17‐140‐cv
Zirogiannis v. Seterus, Inc.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST
CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
ʺSUMMARY ORDERʺ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second
Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in
the City of New York, on the 12th day of September, two thousand seventeen.
PRESENT: RALPH K. WINTER,
DENNY CHIN,
SUSAN L. CARNEY,
Circuit Judges.
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NICHOLAS ZIROGIANNIS, individually and
on behalf of a class,
Plaintiff‐Appellant,
v. 17‐140‐cv
SETERUS, INC.,
Defendant‐Appellee.
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FOR PLAINTIFF‐APPELLANT: DANIEL A. EDELMAN (Tiffany N. Hardy, on
the brief), Edelman, Combs, Latturner &
Goodwin, LLC, Chicago, Illinois.
FOR DEFENDANT‐APPELLEE: LISA J. FRIED (Allison J. Schoenthal, Chava
Brandriss, Courtney Colligan, on the brief),
Hogan Lovells US LLP, New York, New York.
Appeal from the United States District Court for the Eastern District of New York
(Feuerstein, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment and order of the district court are AFFIRMED.
Plaintiff‐appellant Nicholas Zirogiannis appeals the district courtʹs (1) judgment
entered November 30, 2016 pursuant to an opinion and order entered November 28,
2016 dismissing his amended complaint for failure to state a claim and (2) order entered
January 13, 2017 denying his motion to reconsider that dismissal under Federal Rule of
Civil Procedure 59 and his request for leave to further amend his amended complaint.
We assume the partiesʹ familiarity with the underlying facts, procedural history, and
issues on appeal.
Zirogiannisʹs initial complaint in this case alleged that defendant‐appellee
Seterus, Inc. (ʺSeterusʺ), the servicer of a mortgage loan secured by his residence,
violated the Fair Debt Collection Practices Act (the ʺFDCPAʺ) by furnishing him and a
class of similarly‐situated consumers with written validation notices that failed to
adequately specify ʺthe amount of the debtʺ as required by 15 U.S.C. § 1692g(a)(1).
Zirogiannis subsequently amended his complaint to add allegations concerning, inter
alia, the collection status of his loan when Seterus began servicing it, facts that bear on
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whether Seterus is a ʺdebt collectorʺ under the FDCPA. 15 U.S.C. § 1692a(6)(F).
Seterus then moved to the dismiss the amended complaint pursuant to Federal Rule of
Civil Procedure 12(b)(1) and (6), arguing, inter alia, that Zirogiannis lacked standing
under Article III of the Constitution and that the amended complaint did not plausibly
allege that Seterus was a ʺdebt collectorʺ subject to the FDCPAʹs proscriptions.
The district court concluded that Zirogiannis had Article III standing, but that the
amended complaint did not plausibly allege that Seterus was a debt collector vis‐à‐vis
Zirogiannisʹs loan. As to this latter holding, the district court reasoned that the
amended complaintʹs allegations that ʺSeterus regularly services loans that are
delinquent . . . when Seterus first becomes involved with themʺ and that Zirogiannisʹs
ʺloan was one such loanʺ did not support an inference that the loan was in default at the
time Seterus obtained it, a necessary predicate for qualifying the servicer as a ʺdebt
collectorʺ under the FDCPA. App. 33‐34 (quoting Am. Comp. ¶¶ 9‐10); see also 15
U.S.C. § 1692a(6)(F) (articulating when a servicer qualifies as a ʺdebt collectorʺ).
Accordingly, it granted Seterusʹs motion to dismiss for failure to state a claim and
entered judgment in favor of Seterus.
Shortly thereafter, Zirogiannis filed a motion asking the district court to
reconsider under Federal Rule of Civil Procedure 59 its decision to dismiss the amended
complaint or, in the alternative, to allow Zirogiannis to further amend it. The district
court denied that motion and this timely appeal followed.
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On appeal, Zirogiannis argues that his amended complaint sufficiently alleged
that Seterus is a ʺdebt collectorʺ and that, even if the amended complaint is deficient in
this regard, the district court abused its discretion in denying him leave to further
amend his amended complaint. Seterus responds that the amended complaint was
properly dismissed for failure to plead that Seterus is a ʺdebt collector,ʺ the validation
notice attached to the amended complaint adequately specifies ʺthe amount of the
debt,ʺ and Zirogiannis lacks Article III standing.
We review de novo questions of subject matter jurisdiction and the dismissal of a
complaint pursuant to Rule 12(b)(6), and we review for abuse of discretion a district
courtʹs denial of a reconsideration motion and a request for leave to amend a complaint.
Lefkowitz v. Bank of N.Y., 528 F.3d 102, 107 (2d Cir. 2007) (subject matter jurisdiction);
Loreley Fin. (Jersey) No. 3 Ltd. v. Wells Fargo Sec., LLC, 797 F.3d 160, 169 (2d Cir. 2015)
(Rule 12(b)(6) and denial of leave to amend); Stevens v. Miller, 676 F.3d 62, 67 (2d Cir.
