Gary Beauvoir v. David M. Israel

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”).

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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

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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:

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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.

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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

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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).

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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.”).

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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

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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)).

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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.”).

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.