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Sandoval v. I.C. Systems

United States District Court, E.D. New York

March 29, 2018

JUAN SANDOVAL, Plaintiff,
v.
I.C. SYSTEMS, Defendant.

          MEMORANDUM & ORDER

          DORA L. IRIZARRY, Chief United States District Judge

         Juan Sandoval (“Plaintiff”) filed a complaint in Queens County Civil Court on May 22, 2017 against I.C. Systems (“Defendant”) alleging violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. See generally, Complaint (“Compl.”), Ex. A to Notice of Removal, Dkt. Entry No. 1. On June 21, 2017, Defendant removed the case to this Court. See Id. On June 29, 2017, Defendant moved to dismiss the Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. See generally, Def.'s Mem. of Law (“Def.'s Mem.”), Dkt. Entry No. 7-4. Plaintiff opposed Defendants' motion. See generally, Pl.'s Mem. of Law in Opp'n (“Pl.'s Opp'n”), Dkt. Entry No. 10. Defendant filed a reply in response to Plaintiff's opposition. Def.'s Reply Mem. of Law (“Def.'s Reply”), Dkt. Entry No. 9. For the reasons set forth below, Defendant's motion is granted.

         BACKGROUND

         This case arises out of a single phone call, initiated by a third-party credit counselor, on behalf of a consumer, with a consumer debt collector. Plaintiff alleges that on or about February 17, 2017 he sought assistance with his credit from Mrs. Reyes, a credit counselor. See Compl. at ¶ 10. Defendant had reported one of Plaintiff's delinquent accounts to one of the national credit bureaus. Id. at ¶ 9. Mrs. Reyes called the Defendant, and Plaintiff also got on the phone to verify his information and authorize Mrs. Reyes to speak to Defendant on his behalf. Id. at ¶¶ 11-12. Defendant relayed to Mrs. Reyes that there was a Time Warner Cable account that showed a zero balance. Id. at ¶ 13. Mrs. Reyes informed Defendant that, on Plaintiff's credit report, the Time Warner Cable account showed a balance of $139, at which point Defendant explained to Mrs. Reyes that the account had been recalled and was sent back to Time Warner Cable on June 14, 2016. Id. at ¶¶ 14-17.

         Mrs. Reyes then asked Defendant whether Plaintiff could dispute the account over the phone or whether a dispute must be in writing. Id. at ¶ 18. Defendant replied that since the account was recalled it could not be disputed, but it would be deleted from Plaintiff's credit report between thirty and sixty days from the request. Id. at ¶ 19. Mrs. Reyes questioned why, if the recall was in June 2016, the account had not been corrected as of January 2017. Id. at ¶ 20. Defendant responded that the account would be removed from the credit report within thirty to sixty days. Id. at ¶ 21. Mrs. Reyes told Defendant that she wanted to mark the account as disputed because it was affecting Plaintiff's credit score, but Defendant again stated that the account cannot be disputed since it has a zero balance. Id. at ¶¶ 22-23. Defendant then referred Mrs. Reyes to the credit bureau if she had further questions and offered to provide their contact information. Id. at ¶ 23. Mrs. Reyes then asked if Plaintiff should contact Time Warner Cable to dispute the account. Id. at ¶ 24. Defendant informed her that it was unclear if Time Warner Cable would have any information about Plaintiff's credit and suggested that Plaintiff contact the credit bureaus. Id. at ¶ 25.

