Bradshaw v. Hilco Receivables Llc

• Decision Date: 23 February 2011
• Docket Number: Civil Action No. RDB–10–113.
• Citation: 765 F.Supp.2d 719
• Parties: Wayne A. BRADSHAW, et al., Plaintiffs,v.HILCO RECEIVABLES, LLC, Defendant.
• Court: U.S. District Court — District of Massachusetts

765 F.Supp.2d 719

Wayne A. BRADSHAW, et al., Plaintiffs,

v.HILCO RECEIVABLES, LLC, Defendant.

Civil Action No. RDB–10–113.

United States District Court, D. Maryland.

Feb. 23, 2011.

Scott C. Borison, Janet Sue Legg, Phillip Rease Robinson, Legg Law Firm LLC, Frederick, MD, Douglas B. Bowman, Middletown, MD, Michael Gregg Morin, Michael G. Morin Attorney at Law, Severn, MD, Peter A. Holland, The Holland Law Firm PC, Annapolis, MD, for Plaintiffs.Boyd W. Gentry, Surdyk Dowd and Turner Co. LPA, Miamisburg, OH, James M. Connolly, Kramer and Connolly, Reisterstown, MD, for Defendant.

MEMORANDUM OPINION

RICHARD D. BENNETT, District Judge.

Plaintiff Wayne A. Bradshaw filed this action, on behalf of himself and all others similarly situated, against Defendant Hilco Receivables, LLC, for alleged unlawful debt collection practices. Currently pending before this Court is Plaintiff's Motion for Partial Summary Judgment as to Liability Only on Counts II, III, & IV of the Complaint (ECF No. 16). Also pending is Defendant Hilco Receivables, LLC's Cross Motion for Summary Judgment (ECF No. 22). This Court has reviewed the record, as well as the pleadings and exhibits, and conducted a hearing on February 7, 2011 pursuant to Local Rule 105.6 (D.Md. 2010). For the reasons stated below, Plaintiff's motion is GRANTED, and Defendant's Motion is DENIED with respect to Counts II, III, and IV. Defendant's Motion is partially GRANTED with respect to Count I in which the Plaintiffs have sought injunctive and declaratory relief.

BACKGROUND

On September 17, 2009, Wayne A. Bradshaw (“Plaintiff” or “Bradshaw”) filed this class action lawsuit in the Circuit Court for Frederick County, Maryland, seeking damages and declaratory and injunctive relief against Defendant Hilco Receivables, LLC (“Defendant” or “Hilco”). Bradshaw alleges that Hilco acted as a debt collector in the State of Maryland without a license and that Hilco unlawfully filed lawsuits against Plaintiff and others (collectively “Plaintiffs”) as part of its debt collection practices. Bradshaw contends that Hilco, through its actions, violated the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., the Maryland Consumer Debt Collection Act (“MCDCA”), Md.Code Ann., Com. Law § 14–201 et seq. , and the Maryland Consumer Protection Act (“MCPA”), Md.Code Ann., Com. Law § 13–101 et seq. On January 15, 2010, Hilco removed Bradshaw's lawsuit to this Court on the basis of federal question jurisdiction under 28 U.S.C. § 1331.

The Plaintiff class, as represented by Bradshaw, consists of all persons in the State of Maryland who within three years prior to the filing of the initial complaint were contacted by Hilco in connection with any effort to collect a debt. See Pls.' Mot. Certify Class 1, ECF No. 15; Order Granting Class Certification, ECF No. 44.

On June 17, 2009, Hilco filed suit (the “Underlying Lawsuit”) against Bradshaw in the District Court of Maryland for Frederick County in order to collect a debt that it purchased from Bradshaw's creditors after the debt went into default.¹ Likewise, Plaintiffs allege that Hilco regularly pursues litigation against Maryland debtors to collect defaulted debts purchased by Hilco. Pls.' Mot. Summ. J. 7, ECF No. 16–1. At the heart of Plaintiffs' case is their contention that in filing suit against Maryland debtors, Hilco acted as a “collection agency” and thereby violated Maryland and federal law as a result of its failure to obtain a license required by Maryland law.²

Plaintiffs argue that they suffered actual damages under their state law causes of action and that they are entitled to statutory damages under the federal FDCPA. Plaintiffs have moved for partial summary judgment as to liability only on Counts II, III, and IV of the Complaint. Hilco has cross moved for summary judgment, and argues, inter alia, that it was not required to be licensed as a collection agency, that filing of lawsuits in state court is not “collection activity,” and that even if it was required to obtain a license, that failure alone, does not constitute a per se violation of the FDCPA, and finally, that it is entitled to summary judgment on Plaintiffs' state law causes of action.

