[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
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No. 97-6731
Non-Argument Calendar
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D. C. Docket No. CV-97-N-1579-NE
CARRIE HAWTHORNE,
Plaintiff-Appellant,
versus
MAC ADJUSTMENT, INC.,
Defendant-Appellee.
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Appeal from the United States District Court
for the Northern District of Alabama
_________________________
(May 11, 1998)
Before BLACK, HULL and MARCUS, Circuit Judges.
MARCUS, Circuit Judge:
This lawsuit arises out of an alleged tortfeasor’s attempt to obtain statutory damages
under the Fair Debt Collection Practices Act, 15 U.S.C. §1692, et seq. (“FDCPA”), against
a company with subrogation rights of the insurance carrier of the party damaged by the
alleged tortfeasor’s actions. Based on a single letter sent by defendant-appellee Mac
Adjustment, Inc. (“Mac Adjustment”), plaintiff-appellant Carrie Hawthorne claims that Mac
Adjustment violated her rights that are protected by the FDCPA. Finding that Hawthorne’s
obligation to Mac Adjustment did not meet the statutory definition of a “debt” under the
FDCPA, the district court granted Mac Adjustment’s motion for judgment on the pleadings.
Hawthorne now appeals that decision and asks us to reverse the district court’s order and
remand the case for further proceedings. For the reasons stated below, we decline
Hawthorne’s invitation and AFFIRM the ruling of the district court.
I.
Hawthorne was involved in an accident, allegedly resulting from her negligence.1
Liberty Mutual Insurance Company (“Liberty Mutual”) insured the other party to the
accident, who was damaged in the amount of $2,020.18. After paying its insured’s claim,
Liberty Mutual then provided Mac Adjustment with subrogation rights to the $2,020.18 it
claimed Hawthorne owed.
On June 5, 1996, Mac Adjustment sent Hawthorne a letter requesting payment of the
subrogation claim incurred by Liberty Mutual. In relevant part, the letter stated:
Dear CARRIE HAWTHORNE:
The above captioned subrogation claim resulting from your
negligence has been referred to us to bring to a conclusion. If
you had liability insurance to cover this accident, kindly note the
name of your Insurance Company and policy number on the
bottom of this letter and return it to us. If you did not have
insurance and wish to resolve this matter voluntarily, send your
check for the full amount of the claims by return mail.
1
The record contains few facts; consequently, the Court’s statement of the facts is
similarly brief.
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In the event that you are without insurance and you cannot remit
payment immediately, please call our office AS SOON AS
POSSIBLE to make arrangements to get this matter resolved.
Sincerely,
A.F. McGlone
Subrogation Dept.
Unless you, within 30 days after receipt of this notice, dispute
the validity of this claim or any portion thereof, the claim will
be assumed to be valid. If you notify us in writing within 30
days that the claim or any portion thereof is disputed, we will
obtain verification of the claim or a copy of a judgment against
you and a copy of verification or judgment will be mailed to
you. Upon written request within 30 days, we will provide you
with the name and address of the original creditor, if different
from the current creditor. This is an attempt to collect a claim
and any information obtained will be used for that purpose.
Averring that the claim referred to in the Mac Adjustment letter had expired under
Alabama law on December 7, 1994, Hawthorne filed suit for damages in the Circuit Court
of Madison County, Alabama, under the FDCPA. Mac Adjustment timely removed the case
to federal court, and, shortly thereafter, filed a motion for judgment on the pleadings. Over
Hawthorne’s opposition, the district court entered judgment on the pleadings for Mac
Adjustment. In its memorandum opinion granting judgment on the pleadings, the district
court noted that the Eleventh Circuit had not yet addressed whether the FDCPA covers
obligations such as those involved in this case. Based on other courts’ analyses of similar
claims, however, the district court concluded that the obligation at issue in this case did not
constitute a “debt” under the FDCPA because it did not “arise out of any consumer
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transaction in which the plaintiff was ‘offered or extended the right to acquire “money,
property, insurance, or services” which are “primarily for household purposes” and to defer
payment.’” Consequently, the district court entered judgment on the pleadings for Mac
Adjustment and dismissed the case with prejudice. This appeal followed.
II.
We review a judgment on the pleadings de novo. See Slagle v. ITT Hartford, 102
F.3d 494, 497 (11th Cir. 1996) (citing Ortega v. Christian, 85 F.3d 1521, 1524-25 (11th Cir.
