Gray v. Suttell & Assocs.

• Decision Date: 11 August 2015
• Docket Number: CV–10–5132–EFS.,Nos. CV–09–251–EFS,s. CV–09–251–EFS
• Citation: 123 F.Supp.3d 1283
• Court: U.S. District Court — District of Washington
• Parties: Kelli GRAY and all others similarly situated, Plaintiffs, v. SUTTELL & ASSOCIATES; Midland Funding, LLC; Mark T. Case and Jane Doe Case, husband and wife; and Karen Hammer and John Doe Hammer, Defendants. Eva Lauber; Dane Scott; Scott Boolen; Joel Finch; and all others similarly situated, Plaintiffs, v. Encore Capital Group, Inc.; Midland Funding, LLC; Midland Credit Management, Inc.; Suttell & Hammer, PS.; Mark T. Case and Jane Doe Case, husband and wife; Malisa L. Gurule and John Doe Gurule; Karen Hammer and Isaac Hammer, wife and husband; William Suttell and Jane Doe Suttell, husband and wife, Defendants.

123 F.Supp.3d 1283

Kelli GRAY and all others similarly situated, Plaintiffs,

v.SUTTELL & ASSOCIATES; Midland Funding, LLC; Mark T. Case and Jane Doe Case, husband and wife; and Karen Hammer and John Doe Hammer, Defendants.

Eva Lauber; Dane Scott; Scott Boolen; Joel Finch; and all others similarly situated, Plaintiffs,

v.Encore Capital Group, Inc.; Midland Funding, LLC; Midland Credit Management, Inc.; Suttell & Hammer, PS.; Mark T. Case and Jane Doe Case, husband and wife; Malisa L. Gurule and John Doe Gurule; Karen Hammer and Isaac Hammer, wife and husband; William Suttell and Jane Doe Suttell, husband and wife, Defendants.

Nos. CV–09–251–EFS

CV–10–5132–EFS.

United States District Court, E.D. Washington.

Signed Aug. 11, 2015.

Filed Aug. 12, 2015.

Kirk D. Miller, Kirk D. Miller PS, Spokane, WA, for Plaintiffs.

Bradley L. Fisher, Jonathan Mark Lloyd, Davis Wright Tremaine LLP, Seattle, WA, John Degnan Munding, Crumb & Munding, Spokane, WA, Theodore W. Seitz, Dykema Gossett PLLC, Lansing, MI, for Defendants.

ORDER RULING ON MOTION TO STRIKE AND SUMMARY–JUDGMENT MOTIONS REGARDING THE STATUTE OF LIMITATIONS

EDWARD F. SHEA, Senior District Judge.

Before the Court, without oral argument, are the Suttell Defendants'¹ Motion for Summary Judgment Dismissing Plaintiff Gray's "Statute of Limitations" Claim(s), ECF No. 480, Plaintiffs'² Motion for Partial Summary Judgment, ECF No. 483, the Midland Defendants'³ Motion for Summary Judgment on Plaintiff Gray's FDCPA Claims, ECF No. 495, and Plaintiffs' Motion to Strike, ECF No. 523. All three summary-judgment motions relate to Plaintiffs' claim that Defendants violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., by suing Plaintiff Kelli Gray to collect on a debt after the statute of limitations expired. The motion to strike addresses several of the exhibits submitted by the Midland Defendants in support of their summary-judgment motion. Having reviewed the pleadings and the file, the Court is fully informed and finds that, although genuine disputes of material fact exist as to the applicable statute of limitations, the bona fide error defense insulates Defendants from liability even if their debt-collection suit was untimely.

I. UNDISPUTED FACTS ⁴

In August 2001, Plaintiff Kelli Gray applied for and was issued a credit card. Ms. Gray received the credit card in the mail, as well as an Account Agreement and periodic statements. Ms. Gray used the credit card to purchase clothing and apparel from Spiegel Brands, Inc. (Spiegel) stores. She received an account statement dated June 3, 2003, and made the $40 payment reflected therein in May 2003. Ms. Gray made her last payment on the credit card on May 13, 2004.

The June 3, 2003 statement that Ms. Gray received contains "Spiegel Charge" in large bold letters at the top. It then contains a block of text reading,

FCNB has increased the late payment charge to $35, unless you have already rejected the increase. If FCNB does not receive an amount equal to at least the total minimum payment due by the payment due date on this statement, a late payment charge of $35 will be charged to your account. If you have rejected the increase, please see the reverse for late payment charge terms. Effective immediately, Eddie Bauer Stores can no longer accept payments on your FCNB credit card account. To make payments on your FCNB credit card account, please follow the payment instructions that appear on this statement.

Next the statement contains an "Account Summary," reflecting a "Total New Balance" of $1,394.76. A section entitled "Account Activity" follows, showing that a $40 payment was made on May 5, 2003. The bottom of the statement is a detachable payment slip with the word "Spiegel," addressed to:

FCNB Processing Center

9310 SW Gemini Drive

Beaverton, OR 97078–0001.

First Consumers National Bank (FCNB) was a Federal Deposit Insurance Corporation insured, national bank regulated by the Office of the Comptroller of the Currency.

On October 27, 2008, the Suttell Law Firm filed an action on behalf of Midland Funding in Spokane County Superior Court against Ms. Gray to collect on the credit card account. The lawsuit was dismissed with prejudice on March 15, 2011; the dismissal was not based on a statute-of-limitations defense.

