Fox v. Citicorp Credit Services, Inc., 91-16476

Decision Date01 February 1994
Docket NumberNo. 91-16476,91-16476
PartiesAaron FOX; Toni Fox, husband and wife, Plaintiffs-Appellants, v. CITICORP CREDIT SERVICES, INC., a South Dakota corporation; Jerold Kaplan; Jane Doe Kaplan, husband and wife, Defendants-Appellees.
CourtU.S. Court of Appeals — Ninth Circuit

Esther B. Simon and Peter M. Balsino, Aron & Simon, Tucson, Arizona, for the plaintiffs-appellants.

John M. Iurino and Janet Napolitano, Lewis & Roca, Tucson, Arizona, for the defendants-appellees.

Appeal from the United States District Court for the District of Arizona.

Before: FLETCHER, REINHARDT, and NOONAN, Circuit Judges.

REINHARDT, Circuit Judge:

Aaron and Toni Fox appeal the entry of summary judgment in favor of defendants on four claims of violation of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. Secs. 1692 et seq., and on three state-law claims. We affirm summary judgment as to the Foxes' breach-of-contract claim, reverse summary judgment as to the other claims, and remand.

I. Background

In 1986, the Foxes defaulted on their credit card debt with an unpaid balance of $2300.31. Citibank referred the matter for collection to Citicorp Credit Services ("Citicorp"), which in turn retained attorney Jerold Kaplan. Kaplan, on behalf of Citicorp, filed an action against the Foxes in Maricopa County, Arizona. The Foxes, who reside in Pima County, Arizona, successfully moved to transfer the action. The action was dismissed without prejudice when Citicorp failed to pay a transmittal fee. Citicorp filed another suit in Maricopa County; like the preceding suit, it was transferred to Pima County. Eventually, in June 1989, the parties reached a stipulated judgment under which the Foxes were to pay $100 per month to pay off their debt.

The Foxes missed the initial payments. Ray Jacques, a Citicorp representative, contacted Toni Fox at her place of employment, and requested $400 to bring the payments current. A $400 check sent by the Foxes bounced, and Citicorp again contacted Toni Fox. In November 1989, Jacques informed her that the full balance was due and that Citicorp would proceed with garnishing her wages. Jacques then instructed Kaplan to proceed with garnishment. Kaplan apparently did not immediately do so.

In December 1989, another Citicorp representative, Arlene Marshall, newly assigned to the Fox account, contacted Toni Fox. Marshall indicated that Fox would have to express mail a $100 check within a week, and warned her that future failure to comply with payment arrangements would result in the full balance being due or payments being increased from $100 to $200 per month. The Foxes remitted $100.

The Foxes also sent $100 in January. Nonetheless, Marshall called Toni Fox after the payment was received, and told her that an additional $200 was needed or Citicorp would refer the account for garnishment. The Foxes contend that Toni Fox and Marshall agreed upon a new permanent payment schedule of $200 per month. Marshall then sent a request to Kaplan to proceed with garnishment if Citicorp did not instruct him otherwise by January 30, 1990. 1 The Foxes sent the $200. Toni Fox testified at her deposition that each time Marshall called, the tone was threatening and intimidating.

Although the Foxes again sent $200 in February--and were thus current in their payments--Kaplan was never contacted by Citicorp. He therefore proceeded with garnishment in February 1990. He sent a letter to Toni Fox indicating his intention to garnish her wages. The Foxes' attorney, Terry Aron, contacted Kaplan's office by telephone. By subsequent letter, Aron confirmed his understanding that no further action would be taken without first contacting him. Kaplan faxed a copy of the letter back to Aron with a handwritten note asking him to fax information about the Foxes' past payments to Kaplan's office. The note also stated that Kaplan would be out of the office until March 5, 1990.

Having received nothing from Aron, Kaplan filed an application for a writ of garnishment in the Maricopa County court on March 5, 1990. The writ issued and was served on Toni Fox's employer on March 8, 1990. Aron sent Kaplan letters regarding the Foxes' payments on March 6 and March 8. On March 8, 1990, realizing the Foxes were current in their payments, Kaplan quashed the writ of garnishment.

