Conner v. Howe

• Decision Date: 08 November 2004
• Docket Number: No. IP 02-0287-C-B/S.,IP 02-0287-C-B/S.
• Court: U.S. District Court — Southern District of Indiana
• Parties: Paul CONNER, Plaintiff, v. Howard HOWE, Defendant.

344 F.Supp.2d 1164

Paul CONNER, Plaintiff, v. Howard HOWE, Defendant.

No. IP 02-0287-C-B/S.

United States District Court, S.D. Indiana, Indianapolis Division.

November 8, 2004.

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Clifford W. Shepard, Clifford W. Shepard, Indianapolis, IN, for Plaintiff.

Todd J. Kaiser, Ogletree Deakins Nash Smoak & Stewart PC, Indianapolis, IN, for Defendants.

ENTRY

BARKER, District Judge.

This case is before the Court on a motion to dismiss for lack of subject matter jurisdiction and cross motions for partial summary judgment. Plaintiff, Paul Conner, has moved for summary judgment pursuant to Fed.R.Civ.P. 56 with respect to his claims under the Federal Debt Collection Practices Act, 15 U.S.C. § 1692 et. seq. ("FDCPA"). In response, Defendant, Howard Howe, counters that this court should dismiss the complaint pursuant to Fed.R.Civ.P.12(b)(1) because it lacks subject matter jurisdiction. Howe further argues that any FDCPA violation must be excused in light of a bona fide error defense. In addition, Howe has filed his own counter motion for summary judgment seeking judgment in his favor on Conner's pendent state laws claims of statutory deception, attorney deception and abuse of process.

BACKGROUND

This case grows out of a "payday" loan transaction that Defendant, an attorney, was hired to collect when Plaintiff, the borrower, defaulted. A "payday" lender accepts post-dated checks from borrowers in exchange for smaller cash payouts up front. If a borrower does not repay the loan earlier, the loan is considered paid when the post-dated check is deposited and clears the bank.

On October 3, 2000, Paul Conner entered into a "payday" loan agreement with Instant Cash Advance ("ICA"), a company engaged in the business of making such loans and formerly a co-defendant in this litigation. In February of 2000, Conner filed a Chapter 13 bankruptcy petition and, at the time he entered into the payday loan arrangement at issue, the bankruptcy was still pending. Conner's October 3, 2000 payday loan was in the amount of $150.00, which amount he received in exchange for his post-dated check in the total amount of $183.00. The amount of the post-dated check received by ICA includes the amount of the cash provided as well as a pre-determined finance charge. The terms of this transaction compute to an annual interest rate of 286.79%. Conner's post-dated check to ICA was returned for insufficient funds, which became the debt that Defendant Howe, the attorney, was engaged to collect.

Howard Howe is engaged in the regular practice of law, collecting unpaid debts on behalf of clients. In order to recover on this particular loss, ICA sent notice to Howe of the debt owed to it by Conner, and on September 12, 2001, Howe filed a lawsuit against Conner to collect the amount due on the NSF check written by Conner to ICA. Howe's lawsuit against Conner sought treble damages from Conner, pursuant to Ind.Code § 34-4-30-1. This lawsuit against Conner was ultimately dismissed on October 1, 2001 without prejudice, due to the effect of the automatic stay emanating from Conner's bankruptcy.

Approximately three weeks prior to Howe's filing of the lawsuit against Conner on behalf of ICA, on August 16, 2001, the Indiana Supreme Court decided the case of Livingston v. Fast Cash USA, Inc., 753 N.E.2d 572 (Ind.2001). In Livingston, the Court ruled on a certified question submitted by several federal district court judges who were presiding over class action law suits in their courts that had been brought against lenders. The class actions arose under Indiana statutes relating to high interest rates that were being assessed on payday loans. In Livingston, the Court held that payday lenders, like ICA, were imposing finance charges in excess of those allowed by the Indiana Uniform Consumer Credit Code and that when a finance charge exceeds 72% of the loan principal, the lenders are engaging in loan sharking, in violation of IC § 35-45-7-2.

After being sued by Howe for collection of the debt, Conner filed this lawsuit in federal court against Howe, ICA, and two other individuals affiliated with ICA, alleging violations of state and federal law. In an October 3, 2003 settlement agreement with ICA and co-defendants David Klain and Sarann Warner, Conner received $4,000 in exchange for a dismissal and release among other things, of all claims in any manner arising out of or related to those claims, matters, and facts set forth or described in this lawsuit. The terms of the release specifically excluded Howe as a released party, leaving him as the sole remaining defendant in this case.

