Hartman v. Great Seneca Financial Corp.
| Decision Date | 30 June 2009 |
| Docket Number | No. 08-3773.,No. 08-3804.,08-3773.,08-3804. |
| Citation | 569 F.3d 606 |
| Parties | Delores HARTMAN (08-3773); Deborah L. Rice (08-3804), Plaintiffs-Appellants, United States of America, Intervenor, v. GREAT SENECA FINANCIAL CORP.; Javitch, Block & Rathbone, LLP, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
ARGUED: Stephen R. Felson, Law Office, Cincinnati, Ohio, for Appellants. Michael D. Slodov, Javitch, Block & Rathbone LLP, Cleveland, Ohio, for Appellees. Howard S. Scher, United States Department of Justice, Washington, D.C., for Intervenor. ON BRIEF: Stephen R. Felson, Law Office, Cincinnati, Ohio, Steven C. Shane, Bellevue, Kentucky, for Appellants. Michael D. Slodov, Javitch, Block & Rathbone LLP, Cleveland, Ohio, for Appellees. Howard S. Scher, Michael S. Raab, United States Department of Justice, Washington, D.C., for Intervenor.
Before: MOORE and WHITE, Circuit Judges; OLIVER, District Judge.*
MOORE, J., delivered the opinion of the court. OLIVER, D.J. (p. 618), delivered a separate concurring opinion. WHITE, J. (pp. 618-19), delivered a separate dissenting opinion.
Plaintiff-Appellant Delores Hartman ("Hartman") and plaintiff-appellant Deborah Rice ("Rice") appeal the district court's grant of summary judgment in favor of defendants-appellees Great Seneca Financial Corporation1 ("Great Seneca") and Javitch, Block & Rathbone, LLP ("Javitch"). Hartman and Rice both had credit-card accounts with Providian National Bank on which they allegedly owe money. Providian sold their accounts to Unifund CCR Partners, who sold the debts to Great Seneca. With the help of its attorneys (Javitch), Great Seneca attempted to collect on the defaulted debts by filing collection complaints against Hartman and Rice in Ohio state court. In each of those complaints, Great Seneca and Javitch asserted that a copy of the debtor's "account" was attached to the complaint. In each case, the document that Great Seneca and Javitch attached as an "account" resembled a credit-card statement but had been generated on Great Seneca's behalf.
Hartman and Rice filed separate actions in the United States District Court for the Southern District of Ohio arguing that Great Seneca and Javitch violated the Fair Debt Collection Practices Act ("FDCPA") by representing, in their state-court complaints, that the document generated on Great Seneca's behalf was a statement of the debtor's account. The district court determined that there was no genuine issue of material fact as to whether this behavior violated the FDCPA and granted Great Seneca's and Javitch's motions for summary judgment in each case. Hartman and Rice appeal these judgments.
We REVERSE the district court's grant of summary judgment and REMAND the cases for proceedings consistent with this opinion. We also REMAND the question of whether Great Seneca should remain a party to this litigation, given its asserted voluntary dissolution.
The district court explained the facts surrounding Hartman's debt as follows:
Plaintiff Hartman is a consumer who opened a credit card account with Providian National Bank on or about May 10, 2000, account number xxxxxxxxxxxx [yyyy]. Plaintiff received the terms and conditions of the credit card, which permitted transfer or assignment of right to payment. Plaintiff used the account from May 17, 2000 through March 20, 2001, at which time the account had an outstanding balance of $2,089.33. The account records indicate that final payment before charge off was made on February 9, 2001. The last fees were posted to the account in September 2001, with final balance being $2,565.81. The final statement before Plaintiff's account was sold, dated July 29, 2002 showed an unpaid balance of $2,551.30, after the posting of a $14.51 credit for a class action settlement benefit to her account.
In February 2003, Providian National Bank sold Plaintiff's account to Unifund CCR Partners. Later that same month, Unifund sold the account to Defendant Great Seneca. With each sale, certain electronic information was transmitted, including the account number, name of the debtor, address, city, state, zip, phone, current balance, charge off date, charge off amount, last payment amount, last payment date, social security number, APR, account opening date, and an issuer flag for each account. Throughout this time, Plaintiff's account did not accrue additional fees and had an interest rate of 0%. In August 2003, Defendant [Javitch], on behalf of Defendant Great Seneca, sent a validation notice to Plaintiff. Plaintiff did not timely respond to the validation notice.
Hartman Dist. Ct. Op. and Order at 2.