2012) (reconsideration motion). We are ʺfree to affirm an appealed decision on any
ground which finds support in the record, regardless of the ground upon which the
trial court relied.ʺ McCall v. Pataki, 232 F.3d 321, 323 (2d Cir. 2000) (quoting Leecan v.
Lopes, 893 F.2d 1434, 1439 (2d Cir. 1990)).
Because it questions our subject matter jurisdiction, we first address Seterusʹs
contention that Zirogiannis lacks Article III standing in that the FDCPA injury he alleges
is not ʺconcreteʺ as required by the Supreme Courtʹs decision in Spokeo, Inc. v. Robins,
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136 S. Ct. 1540, 1548 (2016). To establish standing under Article III of the Constitution,
a plaintiff must show that he suffered an ʺinjury in fact,ʺ a ʺcausal connectionʺ between
the injury and the challenged conduct, and a likelihood that the injury will be
ʺredressed by a favorable decision.ʺ Lujan v. Defs. of Wildlife, 504 U.S. 555, 560‐61
(1992). An injury in fact must be both ʺparticularizedʺ ‐‐ i.e., ʺit must affect the plaintiff
in a personal and individual wayʺ ‐‐ and ʺconcreteʺ ‐‐ i.e., ʺit must actually exist.ʺ
Spokeo, 136 S. Ct. at 1548 (internal quotation marks omitted). We noted in Strubel v.
Comenity Bank, 842 F.3d 181 (2d Cir. 2016), that Spokeo does not ʺcategorically . . .
preclude[] violations of statutorily mandated procedures from qualifying as concrete
injuriesʺ ‐‐ ʺsome violations of statutorily mandated procedures may entail the concrete
injury necessary for standing.ʺ Id. at 189. For example, ʺan alleged procedural
violation can by itself manifest concrete injury where Congress conferred the
procedural right to protect a plaintiffʹs concrete interests and where the procedural
violation presents a ʹrisk of real harmʹ to that concrete interest.ʺ Id. at 190 (quoting
Spokeo, 136 S. Ct. at 1549). Accordingly, where a plaintiff alleges only a procedural
violation, the ʺcentral inquiry . . . is whether the particular bare procedural violation
may present a material risk of harm to the underlying concrete interest Congress sought
to protect.ʺ Crupar‐Weinmann v. Paris Baguette Am. Inc., 861 F.3d 76, 80‐81 (2d Cir.
2017). Applying these standards, we conclude that Zirogiannis has plausibly alleged
Article III standing.
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First, we have no trouble concluding that § 1692g of the FDCPA ʺprotect[s] an
individualʹs concrete interests.ʺ Strubel, 842 F.3d at 189. One of the reasons that
Congress passed the FDCPA was to protect consumers from ʺabusive debt collection
practices by debt collectors.ʺ Albrandi v. Fin. Outsourcing Servs., Inc., 333 F.3d 82, 85 (2d
Cir. 2003) (quoting 15 U.S.C. § 1692(e)). In furtherance of this purpose, § 1692g
requires a debt collector who solicits payment from a consumer to provide him with ʺa
detailed validation noticeʺ so that he may confirm that he indeed owes the debt sought
by the collector and its amount before paying it. Russell v. Equifax A.R.S., 74 F.3d 30, 34
(2d Cir. 1996). Thus, Congress plainly sought to protect consumersʹ concrete economic
interests by requiring debt collectors to comply with the notice provisions articulated in
§ 1692g.
Second, we also conclude that the specific procedural violation alleged in the
amended complaint presents ʺa material risk of harm to the underlying concrete interest
Congress sought to protectʺ with the FDCPA. Crupar‐Weinmann, 861 F.3d at 81.
Zirogiannis alleges that Seterus violated the FDCPA by failing adequately to specify in
the validation notice ʺthe amount of the debt,ʺ 15 U.S.C. § 1692g(a)(1), in that the notice
did not enumerate ʺadditional third party costs that had not yet been paid by [the] prior
servicerʺ even though Seterus ʺcould readily furnish [such] a complete statement of the
debt,ʺ App. 9‐10 (complaint paragraphs 22‐24). Taken as true, such a violation
plausibly presents a material risk of economic harm to a consumer such as Zirogiannis.
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Indeed, the third party costs that the validation notice does specify are substantial,
including $2,622.64 in foreclosure costs, $661.50 for property inspections, and $90 for
valuations. The alleged failure to furnish a validation notice that enumerates all third
party costs known to the debt collector thus ʺentail[s] the concrete injury necessary for
standing,ʺ Strubel, 824 F.3d at 189, for without such information Zirogiannis arguably
would be placed at a materially greater risk of falling victim to ʺabusive debt collection
practices,ʺ Albrandi, 333 F.3d at 85 (internal quotation marks omitted), if indeed such a
violation were proven.
