FYI: 11th Cir Rejects FDCPA Claim That Debt Collector Misidentified the Creditor

The U.S. Court of Appeals for the Eleventh Circuit ("Eleventh Circuit") recently affirmed the dismissal of a consumer's complaint alleging that a collection letter violated the federal Fair Debt Collection Practices Act, 15 U.S.C. 1692, et seq. (FDCPA) by failing to meaningfully convey the name of his creditor, as required.

 

In so ruling, the Eleventh Circuit concluded that dismissal was appropriate because the consumer did not claim that the collector misidentified his creditor, and the 'least sophisticated consumer' who had been a patient at a hospital would surely understand the hospital to be the creditor when its name was listed next to the amount of the debt on the letter.

 

A copy of the opinion is available at:  Link to Opinion

 

A consumer ("Consumer") accrued debt from personal medical services rendered in 2015. The next year he received a letter ("Collection Letter") from a purported debt collection agency ("Collector"), which indicated that it was seeking collections on the "account(s) indicated below," and listed the medical service provider's name ("Provider") next to a service date, a patient name, and an outstanding balance of $412.  The Collection Letter did not expressly refer to Provider as the creditor. 

 

Notably, although the Collection Letter incorrectly named the Provider in a different word order ("Medical Center Enterprise," rather than "Enterprise Medical Center"), the Consumer did not allege that this caused any confusion, or that the two were different entities.

 

The Consumer sued the Collector, alleging that the Collection Letter failed to "meaningfully convey the name of the creditor to whom the debt is owed," in supposed violation of subsection 1692g(a)(2) of the FDCDPA.  The Collector moved to dismiss, arguing that the letter contained the name of the creditor, even though it did not apply the descriptive term "creditor." 

 

Applying the "least sophisticated consumer" standard, the trial court granted the motion to dismiss, finding it implausible that the Consumer would fail to grasp that the Provider was his creditor after reading the Collection Letter as a whole.  The instant appeal ensued.

 

The Eleventh Circuit first noted that the parties and trial court assumed that the "least sophisticated consumer" standard applies here, despite the fact that the Eleventh Circuit had not adopted this standard to evaluate the validity of a debt collector's notice under 1692g.  However, the Eleventh Circuit declined to resolve that issue here.

 

On appeal, the Consumer argued that the trial court erred for two reasons: (i) that it was plausible that the Collector misidentified his creditor, and; (ii) that the least sophisticated consumer would not understand his creditor's identity.

 

In addressing the Consumer's first argument, the Eleventh Circuit noted that the complaint itself failed to allege a misidentification as to the creditor, as required.  Instead of alleging facts establishing that the Collector failed to effectively convey the name of the creditor, the complaint merely disputed the effectiveness of the Collection Letter. 

 

Accordingly, even evaluating the plausibility of a claim based on the allegations therein in a light most favorable to the plaintiff Consumer, the district court did not err in granting dismissal, because the complaint made no such claim that the Collector misidentified his creditor.   Iqbal, 556 U.S. at 678, 129 S. Ct. 1937.

 

The Eleventh Circuit also rejected the Consumer's argument that the least sophisticated consumer would not understand the debt collector's statement of his creditor's identity.   Noting that the consumer acknowledged that the Collector sent the Collection Letter to collect a upon a purported debt incurred for medical services from the Provider, the Eleventh Circuit opined that the least sophisticated consumer could be expected to connect the dots to understand that the Provider was the creditor, because the Collection Letter listed the Provider's name next to an outstanding balance.  

 

Moreover, the only other entity referenced in the Collection Letter was that of the Collector, which explicitly identified itself as the collection agency.   Thus, the Consumer had no valid argument that the least sophisticated consumer would think the creditor was anyone other than the Provider, as "the debt collector is obviously the agent of the creditor," as opposed to the creditor itself.   Caceres v. McCalla Raymer, LLC,755 F.3d 1299, 1304 (11th Cir. 2014).

 

Accordingly, because the Consumer failed to state a claim under section 1692g of the FDCPA, the Eleventh Circuit affirmed the trial court's order dismissing the Consumer's complaint.

 

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

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FYI: Ohio Sup Ct Holds Mortgagee May Use Parole Evidence to Show Intent of Mortgagor

The Supreme Court of Ohio recently held that a mortgagee may enforce a mortgage against a mortgagor who signed, initialed, and acknowledged the mortgage even though the body of the mortgage agreement does not identify the mortgagor by name.

 

In so ruling, the Supreme Court of Ohio allowed a mortgagee to use parole evidence to determine the mortgage signatory's intent where there is an ambiguity.

 

A copy of the decision is available at:  Link to Opinion

 

A bank issued a mortgage loan to husband and wife borrowers.  Only the husband executed the note. Both borrowers signed the mortgage and acknowledged this before a notary public.  Both borrowers initialed every page of the mortgage, including a page that contained the property's legal description.

 

In 2014, the borrowers filed a Chapter 7 bankruptcy.  The bankruptcy trustee sought a declaration that the mortgage did not encumber the wife's interest in the property because the body of the mortgage did not identify her. 

 

After a trial, the bankruptcy court used extrinsic evidence and the mortgage to conclude that the wife borrower "executed the mortgage with the intent to pledge her interest in the property."  The Trustee appealed.

 

Given conflicting Ohio law on this issue, the Bankruptcy Appellate Panel for the U.S. Court of Appeals for the Sixth Circuit certified to the Supreme Court of Ohio the question of whether a mortgage agreement is invalid and unenforceable against the interest of a person who initialed, signed, and acknowledged the mortgage when the body of the mortgage does not identify the person by name. 

 

The Supreme Court of Ohio initially observed that Ohio statutes prescribe any mortgage formalities that may exist.  Specifically, a mortgage pledges all of the mortgagor's interest except where the mortgage makes it clear that the mortgagor "intended to convey or mortgage a less estate." R.C. 5301.02. A mortgagor must sign and "officially acknowledge before a notary public or other authorized official that" they signed the mortgage, R.C. 5301.01(A), "for the purposes stated in the mortgage," R.C. 147.541(C)(1).  When a mortgagor executes a mortgage with a legible signature, the mortgage does not have to include their name in writing elsewhere to be valid for recording.  See R.C. 317.11. 

 

The Supreme Court of Ohio noted that Ohio's statutes do not require the mortgage to include the mortgagor's name "in the agreement other than in the mortgagor's signature and acknowledgement" to give the mortgage "operative effect." Thus, because Ohio does not formally require including a mortgagor's name in the body of a mortgage, "the failure to include a signatory's name in the body of a mortgage is not fatal to the instrument as a matter of law."

 

The Supreme Court of Ohio also declared that courts may look to general contract rules to interpret a mortgage.  The main goal "is to ascertain and give effect to the intention of the parties" by looking at "the writing of the contract" as a whole.

 

Generally, a contracting parties' signature manifests their intent to have the contract bind them.  When there is any ambiguity over which party to charge on a contract, the signature can demonstrate the intent to be bound by a contract's terms and fix "the actual identity of the party."

 

Further when the body of a contract does not identify a party by name, this alone does not "negate a signatory's intent to be bound by the contract." Thus, "a person who is not identified in the body of a mortgage, but who signs and initials the mortgage, is a mortgagor of his or her interest so long as the mortgage agreement as a whole evinces the person's intent to be bound through his or her signature."

 

Therefore, the Supreme Court of Ohio held that "the failure to identify a signatory by name in the body of a mortgage agreement does not render the agreement unenforceable as a matter of law against that signatory." 

 

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

Alabama   |   California   |   Florida   |   Georgia  |   Illinois   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Texas   |   Washington, DC

 

 

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