SAYYED v. WOLPOFF ABRAMSON, LLP (Md. 8-20-2010)

consumers. See Nat. Fin. Servs. Inc., 98 F.3d at 135-36. One cited case, Russell v. Equifax A.R.S., 74 F.3d 30, 34 (2d Cir. 1996) had noted: "The [FDCPA] is aimed at protecting consumers in general from abusive debt collection practices and the test is how the least sophisticated consumer — one not having the astuteness of a `Philadelphia lawyer' or even the sophistication of the average, everyday, common consumer — understands the notice he or she receives." (emphasis added).

The Court finds such an extension unwarranted. In the earlier phase of the present case, eleven years after it decision in the National Financial Services case, the Fourth Circuit did not address the applicability vel non of the competent attorney standard. The Court understands the Fourth Circuit, citing Heintz v. Jenkins, 514 U.S. 291 (1995), to have held that communications sent to debtors' attorneys in the course of litigation are not ipso facto outside the scope of the FDCPA. Although Heintz found potential liability with respect to a letter sent to debtor's counsel outside of court proceedings in an effort to settle the suit, the Fourth Circuit in this case extended that general principle to include communications to a debtor's attorneycontained in pleadings filed in court, That is, communications made to debtor's attorneys contained within court pleadings (as opposed to those merely made "in the course of litigation," Heinz's words) are not ipso facto be immunized. But that is not to say that every communication to a debtor's attorney is actionable, a distinction the Evory court was careful to make. This Court finds the Seventh Circuit's refinement of the Fourth Circuit's holding in Sayyed appropriate and adopts it here.

The problem with Sayyed's suggestion that the least sophisticated consumer standard applies, notwithstanding the fact that he was represented by counsel, is well-illustrated by his challenges to W A's alleged transgressions in the present case.

Start with the allegedly "false" trial date of June 11, 2004. When the case against Sayyed was pending in the District Court for Prince George's County, that was indeed the correct trial date. It was Sayyed's own attorney (the same attorney who represents him in the present case) who removed the case from the District Court to the Circuit Court by praying a jury trial. Jury trials are not within the jurisdiction of district courts in Maryland and can only be held in the Circuit Courts. See Md. Code. Ann., Courts and Judicial Proceedings, §§ 1-502, 4-201. Not only would any reasonably competent member of the Maryland bar know that to be the case; it is quite likely that Sayyed's attorney prayed for a jury trial, hence for removal of the case to the Circuit Court, precisely in order to postpone the imminent June 11 trial date, a ploy that this member of the federal bench judicially notices as having been a common tactic during his days as a Maryland practitioner and Circuit Court Judge. To allow Sayyed — who apparently never saw the interrogatories until the present suit came about — to argue that he, as a least sophisticated consumer, might have been deceived or misled by the trial date misstatement when his own lawyer engineered the change of the trial date would be a true perversion of everything the FDCPA stands for.

W A's other alleged missteps in the interrogatories, even if technically erroneous — although the Court finds in fact that they were not — would also have been immediately apparent to even the least competent member of the Maryland bar. Sayyed complains that the interrogatories "falsely state that the grounds of refusal to answer the interrogatories must be stated under oath; [whereas] in fact objections do not need to be stated under oath." It is true that W A's instructions to the interrogatories indicated that "[e]ach of the following Interrogatories (questions) shall be answered separately and fully in writing and under oath or the grounds of refusal to answer shall be fully stated under oath." It is also true that the first two sentences of Maryland Rule of Procedure 2-421(b) provide:

The party to whom the interrogatories are directed shall serve a response within 30 days of service of the interrogatories or within 15 days after the date on which the party's initial pleading or motion is required, whichever is later. The response shall answer each interrogatory separately and fully in writing under oath, or shall state fully the grounds for refusal to answer any interrogatory.

