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Taubenfliegel v. EGS Financial Care, Inc.

United States District Court, E.D. New York

June 21, 2018

MENACHEM TAUBENFLIEGEL, individually and on behalf of others similarly situated, Plaintiff,
v.
EGS FINANCIAL CARE, INC., Defendant.

          OPINION & ORDER

          Allyne R. Ross, United States District Judge.

         Plaintiff Menachem Taubenfliegel brings this putative class action against defendant EGS Financial Care, Inc., a debt collector. Plaintiff alleges that defendant violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., by sending him an inaccurate and misleading debt collection letter. Defendant has moved to dismiss the complaint on the ground that plaintiff has failed to state a claim under Federal Rule of Civil Procedure 12(b)(6). For the reasons discussed below, defendant's motion to dismiss is granted.

         BACKGROUND

         In November 2016, defendant sent plaintiff a debt collection letter regarding a consumer credit card debt. Compl. ¶¶ 9-10, ECF No. 1. This was defendant's first communication with plaintiff. Id. ¶ 11. The letter states that plaintiff's “total balance” is $6, 834.00. Id. at 10 (“Collection Letter”); see also id. ¶ 12. It also states that plaintiff's “account balance may be periodically increased due to the addition of accrued interest or other charges as provided in your agreement with the original creditor or as otherwise provided by state law.” Id.. Finally, the letter provides a phone number to call if the debtor “need[s] to speak to a representative.” Collection Letter.

         Under the FDCPA, a “debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. Specifically, a debt collector may not falsely represent “the character, amount, or legal status of any debt.” Id. § 1692e(2)(A). Nor may a debt collector “use . . . any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.” Id. § 1692e(10). Whether a collection letter violates § 1692e is judged by the objective “least sophisticated consumer” standard. Avila v. Reixinger & Assocs., LLC, 817 F.3d 72, 75 (2d Cir. 2016) (quoting Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir. 1993)). This test “ask[s] how the least sophisticated consumer—‘one not having the astuteness of a “Philadelphia lawyer” or even the sophistication of the average, everyday, common consumer'—would understand the collection notice.” Avila, 817 F.3d at 75 (quoting Russell v. Equifax A.R.S., 74 F.3d 30, 34 (2d Cir. 1996)). “Under this standard, a collection notice can be misleading if it is ‘open to more than one reasonable interpretation, at least one of which is inaccurate.'” Id. (quoting Clomon, 988 F.2d at 1319).

         In addition, the FDCPA requires a debt collector to provide written notice of “the amount of the debt.” 15 U.S.C. § 1692g(a)(1). This too is judged by “how the ‘least sophisticated consumer' would interpret the notice.” Carlin v. Davidson Fink LLP, 852 F.3d 207, 216 (2d Cir. 2017) (citing Russell, 74 F.3d at 34). The notice must state the amount of debt “clearly and effectively, ” such that the least sophisticated consumer is not “‘uncertain' as to the meaning of the message.” Id. (quoting DeSantis v. Computer Credit, Inc., 269 F.3d 159, 161 (2d Cir. 2001)).

         Plaintiff alleges that the collection letter is misleading under § 1692e and fails to state the amount of debt under § 1692g. Compl. ¶ 50. These claims stem from the letter's statement that the “account balance may be periodically increased due to the addition of accrued interest or other charges as provided in your agreement with the original creditor or as otherwise provided by state law.” Compl. ¶ 12. According to plaintiff, this language raises a number of questions that render the letter misleading under the FDCPA. Plaintiff alleges that it fails to inform him, among other things, of “whether the account balance listed already includes ‘accrued interest'. . . [or] ‘other charges, '” id. ¶¶ 22-23; “whether the account balance listed will increase, ” id. ¶ 25; and what the nature and amount of the interest and other charges might be, id. ¶¶ 26-30. The least sophisticated consumer could reasonably believe, therefore, that the account balance listed on the letter was only accurate as of the date of the letter. Id. ¶ 31. In addition, plaintiff argues, the least sophisticated consumer would not know the amount of debt, because the letter lacks detail on the accrual of interest or other charges. Id. ¶¶ 32-36 & n.1.

         In sum, plaintiff alleges that the debt collection letter violates §§ 1692e and 1692g because “it is reasonably susceptible to an inaccurate reading by the least sophisticated consumer” and does not inform the debtor whether the account balance is “the actual amount of the debt due.” Id. ¶¶ 20-21.

         Defendant has moved to dismiss for failure to state a claim under Rule 12(b)(6). Def.'s Mem. in Supp. of Mot. to Dismiss 1, ECF No. 12-1 (“Def.'s Mot.”). It argues that the letter's language is substantially similar to language the Second Circuit identified as acceptable in Avila. Id. at 1-2. The letter, according to defendant, thus does not violate the FDCPA. Id.

         DISCUSSION

         On a motion to dismiss under Rule 12(b)(6), the court must accept all factual allegations in the complaint as true and must draw all reasonable inferences in favor of the non-moving party. Lundy v. Catholic Health Sys. of Long Island Inc., 711 F.3d 106, 113 (2d Cir. 2013) (citing Holmes v. Grubman, 568 F.3d 329, 335 (2d Cir. 2009)). Thus in deciding defendants' motion to dismiss, the court must accept the facts alleged in plaintiff's amended complaint as true. The complaint's allegations “must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Only “a plausible claim for relief survives a motion to dismiss.” LaFaro v. N.Y. Cardiothoracic Grp., 570 F.3d 471, 476 (2d Cir. 2009) (citing Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). Courts “are not bound to accept as true a legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555)).

         A. Plaintiff Has Failed to State a Claim Under 15 U.S.C. §§ 1692e or 1692g.

         Plaintiff's claims under §§ 1692e and 1692g must be dismissed because the debt collection letter accurately states the amount of his debt and is not deceptive.

         “[T]he FDCPA requires debt collectors, when they notify consumers of their account balance, to disclose that the balance may increase due to interest and fees.” Avila, 817 F.3d at 76. In Avila, the Second Circuit held that a debt collection letter violated § 1692e because it did not reveal that interest was accruing on the debt at issue—when, in fact, interest was accruing at a rate of 500% per year. Id. at 74. The letter was deceptive because the least sophisticated consumer might believe that paying the amount listed on the debt collection letter would satisfy his debt. Id. at 76. The Avila court held that if a debt collection letter did not disclose that the “balance may increase due to interest and fees, ” it still would not violate § 1692e, provided it “either accurately inform[ed] the consumer that the amount of the debt stated in the letter will increase over time, or clearly state[d] that the holder of the debt will accept payment of the amount set forth in full satisfaction of the debt if payment is made by a specified ...


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