Lyon v. Chase Bank U.S.
| Decision Date | 30 August 2011 |
| Docket Number | 10–35846.,Nos. 10–35230,s. 10–35230 |
| Citation | 656 F.3d 877,11 Cal. Daily Op. Serv. 11144,2011 Daily Journal D.A.R. 13347 |
| Parties | Barbee B. LYON and Joan Kruse, Plaintiffs–Appellants,v.CHASE BANK USA, N.A., Captioned in original complaint as JP Morgan Chase & Co., Defendant–Appellee.Barbee B. Lyon and Joan Kruse, Plaintiffs–Appellants,v.Chase Bank USA, N.A., Captioned in original complaint as JP Morgan Chase & Co., Defendant–Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
OPINION TEXT STARTS HERE
Anna K. Sortun (argued), of Tonkon Torp LLP, Portland, OR, for the plaintiffs-appellants.John L. Langslet (argued), Michael J. Farrell, and Joan L. Volpert, of Martin, Bischoff, Templeton, Langslet & Hoffman LLP, Portland, OR, for the defendant-appellee.Appeal from the United States District Court for the District of Oregon, John V. Acosta, Magistrate Judge, Presiding. D.C. No. 3:07–cv–01779–AC.Before: ALFRED T. GOODWIN, HARRY PREGERSON, and MILAN D. SMITH, JR., Circuit Judges.
This case originated with a misunderstanding regarding a $645 charge on the credit-card bill of Appellant Barbee Lyon. Appellee Chase Bank USA, N.A. (“Chase”) misidentified the basis for the charge but failed to respond to Lyon's requests for information about it. Chase continued to seek payment and reported the debt as delinquent to credit agencies, despite Lyon's protest. In doing so, Chase admittedly violated multiple sections of the Fair Credit Billing Act (“FCBA”), 15 U.S.C. §§ 1666–1666j.
After unsuccessfully attempting to get a direct response from Chase, Lyon and his wife filed this action in the District of Oregon, alleging inter alia claims under the FCBA and Oregon's Unlawful Debt Collection Practices Act (“UDCPA”), Or.Rev.Stat. §§ 646.639–.643. The trial court dismissed the UDCPA claim and limited Lyon's total recovery under the FCBA to $1000.
We reverse and remand for further proceedings. The trial court erred in holding that Appellants failed to state a claim under the UDCPA. We decline to certify Appellants' proposed question to the Oregon Supreme Court regarding this claim because existing state precedent guides our decision. As to Lyon's FCBA claims, the trial court erred in requiring evidence of detrimental reliance to support actual damages and in limiting statutory damages for Chase's multiple violations of the FCBA to a single recovery. Finally, the trial court abused its discretion in denying any award of attorneys' fees related to Lyon's successful claim under the FCBA.
Congress enacted the FCBA in order to regulate billing disputes involving “open end consumer credit plans.” See 15 U.S.C. § 1666; Gray v. Am. Express Co., 743 F.2d 10, 13 (D.C.Cir.1984) (). If a credit-card holder sends a written notice disputing a charge within sixty days of receiving a bill, the FCBA requires a credit-card issuer to acknowledge the dispute within thirty days, investigate the matter, and provide a written explanation of its decision within ninety days. 15 U.S.C. § 1666(a); Am. Express Co. v. Koerner, 452 U.S. 233, 234–37, 101 S.Ct. 2281, 68 L.Ed.2d 803 (1981).
“The creditor must send its explanation before making any attempt to collect the disputed amount.” Koerner, 452 U.S. at 237, 101 S.Ct. 2281; see also 15 U.S.C. § 1666(a)(3)(B). Further, “the card issuer must notify the cardholder on subsequent statements of account that he need not pay the amount in dispute until the card issuer has complied with § 1666.” Gray, 743 F.2d at 14 (citing 15 U.S.C. § 1666(c)(2)). Additionally, “a creditor or his agent may not directly or indirectly threaten to report to any person adversely on the obligor's credit rating ... and such amount may not be reported as delinquent to any third party until the creditor has met [these] requirements.” 15 U.S.C. § 1666a(a). If a creditor fails to comply with any of these provisions, it is subject to civil liability under 15 U.S.C. § 1640 and forfeiture of the disputed amount under § 1666(e).