The Foxes brought suit against Citicorp and Kaplan under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. Sec. 1692 et seq., and under Arizona state law. The complaint alleged five FDCPA claims and seven state-law claims. Citicorp and Kaplan moved for summary judgment on all claims. On September 3, 1991, in a tersely-worded order, the district court granted summary judgment on all claims. The Foxes now appeal the grant of summary judgment on four FDCPA claims and three state-law claims. 2

II. Violation of FDCPA Venue Provision

Claim one in the Foxes' complaint alleges that both Citicorp and Kaplan violated the FDCPA by filing the March 1990 application for a writ of garnishment in the Maricopa County Superior Court rather than in Pima County where the Foxes reside. 3 The parties agree that a violation of the venue provision may support civil liability. See 15 U.S.C. Sec. 1692k. Section 1692i requires that a debt collector's legal action on a debt against a consumer be brought:

... only in the judicial district or similar legal entity--

(A) in which such consumer signed the contract sued upon; or

(B) in which such consumer resides at the commencement of the action.

15 U.S.C. Sec. 1692i(a)(2). The defendants concede that Maricopa County is neither the county in which the Foxes reside nor the county in which they signed any contract sued upon.

Nonetheless, the defendants raise several arguments in support of the entry of summary judgment on claim one. Some of these defenses are generally applicable to all FDCPA claims, while others are defenses specific to the venue claim. We address each of these contentions in turn, beginning with the theory adopted by the district court.

A. Exemption for Kaplan's "Purely Legal" Activity

Expressing concern that Kaplan may have violated the venue provision, the district court stated in its order that the FDCPA does not reach "a pure legal action." Of course, as a general matter, 15 U.S.C. Sec. 1692i plainly reaches "legal actions," specifying that actions by debt collectors against consumers must be brought in judicial districts to which the consumer has a specified tie. It is clear from the record, however, that what the district court had in mind was that attorneys engaged in activity of a "purely legal" nature were exempted from the statutory prohibitions. That is the theory upon which Kaplan relied. The argued exemption has its roots in the now-defunct all-purpose FDCPA attorney exemption.

As originally enacted in 1977, the FDCPA specifically excluded from the definition of "debt collector" "any attorney-at-law collecting a debt as an attorney on behalf of and in the name of a client." 15 U.S.C. Sec. 1692a(6)(F) (repealed 1986). In 1986, however, concerned that "attorneys have increasingly entered the debt collection business and used the exemption to evade compliance with the Act," Congress deleted the attorney provision. H.Rep. No. 405, 99th Cong., 1st Sess. 1-2 (1985), reprinted in 1986 U.S.C.C.A.N. 1752, 1752. Kaplan argues that, in repealing the provision, the legislature intended that the statute would thereafter apply to attorneys engaged in traditional collection practices of a non-legal nature but not to those engaged in purely legal activities--activities that can only be performed by an attorney--such as the filing of an application for a writ of garnishment.

Kaplan relies upon two district court decisions interpreting the legislative history of the 1986 attorney-exemption repeal. See Firemen's Ins. Co. v. Keating, 753 F.Supp. 1137, 1141-44 (S.D.N.Y.1990); National Union Fire Ins. Co. v. Hartel, 741 F.Supp. 1139, 1140-41 (S.D.N.Y.1990); see also Green v. Hocking, 792 F.Supp. 1064, 1065-66 (E.D.Mich.1992). These cases conclude that the Congress did not intend to expose to FDCPA liability "those attorneys acting in the role of legal counsel while representing clients." Keating, 753 F.Supp. at 1142; see also Green, 792 F.Supp. at 1065 (concluding that literal application of "debt collector" definition is at odds with legislative intent). On the basis of this perceived congressional intent, these cases hold that attorneys "engaged in activities only of a purely legal nature" are not "debt collectors" under the FDCPA. Hartel, 741 F.Supp. at 1141.

We decline to adopt this "phantom limb" theory of statutory interpretation--allowing an excised provision to continue to determine the scope of a statute. We are unwilling to assume that the Congress acted contrary to its intentions when it repealed the attorney exemption and enacted no substitute. Like the only other circuit to consider this creative residual attorney-exception, we conclude that it simply does not exist. The plain language of the statute unambiguously precludes any continued doctrine of special treatment for attorneys under the FDCPA. See Scott v. Jones, 964 F.2d 314 (4th Cir.1992).

In short, the attorney exemption is no longer a part of the statute; the fact that it was once a part of the statute does not alter the required approach to statutory construction. Applying our general rules of statutory construction to the FDCPA freed from the repealed limitation, neither the plain language of the Act nor its structure supports any exemption for attorneys' "purely legal" debt collection activities. See, e.g., Sacramento Regional County Sanitation Dist. v. Reilly, 905 F.2d 1262, 1268 (9th Cir.1990) (plain language is starting point of statutory construction); Seldovia Native Ass'n v. Lujan, 904 F.2d 1335, 1341 (9th Cir.1990) (to determine plain meaning court must look to language and...

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