Antitrust Law Daily Wrap Up, PRIVACY—S.D.N.Y.: Material issues of fact allow TCPA claim against mortgage debt collector to proceed, (Aug 15, 2013)

By Peter Reap, J.D., LL.M.

Material issues of fact existed in connection with a claim brought by mortgagors against mortgage debt collector Green Tree Servicing LLC and its employee Kevin Smith for violation of the Telephone Consumer Protection Act (TCPA), the federal district court in New York City has decided (Castro v. Green Tree Servicing LLC, August 14, 2013, Ramos, E.). In addition, the Castros were entitled to summary judgment on their claims that a September 18, 2009, letter, privacy notice, and voicemail messages, but not an October 28, 2009, letter, violated the Federal Debt Collection Practices Act (FDCPA).

In August 2004, Plaintiff Krisber Castro executed a note (the “Note”) in the principal amount of $83,000 payable to National Bank of Kansas, secured by a mortgage on the home she owns with her husband, Mario Castro. In 2008, the Castros fell behind on their mortgage payments. In August 2009, after the debt was in default, the defendants acquired the right to collect the defaulted mortgage debt.

Ms. Castro received a letter from Green Tree dated September 18, 2009. The letter stated that it was “an attempt to collect a debt” and identified Green Tree as a “debt collector.” The letter further advised:

AS OF THE DATE OF THIS LETTER, YOU OWE $81,263.47. BECAUSE OF INTEREST, LATE CHARGES, AND OTHER CHARGES THAT MAY VARY FROM DAY TO DAY, THE AMOUNT DUE ON THE DAY YOU PAY MAY BE GREATER. HENCE, IF YOU PAY THE AMOUNT SHOWN ABOVE, AN ADJUSTMENT MAY BE NECESSARY AFTER WE RECEIVE YOUR CHECK, IN WHICH EVENT WE WILL INFORM YOU BEFORE DEPOSITING THE CHECK FOR COLLECTION. FOR FURTHER INFORMATION, CONTACT CUSTOMER SERVICE AT THE ADDRESS OR TOLL-FREE NUMBER LISTED ABOVE.

Subsequently, Ms. Castro received other letters and billing statements from the defendants. On October 28, 2009, Green Tree sent Ms. Castro a notice entitled “90 Day Notice,” which stated: “You could lose your home. Please read the following notice carefully.”

Soon after the Castros received the first letter from Green Tree, they began receiving calls on their home and cell phones from Smith, a collector employed by Green Tree, who contacted the Castros in an attempt to get them current on their loan payments. It was undisputed that Smith placed numerous calls to the Castros in an attempt to collect on their debt. It was also undisputed that on six occasions, the Castros returned the defendants’ calls using their cell phones.

TCPA claim. The defendants moved for summary judgment on the Castros’ TCPA claim on the basis that “there is no evidence to demonstrate that there were any connected calls from an auto-dialer to the plaintiffs’ cell phones” and that “the plaintiffs consented to receiving calls on their cell phones by using their cell phones to initiate contact with the defendants, thus falling under an exception to the TCPA.”

The TCPA makes it unlawful “to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial prerecorded voice . . . to any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call.” 47 U.S.C. § 227(b)(1)(A)(iii).

After reviewing all of the evidence, the defendants’ utterly failed to establish that no disputed issues of fact existed regarding the TCPA claim, the court held.

The defendants’ contention that none of the calls to the Castros’ cellular phones were from an automatic dialer was patently meritless, the court declared. Green Tree’s own Rule 30(b)(6) witness testified in no uncertain terms that Green Tree placed at least thirty-four calls to the Castros’ cellular phones using an auto dialer.

In an attempt to avoid liability under the TCPA, the defendants distinguished between those calls that were “connected” and those that were not answered or went to voicemail. The defendants suggested that it was “irrelevant” that Green Tree made 34 calls to the Castros’ cell phones using an auto-dialer “when there is absolutely no evidence that any of those calls ever connected.”