To be sure, the Supreme Court recently put to rest W A's argument that errors of law — at least errors of law with respect to the Act itself — are not covered by the FDCPA, See Jerman v. Carlisle, McNellie, Rini, Kramer Ulrich LPA, 130 S.Ct. 1605, 1611 n. 4 (2010). But as to this particular claim, it cannot be said that W A's instruction was an error of law, much less one that was false, misleading or deceptive. In the first place, there is no case law from the Maryland Courts, nor indeed any commentary that the Court is aware of, affirming that refusals to answer interrogatories do not need to be under oath. In fact, despite the language of Maryland Rule of Civil Procedure 2-421(b) that "the response shall answer each interrogatory separately and fully in writing under oath," the Court takes judicial notice of the fact that, not only in Maryland state courts but in this and every federal court this Court is aware of, parties answering interrogatories do not insert a separate oath within each and every answer to the interrogatories; in fact, they invariably place a single oath at the end of their answers to all the interrogatories, including interrogatories where they give reasons for their refusals to answer. And, mirabile dictu, that is precisely what Sayyed did in his answers to the interrogatories that his attorney mailed to W A in the state court proceedings. He placed a single oath at the end of the answers, stating — under penalties of perjury — "that the contents of the foregoing paper are true to the best of my knowledge, information, and belief." The "foregoing paper," of course, included Sayyed's objections to the interrogatories, which is to say, his refusals to answer. This invariable practice clearly undercuts Sayyed's implicit suggestion that a separate oath must be contained in each answer to each interrogatory, but that it may be skipped as to the refusals to answer. Moreover, it may seriously be doubted that this thought ever occurred to anyone — lawyer or judge — before Sayyed's counsel apparently went over W A's pleadings with his magnifying glass. How, truly, would even the least sophisticated debtor — especially one who in all likelihood never even saw the pleading — conceivably be misled or deceived by this statement? How, much less, would a reasonably competent attorney be misled or deceived? The Court concludes as a matter of law that this claim cannot survive summary judgment in favor of W A.

"The parties disagree about whether § 1692k(c) applies when a violation results from a debt collector's misinterpretation of the legal requirements of state law or federal law other than the FDCPA. . . . Because this case involves only an alleged misinterpretation of the requirements of the FDCPA, we need not, and do not, reach those other questions." 130 S.Ct. at 1611 n. 4.
The mistake of law in Jerman was that the notice accompanying the complaint filed in court stated that the debt would be assumed valid unless the debtor disputed it in writing. Section 1692g(a)(3) of the FDCPA requires that the notice from the debt collector to the consumer must be in writing and must contain "a statement that unless the consumer, within 30 days after receipt of the notice, disputes the validity of the debt, or any portions thereof, the debt will be assumed to be valid by the debt collector." The issue was whether the consumer has to dispute the debt in writing.
Although authority from the lower courts was divided as to this issue, 130 S.Ct. at 1606, the Supreme Court ultimately held that the consumer's dispute did not need to be in writing.
The Supreme Court obviously has the final word as to the meaning of the FDCPA. Errors of state law present a different problem. Where, as here, errors of state law are alleged and no Maryland Court has opined as to whether these are in fact errors, who is to judge? Presumably the federal district court must try, and the federal appeals court will review the case, but the unseen hazards to the collecting attorney would seem to be considerable.

Then there is the matter of the third alleged deception in the interrogatories regarding the time for Sayyed to respond. This part of W A's instructions stated:

If the answer to these Interrogatories is not mailed to counsel for Plaintiff within thirty (30) days after the date on which they have been served upon you, the Court may make such orders in regard to the failure to answer the said Interrogatories as the Court finds to be just, including but not limited to, the rendering of judgment be [sic] default in favor of the Plaintiff.

Sayyed says this directive was false in two respects. Primarily, he says, the statement that the court could enter orders against him for failure to serve answers to the interrogatories if he failed to serve an answer within 30 days after service of the interrogatories was false because Sayyed actually had 33 days to serve his answers or response without being subject to any orders of the court.

Sayyed also says the statement was false because it indicated that he needed to serve answers to the interrogatories to avoid a court order, whereas he also had the option to serve objections to the interrogatories. This allegation is not set forth in the Complaint and the Court declines to address it here.

