LLC v. James Yuchniuk (2012)

MEMORANDUM OF DECISION

I. BACKGROUND

This is a vigorously contested collection action in which the plaintiff, CUDA & Associates, LLC, seeks judgment against the defendant, James Yuchniuk, for a credit card debt the defendant allegedly owes.   On September 4, 2009, the plaintiff filed a two-count complaint against the defendant.   The first count is based upon breach of contract, while the second count sets forth an account stated theory.   In count one, the plaintiff alleges the following facts.   U.S. Bank National Association ND (U.S.Bank) issued the defendant a credit card with the account number 4037694851004308.   The defendant borrowed against the credit line issued by U.S. Bank in the amount of $4,941.11 along with accrued interest charges of $3,677.81.   The plaintiff alleges it is now the owner of that debt, which totals $8,618.92 with interest accruing.   Written demand for payment of the debt was made on the defendant, who has allegedly failed, refused and/or neglected to pay the debt since February 1, 2006.

In count two, the plaintiff alleges the following facts.   From October 1, 2004, to June 30, 2006, U.S. Bank issued monthly statements to the defendant consistent with the defendant's use of the credit card.   The monthly statements referenced the debtor's name, account number, address, previous balance, payments and adjustments, credit card activity, interest rate, new balance, payment due date, minimum payment due and the applicable time period for the statement.   The plaintiff further alleges that the defendant received the statements and retained them without objection.   As of June 30, 2006, the plaintiff alleges the defendant owed $4,941.11, and presently the defendant owes $8,618.92 with interest accruing.   Despite demand from the plaintiff, the defendant has not paid the outstanding balance.

On November 19, 2009, the defendant filed an answer and counterclaim.   The defendant denies the essential allegations of each count and, in its counterclaim, alleges that the plaintiff violated the Creditor Collection Practices Act (CCPA) § 36a–645 Connecticut General Statutes.   The defendant alleges the following facts.   On June 23, 2009, the plaintiff's attorney sent the defendant a collection letter that stated that the plaintiff owned the debt allegedly owed by the defendant, and that the original creditor was U.S. Bank. The defendant alleges that the debt belonged to his wife, not him, and that he was an authorized user of the account, but not a signatory.   The debt was discharged in his wife's bankruptcy proceeding in 2005.   On July 1, 2009, the defendant sent a letter to Morris disputing and requesting verification of the debt.   On August 19, 2009, Morris responded to the defendant's letter, stating that it “had requested additional information” and would send it to the defendant when it was received.   The defendant never received that information and, on August 27, 2009, was served with a summons and complaint seeking judgment on the debt.   The defendant alleges that the plaintiff violated the CCPA by unfairly sending collection letters and suing the defendant on a debt the defendant does not owe, and by continuing its collection activity without providing the requested verification.

On January 5, 2010, the plaintiff filed an answer to the defendant's counterclaim, admitting many of the defendant's factual allegations but denying that it had violated the CCPA. On January 12, 2010, the defendant filed an amended counterclaim, adding a claim that the plaintiff violated the Fair Debt Collection Practices Act (FDCPA) 15 U.S.C. § 1692.   The defendant's FDCPA counterclaim contains identical allegations to those contained in the CCPA counterclaim.

A trial was held before the court on September 14, 2011.   The plaintiff called three witnesses ¹ and introduced seven exhibits,² while the defendant introduced eight exhibits.³  The defendant filed a post-trial brief on October 5, 2011, and the plaintiff filed a post-trial brief on October 13, 2011.

II. ANALYSIS AND FINDING OF FACTS

There are two issues before the court:  (1) whether the plaintiff has presented sufficient evidence to support a finding that it purchased a debt actually owed by the defendant;  and (2) whether the plaintiff's actions in attempting to collect on the defendant's alleged debt violated the CCPA or the FDCPA.

1.

The plaintiff argues that it is entitled to judgment for a credit card debt the defendant owes.   Specifically, the plaintiff argues that the defendant's obligation was not discharged when his wife, Tena Yuchniuk, filed for bankruptcy individually, as the protection afforded by that proceeding did not extend to the defendant.   The plaintiff argues that the account it purchased identified the defendant as the debtor, and that neither the defendant nor his wife at trial could explain why the defendant's name appeared on the statements or why his social security number was listed on the account.   Additionally, the plaintiff argues that the defendant acknowledged making a payment in February 2006, even though the debt presumably should have been discharged in his wife's bankruptcy proceeding.   Further, the plaintiff argues that the defendant could not provide documentary proof supporting its argument that the account belonged to his wife.   Lastly, the plaintiff argues that the defendant failed to explain why statements were still being mailed on the account after his wife's bankruptcy proceeding, or why the defendant did not attempt to get a refund on the February 2006 payment if it was paid by mistake.

