Gonzalez v. Cullimore

• Decision Date: 26 February 2018
• Docket Number: No. 20160373,20160373
• Parties: Tamera GONZALEZ, Sebastian Gonzalez, and Maria Antonieta Gujardo, Appellants, v. Kirk CULLIMORE, Jr.; The Law Offices of Kirk A. Cullimore, Appellees. Pemberley at Robinson’s Grove Condominium Unit Owners Association, Plaintiff, v. Tamera Gonzalez, Defendant.
• Court: Utah Supreme Court

417 P.3d 129

Tamera GONZALEZ, Sebastian Gonzalez, and Maria Antonieta Gujardo, Appellants,

v.Kirk CULLIMORE, Jr.; The Law Offices of Kirk A. Cullimore, Appellees.

Pemberley at Robinson’s Grove Condominium Unit Owners Association, Plaintiff,

v.Tamera Gonzalez, Defendant.

No. 20160373

Supreme Court of Utah.

Filed February 26, 2018

Brian W. Steffensen, Salt Lake City, for appellants

Kirk Cullimore, Derek J. Barclay, Kirk A. Cullimore, Jr., Sandy, for appellee

Chief Justice Durrant authored the opinion of the Court, in which Associate Chief Justice Lee Himonas, Justice Pearce and Judge Hyde joined.

Due to her retirement, Justice Durham did not participate herein; and District Court Judge Noel S. Hyde sat.

Justice Petersen became a member of the Court on November 17, 2017, after oral argument in this matter and accordingly did not participate.

On Direct Appeal

Chief Justice Durrant, opinion of the Court:

Introduction

¶ 1 Tamara Gonzalez, an owner of a condominium unit within Pemberley at Robinson’s Grove Condominium Unit Owners Association (Association), allegedly fell behind on paying her Association assessment fees. The Association hired a law firm to collect on the delinquent fees. The firm sent demand letters to Ms. Gonzalez, who upon receipt of the letters, claimed that the letters misrepresented the amount she actually owed. When negotiations between the Association and Ms. Gonzalez fell through, the Association again contacted the law firm for collection services, and the firm subsequently filed a lawsuit against Ms. Gonzalez on behalf of the Association. After several years of proceedings, Ms. Gonzalez brought a counterclaim against the law firm, asserting, in addition to other claims, that the law firm had violated § 1692e of the Fair Debt Collection Practices Act (FDCPA)¹ by misrepresenting the character, amount, and legal status of the debt she owed in the law firm’s demand letters and in its complaint.

¶ 2 The law firm brought a motion for summary judgment on the counterclaims and the trial court granted the motion in part, dismissing Ms. Gonzalez’s § 1692e counterclaims. In support of its dismissal, the court relied on a Utah Court of Appeals decision, Midland Funding LLC v. Sotolongo ,² which held that the FDCPA was not a strict liability statute and that a debt collector may rely on its client’s representations of the amount of the debt owed without incurring FDCPA liability. The district court held, pursuant to Midland Funding , that the law firm relied on the Association’s representation and so was not liable under § 1692e of the FDCPA.

¶ 3 Ms. Gonzalez appeals the district court’s dismissal of her § 1692e claims and also contends that we should abrogate the holding in Midland Funding . She argues that the Midland Funding court applied the wrong standard for evaluating § 1692e claims. She further argues that her § 1692e claims should be evaluated under a strict liability standard (a standard in which a debtor is not required to show that a debt collector intended or had knowledge that it was misrepresenting the character or amount of the debt) and that the district court was therefore wrong in dismissing her claims merely because the law firm produced evidence showing that it had relied on the representations it had received from the Association. Ms. Gonzalez asks this court to overturn Midland Funding and to reverse the district court’s partial grant of summary judgment.

¶ 4 We hold that the court of appeals erred in the standard it applied to § 1692e claims and accordingly abrogate Midland Funding . Not only does Midland Funding misstate the Ninth Circuit Court of Appeals’ standard for § 1692e claims, but the standard set forth in Midland Funding clearly contradicts the language of the FDCPA. Additionally, a strict liability interpretation of § 1692e is consistent with § 1692k(c) of the FDCPA. That section creates an affirmative defense to strict liability for "bona fide errors"—those errors that are unintentional and not preventable by procedures the debt collector should have in place to check the accuracy of representations made to it by clients. Reading a scienter requirement into § 1692e, as Midland Funding suggests, would render § 1692k(c) superfluous—an action we should avoid. We accordingly follow the overwhelming majority of courts and hold § 1692e claims to a strict liability standard.³

¶ 5 Even under a strict liability standard, however, a plaintiff is still required to make a threshold showing that a misrepresentation occurred under the FDCPA. And, because the law firm was the moving party on summary judgment in this case, it bore the initial burden of showing that it did not engage in an act prohibited by the FDCPA—or, in other words, that there is no genuine issue of material fact as to its claims that it made no false representation of the character, amount, or legal status of Ms. Gonzalez’s debt. Yet the district court failed to determine whether the law firm had met its initial burden. We therefore remand the case to the district court to make such determination.

