Mendus v. Morgan & Associates, PC

• Decision Date: 29 June 1999
• Docket Number: No. 92,418.,92,418.
• Citation: 994 P.2d 83,1999 OK CIV APP 137
• Parties: Clare A. MENDUS, Defendant/Cross-Plaintiff/Appellant, v. MORGAN & ASSOCIATES, P.C., an Oklahoma corporation and Lisa Gifford, Individually, Cross-Defendants/Appellees.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

994 P.2d 83

1999 OK CIV APP 137

Clare A. MENDUS, Defendant/Cross-Plaintiff/Appellant, v. MORGAN & ASSOCIATES, P.C., an Oklahoma corporation and Lisa Gifford, Individually, Cross-Defendants/Appellees.

No. 92,418.

Court of Civil Appeals of Oklahoma, Division No. 4.

June 29, 1999.

Rehearing Denied September 7, 1999.

William T. Brett, Brett & Kaestner, P.A., Oklahoma City, Oklahoma, for defendant/cross-plaintiff/appellant.

Lisa Gifford, Morgan & Associates, P.C., Oklahoma City, Oklahoma, for cross-defendants/appellees.

Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 2.

OPINION

RAPP, J.

¶ 1 The trial court defendant/cross-plaintiff, Clare A. Mendus ("Mendus"), appeals an order granting summary judgment to the trial court cross-defendants, Morgan & Associates, P.C. and Lisa Gifford ("Morgan"). That order is final pursuant to 12 O.S.Supp. 1998, § 994(A).

I. Facts

¶ 2 The facts are not in controversy. Credit Adjustment Co., Inc., as assignee, sued Mendus to collect a medical bill. Morgan & Associates is the law firm representing Credit Adjustment and Ms. Gifford is an attorney with that firm.

¶ 3 Mendus was served with a summons and entered an appearance. Thereafter, she defaulted but obtained permission to file her answer out of time. She then initiated the cross-action against Morgan claiming that each cross-defendant violated the Federal Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq., ("Act"), because the 30-day notice provisions of the Act were presented to her in the summons which, under State law, provided only 20 days to respond, and resulted in a communication which was, at best, confusing to an unsophisticated consumer.¹ 12 O.S.1991, §§ 2012, 2027. Although the parties agreed that the wording of the 30-day notice as stated in the summons fully complied with the Act's requirements, nevertheless, there were deficiencies. 15 U.S.C. § 1692g.

¶ 4 Morgan's response to the petition-in-error suggests that an earlier 30-day notice was given in compliance with the Act by its client, Credit Adjustment.² However, the record neither mentions nor documents this event. Under the record presented, therefore, the only notification given under the Act was that contained in and made a part of the summons. Thus, under the record, the summons and petition constituted the first contact by Morgan with Mendus.

¶ 5 Mendus alleged that the summons 20-day answer time is unlawfully inconsistent with the 30-day notice provided by the Act. Mendus claimed that it is unlawful to contradict or overshadow the Act so as to confuse the least sophisticated debtor and she claimed both statutory and actual damages under the Act.³ Both parties moved for summary judgment.

¶ 6 The issues, as framed by the summary judgment proceedings, are the following: (1) Is there a conflict between the Oklahoma Pleading Code and the Act; and, if so, (2) Does the Act pre-empt the Oklahoma Pleading Code ("Code") so as to remove the 20-day answer period when, as here, there has not been any prior notification under the Act and the first notice of the debtor's rights under the Act is given in the summons. The trial court, without specific findings or conclusions, ruled in favor of Morgan. Mendus appeals.

II. Standard of Review

¶ 7 The appellate standard of review in summary judgment is de novo. This means without deference. Hulett v. First National Bank & Trust Company In Clinton, 1998 OK 21, 956 P.2d 879; see Salve Regina College v. Russell, 499 U.S. 225, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991)

. The pleadings and evidentiary materials will be examined to determine what facts are material and whether there is a substantial controversy as to one material fact. Sperling v. Marler, 1998 OK 81, 963 P.2d 577; Malson v. Palmer Broadcasting Group, 1997 OK 42, 936 P.2d 940. All inferences and conclusions to be drawn from the materials must be viewed in a light most favorable to the non-moving party. Carmichael v. Beller, 1996 OK 48, 914 P.2d 1051. Even though the facts may be uncontroverted if reasonable persons may draw different conclusions from these facts summary judgment must be denied. Bird v. Coleman, 1997 OK 44, 939 P.2d 1123. Summary judgment is proper only if the record reveals uncontroverted material facts failing to support any legitimate inference in favor of the nonmoving party. N.C. Corff Partnership, Ltd. v. OXY, USA, 1996 OK CIV APP 92, 929 P.2d 288. When genuine issues of material fact exist summary judgment should be denied and the question becomes one for determination by the trier of fact. Brown v. Oklahoma State Bank & Trust Co. of Vinita, 1993 OK 117, 860 P.2d 230; Flowers v. Stanley, 1957 OK 237, 316 P.2d 840.

