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Date: 07-21-2015

Case Style: Gary Beauvoir v. David M. Israel

Case Number: 14‐3794‐cv

Judge:

Court: United States Court of Appeals for the Second Circuit on appeal from the Eastern District of New York

Plaintiff's Attorney: LEVI HUEBNER, Levi Huebner & Associates, PC, Brooklyn, NY, for Plaintiffs‐Appellants.

Defendant's Attorney: MATTHEW J. BIZZARO, LʹAbbate, Balkan, Colavita & Contini, L.L.P., Garden City,
NY, for Defendant‐Appellee.

Description: The question presented is whether money owed as a result of
theft of unmetered natural gas qualifies as a “debt” for purposes of
the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692–1692p
(“FDCPA”).
3
We hold that money owed as a result of theft is not an
“obligation or alleged obligation of a consumer to pay money arising
out of a transaction” and, therefore, does not constitute a “debt” for
purposes of the FDCPA. 15 U.S.C. § 1692a(5).
We thus affirm the August 7, 2014 judgment of the United
States District Court for the Eastern District of New York (Frederic
Block, Judge).
BACKGROUND
Plaintiffs Gary and Husbene Beauvoir appeal from the District
Court’s August 7, 2014 judgment granting defendant’s motion to
dismiss and dismissing plaintiffs’ complaint.
On March 8, 2013, the Beauvoirs filed their putative class
action complaint against defendant David M. Israel, an attorney
representing National Grid New York (“National Grid”), a company
that provided natural gas to the Beauvoirs’ home. The complaint
alleged that Israel sent the Beauvoirs a letter on April 23, 2012,
which stated that National Grid had referred the matter to him “for
purposes of collection of the debt in the amount set forth above,
based upon the consumption of unmetered gas” at the Beauvoirs’
residence. J.A. 20. Although the letter advised the Beauvoirs of their
right to dispute National Grid’s claim, it did not advise them that
they had thirty days to do so or state the amount of the debt. The
Beauvoirs allege that these omissions violated the FDCPA. See 15
4
U.S.C. § 1692g(a).1 The Beauvoirs also allege that the collection letter
violated 15 U.S.C. § 1692e(5) and (10) because it purportedly
“engag[ed] in deceptive and falsely threatening practices.” J.A. 15.2
1 Section 1692g(a) provides:
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.
2 Sections 1692e(5) and (10) provide:
5
Separately, in a state‐court complaint filed on May 31, 2012 by
National Grid against the Beauvoirs, National Grid alleged that the
Beauvoirs “diverted and consumed unmetered natural gas . . . by
means of unlawfully tampering with [National Grid’s] gas meter to
impede, impair, obstruct and prevent the said meter from
performing its recording function.” J.A. 54. In proceedings before
the District Court, Israel asserted that the Beauvoirs had failed to
state a claim under the FDCPA, because the collection action he
initiated concerned an alleged theft of natural gas and, thus, did not
concern a debt, as that term is defined in the statute.
On August 7, 2014, the District Court granted Israel’s motion
to dismiss, holding that “obtaining natural gas through meter
tampering is theft and, as such, outside the scope of the FDCPA.”
The District Court further held that it was immaterial that the
A debt collector may not use any false, deceptive,
or misleading representation or means in
connection with the collection of any debt. Without
limiting the general application of the foregoing,
the following conduct is a violation of this section:
. . .
(5) The threat to take any action that cannot legally
be taken or that is not intended to be taken.
. . .
(10) The use of any false representation or
deceptive means to collect or attempt to collect any
debt or to obtain information concerning a
consumer.
6
Beauvoirs deny the alleged theft because “the merit[] of that claim is
not a matter for the Court to decide. . . . What matters in the context
of an FDCPA claim is the asserted basis for the obligation to pay.”
This appeal followed.
DISCUSSION
I.
As a preliminary matter, we must address whether we have
jurisdiction to hear this case. Plaintiffs filed a notice of appeal out of
