Hooks v. Forman, Holt, Eliades & Ravin, LLC 1

12-3639-cv
Hooks v. Forman, Holt, Eliades & Ravin, LLC
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UNITED STATES COURT OF APPEALS 2
FOR THE SECOND CIRCUIT 3
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August Term, 2012 5
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(Argued: February 13, 2013 Decided: May 29, 2013) 7
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Docket No. 12-3639-cv 10
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KAREN HOOKS and GERALDINE MOORE, on behalf of themselves individually and all others 15
similarly situated, 16
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Plaintiffs-Appellants, 18
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v. 20
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FORMAN, HOLT, ELIADES & RAVIN, LLC, 22
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Defendant-Appellee.*
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Before: HALL, LIVINGSTON, and DRONEY, Circuit Judges. 28
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Suit against debt collector alleging, inter alia, that a collection notice requiring dispute of 30
validity of debt to be in writing violated the Fair Debt Collection Practices Act. The United 31
States District Court for the Southern District of New York (Preska, C.J.) granted defendants’ 32
motion to dismiss all claims. We VACATE the district court’s order as it relates to 15 U.S.C. § 33
1692g(a)(3) and REMAND for further proceedings. 34
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JOANNE S. FAULKNER, New Haven, 38
Connecticut (Novlette R. Kidd, Fagenson & 39
Puglisi, New York, New York, Richard J. 40
Rubin, Santa Fe, New Mexico, on the brief), 41
for Plaintiffs-Appellants. 42
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* The Clerk of the Court is directed to amend the official caption to conform to the above.

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DAVID H. WEINSTEIN, Leila E. Ely, 1
Weinstein Kitchenoff & Asher LLC, 2
Philadelphia, Pennsylvania, for Defendant- 3
Appellee. 4
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DRONEY, Circuit Judge: 6
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Karen Hooks and Geraldine Moore (“Plaintiffs”), brought suit against Forman, Holt, 8
Eliades & Ravin, LLC (“Forman Holt”), a debt collector within the meaning of 15 U.S.C. § 9
1692a(6),1 alleging a violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 10
1692g.2 Plaintiffs allege that Forman Holt’s collection notice violated the FDCPA by stating that 11
the Plaintiffs could only dispute the validity of a debt in writing. The district court granted 12
Forman Holt’s motion to dismiss, concluding that the Plaintiffs had failed to state a claim. We 13
VACATE and REMAND. 14
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BACKGROUND 16
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Plaintiffs are New York residents. During a visit to Atlantic City, New Jersey, in 18
December 2009, they attended a presentation on vacation timeshares sponsored by Wyndham 19
Vacation Resorts, Inc. (“Wyndham”). Plaintiffs then signed an agreement with Wyndham to 20
purchase a timeshare. Hooks has stated that the Plaintiffs did not realize that the document they 21
signed was a mortgage, and neither made any subsequent payments. 22
Wyndham then engaged Forman Holt to begin the timeshare debt collection process. 23
Forman Holt sent a collection notice (“Notice”) to Plaintiffs at their New York addresses on 24
April 5, 2011. The Notice read, in relevant part: 25
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UNLESS YOU NOTIFY US IN WRITING WITHIN THIRTY (30) DAYS 27
AFTER RECEIPT OF THIS LETTER THAT THE DEBT, OR ANY PART OF 28
1 Although Forman Holt contests the allegation that it is a debt collector, it has not challenged that characterization
for purposes of the motion to dismiss.
2 In their initial complaint, Plaintiffs asserted additional causes of action and brought suit against an additional
defendant. They have not elected to appeal the district court’s dismissal of those claims, and we do not consider
them here. In particular, the Plaintiffs initially named William L. Waldman, a “partner, associate, officer or
employee” of Forman Holt, as a defendant in this case. However, the district court dismissed these claims with
prejudice on the ground that the complaint did not sufficiently allege that Waldman was a “debt collector” within the
meaning of 15 U.S.C. § 1692a(6).