1996)). Judgment on the pleadings is appropriate when there are no material facts in dispute,
and judgment may be rendered by considering the substance of the pleadings and any
judicially noticed facts. See Bankers Insurance Co. v. Florida Residential Property and
Casualty Joint Underwriting Ass’n, 137 F.3d 1293, ___, (11th Cir. 1998) (citing Hebert
Abstract Co. v. Touchstone Properties, Ltd., 914 F.2d 74, 76 (5th Cir. 1990)); see also Rule
12(c), Fed. R. Civ. P. When we review a judgment on the pleadings, therefore, we accept
the facts in the complaint as true and we view them in the light most favorable to the
nonmoving party. See Ortega, 85 F.3d at 1524 (citing Swerdoff v. Miami Nat’l Bank, 584
F.2d 54, 57 (5th Cir. 1978)). The complaint may not be dismissed “‘unless it appears beyond
doubt that the plaintiff can prove no set of facts in support of his claim which would entitle
him to relief.’” Slagle, 102 F.3d at 497 (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)
& citing Hartford Fire Ins. Co. v. California, 509 U.S. 764, 811 (1993)).
III.
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Review of the plain language of the FDCPA provisions at issue and the case law
yields the conclusion that the district court properly granted judgment on the pleadings for
Mac Adjustment in this case. Congress enacted the FDCPA in 1977 as an amendment to
the Consumer Credit Protection Act “to protect consumers from a host of unfair, harassing,
and deceptive debt collection practices without imposing unnecessary restrictions on ethical
debt collectors. . . .” Consumer Credit Protect Act, S. Rep. No. 95-382, at 1-2 (1977),
reprinted in 1977 U.S.C.C.A.N. 1695, 1696. Indeed, the statute itself provides, “It is the
purpose of this subchapter to eliminate abusive debt collection practices by debt collectors,
to insure that those debt collectors who refrain from using abusive debt collection practices
are not competitively disadvantaged, and to promote consistent State action to protect
consumers against debt collection abuses.” 15 U.S.C. §1692(e).
In analyzing the application of the FDCPA to the case at hand, we begin with the
language of the statute itself. See Brown v. Budget Rent-A-Car Systems, Inc., 119 F.3d 922,
924 (11th Cir. 1997) (citing Holly Farms Corp. v. NLRB, 517 U.S. 392, ___, 116 S. Ct. 1396,
1401 (1996)). Specifically, Hawthorne alleges that Mac Adjustment violated 15 U.S.C.
§1692e(10), which provides in its entirety:
A debt collector may not use any false, deceptive, or misleading
representation or means in connection with the collection of any
debt. Without limiting the general application of the foregoing,
the following conduct is a violation of this section:
(10) The use of any false representation or deceptive
means to collect or attempt to collect any debt or to
obtain information concerning a consumer.
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Thus, section 1692e makes the existence of a “debt” a threshold requirement for the section’s
applicability. See Mabe v. G.C. Servs. Ltd. Partnership, 32 F.3d 86, 88 (4th Cir. 1994);
Zimmerman v. HBO Affiliate Group, 834 F.2d 1163, 1167 (3d Cir. 1987); Riebe v.
Juergensmeyer and Assocs., 979 F. Supp. 1218, 1220 (N.D. Ill. 1997). The FDCPA defines
“debt,” in turn, as “. . . any obligation or alleged obligation of a consumer to pay money
arising out of a transaction in which the money, property, insurance, or services which are
the subject of the transaction are primarily for personal, family, or household purposes,
whether or not such obligation has been reduced to a judgment.” 15 U.S.C. §1692a(5).
Although we recently held that a “debt” need not require the extension of credit, Brown v.
Budget Rent-A-Car, 119 F.3d 922 (11th Cir. 1997), we have not previously addressed the
limits of the FDCPA’s definition of “debt.”
By the plain terms of the statute, not all obligations to pay are considered “debts”
subject to the FDCPA. See Bass v. Stolper, Koritzinsky, Brewster & Neider, S.C., 111 F.3d
1322, 1324 (7th Cir. 1997). Rather, the FDCPA may be triggered only when an obligation
to pay arises out of a specified “transaction.” Although the statute does not define the term
“transaction,” we do not find it ambiguous. A fundamental canon of statutory construction
directs us to interpret words according to their ordinary meaning. See Anderson v.
Singletary, 111 F.3d 801, 804 (11th Cir. 1997) (citing Perrin v. United States, 444 U.S. 37,
42 (1979)). The ordinary meaning of “transaction” necessarily implies some type of business
dealing between parties. See Webster’s New Collegiate Dictionary 1230 (1979) (defining
“transaction” as “a business deal”); Bass, 111 F.3d at 1325 (citing Webster’s New World
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Dictionary 1509 (2d ed. 1986)). In other words, when we speak of “transactions,” we refer
to consensual or contractual arrangements, not damage obligations thrust upon one as a result
of no more than her own negligence. See Bass, 111 F.3d at 1326 (“[T]he FDCPA limits its
reach to those obligations to pay arising from consensual transactions, where parties
negotiate or contract for consumer-related goods or services.”). While we do not hold that
every consensual or business dealing constitutes a “transaction” triggering application of the
FDCPA (such a holding would be contrary to the plain language of the statute limiting
applicability to specified transactions, as well as to other portions of the statute not relevant
to this analysis, which require the existence of other conditions before the FDCPA applies),
at a minimum, a “transaction” under the FDCPA must involve some kind of business dealing
or other consensual obligation. Because Hawthorne’s alleged obligation to pay Mac
Adjustment for damages arising out of an accident does not arise out of any consensual or
business dealing, plainly it does not constitute a “transaction” under the FDCPA. Moreover,
the fact that Mac Adjustment may have entered into a contract with the insurer for
subrogation rights does not change the fact that no contract, business, or consensual
arrangement between Hawthorne and the damaged party, its insurer, or Mac Adjustment
exists. Consequently, the FDCPA does not apply because this is not a transaction.
