Felberbaum v. Sequium Asset Solutions, LLC

Background

Lazar Felberbaum sued Sequium Asset Solutions, LLC, and LVNV Funding LLC under the Fair Debt Collection Practices Act, a federal law regulating debt-collection practices. Felberbaum alleged that he owed a consumer debt originally associated with Citibank, N.A.; LVNV later purchased the delinquent debt and hired Sequium to collect it.

In December 2020, the defendants sent Felberbaum a letter stating that a judgment totaling $27,212.94 remained unresolved. The letter listed $27,212.94 as the “Total Due” and offered to settle the debt for 65% of that amount. The letter did not state whether interest was accruing and did not include a specific deadline for accepting the settlement offer.

Felberbaum alleged that the letter was false, deceptive, misleading, and unfair. He claimed that interest at New York’s nine-percent post-judgment rate had increased the amount actually due to $49,051.33 as of the date he filed the complaint. He also alleged that the settlement offer was illusory because the defendants would not have honored it if he accepted it later.

Motion and additional filing

The defendants moved under Federal Rule of Civil Procedure 12(c) for judgment on the pleadings. That rule allows a court to decide whether the pleadings state a legally sufficient claim after the pleadings are closed. The court applies the same standard used for a motion to dismiss for failure to state a claim, accepting material factual allegations as true but not accepting unsupported legal conclusions.

The defendants also moved to strike Felberbaum’s supplemental filing, which he called a “Notice of Supplemental Authority.” Although Felberbaum had not obtained permission to file it, the court denied the motion to strike and accepted the supplemental filing for purposes of deciding the Rule 12(c) motion.

Claims under the debt-collection law

Felberbaum asserted claims under Sections 1692e, 1692f, and 1692g of the Fair Debt Collection Practices Act. Section 1692e prohibits false, deceptive, or misleading representations; Section 1692f prohibits unfair or unconscionable collection methods; and Section 1692g requires a debt collector to state the amount of the debt.

The court focused on whether the defendants violated Section 1692e by failing to disclose whether interest was accruing while offering to settle the debt for a specified amount. The court relied on Second Circuit precedent holding that a settlement offer is not misleading merely because it does not explain interest or fees that could accrue after a payment deadline, so long as the offer clearly tells the debtor that payment of a specified amount by a specified date will satisfy the debt.

The court concluded that the absence of a specific acceptance deadline did not make this letter misleading. The offer remained open, and Felberbaum could pay the specified sum of $27,212.94 to extinguish the debt. Before Felberbaum accepted the offer, the defendants could revoke it only by giving him unambiguous notice of revocation. After acceptance by payment, the defendants could not revoke the offer. The court therefore rejected Felberbaum’s speculation that the defendants would refuse to honor the offer.

The court also concluded that the letter did not violate Section 1692f because an open offer to settle the debt interest-free for a specified amount was not “shockingly unjust or unfair.” The court found no Section 1692g violation because the $27,212.94 amount stated in the letter represented the sum Felberbaum could pay to extinguish the debt while the offer remained open.

Disposition

The court granted the defendants’ motion for judgment on the pleadings and dismissed Felberbaum’s complaint. The court denied the defendants’ motion to strike Felberbaum’s supplemental filing and directed the Clerk of Court to terminate the action.