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United States District Court, Southern District of New York

January 15, 2003


The opinion of the court was delivered by: Lewis A. Kaplan, United States District Judge


This is an action for alleged violation of the Fair Debt Collection Practices Act (the "FDCPA").*fn1 There are no issues of fact, and the parties have cross-moved for summary judgment. Plaintiff has moved also for class certification. In view of the disposition of the cross-motions, there is no need to address the class certification motion.


Defendant Riddle & Associates, P.C. ("Riddle") was retained to recover $309.76 owed to its client by plaintiff Steven Shapiro pursuant to a contract that provided, inter alia, that:

"[i]f we are required to use a collection agency or attorney to collect money that you owe to us . . ., you agree to pay the reasonable cost of collection or other action. These costs might include, but are not limited to, the costs of the collection agency, reasonable attorney fees, and court costs."*fn2

On or about April 30, 2001, Riddle sent plaintiff a letter containing the following language:

"If you want to resolve this matter without a lawsuit, you must either pay the Total Amount Due listed above (unless it has already been paid) or call our firm at 1-800-225-5050 and work out arrangements for payment. If you do neither of these things, our client will be entitled to file a lawsuit against you for collection of this debt. No decision has been made to file a law suit. If legal action is taken and a law suit is filed, it will be handled by an attorney licensed in your state.

"Federal law gives you thirty days after you receive this letter to dispute the validity of the debt or any part of it. If you don't dispute it within that period, we will assume it is valid. If you do dispute it — by notifying our firm in writing to that effect — we will, as required by law, obtain and mail to you proof of the debt. And if, within the same period, you request in writing the name and address of your original creditor, if the original creditor is different from the current creditor, we will furnish you with that information too.

"The law does not require our client to wait until the end of the thirty-day period before suing you to collect this debt. If, however, you request proof of the debt or the name and address of the original creditor within the thirty-day period that begins with your receipt of this letter, the law requires our firm to suspend our efforts (through litigation or otherwise) to collect the debt until we mail the requested information to you.

"This is an attempt to collect a debt. Any information obtained will be used for that purpose. This communication is from a debt collector."*fn3

The letter sought recovery of, in addition to the debt owed by plaintiff, a $98 attorney/collection cost.*fn4


Plaintiff advances two theories on which, he claims, the letter violated the FDCPA. First, he maintains that the inclusion of the $98 attorney collection cost charge constituted a false representation that the plaintiff was subject to a collection charge that was, in fact, illegal. Second. he argues that the letter, taken as a whole, violated the FDCPA's validation provision, which requires notice to the debtor of the debtor's right to seek validation of the debt.*fn5 Neither theory has the slightest basis in law or fact.

The Collection Charge

The FDCPA provides in relevant part that it is unlawful for a debt collector such as Riddle to collect "any amount (including any . . . fee, charge. or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law."*fn6 In this case, the agreement between plaintiff and Riddle's client explicitly permitted the creditor to collect a reasonable fee if it were required to employ a collection agency or attorney, as it obviously was.*fn7 Thus, the only conceivable line of attack open to plaintiff — and it is far from clear that plaintiff seeks to use it — would be a contention that the $98 charge was unreasonable.

In this case, the undisputed evidence shows that Riddle, prior to sending the letter, examined the agreement with plaintiff to ensure that charging a fee was authorized.*fn8 screened the group of accounts (including plaintiff's) that were referred for collection in order to ensure that they met criteria necessary for inclusion in its information system and that each involved a minimum overdue balance,*fn9 screened the accounts to ensure that partial payment had not been made,*fn10 conducted bankruptcy, change of address and current phone number checks,*fn11 and had a compliance attorney review both the account and the collection letter.*fn12 All of this takes time and costs money, as do the insurance premiums that Riddle pays to cover its business and the administrative and technical staffs it employs and the information systems it operates.

