Motions for Summary Judgment Denied in Case of Collection Letter That Failed to State Interest Would Accrue

On May 18, 2017, a federal judge in Missouri denied joint motions for summary judgment on the issue of whether a letter that “did not state that interest was accruing”, violated the Fair Debt Collection Practices Act (FDCPA). The case is Mygatt v. Medicredit, Inc. (Case No. 15-1947, U.S. D.C., Eastern District of Missouri). 

A copy of the court’s memorandum and order can be found here.   

Background 

Plaintiff Timberly Mygatt incurred debt as a result of medical treatment she received at Missouri Delta Medical Center (MDMC). Medicredit, Inc. (Medicredit) sent at least two collection letters to Mygatt in an attempt to collect the debt owed to MDMC. 

Medicredit mailed Mygatt a letter, dated December 24, 2014, listing a balance due of $300.23. Medicredit's December 24, 2014 letter did not disclose that the "Balance Due" of $300.23 would increase after the date of the letter. 

Medicredit mailed Mygatt a letter, dated April 25, 2015, listing a balance due of $308.20. Medicredit's April 25, 2015 letter did not disclose that the "Balance Due" would increase after the date of the letter. As of April 25, 2015, Medicredit was assessing 9% interest per annum on Mygatt's debt. 

Mygatt alleges that on October 23, 2015, she called Medicredit and was informed that the balance due was $319.44. Mygatt claims she was told that the amount from Medicredit's April 25, 2015 letter had increased because Medicredit was assessing interest on Plaintiffs MDMC debt. Every dollar of interest that accrued on the MDMC debt occurred after the accounts were placed with Medicredit for collections.

Both parties filed motions for summary judgment.

Editor’s Note: A motion for summary judgment is based upon a claim by one party (or, in some cases, both parties) that contends that all necessary factual issues are settled or so one-sided they need not be tried. The summary judgment is appropriate when the court determines there no factual issues remaining to be tried, and therefore a cause of action or all causes of action in a complaint can be decided upon certain facts without trial. 

The Court’s Memorandum and Order 

Mygatt argued that she is entitled to partial summary judgment with respect to Medicredit's liability under 15 U.S.C. §1692e(2)(A). See 15 U.S.C. §1692e(2)(A) ("A debt collector may not use any false, deceptive, or misleading representation or means in connection. Mygatt argued that the contents of Medicredit's December 24, 2014 and April 25, 2015 letters, along with the October 2015 collection call, violate the FDCPA because they informed Mygatt that she had a single "Balance Due" on a medical debt, but with the collection of any debt, Medicredit subsequently assessed and attempted to collect interest beyond the static balance amount listed in the letter. 

Medicredit argued that it did not violate the FDCPA by failing to disclose the accrual of interest in its letters. Medicredit also argued that it is not liable under the FDCPA for failing to specify in its letters that interest was accruing because Mygatt had conceded and admitted that interest was accruing on her debt with Medicredit. 

The Court’s Decision   

As noted above, the judge in this case, the Honorable Ronnie L. White, U.S. District Court Judge, denied both motions for summary judgment. This means the matter will proceed.  

As to the plaintiff’s motion, Judge White wrote: 

“Mygatt maintains that the FDCPA requires debt collectors, when they notify consumers of their account balance, to disclose that the balance may increase due to interest and fees. See Avila v. Riexinger & Assocs., LLC, 817 F.3d 72, 76 (2d Cir. 2016) ("Because the statement of an amount due, without notice that the amount is already increasing due to accruing interest or other charges, can mislead the least sophisticated consumer into believing that payment of the amount stated will clear her account, we hold that the FDCP A requires debt collectors, when they notify consumers of their account balance, to disclose that the balance may increase due to interest and fees .") (vacating dismissal of the plaintiffs' claims on this ground). 

Medicredit takes the position that a debt collector is not required by the FDCPA to state that interest is accruing on debt. Medicredit argues that whether a debt collector is required by the FDCPA to state that interest is accruing is a matter that must be evaluated on a case-by-case basis. Medicredit contends that, as a bare minimum, a fact question exists on the issue that precludes summary judgment in favor of Mygatt. 

The Court holds that Mygatt has failed to establish that she is entitled to summary judgment as a matter of law for her claim under 15 U.S.C. § 1692e(2)(A). As an initial matter, the Court notes that the case law from this district cited by Mygatt were all denials of motions to dismiss and have little value in determining a violation as a matter of law. Likewise, district courts have refused to identify a bright line rule of liability. Rather, the district courts evaluated the facts of the cases and refused to dismiss the FDCPA claims on those facts. 

Moreover, the fact that the Eighth Circuit has yet to address whether a debt collector must disclose that interest is accruing on a debt bolsters this Court's decision to refrain from deciding this issue as a matter of law. Finding that the evidence before the Court is disputed and not amenable to disposition as a matter of law, the Court denies Mygatt's Motion for Summary Judgment.” 

As to Defendant’s motion, Judge White wrote: 

“Medicredit states that omitting to disclose the accrual of interest in a collection letter is not a violation of the FDCPA. Medicredit acknowledges that several, recent district court cases have held that a debt collector may violate the FDCPA by sending a written demand for payment without specifying interest accruing on the debt. however, notes that the May Court stated that "it would be highly improvident for this Court to establish a bright line rule that a debt collector assessing interest without specifying so in its collection letters is, as a matter of law, liable for violating Sections 1692g(a)(l) and 1692e(2)(A) of the FDCPA. That inquiry, both in these proceedings, and in future cases, will necessarily turn on the particular facts of the case." 

Medicredit argues that it is not liable under the FDCPA for failing to specify in its letters that interest was accruing because Mygatt has conceded and admitted that interest was accruing on her debt with Medicredit. 

The Court denies Medicredit's Motion for Summary Judgment. As previously discussed, whether there was a violation of the FDCP A is largely an issue of fact that is not generally amenable to summary judgment. The Court holds that various factual disputes preclude entry of summary judgment. 

The Court finds, without holding, that a reasonable person could find that the balance provided to Mygatt, which did not state that interest was accruing, was confusing. The Court defers to a factfinder to determine whether Medicredit violated the FDCPA.” 

insideARM Perspective 

This decision is not a dispositive outcome in this case. The court merely denied both motions for summary judgment. As a result, this case will continue to either a settlement or a trial where the trial judge or jury will decide whether there was an FDCPA violation.  The case highlights the issue regarding failure to mention whether or not an account is continuing to accrue interest. 

As noted yesterday in our article on Taylor v. Financial Recovery Services, Inc. (Case No. 15-4685, U.S.D.C Southern District of New York), these two decisions should be read together.  The facts in this case are clearly distinguishable from the facts in the Taylor matter. Here, the debt was collector was, in fact, continuing to accrue interest on the account. In Taylor, the debt collector was not accruing interest.