The district court delineated the similar facts of Rice's case:
Plaintiff Rice is a consumer who opened a credit card account with Providian National Bank on or about June 26, 2000, account number [zzzz]. Plaintiff received the terms and conditions of the credit card, which permitted transfer or assignment of right to payment. Plaintiff used the account from July 25, 2000 through March 21, 2001, at which time the account had an outstanding balance of $1,994.88. The account records indicate that final payment before charge off was made on April 6, 2001. The last fees were posted to the account in November 2001, with final balance being $2,778.99. The final statement before Plaintiff's account was sold, dated January 28, 2003, reflected the $2,778.99 balance.
In February 2003, Providian National Bank sold Plaintiff's account to Unifund CCR Partners. Later that same month, Unifund sold the account to Defendant Great Seneca. With each sale, certain electronic information was transmitted, including the account number, name of the debtor, address, city, state, zip, phone, current balance, charge off date, charge off amount, last payment amount, last payment date, social security number, APR, account opening date, and an issuer flag for each account. Throughout this time, Plaintiff's account did not accrue additional fees and had an interest rate of 0%. In August 2003, Defendant [Javitch], on behalf of Defendant Great Seneca, sent a validation notice to Plaintiff. Plaintiff did not timely respond to the validation notice.
Rice v. Great Seneca Fin. Corp., 556 F.Supp.2d 792, 795 (S.D.Ohio 2008).2
In October 2003, Javitch filed civil complaints in state court against Hartman and Rice on behalf of Great Seneca. The state-court complaint filed against Hartman read as follows:
1. There is due the Plaintiff from the Defendant upon an account, the sum of $2,551.30.
2. A copy of the said Account is attached hereto as "Exhibit A".
Hartman Ex. A to Am. Compl. The language of the state-court complaint filed against Rice is identical except that the amount owed is different. Javitch attached a financial document called "Exhibit A" to each of the complaints. In each case, Exhibit A was prepared by Great Seneca's law firm3 and resembles a typical credit-card statement. Hartman Ex. B to Am. Compl.; Rice Ex. B to Am. Compl. In both cases, the document heading indicates that Exhibit A was produced by Great Seneca. The document includes the debtor's address and a space for her to change her address. It also contains an account number and indicates a new balance, $2551.30 for Hartman and $2778.99 for Rice, "DUE NOW." Hartman Ex. B to Am. Compl.; Rice Ex. B to Am. Compl. Below this general account information are boxes for credit limit, credit available, amount past due, statement closing date, and a summary of transactions. The document also states that Great Seneca is the assignee of Unifund which is, in turn, the assignee of Providian. Hartman and Rice answered the complaints against them and served discovery. Great Seneca then dismissed the state-court actions against Hartman and Rice without prejudice.
After the state-court actions against them were dismissed, Hartman and Rice each filed an action in the United States District Court for the Southern District of Ohio alleging that Great Seneca and Javitch violated the FDCPA. Hartman and Rice argued that Great Seneca and Javitch acted in a false, deceptive, or misleading manner when they represented that Exhibit A, generated by Great Seneca, was an account statement. Hartman and Rice also alleged that this behavior violated the Ohio Consumer Sales Practices Act ("OCSPA"). In both cases, the plaintiffs moved for partial summary judgment, and the defendants moved for summary judgment. The United States filed briefs as an intervenor because Great Seneca and Javitch challenged the constitutionality of the FDCPA. Because of the similarity of the two cases, the district court judge in deciding Hartman's case adopted his Rice opinion.
The district court granted summary judgment in favor of Great Seneca and Javitch in both cases because it concluded that, as a matter of law, the least sophisticated consumer would have not have been confused or misled by the representation that Exhibit A was an account statement. Additionally, the district court found that, even assuming that there was an issue of material fact, Great Seneca and Javitch were protected by the FDCPA's bona-fide-error ("BFE") defense.
Hartman and Rice appeal the district court's grant of summary judgment in favor of Great Seneca and Javitch. Hartman and Rice first argue that Great Seneca's and Javitch's representation that Exhibit A to the state-court complaints was a copy of the debtor's account was false in violation of 15 U.S.C. §§ 1692e and 1692e(10). Second, they argue that presenting Exhibit A, which facially resembled a credit-card statement, as a copy of the debtor's account was deceptive and misleading in violation of §§ 1692e and 1692e(10) and an unfair means of debt collection under § 1692f. Finally, Hartman and Rice assert that the BFE defense does not protect Great Seneca and Javitch because this defense does not apply to mistakes of law and because Great Seneca and...
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