On November 8, the Eastern District of New York rendered an opinion granting Credit Control Services' motion to dismiss plaintiff Yendy Cruz's claim. Specifically, the Court found Credit Control's collection letter was not false or misleading under the Fair Debt Collection Practices Act because Credit Control was not including either interest or fees on its balance listed in its collection letter under either N.Y. C.P.L.R. § 5001 or the underlying credit documents.
In Cruz v. Credit Control Servs., originally filed in New York state court, Cruz alleged Credit Control sent her a debt collection letter listing a balance owed after the words "amount of debt" but failed to disclose whether interest or fees were accruing on the debt. Cruz contended such a disclosure was necessary because Credit Control had the right to collect pre-judgment interest on the debt under N.Y. C.P.L.R. § 5001 as well interest and fees through the underlying credit documents. Cruz alleged Credit Control's failure to include the disclosure made the collection letter false and misleading to the least sophisticated consumer. She also alleged Credit Control used unfair and unconscionable means to collect the debt and that Credit Control falsely represented itself in the collection letter. Credit Control moved to dismiss the Complaint because it never requested pre-judgment interest on Cruz's balance. Further, Credit Control contended the letter clearly stated that if the amount listed in the letter was paid, Credit Control would consider the claim settled in full.
In holding for Credit Control, the Court noted statutory pre-judgment interest can only be awarded by a court upon a petition by the judgment creditor. Since Credit Control had not filed a lawsuit, the Court found that, as a matter of law, pre-judgment interest could not be accruing on Cruz's debt. Further, the Court found the letter clearly laid out steps a debtor would have to take to satisfy the debt.
The Court was also unmoved by Cruz's argument that the Second Circuit's decision in Avila v. Riexinger applied because she failed to allege that interest or fees were accruing on the debt. The Court recognized that the facts in this case were "fundamentally distinguishable" from that in Avila. For those reasons, the Court dismissed Cruz's current balance claims.
In dismissing Cruz's unconscionable conduct claim, the Court held that Cruz had failed to allege any additional conduct beyond what was alleged to support her current balance claims. This fact was fatal to Cruz's claim that Credit Control's actions were unfair or unconscionable.
As an aside, the Court recognized that Cruz filed an identical claim in the same court. Since the Court had specifically addressed the same allegations in deciding the current action, it resolved the second case in favor of Credit Control.
Troutman Sanders will continue to monitor this case as well as other current balance decisions as the district courts of New York review this issue further. Updates will be provided as they become available.
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