time. Simultaneous with that late filing, plaintiffs filed a motion to
extend the time to file a notice of appeal, which the District Court
granted before defendant responded. Defendant then filed a motion
for reconsideration. That motion remained pending in the District
Court for several months while the parties briefed this appeal.
Because that motion was still pending, we issued an order to show
cause why this appeal should not be dismissed for lack of
jurisdiction. Shortly thereafter, the District Court denied the motion
for reconsideration.
The Federal Rules of Appellate Procedure do not appear to
address this unusual situation. See generally Fed. R. App. P. 4(a). Had
the motion for reconsideration remained pending in the District
Court while we heard this appeal, we may very well have lacked
appellate jurisdiction. If that were not the rule, and we had exercised
jurisdiction, then the appeal may have overtaken the motion still
pending in the District Court, the result of which may have
7
determined whether we had jurisdiction in the first place. In such a
case, a party effectively may never be able to have a district court
reconsider its grant of a motion to extend the time to file a notice of
appeal.
In any event, the District Court’s intervening denial of the
motion for reconsideration has mooted this issue. We conclude that,
in the circumstances presented, we have appellate jurisdiction.
II.
“We review de novo a district court judgment granting a
motion to dismiss pursuant to Federal Rule of Civil Procedure
12(b)(6), accepting all factual allegations in the complaint as true.”
City of Pontiac Policemen’s & Firemen’s Ret. Sys. v. UBS AG, 752 F.3d
173, 179 (2d Cir. 2014).
The FDCPA defines a “debt” as “any obligation or alleged
obligation of a consumer to pay money arising out of a transaction
in which the money, property, insurance, or services which are the
subject of the transaction are primarily for personal, family, or
household purposes, whether or not such obligation has been
reduced to judgment.” 15 U.S.C. § 1692a(5). We have held that, “at a
minimum, the statute contemplates that the debt has arisen as a
result of the rendition of a service or purchase of property or other
item of value.” Beggs v. Rossi, 145 F.3d 511, 512 (2d Cir. 1998)
(internal quotation mark omitted).
8
Although we have not previously had occasion to address
whether money owed as a result of theft constitutes a “debt” for
purposes of the FDCPA, several of our sister circuits have addressed
the question and unanimously held that liability deriving from theft
or torts does not constitute a “debt” within the meaning of the
FDCPA. See Fleming v. Pickard, 581 F.3d 922, 926 (9th Cir. 2009)
(“[W]e have little difficulty concluding that Defendants’ cause of
action against Plaintiffs for wrongful conversion does not, as a
matter of law, constitute a debt for purposes of the FDCPA.”);
Hawthorne v. Mac Adjustment, Inc., 140 F.3d 1367, 1371 (11th Cir.
1998) (“[T]he FDCPA may be triggered only when an obligation to
pay arises out of a specified ‘transaction’ . . . . Because Hawthorne’s
alleged obligation to pay Mac Adjustment for damages arising out
of an accident does not arise out of any consensual or business
dealing, plainly it does not constitute a ‘transaction’ under the
FDCPA.”); Bass v. Stolper, Koritzinsky, Brewster & Neider, S.C., 111
F.3d 1322, 1326 (7th Cir. 1997) (“[A]lthough a thief undoubtedly has
an obligation to pay for the goods or services he steals, the FDCPA
limits its reach to those obligations to pay arising from consensual
transactions, where parties negotiate or contract for consumerrelated
goods or services.”); Zimmerman v. HBO Affiliate Grp., 834
F.2d 1163, 1168 (3d Cir. 1987) (“[N]othing in the statute or the
legislative history leads us to believe that Congress intended to
equate asserted tort liability with asserted consumer debt.”).3 Each
3 See also Coretti v. Lefkowitz, 965 F. Supp. 3, 5 (D. Conn. 1997) (“A claim
arising out of an alleged theft does not constitute a ‘debt’ under the FDCPA.”).
9
court reasoned that the “transaction” from which the obligation to
pay money arises must, by definition, be one that is consensual in
nature.
