637 F.3d 939 (9th Cir. 2011), 09-35767, McCollough v. Johnson, Rodenburg & Lauinger, LLC

Docket Nº:09-35767.
Citation:637 F.3d 939
Opinion Judge:THOMAS, Circuit Judge:
Party Name:Timothy McCOLLOUGH, Plaintiff-Appellee, v. JOHNSON, RODENBURG & LAUINGER, LLC, Defendant-Appellant.
Attorney:John H. Boyer, Fred Simpson, and Jessie Lundbert, Missoula, MT, for the appellant. John Heenan, Billings, MT, and Richard Rubin, Santa Fe, NM, for the appellee.
Judge Panel:Before: SANDRA DAY O'CONNOR, Associate Justice,[*]SIDNEY R. THOMAS and WILLIAM A. FLETCHER, Circuit Judges.
Case Date:March 04, 2011
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
FREE EXCERPT

Page 939

637 F.3d 939 (9th Cir. 2011)

Timothy McCOLLOUGH, Plaintiff-Appellee,

v.

JOHNSON, RODENBURG & LAUINGER, LLC, Defendant-Appellant.

No. 09-35767.

United States Court of Appeals, Ninth Circuit

March 4, 2011

Argued and Submitted July 29, 2010.

Page 940

[Copyrighted Material Omitted]

Page 941

[Copyrighted Material Omitted]

Page 942

[Copyrighted Material Omitted]

Page 943

[Copyrighted Material Omitted]

Page 944

John H. Boyer, Fred Simpson, and Jessie Lundbert, Missoula, MT, for the appellant.

John Heenan, Billings, MT, and Richard Rubin, Santa Fe, NM, for the appellee.

Appeal from the United States District Court for the District of Montana, Carolyn S. Ostby, Magistrate Judge, Presiding. D.C. No. 1:07-cv-00166-CSO.

Before: SANDRA DAY O'CONNOR, Associate Justice,[*]SIDNEY R. THOMAS and WILLIAM A. FLETCHER, Circuit Judges.

OPINION

THOMAS, Circuit Judge:

Debt collection law firm Johnson, Rodenburg & Lauinger (" JRL" or " the law firm" ) appeals from the entry of summary judgment against it under the federal Fair Debt Collection Practices Act (" FDCPA" ), and from a subsequent jury verdict awarding damages under the FDCPA, the Montana Unfair Trade Practices and Consumer Protection Act (" MCPA" ), and state torts of malicious prosecution and abuse of process. We have jurisdiction pursuant to 28 U.S.C. § 1291 and we affirm.

I

Tim McCollough, a former school custodian, opened a credit card account with Chemical Bank sometime around 1990. Chemical Bank merged with the Chase Manhattan Bank (" Chase Manhattan" ) in 1996 and continued business under the Chase Manhattan name. McCollough continued to make purchases on the account.

McCollough and his wife fell behind on their credit card bills after he allegedly suffered a brain injury at work and she underwent surgery. When McCollough made his last payment on the Chase Manhattan account in 1999, an unpaid balance of approximately $3,000 remained. In 2000, Chase Manhattan " charged off" the account on its books.

Collect America, Ltd. (" Collect America" ),1 through its subsidiary, CACV of Colorado, Ltd. (" CACV" ), is a purchaser of bad debt portfolios— typically, debts that have been charged off by the primary lender. CACV purchases the debts; Collect America attempts collection.

In 2001, CACV purchased McCollough's delinquent account from Chase Manhattan. CACV sued McCollough in 2005 for $3,816.80 in state court to collect the debt. Acting pro se, McCollough replied that the " statute of limitations is up." Two weeks later, CACV dismissed the case. CACV documented service of the complaint and McCollough's response in its electronic files.

In 2006, Collect America retained JRL, a law firm specializing in debt collection, to pursue collection of McCollough's outstanding debt. Although JRL is a North Dakota law firm, some of its lawyers are admitted to practice in Montana. Charles

Page 945

Dendy was the JRL attorney who handled the law firm's collection cases for Montana. During the period from January 2007 through July 2008, JRL filed 2,700 collection lawsuits in Montana. On an average day, JRL filed five lawsuits in the state; on one day, JRL filed 40 lawsuits. JRL attorney Lisa Lauinger testified that approximately 90% of the collection lawsuits resulted in a default judgment.

The contract between JRL and Collect America contained the following disclaimer: " Collect America makes no warranty as to the accuracy or validity of data provided." In addition, the contract expressly made JRL " responsible to determine [its] legal and ethical ability to collect these accounts." CACV transmitted information about McCollough's account to JRL using debt collection software. CACV also sent the law firm the electronic file.

The law firm's screening procedures flagged a statute of limitations problem with McCollough's debt. On January 4, 2007, JRL account manager Grace Lauinger wrote to CACV: " It appears that the Statute of Limitations has expired on this file as of August 21, 2005. If you can provide us with an instrument in writing to extend the Statute of Limitations." The next day, JRL recorded in the electronic file that " * * * NO DEMAND HAS GONE OUT ON THIS FILE * * * THIS IS THE COLLECT AMERICA BATCH THAT WE ARE HAVING PROBLEMS W[ITH]."

