Allison v. Mccabe Trotter & Beverly, P.C.
| Decision Date | 09 August 2018 |
| Docket Number | Civil Action No. 2:17-cv-1727-RMG |
| Court | U.S. District Court — District of South Carolina |
| Parties | Mills K. Allison and Caitlin M. Barca, a.k.a. Caitlin Barca Allison, Plaintiff, v. McCabe Trotter & Beverly, P.C., Defendant. |
This matter is before the Court on Defendant McCabe, Trotter & Beverly, P.C.'s ("MTB") motion for summary judgment (Dkt. No. 42). For the reasons set forth below, the Court grants the motion for summary judgment.
Plaintiffs Mills K. Alison and Caitlin M. Barca Allison (the "Allisons") live in Charleston National, a housing development. The development is subject to the Charleston National Community Association, a homeowners' association ("HOA") that charges annual assessments pursuant to the HOA's covenants and restrictions ("CRs"). (Dkt. No. 44 at 6.) The HOA employs Defendant MTB to represent it in the collection of assessments. (Dkt. No. 42-1 at 1.)
As owners in Charleston National, Plaintiffs are members of the HOA. (Dkt. No. 42 at 4.) The CRs further provide that the owners are obligated to pay annual assessments, interest, costs and reasonable attorneys' fees, all of which are a continuing lien on the land. (Id.) Most relevantly, the CRs detail what occurs if an owner fails to timely pay an assessment:
Section 9. Effect of Non-Payment of Assessments; Remedies of the Association. Any assessment not paid within thirty (30) days after the due date shall bear interest from the due date at a rate of eighteen (18%) percent per annum. The Association may bring an action at law against the Owner personally obligated to pay the same or foreclose the lien against the property and such Owner shall be responsible for all costs of collection, including reasonable attorneys' fees and expenses incurred whether before or after a suit for collection is brought.
(Dkt. No. 44-8 at 3.) (emphasis added). The CRs are enforced by the HOA through their property management company, Gold Crown Management ("Gold Crown"). (Id.)
On December 8, 2014, the HOA entered into an Attorney Employment Agreement ("fee agreement") with Defendant. (Dkt. No. 44 at 2; Dkt. No. 42-1 at 1.) The fee agreement makes clear that while Gold Crown manages the property, it is Defendant's job to pursue the "collection and foreclosure of liens and assessments." (Dkt. No. 42-1 at 1.) The fee agreement provides that actions to pursue unpaid assessments are handled "on a flat fee basis." (Id.) Upon instituting an action to recover unpaid assessments, including sending a letter to the owner and eventually filing a notice of lien, the fee agreement identifies two sets of fees. (Id. at 8.) First, Defendant charges the HOA a flat fee of $65. (Id. at 8.) Second, the fee agreement identifies $425 in "fees to Homeowner" which includes the $65 already paid by the HOA. (Id.) Defendant never generates an invoice for the remaining $360 of attorneys' fees unless and until it is collected from the homeowner. (Id. at 1.) The fee agreement itself is clear on this point: "The fees will not be invoiced until collected from the owner." (Id.) Therefore, under the payment regime in the fee agreement, the HOA never owes Defendant more than $65 out of pocket, and all of the HOA's costs are reimbursed upon collection from a Homeowner. (Id.; Dkt. No. 44 6 - 7.)
As of April 2017, Plaintiffs owed $431.32 in unpaid assessments and late fees. While prior statements had not reached Plaintiffs because their mailing address was incorrect in Gold Crown's system, it is undisputed that by April 4, 2017, Plaintiffs received a Statement of Account showing their outstanding amount. (Dkt. No. 34-12.) On April 12, 2017, Gold Crown sent a letter to Plaintiffs, informing them of their outstanding balance and stating that, (Dkt. No. 34-13.) At some point after receiving this letter, Plaintiffs prepared and sent a check for $431.32, noting on the memo line that it was for "Dues up to May '17." (Dkt. No. 1-1 at 25.) The check was dated April 14, 2017. (Id.) While there is some dispute over exactly when the Plaintiffs mailed the check, Plaintiffs have not disputed that the check was sent after April 22, 2017, after the ten days required by Gold Crown's letter.1
On April 28, 2017, Gold Crown gave the file to Defendant to pursue collection of the assessments. (Dkt. No. 44 at 10.) On May 2, 2017, Defendant opened a file and filed a notice of lien for $906.32.2 (Dkt. No. 1-1 at 27.) The $906.32 included the previously owed $431.32, a $50 administrative fee/collection cost, and $425 in legal fees from MTB. (Id.) Since the check dated April 14, 2017 arrived after Defendant had already added the $425 in legal fees, MTB returned the check to the Plaintiffs on May 3, 2017, with a letter reiterating that $906.32 was owed. (Dkt. No. 44 at 11.) Ultimately, on June 9, 2017, the Plaintiffs disputed the debt and asked Defendants to verify the amount. (Dkt. No. 44-11.) As of June 13, 2017, Defendants represented that Plaintiffs owed $918.70 based on newly incurred late fees. (Dkt. No. 44 at 14.) The Plaintiffs ultimately sent a check for $918.70 to Defendants on June 14, 2017. (Dkt. No. 44-13.) The HOA then paid Defendant's remaining $360 in attorneys' fees out of a trust account maintained by MTB. (Dkt. Nos. 42 at 17; 42-2 at 34.)
