Friday, February 20, 2015

District Court Grants Summary Judgment in Favor of Debt Buyer on FDCPA and North Carolina Debt Collection Claims

            The Eastern District of North Carolina has granted summary judgment in favor of debt buyer on both federal and state debt collection claims, but ruled in favor of the consumer on his TCPA claims.  In Wallace v. Optimum Outcomes, Inc., C.A. No. 5:13-cv-277 (E.D.N.C. Feb. 12, 2015), Wallace asserted violations of the FDCPA, the North Carolina Collection Agency Act (the “NCCAA”) and the TCPA regarding wrong number calls made by Optimum Outcomes, Inc. (“Optimum”).  Prior to this suit being filed, Wallace settled wrong number claims with Optimum’s assignor, Absolute Collection Services (“ACS”) who then added Wallace’s cell phone number to a “do not call” list.  After settling with ACS, Wallace’s cellular telephone number changed. Optimum then took assignment of certain portions of ACS’ business, including the “do not call” list. Optimum subsequently received a new account for collection against a third party which included Wallace’s new cellular telephone number.  Optimum made two calls to Wallace’s cellular telephone number in its attempt to collect the new account.

            Wallace’s NCCAA claim was premised upon Section 58-70-100’s prohibition against conduct whose natural consequence is to oppress, harass or abuse any person in connection with the attempt to collect any debt and specifically, it’s prohibition against causing a telephone to ring or engaging any person in telephone conversation with such frequency as to be unreasonable or to constitute harassment under the circumstances.  (emphasis supplied).  The NCCAA is expansive in its definition of a consumer, including any “individual, aggregation of individuals, corporation, company, association, or partnership that has incurred a debt or alleged debt.”  Debt is defined as being any obligation owed or due or alleged to be owed or due from a consumer.  However, the court keyed in on the enforcement provision of the NCCAA which provides that “[a]ny collection agency which violates Part 3 of this Article with respect to any debtor shall be liable to that debtor in an amount equal to the sum of any actual damages sustained by the debtor as a result of the violation.” N.C.G.S. §58-70-130(a).  The court concluded that there was no violation of the NCCAA because of subsection 130’s limitation of remedies to a “debtor” bars his claim under the NCCAA. Thus, it appears that at least in the Eastern District, there may be some traction that wrong number calls are not actionable under the NCCAA.

            The court also found in favor of Optimum with respect to the FDCPA claim which was brought pursuant to 15 U.S.C. §1692d (prohibiting causing a phone to ring or engaging in telephone conversation repeatedly or continuously with intent to annoy, abuse or harass any person at the called number”).  The court perfunctorily held that a “showing of a mere two calls to plaintiff’s cell phone number, made weeks apart” was not sufficient to establish a claim.

            As to the TCPA claim, Optimum raised equitable estoppel and failure to mitigate defenses which the court did not accept.  Optimum asserted that Wallace was equitably estopped from bringing his TCPA claims because he did not provide the new cell number to Optimum’s assignor.  Had Wallace done so, the number would have been added to the “do not call” file.  Likewise, Optimum argued that Wallace had failed to mitigate his damages by failing to provide the new cell number.  The court dismissed these arguments and noted that the TCPA places no affirmative duty on telephone subscribers to notify companies that the subscriber does not wish to be called.  The court did, however, find that the calls amounted to a negligent violation of the statute and thus, the treble damage provision was not called into play. 


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