Fed'l Debt Law Held Violated
The New York Law Journal, January 8, 1998
BY BILL ALDEN
IN A DECISION that will affect New York landlord-tenant practice, a Manhattan federal judge has ruled that a three-day demand for rent signed by a landlord's attorney violates the federal Fair Debt Collection Practices Act (FDCPA).
Southern District Judge Lewis A. Kaplan rejected arguments that the notice should be exempt from the FDCPA since it complied with a state real estate law which gives a tenant a three-day period to respond to a rent demand.
Instead, Judge Kaplan reluctantly found that rent was a "debt" covered by the law and that the notice amounted to a "communication" under its terms.
"It is not without some discomfort that the court reaches this conclusion," acknowledged Judge Kaplan in his opinion in Romea v. Heiberger & Associates, 97 Civ. 4681.
"The broad language of the FDCPA's definition of 'communication' will have a significant effect on New York's statutory scheme for the fair and efficient resolution of landlord-tenant disputes."
Moreover, he added, there is "nothing to indicate that such was the intent of Congress in enacting the FDCPA, a statute designed to protect debtors from fraudulent and abusive debt collection practices."
The 1977 law, among other things, bars debt collectors from making late-night phone calls, using profane language, threatening violence or making groundless threats of litigation.
A key provision of the law requires collectors to advise debtors in writing that they have 30 days to contest the validity of the alleged obligation.
In late 1996, the plaintiff, Jennifer Lynn Romea, a tenant in a Manhattan apartment, received a notice from defendant, Heiberger & Associates, her landlord's attorneys, advising her that if she did not pay four months back rent in three days, she would face eviction.
Ms. Romea responded by suing Heiberger & Associates in federal court, alleging that the notice violated the terms of the FDCPA.
Specifically, she claimed that the firm did not clearly spell out that it was attempting to collect a debt, that it made threats which it did not intend to carry out and that it omitted the required 30-day validation period.
The law firm moved to dismiss, arguing that unpaid rent was not a "debt" covered by the FDCPA because it did not involve a credit transaction.
It also argued that since the three-day period to pay rent is required under §711 of New York's Real Property Actions and Proceedings Law, the notice was not a "communication" within the scope of the FDCPA.
Broader View Taken
Judge Kaplan, however, took a broader view of the FDCPA and allowed the suit to proceed.
The FDCPA, he declared, "clearly embraces consumer obligations to pay money" arising out of "personal, family or household purposes" without regard "to whether the underlying transactions involve the extension of credit or the deferral of payment."
Citing the law's legislative history, he noted that Congress "dropped proposed statutory language" which would have "limited the statute to debts arising from extensions of credit..."
Noting that the FDCPA defines "communication" as the "conveying of information regarding a debt directly or indirectly to any person through any medium," Judge Kaplan found that the notice fell within the law.
Since the §711 notice "demanded payment on pain of eviction proceedings," he observed, there is "no colorable argument" that it does not satisfy the FDCPA's definition of "communication."
Colleen F. McGuire and Robert E. Sokolski represented Ms. Romea. Janice J. DiGennaro of Rivkin, Radler & Kremer in Uniondale represented Heiberger & Associates.