Plaintiffs allege that Defendant violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1601, by attempting to collect, and actually collecting, $425 in attorneys' fees, since the fees were never incurred and therefore were not owed. Plaintiffs also allege that Defendant violated the South Carolina Unfair Trade Practices Act ("SCUTPA"), S.C. Code Ann. § 39-5-10, et seq., when attempting to collect the $425 in attorneys' fees.
To prevail on a motion for summary judgment, the movant must demonstrate that there is no genuine issue of any material fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The party seeking summary judgment has the burden of identifying the portions of the "pleadings, depositions, answers to interrogatories, any admissions on file, together with the affidavits, if any, which show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The Court will construe all inferences and ambiguities against the movant and in favor of the non-moving party. U.S. v. Diebold, Inc., 369 U.S. 654, 655 (1962). The existence of a mere scintilla of evidence in support of the non-moving party's position is insufficient to withstand a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). However, an issue of material fact is genuine if the evidence is such that a reasonable jury could return a verdict in favor of the non-movant. Id. at 257.
"When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). "In the language of the Rule,the nonmoving party must come forward with 'specific facts showing that there is a genuine issue for trial.'" Id. at 587. "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no 'genuine issue for trial.'" Id. (quoting First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968)).
Plaintiffs argue that since the HOA will never pay more than $65 to the Defendants, $425 in attorneys' fees is never incurred under the terms of the CRs and therefore any attempt to collect $425 in attorneys' fees is a violation of the FDCPA. To make out a claim under the FDCPA, Plaintiffs must prove that:
(1) Plaintiffs have been the object of collection activity arising from consumer debt;
(2) Defendant is a debt collector as defined by the FDCPA, and;
(3) Defendant has engaged in an act or omission prohibited by the FDCPA
See Chatman v. GC Servs., LP, 57 F. Supp. 3d 560, 565 (D.S.C. 2014). In relevant part here, the FDCPA prohibits a debt collector from using "any false, deceptive, or misleading representation or means in connection with the collection of any debt," or from using "unfair or unconscionable means to collect or attempt to collect any debt." 15 U.S.C.A. § 1692(e); §1692(f). Courts must review whether a communication is misleading through the lens of the least sophisticated consumer, which is "an objective standard that evaluates § 1692e claims based upon how the least sophisticated consumer would interpret the allegedly offensive language." Russell v. Absolute Collection Servs., Inc., 763 F.3d 385, 394-95 (4th Cir. 2014). Plaintiffs additionally allege that by including the attorneys' fees on the collection letters, Defendant stated an incorrect amount of debt, in violation of FDCPA §§ 1692(g) and (j).
Defendant does not contest that it sought to collect a debt and that it is a debt collector as defined by the FDCPA. (Dkt. No. 42 at 18.) The only question, therefore, is whether Defendant violated the FDCPA by stating that the Plaintiff's owed $425 in attorneys' fees.
To begin with, Plaintiffs allege that Defendant violated the FDCPA by filing a notice of lien and seeking to collect attorneys' fees before any court had determined that attorneys' fees were owed. Filing a notice of lien for outstanding debts is a recognized practice under South Carolina law. See Erdogan v. Pres. at Charleston Park Homeowners Ass'n, Inc., No. 2:18-CV-00084-RMG, 2018 WL 3075825, at *3 (D.S.C. June 21, 2018) (collecting cases). Furthermore, while courts in the Fourth...
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