Moreover, the statutory language further limits application of the FDCPA to debts
arising from consumer transactions. See 15 U.S.C. §1592a; Shorts v. Palmer, 155 F.R.D.
172, 174 (S.D. Ohio 1994); Battye v. Child Support Servs., Inc., 873 F. Supp. 103, 105 (N.D.
Ill. 1994). Indeed, as noted above, the statute provides that a “debt” is “. . . any obligation
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or alleged obligation of a consumer to pay money arising out of a transaction in which the
money, property, insurance, or services which are the subject of the transaction are primarily
for personal, family, or household purposes, whether or not such obligation has been reduced
to a judgment.” 15 U.S.C. §1692a(5) (emphasis added). Quite simply, Hawthorne’s alleged
obligation to Mac Adjustment does not arise out of a consumer transaction; it arises from a
tort. In conducting herself in an allegedly negligent manner that precipitated an accident,
Hawthorne engaged in no consumer transaction. She neither purchased nor used goods or
services. Rather, Hawthorne finds herself indebted to Mac Adjustment because she allegedly
failed to conduct herself with the reasonable care that society demands of all of us, and she
cannot somehow transform this payment obligation arising out of an accident into a
consumer transaction. Thus, we hold that the district court properly granted judgment on the
pleadings for Mac Adjustment.2
2
Although unnecessary to our holding, we note in passing that the legislative history and
the Federal Trade Commission’s (“FTC”) staff commentary on the FDCPA confirm our reading
of the statute. First, considering the legislative history, the Senate Report on the Fair Debt
Collection Practices Act expressly defines the scope of the Act as applying “only to debts
contracted by consumers for personal, family, or household purposes; it has no application to
the collection of commercial accounts.” Consumer Credit Protect Act, S. Rep. No. 95-382
(1977), reprinted in 1977 U.S.C.C.A.N. 1695 (emphasis added). Hawthorne’s obligation to Mac
Adjustment, which arose purely out of an accident, involved no contract of any type between
Hawthorne and the damaged party, the insurer, or Mac Adjustment. Likewise, it involved no
consumer transaction. Accordingly, it does not constitute the type of obligation that Congress
envisioned protecting through the FDCPA.
Similarly, the FTC’s staff commentary on the FDCPA supports our understanding of the
statute. Congress specifically charged the FTC with enforcement and administration of the
FDCPA. See 15 U.S.C. §1692l. Although the FTC’s construction of the FDCPA is not binding
on the courts, because the FTC is entrusted with administering the FDCPA, its interpretation
should be accorded considerable weight. See Chevron, U.S.A. v. Natural Resources Defense
Council, Inc., 467 U.S. 837, 844 (1984). In a notice entitled “Statements of General Policy or
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Review of other cases concerning the FDCPA confirms our interpretation of the
statutory definition of “debt” to exclude tort obligations such as the one at issue in this case.
In Zimmerman v. HBO Affiliate Group, 834 F.2d 1163 (3d Cir. 1987), and Shorts v. Palmer,
155 F.R.D. 172 (S.D. Ohio 1994), for example, the courts concluded that obligations to pay
money arising out of the alleged theft of property or services did not constitute “debts” under
the FDCPA.3 Obviously, theft is neither consensual nor contractual; nor does it constitute
a business dealing. Consequently, it fails to meet the definition of a “transaction” under the
FDCPA. See also Mabe v. G.C. Servs. Ltd. Partnership, 32 F.3d 86 (4th Cir. 1994) (an
obligation to pay child support arising out of an administrative support order issued by
Virginia’s Department of Social Services does not qualify as a “debt” under the FDCPA).
On the other hand, several courts have concluded that bounced checks may well involve
“debts” protected under the FDCPA. See, e.g., Bass, 111 F.3d 1322 (7th Cir. 1997); Ernst v.
Jesse L. Riddle, P.C., 964 F. Supp. 213 (M.D. La. 1997); Narwick v. Wexler, 901 F. Supp.
Interpretation, Staff Commentary on the Fair Debt Collection Practices Act,” 53 Fed. Reg.