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IT, IS DISPUTED, WE WILL ASSUME THAT THE DEBT IS VALID. IF 1
YOU DO NOTIFY US OF A DISPUTE, WE WILL OBTAIN VERIFICATION 2
OF THE DEBT AND MAIL IT TO YOU. ALSO UPON YOUR WRITTEN 3
REQUEST WITHIN THIRTY (30) DAYS, WE WILL PROVIDE YOU WITH 4
THE NAME AND ADDRESS OF THE ORIGINAL CREDITOR IF 5
DIFFERENT FROM WYNDHAM. 6
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The Plaintiffs brought suit in the United States District Court for the Southern District of 8
New York, alleging that the Notice failed to comply with 15 U.S.C. § 1692g. Section 1692g 9
requires a debt collector to send a written notice to any consumer debtor with whom it 10
communicates in connection with the collection of a debt. Section 1692g(a)(3) further requires 11
that this notice must contain “a statement that unless the consumer, within thirty days after 12
receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be 13
assumed to be valid by the debt collector.” The Plaintiffs asserted that the Notice violated § 14
1692g(a)(3) because the Notice indicates that a challenge to the validity of the debt must be 15
made in writing and cannot be made orally. 16
Forman Holt moved to dismiss the complaint for failure to state a claim, pursuant to Rule 17
12(b)(6) of the Federal Rules of Civil Procedure. The district court granted the motion, 18
concluding that a notice requiring that disputes must be presented in writing does not violate 15 19
U.S.C. § 1692g(a)(3).3 See Hooks v. Forman Holt Eliades & Ravin LLC, No. 11 Civ. 2767, 2012 20
WL 3322637 (S.D.N.Y. Aug. 13, 2012). 21
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DISCUSSION 23
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I. Standard of Review 25
We review a district court’s decision to grant a motion to dismiss under Rule 12(b)(6) de 26
novo, accepting all properly pled factual allegations in the complaint as true and drawing all 27
reasonable inferences in favor of the plaintiff. Anderson News, L.L.C. v. Am. Media, Inc., 680 28
F.3d 162, 185 (2d Cir. 2012). We also review questions of statutory interpretation de novo. In 29
re Air Cargo Shipping Servs. Antitrust Litig., 697 F.3d 154, 157 (2d Cir. 2012). 30
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3 This case was brought as a putative class action, but the district court has yet to rule on the class aspects of this
case. The district court also has yet to rule on Forman Holt’s motion to transfer venue.

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II. Analysis 1
Section 1692g(a) provides that a debt collector must send consumer debtors a written 2
notice that contains: 3
(1) the amount of the debt; 4
(2) the name of the creditor to whom the debt is owed; 5
(3) a statement that unless the consumer, within thirty days after receipt of the 6
notice, disputes the validity of the debt, or any portion thereof, the debt will be 7
assumed to be valid by the debt collector; 8
(4) a statement that if the consumer notifies the debt collector in writing within 9
the thirty-day period that the debt, or any portion thereof, is disputed, the debt 10
collector will obtain verification of the debt or a copy of a judgment against the 11
consumer and a copy of such verification or judgment will be mailed to the 12
consumer by the debt collector; and 13
(5) a statement that, upon the consumer’s written request within the thirty-day 14
period, the debt collector will provide the consumer with the name and address of 15
the original creditor, if different from the current creditor. 16
17
Section 1692g(b) further provides that if the consumer “notifies the debt collector in writing” 18
that the debt is disputed, the debt collector must “cease collection of the debt, or any disputed 19
portion thereof, until the debt collector obtains verification of the debt . . . and a copy of such 20
verification . . . is mailed to the consumer by the debt collector.” Because sections 1692g(a)(4), 21
(a)(5), and (b) state that a consumer debtor can only obtain her rights under those sections by 22
notifying the debt collector in writing, Forman Holt maintains that a writing is required to 23
dispute the validity of the debt under § 1692g(a)(3), although that section does not state that a 24
writing is required. 25
This is a question of first impression for this Circuit.4 The two other circuits that have 26
considered the issue have reached different conclusions. See Jerman v. Carlisle, McNellie, Rini, 27
Kramer & Ulrich LPA, 130 S.Ct. 1605, 1610 n.3 (2010) (noting circuit split). The Third Circuit 28
has held that a notice imposing a writing requirement does not violate § 1692g, while the Ninth 29
Circuit has held that it does. 30
4 Previous opinions of this Court have included language apparently assuming that a written notice is required to
dispute a debt. But, fairly read, none of these opinions appears to have resolved the issue. See Ellis v. Solomon &
Solomon, P.C., 591 F.3d 130, 134 (2d Cir. 2010) (summarizing § 1692g(a)(3) as involving a mailing requirement in
the context of an unrelated challenge to the effect of a lawsuit during the dispute period); Miller v. Wolpoff &
Abramson, L.L.P., 321 F.3d 292, 309-10 (2d Cir. 2003) (acknowledging that oral notice is not sufficient to preserve
all rights under the FDCPA, including, inter alia, the verification right, in the course of evaluating a challenge to
separate language encouraging a telephone call).

