The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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YITZCHOK WEISS,
Plaintiff, MEMORANDUM & ORDER
21-CV-218(EK)(TAM)
-against-
SEQUIUM ASSET SOLUTIONS, LLC; LVNV
Funding LLC; and John Does 1-25,
Defendants.
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ERIC KOMITEE, United States District Judge:
Plaintiff Yitzchok Weiss claims that a letter he
received from Sequium Asset Solutions, LLC violated the Fair
Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692p. The
named defendants move for judgment on the pleadings. For the
reasons stated below, Defendants’ motion is granted.
I. Background
In the complaint, Weiss states that he “allegedly”
incurred a debt to HSBC Bank that became the subject of a 2012
court judgment against him in the amount of $12,777.90. Compl.
¶¶ 23, 33, ECF No. 1.1 HSBC is not a party here; Weiss alleges
that the bank “sold or assigned the alleged [] debt” to
defendant LVNV Funding. Id. ¶ 27. The facts below are taken
1 All page numbers to citations to record documents refer to ECF
pagination rather than native pagination.
from the complaint and assumed to be true for purposes of the
instant motion.
Defendant Sequium Asset Solutions is a “debt
collector” within the FDCPA definition. On December 8, 2020,
Sequium sent Weiss a letter on LVNV’s behalf. Id. ¶ 31. The
letter noted a “Total Due” of $12,777.90 — the amount of the
2012 judgment — and set out a settlement offer: the debt would
be extinguished if Weiss paid sixty percent of that amount. See
Debt Notice, Exhibit A to Compl., ECF No. 1-1. Sequium’s letter
did not provide a deadline by which Weiss had to accept this
offer or otherwise provide that the offer would expire. Id.
Weiss maintains that the “Total Due” field in
Sequium’s letter misstated the amount of his debt. He claims
the amount he owed was substantially higher, because interest
had been accruing since 2012 at nine percent annually by
operation of New York law. See Compl. ¶ 38. He argues that the
letter violated the FDCPA because it failed to include interest
in the total due or state explicitly that statutory interest
would be waived. Id. ¶¶ 34-40; see also id. ¶¶ 58-72 (alleging
violations of Sections 1692e, 1692f, and 1692g of the FDCPA).
Weiss seeks certification of a class of similarly
situated consumers.2 Defendants answered the complaint (and then
amended their answer) but did not move for dismissal under
Federal Rule of Civil Procedure 12(b)(6). They now move for
judgment on the pleadings pursuant to Rule 12(c).
II. Legal Standard
A. Motion for Judgment on the Pleadings
A motion for judgment on the pleadings pursuant to
Federal Rule of Civil Procedure 12(c) is reviewed under the same
standard as a motion to dismiss under Rule 12(b)(6). Bank of
New York v. First Millennium, 607 F.3d 905, 922 (2d Cir. 2010).3
In resolving a motion for judgment on the pleadings, the court
“will accept all factual allegations in the complaint as true
and draw all reasonable inferences in [plaintiff’s] favor.”
Johnson v. Rowley, 569 F.3d 40, 43 (2d Cir. 2009). “To survive
a Rule 12(c) motion, however, [plaintiff’s] complaint must
contain sufficient factual matter, accepted as true, to state a
claim of relief that is plausible on its face.” Id. The court
is “not bound to accept as true legal conclusions couched as
2 In addition to Sequium and LVNV, the complaint names “John Does 1-25”
as defendants. Weiss intends to identify those entities in discovery, which
was stayed, on consent, pending resolution of this motion.
3 Unless otherwise noted, when quoting judicial decisions this order
omits all alterations, citations, and internal quotation marks.
factual allegations.” LaFaro v. New York Cardiothoracic Group,
PLLC, 570 F.3d 471, 476–77 (2d Cir. 2009).
B. The FDCPA and the Least Sophisticated Consumer Standard
The FDCPA is a consumer protection statute intended to
“eliminate abusive debt collection practices.” 15 U.S.C.