II. LEGAL STANDARDS

A. Summary Judgment

Summary judgment is appropriate if the record establishes "no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The party opposing summary judgment must point to specific facts establishing a genuine dispute of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A statement or dispute of fact must be supported by materials in the record. Fed.R.Civ.P. 56(c)(1)(a) & 2010 advisory committee's note. If the non-moving party fails to make such a showing for any of the elements essential to its case for which it bears the burden of proof, the trial court should grant the summary-judgment motion. Celotex Corp., 477 U.S. at 322, 106 S.Ct. 2548.

"[W]hen parties submit cross-motions for summary judgment, each motion must be considered on its own merits." Fair Housing Council of Riverside Cnty., Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir.2001) (internal quotations, modifications, and citations omitted). However, the Court must review evidence submitted in support of any of the cross-motions to determine whether it presents a dispute of material fact that precludes summary judgment for the opposing party. Id. at 1135 ; Las Vegas Sands, LLC v. Nehme, 632 F.3d 526, 532 (9th Cir.2011). In ruling on a motion for summary judgment, the Court must consider only evidence that could be presented in an admissible form at trial. Fed.R.Civ.P. 56(c)(2) ; see Ed Brunet, John Parry & Martin Redish, Summary Judgment: Federal Law and Practice § 8.6 (2014).

B. Fair Debt Collection Practices Act

The FDCPA prohibits debt collectors from engaging in various abusive and unfair practices. Heintz v. Jenkins, 514 U.S. 291, 292–93, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995). A debt collector is prohibited from using "unfair or unconscionable means to collect or attempt to collect debt." 15 U.S.C. § 1692f. "The collection of any amount ... unless such amount is expressly authorized by the agreement creating the debt or permitted by law" is a violation of the FDCPA. 15 U.S.C. § 1692f(1). Filing a debt-collection lawsuit outside the statute of limitations, without having determined that the limitations period has been or should be tolled, violates the FDCPA. Id.; Kimber v. Fed. Fin. Corp., 668 F.Supp. 1480, 1487 (M.D.Ala.1987).

C. Bona Fide Error Defense

"The bona fide error defense is an affirmative defense that insulates debt collectors from liability even when they have violated the FDCPA." Johnson v. Riddle, 443 F.3d 723, 727 (10th Cir.2006). A defendant may escape liability using the defense if it can prove that the violation was "1) unintentional, 2) a bona fide error, and 3) made despite the maintenance of procedures reasonably adapted to avoid the error." McCollough v. Johnson, Rodenburg & Lauinger, LLC, 637 F.3d 939, 948 (9th Cir.2011) ; 15 U.S.C. § 1692k(c). The debt collector has the burden of proof on this affirmative defense. Reichert v. Nat'l Credit Sys., Inc., 531 F.3d 1002, 1006 (9th Cir.2008).

Although the Supreme Court has held that the bona fide error defense in section 1692k(c) does not apply when a debt collector mistakenly interprets the legal requirements of the FDCPA, it explicitly declined to reach the question of whether a bona fide error defense is available when a violation results from a misinterpretation of the legal requirements of a state or federal law, other than the FDCPA. Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573, 580 n. 4, 130 S.Ct. 1605, 176 L.Ed.2d 519 (2010). The Courts of Appeals and District Courts have reached different conclusions on this question. See Janet Flaccus, Fair Debt Collection Practices Act: Lawyers and the Bona Fide Error Defense, 2001 Ark. L. Notes 95, 96 (2001) ("On first examination, the cases discussing the bona fide error rule seem in disarray. It is submitted, however, that most can be explained by one simple observation. If the lawyer's actions are taken when the law is reasonably clear that what they are doing they can not do, the bona fide error defense will not apply. If, on the other hand, the law that the attorney is allegedly breaking is not at all clear, the bona fide error defense is applied."); Johnson v. Riddle, 305 F.3d 1107, 1120 n. 14 (10th Cir.2002) (collecting cases).

More than thirty years ago, the Ninth Circuit stated broadly, "[r]eliance on advice of counsel or a mistake about the law is insufficient by itself to raise the bona fide error defense." Baker v. G.C. Servs. Corp., 677 F.2d 775, 779 (9th Cir.1982). However, the issue in Baker was whether a debt collector could rely on its attorney's mistaken interpretation of the FDCPA's requirements. Id. at 777. Some courts in this circuit have applied Baker broadly and refused to apply the bona fide error defense when the defendant was ignorant or mistaken about the applicable state law. Van Westrienen v. Americontinental Collection Corp., 94 F.Supp.2d 1087, 1101 (D.Or.2000) (holding bona fide error defense was inapplicable where defendant was ignorant or mistaken about the law in Oregon that required a five-day waiting period before collecting a judgment).

Other courts in this circuit and elsewhere have taken a limited view of Baker's expansive language. Watkins v. Peterson Enter., Inc., 57 F.Supp.2d 1102, 1107–08 (E.D.Wash.1999) (holding that a mistaken view of the law that had been approved by state district courts was a bona fide error); Frye v. Bowman, Heintz, Boscia and Vician, P.C., 193 F.Supp.2d 1070, 1085–86 (S.D.Ind.20...