¶ 8 Similarly, the appellate court has the plenary, independent and nondeferential authority to reexamine a trial court's legal rulings. Neil Acquisition L.L.C. v. Wingrod Investment Corp., 1996 OK 125, 932 P.2d 1100, Fn. 1. Matters involving legislative intent present questions of law which are examined independently and without deference to the trial court's ruling. Salve Regina College v. Russell, 499 U.S. 225, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991); Keizor v. Sand Springs Ry. Co., 1993 OK CIV APP 98, ¶ 5, 861 P.2d 326, 328.

III. Analysis and Review

A. The Existence of Conflict

¶ 9 An affirmative answer must be given to the first question posed — Is there a conflict between the Code and the Act?

¶ 10 The Act's purpose is to eliminate abusive debt collection practices found by Congress to exist. 15 U.S.C. § 1692. The Act is a strict liability statute. Cavallaro v. The Law Office of Shapiro & Kreisman, 933 F.Supp. 1148 (E.D.N.Y.1996). The Act is applicable to attorneys regularly engaged in consumer debt-collection litigation on behalf of a creditor client. Heintz v. Jenkins, 514 U.S. 291, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995). Moreover, the Act applies to attorneys that regularly engage in consumer debt collection "even when the activity consists of litigation." 514 U.S. at 299, 115 S.Ct. 1489.⁴ Here, the parties did not dispute that the Act applied to Morgan or that Mendus is a consumer debtor covered by the Act.⁵

1. Communication Under The Act

¶ 11 A sub-issue here to be first answered is whether a summons or pleading is a communication under the Act. This Court holds that the summons is a communication for the reasons set out below.

¶ 12 The Act to accomplish its purposes prescribes rules for creditors' relationships with covered debtors. The Act directs that, either at the time of "initial communication" with the consumer debtor or within five days thereafter, specific information must be provided. Among the items included in the body of information are notices to the debtor advising that the debtor may challenge the debt validity within 30 days or demand the name and address of the original creditor if it is, as here, different from the notifying creditor. In addition, if the debtor notifies the debt collector in writing of a dispute about the debt's validity, the debt collector must obtain and provide verification of the debt by mail. Moreover, when the debt's validity is disputed, the creditor must cease collection of the debt until such documentation is provided.⁶ 15 U.S.C. § 1692g. Under the record presented, the petition and summons were the initial communication with Mendus.

¶ 13 The Act imposes conformity with its notification requirements "within five days after the initial communication with a consumer." The word "communication" is defined as "the conveying of information regarding a debt directly or indirectly to any person through any medium." 15 U.S.C. § 1692a(2).

¶ 14 It is here noted that the Federal Trade Commission in 1989, published a nonbinding "Commentary" which states in part:

1. Coverage (Sections 803(2, 5, 6), 811)

Attorneys or law firms that engage in traditional debt collection activities . . . are covered by the FDCPA, but those whose practice is limited to legal activities are not covered. Similarly, filing or service of a complaint or other legal paper (or transmission of a notice that is a legal prerequisite to enforcement of a debt) is not a `communication' covered by the FDCPA, but traditional collection efforts are covered.

. . . .

Section 803 — Definitions

. . . .

2. Exclusions. The term [communication] does not include formal legal action (e.g., filing of a lawsuit or other petition/pleadings with a court; service of a complaint or other legal papers in connection with a lawsuit, or activities directly related to such service.)

. . . .

Section 809(a) requires a collector, within 5 days of the first communication, . . .

6. Legal Action. A debt collector's institution of formal legal action against a consumer (including the filing of a complaint or service of legal papers by an attorney in connection with a lawsuit to collect a debt). . . is not a `communication in connection with collection of any debt', and thus does not confer section 809 notice-and-validation rights on the consumer.

53 F.R. 50097, 50100, 50101, 50108.

¶ 15 The FTC Commentary also notes that an attorney may take legal action within the 30-day period after sending the notice. If the consumer disputes the debt's validity, the attorney, according to the Commentary, may still take legal action but must cease other collection efforts. 53 F.R. 50097, 50101.

¶ 16 It is to be noted and emphasized that reliance placed upon the nonbinding FTC Commentary in light of Heintz v. Jenkins, 514 U.S. 291, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995), is done so at the debt collector's peril. Heintz specifically rejected that part of the Commentary which read "Attorneys or law firms that engage in traditional debt collection activities . . . are covered by the FDCPA, but those whose practice is limited to legal activities are not covered." 514 U.S. at 298, 115 S.Ct. 1489. The Court also rejected arguments based upon statutory language and legislative history in reaching...