The defendant relies on the fact that there is no evidence produced by the plaintiff at trial that the defendant entered into a credit card agreement with U.S. Bank. Rather, it is found that the evidence produced at trial shows that Tena Yuchniuk alone entered into the credit card agreement, not the defendant.   Additionally, the defendant argues that he is not liable under an account stated theory, as he objected to the statements.   The defendant argues and it is found that the payment it made on the account was a mistake, and a single mistaken payment does not constitute the acceptance of a statement.   Lastly, the defendant argues that the plaintiff, as a second-tier debt buyer, did not meet its burden of proving the entire chain of title to the account.

“The elements of a breach of contract action are the formation of an agreement, performance by one party, breach of the agreement by the other party and damages.”  (Internal quotation marks omitted.)  Rosato v. Mascardo, 82 Conn.App. 396, 411, 844 A.2d 893 (2004).  “[A] breach of contract claim ․ requires proof by a preponderance of the evidence.”  Foley v. Huntington Co., 42 Conn.App. 712, 732 n.7, 682 A.2d 1026, cert. denied, 239 Conn. 931, 683 A.2d 397 (1996).

In the present case, the plaintiff presented as evidence the purchase and sale agreement between Dodeka, LLC and the plaintiff.   The list of accounts sold to the plaintiff describe the defendant's name, address and social security number, and U.S. Bank is listed as the original creditor.   This information matched statements introduced into evidence by the plaintiff from Liberty Bank for activity from January 20, 2006, through February 16, 2006, and May 19, 2006, through June 30, 2006.   The plaintiff also introduced an affidavit of Jana Meyer, an authorized representative of Dodeka, LLC, and an affidavit of Donna Garamella, the plaintiff's vice president, each stating that the account belonged to the defendant.   At trial, both the defendant and his wife testified and it is found that Tena Yuchniuk opened the account, that she alone used the account and that the defendant had no involvement in the account besides making payments from the couple's joint checking account.   Tena Yuchniuk testified and it is found that the account originated with Liberty Bank who reported it on her credit report as an individual account.

The plaintiff has failed to prove by a preponderance of the evidence that the defendant had a credit card account with U.S. Bank. No documentary evidence was submitted to establish that the defendant applied for or entered into any credit agreement with U.S. Bank. See, e.g., Cach, LLC v. Stupack, Superior Court, judicial district of New Britain, Docket No. CV 08 5008144 (March 1, 2010, Swienton, J.) [49 Conn. L. Rptr. 403].   The plaintiff has not established that the defendant owed the plaintiff under any credit card agreement;  rather, the plaintiff has merely introduced evidence that it bought a debt from Dobeka, LLC, who stated that the defendant was the debtor.   The fact that the defendant's information appeared on the listing of accounts in the purchase and sale agreement between Dobeka, LLC and the plaintiff is insufficient to prove that the defendant entered into a credit card agreement with U.S. Bank, the original creditor.

The plaintiff alternatively seeks to prove that the defendant is liable under an account stated theory.   The theory of account stated is described as follows:  “The delivery by the [creditor] to the [debtor] of each statement of the latter's account, with the [documentation] upon which the charges against [the debtor's account] were based, [is] a rendition of the account so that retention thereof for an unreasonable time constitute[s] an account stated which is prima facie evidence of the correctness of the account.   Such account stated can be opened or impeached upon proof of mistake or fraud, but the [debtor's] silence as to the correctness of the account rendered puts upon it the burden of proving that the account, as stated, was the result of such fraud or mistake.”  (Internal quotation marks omitted.)  Credit One, LLC v. Head, 117 Conn.App. 92, 98, 977 A.2d 767, cert. denied, 294 Conn. 907, 982 A.2d 1080 (2009).  “A plaintiff satisfies its burden of proof for account stated by showing it sent [the] defendant monthly statements evidencing [a] balance due and [that the] defendant did not dispute [the] balance listed on [the] statements prior to commencement of action.”  (Internal quotation marks omitted.)   Citibank v. Viegas, Superior Court, judicial district of New Haven, Docket No. CV 10 6011782 (October 6, 2011, Woods, J.).