On January 23, 2007, CACV responded to JRL attorney Lisa Lauinger in an email entitled " sol extended" that McCollough had made a $75 partial payment on June 30, 2004, and inquired: " Do you need any info from me on this one?" Based on that payment date, the five-year statute of limitations on the claim against McCollough would not have expired until 2009. See Colo. Nat'l Bank of Denver v. Story, 261 Mont. 375, 862 P.2d 1120, 1122 (1993) (holding that Montana's five-year statute of limitation on an account stated commences running from the date of the last payment).

However, the information was incorrect: McCollough had not made a partial payment on June 30, 2004. Rather, as reflected in the electronic file, the event that took place on June 30, 2004, was the return of court costs to CACV for a collection complaint and summons that CACV had prepared in 2003. Lisa Lauinger did not respond to CACV's offer to provide additional documentation of the event.

On April 17, 2007, JRL filed a collection complaint signed by JRL attorney Charles Dendy against McCollough in Montana state court. The complaint sought judgment for an account balance of $3,816.80, interest of $5,536.81, attorney's fees of $481.68, and court costs of $120.00.

Dendy later testified that he reviewed the information in the electronic file before filing suit. At that point, the electronic file indicated the 2000 charge-off date; a June 30, 2004, entry indicating the return of court costs; an entry showing that CACV had previously sued McCollough; and an entry indicating that McCollough had pled a statute of limitations defense in response. Dendy admitted that he made no inquiry into whether a partial payment occurred on June 30, 2004. Instead, he explained: " In this case I relied upon the information that was provided by the client."

On June 13, 2007, McCollough filed a pro se answer to the complaint, asserting a statute of limitations defense:

FORGIVE MY SPELLING I HAVE A HEAD INJURY AND WRITING DOSE NOT COME EASY

(1) THE STACUT OF LIMITACION'S IS UP, I HAVE NOT HAD ANY

Page 946

DEALINGS WITH ANY CREDITED CARD IN WELL OVER 8 1/2 YEARS

(2) I AM DISABLED I GET 736.00 A MONTH S.S.I....

(3) WHEN WORKERS COMP STOPED PAYING I RAN OUT OF MONEY, CHASE WOULD NOT WORK WITH ME, THEY PASSED IT ON TO COLLECTOR'S— THEY LIED TO ME, THEY INSULTED ME, THEY USED BAD LANGUAGE, THEY CALLED AROUND THE CLOCK, SO I COULD NOT REST, THEY GOT ME SO WOUND UP AND CONFUSED THE HEALING OF MY HEAD INJURY STOPED! THEY WERE HURTING ME, SO I HAD TO STOP DEALING WITH THEM SO I COULD RECOVER, IM STILL RECOVERING. THE PAIN THEY COSSED AND NEW MED BILLS ARE WORTH MORE THEN THE MONEY THEY WANT.

(4) THIS IS THE THIRED TIME THEY HAVE BROUGHT ME TO COURT ON THIS ACCOUNT, ... WHEN WILL IT STOP DO I HAVE TO SUE THEM SO I CAN LIVE QUIETLY IN PAIN

One month later, McCollough also telephoned Dendy and left a message indicating that he would be seeking summary judgment on the basis of the statute of limitations.

Dendy noted on July 11, 2007, " [w]e need to get what the client has for docs on hand." The following day, Grace Lauinger sent an email to Collect America asking for documentation. Collect America responded: " [b]ecause of the age of the account, we can't get any more statements (other than what has been sent to you)." Dendy continued to prosecute the suit.

On August 6, 2007, CACV informed Grace Lauinger that McCollough had not made a partial payment on June 30, 2004, as previously stated; rather, the entry on that date " was actually unused costs by another office, not payment." Grace Lauinger testified that she scanned the email into the electronic file to which Dendy had access and that she did not recall whether she directly conveyed the new information to Dendy. Dendy testified that he did not learn of this information until later. He continued to prosecute the suit.

In October 2007, Dendy served on McCollough a list of twenty-two requests for admission that included the following:

11. Prior to initiation of this suit, Defendant Tim M. McCollough has never notified plaintiff or any other party in interest in this action of any disputes regarding said Chase Manhattan Bank credit card.

....

14. There are no facts upon which Defendant Tim M. McCollough relies as a basis for defense in this action.

....

17. Every statement or allegation contained in plaintiff's Complaint is true and correct.

....

21. Defendant Tim M. McCollough made a payment on said Chase Manhattan Bank credit card on or about June 30, 2004 in the amount of $75.00.

The requests for admission did not include an explanation that, under Montana Rule of Civil Procedure 36(a), the requests would be deemed admitted if McCollough did not respond within thirty days.

McCollough retained counsel and timely denied all of the requests. Continuing to prosecute the collection case, Dendy issued a subpoena to Chase in November 2007 seeking production of the operative records from McCollough's account. Chase responded a month later that it had no records of the account.

Page 947

On December 7, 2007, Dendy sent to CACV an email marked " URGENT." The email read:

An attorney has appeared in this action and has served discovery requests....

The attorney is one who is anti purchased debt and who attempts to run up costs in an attempt to secure a large cost award against plaintiff....

Please provide me with copies of everything you can get for documentation as soon as possible. We need to request everything available from the original creditor, not just the things that you normally request, etc. Application, statements, cardmember agreement,...

To continue reading

FREE SIGN UP