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In Graziano v. Harrison, 950 F.2d 107 (3d Cir. 1991), the Third Circuit concluded that a 1
consumer debtor must send a written statement to contest the validity of the debt under § 2
1692g(a)(3).5 The Third Circuit’s reasoning centered on two points. First, the Third Circuit 3
stated that reading § 1692(a)(3) not to impose a writing requirement would result in an 4
“incoherent . . . system” in light of the explicit writing requirements in sections 1692g(a)(4), 5
1692g(a)(5), and 1692g(b). Id. at 112. “[U]pon the debtor’s non-written dispute, the debt 6
collector would be without any statutory ground for assuming that the debt was valid, but 7
nevertheless would not be required to verify the debt or to advise the debtor of the identity of the 8
original creditor and would be permitted to continue debt collection efforts.” Id. The court 9
concluded that Congress could not have intended such a result. Second, the court observed that 10
written statements serve the useful purpose of creating a record of the dispute. Id. 11
In Camacho v. Bridgeport Financial, Inc., 430 F.3d 1078 (9th Cir. 2005), the Ninth 12
Circuit concluded that a consumer debtor need not send a writing to contest the debt under § 13
1692g(a)(3). The Ninth Circuit’s reasoning centered on four points. First, the court stated that 14
the contrasting explicit writing requirements in § 1692(a)(4) and (a)(5) showed that Congress did 15
not intend to impose a writing requirement under § 1692(a)(3): “[w]here Congress includes 16
particular language in one section of a statute but omits it in another section of the same Act, it is 17
generally presumed that Congress acts intentionally and purposely in the disparate inclusion or 18
exclusion.” Id. at 1081 (quoting Russello v. United States, 464 U.S. 16, 23 (1983)) (alteration in 19
Camacho). Second, the court stated that this interpretation was sound because the statute 20
provides for other protections in the event of a dispute, and those protections depend only on 21
whether a debt was disputed, and not on whether there was a prior writing. Id. at 1081-82. For 22
example, once a debt has been disputed, a debt collector cannot communicate the debtor 23
consumer’s credit information to others without disclosing the dispute. 15 U.S.C. § 1692e(8). 24
And if the debtor consumer owes multiple debts and makes a payment, the debt collector cannot 25
apply the payment to the disputed debt. Id. at § 1692h. Third, the court concluded that the 26
legislative purpose of allowing alleged debtors to question and challenge the initial 27
communication of the collection agency is furthered by permitting oral objections. Camacho, 28
430 F.3d at 1082. Finally, the court stated that its reading – by which some rights can be 29
5 The Third Circuit recently reaffirmed this holding. See Caprio v. Healthcare Revenue Recovery Grp., LLC, 709
F.3d 142, 148 (3d Cir. 2013).

