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Udell v. Kansas Counselors, Inc.

Citations: 313 F. Supp. 2d 1135; 2004 U.S. Dist. LEXIS 6161; 2004 WL 785065Docket: 03-2412-JWL

Court: District Court, D. Kansas; April 12, 2004; Federal District Court

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In the case Udell v. Kansas Counselors, Inc., the plaintiffs, Colleen and Jack Udell, filed suit against the defendant, Kansas Counselors, Inc. (KCI), alleging violations of the Fair Debt Collection Practices Act (FDCPA) and the Kansas Consumer Protection Act (KCPA) due to KCI's debt collection practices. The court is considering KCI's motion for summary judgment, while the plaintiffs also sought summary judgment.

The factual background reveals that starting in July 2001, KCI was assigned several debts from the Udells, which it attempted to collect through letters and phone calls. On March 21, 2003, the Udells sent KCI a cease-and-desist letter regarding all accounts, after which KCI halted communication and assigned a unique status code to prevent further contact. However, on May 2 and 13, 2003, KCI received new accounts for the Udells and proceeded to send validation statements and collection notices, as well as make automated calls, none of which were answered or left messages.

An attorney for the Udells, David Bryan, sent a letter to KCI on May 13, 2003, asserting that the calls violated the FDCPA due to the previous cease-and-desist request. KCI responded, maintaining that its communications were related to accounts assigned after the cease-and-desist letter. Following this, KCI applied a no-communication status to all Udell accounts, including the newly assigned ones.

Ultimately, the court granted KCI's motion for summary judgment in full and denied the Udells' motion, indicating a finding in favor of KCI regarding the claims made under the FDCPA and KCPA.

Since May 19, 2003, KCI has not attempted to communicate with the plaintiffs about five new accounts assigned to them. On May 20, 2003, Mr. Bryan sent a letter to KCI referencing a cease-and-desist letter from March 21, 2003, which prohibited all communications about any accounts, asserting that under the Fair Debt Collection Practices Act (FDCPA), KCI's communication regarding any accounts was impermissible. Despite this, KCI communicated with the plaintiffs regarding additional accounts assigned in June, July, and August of 2003. The plaintiffs allege that KCI violated the FDCPA, specifically 15 U.S.C. 1692c(c), by contacting them post-cease-and-desist, and 15 U.S.C. 1692d(6) by making multiple phone calls between May 7-13, 2003. They also claim KCI's actions constituted deceptive and unconscionable conduct under the Kansas Consumer Protection Act (KCPA), specifically Kan. Stat. Ann. 50-626 and 50-627. KCI seeks summary judgment, arguing that the cease-and-desist letter did not apply to the new accounts and that the calls did not amount to harassment. The document outlines the legal standard for summary judgment, emphasizing that it is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. The burden of proof initially lies with the moving party to demonstrate this absence of genuine issues, after which the nonmoving party must provide specific facts to show a triable issue.

The nonmoving party in a legal dispute must present specific, admissible facts that a rational trier of fact could use to decide in their favor, as established in Mitchell v. City of Moore. These facts should be supported by affidavits, deposition transcripts, or specific exhibits. Summary judgment is a recognized procedural tool aimed at ensuring efficient legal resolutions, as noted in Celotex, and is not merely a shortcut. 

The court concurs with KCI's entitlement to summary judgment on all claims brought by the plaintiffs. The Fair Debt Collection Practices Act (FDCPA) does not prohibit debt collectors from discussing future debts, even with a cease-and-desist letter from the consumer. Additionally, KCI's four phone calls to the plaintiffs within a week, without messages, do not legally constitute harassment under the FDCPA. Claims asserting violations related to communication after the plaintiffs were represented by counsel are unfounded, as KCI did not directly communicate about any debts known to involve counsel. Furthermore, KCI is also granted summary judgment on the plaintiffs' Kansas Consumer Protection Act (KCPA) claim, having not performed any deceptive or unconscionable acts since May 2003.

The FDCPA was enacted to combat abusive debt collection practices and ensure fair treatment of consumers, with broad prohibitions against harassment, deception, and unfair means in debt collection. The statute, being remedial, should be interpreted in favor of consumers. The plaintiffs alleged violations of three FDCPA provisions, specifically pointing to 15 U.S.C. 1692c(c), which states that once a debt collector receives a written notice to cease communication, they must comply. The plaintiffs argued that their cease-and-desist letter, which referred to "All Accounts," directed KCI to stop efforts to collect both current and future debts.

