The Court of Appeals for the Ninth Circuit has partially affirmed and partially reversed a lower court’s ruling in a Fair Debt Collection Practices Act case, determining that the District Court judge should not have granted summary judgment for a collection law firm that “expressly” informed an individual in a collection letter that any dispute must be filed in writing.
A copy of the ruling in the case of Almada v. Krieger Law Firm can be accessed by clicking here.
The plaintiff received a collection letter that included the following passage:
Under the federal Fair Debt Collection Practices Act, if you dispute this debt, or any portion thereof, you must notify this office in writing within thirty (30) days of receipt of this letter. After notifying this office of a dispute, all debt collection activities will cease until this office obtains verification of the debt and a copy of such verification is mailed to you. If you do not dispute the validity of this debt or any portion thereof within thirty (30) days of receipt of this letter, the debt will be assumed valid. You may request in writing, within thirty (30) days of receipt of this letter, the name and address of the original creditor, if different from the current creditor, which is the homeowners association named above, and we will provide you with the information.
The District Court judge ruled the passage did not violate the FDCPA because he only looked at the third sentence of the disclosure — If you do not dispute the validity of this debt or any portion thereof within thirty (30) days of receipt of this letter, the debt will be assumed valid — which did not mention that the dispute had to be filed in writing. But a least sophisticated consumer is expected to read the letter as a whole, noted the Ninth Circuit, and that includes the first sentence of the disclosure, which says that the plaintiff “must notify this office in writing” in order to properly dispute the debt.
“… the least sophisticated debtor would not extract each sentence of the challenged paragraph, line them up against the disclosures the FDCPA requires, and analyze whether each sentence, in isolation, accurately conveys the required warnings,” the Appeals Court wrote. “Instead, the least sophisticated debtor would examine the letter as a whole and would conclude based on the bold text expressly stating that he must dispute the debt in writing that he was required to dispute the debt in writing.”
The Appeals Court did uphold the ruling in favor of the law firm over its assessment of a prelien fee as a reasonable attorney’s fee and that the implication that the fee was an attorney’s fee was true.
The defendant had argued before the District Court that it was entitled to the FDCPA’s bona fide error defense, but because it was granted summary judgment, the District Court judge did not address those arguments. The case was remanded back to the District Court to address the defendant’s remaining arguments and the summary judgment motion.