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Recent Case Law on Validation & Verification of Debts

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CIV. NO. 03-00038 HG-LEK


2004 U.S. Dist. LEXIS 15416

July 9, 2004, Decided

July 9, 2004, Filed

DISPOSITION: [*1] Defendant's Motion to Dismiss DENIED; Plaintiff's Motion for Summary Judgment GRANTED IN PART AND DENIED IN PART; and Defendant's Counter Motion for Summary Judgment GRANTED IN PART AND DENIED IN PART. Plaintiff's request for reasonable attorneys' fees and costs GRANTED; Defendant's request for reasonable attorneys' fees and costs DENIED.

I cut the crap out to get to the meat of the matter

In sum, the June 14, 2002 letter from Defendant to Plaintiff's counsel expressly constituted "an attempt to collect a debt" following Plaintiff's request for verification of the debt, and establishes that Defendant did not cease in its efforts to collect the alleged debt upon receipt of Plaintiff's request for verification.

The Court notes that even if Defendant had ceased with its efforts to collect the alleged debt, Defendant still would have been obligated to verify the debt. Under 15 U.S.C. § 1692g(a)(4), a debt collector must inform a consumer that if the consumer timely notifies the debt collector in writing that the debt is disputed, the debt collector will obtain verification [*28] of the debt and that such verification will be mailed to the consumer by the debt collector. The statute could not have required such a statement without intending that a debt collector be required to follow through with the promise to obtain and send verification. Chief Judge Ezra of this District Court has so held on multiple occasions. See, e.g., Powell v. J. J. Mac Intyre Co., Inc., 2003 U.S. Dist. LEXIS 24699, Civ. No. 03-00402 DAE-BMK (D. Haw. Oct. 16, 2003); De Coito v. Unifund Corp., Civ. No. 01-00379 DAE-BMK (D. Haw. June 4, 2002). District Judge Mollway's holding in Sambor v. Omnia Credit Servs., Inc., 183 F. Supp. 2d 1234 (D. Haw. 2002), is not applicable to the facts of this case. In Sambor, the Court held that verification was not required where it was undisputed that the defendant had ceased collection of the alleged debt and returned the account to the prior creditor. Id. at 1242. Even if Defendant had ceased collection of the alleged debt in this case, a hypothetical unsupported by the facts, no evidence has been presented to this Court that Defendant returned the account to Citibank.

Finally, the Court finds unconvincing Defendant's attempt to characterize [*29] its June 14, 2002 letter as a verification. First, the letter expressly acknowledged that it was not a verification by stating, "We are in the process of complying with your request to verify the above referenced account. Same will be sent to you upon receipt." At the very least, the letter's indication that Defendant was "in the process" of complying with Plaintiff's verification request and that the verification "will be sent . . . upon receipt" implied that the substantive information contained in the letter was not verified.

Even if the June 14, 2002 letter had not contained statements casting doubt on the accuracy of the information regarding Plaintiff's account, the information contained in the letter would not have sufficed to verify the debt. The only information disclosed in the letter was the date that the account was opened, the date that the last payment was posted, the name and social security number listed on the account, and the current balance. The letter did not indicate the amount or basis of the charges underlying the current balance, nor did it indicate the dates on which such charges were incurred. See, e.g., Chaudhry v. Gallerizzo, 174 F.3d 394, 406 (4th Cir. 1999); [*30] Graziano v. Harrison, 950 F.2d 107, 113 (3d Cir. 1991); Stonehart v. Rosenthal, 2001 U.S. Dist. LEXIS 11566, 2001 WL 910771, *7 (S.D.N.Y. Aug. 13, 2001). The letter also failed to indicate whether interest was factored into the current balance, and, if so, at what rate and for what time period. Particularly in this case, where Defendant added interest at a rate different from the original, contractual rate for Plaintiff's account, the limited information provided in the June 14, 2002 letter was insufficient to verify the alleged debt.

The Court finds that Defendant's June 14, 2002 letter did not verify Plaintiff's alleged debt. The letter was an express "attempt to collect a debt" following Defendant's receipt of Plaintiff's verification request. Defendant, therefore, violated 15 U.S.C. § 1692g by continuing its efforts to collect the alleged debt without first obtaining and sending verification of the debt to Plaintiff. The Court grants summary judgment to Plaintiff on his § 1692g claim.

Granted this is in the 9th District, but there is a history of ruling to support it and the logic of the argument can certainly be used for someone to argue their own position (outside of the 9th District).

Note the reference to Chaudhry. I am now of the opinion that everything we know about Chaudhry, we being debt collectors who cite it in "verificatoin" letters and consumers, is wrong.