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triggered by an oral dispute, but others required a written statement – would not mislead 1
consumers, as Graziano had suggested it would. Id. 2
We find the reasoning of the Ninth Circuit more persuasive. The language of § 3
1692g(a)(3) does not incorporate the writing requirement included specifically in other sections 4
of the same statute. We see no reason to ignore this difference in statutory language. Indeed, 5
giving effect to the difference creates a sensible bifurcated scheme. The right to dispute a debt is 6
the most fundamental of those set forth in § 1692g(a), and it was reasonable to ensure that it 7
could be exercised by consumer debtors who may have some difficulty with making a timely 8
written challenge. Such debtor consumers would also undoubtedly benefit from having their 9
payments applied to the undisputed portion of their debts, in accordance with § 1692h, or having 10
the fact of the dispute reported whenever the debt collector communicates with others about the 11
debt, in accordance with § 1692e(8). But such debtor consumers are less likely to benefit from 12
further written notices validating the debt, per § 1692g(a)(4), or naming the original creditor, per 13
§ 1692g(a)(5). 14
In addition, the rights defined by §§ 1692h and 1692e(8) place less of a burden on debt 15
collectors than the rights defined by §§ 1692g(a)(4), (a)(5) and (b). Sections 1692g(a)(4) and 16
(a)(5) call for affirmative steps on the part of the debt collector, and § 1692g(b) requires the debt 17
collector to “cease collection of the debt” unless it complies with several conditions that relate to 18
verifying the debt or judgment in question. “Section 1692g(b) thus confers on consumers the 19
ultimate power vis-à-vis debt collectors: the power to demand the cessation of all collection 20
activities.” Brady v. Credit Recovery Co., 160 F.3d 64, 67 (1st Cir. 1998). It therefore makes 21
sense to require debtor consumers to take the extra step of putting a dispute in writing before 22
claiming the more burdensome set of rights defined in § 1692g(a)(4), (a)(5) and (b). This is 23
certainly not the type of patently unreasonable policy that could cause us not to apply the 24
straightforward language of the statute. 25
As a result, Forman Holt’s challenge to the statutory structure is unavailing. Debtors can 26
protect certain basic rights through an oral dispute, but can trigger a broader set of rights by 27
disputing a debt in writing. Admittedly, a scheme where some rights can be asserted orally while 28
others require a written statement is more complex than one where all rights require a written 29
statement. But even if we were inclined to strike a different balance between the value of 30
allowing oral disputes and the value of simpler requirements for debtors, “[w]e are not at liberty 31

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to substitute a view different from that expressed by Congress in the legislative enactment.” 1
Pipiles v. Credit Bureau of Lockport, Inc., 886 F.2d 22, 27 (2d Cir. 1989). As a result, we 2
conclude that § 1692g(a)(3) does not impose a writing requirement. 3
Forman Holt, in anticipating this conclusion, characterizes it as a “new legal rule,” and 4
proposes giving it purely prospective effect. However, prospective application is appropriate 5
only where there has been “justifiable reliance” on some settled understanding of prior law. 6
Walsche v. First Investors Corp., 981 F.2d 649, 653 (2d Cir. 1992). As noted above, our 7
conclusion is not in tension with any prior holding of this Court, and indeed, many district courts 8
in this Circuit have concluded that § 1692g(a)(3) does not require a written notice. See Register 9
v. Reiner, Reiner & Bendett, PC, 488 F. Supp. 2d 143, 147 (D. Conn. 2007) (stating that “the 10
Second Circuit has not spoken to this issue” before concluding that the consumer need not put 11
her dispute in writing to trigger the protection of § 1692g(a)(3)); Vega v. Credit Bureau Enters., 12
No. 02-CIV-1550, 2005 WL 711657, at *8 (E.D.N.Y. Mar. 29, 2005) (“The Second Circuit has 13
not yet decided whether § 1692g(a)(3) requires consumers to dispute the validity of debts in 14
writing. However, all district courts within the Second Circuit that have considered the issue 15
concluded that subsection (a)(3) does not require a consumer to write to the collection agency to 16
dispute the validity of the debt.”). Given the absence of any settled rule that § 1692g(a)(3) 17
included a writing requirement, Forman Holt cannot show the “justifiable reliance” needed for 18
prospective application. Prospective application would also be uniquely inappropriate here, 19
given the Supreme Court’s recent holding that the FDCPA does not provide a “good faith” 20
defense for mistakes of law. Jerman, 130 S.Ct. at 1611. 21
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CONCLUSION 23
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For the foregoing reasons, we VACATE the judgment of the district court that dismissed 25
the plaintiff’s complaint on the ground that a debtor consumer can claim the benefits of 15 26
U.S.C. § 1692g(a)(3) only by sending the debt collector a written notice of the dispute, and 27
REMAND for further proceedings consistent with this opinion. 28

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