Not every violation of a consumer's wishes constitutes a breach of the Fair Debt Collection Practices Act (FDCPA). Courts must analyze the specific statutory language to ascertain what the FDCPA prohibits. If the language is clear and the structure of the statute is coherent, no further examination is necessary. The FDCPA does not prohibit communications about future debts; it specifically addresses debts that a consumer has refused to pay, indicating that such refusal must follow a request for payment. The statute permits cessation of communications only regarding debts that have already been discussed with the consumer. This limitation suggests that the FDCPA applies exclusively to existing debts, not future ones.

An informal Federal Trade Commission (FTC) letter from December 30, 1977, supports this interpretation, clarifying that the FDCPA does not prevent debt collectors from contacting consumers about other debts assigned subsequently unless the consumer invokes protections concerning those debts. While FTC interpretations hold limited precedential value, the court finds the advisory opinion persuasive due to its uniqueness, the FTC's expertise, and its alignment with the FDCPA's plain language. Courts have previously recognized that while FTC opinions may not supersede statutory text, they can be considered helpful and persuasive.

The court interprets the FDCPA to mean that the prohibition against communicating with consumers after a cease-and-desist letter applies only to existing debts, not future ones. In this case, KCI's communications with the plaintiffs after receiving their cease-and-desist letter were about new accounts assigned to KCI in May, June, July, and August of 2003, rather than any existing debts. The court determined that KCI was not required to cease communication regarding these new debts, as it had not received a new cease-and-desist letter applicable to them. Consequently, plaintiffs failed to demonstrate a genuine issue of material fact to challenge KCI's entitlement to summary judgment on their claim under 15 U.S.C. § 1692c(c).

Regarding the plaintiffs' claim of harassment under 15 U.S.C. § 1692d(6) due to KCI's phone calls on May 7, 8, 12, and 13, 2003, the court found that the plaintiffs did not adequately explain how these calls constituted harassment or refute KCI's arguments. As a result, the court granted KCI's motion for summary judgment on this claim, noting that not leaving a message during calls does not inherently violate the FDCPA's harassment provisions when viewed in context.

KCI made four phone calls to the plaintiffs over seven days without leaving messages, which the court found neither harassing nor abusive, and thus not a violation of 15 U.S.C. § 1692d(6). Additionally, the plaintiffs claimed that KCI violated 15 U.S.C. § 1692c(a)(2) by contacting them directly after knowing they were represented by counsel. However, the court noted that this claim was not included in the plaintiffs' complaint, and they did not seek to amend it. Even if they had sought to amend, the court would have denied the request as the claim was deemed meritless. The statute prohibits direct communication from a debt collector if they know the consumer is represented by an attorney regarding that specific debt. Citing the Third Circuit ruling in Graziano v. Harrison, the court clarified that KCI did not violate this provision since there was no evidence that KCI was aware of the plaintiffs' legal representation concerning any specific debts at the time of contact. The letters from the plaintiffs' attorney did not identify the accounts he represented, and it was unclear whether KCI knew of any representation for accounts placed with them after those letters. Consequently, any potential claim under § 1692c(a)(2) was determined to be without merit.

KCI is granted summary judgment on the plaintiffs' KCPA claims, both for deceptive acts under K.S.A. 50-626 and for unconscionable practices under K.S.A. 50-627. KCI argues that it did not engage in any deceptive or unconscionable conduct, and plaintiffs do not oppose this aspect of KCI's motion. The court finds no evidence supporting the plaintiffs' claims of deceptive conduct, noting that KCI's correspondence clarified that it would continue to communicate regarding future debts, thereby undermining any potential claim of deception. Regarding unconscionability, the court similarly concludes that no evidence indicates KCI's actions were unconscionable. As a result, the court dismisses the case, accepting KCI's statements of fact as true due to plaintiffs’ failure to provide contrary evidence. The motions for summary judgment from both parties are addressed together, affirming that each must demonstrate the absence of material factual issues. The court also highlights that the plaintiffs' cease-and-desist letter did not meet the necessary statutory requirements for halting communications.

The court's research has not revealed any case law or significant legislative guidance from the Fair Debt Collection Practices Act (FDCPA) addressing the issue at hand. An unpublished staff letter relevant to the case is not accessible through major legal research platforms, suggesting that KCI should have included it as an exhibit in its summary judgment memorandum, as mandated by local rules. The court notes that the theory regarding KCI hiding its identity in calls to the plaintiffs is unfounded, as the record does not confirm whether the plaintiffs had an answering machine or voicemail. Moreover, KCI's contact information was clearly identified in correspondence, indicating that the plaintiffs were aware of KCI's identity through their caller identification system and that KCI did not attempt to conceal its identity during the calls.