendants had been retained for legal action; falsely representing the character of a debt; and threatening to communicate false credit information.

Discussion:

FCRA and CCRAA Claims:

Plaintiff alleged that the Law Office violated the FCRA and the parallel California statute, the CCRAA, by obtaining his consumer report without a permissible purpose.  The FCRA prohibits a person from obtaining a credit report for purposes not specified in 15 U.S.C. § 1681b.  One such purpose, however, is using “the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the … collection of an account of [] the consumer.”  15 U.S.C. § 1681b(a)(3)(A).  Plaintiff alleged that the Law Office lacked a permissible purpose because he was not involved with any credit transaction with the Law Office.  The Judge quickly dismissed this argument as the FCRA and CCRAA do not limit permissible purposes to situations where consumers have “direct dealings” with debt collectors.  Pyle v. First Nat’l Collection Bureau, No. 1:12-CV-00288-AWI, 2012 WL 5464357m at *3 (E.D. Cal. Nov. 8, 2012).  The relevant inquiry is whether the debtor was involved in a credit transaction with the creditor, not the collection agency.  Therefore, the Law Office had a permissible purpose for obtaining Plaintiff's credit report.

FDCPA and Rosenthal Act Claims:

Plaintiff also alleged various violations of the FDCPA and the parallel California statute, the Rosenthal Act.  Many of Plaintiff’s claims were unsupported with facts and were quickly dismissed as failing to state a claim.  The most interesting finding of the Court’s decision involved Plaintiff's claims under FDCPA §1692e(3) and e(5).  Under §1692e(3) a debt collector is prohibited from falsely representing that “any individual is an attorney or that any communication is from an attorney.”  Likewise, §1692e(5) prohibits debt collectors from threatening “to take any legal action that cannot legally be taken or that is not intended to be taken.  The Plaintiff alleged that the Law Office misrepresented that the dunning letter came from an attorney in violation of §1692e(3).  The Plaintiff also alleged that the dunning letter misled him to believe that the Law Office had been “retained for legal action” against him by stating that “[t]his office has been retained to collect the debt owed by you.” 

The Court specifically found that the dunning letter did not give the misimpression that an attorney was involved in the collection of a debt, or that it threatened legal action.  First, the Plaintiff alleged no facts to support that the dunning letter was written by a non-attorney.  Conversely, Plaintiff alleged that Mr. Pezzuto is an attorney.  Second, the Court stated that “[t]he disclaimer that ‘no attorney with our law firm has personally reviewed the particular circumstances of your account,’ does not support the allegation that a non-attorney wrote the letter, rather, the statement creates a presumption of some minimal level of attorney involvement.”  Therefore, the dunning letter did not give the misimpression that an attorney was involved in the collection of the debt, and was not in violation of §1692e(3).

Likewise, the Court found that the dunning letter did not threaten legal action.  In fact, the language of the letter informed Plaintiff that the Law Office was “retained to collect the debt against” him, with no reference to possible litigation.  Additionally, the letter states, “[a]t this time, no attorney with our law firm has personally reviewed the particular circumstances of your account.”  The Court found that no language in the letter refers to litigation or suggests any purpose for the letter other than to collect a debt.  Therefore, the letter was not in violation of §1692e(5).

If you need assistance with reviewing or rewriting your dunning letter, contact Nicole Strickler at (312) 334-3442 or by e-mailing nstrickler@messerstrickler.com.