In the present case, the plaintiff has presented as evidence two credit card statements in the defendant's name.   The first statement is for activity from January 20, 2006, through February 16, 2006, and the second statement is for activity from May 19, 2006, through June 30, 2006.   The first statement shows a $50 payment made on the account on February 1, 2006.   Both the defendant and his wife testified at trial and it is found that the defendant received the statements and made the $50 payment;  however, they testified and it is found that the payment was made by mistake.   The defendant's wife testified that she called Elan Financial Services (Elan) to dispute the debt as soon as statements began arriving in the defendant's name.   The court credits that testimony.   Additionally, the defendant has presented as evidence two letters he sent to Elan, dated May 24, 2006, and July 16, 2006, disputing the debt.

The court finds that, although the defendant made one $50 payment, the defendant disputed the remainder of the account after realizing that he made the payment by mistake.   While there is authority in other jurisdictions for the proposition that partial payment can result in an implicit promise to pay the remainder of the balance;  see, e.g., Kramer, Levin, Nessen, Kamin & Frankel v. Aronoff, 638 F.Sup. 714, 720 (S.D.N.Y.1986);  Precision Erecting, Inc. v. AFW Foundry, Inc., 229 Wis.2d 189, 197, 598 N.W.2d 614 (Wis.Ct.App.1999);  the defendant's single $50 payment, under the circumstances of this case, does not constitute such a promise, as he subsequently objected to the account through correspondence with Elan. Accordingly, it is found that the plaintiff has not met its burden of proof with respect to either its breach of contract or account stated claims.

2.

In his counterclaims, the defendant argues that the plaintiff's conduct in attempting to collect on this debt violated both the FDCPA and the CCPA. The defendant argues that the plaintiff falls within the definition of “debt collector” under the FDCPA, as that definition includes purchasers of defaulted accounts.   Additionally, the defendant argues that it sought verification of the debt from the plaintiff under the FDCPA, which the plaintiff never provided.   The defendant therefore argues that, because the plaintiff resumed its collection activity without sending the defendant verification of the debt, the plaintiff violated the FDCPA.   Further, the defendant argues that the plaintiff violated the CCPA, which is substantively similar to the FDCPA.   The plaintiff counters that the defendant has failed to prove that it is entitled to judgment on its counterclaims.   The plaintiff argues that it properly verified the debt in accordance with the FDCPA, as its attorney sent the defendant a letter identifying the original creditor on the account and the amount due in response to the defendant's verification request.⁴

The FDCPA prohibits the use of “any false, deceptive, or misleading representation or means in connection with the collection of any debt.”  15 U.S.C. § 1692e.   Our Appellate Court, relying on Russell v. Equifax A.R.S., 74 F.3d 30 (2d Cir.1996) and the legislative history behind the act, has analyzed the history and purposes of the act.  “While debt collectors are, of course, charged with the duty of collecting debts that are owed, they may not do so today in a manner that prevents consumers from exercising their legal rights.   In enacting the [FDCPA], Congress pointed out that [m]eans other than misrepresentation or other abusive debt collection practices are available for the effective collection of debts ․ As a consequence of its concern, the legislature armed consumers with a shield against the overly zealous debt collector;  this shield is particularly important in our modern computer-driven world ․ The [FDCPA], consisting of 16 succinct sections, is based on Congress' findings that debt collection abuses are serious and widespread, and a finding by the National Commission on Consumer Finance, referred to in the legislative history, which showed that the vast majority of consumers who obtain credit fully intend to repay their debts ․ Congress explained that although unscrupulous collectors comprise only a small portion of the industry, the less ethical debt collectors threaten consumers with violence, use profane or obscene language, make telephone calls at unreasonable hours, impersonate public officials and lawyers, disclose debtors' personal affairs to employers and engage in other sorts of unscrupulous practices ․ The [a]ct's purpose is to eliminate such practices ․ The [a]ct also bars the general use of any false, deceptive, or misleading representation or means in connection with the collection of any debt.”  Heim v. California Federal Bank, 78 Conn.App. 351, 375–76, 828 A.2d 129, cert. denied, 266 Conn. 911, 832 A.2d 70 (2003).

The parties disagree as to whether the plaintiff is a “debt collector,” which is a necessary prerequisite to recovery under the FDCPA.⁵  The court need not decide this issue, however, because even assuming that the plaintiff is a debt collector, the evidence put forth by the defendant is insufficient to allow recovery under the FDCPA.

