This blog entry, and the case[1] it is premised upon, is important because it demonstrates that even a solid FDCPA case may fall short of satisfying all elements of concomitant state law theories.
Federal District Court Judge, John F. Keenan, authored an opinion in one of our own cases that masterfully defines issues and explains the law.
In this case, our client was targeted years after her alleged default of a payday loan issued by Eagle Finance. The defendant in this action, Sieger Ross & Aguire, was Eagle's debt collector. Usury issues with payday loans aside, this case involved clear violations of the Fair Debt Collection Practices Act ("FDCPA") for Sieger Ross' threats of lawsuits, jail time, and tax warrants. Furthermore, Sieger Ross called our client's aunt several times in a way that instilled a sense of emergency.
Sieger Ross initially appeared in the case for purposes of getting an extension of its time to answer while attempting to settle the case. Sieger Ross agreed to pay our client a modest sum for damages and attorneys' fees. However, when it came time to pay, Sieger Ross vanished and defaulted in the case. The Langel Firm made a motion for a default judgment against Sieger Ross. Aside from FDCPA violations, we alleged state law theories of deceptive acts and practices (New York General Business Law § 349), intentional infliction of emotional distress, and fraud.
Below is a brief encapsulation of Judge Keenan's handling of the plaintiff's claims:
Fair Debt Collection Practices Act:
Full statutory damages of $1,000 are warranted. Furthermore, actual damages of $1,000 is fair to compensate the plaintiff for her "general" emotional distress stemming from Sieger Ross' verbal abuse. Our firm was granted our full request of $6,197 in attorneys' fees for prosecuting the case.
New York General Business Law § 349:
This law protects consumers against deceptive business practices that have a broad impact on consumers at large. Although our plaintiff sufficiently pleaded that Sieger Ross' verbal threats ("tax warrants" and "district attorneys") violated this law, our client was not entitled to collect twice for the same injury.
Judge Keenan held, "[t]he fact that Plaintiff presented both state and federal law theories of liability does not entitle her to separate recoveries for a single injury – that is her emotional distress. That would violate the rule against double recovery." Therefore, since a recoverable damage was lacking, this claim was denied.
Intentional Infliction of Emotional Distress Claim:
To make out a claim of intentional infliction of emotional distress under New York law, a plaintiff must demonstrate: 1) extreme and outrageous conduct; 2) intent to cause, or reckless disregard of a substantial probability of causing, severe emotional distress; 3) causal connection between the conduct and the injury; and 4) severe emotional distress.
The type of conduct needed to satisfy these elements are so "rigorous and difficult to satisfy" it is extremely difficult to establish conduct sufficiently outrageous. Here, Sieger Ross' threats of criminal and tax liability did not rise to the "level of atrocity" required to make out this claim. Sieger's three calls to her aunt and six calls to the plaintiff were not so aggravating as to constitute a "campaign of harassment." Furthermore, a lacking of medical evidence to support her emotional distress injury mitigated against this claim. Without a physician's support, allegations of emotional distress injuries under this state-tort theory is a lost cause.
Common Law Fraud:
To establish a claim for common law fraud under New York law, a plaintiff must allege 1) a material misrepresentation or omission of fact; 2) made with knowledge of its falsity; 3) with an intent to defraud; 4) reasonable reliance on the part of the plaintiff 5) that causes damage to the plaintiff. Actual, out-of-pocket losses are necessary.
Although the court found that Sieger Ross may have misrepresented the existence of the debt and the legal consequences of failing to pay that debt, the court was not convinced that the plaintiff relied on those misrepresentations or that she suffered out-of-pocket losses. In the case, the plaintiff alleged that threats directed at her caused her to refrain from seeking a new job or housing for fear of denial due to an impugned credit history. She could have obtained her credit report to dispel any such fear. Furthermore, the plaintiff's argument that she may have lost a job opportunity is simply too speculative to constitute a "cognizable fraud injury."
The court held, "damages are to be calculated to compensate plaintiffs for what they lost because of the fraud, not to compensate them for what they might have gained."