Split Circuit Court Rules Against Debt Collector in FDCPA Letter Case

The Ninth Circuit Court of Appeals last week in a split decision overturned a lower court’s ruling in a case claiming FDCPA violations in debt collection letters that were never even read by the plaintiff debtor. The violations were related to an error in the letter misidentifying the original creditor.

The class action, Tourgeman v. Collins Financial Services, et al. was filed after the plaintiff defaulted on a debt incurred by purchasing a Dell computer, which was financed through Dell Financial Services. The debt was eventually sold to Collins, who then outsourced collection and then legal services to other firms.

Tourgeman was residing in Mexico at the time he purchased the computer, but had it shipped to his parents’ house in California. Using that address, collection agency Paragon Way mailed three letters to the plaintiff in an attempt to collect. But the letters identified the original creditor as “American Investment Bank, N.A.” rather than Dell’s loan underwriter, and originator of Tourgeman’s loan, CIT Online Bank.

The error was compounded when a law firm contracted by Collins, Nelson & Kennard, used the same company name in a debt collection lawsuit filing. Plaintiff filed suit claiming that the misidentification was a violation of the FDCPA (§ 1692e – “false, deceptive, or misleading representation or means in connection with the collection of any debt”).

A district court judge sided with the defendants and granted summary judgment in their favor. The defendants argued that the misidentification was not so straightforward: the first two letters included a “Description” line item that stated, “Dell Computer Corporation.” Also coloring the issue is the fact that Tourgeman never even received the letters as they were sent to an address at which he did not live.

But on appeal to the Circuit Court, the three-judge panel’s majority opinion reversed the lower court’s ruling holding that “the letters and the complaint were materially misleading, and that the plaintiff was entitled to judgment under §1692e(2) and (10).” The case was remanded for further proceedings.

Tomio Narita, of Simmonds & Narita LLP — the defense attorney in this case — told insideARM that the decision highlights how rulings can go in a crowded circuit like the Ninth.

“This just shows how wildly different outcomes can be within the same circuit. The draw of the judges panel can have a significant impact on the ruling,” said Narita. On the merits of the case, Narita commented, “The fact that the consumer never read the letter stretches the intent of the FDCPA, in my opinion.”

Narita was not alone in his assessment.

In a very brief but direct dissent, one of the Circuit Judges wrote, in full, “I respectfully dissent. As I view the record, the trial court got it right. I would affirm.”

Read the full published opinion.