         Plaintiff alleges that Defendants responses on the February 17, 2017 phone call violated sections 1692e and 1692f of the FDCPA, which respectively prohibit the use of any false, deceptive, or misleading representations in connection with the collection of a debt and the use of unfair or unconscionable means in connection with the collection of a debt. See generally, Compl.; 15 U.S.C §§ 1692e, f. Defendant argues that Plaintiff's claims should be dismissed because the FDCPA regulates communications between consumers and debt collectors, not debt collectors and third parties, and that: (1) referring a debt to a credit bureau; (2) referring a debtor's representative to the original account creditor/credit bureau; and (3) refusing to change the status of an account to “disputed” are not actionable under § 1692e. See generally, Def.'s Mem. Defendant further argues that Plaintiff fails to allege how its communications were unfair or unconscionable. Id. In opposition, Plaintiff argues that the FDCPA is construed broadly and adopting Defendant's arguments will undermine the purposes of the act by: (1) penalizing a consumer for availing himself of the assistance of a credit counselor or other representative and (2) excluding from protection communications initiated by the debtor. See generally, Pl.'s Opp'n.

         DISCUSSION

         I. Legal Standard

         To survive a Rule 12(b)(6) motion to dismiss, a complaint must “state a claim of relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 561 (2007) (citations and internal quotation marks omitted). The plausibility standard “does not require ‘detailed factual allegations, ' but it demands more than [] unadorned, the-defendant-unlawfully-harmed-me accusation[s].” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). Iqbal requires more than “‘a formulaic recitation of the elements of a cause of action.'” Id. at 681 (quoting Twombly, 550 U.S. at 555). Where a complaint pleads facts that are “merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.” Id. at 678 (quoting Twombly, 550 U.S. at 557) (internal quotation marks omitted). On a motion to dismiss, the court accepts as true all well pled factual allegations and draws all reasonable inferences in the plaintiff's favor. See Dangler v. N.Y.C. Off Track Betting Corp., 193 F.3d 130, 138 (2d Cir. 1999).

         II. Analysis

         A. Section 1692e

         Section 1692e prohibits a debt collector from using any “false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. In analyzing whether a debt collector has violated this section, courts use an objective test based on the “least sophisticated consumer.” Jacobson v. Healthcare Fin. Servs., Inc., 516 F.3d 85, 90 (2d Cir. 2008) (citing Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir. 1993)). This standard “ensure[s] that the statute protects the gullible as well as the shrewd, ” but “carefully preserve[s] the concept of reasonableness, ” and “protects debt collectors from unreasonable constructions of their communications.” Id. (citing Clomon, 988 F.2d at 1318-20). The Second Circuit and courts in this district have recognized that section 1692e includes a materiality requirement. See Gabriele v. Am. Home Mortg. Servicing, Inc., 503 F. App'x 89, 94 (2d Cir. 2012) (collecting cases).

         Defendant contends that: (1) since the statements at issue were made to a third-party and not the debtor, on a call initiated by the third-party/debtor, the FDCPA's protections do not apply, and (2) even if the FDCPA did apply, the statements are immaterial as a matter of law. Def.'s Mem. at 7-9. In opposition, Plaintiff argues that the FDCPA is interpreted broadly to include communications initiated by the debtor or his representative and includes statements made to a debtor's representative. See generally, Pl.'s Opp'n.

         The Court's decision in Vernot v. Pinnacle Services, L.L.C. is instructive. Vernot v. Pinnacle Servs., L.L.C., 2017 WL 384327 (E.D.N.Y. Jan. 26, 2017). In Vernot, plaintiff alleged that defendant debt collector violated sections 1692e and 1692f by “deceptively and deceitfully [claiming] that no information was available” and referring plaintiff to another entity during a phone call initiated by the consumer's representative. Id. at *1. Plaintiff further alleged that defendant debt collector violated the FDCPA by failing to notify the appropriate credit bureaus that plaintiff disputed the reported debt. Id. The Court concluded that the defendant's conduct was neither unfair nor unconscionable, nor were its statements materially false, misleading, or deceptive. Id. at *4-5. In dismissing the complaint, the Court further noted that, although the Second Circuit has not addressed whether the FDCPA's protections apply to communications between a debt collector and an attorney, it is likely that they do not, since the assumption is that “[w]here an attorney is interposed as an intermediary between a debt collector and ...


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