Again, bearing in mind that Sayyed would have to demonstrate that the trier of fact could conclude that it is more likely than not that this statement was false, misleading or deceptive, he has not done so. Maryland Rule 2-421(b) expressly states that the party responding to the interrogatories "shall serve a response within thirty days after service of the interrogatories." Sayyed says he actually "had thirty-three days to serve his answers" because Maryland Rule 1-203(c) provides that three days shall be added to a prescribed period when "service is made by mail." That is not correct. In fact, Sayyed's counsel could not have walked into W A's office on the thirty-first day after Sayyed was sent the interrogatories, handed over Sayyed's answers to W A and claimed he was making a timely filing. Only if Sayyed or his counsel mailed his responses by the 30th day would he get the benefit of the additional three days for service. As such, it was correct for W A to say that certain consequences might follow if the answers were not "mailed" to W A within 30 days. Not having even seen the pleading, Sayyed would not have been misled, much less would his attorney have been.

Finally, the Court's conclusion that a competent attorney would not be confused or misled by any of the alleged misrepresentations at issue in the interrogatories is buttressed by the opinion of W A's expert, Mark Scurti, Esquire. Scurti, a practicing attorney for nineteen years who has previously been designated as an expert in consumer and bankruptcy issues, has submitted an affidavit on behalf of W A. Scurti opines that a competent lawyer would not have been misled by what Sayyed alleges are W A's misrepresentations because a competent lawyer would not rely solely on a trial date listed in a pleading from opposing counsel to determine the court's trial schedule and would likewise be aware of Maryland's discovery rules, which of course he could consult to determine whether refusals to answer interrogatories have to be under oath or how much time is allowed for responding to interrogatories. The Court notes that Sayyed has provided no rebuttal expert testimony as to how a competent attorney might have been confused or misled by any of the alleged misrepresentations. The Court therefore accepts the conclusions of W A's expert as confirmation of its own analysis.

For all these reasons, summary judgment is granted in favor of W A as to Count II.

C.

In Count III Sayyed claims that the allegedly false statements in the interrogatories violate the "Maryland Rules of Professional Conduct on making a false statement of material fact or law" and therefore operate as an unconscionable or unfair means to collect the debt in violation of 15 U.S.C. § 1692f.

The Court has already concluded above that the misrepresentations alleged by Sayyed are not actionable under the FDCPA. Alleging that the same communications violate the Maryland Rules of Professional Conduct does not alter the Court's conclusion or create a separate actionable claim under the FDCPA. The Preamble to the Maryland Rules of Professional Conduct itself specifically provides that: "Violation of a Rule does not itself give rise to a cause of action against a lawyer." Moreover, several courts have held that a debtor cannot maintain a cause of action under the FDCPA based on a claim that a debt collection attorney violated a state rule of ethical conduct. See Heard v. Bonneville Billing and Collections, 216 F.3d 1087 (10th Cir. 2000); Reade-Alverez v. Eltman and Cooper, P.C., 369 F. Supp. 2d 353, 361 (E.D.N.Y. 2005); Bass v. Arrow Financial Services, L.L.C., No. 8595, 2002 WL 1559635 (N.D. Ill. July 16, 2001).

Summary judgment is granted in favor of W A as to Count III.

D.

Count IV is Sayyed's claim that W A violated 15 U.S.C. § 1692e(2)(A) by filing a motion for summary judgment in the State Circuit Court which falsely represented that he was indebted to Discover Card in the amount of $13,983.05. Sayyed alleges the amount sought by W A was inaccurate because it included interest on amounts that Discover Bank had promised it would not charge any interest on. The Court has acknowledged that this type of statement by a debt collector to a debtor's attorney might well be actionable. W A responds, however, that in its pleadings it was relying upon the information provided to it by its client and asserts the bona fide error defense provided for by the FDCPA. The Court agrees that this defense prevails.