STANDARD OF REVIEW

Rule 56 of the Federal Rules of Civil Procedure provides that a court “shall grant summary judgment if the movant shows that there is 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(c). A material fact is one that “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine issue over a material fact exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. In considering a motion for summary judgment, a judge's function is limited to determining whether sufficient evidence exists on a claimed factual dispute to warrant submission of the matter to a jury for resolution at trial. Id. at 249, 106 S.Ct. 2505.

In undertaking this inquiry, this Court must consider the facts and all reasonable inferences in the light most favorable to the nonmoving party. Scott v. Harris, 550 U.S. 372, 378, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007). However, this Court must also abide by its affirmative obligation to prevent factually unsupported claims and defenses from going to trial. Drewitt v. Pratt, 999 F.2d 774, 778–79 (4th Cir.1993). If the evidence presented by the nonmoving party is merely colorable, or is not significantly probative, summary judgment must be granted. Anderson, 477 U.S. at 249–50, 106 S.Ct. 2505. This Court has previously explained that a “party cannot create a genuine dispute of material fact through mere speculation or compilation of inferences.” Shin v. Shalala, 166 F.Supp.2d 373, 375 (D.Md.2001) (citations omitted).

When both parties file motions for summary judgment, as here, the court applies the same standard of review to both motions, with this Court considering “each motion separately on its own merits to determine whether either [side] deserves judgment as a matter of law.” Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir.2003); see also havePower, LLC v. Gen. Elec. Co., 256 F.Supp.2d 402, 406 (D.Md.2003) (citing 10A Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 2720 (3d ed. 1983)).

ANALYSIS

This Court has jurisdiction over this matter pursuant to 15 U.S.C. § 1692k(d) and 28 U.S.C. § 1331 because Plaintiffs' claims constitute a federal question arising under the FDCPA. This Court has supplemental jurisdiction over Plaintiffs' state law claims under 28 U.S.C. § 1367(a). Because the basis for this Court's jurisdiction arises under the FDCPA claims, those claims will be discussed first, with the state law claims to follow. As the parties' arguments overlap to a significant degree, and for the sake of clarity and brevity, the parties' claims and arguments will be discussed together in the following sections, with the understanding that each motion will be considered on its own merits.

As a preliminary matter, during oral argument heard on February 7, 2011, both parties acknowledged that the issues set forth in the respective motions for summary judgment are legal issues and present no genuine issues of material fact that would foreclose this Court from rendering judgment. Essentially, this Court is asked to determine whether Hilco's filing of lawsuits in Maryland state court without a debt collection license constitutes violations of the FDCPA, the MCDCA, and the MCPA. For the reasons set forth below, this Court finds that in failing to obtain a license and nevertheless filing lawsuits to collect debt, Hilco violated the FDCPA and the respective state statutes.

I. Plaintiffs' Fair Debt Collection Practices Act (FDCPA) Claims (Count IV)

The FDCPA safeguards consumers from abusive and deceptive debt collection practices by debt collectors. Spencer v. Hendersen–Webb, Inc., 81 F.Supp.2d 582, 590 (D.Md.1999) (citing United States v. Nat'l Fin. Servs. Inc., 98 F.3d 131, 135 (4th Cir.1996)). The FDCPA regulates debt collectors who “regularly collect or attempt to collect, directly or indirectly, [consumer] debts owed or due another.” Heintz v. Jenkins, 514 U.S. 291, 294, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995) (quoting 15 U.S.C. 1692a(6)). Section 1692a(6) provides in relevant part: “The term ‘debt collector’ means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another....” It is clear that Hilco is a debt collector within the meaning of 15 U.S.C § 1692a(6) and has engaged in collection activity as a result of its initiation of state court lawsuits brought against Bradshaw and the class members. See Heintz, 514 U.S. at 297, 115 S.Ct. 1489 (holding that litigation to collect a debt is collection activity under the FDCPA); see also Sayyed v. Wolpoff & Abramson, 485 F.3d 226, 230 (4th Cir.2007); LeBlanc v. Unifund CCR Partners, 601 F.3d 1185, 1193 (11th Cir.2010) (summarily rejecting debt collector's claim that filing lawsuits to collect debt is not “collection activity” under the FDCPA).

It is well established that “the threshold requirement for application of the [FDCPA] is that prohibited practices are used in an attempt to collect a debt.” Mabe v. G.C. Servs. Ltd. P'ship, 32 F.3d 86, 87–88 (4th Cir.1994). The FDCPA prohibits the use of any “false, deceptive, or misleading representation or means in connection with the collection of any debt,” 15 U.S.C. § 1692e, and provides a non-exhaustive list of conduct that violates the FDCPA, including “[t]he threat to take any action that cannot legally be taken.” 15 U.S.C. § 1692e(5). The FDCPA is a strict...