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A Wisconsin federal court granted a debt collector’s motion for summary judgment in a lawsuit alleging a violation of the Fair Debt Collection Practices Act (FDCPA). In granting summary judgment, the Court held that a letter warning the debtor of impending arbitration did not violate the FDCPA.
In Bruesewitz v. Law Offices of Gerald E. Moore & Associates, P.C., No. 06 C 400 S, 2006 WL 3337361 (W.D. Wis. Nov. 15, 2006), Gerald E. Moore & Associates (GEMA) attempted to collect an unpaid credit card balance from Bruesewitz. As part of its collection efforts, GEMA sent Bruesewitz a letter stating that it was exercising its remedy under the cardmember agreement and submitting the claim to binding arbitration.
Bruesewitz sued GEMA, alleging that the letter violated the FDCPA because GEMA never intended to follow through on its “threat to arbitrate.” GEMA moved for summary judgment. In support of his claim, Bruesewitz offered only that GEMA did not commence arbitration after he refused to pay. Additionally, Bruesewitz claimed that since the letter stated that payment of 80% of the debt within ten days “w[ould] prevent the filing of a claim,” GEMA was required file the claim as soon as the ten-day period expired.
The Court granted summary judgment. The Court first noted that GEMA had arbitrated several previous cases and only deviated from its ordinary practice as a result of Bruesewitz filing the lawsuit. These circumstances provided “overwhelming” evidence that GEMA intended to arbitrate the claim.
Next, the Court found that even to an “unsophisticated debtor,” the standard by which courts judge FDCPA claims, the letter could not be read as stating that arbitration would be initiated as soon as the ten-day period expired. Instead, the letter meant only that the 80% settlement offer would expire in ten days.
So long as a debt collector intends to follow through, warning a debtor that arbitration will be initiated does not violate the FDCPA. See, e.g., Lamb v. Javitch, Block & Rathbone, L.L.P., No. 1:04-CV-520, 2005 WL 4137778 (S.D. Ohio Jan. 24, 2005) (noting that in light of the strong federal policy favoring arbitration, it would be “anomalous” to conclude that notifying a debtor of an intent to arbitrate violates the FDCPA). In fact, instead of finding that arbitration of debt disputes violates the FDCPA, courts frequently order arbitration of FDCPA claims. See, e.g., Miller v. Northwest Trustee Services, Inc., No. CV-05-5043-RHW, 2005 WL 1711131 (E.D. Wash. July 20, 2005).
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