to conclude that the thirty-day period commenced on the date the February
letter was written as opposed to received. While the statement on the front
of the February letter might have created some uncertainty, the
clarification and precision of the validation notice would have effectively
laid it to rest.
McStay also complains that IC violated §§ 1692e, 1692e(2), and
1692e(10) of the FDCPA. (Cplt. ¶ 32(B)-(C).) Section 1692e prevents
a debt collector from using false or misleading means or representations
to collect a debt. In particular, § 1692e(2) prevents a debt
collector from falsely representing "the character, amount, or legal
status of any debt" or "any services rendered or compensation which may
be lawfully received by any debt collector for the collection of a debt."
Section 1692e(10), similarly, prevents the "use of any false
representation or deceptive means to collect or attempt to collect any
debt or to obtain information concerning a consumer." McStay alleges that
IC violated § 1692e(2) when it attempted to charge an annual interest
rate of 12% in each of its letters, in excess of the 9% rate mandated by
CPLR § 5004. (Pl.'s Mem. of Law in Supp. of Pl.'s Cross-Motion for
Partial Summ. Judg. at 5-8.) McStay further alleges that IC violated
§§ 1692e and 1692e(10) by mailing deceptive notices that misled
consumers. Id. at 5. The court finds McStay's arguments to be without
To successfully state a claim pursuant to § 1692e(2), McStay must
show that IC knowingly or intentionally misrepresented the amount of the
debt in its collection letters. See Stonehart v. Rosenthal et. al, 2001
U.S. Dist. LEXIS 11566, *22 (S.D.N Y 2001) (Scheindlin, J.) ("To state a
claim under section 1692e(2) of the FDCPA, [plaintiff] must show that
[defendant] knowingly misrepresented the amount of the debt . . .")
(citing Ducrest v. Alco Collections, Inc., 931 F. Supp. 459, 462
(M.D.La. 1996)). As McStay has not adduced any evidence indicating that
IC intentionally misrepresented the applicable interest rate or the
amount of the debt, McStay has not met his burden of proof on this
element. If anything, the evidence provided by IC indicates that IC
justifiably relied on Dr. Rhodes to set the applicable interest rate.
(Melton Aff. ¶ 4.) "A debt collector must be able to rely on
representations from his client as to the amount of the debt. The FDCPA
does not require debt collectors to conduct independent investigations of
the information provided by clients when collecting a debt." Stonehart,
2001 U.S. Dist. LEXIS at *22.
Nor has McStay succeeded in making out a claim pursuant to § 1692e
and, in particular, § 1692e(10). Both sections deal with the use of
misleading or deceptive means to collect a debt. The Second Circuit has
ruled that "a collection notice is deceptive when it can be reasonably
read to have two or more different meanings, one of which is inaccurate."
Russell v. Equifax. A.R.S. 74 F.3d 30, 35 (2d Cir. 1996). See also Vera
v. Trans-Continental Credit and Collection Corp., 1999 WL 163162, *3
(S.D.N.Y. 1999) (Chin, J.) (applying Russell standard to violations of
§§ 1692e and 1692e(10)). Since the court has already decided that the
February letter cannot reasonably admit of two different readings, the
court must conclude that the February letter does not violate §§ 1692e
Lastly, McStay contends that IC committed common law fraud by sending
her the collection letters. The court fails to see how McStay's
conclusory allegations satisfy the high threshold set by Rule 9(b), F.R.
Civ. P., requiring plaintiffs to plead
fraud with particularity.
"Pleadings of fraud must . . . specify the time, place, speaker, and
sometimes even the content of the alleged misrepresentation." Sendar
Co., Inc. v. Megaware, Inc., 705 F. Supp. 159, 161 (S.D.N.Y. 1989)
(Leisure, J.) (citations omitted). Notably, McStay pleads that the
defendant committed common law fraud: "by collecting fees which were
known by defendant to be unfair, deceptive, or illegal" (Cplt. ¶
36); "by intentionally claiming and then collecting `additional client
charges' that were known by defendant to be illegal" (Cplt. ¶ 37);
and "by intentionally claiming and then collecting `interest at the rate
of 12.00% annually' that was know [sic] by defendant to be illegal"
(Cplt. ¶ 38).
These pleadings, in the court's view, do not fulfill the requirements
of Rule 9(b), F.R. Civ. P., because they fail to allege particularized
facts as to how IC's statements were false or misleading. McStay attempts
to remedy this weakness by arguing that a plaintiff is permitted to aver
intent or state of mind generally under Rule 9(b), F.R. Civ. P.,
especially if the facts pleaded are peculiarly within the opposing
party's knowledge. (Pl.'s Mem. of Law in Supp. of Pl.'s Cross-Motion for
Partial Summ. Judg. at 9.) While McStay is correct to point out that Rule
9(b), F.R. Civ. P. permits a plaintiff to allege fraudulent intent
generally, see, e.g., PI. Inc. v. Ogle, 932 F. Supp. 80, 84 (S.D.N.Y.
1996) (Koeltl, J.), she fails to satisfy the attendant requirement that
such allegations be supplemented with statements of fact upon which the
belief or intent is founded. "Allegations of fraud cannot ordinarily be
based `upon information and belief,' except as to `matters peculiarly
within the opposing party's knowledge' . . . To satisfy Rule 9(b) in the
latter instance, the allegations must be accompanied by a statement of
the facts upon which the belief is founded." Luce v. Edelstein,
802 F.2d 49, 54 n. 1 (2d Cir. 1986) (citations omitted); see also PI, 932
F. Supp. at 84 ("Although Rule 9(b) allows a plaintiff to allege
fraudulent intent generally, a plaintiff must allege facts that give rise
to a strong inference of fraudulent intent . . . This strong inference
can be established either `(a) by alleging facts to show that defendants
had both motive and opportunity to commit fraud, or (b) by alleging facts
that constitute strong circumstantial evidence of conscious misbehavior
or recklessness.'" (quoting Shields v. Citytrust Bancorp, Inc.,
25 F.3d 1124, 1128 (2d Cir. 1994)). Accordingly, since McStay has not
alleged facts giving rise to a strong inference of fraudulent intent, her
pleading is deficient under the strict standard of Rule 9(b), F.R. Civ.
In view of the above determinations, it is not necessary to evaluate
IC's contention that the common law fraud claim, alternatively, should be
dismissed due to the fact that there remains no independent ground for
federal jurisdiction over McStay's state law, common law fraud claim once
the federal claims have been dismissed. (Def.'s Mem. of Law in Supp. of
Motion to Dismiss at 22.)
For the foregoing reasons, IC's motion for summary judgment pursuant to
Rules 9(b), 12(c), and 56, F.R. Civ. P. is granted and McStay's
cross-motion for partial summary judgment pursuant to Rule 56, F.R. Civ.
P. is denied.
IT IS SO ORDERED