§ 1692. Section 1692e prohibits the use of “false, deceptive,
or misleading representation or means in connection with”
collecting a debt. A representation can be deceptive or
misleading under section 1692e if it is “open to more than one
reasonable interpretation, at least one of which is inaccurate.”
Easterling v. Collecto, Inc., 692 F.3d 229, 233 (2d Cir. 2012).
Section 1692f prohibits the use of “unfair or
unconscionable means” in collecting a debt. “Although the FDCPA
leaves the term ‘unfair or unconscionable means’ undefined, [the
Second Circuit has] held that the term refers to practices that
are ‘shockingly unjust or unfair, or affronting the sense of
justice, decency, or reasonableness.’” Arias v. Gutman, Mintz,
Baker & Sonnenfeldt LLP, 875 F.3d 128, 135 (2d Cir. 2017). The
LSC standard is used to determine whether a practice is unfair
or unconscionable. Id.
Section 1692g requires a debt collector to “send a
written notice, within five days of its initial communication
with the consumer, stating the amount of the debt and the name
of the creditor to whom the debt is owed.” Jacobson v.
Healthcare Financial Services, Inc., 516 F.3d 85, 91 (2d Cir.
2008). The statute affords a right of action for cases where,
as alleged here, the notice misstates the amount of the debt.
15 U.S.C. § 1692g(a)(1); see also Carlin v. Davidson Fink LLP,
852 F.3d 207, 210 (2d Cir. 2017).
In FDCPA cases under all three sections, courts read
debt-collection letters from the perspective of the “least
sophisticated consumer” (“LSC”). See Russell v. Equifax A.R.S.,
74 F.3d 30, 34 (2d Cir. 1996). The LSC could misunderstand a
collection letter if it is “reasonably susceptible to an
inaccurate reading.” DeSantis v. Computer Credit, Inc., 269
F.3d 159, 161 (2d Cir. 2001).
Still, in applying the LSC standard, “courts have
carefully preserved the concept of reasonableness.” Clomon v.
Jackson, 988 F.2d 1314, 1319 (2d Cir. 1993). “The FDCPA does
not extend to every bizarre or idiosyncratic interpretation by a
debtor of a creditor’s notice.” Schweizer v. Trans Union Corp.,
136 F.3d 233, 237 (2d Cir. 1998). Instead, courts may assume
the LSC makes “reasonable and logical deductions and
inferences,” Dewees v. Legal Serv., LLC, 506 F. Supp. 2d 128,
132 (E.D.N.Y. 2007), and that he will read the letter from start
to finish. See McStay v. I.C. Sys., Inc., 308 F.3d 188, 191 (2d
Cir. 2002).
III. Discussion
This case concerns the extent to which debt collectors
must disclose the effect of interest on a consumer’s account
balance to ensure that a collection notice is not false,
deceptive or misleading under the FDCPA. The Second Circuit has
addressed this subject multiple times in recent years.
In Avila v. Riexinger & Associates, LLC, the Court of
Appeals held that Section 1692e requires debt collectors,
generally speaking, “when they notify consumers of their account
balance, to disclose that the balance may increase due to
interest and fees.” 817 F.3d 72, 76 (2d Cir. 2016). This rule
serves to protect consumers who, absent clarity about the
interest clock, “may hold the reasonable but mistaken belief
that timely payment will satisfy their debts.” Id. The Avila
court qualified its directive, however, by stating that no
liability would obtain when a collection notice “clearly states
that the holder of the debt will accept payment of the amount
set forth in full satisfaction of the debt if payment is made by
a specified date.” Id. at 77.
Two years later, the Second Circuit held that when no
interest is accruing, a notice does not have to say so
explicitly to avoid liability under Section 1692e. Taylor v.
Financial Recovery Services, Inc., 886 F.3d 212, 214 (2d Cir.
