Commercial Banking, Collections, and Bankruptcy

Magistrate Judge erred in granting plaintiffs-debtors’ motion for summary judgment in their action alleging that defendant-debt collector violated Fair Debt Collection Practices Act (FDCPA) by sending dunning letter that lacked statement indicating that interest was accruing on their debts. Dismissal of plaintiffs’ claims was required, where plaintiff failed to present facts in their affidavits supporting their summary judgment motion indicating that they had suffered concrete and particularized injury that was fairly traceable to challenged conduct and likely redressable by judicial decision. Ct. rejected plaintiffs’ contention that instant alleged violation was enough, by itself, to establish concrete injury necessary for standing, since failure to provide required information under FDCPA inflicts concrete injury only if it impairs plaintiffs’ ability to use withheld information for substantive purpose that statute envisioned. Here, record contained no evidence that absence of statement about interest had any effect on how plaintiffs responded to dunning letter or managed their debts.

Plaintiffs-debtors lacked standing to bring action under Fair Debt Collection Practices Act (FDCPA), where defendant-debt collector sent dunning letter stating that creditor might seek foreclosure of mechanics lien, covenant, mortgage or security agreement as it pertained to plaintiffs’ $2,000 debt. While statement in dunning letter was legally and factually correct, plaintiffs asserted that it was false and misleading because debt collector would have found it too costly to pursue foreclosure to collect instant $2,000 debt. Although Dist. Ct. dismissed case on its merits, Ct. of Appeals found that case should have been dismissed for lack of Article III standing, since plaintiffs failed to alleged how said statement injured them when plaintiffs did not pay anything in response to said statement and did not allege that said statement reduced their credit rating. Fact that plaintiffs were annoyed or intimidated by said statement, or that plaintiff’s claim concerned alleged substantive right under FDCPA did not require different result.

Plaintiff-debtor lacked standing to bring action under Fair Debt Collection Practices Act (FDCPA), alleging that defendant-debt collector sent false dunning letter that offered to settle debt at 50% of what was owed, but informed plaintiff that if creditor ended up forgiving more than $600, it would be required to report said forgiveness as taxable income to IRS on Schedule 1099C. Record showed that plaintiff essentially asked defendant to forgive entire $1,012 debt, and thus plaintiff would be subject to such reporting. While Dist. Ct. dismissed case on merits, plaintiff lacked Article III standing to bring instant action because she could not establish any concrete injury arising out of said alleged violation, where: (1) plaintiff conceded that dunning letter had not injured her; (2) plaintiff did not pay something that she did not owe; and (3) statement regarding obligation to report forgiveness of debt to IRS did not affect her credit rating or discourage anyone from doing business with her. Fact that complaint purported to allege violation of substantive as opposed to procedural right under FDCPA or that plaintiff claimed that she was confused by dunning letter did not require different result.

Plaintiff-debtor brought action under Fair Debt Collection Practices Act (FDCPA), alleging that defendant-debt collector violated FDCPA by sending dunning letter that provided total balance of debt, but failed to indicate whether said debt might increase with accrual of interest. In its motion to dismiss, defendant asserted among other things that plaintiff lacked Article III standing because no interest actually accrued on plaintiff’s debt, and thus plaintiff lacked any actual injury arising out of alleged violation. While Dist. Ct. dismissed case on other grounds, remand was required to resolve standing issue, where plaintiff asserted her injury arose out of accrual of interest, and where defendant disputed truthfulness of plaintiff’s claim that she incurred injury due to defendant’s withholding of required information about interest on debt. As such, Dist. Ct. must hold evidentiary hearing to resolve factual dispute concerning plaintiff’s standing to proceed on claim.

Dist. Ct. did not err in dismissing plaintiffs’ actions under Fair Debt Collection Practices Act (FDCPA), alleging that defendant’s dunning letter, which stated, in part, that “You want to be worthy of the faith put in you by your creditor,” and that “We are interested in you preserving a good credit rating with the above creditor,” contained false, deceptive or misleading statements. While Dist. Ct. found that said statements did not violate section 1692e or 1692f of FDCPA, Ct. of Appeals found that plaintiffs lacked Article III standing to bring instant actions, because: (1) both complaints failed to contain any allegation of harm or appreciable risk of harm arising from claimed statutory violations; and (2) plaintiffs only generally alleged that said statements were false, deceptive or misleading.

Dist. Ct. did not err in finding in favor of plaintiff after bench trial in action that sought recovery for costs incurred by plaintiff-buyer in supply contract, where plaintiff’s costs arose out of buying from third-party carbon black to replace carbon black that defendant would have supplied to plaintiff under instant supply contract, and where defendant had failed to give plaintiff adequate assurance of its future performance under section 2-609 of Uniform Commercial Code. Defendant conceded that it had attempted to impose price increase on carbon black during lifetime of supply contract, and that such conduct gave plaintiff reasonable grounds of insecurity for purposes of section 2-609. Moreover, record showed that: (1) plaintiff placed orders for black carbon at contract price, and defendant did not respond to said orders; (2) plaintiff wrote letter to defendant to say that it expected defendant to abide by contract price; and (3) individuals at defendant subsequently told plaintiff that it could not guarantee shipment of carbon black under plaintiff’s purchase orders or confirm any future shipment dates. Also, defendant hedged as to whether it would actually fill plaintiff’s orders and continued to demand that plaintiff accept defendant’s price increase. As such, plaintiff could treat defendant as having repudiated contract, so as to allow it to look elsewhere for supplier of carbon black and seek difference between cost of carbon black supplied by third-party and cost of carbon black under supply contract.

Dist. Ct. did not err in granting defendant-debt collector’s motion to dismiss plaintiff-debtor’s action under Fair Debt Collection Practices Act (FDCPA), alleging that defendant’s dunning letter, which told plaintiff that plaintiff would not owe interest or fees on debt “through course of [defendant’s] collection efforts concerning your account” was misleading because: (1) subsequent letter contained itemized summary of plaintiff’s current balance, which listed “0.00” as interest charge; and (2) plaintiff contended that letter implied that creditor would begin to add interest if plaintiff failed to resolve debt with defendant. Itemization of debt is record of what has already happened, such that unsophisticated consumer would construe letter as only status of debt as of date of letter. As such, plaintiff could only speculate as to whether debt would accrue interest in future, and that instant letter, which related only to current status of debt and was silent as to future treatment, did not run afoul of FDCPA.

Dist. Ct. did not err in granting plaintiff’s motion for summary judgment in action alleging that defendant breached contract calling for sale of 30 parcels of land with gas stations and convenience stores, where defendant failed to close on agreement and failed to pay plaintiff earnest money called for in agreement, which served as liquidated damages clause. Contract called for defendant to pay total of $750,000 in earnest money in two stages, and defendant never paid any earnest money and had failed to provide timely written notice of disapproval of said sale, which would have entitled defendant to return of any earnest money. Ct. rejected defendant’s argument that plaintiff had failed to satisfy two conditions precedent requiring plaintiff to have authority to sell subject properties and to submit certain due diligence materials. Moreover, instant liquidated damages provision satisfied all three factors required in any valid liquidated damages provision, in that: (1) it was agreed to by parties as settlement of damages claim; (2) amount of liquidated damages was reasonable in light of instant $67 million contract; and (3) actual damages arising out of breach would be uncertain and difficult to prove. Fact that plaintiff had not incurred any damages at time of defendant’s failure to close on properties or that defendant had not placed any money into escrow account did to require different result.