The U.S. District Court for the Southern District of Texas recently granted summary judgment in favor of a lender (“Lender”) and against a borrower (“Borrower”) as to the Borrower’s claims under the federal Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. (“TCPA”), and the Texas Telephone Consumer Protection Act, Tex. Bus. And Comm. Code § 305.053 (“Texas TCPA”).
In so ruling, the Court held that the Borrower provided his prior express consent to be called on his cell phone using an automatic telephone dialing system by including his cell phone number on a credit application, and that this prior express consent was never revoked.
The Borrower argued that he revoked consent, but the Court rejected the Borrower’s self-serving testimony, as the Lender’s records showed that no such revocation had occurred. Additionally, the Court held that if there was no TCPA violation, there could be no Texas TCPA violation.
The Court further ruled:
1. The Lender was entitled to summary judgment as to the Borrower’s Texas Debt Collection Act, Tex. Fin. Code § 292.001, et seq. (“TDCA”) claim because the Lender’s attempts to communicate were not harassing, abusive or unconscionable;
2. The Lender did not intentionally intrude upon the Borrower’s seclusion because the Lender had a bona fide business purpose for its administration of the loan and communications with the Borrower; and
3. Summary judgment in favor of the Lender as to the Lender’s breach of contract claim was appropriate, because the Lender performed its obligations under the contract, and the Lender suffered damages in the amount of the unpaid balance on the loan.
A copy of the Court’s ruling is attached.
The Borrower applied for an auto loan with the Lender for the purchase of a vehicle. On his credit application, the Borrower provided his cell phone number. Subsequently, the Borrower and Lender entered into a retail installment contract (“Contract”) to finance the purchase of the vehicle. In October of 2009, the Borrower defaulted on the loan. The Lender provided a total of eight months of payment deferments, waived certain fees and extended payment due dates. The Borrower failed to make any payment after December 2012.
The Lender placed calls to the Borrower’s cell phone. Over 99% of the calls placed by the Lender to the Borrower went unanswered or otherwise did not result in a conversation. The Borrower placed almost 50 calls to the Lender.
The Lender’s records showed that Borrower never communicated any written or oral request for the Lender to stop calling his cell phone. Instead, the Lender’s records showed that he repeatedly verified that his cell phone number was an acceptable contact number.
Based upon this record, the Court found that the Lender’s actions were consistent with “industry standards and practices under the circumstances” and demonstrated intent to provide the Borrower with an opportunity to become current on the loan. Additionally, the Court found that the Lender did not act with any intent to harass or abuse the Borrower. It never used any profanity or abusive or harassing language towards the Borrower and only communicated with the Borrower for the purpose of obtaining the payments due.
The Court further concluded that by providing his cell phone number in his initial credit application, the Borrower provided prior express consent to be called at that number. In Re Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 23 F.C.C.R. 559, 564 (2008); Cunningham v. Credit Mgmt., L.P., 3:09-CV-1497-GB(BF), 2010 WL 3791104 at *4-5 (N.D. Tex. Aug. 30, 2010) report and recommendation adopted, 3:09-CV-1497-G(BF), 2010 WL 3791049 (N.D. Tex. Sept. 27, 2010). The Court further found that the Borrower never “effectively communicated any revocation of his prior express consent to be called on his cell phone using an automated telephone dialing system.”
Additionally, the Court found Borrower’s “self-serving and uncorroborated contention that he revoked consent is contradicted by the overwhelming evidence in the record.” Because the Borrower failed to raise a genuine dispute of material fact as to whether he revoked prior express consent, the Lender did not violate the TCPA’s restriction on placing calls to the Borrower’s cell phone using an automatic telephone dialing system without his prior express consent.
The Court next addressed the Borrower’s Texas TCPA claim. Because the Lender did not violate the TCPA, it did not violate state law claims arising under the Texas TCPA. As you may recall, the Texas TCPA proscribes only that conduct which is also prohibited by the TCPA. If there is no violation of the TCPA, there is no violation of the Texas TCPA. Tex. Bus. & Com. Code Ann. § 305.053; Shields v. Americor Lending Grp., Inc., 01-06-00475-CV, 2007 WL 2005079 at *3 n.8 (Tex. App. July 12, 2007).
The Court also found that the Lender could not have violated the TDCA because the Lender’s communications did not constitute harassment. The volume or number of calls alone was insufficient to establish intent to harass, and the records did not show any intent to harass. Accordingly, the Lender’s administration of the loan and interactions with the Borrower were not harassing, abusive, or unconscionable under the TDCA.
Next, the Court held that the Lender did not intentionally intrude upon the Borrower’s seclusion that would be highly offensive to a reasonable person. As you may recall, in order to be actionable, the intrusion must be highly offensive, meaning that it must be unreasonable, unjustified, or unwarranted. The Court concluded that the Lender had a bona fide business purpose for its administration of the loan and communications with the Borrower.
Additionally, the Court concluded that the Lender had a permissible purpose for obtaining the Borrower’s credit report. As you may recall, under the federal Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. (“FCRA”), one permissible purpose for obtaining credit information is in connection with a credit transaction. A business may permissibly obtain credit information when it obtains such information in connection with a business transaction that is initiated by the consumer or to review an account to determine whether the consumer continues to meet the terms of the contract. 15 U.S.C. § 1681(a)(3)(A), (F). Accordingly, the Court granted summary judgment in the Lender’s favor as to the invasion of privacy claim.
Finally, the Court concluded that the Lender was entitled to damages from the Borrower for its breach of contract counterclaims because the Lender performed its obligations under the contract and it suffered damages as a result of the Borrower’s breach in the amount of the unpaid balance on the loan.
Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
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