The case of Fallas v. Cavalry SPV I, LLC[1] out of the New Jersey District Court reminds us of how important it is to draft specific pleadings in FDCPA and FCRA actions. Here, the plaintiff alleged that upon receipt of a dunning letter from collection law firm Schachter Portnoy, seeking payment on a Cavalry SPV I, LLC debt, he sent a letter to Schachter disputing the validity of the debt and requesting that Schachter either provide proof of the debt or cease and desist communications. Plaintiff alleges that he never received any type of validation, and that subsequent to his dispute and verification letter, he received two letters demanding a balance due on the same debt fromCavalry Portfolio Services. Plaintiff's complaint alleges that later, Cavalry reported plaintiff's account as delinquent to credit reporting agencies Experian and Equifax. Plaintiff's complaint alleges that the conduct amounts to violations of the FDCPA as well as FCRA.
In practical terms, Schachter did indeed cease collection activities following receipt of the letter sent by plaintiff. The two subsequent communications attempting to collect the same debt were sent from a different entity, namely Cavalry Portfolio Services.
A basic requirement for any FDCPA pleading is that the defendant is a debt collector under the statute's definition of that term, and that the debt at issue is a debt under the statute's definition. In this case, the court found that the plaintiff plead only the barest of facts, and in fact failed to allege that the debt at issue constitutes a debt under the FDCPA (that is, a debt incurred primarily for personal, family, or household purposes). Plaintiff also failed to allege that either of the defendants, most importantly SPV, are "debt collectors" under the FDCPA. These basic errors with the pleadings alone are enough for the court to dismiss the claim outright. But the court continues its analysis.
The plaintiff has only named as the only defendant an entity called Cavalry SPV I, LLC. Cavalry Portfolio Services, the entity that allegedly sent the two letters following plaintiff's validation letter, is not named as a defendant in the instant action. The plaintiff failed to allege that Cavalry Portfolio Services and Cavalry SPV I, LLC are the same or even related entities.
Because the plaintiff failed to allege facts showing that the debt in question qualifies as a debt under the FDCPA, and its failure to allege facts showing that the defendant(s) are debt collectors under the statute, the court held that the FDCPA claims must be dismissed. The court outlined further deficiencies in the plaintiff's FDCPA claims, which include plaintiff's failure to specifically articulate which FDCPA violations occurred.
Even if the FDCPA claims had been properly plead, the court stated that it still would likely have dismissed the complaint on the basis that the plaintiff failed to show that Schachter communicated with the plaintiff any further following his verification letter, given that Cavalry was the entity that sent subsequent communications, not Schachter. The court would also dismiss the claim against SPV until and unless the plaintiff alleged facts sufficient to support a finding that SPV is indeed a debt collector under the FDCPA.
The plaintiff also attempted to plead a FCRA claim. In order to state a claim under FCRA, the plaintiff must plead that:
1) she sent notice of disputed information to a consumer reporting agency,
2) the consumer reporting agency then notified the defendant furnisher of the dispute, and
3) the furnisher failed to investigate and modify the inaccurate information.
Here, plaintiff did not allege that he contacted any of the credit reporting agencies that allegedly reported the information furnished by the defendants. If a plaintiff never contacts any of the reporting agencies, then a defendant's duty to investigate the accuracy of the account information is not triggered. Thus, the court held that the plaintiff also failed to state a FCRA claim.