The FDCPA requires debt collectors to provide consumers from whom debt collection is sought the right to seek verification of the debt.⁶  “If the consumer notifies the debt collector in writing ․ that the debt, or any portion thereof, is disputed ․ the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.”  15 U.S.C. 1692g(b).

The FDCPA does not delineate what constitutes proper “verification” under the act.   However, “courts in examining the language and legislative history of the FDCPA uniformly have held that a debt collector need not do much to verify a debt ․ Indeed ․ it appears as though every court to have examined the issue has held that the verification provided here—confirmation of the amount of the debt and the identity of the creditor, which is then relayed to the debtor—is sufficient ․ [T]his provision of the FDCPA is not intended to give a debtor a detailed accounting of the debt to be collected.   Instead, [c]onsistent with the legislative history, verification is only intended to eliminate the problem of debt collectors dunning the wrong person or attempting to collect debts which the consumer has already paid.”  (Citations omitted;  internal quotation marks omitted.)  Poulin v. Thomas Agency, 760 F.Sup.2d 151, 159–60 (D.Me.2011).  “[V]erification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed;  the debt collector is not required to keep detailed files of the alleged debt.”  Chaudhry v. Gallerizzo, 174 F.3d 394, 406 (4th Cir.1999), cert. denied, 528 U.S. 891, 120 S.Ct. 215, 145 L.Ed.2d 181.

In the present case, the Law Office of Benjamin Morris (Morris), seeking to collect on a debt purchased by the plaintiff, sent the defendant a written notice of debt dated June 23, 2009, in compliance with 15 U.S.C. § 1692g(a).   In response, the defendant sent a letter to Morris dated July 1, 2009, disputing and requesting verification of the debt.   Morris responded in a letter dated August 19, 2009, which stated the following:  “In response to your July 1, 2009 letter regarding the above credit card account [U.S. Bank National Association N.D. Account # 4037694851004308], our office has requested additional documentation, and will forward it to you when we receive it.   The original creditor as indicated above was U.S. Bank National Association ND. The amount you owe is $8,664.41.”   It is found that this information is sufficient verification under 15 U.S.C. § 1692g(b), as it confirmed in writing that the amount being demanded is what the creditor is claiming is owed.   Further, the letter provided the defendant with the name of the original creditor and the account number.   Any “additional documentation,” which the defendant argues he never received, did not need to be provided in order to comply with the minimal requirements of proper debt verification under the FDCPA.   The defendant has not sustained his burden of proof on his counterclaim for a violation of the FDCPA.

The defendant has also asserted a counterclaim for violation of the CCPA, which arises from the same facts as the alleged FDCPA violation.  General Statutes § 36a–648 provides, in relevant part:  “A creditor, as defined in section 36a–645, who uses any abusive, harassing, fraudulent, deceptive or misleading representation, device or practice to collect or attempt to collect a debt in violation of section 36a–646 or the regulations adopted pursuant to section 36a–647 shall be liable to a person who is harmed by such conduct ․” Section 36a–647–5(14) of the Regulations of Connecticut State Agencies provides that a creditor is liable if it “[r]efus[es] to make a reasonable effort to determine the validity of a debt the consumer debtor disputes unless such a verification has already been made ․” The CCPA authorizes a private cause of action for consumers harmed by creditors.   Mosley v. Green Tree Servicing, LLC, Superior Court, judicial district of New London, Docket No. CV 10 6006080 (May 23, 2011, Cosgrove, J.) [52 Conn. L. Rptr. 23].

In the present case, the defendant's CCPA counterclaim centers on the plaintiff's inability to properly verify the debt.   As stated above, it is found that the defendant was provided with proper verification under the FDCPA.   The CCPA parallels that FDCPA in almost all respects;  see Lienfactors, LLC v. Kung, Superior Court, judicial district of Middlesex at Middletown, Docket No. CV 09 5006629 (July 9, 2010, Burgdorff, J.);   and there are no Connecticut decisions cited to or found by the court distinguishing the CCPA's verification requirement from that of the FDCPA.   Accordingly, it is found that the defendant has not sustained his burden of proof with respect to his counterclaim for violation of the CCPA.

III. CONCLUSION

The court, having found that the plaintiff has failed to prove that it is entitled to judgment on its breach of contract and account stated claims, therefore, judgment is entered for the defendant on the complaint as to those claims.   Further, the court having found that the defendant has failed to prove that he is entitled to judgment on his counterclaims for violations of the FDCPA and CCPA, judgment is entered for the plaintiff as to those counterclaims.   No costs are awarded as to either party.