Nevertheless, we conclude as a matter of law that the validation notice, which
was attached to the amended complaint as Exhibit A, adequately stated ʺthe amount of
the debtʺ as required by 15 U.S.C. § 1692g(a)(1). See DiFolco v. MSNBC Cable LLC, 622
F.3d 104, 111 (2d Cir. 2010) (courts ʺmay consider . . . documents attached to the
complaint as exhibitsʺ in evaluating a Rule 12(b)(6) motion). ʺWhen determining
whether a debt collector has violated § 1692gʹs notice requirements, we consider how
the ʹleast sophisticated consumerʹ would interpret the notice.ʺ Carlin v. Davidson Fink
LLP, 852 F.3d 207, 216 (2d Cir. 2017) (quoting Russell, 74 F.3d at 34). ʺWe ask whether
ʹthe notice fails to convey the required information clearly and effectively and thereby
makes the least sophisticated consumer uncertain as to the meaning of the message.ʹʺ
Id. (quoting DeSantis v. Computer Credit, Inc., 269 F.3d 159, 161 (2d Cir. 2001)). Although
ʺ[t]he hypothetical least sophisticated consumer does not have ʹthe astuteness of a
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Philadelphia lawyer or even the sophistication of the average, everyday, common
consumer,ʹʺ he ʺis neither irrational nor a dolt.ʺ Ellis v. Soloman & Soloman, P.C., 591
F.3d 130, 135 (2d Cir. 2010) (quoting Russell, 74 F.3d at 34). Indeed, ʺeven the least
sophisticated consumer can be presumed to possess a rudimentary amount of
information about the world and a willingness to read a collection notice with some
care.ʹʺ Id. (quoting Greco v. Trauner, Cohen & Thomas, LLP, 412 F.3d 360, 363 (2d Cir.
2005)). In light of these observations, ʺcourts have consistently applied the
least‐sophisticated‐consumer standard in a manner that protects debt collectors against
liability for unreasonable misinterpretations of collection notices.ʺ Clomon v. Jackson,
988 F.2d 1314, 1319 (2d Cir. 1993).
Here, the amended complaint alleges that the validation notice ʺprovides a
number for the debt, but further states that the debt ʹmight include additional
third‐party costs that have not yet been paid by your prior servicer.ʹʺ App. 9 (quoting
the validation notice). It further alleges that ʺ[s]uch additional costs are . . . amounts
already incurred and claimed to be owed by the consumer[,] [but] they are not specified
in the letterʺ and therefore the notice ʺdoes not state the amount of the debt as required
by 15 U.S.C. § 1692g.ʺ Id.
These allegations are flatly contradicted by the document itself, which plainly
states that ʺthe amount of your debt as of the date of this noticeʺ is stated below, but that
the notice ʺis not a payoff statementʺ and that a ʺpayoff amount might include additional
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third‐party costs that have not yet been paid by your prior servicer and future costs that
may be necessary.ʺ App. 16 (emphasis added). Even an unsophisticated consumer
would understand that ʺthe amount of your debt as of the date of this noticeʺ and a
ʺpayoff amount,ʺ ‐‐ i.e., the amount one would have to pay as of a particular date in the
future to fully satisfy the debt ‐‐ are different and that the latter could be greater than
the former if the debt servicer were to incur and pay additional costs in servicing the
debt. Zirogiannisʹs attempt to read out of the validation notice the clear distinction
between ʺthe amount of your debt as of the date of this noticeʺ and ʺthe payoff amount,ʺ
App. 16, constitutes an ʺunreasonable misinterpretationʺ of the notice, Clomon, 988 F.2d
at 1319. Because Zirogiannis does not allege any other deficiency in the document,
and indeed the notice lays out in great detail the amount of the debt, including unpaid
principal, accrued interest, escrow overdraft, and certain fees and charges, we conclude
that the validation notice adequately stated the amount of the debt in accordance with
15 U.S.C. § 1692g(a)(1), and therefore the amended complaint was properly dismissed.
Cf. Williams v. OSI Educ. Servs., Inc., 505 F.3d 675, 679 (7th Cir. 2007) (holding that a
validation notice adequately stated the amount of the debt where it explained ʺthe
difference between the ʹtotal dueʹ and the ʹexact payout balanceʹʺ that plaintiff could
receive if he requested it from the debt collector).
Because we conclude that the validation notice adequately stated the amount of
Zirogiannisʹs debt, we do not reach the issues whether the amended complaint failed to
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plausibly allege that Seterus is a ʺdebt collectorʺ subject to the FDCPA or whether the
district court abused its discretion in denying Zirogiannis leave to further amend his
complaint to cure any such defect. Accordingly, we AFFIRM the judgment and order
of the district court.
FOR THE COURT:
Catherine OʹHagan Wolfe, Clerk
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