E-Alert Case Updates
Creditor Did Not Violate Fair Debt Collection Practices Act in Using a False Name
Paul A. Mahon v. Anesthesia Business Consultants, LLC
In a recent opinion, the United States District Court for the District of Columbia held that an entity that qualified as a “creditor” under the Fair Debt Collection Practices Act (“FDCPA”) did not violate the FDCPA because it used the same false name in all interactions with the plaintiff.
Plaintiff, Paul A. Mahon, alleged that he incurred a debt of $1,320.00 owed to a company named Certified Anesthesia Services as a result of treatment he received at Sibley Memorial Hospital in Washington, D.C. Subsequently, Certified Anesthesia Services assigned that debt to Defendant, Anesthesia Business Consultants, LLC (“ABC”). Plaintiff’s insurer paid ABC $1,207.94. ABC then sought payment of the outstanding amount, requesting that Plaintiff pay $112.06 with a check addressed to “Surgical and Anes Assoc.” Plaintiff did so on May 6, 2014, and ABC deposited his check.
Approximately two (2) months later, on July 2, 2014, ABC again billed Plaintiff for $112.06. Over the next two (2) months, ABC contacted Plaintiff regarding the alleged debt no less than four (4) separate times, despite Plaintiff’s attempts to dispute the debt. In each interaction with Plaintiff, ABC sought payment to “Surgical and Anes Assoc.” In October 2014, ABC sold Plaintiff’s debt to another company for debt collection purposes.
In July 2015, Plaintiff sued ABC, setting forth causes of action for violations of the FDCPA and the District of Columbia fair debt collection statute. ABC moved to dismiss the lawsuit, arguing that it was not a debt collector within the meaning of the FDCPA, and that Plaintiff’s debt did not arise from a consumer credit sale and therefore did not fall within the ambit of the D.C. fair debt collection statute.
Judge Rudolph Contreras, writing for the Court, granted ABC’s motion. The Court noted that the FDCPA applies only to “debt collectors” – a term defined under the statute to include “any person who uses . . . interstate commerce or the mails in . . . the collection of any debts” and “any person . . . who regularly . . . attempts to collect . . . debts owed or due . . . another.” 15 U.S.C. § 1692a(6). The FDCPA, however, expressly excludes from this definition “any person collecting . . . any debt . . . asserted to be owed or due another to the extent such activity . . . concerns a debt which was not in default at the time it was obtained by such person.” Id. at § 1692a(6)(F)(iii). In this case, under the allegations in Plaintiff’s Complaint, ABC fell into the foregoing exclusion because Plaintiff’s debt was not in default at the time ABC obtained it. Specifically, Plaintiff alleged that ABC obtained his debt before any payment was due. As a result, ABC was not acting as a debt collector within the meaning of the FDCPA.
In response to this analysis, Plaintiff argued that ABC violated the FDCPA by using a false name (i.e., “Surgical and Anes Assoc.”) in attempting to collect his debt. In this regard, the Court noted that “creditors” may be held liable under the FDCPA if, “in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting . . . such debts.” Id. at § 1692a(6). The Court, nevertheless, concluded that ABC did not fall within this definition. Although ABC was a creditor collecting its own debt and used a name other than its own in the process of attempting to collect its debt, the circumstances of its collection attempt did not indicate that a third person was attempting to collect the debt. In fact, every communication that Plaintiff received from ABC was set forth as having come from “Surgical and Anes Assoc.” Plaintiff apparently did not ascertain ABC’s correct entity name until he filed this lawsuit. Because ABC consistently used the name “Surgical and Anes Assoc.,” it did not indicate to Plaintiff that a person other than the owner of the debt was attempting to collect it. As a result, the Court granted ABC’s motion to dismiss Plaintiff’s FDCPA claims.
Turning then to Plaintiff’s claims under the D.C. fair debt collection statute, the Court noted that Plaintiff’s only avenue to federal jurisdiction on these non-federal claims was through supplemental jurisdiction under 28 U.S.C. § 1367. A District Court’s exercise of supplemental jurisdiction, however, is discretionary where “the claim raises a novel or complex issue of State law.” Id. at § 1367(c). In this case, the Court noted that Plaintiff’s remaining claims depended primarily on the interpretation of a term contained in the D.C. fair debt collection statute that only two (2) D.C. cases had even tangentially addressed. Because the issue was therefore a novel question of local law, the Court declined to exercise supplemental jurisdiction. Accordingly, the Court granted ABC’s motion to dismiss without prejudice so that Plaintiff could re-file the case in the District of Columbia Superior Court.
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