50,097 (1988), the FTC considered the meaning of the term “debt” under the FDCPA. See id. at
50,102. In providing examples of obligations that the FTC considered “exclu[ded]” from the
definition of a “debt” under the FDCPA, the FTC stated, “The term does not include: . . . tort
claims, because they are not debts incurred from a ‘trans[action] (involving purchase of)
property . . . or services . . . for personal, family or household purposes.” Id. (The commentary
refers to a “transportation.” Because the statute the commentary quotes refers to a “transaction,”
we assume that this is a typographical error.) Thus, the FTC contemplated precisely the type of
obligation at issue in this case and expressly found it not to trigger the FDCPA.
3
The Third Circuit appears to have concluded that the alleged theft did not constitute the
type of obligation necessary to trigger the FDCPA at least in part because it did not result from
the extension of credit. Zimmerman, 834 F.2d at 1168. Although, as we have previously held,
we disagree with Zimmerman in this respect, see Brown v. Budget Rent-A-Car, 119 F.3d at 924
n.1, Zimmerman may fairly be read to stand for the proposition that a theft does not constitute a
“transaction” as required by the statute.
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1275 (N.D. Ill. 1995); In re Scrimpsher, 17 B.R. 999 (Bankr. N.D.N.Y. 1982). Unlike torts,
however, bounced checks represent legal obligations to pay. In other words, they constitute
evidence of a business dealing, or a “transaction” under the FDCPA.
We also reject Hawthorne’s attempt to persuade the Court that our recent decision in
Brown requires us to conclude that the obligation at issue in this case is covered by the
FDCPA. Brown rented a truck from Budget Rent-A-Car. In doing so, he signed an
agreement and paid Budget cash in an amount that included loss damage waiver protection.
Upon leaving Budget, Brown collided the rented vehicle with an underpass and damaged the
truck. Budget subsequently demanded damages. Brown’s insurance carrier paid for the
damage to the truck, but refused to pay the deductible or loss-of-use fee. Brown also refused
to pay these amounts because he believed them to be covered by the loss damage waiver
protection. Budget retained the services of an agency to initiate collection activities against
Brown, and Brown sued for violations of the FDCPA. Budget claimed that the FDCPA did
not apply because Brown had not paid on credit, but rather had used cash. We held that the
FDCPA does not require the extension of credit to be applicable to an obligation. We did not
consider the question of whether the obligation at issue in Brown involved a “transaction”
under the FDCPA. It is clear, however, that the facts delineated in Brown do not exclude the
possibility that the obligation in that case constituted a “debt” under the FDCPA, as Brown’s
obligations arose at least in part out of a business transaction where Brown contracted for
what appear to be personal services (the truck rental and the loss damage waiver protection).
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In the case at hand, no such transaction occurred. Consequently, Brown does not demand
the result that Hawthorne seeks.
Finally, Hawthorne attempts to avoid our conclusion by contending that Mac
Adjustment waived “any claim to be exempted from the FDCPA.” Appellant’s Brief at 5.
Specifically, she claims that Mac Adjustment “voluntarily inclu[ded] . . . FDCPA language
in its dunning letter” and thus waived its ability to contend now that the FDCPA does not
apply. Id. at 6. In support of her argument, Hawthorne relies upon Vasquez v. Allstate
Insurance Co., 937 F. Supp. 773 (N.D. Ill. 1996).
Several problems with Hawthorne’s argument exist. First, we note that the letter sent
by Mac Adjustment does not refer to the FDCPA at all. Second, federal jurisdiction in this
case is predicated on the alleged existence of a federal question under the FDCPA. We have
held, however, that the FDCPA does not apply in this case. Thus, to the extent that Mac
Adjustment chooses to govern itself according to certain principles of the FDCPA without
referring to them expressly in its dunning letters, it is well established that the parties cannot
confer federal jurisdiction by “waiving” into applicability of the FDCPA. See Eagerton v.
Valuations, Inc., 698 F.2d 1115, 1118 (11th Cir. 1983). Rather, federal jurisdiction may be
created only by congressional grant. See Weinberger v. Bentex Pharmaceuticals, 412 U.S.
645, 652 (1973). Finally, we need not quarrel with Vasquez on this point because it does not
even mention the term “waiver,” let alone address the concept. Indeed, the court in Vasquez
concluded, “This opinion should . . . not be viewed as an expression of any view as to [the
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defendant’s] possible liability under the Act.” 937 F. Supp. at 775 n.1. In short, Vasquez
is inapplicable to this case.
IV.
We therefore conclude that the district court properly granted judgment on the
pleadings for Mac Adjustment. The tort obligation at issue in this case does not constitute
a “debt” under the plain language of the FDCPA or any of the applicable case law.
Accordingly, the judgment of the district court must be, and is, AFFIRMED.
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