Alleged Gas Thieves Can’t Hide Behind Debt Act

     MANHATTAN (CN) – A couple who allegedly stole gas service from a New York utility cannot challenge a collections attempt under the Fair Debt Collection Practices Act, a federal appeals panel ruled.
     “[M]oney 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 the purposes of the FDCPA,” the Second Circuit decided Tuesday.
     In 2013, Gary and Husbene Beauvoir filed a putative class action complaint in Federal Court against attorney David Israel for the collections letter he sent on behalf of his client, National Grid New York, for “consumption of unmetered gas” at their home.
     The couple contended the letter, sent a year earlier, violated the Act by not telling them how much they owed or that they had 30 days to dispute the claim. They also alleged the letter was deceptive and threatening.
     The Fair Debt Collection Practices Act, a 1996 amendment to the Federal Trade Commission’s Consumer Credit Protection Act, bars abusive debt-collection practices, which lawmakers found contributed to personal bankruptcy, marital discord, job loss and invasion of personal privacy.
     Israel countered the Beauvoirs’ complaint by contending they had failed to state a claim under the act because his letter was prompted by their alleged theft of gas service, which is different from a debt as defined by the Act.
     National Grid earlier sued the couple in state court, contending they stole service by tampering with a meter to mask their real natural gas usage.
     Israel sought dismissal of the Beauvoirs’ complaint, which a federal judge in Brooklyn granted in 2014. The couple appealed to the Second Circuit.
     On Tuesday, the circuit agreed that what the Beauvoirs owed did not qualify for FDCPA consumer debt protection.
     U.S. Circuit Judge Jose Cabranes, writing for the three-judge panel, noted that the Manhattan circuit had never before addressed the question, although other U.S. circuits had.
     The four others he cited “unanimously held that liability deriving from theft or torts does not constitute a ‘debt’ within the meaning of FDCPA,” he said.
     He added that the Second Circuit would hold likewise, and referred to a 1998 opinion in which the judges found that “at a minimum, the statute [FDCPA] contemplates that the debt has arisen as a result of the rendition of a service or purchase of property or other item of value.”
     Theft, though, does not create a similar transaction, Cabranes said.
     Whether the Beauvoirs actually stole the gas service as alleged by National Grid is immaterial, according to the judge.
     “The Beauvoirs are correct that a defendant may not evade the protections of the FDCPA merely by framing the basis of the alleged obligation in terms of theft or tort,” he wrote. “By the same token, however, a plaintiff may not impose the burdens of the FDCPA on an obligation outside the scope of the statute.”
     Joining Cabranes’ opinion were U.S. Circuit Judges Rosemary Pooler and Christopher Droney.

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