Background

¶ 6 Tamara Gonzalez purchased a condominium unit in 2006 located within Pemberley at Robinson’s Grove in Pleasant Grove, Utah. She purchased her unit subject to a validly recorded Declaration of Condominium, a document containing certain covenants, conditions, and restrictions on the property, one of which required the payment of monthly assessments to cover maintenance and services provided by the Condominium Unit Owners Association. The Declaration also provided that a unit owner would be liable to the Association for late payment fees, interest, and cost incurred in collecting on delinquencies of such assessments, including reasonable attorney fees. Sometime in 2009, Ms. Gonzalez allegedly fell behind on her assessment payments. In November 2009, the Association hired the Law Office of Kirk A. Cullimore (the Cullimore firm) to collect on Ms. Gonzalez’s delinquent assessments. At the time the Cullimore firm was hired, Sam Bell, an attorney for the Cullimore firm, reviewed the Association’s ledger to see if Ms. Gonzalez was in arrears. Shortly thereafter, the Cullimore firm sent Ms. Gonzalez demand letters, notifying her that her account with the Association was in arrears and demanding payment. The Cullimore firm also recorded a lien on her unit, pursuant to the Declaration. After receiving these letters, Ms. Gonzalez contacted the Cullimore firm and the Association by phone and disputed the amount of the debt represented by the Cullimore firm. Thereafter, Ms. Gonzalez and the Association entered an oral payment agreement, but the agreement soon fell apart.

¶ 7 In January 2010, the Association again hired the Cullimore firm to commence collection proceedings on Ms. Gonzalez’s delinquent fees. Mr. Bell, who was still working for the Cullimore firm, again checked the Association’s ledger to confirm that Ms. Gonzalez’s account with the Association was delinquent. The Cullimore firm then filed a lawsuit on behalf of the Association on March 12, 2010. Ms. Gonzalez failed to file an answer within the prescribed time and a default judgment order was entered against her on March 14, 2011. Mr. Bell thereafter left the Cullimore firm and started SEB Legal, LLC. The Association transferred its business, including Ms. Gonzalez’s collection lawsuit, to SEB Legal, who represented the Association through the rest of its litigation.

¶ 8 After two years of negotiations and proceedings, the parties eventually stipulated to setting aside the original default judgment against Ms. Gonzalez. The district court set aside the judgment and granted Ms. Gonzalez leave to answer and make counterclaims. Ms. Gonzalez filed her answer and counterclaim on December 15, 2013, asserting claims under the FDCPA against the Law Office of Kirk A. Cullimore and Kirk A. Cullimore, Jr. (collectively, Cullimore) and SEB Legal, LLC, Sam Bell, and Jayln Peterson (collectively, SEB). Ms. Gonzalez’s counterclaim included, among others, claims under § 1692e of the FDCPA for false representation of the character, amount, and legal status of the debt she owed. Specifically, Ms. Gonzalez argued that SEB and Cullimore had falsely represented the amount she owed the Association in the demand letters she received and in the lawsuit commenced against her. She also asserted that both law firms continued to falsely represent the amount and character of the debt she owed throughout the course of litigation. Ms. Gonzalez attached to her counterclaim a detailed accounting of the assessment payments she owed and those she paid during the years of 2009 to 2013. She also attached a verification statement, in which she swore, under penalty of perjury, that the factual allegations within her counterclaim were true and that she did not owe the amount claimed by the Association, SEB, or Cullimore.

¶ 9 Both SEB and Cullimore filed motions for summary judgment seeking to dismiss Ms. Gonzalez’s § 1962e counterclaims. In support of these motions, the law firms provided the court with the Association’s ledger on Ms. Gonzalez’s account, a copy of the Declaration, Ms. Gonzalez’s warranty deed, and an affidavit signed by Mr. Bell stating that he had verified Ms. Gonzalez’s arrearage on the Association’s ledger when Cullimore initially received her file from the Association in November 2009, and again in January 2010, before Cullimore filed suit against Ms. Gonzalez with the district court. Ms. Gonzalez filed memoranda in opposition to these summary judgment motions and provided the court, through reference to her counterclaim, with a detailed spreadsheet illustrating the payments she allegedly had made to the Association from 2009 to 2013, her calculated delinquency for each month, as well as a sworn statement from Ms. Gonzalez affirming that the facts alleged in the counterclaim were true and that she did not owe the purported amount.

¶ 10 The trial court granted both motions in part and...