STANDARD OF REVIEW

When a party challenges a district court's subject matter jurisdiction, the party invoking jurisdiction has the burden of establishing that all jurisdictional requirements have been satisfied. Kontos v U.S. Dept. of Labor, 826 F.2d 573, 576 (7th Cir.1987). When deciding a Fed.R.Civ.P. 12(b)(1) motion, the court must accept as true all well-pleaded factual allegations and draw all reasonable inferences in favor of the plaintiff. Ezekiel v. Michel, 66 F.3d 894, 897 (7th Cir.1995). Nevertheless, the court may look beyond the jurisdictional requirements of a complaint and consider whatever evidence has been submitted by the parties on the issue to determine whether subject matter jurisdiction exists. Id.

Summary judgment is appropriate where the pleadings, depositions, answers to interrogatories and admission on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). A genuine issue of material fact exists if there is sufficient evidence for a reasonable jury to return a verdict in favor of the non-moving party on a particular issue. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). With a motion for summary judgment, the burden rests on the moving party to demonstrate that there is an absence of evidence to support the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 322-323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). After the moving party demonstrates the absence of a genuine issue for trial, the responsibility shifts to the non-movant to go beyond the pleadings to cite evidence which creates a genuine factual dispute on issues for which it has the burden of proof at trial, thereby precluding summary judgment. Id. at 322, 106 S.Ct. 2548; Liu v. T & H Machine, Inc. 191 F.3d 790, 796 (7th Cir.1999). If the non-movant does not come forward with evidence that would reasonably permit the finder of fact to find in his favor on a material question, the court must enter summary judgment against him. Celotex, 477 U.S. at 322, 106 S.Ct. 2548.

ANALYSIS

A. SUBJECT MATTER JURISDICTION

Howe has moved to dismiss Conner's FDCPA claims for lack of subject matter jurisdiction, contending that: (1) Conner has been compensated by previously released parties for acts upon which his federal claims are based resulting in there being no remaining case or controversy; (2) alternatively, Howe contends he is entitled to an equitable credit which would negate any remaining case or controversy; and (3) the bankruptcy court is the exclusive venue in which Conner may seek relief.

1. Effect of Prior Release & Settlement with Co-Defendants on Ongoing Case or Controversy

Howe contends that Conner's relief, and thus all his claims, are premised on one act, his filing of the underlying lawsuit against Conner on behalf of ICA. Since Conner has already been compensated by settlement for any injuries resulting from that one central and controlling act, Howe maintains that no case or controversy continues to exist with respect to Conner's FDCPA claims. Howe's argument rests on the premise that all the original defendants were jointly and severally liable and acted in concert to cause the alleged single harm. When several independent actors concurrently or consecutively produce a single, indivisible injury, each actor is held jointly responsible for the entirety of damages resulting from the concerted activity. Watts v. Laurent, 774 F.2d 168, 179 (7th Cir.1985).

To eliminate abusive debt collection practices, Congress enacted in 1968 the FDCPA. See 15 U.S.C. § 1692(a). Under the terms of the statute, the damages available for a violation include any actual damages and an amount not to exceed $1,000 in additional damages, as determined by the court based upon its review of the frequency, persistence and nature of any noncompliance by the debt collector. 11 U.S.C. § 1692k. Generally, courts agree that this $1,000 limitation prevents a plaintiff from recovering more than $1,000 in additional damages per proceeding, no matter how many provisions of the FDCPA a debt collector violated. Peter v. GC Services L.P., 310 F.3d 344, 352 n. 5 (5th Cir.2002); Wright v. Finance Service of Norwalk, Inc., 22 F.3d 647, 650 (6th Cir.1994); Raimondi v. McAllister & Associates, Inc., 50 F.Supp.2d 825, 828 (N.D.Ill.1999). Howe refers us to a recent decision by Judge Richard L. Young of our court interpreting the $1,000 limitation as preventing a recovery of more than $1,000 in additional damages, regardless of the number of debt collectors jointly involved in violating the Act. See Adams v. Pollard, IP 01-1929-C-Y/K, Entry On Defendants Motion To Dismiss And Motion For Summary Judgment (S.D.Ind. Sept. 25, 2003).

In Adams, multiple debt collectors were accused of jointly violating the FDCPA. Judge Young held that when a Plaintiff has received the maximum compensation permitted under the statute from a single debt collector source, there is no longer a case or controversy under the FDCPA upon which the court may base continued subject matter jurisdiction. Id at 8. While we are informed by Judge Young's insightful analysis and discussion, we perceive a significant distinction...