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Spiegel v. Ashwood Financial, Inc.

United States District Court, S.D. Indiana, Indianapolis Division

March 23, 2017

MIKE SPIEGEL individually and on behalf of all others similarly situated, Plaintiff,
v.
ASHWOOD FINANCIAL, INC., an Indiana corporation, Defendant.

          ORDER ON CROSS MOTIONS FOR JUDGMENT ON THE PLEADINGS

          LARRY J. McKINNEY, United States District Judge

         This matter comes before the Court on Defendant Ashwood Financial, Inc.'s (“Ashwood's”) Motion for Judgment on the Pleadings (“Ashwood Motion”), Dkt. No. 47; and Plaintiff's, Mike Spiegel, individually and on behalf of all others similarly situated (“Spiegel's”), Cross Motion for Judgment on the Pleadings (“Spiegel Cross Motion”). Dkt. No. 55. For the foregoing reasons, the Court DENIES both motions.

         I. BACKGROUND & ARGUMENTS

         On March 16, 2016, Spiegel received an initial form letter from Ashwood, demanding payment of a delinquent consumer debt (the “Letter”). Dkt. No. 1, ¶ 7. The Letter stated, in part,

Unless within (30) days after receipt of the first communication from this office you dispute the validity of the debt or any portion thereof, it will be assumed to be valid. If you notify this office information [sic] within the thirty (30) day period after receipt of the first communication from this office that you dispute the debt or any portion thereof, this office will obtain verification of the debt and a copy of such verification, along with the creditor's name and address, will be mailed to you by this office. If you request information, within the thirty (30) day period, the name and address of the original creditor, if different from the current creditor, this office will provide you with the requested information. This is required under the Fair Debt Collection Practices Act.

Id.

         Spiegel filed his Complaint-Class Action (the “Complaint”) on July 26, 2016, [1]alleging that the Letter violated the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692g(a)(4) & (5), by failing to state that any dispute of a debt or any request for the name and address of the original creditor must be made in writing for a debtor to obtain a verification of the debt or the name and address of the original creditor, if different than the current creditor. Id. at ¶¶ 12-13. Spiegel further argues that Ashwood's failure to notify debtors that such disputes or requests must be in writing constituted unfair and unconscionable collection actions in violation of the FDCPA because whether a dispute could be made orally or in writing could determine whether a consumer wishes to dispute the debt. Id. at ¶¶ 8, 17.

         Ashwood filed its Answer to Spiegel's Complaint on September 16, 2016. Dkt. No. 15. In its Answer, Ashwood denied “that any communications to Spiegel … failed to comply with 15 U.S.C. § 1692g or were ineffective.” Id. at 9. Ashwood further denied “that the FDCPA requires a consumer dispute or request for validation of a debt to be in writing to be effective” and “that disputes or requests for the name of the original creditor are required to be in writing by the [FDCPA] to be effective.” Id. at 5, 9 (emphasis in original). Ashwood also provided a list of eight affirmative defenses in its Answer. Id. at 17-19. In its first affirmative defense (the “First Affirmative Defense”), Ashwood indicated that the Letter did not violate the FDCPA but stated that

[a]ny alleged violation of the FDCPA was purely technical, the result of bona fide error and not intentional, resulting in no actual damages, no lack of material information that would play a role in a consumer's decision as to whether to dispute a debt, notwithstanding Ashwood's maintenance of procedures reasonably adapted to avoid any such error. 15 U.S.C. §1692k(c).

Id. at 17.

         On January 21, 2017, Ashwood filed the Ashwood Motion, arguing that the Letter did not violate the FDCPA because 15 U.S.C. § 1692g(a)(3) does not require consumer disputes to be in writing to be effective. Dkt. No. 47 at 2, 6-13. Spiegel submitted his Response in Opposition to the Ashwood Motion on February 14, 2017. Dkt. No. 54. Therein, Spiegel agreed that oral disputes of a debt can be effective under 15 U.S.C. § 1692g(a)(3), but argued that the Letter still violated the FDCPA because it did not communicate that a debtor must submit his or her dispute in writing to protect his or her rights to a verification of their debts or to the name and address of the original creditor under 15 U.S.C. § 1692g(a)(4) & (5). Dkt. No. 54 at 2-3, 5-8. Spiegel's Response in Opposition also clarified that the Letter appears to use the word “information” where the words “in writing” would logically be found to meet the requirements of 15 U.S.C. § 1692g(a)(4) & (5). Id. at 2. On February 21, 2017, Ashwood filed its Reply in Support of the Ashwood Motion, [2] in which it asserts that Spiegel's acknowledgement that oral disputes can be effective under 15 U.S.C. § 1692g(a)(3) and his reference to a specific language flaw in the Letter represented an improper change in Spiegel's theory of liability. Dkt. No. 57 at 7-9. Ashwood also claims that, even though the Letter as written violates the FDCPA, the Letter's violation of the FDCPA was a result of bona fide error by substituting the word “information” for “in writing.” Id. at 9-16.

         In addition to filing his Response in Opposition to the Ashwood Motion, Spiegel concurrently filed the Spiegel Cross Motion on February 14, 2017. Dkt. No. 55. In the Spiegel Cross Motion, Spiegel argues that he is entitled to judgment because the Letter fails to state that a debtor's dispute must be in writing in order to protect the debtor's right to verification of the debt and to the name and address of the original creditor, as required by the plain language of 15 U.S.C. § 1692g(a)(4) & (5). Dkt. No. 56 at 1-2, 4-7. Moreover, Spiegel contends that Ashwood's First Affirmative Defense does not prevent the Court from granting the Spiegel Cross Motion because the First Affirmative Defense was not plead with sufficient factual support under Federal Rule of Civil Procedure 9(b). Id. at 7-9. In response, Ashwood asserts that the Spiegel Cross Motion should be denied because sufficient evidence exists, including the Affidavit of Dan P. Bailey attached to its Reply in Support of the Ashwood Motion, to support its bona fide error defense, which would preclude liability under the FDCPA. See generally, Dkt. No. 65.

         II. STANDARD

         The Court decides motions brought under Federal Rule of Civil Procedure 12(c) (“Rule 12(c)”) by the same standard as that for a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) (“Rule 12(b)(6)”). See R.J. Corman Derailment Servs., LLC v. Int'l Union of Operating Eng'rs, 335 F.3d 643, 647 (7th Cir. 2003). The Court may consider only the pleadings and must view the allegations in the light most favorable to the non-moving party. See Id. The pleadings include the complaint, the answers, and any documents attached thereto as exhibits. See N. Ind. Gun & Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449, 452-53 (7th Cir. 1998); Wright v. Assoc'd. Ins. Cos., 29 F.3d 1244, 1248 (7th Cir. 1994) (stating that “documents attached to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to his claim”). The Court may also take judicial notice of matters of public record and not subject to reasonable dispute. See Ennenga v. Starns, 677 F.3d 766, 773-74 ...


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