2018). The defendant in Taylor “produced unrebutted evidence”
in discovery that no interest had accrued. The court reasoned
that under those circumstances, the risk that Avila identified
is absent (namely, that a consumer will pay the amount listed as
due, only to discover later that he still owes a debt). Id.
Most recently, in Cortez v. Foster & Garbus, LLP, the
Court of Appeals clarified that a debt notice offering to settle
for a fixed amount does not have to state, in addition, that the
interest clock is running (even if that is indeed the case).
999 F.3d 151, 155 (2d Cir. 2021). The court wrote:
As with debtors faced with a collection notice for a
static debt, who are not prejudicially misled by the
collector’s failure to disclose that interest is not
accruing, debtors faced with a settlement offer are not
misled by the failure to disclose that interest is
accruing because in both situations, payment of the
amount indicated in a collection notice would
extinguish the debt.
Id. The instant case precisely presents this latter fact
pattern: Sequium offered to settle the debt for sixty
percent of the amount shown as due and owing. If Weiss had
availed himself of that offer, his “payment . . . would
extinguish the debt,” just as in Cortez. Id.4
Weiss attempts to avoid this clear application of
Cortez by distinguishing Sequium’s letter from the letter at
4 It is irrelevant that the Cortez court was considering interest
accruing from the date of the letter onward, whereas Weiss is talking about
interest accruing prior to the date of the debt-collection notice. Either
way, the settlement offer would (if accepted) render the interest calculation
moot.
issue there. Specifically, he says, Sequium’s letter did not
set out an expiration date for the settlement offer, while the
letter in Cortez did: the debt collector indicated that “we
shall expect” payment by a date specified. Id. at 153. But
Cortez did not establish a bright line rule that every
settlement offer must come with an expiration date. Cortez
referenced the expiration date because the central issue there
was whether a consumer might be confused about the consequences
of paying the settlement amount after that date. Id. at 156.
That is not an issue in this case, precisely because there was
no expiration date in the offer. Indeed, the open-ended offer
from the Defendants was more generous to Weiss than the defined
expiration in Cortez, in that it gave Weiss longer than Mr.
Cortez was afforded to accept the settlement offer.
At oral argument, Weiss’s counsel hypothesized that if
Weiss was inclined to wait a substantial amount of time — like
ten years — before paying the settlement amount, he would not
know whether (or when) the offer had expired. See Transcript of
Oral Argument held on November 15, 2021, 11:10-14, ECF No. 21
(“It’s deceptive in the sense that if they pull back their
offer, when can they pull back their offer . . . . Let’s say
plaintiff thinks that, you know what, I can pay this in ten
years.”). Thus, the LSC might not know what amount to pay.
The complaint does not allege that Weiss himself
experienced this manner of confusion, or even that the least
sophisticated consumer would. In any event, Section 1692e “does
not require that a collection notice anticipate every potential
collateral consequence that could arise in connection with the
payment or non-payment of a debt.” Cortez, 999 F.3d at 156.
This is especially true of potential collateral consequences
that are so esoteric as to arise only if a debtor decides to
wait ten years to accept a settlement offer.
For the same reasons Weiss’s claim under Section 1692e
fails, so, too, does his claims under Section 1692f and 1692g.
The settlement offer is not an “unfair or unconscionable means”
of collecting a debt — Weiss proffers nothing about the open
offer that was “shockingly unjust or unfair, or affronting the
sense of justice, decency, or reasonableness.” Arias, 875 F.3d
at 135. And it comports with Section 1692g’s requirement to
state “the amount of the debt,” again for the reasons set out
above.
IV. Conclusion
For the reasons stated above, Defendants’ motion for
judgment on the pleadings is granted. The clerk is respectfully
directed to close this case.
SO ORDERED.
__/s Eric Komitee___________
ERIC KOMITEE
United States District Judge
Dated: April 7, 2022
Brooklyn, New York