It would be plaintiff's burden at trial to establish that the $98 charge was unreasonable. As defendant has put plaintiffs ability to sustain that burden in issue, defendant is entitled to summary judgment on this issue unless plaintiff has offered admissible evidence sufficient to raise a genuine issue of fact as to reasonableness.*fn13 This plaintiff has not done. Nor do the cases upon which he relies support his position in any other respect.*fn14

Debt Validation Notice

Plaintiff claims also, in substance, that the collection letter violated Section 1692g's validation provision — which requires notice to the debtor of the debtor's right to seek validation of the debt — because the references to possible litigation overshadowed the notice and would lead the debtor to believe that seeking validation or disputing the debt would be futile and could not stave off litigation.*fn15 He relies on Savino v. Computer Credit Inc.*fn16

As Savino makes clear, when determining whether a debt collector's notice violates Section 1962g, a court is to apply "an objective standard, measured by how the least sophisticated consumer would interpret the notice received from the debt collector."*fn17 "When a notice contains language that overshadows or contradicts other language informing a consumer of her rights, it violates the Act."*fn18

Here, it is undeniable that the collection letter clearly informed the debtor of his rights under Section 1962g. The question is whether the references to litigation would have left the "least sophisticated consumer" uncertain as to his or her rights under the FDCPA. This Court is satisfied that the letter, read as a whole, would not have done so.

The letter began by advising the debtor that he had to do one of two things if he "want[ed] to resolve this matter without a lawsuit."*fn19 It then went on to say that if he did neither, Riddle's client would "be entitled to file a lawsuit."*fn20 If the letter had stopped there, it might well have been at least confusing if not downright misleading, as it would have been entirely reasonable to construe the letter as meaning that Riddle's client would be entitled to, and in fact would, sue if the debtor did not take one of the two options presented — make payment or call to arrange for payment. But the letter did not stop there. The very next sentence read: "No decision has been made to file a lawsuit," and it went on to add that "[i]f legal action is taken," it would be handled by an attorney licensed in the debtor's state.*fn21 Thus, whatever mistaken impression or confusion might have been created by the first two sentences, had they stood alone, unequivocally was removed or clarified by the third and fourth sentences. The letter as a whole left no doubt that litigation was merely an option, that no decision had been made as to whether to litigate, but that the debtor could avoid the risk of a lawsuit either by paying or arranging to pay.

Moreover, the letter's references to litigation did not overshadow or contradict its debt validation language. The letter clearly explained, in language similar to that suggested by the Savino panel, that the defendant would be obliged to cease all collection efforts, whether through litigation or other means, if the debtor exercised his right to seek validation of the debt.*fn22 In other words, this letter, unlike that in Savino, made it entirely clear that the right to seek validation of the debt would trump the commencement or continuation of a lawsuit until such time as the debt collector complied with the statute.*fn23 Far from overshadowing the notice of the debtor's validation right, this letter made it quite clear.*fn24 Thus, because the reference to litigation did not overshadow or contradict the mandatory validation notice, the "least sophisticated consumer" would not have been uncertain as to her rights.*fn25

Plaintiff's memorandum, generously interpreted, could be read to contend that the letter suffers from an additional deficiency under the FDCPA — that it misleadlingly suggested that litigation was imminent when "there is no reason to believe that it was ever contemplated by the creditor to commence litigation within thirty days of when the consumer received this letter."*fn26 This argument suffers from a number of deficiencies.

First, plaintiff, who bears the burden on this point. has failed to come forward with any evidence to suggest that, even if the letter reasonably could be interpreted to threaten imminent suit, Riddle had no intention of commencing litigation. Furthermore, plaintiff's contention is belied by the letter, which stated explicitly that no decision to sue had been made. Finally, the undisputed evidence shows that Riddle has filed, or caused to be filed on behalf of its clients, approximately 8,000 to 10,000 lawsuits where the average balance owed was between $25 and $50.*fn27 Thus, this argument is without merit.


For the foregoing reasons, defendant's motion for summary judgment dismissing the complaint is granted. Plaintiff's motion for summary judgment is denied. Plaintiff's motion for class certification is denied as moot.


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