I would base that on the fact that no one has actually seen the document purported to constitute "verification" so no one knows what information it acutally contained regarding verification. According to this case, verification under Chaudhry contains a boatload of information above and beyond what the judge mentioned here.

In other words, when a CA sends a letter citing Chaudhry, it may be a misrepresentation if the CA doesn't provide information at least equal to what was contained in Chaudhry's verificaiton.

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er, English translation is not possible from me but i'll take a try.

the ruling says that if you send a DV and they send you anything other than validation, such as a letter saying we are still getting validation that has an amount owed on it, with a statement saying 'this is an attempt to collect a debt', it is continued collection activity.

they either must validate as their next communication, or stop collection and send it back to the OC

it also states that the letters contents 'the date that the account was opened, the date that the last payment was posted, the name and social security number listed on the account, and the current balance.' is not validation.

any better?

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According to NACA, they are fighting this tooth and nail. The last thing that the collection industry wants is a legal definition of what constitutes validation, especially under the terms of this decision.

Some would have you believe that a CA needs to provide nothing more than a letter saying nothing more than, "Yep, you owe money. Pay up."

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The ninth circuit tends to be a pretty liberal court. I will be surprised if the CA's don't lose this one.

They are pretty supportive of consumer rights, but they really don't like consumers who they think are playing them (e.g. Mahon, Linda Clark's case).

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As the "atty's" for Erin Mgmt, signed for my Dv req. along with the req. for written communication only.....called me 3 times after, and now are suing me.....I have an atty and have dodged the Process server, but they now have until 11/14 to decide to issue an alias summons, or the case wil be dismissed.....At which time I will contact the OC, and arrange to pay them the remaining 1200.00......The JDB Atty's want just under 5000.00

At least I can check the website for Missouri everyday, to see if there is anything new on the suit.

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Enetered on 10/31/05:

MINUTE ORDER by Judge Helen Gillmor - On August 31, 2005, Defendant RJM Acquisitions LLC filed a Motion for Leave to Deposit Funds in Lieu of Supersedeas Bond and for Stay of Enforcement of Judgment. On October 5, 2005, Plaintiff filed a Joinder in Defendant RJM Acquisitions LLC's Motion for Leave to Deposit Funds in Lieu of Supersedeas Bond and for Stay of Enforcement of Judgment. Rule 62(d) of the Federal Rules of Civil Procedure ("FRCP") states: When an appeal is taken the appellant by giving a supersedeas bond may obtain a stay subject to the exceptions [pertaining to injunctions, receiverships and patent accountings] contained in subdivision (a) of this rule. The bond may be given at or after the time of filing the notice of appeal or of procuring the order allowing the appeal, as the case may be. The stay is effective when the supersedeas bond is approved by the court. The purpose of the bond is to "secure an appellee from loss resulting from the stay of execution." Miami Int'l Realty Co. v. Paynter, 807 F.2d 871, 873 (10th Cir. 1986). See also Wilmer v. Board of County Comm'rs of Leavenworth County, Kan., 844 F. Supp. 1414, 1417 (D. Kan. 1993), aff'd 28 F.3d 114 (10th Cir. 1994). The security that would be deposited with the Court would amply secure Plaintiff for any potential loss caused by the stay of enforcement. This amount is one hundred and fifty percent (150%) of $47,782.21, which is the total amount awarded to Plaintiff. The amount is sufficient to secure the whole amount of the judgment, costs on appeal and post-judgment interests. The alternate form of security will preserve the status quo pending appeal and will protect the Plaintiff's rights. A party taking an appeal from federal district court is entitled to a stay of money judgment as a matter of right if he posts bond in accordance with these rules. Bass v. First Pacific Networks, Inc., 219 F.3d 1052, 1055 (9th Cir. 2000), (quoting American Mfrs. Mut. Ins. Co. v. American Broadcasting-Paramount Theatres, Inc., 87 S. Ct. 1, 3 (1966)). The Court GRANTS Defendant's Motion for Leave to Deposit Funds in Lieu of Supersedeas Bond and for Stay of Enforcement of the December 15, 2004 Judgment, the June 9, 2005 Order Adopting Report of Special Master, and any other judgments to be entered in favor of Plaintiff and against Defendant RJM Acquisitions LLC in this action pending the conclusion of Defendant's appeal. IT IS SO ORDERED. cc: above parties Judge Gillmor's chambers [90-1], [91-1] (ecs) (Entered: 10/31/2005

Next case number is 5-15121 - Which is the appeal, which is termed. I'll have more information tonight.

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