Collection Bureau Services, Inc. v. Morrow

Decision Date06 April 2004
Docket NumberNo. 03-059.,03-059.
CourtMontana Supreme Court
PartiesCOLLECTION BUREAU SERVICES, INC., a Montana corporation, Plaintiff and Appellant, v. Ruth A. MORROW a/k/a Ruth A. Buckner, Defendant and Respondent.

For Appellant: Dennis E. Lind, Datsopoulos, MacDonald & Lind, Missoula, Montana.

For Respondent: S. Kim Taylor, Lucas & Tonn, Miles City, Montana.

For Amicus: Andrea J. Olson, ASUM Legal Services, Missoula, Montana.

Justice W. WILLIAM LEAPHART delivered the Opinion of the Court.

¶ 1 Collection Bureau Services, Inc. (Collection Bureau), filed a complaint on February 23, 2001, in Justice Court against Ruth Morrow (Morrow) to collect the face value, service charges, and statutory damages for eight checks she issued with insufficient funds in June of 2000. Morrow countered that Collection Bureau waived its right to seek $800 in statutory damages under § 27-1-717(3), MCA, and in pursuing such damages, it had violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692. After the Justice Court entered judgment in favor of Morrow, Collection Bureau appealed to the District Court. The District Court also granted summary judgment in favor of Morrow and, after a trial on damages, awarded actual damages, statutory damages, costs of suit and attorney fees to Morrow. Collection Bureau now appeals those two orders of the District Court. For the reasons stated below, we affirm the orders of the District Court.

FACTS

¶ 2 In June of 2000, Ruth Morrow issued eight bad checks for a total face value of $148.96. The checks ranged in value from $10.20 to $25.00. Three of the checks were to the Golden Spur, three to Pizza Hut, and one each to 4B's and Holiday. Those businesses engaged Collection Bureau to collect the unpaid value of the checks. In July 2000, Collection Bureau sent Morrow eight letters, one for each check demanding the face value plus a thirty dollar service charge. Adding the thirty dollar service charge to each of eight checks increased the amount Morrow owed by $240.00, more than doubling the amount from $148.96 to $388.96. On November 22, 2000, Collection Bureau sent Morrow another letter, which demanded payment of the entire balance of $388.96 and also stated:

YOU MAY EXPERIENCE DIFFICULTY WRITING CHECKS DUE TO THE UNPAID ITEMS. MT. CODE ANNOTATED 27-1-717 PROVIDES SPECIFIC LEGAL REMEDIES. CALL U.S. TO RESOLVE THIS.

On December 4, 2000, Morrow responded by sending a check for $25.00. She also included a note which stated: "I must have missed your bill in the mail. I will send 50.00 or more every two weeks until this is taken care of." Morrow next sent Collection Bureau a money order for $10.00 on January 4, 2001. That same day, Collection Bureau returned the money order with a letter which indicated the agreement was to pay $50.00 every two weeks. On January 16, 2001, Morrow made another $50.00 payment which Collection Bureau accepted, leaving a new balance of $313.96.

¶ 3 Morrow missed the next two promised payments, and on February 23, 2001, Collection Bureau filed suit in Justice Court. Collection Bureau's complaint prayed for a total of $1,113.96, reflecting the $313.96 balance owing for the face amount of the checks and service charges as well as the § 27-1-717(3), MCA, statutory damages of $100 for each of the eight checks for an additional $800.

¶ 4 On February 27, 2001, Morrow sent a payment of $150.00. On March 1, 2001, Morrow was served with Collection Bureau's complaint. The next day, she called Collection Bureau and spoke with Collection Bureau's employee Cody Kruger. Morrow asked whether or not they had received her payment and inquired into the reason for the suit. Kruger said they filed suit because of Morrow's failure to make the agreed-on payments. Morrow felt that because she had sent the money before being served, it should have been applied to reduce the $313.96 to $163.96. Kruger, however, was only willing to apply the $150.00 to reduce the total prayed for relief of $1,113.96. Kruger also indicated it might be possible to "knock off" a couple hundred dollars if Morrow paid in one lump sum, or in the alternative, Collection Bureau would accept regular payments of $50.00 on the amount prayed for in the complaint.

¶ 5 Throughout these proceedings, Morrow has only contested the statutory damages. She does not challenge the validity of the face value of the checks plus the service charges. The Justice Court ruled in favor of Morrow, reasoning that, by accepting partial payments instead of payment in full, Collection Bureau had waived its right to statutory damages and subsequently violated the FDCPA by pursuing such damages. On appeal, the District Court granted Morrow's motion for partial summary judgment, holding that Collection Bureau, in accepting partial payment, waived its right to the statutory damages and then violated the FDCPA by pursuing these damages. After a trial on Morrow's damages, the District Court awarded $40.00 actual damages, $1,000 statutory damages, costs of $183.75 and attorney fees in the amount of $17,000. Collection Bureau now appeals, claiming that the District Court erred in interpreting § 27-1-717, MCA, and that if it violated the FDCPA the bona fide error defense applies. 15 U.S.C. § 1692k(c).

