Northern District of NY Agrees with Debt Collector: Pre-Judgment Interest Does Not Trigger Avila Disclosure Requirements

The far-fetched “reverse Avila” claims continue to crumble in New York district courts. On November 15, 2017, Judge McAvoy of the Northern District of New York dismissed a reverse Avila claim, which alleged that the Avila disclosure was required on a letter due to pre-judgment interest that may accrue on the account as prescribed N.Y. C.P.L.R. § 5001.  The case is Altieri v. Overton, Russell, Doerr, and Donovan, LLP (2017 WL 5508372). 

You can read the decision here.

Note: The decision also contains a discussion on a separate claim, but this summary discusses only the reverse Avila claim. 

Background

Overton, Russell, Doerr, and Donovan, LLP (“Overton”), a law firm, was hired by Bank of America to collect on an outstanding debt owed by plaintiff Christina Altieri. Overton sent a collection letter to Altieri that contained a balance but did not contain the Avila safe harbor disclosure. 

Altieri, represented by consumer attorney Mitchell Pashkin, filed a suit against Overton claiming, among other things, that due to pre-judgment interest prescribed by New York law, the letter violated the FDCPA by not including a disclosure that interest may accrue.  

Overton moved to dismiss the complaint.

Decision 

The court granted in part and denied in part the motion to dismiss. Of the six causes of action in the complaint, the court dismissed five causes of action with prejudice. The court denied dismissal of one cause of action because Overton did not address it sufficiently in the motion to dismiss. However, the court granted defendant leave to file another motion to dismiss for that claim, signaling the court’s intent to dismiss the complaint in its entirety. 

In the discussion on the reverse Avila claim, the court recognized that pre-judgment interest is speculative – a conditional future event that can only be triggered by certain actions. The court ruled that because of the conditional nature of pre-judgment interest, the balance included on the letter at the time the letter was sent was not false or misleading. 

The court, citing the U.S. Supreme Court case Ashcroft v. Iqbal, 556 U.S. 662, also dismissed two (and hopefully soon three) causes of action as “unadorned, the-defendant-harmed-me-accusations that lack factual content that allows the Court to draw the reasonable inference that Defendant is liable for the misconduct alleged.”  

Following the Decision 

Overton filed its subsequent motion to dismiss on the same day the decision came out. The hearing is set for December 22 before Judge McAvoy. 

Conclusion

Debt collectors plagued by the reverse Avila claims from the frequent-filer plaintiffs’ attorneys are slowly catching their breath. District courts throughout New York are making reasonable decisions on the reverse Avila claims for accounts that are no longer accruing interest.  The last-ditch, far-fetched reaches for Avila liability against debt collectors is failing.  

Unfortunately, it was a very costly effort from many in the industry to get to this point. The inequity of the fact that agencies get no financial recourse for successfully defending such meritless suits while consumer attorneys – not the consumers – profit by bringing them in droves is a conversation that deserves the light of day. The industry’s gratitude extends to agencies and firms such as Overton, and many who continue to defend these reverse Avila claims, for fighting the good fight.