Oregon enacted the UDCPA to prohibit debt collectors from using specific abusive practices. See Or.Rev.Stat. § 646.639(2) ().1 Specifically, Oregon Revised Statutes § 646.639(2)(k) prohibits a debt collector from “[a]ttempt[ing] to or threaten [ing] to enforce a right or remedy with knowledge or reason to know that the right or remedy does not exist.”
In 2003, Barbee Lyon opened a Visa credit-card account with Chase and identified his wife, Joan Kruse, as an authorized user. In September 2006, Lyon's wallet was stolen, and he notified Chase of the theft of the card. Lyon spoke with Chase's fraud department to identify fraudulent charges but advised Chase that a pending $645 charge payable to Resorts Advantage was a valid, authorized charge. Nonetheless, Chase declined to make payment on this charge, and after being contacted by Resorts Advantage, Lyon paid the debt through a different credit card.
Unbeknownst to Lyon, Chase mistakenly credited his account $645 during the process of resolving fraudulent charges and issuing a new account number. To correct this mistaken credit, Chase added a $645 charge to Lyon's bill months later, which it incorrectly identified as a transaction with Resorts Advantage. After confirming that Resorts Advantage had not been paid by Chase, Lyon disputed this charge, not knowing that Chase was attempting to correct its prior mistake. On April 16, 2007, Chase acknowledged receipt of the billing dispute and notified Lyon that it was investigating the matter and would write to respond to his question.
Chase admits that it never sent a written explanation of the charge and that it failed to respond to multiple letters Lyon sent about the issue. Indeed, months after the original notification, Lyon independently determined that the mistaken credit was the likely basis for the charge and specifically asked Chase to confirm this. Chase again failed to respond. Chase admits that it continued to attempt to collect the debt from Lyon and levied finance charges related to the debt. Chase also admits that it reported to credit agencies a delinquency by Lyon in paying the debt.
Lyon and Kruse filed this action in the District of Oregon, alleging violations of the FCBA, a violation of the UDCPA, defamation of their credit, and intentional infliction of emotional distress. Adopting the findings and recommendation of the magistrate judge, the district court granted Chase partial summary judgment. As to the UDCPA claim, the magistrate judge found that “Plaintiffs have presented evidence which, if believed by a trier of fact, could be reasonably viewed as constituting ‘coercive and abusive’ methods by Chase to collect its debts from Plaintiffs.” Nonetheless, the court dismissed the claim, deciding sua sponte that the language of the complaint failed to state a claim under Oregon law. As to the FCBA claims, the district court found that Kruse lacked standing, but Lyon's claims under the statute remained alive because Chase had not contested his standing or FCBA-related allegations. As to the tort actions, the district court found triable issues of fact as to defamation but granted Chase summary judgment on the emotional distress claim.
The parties subsequently agreed to proceed before the magistrate judge, who denied Appellants' motion to amend their complaint. Lyon, who is an attorney, had been representing himself up to this point, but retained separate counsel in December 2009 as the case neared trial. Chase then moved to limit argument or evidence of its multiple violations of the FCBA. While admitting it had violated the FCBA, Chase argued that “Lyon is precluded from recovering separate statutory penalties for multiple technical violations.” The magistrate judge granted this motion in limine during an initial pretrial conference without issuing a written order.
Chase further moved to exclude evidence or argument regarding Lyon's right to recover actual damages, arguing that Lyon suffered no out-of-pocket economic loss and that an award of actual damages under the FCBA requires evidence of detrimental reliance. The magistrate judge stated during the pretrial conference that “Lyon's [non-attorney] time and its value does constitute an item of special or actual damage.” 2 Nonetheless, the court held that Lyon had to provide evidence of detrimental reliance in order to support an award of actual damages resulting from Chase's violations of the FCBA. Because Lyon had not relied on information from Chase, as Chase had provided none, the court granted the motion.
The magistrate judge subsequently allowed Chase to amend its answer to admit liability under the FCBA up to a $1000 maximum statutory penalty. Accordingly, only Appellants' defamation claim was presented to the jury, which rendered a verdict in favor of Chase. Although the magistrate judge entered judgment in favor of Lyon as to his FCBA claims, his recovery was limited to $1000 in statutory damages and an award of reasonable attorneys' fees.
Lyon moved for an award of $37,087 in attorneys' fees, based on the work of his separate counsel before and during trial in pursuing both the FCBA and defamation claims. While finding the requested hourly rate reasonable, the court stated that it would grant fees only for work...
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