STANDARD OF REVIEW

¶ 6 Our standard of review on appeals from summary judgment is de novo. Sherner v. Conoco, Inc., 2000 MT 50, ¶ 10, 298 Mont. 401,

¶ 10, 995 P.2d 990, ¶ 10. We apply the same evaluation as the district court based on Rule 56, M.R.Civ.P. Danelson v. Robinson, 2003 MT 271, ¶ 11, 317 Mont. 462, ¶ 11, 77 P.3d 1010, ¶ 11. We review a trial court's legal conclusions to determine whether they are correct. Gonzales v. Walchuk, 2002 MT 262, ¶ 9, 312 Mont. 240, ¶ 9, 59 P.3d 377, ¶ 9. Our standard of review for a question of law is plenary. In re Marriage of Robison, 2002 MT 207, ¶ 15, 311 Mont. 246, ¶ 15, 53 P.3d 1279, ¶ 15.

DISCUSSION
Part I: Waiver

¶ 7 Before addressing the Fair Debt Collection Practice Act violations, we first address waiver. We conclude, as did the District Court, that Collection Bureau waived its right to statutory damages.

¶ 8 Montana provides various statutory remedies for the payee or the payee's assignee of a dishonored draft. Section 27-1-717, MCA. A payee may collect both the face value of the check and a service charge in a reasonable amount not to exceed $30. Furthermore, when a written demand is made for payment in full, but payment in full is not made, then the payee or its assignee may pursue statutory damages in an amount which is "equal to the service charge plus the greater of $100 or three times the amount for which the check, draft, or order was issued. However, damages may not exceed the value of the check, draft, or order by more than $500." Section 27-1-717(3), MCA. Before a payee on a dishonored check may seek statutory damages in court, it must demand payment in full and wait at least ten days. Section 27-1-717(4)(a), MCA.

¶ 9 The District Court held that Collection Bureau had waived its right to seek statutory damages. A waiver is the intentional and voluntary relinquishment of a known right, claim or privilege. Reiter v. Yellowstone County (1981), 192 Mont. 194, 202, 627 P.2d 845, 850. Statutorily-created rights may be waived.

Waiver of a benefit of a law. Anyone may waive the advantage of a law intended solely for his benefit. But a law established for a public reason cannot be contravened by a private agreement.

Section 1-3-204, MCA.

¶ 10 Although statutes creating rights for a public benefit are not subject to waiver, Rothwell v. Allstate Ins. Co., 1999 MT 50, ¶ 16, 293 Mont. 393, ¶ 16, 976 P.2d 512, ¶ 16 (employee indemnification statute, § 39-2-701(1), MCA, not subject to waiver) and State ex rel. Neiss v. Dist. Ct. (1973), 162 Mont. 324, 328, 511 P.2d 979, 981 (minimum wage is public benefit not subject to waiver), rights created for private benefits can be waived. In Matter of Gaither (1990), 244 Mont. 383, 389, 797 P.2d 208, 212, we held that the surviving widow's right to benefits under the workers' compensation laws was personal to her and thus she could waive or abandon those rights. In the present case, the right of a payee on a dishonored check to pursue statutory damages is a right created solely for the benefit of the payee and is thus subject to waiver under § 1-3-204, MCA.

¶ 11 Waiver may be proven by express declarations or by a course of acts and conduct so as to induce the belief that the intention and purpose was to waive. Kelly v. Lovejoy (1977), 172 Mont. 516, 520, 565 P.2d 321, 324. We have held that waiver may be established by conduct which manifests the intention to forego the benefit:

It may be proved by express declarations, or by acts and declarations manifesting an intent and purpose not to claim the supposed advantage, or by a course of acts and conduct, or by so neglecting and failing to act, as to induce the belief that it was his intention and purpose to waive.

Northwestern F. & M. Ins. Co. v. Pollard (1925), 74 Mont. 142, 149, 238 P. 594, 596.

¶ 12 In VanDyke Const. Co., v. Stillwater Mining Co., 2003 MT 279, ¶ 16, 317 Mont. 519, ¶ 16, 78 P.3d 844, ¶ 16, VanDyke's letters requesting arbitration were deemed a waiver of its right to subsequently object to the contract provisions requiring arbitration. The express conduct of the sellers in a real estate contract established waiver in Thiel v. Johnson (1985), 219 Mont. 271, 711 P.2d 829. Thiels, the sellers of a motel, expressly waived their right to receive certain monthly contract payments on time when the buyers communicated that, because of low winter months' revenue and an increase in utility rates, they were unable to make their monthly installment payments. Thiels said this was "fine" and that they were willing to work with the buyers as long as the interest payments were made on the underlying contract with the...

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