We join our sister circuits and hold that money owed as a
result of theft is not an “obligation or alleged obligation of a
consumer to pay money arising out of a transaction” and, therefore,
does not constitute a “debt” for purposes of the FDCPA. 15 U.S.C.
§ 1692a(5). Such an obligation plainly is not one that has “arisen as a
result of the rendition of a service or purchase of property or other
item of value.” Beggs, 145 F.3d at 512.
Applying this holding, we conclude that the Beauvoirs have
not plausibly alleged a “debt” within the meaning of the FDCPA. See
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The complaint alleges in
only conclusory terms the existence of a “consumer debt.” J.A. 11–
12. This threadbare recital is contradicted by the April 23, 2012 letter
from Israel, attached as an exhibit to the Beauvoirs’ complaint,
stating that the money owed is a result of “the consumption of
unmetered gas,” J.A. 20, and by National Grid’s May 31, 2012 statecourt
complaint, alleging that the Beauvoirs “diverted and
consumed unmetered natural gas . . . by means of unlawfully
tampering with [National Grid’s] gas meter, ” J.A. 54. See Iqbal, 556
10
U.S. at 678 (“Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.”).4
This does not mean that we accept the allegation of theft as
true. As the District Court observed, “the Court need not determine
whether the Beauvoirs are or are not actually liable to National Grid
for theft. What matters in the context of an FDCPA claim is the
asserted basis for the obligation to pay.”5 The Beauvoirs are correct
that a defendant may not evade the protections of the FDCPA
4 It is well established that “[d]ocuments that are attached to the
complaint or incorporated in it by reference are deemed part of the pleading and
may be considered.” Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007).
Furthermore, we may take judicial notice of the fact that the state‐court complaint
contained certain statements, albeit “not for the truth of the matters asserted.” Id.
(internal quotation marks and emphasis omitted); see also Shuttlesworth v. City of
Birmingham, 394 U.S. 147, 157 (1969) (“As the respondent suggests, we may
properly take judicial notice of the record in that [separate] litigation between the
same parties who are now before us.”); In re Thelen LLP, 736 F.3d 213, 223 n.13
(2d Cir. 2013) (“This panel has taken judicial notice of the arguments raised in [a
separate] appeal.”); Hirsch v. Arthur Andersen & Co., 72 F.3d 1085, 1095 (2d Cir.
1995) (“[T]he Complaintʹs attenuated allegations of control are contradicted both
by more specific allegations in the Complaint and by facts of which we may take
judicial notice.”); Kaggen v. I.R.S., 71 F.3d 1018, 1020 (2d Cir. 1995) (“[T]his Court
may appropriately take judicial notice of the fact that banks do send monthly
statements to customers and that those statements tell customers to whom their
money was paid and in what amounts.”).
5 See, e.g., Zimmerman, 834 F.2d at 1164, 1166 (affirming dismissal of
complaint brought by plaintiff merely “accused of having illegally received
microwave television signals” because plaintiff had not alleged a “debt” within
the meaning of the FDCPA, even though plaintiff had “no antenna on his roof”
and wires from neighbor’s antenna were “not connected to anything” (emphasis
supplied)).
11
merely by framing the basis of the alleged obligation in terms of
theft or tort.6 By the same token, however, a plaintiff may not
impose the burdens of the FDCPA on an obligation outside the
scope of the statute.

* * *

For the reasons set forth above, we AFFIRM the District
Court’s August 7, 2014 judgment.
6 Cf. Coretti, 965 F. Supp. at 5 (“Plaintiff is correct that a debt collector
cannot escape the provisions of the FDCPA by using alternative means of
collecting a debt, such as through a court proceeding. However, there must be a
debt.”).

Outcome: We hold that money owed as a result of theft is not an
“obligation or alleged obligation of a consumer to pay money arising
out of a transaction” and, therefore, does not constitute a “debt” for
purposes of the FDCPA.

Plaintiff's Experts:

Defendant's Experts:

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