However, the TCPA clearly restricts the making of any call using an automatic telephone dialing system to a cellular phone, and does not distinguish between calls that are picked up and calls that go to voicemail, the court observed. Thus, for purposes of the Castro’s TCPA claim, it was immaterial whether the Castros picked up all of the defendants’ calls or whether several of the calls went unanswered.

Moreover, the defendants’ argument that their TCPA violations should be excused on the theory that the Castros did not incur any additional cost as a result of the 34 calls at issue failed as a matter of statutory construction, the court ruled. Under the “rule of the last antecedent,” which provides that, where no contrary intention appears, a limiting clause or phrase should be read as modifying only the noun or phrase that it immediately follows, the phrase “for which the called party is charged for the call” only modifies “any service.” Courts that have addressed this issue have routinely held that a plaintiff need not prove that he was charged for a cellular phone call to state a claim under the TCPA, the court added.

With respect to the defendants’ argument that the Castros consented to the calls at issue, prior express consent is deemed to be granted only if the wireless number was provided by the consumer to the creditor, and the number was provided during the transaction that resulted in the debt owed. The Federal Communications Commission noted, however, that if a caller’s number is “captured” by a Caller ID without notice to the caller, the caller cannot be considered to have given an invitation or permission to receive autodialer or prerecorded voice message calls. Thus, the defendants’ argument that the Castros consented to the calls at issue by initiating calls to the defendants using their cell phones failed, the court explained.

Further, the evidence on which the defendants relied in support of their argument actually undercut their position. Specifically, the defendants cited to the deposition transcript of Mario Castro, in which he testified that he did not tell the defendants that they could call him on his cell phone and that he “believe[d]” the defendants obtained his cell phone number when they “grabbed the number from the caller ID.” This testimony directly contradicted the defendants’ argument.

Because material issues of fact existed with respect to the TCPA claim, the defendants’ motion for partial summary judgment was denied.

FDCPA claims. Because the September 18, 2009, letter did not accurately identify the amount of debt owed, and because the defendants failed to send a notice containing all the required information within five days of the September 18 letter, summary judgment in favor of the Castros for violation of § 1692g of the FDCPA was warranted, according to the court. Further, the September 18, 2009 letter also violated § 1692e of the FDCPA. The least sophisticated consumer would be misled by the inclusion of the total underlying balance, rather than the amount being collected, and would not know either the amount sought by the letter or the fact that she was not required to pay off the balance in full. Accordingly, the letter could mislead a consumer as to the nature and legal status of the underlying debt and/or impede a consumer’s ability to respond to or dispute collection.

The Privacy Notice sent by Green Tree to the Castros clearly stated that that Green Tree “collect[s] and share[s]” certain nonpublic information with third parties, including “non-affiliates” and “other financial companies,” and required the consumer to “opt out” of such sharing. Accordingly, the Privacy Notice violated § 1692e of the FDCPA, the court held.

At least three of the voicemails left by the defendants with the Castros violated the FDCPA by failing to identify that the call was from a debt collector or who the caller was and/or where he was calling from. Accordingly, the Castros were entitled to summary judgment on their FDCPA claim related to the defendants’ voicemail messages.

However, because the Notice did not constitute a “threat” to take an action that could not legally be taken, the Castros were not entitled to summary judgment on their FDCPA claim as to the October 28, 2009, letter that was labeled as a “90 Day Notice,” the court held.

The case is No. 10-CV-7211 (ER).

Attorneys: Brian Lewis Bromberg (Bromberg Law Office, P.C.) for Krisber Castro. Michael J. Catalfimo (Carter, Conboy, Case, Blackmore, Maloney & Laird, P.C.) for Green Tree Servicing LLC.

Companies: Green Tree Servicing LLC.

Cases: Privacy ConsumerProtection NewYorkNews