The FDCPA does not require a debt collector to engage in an independent investigation of the debt referred for collection. See Jenkins v. Heintz, 124 F.3d 824, 834 (7th Cir. 1997) (holding that a debt collector has no obligation to conduct an independent debt validity investigation); Elane v. Revenue Maximization Group, 233 F. Supp. 2d 496, 500 (E.D.N.Y. 2002) (noting that defendant was entitled to rely on its client's representation that the debt was valid); see also Jenkins v. Union Corp., 999 F. Supp. 1120, 1140-41 (N.D. Ill. 1998); Ducrest v. Alco Collections, Inc., 931 F. Supp. 459, 462 (M.D. La. 1996). Moreover, a misrepresentation made by the debt collector solely as a result of inaccurate information provided by its client would be a bona fide error as defined under 15 U.S.C. § 1692k(c). See Smith v. Transworld Systems, Inc., 953 F.2d 1025, 1032 (6th Cir. 1992) (holding the defendant reasonably relied on

its client's calculation of the debt owed, and that the resulting misrepresentation in a subsequent communication was a bona fide error pursuant to 15 U.S.C. § 1692k(c)).

In its oral opinion on W A's Motion to Dismiss, the Court observed that W A's reliance on its client as to the amount of the debt owed was another reason why W A could not be held liable under the FDCPA. See Sayyed, 485 F.3d at 235. The Fourth Circuit held that it was error to consider this argument at the motion to dismiss stage but held that on remand "W A may of course . . . avail itself of the § 1692k(c) defense" and that "W A's reliance on its client may well be relevant to that inquiry." Id.

With the benefit of the briefing and affidavits submitted by the parties on summary judgment now complete, the Court concludes that the bona fide error defense does indeed bar Sayyed's claim in Count IV of the Complaint. In an affidavit, Barry E. Gordon, the W A attorney responsible for drafting the challenged pleadings in this case, sets out the firm's procedures both for complying with court rules and for filing summary judgment motions with supporting affidavits. Gordon states that all W A attorneys regularly review the Maryland Rules of Procedure, including all amendments thereto, to ensure that all pleadings filed by the firm are in full compliance with those rules. Additionally he explains that in every summary judgment motion filed by the firm in a debt collection action, the amount requested in the motion is verified under oath by the client in an accompanying affidavit and must supported by documentation provided by the client.

Indeed, W A has furnished the Court with the sworn affidavit of the account manager at Discover Bank as well as the underlying account statements that W A attached to its summary judgment motion in the state court. Sayyed does not dispute that these documents in fact accompanied the motion in state court. Rather, he says, W A has failed to demonstrate that W A's procedure is one that a reasonable debt collector would follow. The Court disagrees. As noted, W A was not required to engage in an independent investigation of the debt referred for collection. In claiming the amount of the debt owed in the motion for summary judgment in state court, W A provided both the underlying documentation from its client, as well as a sworn affidavit from its client stating that the records were accurate. The Court finds no fault with such a procedure and holds that it was and is entirely reasonable under the circumstances. Sayyed seems to suggest that W A had an obligation to review the entirety of his history with Discover Bank, in considerable detail, and to confirm that Discover Bank had never charged an incorrect interest rate or made any other clerical error in the maintenance of his account. It is clear that a debt collector has no such obligation under the law. See Transworld Systems, Inc., 953 F.2d at 1032.

Summary judgment is granted in favor of W A and against Sayyed, as to Count IV of the Complaint.

E.

In Count V, Sayyed claims that W A's request for fifteen percent (15%) attorneys fees in its motion for summary judgment amounted to a false representation as to the compensation that could lawfully be received by the firm for its services, which is prohibited by 15 U.S.C. § 1692e(2)(B), and that the claim for fees represented an attempt to collect an amount not expressly authorized by the credit agreement or permitted by law, in violation of 15 U.S.C. § 1692f(1). W A responds that its contract with Sayyed provided for the payment of a reasonable fee, but more importantly, that its request for attorneys' fees was directed to the court, as opposed to Sayyed, and is thus not actionable under the FDCPA. Once more, W A prevails.

