My letter sent to SURETY ACCEPTANCE CORP.
To: David Christie:
6440 E. Broadway Blvd.
Tucson, Az. 85710
520-790-7181
Mr. Christie:
It has been over two years now that your agency continues to report erroneous data about me on my credit files (Experian, Transunion and Equifax). Myself and Mr. John Elixson from GMAC Insurance have contacted your offices via telephone conference with both Dan and Marty to correct these discrepancies.
These two accounts have been verified paid by both Angelica and Sherry at the Kino Park Hospital. Their ref. Number: code 99284 Acct #: 7012679.
My credit report still reflects these two collections accounts with your agency.
I need you to remove these items from my report as they are very damaging to my credit status.
In fairness to you and the credit reporting agencies, I am sending another request to your offices to correct this over looked discrepancy.
Case History Articles:
Horwitz, Horwitz & Associates Attorney: O. Randolph Bragg
CASE REPORT:
SURETY ACCEPTANCE: Sued Over FDCPA Violation In Debt Collection In Ariz
After holding that dishonored checks constitute debts for purposes of the Fair Debt Collection Practices Act, the U.S. District Court for the District of Arizona certified a class of Arizona debtors who received collection notices lacking validation notices and debt collection warnings. Price, et al. V. Surety Acceptance Corp., No. 97-1145 phx bmv (jws) (d. Ariz. 8/19/99).
Surety Acceptance Corp. Mailed Eleanor L. Price and her husband, Donald L. Price, two letters requesting payment for two dishonored checks. Because neither correspondence contained a FDCPA mandated validation notice or debt collection warning, the Prices sued Surety.
At the time of the suit, two unpublished opinions issued by another District Court judge held that dishonored checks did not constitute a debt under the FDCPA. Surety claimed that it relied on these decisions and thus, did not draft its collection letters in compliance with the act. Shortly after the Prices filed suit, however, the 9th U.S. Circuit Court of Appeals decided Charles v. Lundgren & Assocs. P.C., 119 f. 3d 739 (9th Cir. 1997), which held that dishonored checks were indeed debts for the purposes of the FDCPA.
Surety moved for summary judgment arguing that it could not be liable as a matter of law because the 9th Circuit had not yet decided Lundgren when it wrote to the Prices. The Prices moved for partial summary judgment on the issue of whether Surety violated the FDCPA and also moved for class certification. Although Surety did not oppose the motion for certification, it did dispute the ability of one of the plaintiffs' attorneys to represent the class.
Retroactive Effect
The court began by applying the 9th Circuit's three-part test for determining if a decision applies retroactively. The court asked " (1) whether the decision establishes a new principle of law; (2) whether the retroactive application will further or retard the purposes of the rule in question; and (3) whether applying the new decision will produce substantial inequitable results."
Regarding the first element of the test, Judge W. Sedwick pointed out that although Lundgren was a case of first impression in the Circuit, the decision did not have an unexpected result as suggested by Surety. He opined that other courts had issued published opinions, which held dishonored checks were debts under the FDCPA, and recognized that authority was split on the issue. Furthermore, said Judge Sedwick, the Federal Trade Commission, the agency charged to enforce the act, "has always taken the position that dishonored checks were 'debts' for the purposes of the FDCPA."
The court ruled, however, that because the legislative history did not conclusively state whether Congress intended the act to apply to the collection of dishonored checks and a split of authority existed when Surety mailed the notices, it could not conclude that Lundgren was or was not clearly foreshadowed.
The District Court analyzed the two remaining factors of the test and concluded that they militated in favor of according retroactive effect to the Lundgren decision. The court reached this decision after finding:
* Retroactive effect would not retard the FDCPA's operation;
* Retroactive effect would not produce substantially inequitable results;
* It was not inequitable for Surety, a collection agency, to keep itself abreast of developing trends;
* The cost of complying with the FDCPA was minimal;
* Surety's reliance on unpublished orders was questionable given the known split of authority; and
* It furthered the purpose of the act to protect consumers.
The District Court explained that even if Lundgren did not pass the retroactive effect test it would have relied on relevant authority from the 7th, 8th, 9th and 10th Circuits to decide the underlying issue of law. Using these decisions, the District Court ruled that dishonored
checks are debts for the purpose of the FDCPA.
Class Certification
Surety did not contest numerosity given that it mailed 1,000 form letters, which mirrored those mailed to the Prices, to consumers in Arizona. Nor did Surety dispute that commonality or typicality existed. The only element of Fed. R. Civ. P. 23 that Surety challenged was that
of adequacy of representation. Surety argued that this requirement was lacking because Prices' counsel was sanctioned in the past. The Prices countered that the lawyer in question was not involved in the case and
was only a member of the firm representing them. At oral argument, Surety withdrew its objection.
After finding that a class action was maintainable, the court granted the Prices' motion for partial summary judgment and motion for class certification. It denied Surety's motion for summary judgment.
The court defined the class as "All persons with addresses in Arizona to whom defendant sent collection letters in the forms entitled 'Returned Check Notice' [of the type used in this case], which letters were not
returned as undelivered by the Post Office, in connection with attempts to collect debts which are shown by defendant's records to be primarily for personal, family, or household purposes during the one year period
prior to the date of filing this action."
O. Randolph Bragg of Horwitz, Horwitz & Associates Ltd.in Chicago and Floyd Bybee of Bybee & Shaw in Tempe, Ariz., represent the plaintiffs. William W. Holder of Sharecky, Cales & Holder PA in Phoenix represents
the defendant. (Consumer Financial Services Law Report 9-7-1999)
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