Robert C. Leuba, JTR

FOOTNOTES

FN1. The plaintiff called as witnesses:  (1) Donna Garamella, the plaintiff's vice president;  (2) the defendant and (3) Tena Yuchniuk, the defendant's wife..  FN1. The plaintiff called as witnesses:  (1) Donna Garamella, the plaintiff's vice president;  (2) the defendant and (3) Tena Yuchniuk, the defendant's wife.

FN2. The plaintiff's exhibits included:  (1) an affidavit of indebtedness and assignment of Jana Meyer;  (2) certain credit card statements from Liberty Bank;  (3) a confidential agreement for sale of the debt from Dodeka, LLC to the plaintiff;  (4) a bill of sale and assignment of debts from U.S. Bank to Dodeka, LLC;  (5) an affidavit of debt of Donna Garamella, the plaintiff's vice president;  (6) a U.S. Bank Visa credit card agreement and (7) a subpoena duces tecum of the defendant..  FN2. The plaintiff's exhibits included:  (1) an affidavit of indebtedness and assignment of Jana Meyer;  (2) certain credit card statements from Liberty Bank;  (3) a confidential agreement for sale of the debt from Dodeka, LLC to the plaintiff;  (4) a bill of sale and assignment of debts from U.S. Bank to Dodeka, LLC;  (5) an affidavit of debt of Donna Garamella, the plaintiff's vice president;  (6) a U.S. Bank Visa credit card agreement and (7) a subpoena duces tecum of the defendant.

FN3. The defendant's exhibits included:  (1) a letter from the plaintiff's attorney to the defendant;  (2) a letter from the defendant to the plaintiff's attorney;  (3) a letter from the plaintiff's attorney to the defendant;  (4) Experian credit information, page four;  (5) Experian credit information, page ten;  (6) a letter from Elan Financial Services to the defendant;  (7) a letter from the defendant to Elan Financial services and (8) a second letter from the defendant to Elan Financial Services..  FN3. The defendant's exhibits included:  (1) a letter from the plaintiff's attorney to the defendant;  (2) a letter from the defendant to the plaintiff's attorney;  (3) a letter from the plaintiff's attorney to the defendant;  (4) Experian credit information, page four;  (5) Experian credit information, page ten;  (6) a letter from Elan Financial Services to the defendant;  (7) a letter from the defendant to Elan Financial services and (8) a second letter from the defendant to Elan Financial Services.

FN4. Additionally, the plaintiff argues that it is not a “debt collector” under the FDCPA, as it purchases debts and hires others to collect them.   The plaintiff also argues that the defendant has not offered evidence of vicarious liability, as there is no evidence indicating that the plaintiff exercised control over its attorney's conduct.   Lastly, the plaintiff argues that the defendant offered no evidence that the debt was primarily for personal, family or household purposes, which is required under the FDCPA..  FN4. Additionally, the plaintiff argues that it is not a “debt collector” under the FDCPA, as it purchases debts and hires others to collect them.   The plaintiff also argues that the defendant has not offered evidence of vicarious liability, as there is no evidence indicating that the plaintiff exercised control over its attorney's conduct.   Lastly, the plaintiff argues that the defendant offered no evidence that the debt was primarily for personal, family or household purposes, which is required under the FDCPA.

FN5. A “debt collector” is defined as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.”  15 U.S.C. § 1692a(6).   Conversely, a “creditor,” which is generally not subject to the FDCPA, is defined as “any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.”  15 U.S.C. § 1692a(4)..  FN5. A “debt collector” is defined as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.”  15 U.S.C. § 1692a(6).   Conversely, a “creditor,” which is generally not subject to the FDCPA, is defined as “any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.”  15 U.S.C. § 1692a(4).

FN6. The relevant portion of the act provides as follows:(a) Notice of debt;  contents Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing(1) the amount of the debt;(2) the name of the creditor to whom the debt is owed;(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector;  and(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.15 U.S.C. § 1692g(a)..  FN6. The relevant portion of the act provides as follows:(a) Notice of debt;  contents Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing(1) the amount of the debt;(2) the name of the creditor to whom the debt is owed;(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector;  and(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.15 U.S.C. § 1692g(a).

Leuba, Robert C., J.T.R.