Numerous courts have held that a debt collector's request for attorneys' fees directed to the court in its pleadings is not an actionable representation under the FDCPA. See Reyes v. Kenosian Miele, LLP, 619 F. Supp. 2d 796, 808 (N.D. Cal. 2008) (holding a request for attorney fees did not violate the FDCPA since an allegation of an alternative statutory basis for an award of attorney fees that is not unlawful does not violate the FDCPA); Cisneros v. Neuheisel Law Firm, P.C. 444 F. Supp. 2d 946, 950 (N.D. Ind. 2006) (noting that if an agreement authorizes collection of reasonable attorney fees, a request for a specific amount is not actionable under the FDCPA); Rael v. Davis, No. 06-0081, 2006 WL 2346396 at *4-5 (S.D. Ind. Aug. 11, 2006) (holding that "even though there was no contractual basis for the fee request and a fee award may have been unlikely given the limited exceptions to the American Rule regarding payment of fees . . . the mere request for attorney's fees did not violate the FDCPA").

In holding that it was "abundantly clear" that such a fee request is not actionable under the FDCPA, the court in Argentieri v. Fisher Landscapes, Inc. provided a succinct justification for applying such a rule:

A prayer for relief in a complaint, even where it specifies the quantity of attorney's fees, is just that: a request to a third party-the court-for consideration, not a demand to the debtor himself. A request for attorney's fees ultimately rests upon the discretion of the court and a determination of applicability at a later stage of the litigation. The whole purpose of regulating debt collection was to "supervise" a range of unsupervised contacts, such as demand letters and late-night telephone calls. In contrast, a statement in a pleading is supervised by the court and monitored by counsel. The two situations are drastically different.

15 F. Supp. 2d 55, 61-62 (D. Mass. 1998).

The Court finds the holdings and rationale of these courts compelling.

Sayyed's agreement with Discover Bank provided for the recovery of "reasonable attorneys fees" in the event of a collection suit. The ad damnum clause in W A's summary judgment motion before the state court read:

WHEREFORE, your Plaintiff [Discover Bank] Prays, that summary judgment be entered in its favor in the sum of $13,983.05 plus court costs, plus 15% attorneys fees.

In the state proceeding, W A attorney Ronald Canter attached an affidavit to the motion for summary judgment attesting that a fee of 15% was "fair and reasonable" in the matter, given, among other services, the law firm's review of the client's data, pre-suit correspondence with Sayyed, and preparation of the pleadings (complaint, summons, interrogatories, and correspondence with Sayyed's attorney). The sheer bulk of the correspondence and pleadings before the state courts — which have been submitted to this Court — confirms that a 15% fee request would have been fair and reasonable.

In any case, W A's request to the state court for fifteen percent (15%) attorneys' fees contained in its motion for summary judgment was just that — a request directed to the court, not a communication directed to the debtor, and certainly not a misrepresentation to Sayyed's attorney, who could and in fact did easily take issue with it.

Summary judgment is granted in favor of W A and against Sayyed as to Count V.

VI.

For all the foregoing reasons, the Court GRANTS W A's Motion for Summary Judgment and DENIES Sayyed's Cross-Motion for Partial Summary Judgment as to Liability.

A separate Order will ISSUE.

FINAL ORDER OF JUDGMENT

Upon consideration of the various pending motions in this case, and the respective Oppositions thereto, oral argument having been held thereon, it is for the reasons stated in the accompanying Opinion, this 20th day of August, 2010

ORDERED

1. Defendant Wolpoff Abramson, LLP's Motion for Summary Judgment [Paper No. 46] is GRANTED;

2. Plaintiff Sayyed's Cross-Motion for Partial Summary Judgment as to Liability [Paper No. 55] is DENIED;

3. Final judgment is ENTERED on behalf of Defendant Wolpoff Abramson, LLP and against Plaintiff Farid Sayyed;

4. The Clerk of the Court is DIRECTED to close the case; and

5. Following entry of the Court's Opinion and this Order, Ronald S. Canter's Motion to Withdraw AppearAppearance as Counsel for Wolpoff Abramson, LLP [Paper No. 85] is GRANTED.