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Jorgensen v. Accounts Receivable Services, LLC

United States District Court, D. Minnesota

April 26, 2017

Mark C. Jorgensen, Plaintiff,
Accounts Receivable Services, LLC, Defendant.


          RICHARD H. KYLE United States District Judge

         Plaintiff Mark Jorgensen commenced this action after Defendant Accounts Receivable Services, LLC (“ARS”) sued him in state court to collect an allegedly past-due medical debt. Jorgensen alleges that ARS violated the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., by falsely asserting he was liable on an “account stated.” Presently before the Court are the parties' cross-Motions for Summary Judgment. For the reasons set forth below, the Court will grant ARS's Motion and deny Jorgensen's Motion.

         The following facts are undisputed. On October 5, 2015, ARS sued Jorgensen in Anoka County, Minnesota conciliation court. There it alleged, in relevant part:

[Jorgensen] owe[s] [ARS] . . . because: Allina Health System provided medical services to [Jorgensen] on various dates . . . The costs for medical services rendered was $1, 487.50. Allina Health System sold and assigned [Jorgensen's] Accounts Receivable to [ARS].
[Jorgensen is] liable to [ARS] on an account stated, for medical services rendered, in the amount of $1, 859.30. Included in the above account stated amount is interest of $371.80 assessed to today's date . . . as allowed by Minnesota [law].

         (Answer Ex. A.) Jorgensen appeared in conciliation court and, ultimately, ARS voluntarily dismissed its lawsuit. Jorgensen then commenced this action; against this factual backdrop, the parties cross-move for summary judgment.[1]

         The FDCPA prohibits debt collectors from using a “false, deceptive, or misleading representation” while attempting to collect a debt, including a false representation of “the character, amount, or legal status of any debt.” 15 U.S.C. § 1692e. Jorgensen argues ARS ran afoul of this proscription by alleging an “account stated, ” a legal doctrine addressing the formation of an implied contract to pay a debt. Where a debt purportedly exists, and “one side proffers a ‘statement' of an account between the parties, the other side's retention of it without objection for an unreasonable amount of time constitutes prima facie evidence of the accuracy of the account that has been set forth.” Egge v. Healthspan Servs. Co., Civ. No. 00-934, 2001 WL 881720, at *2 (D. Minn. July 30, 2001) (Montgomery, J.) (citing Erickson v. Gen. United Life Ins. Co., 256 N.W.2d 255, 259 (Minn. 1977) (internal citations omitted)). Once established, an account stated “constitute[s] a promise to pay whatever balance is thus acknowledged to be due.” Meagher v. Kavli, 88 N.W.2d 871, 879 (Minn. 1958).

         Here, ARS contends it sent Jorgensen billing statements reflecting a balance due of $1, 487.50 and that it “merely added” prejudgment interest of $371.80 to that amount “[f]or the convenience of the conciliation court.” (Def.'s Mem. in Opp'n 5.) But, as quoted above, ARS's state-court complaint averred in no uncertain terms that Jorgensen was liable on an account stated for $1, 859.30. It is undisputed that ARS never sent Jorgensen a statement reflecting that amount and, hence, its representation was false.

         That said, not every falsity gives rise to FDCPA liability. To be actionable, a misrepresentation must also be material. Powers v. Credit Mgmt. Servs., Inc., 776 F.3d 567, 571 (8th Cir. 2015). A misrepresentation is material if it “frustrate[s] the consumer's ability to intelligently choose his or her response” to the creditor. Salaimeh v. Messerli & Kramer, P.A., Civ. No. 13-3201, 2014 WL 6684970, at *3 (D. Minn. Nov. 25, 2014) (Doty, J.) (citations omitted). The Court must analyze materiality through the lens of the unsophisticated consumer, a standard “designed to protect consumers of below average sophistication or intelligence without having the standard tied to the very last rung on the sophistication ladder.” Duffy v. Landberg, 215 F.3d 871, 874-75 (8th Cir. 2000) (citations and quotations omitted). Thus, while the standard protects even the “uninformed or naive consumer, ” it also incorporates “an objective element of reasonableness which ensures that debt collectors remain free from liability for peculiar interpretations of [statements].” Adams v. J.C. Christensen & Assocs., Inc., 777 F.Supp.2d 1193, 1195-96 (D. Minn. 2011) (citing Strand v. Diversified Collection Serv., Inc., 380 F.3d 316, 317 (8th Cir. 2004) (internal citations and quotations omitted)). As the Seventh Circuit has explained:

[§ 1692e] is designed to provide information that helps consumers to choose intelligently, and by definition immaterial information neither contributes to that objective (if the statement is correct) nor undermines it (if the statement is incorrect). . . . If a statement would not mislead the unsophisticated consumer, it does not violate the [FDCPA]-even if it is false in some technical sense.

Hahn v. Triumph P'ships, LLC, 557 F.3d 755, 757-58 (7th Cir. 2009) (cited with approval in Powers, 776 F.3d at 571); see also McIvor v. Credit Control Servs., Inc., 773 F.3d 909, 913 (8th Cir. 2014) (“Even a literally false statement does not violate § 1692e if it would not mislead the recipient.”).

         Here, Jorgensen asserts that he found ARS's state-court complaint misleading because he “never received any account statement from Allina or [ARS] . . . so [he] could not understand why that was listed as . . . an account stated.” (Jorgensen Decl. ¶ 7.) As a result, “[r]ather than simply placing a call to [ARS] and explaining that [he] did not owe any money, [he] appeared for the hearing in Anoka County with counsel.” (Id. ¶ 9.) It is difficult to perceive exactly how his decision to appear at the hearing (rather than call ARS) flowed from ARS's invocation of the term “account stated.” After all, he was summoned to conciliation court. In any event, the Court need not linger on this point, as materiality is analyzed objectively, e.g., Adams, 777 F.Supp.2d at 1195-96, and hence Jorgensen's subjective confusion is not dispositive.

         In the Court's view, ARS's use of the words “account stated” in this context is not material as a matter of law. ARS's state-court pleading set forth the cost of medical services Jorgensen allegedly received ($1, 487.50) and the amount of prejudgment interest ARS sought ($371.80). This breakdown does not remedy the falsity, but it clearly informed Jorgensen (or any other person who might have reviewed it) of the precise components of the alleged debt, and it equipped him to respond intelligently. Under these circumstances, it is fair to classify Jorgensen's view that the words “account stated” mandated his appearance in court as “peculiar.”[2] Considered objectively, the presence of the words “account stated”-a legal term of art-is not misleading to the unsophisticated consumer when combined with a breakdown of the amount allegedly owed. Indeed, had ARS omitted the words “account stated, ” in the Court's view, the objective, unsophisticated consumer would have responded in the same way, and no FDCPA claim would lie.

         Accordingly, and based upon all the files, records, and proceedings herein, IT IS ORDERED that ARS's Motion for Summary Judgment (Doc. No. 37) is GRANTED, Jorgensen's Motion for Summary Judgment on Liability (Doc. No. 41) ...

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