The Second Circuit Court of Appeals has upheld a lower court’s summary judgment in favor of a defendant who was sued for allegedly violating the Fair Debt Collection Practices Act by not mentioning in a collection letter that interest and fees may be accruing on an account, even though fees and interest were not accruing.
A copy of the non-precedential ruling in the case of Derosa v. CAC Financial can be accessed by clicking here.
The ruling is a result of a spate of lawsuits that were filed by plaintiff’s attorneys related to what were known as “Avila” lawsuits, which tied back to Avila v. Riexinger & Associates, in which a plaintiff sued because a collection letter referenced the “current balance” of an unpaid debt, but did not mention that interest and fees were accruing on the account. The Second Circuit earlier this year ruled in Taylor v. Financial Recovery Services that ruled a collection notice that fails to disclose that interest and fees are not currently accruing on a debt is not misleading within the meaning of Section 1692e of the FDCPA.
In Derosa, the plaintiff sued after receiving a collection letter that listed the balance due but did not indicate whether interest or fees were accruing on the unpaid debt. The defendant produced two collection letters — sent two months apart — which indicated the balance owed had not changed and proved that neither interest was accruing nor had any additional fees been added. The plaintiff provided a personal declaration that the underlying debt — a credit card — had previously accrued interest on any balance carried over from month to month as well as had late fees assessed if a payment was missed or late, and a “generic credit card agreement” which showed interest and fees would continue to accrue even after the account was found to be in default. Neither argument swayed the Second Circuit:
Neither piece of evidence establishes a genuine dispute of material fact. The fact that the account accrued interest and fees when being administered by the original creditor is not indicative of how the account would function when transferred to a debtcollection agency like CAC. It is thus speculative to claim that the underlying account would continue to accrue interest and fees when the account had been transferred or assigned to another party for collection. Speculation alone is not enough to defeat a motion for summary judgment.