Lee v. Javitch, Block & Rathbone, Llp

• Decision Date: 07 November 2007
• Docket Number: No. 1:06-cv-585.,1:06-cv-585.
• Citation: 522 F.Supp.2d 945
• Court: U.S. District Court — Southern District of Ohio
• Parties: Norma LEE, Plaintiff, v. JAVITCH, BLOCK & RATHBONE, LLP, et al., Defendants.

522 F.Supp.2d 945

Norma LEE, Plaintiff, v. JAVITCH, BLOCK & RATHBONE, LLP, et al., Defendants.

No. 1:06-cv-585.

United States District Court, S.D. Ohio, Western Division.

November 7, 2007.

COPYRIGHT MATERIAL OMITTED

Stephen R. Felson, Cincinnati, OH, Steven Charles Shane, Bellevue, KY, for Plaintiff.

Michael D. Slodov, Javitch, Block & Rathbone LLP, Cleveland, OH, Vincent P. Antaki, Reminger & Reminger Co. LPA, Cincinnati, OH, for Defendants.

ORDER

SANDRA S. BECKWITH, Chief Judge.

Before the Court are several motions. Defendants seek summary judgment on all of Plaintiff's claims. (Doc. 49) Plaintiff opposes that motion (Doc. 69) and Defendant has replied. (Doc. 72) Plaintiff has filed a motion seeking partial summary judgment on liability only (Doc. 53), which Defendant opposes (Doe. 61), and to which Plaintiff has replied. (Doc. 71) Defendant has filed a motion to strike an affidavit attached to Plaintiffs partial summary judgment motion. (Doc. 58) The motion to strike has been fully briefed. (Does. 59, 65 and 68)

Plaintiff filed her motion for class certification (Doc. 42) shortly before the summary judgment motions were filed. Defendants oppose class certification (Doc. 52), and Plaintiff has replied and filed two supporting affidavits (Docs. 60, 66 and 67).

The Court has discretion to address the parties' summary judgment motions prior to determining the appropriateness of class certification. See, e.g., Thompson v. County of Medina, Ohio, 29 F.3d 238, 240-41 (6th Cir.1994). The Court concludes that resolving the dispositive motions first will assist in a more efficient resolution of the issues raised in all pending motions.

FACTUAL BACKGROUND

Someone named Norma Lee, who claimed to live at 10947 Birchridge Avenue, Cincinnati, Ohio 45240, signed an application for an "Aspire Diamond Visa" credit card on October 15, 2000. According to records of Columbus Bank & Trust Company, the issuer of the credit card, some charges were made and payments were received on that account. But by September 2002, the balance shown on the statement was $2,795.75, and the payments had stopped. (See Doc. 49, Exhibits B-1 and B-2) The record is silent concerning any efforts the Bank may have made to collect the past due amount.

Midland Funding LLC is a company that buys old or defaulted debts from other creditors, typically for significantly less than the face amount, a discount that probably reflects the uncertainty of collection. At some point, Midland Funding acquired this credit card account from Columbus B & T. On February 13, 2006, Midland referred the debt to Defendant Javitch, Block & Rathbone ("JB & R"), a law firm that regularly engages in debt collection for its clients. (See Doc. 49, Exhibit C, JB & R's confidential client history notes, reflecting that a JB & R file in the name of "Norma J. Lee" with the Birchridge address was opened on 2/13/2006.)

JB & R maintains standard procedures governing its debt collection practices. JB & R's partner Joel Rathbone designed and created a proprietary software program that permits JB & R staff to create a detailed history of each client file from the day it is received. (Doc. 49, Exhibit 5, Rathbone Decl., ¶¶ 9-13) JB & R typically receives file information from its clients in electronic form, which is uploaded directly to JB & R's database, while a hard copy is kept separately. Firm employees review all new files before the information is imported into the firm's database, to look for "possible statute of limitation issues, possible corrupt or incongruous data, and potential existing identity information on the same debtor contained in the system." (Rathbone Dec. 120) Any anomalous data is flagged for further review. The data received typically includes information about the original creditor, the debtor's last known address, Social Security number, birthdate, and may reveal if the debtor is employed or receiving Social Security benefits. Firm procedures require the electronic file to be continuously and contemporaneously updated to reflect all information received on that file.

According to JB & R's file history, a JB & R employee ordered a credit report on Norma Lee on February 16, 2006. JB & R received the report the next day, and it listed 1317 Landis Lane as Lee's current address. 10947 Birchridge Drive was listed as a "former" address. The credit report states that the Midland debt was "verified" in February 2006, listed three other collection matters, and identified four "trades" accounts. All four are listed as "closed," with one closed by the credit grantor with a balance shown. (Doc. 49, Exhibit F)

Once the client data is imported into the firm's database, the software system automatically generates an FDCPA-required debt validation notice.¹ JB & R's notice was sent to Norma Lee at the Birchridge address on February 16, prior to receipt of the credit report. According to the file history, the validation notice was not returned as undeliverable, and no response or objection to the notice was received within the statutory 30-day period. (Rathbone Dec. ¶ 28)

JB & R uses an automated telephone dialer program that places calls to a debtor's home number if available. Rathbone describes this automated dialer as programmed to call debtors "in accordance with call patterns approved by the managing partners, in an effort to establish contact with the debtor and to attempt to arrange voluntary payment. If a call is answered, it is connected to a call center desk and routed to the collection staff personnel responsible for the file." (Rathbone Dec. ¶ 32) JB & R's file history lists over fifty calls to a telephone number that JB & R obtained, and that no one responded to any of these calls. Plaintiff admitted that this phone number was hers during this time. (Doe. 49, Exhibit G, Plaintiffs Responses to Defendants' Requests for Admissions.)

On March 8, 2006, Lee's file was placed on what Rathbone calls a "suit approval review list." JB & R procedures provide that if the debtor cannot be contacted and no satisfactory payment arrangements are made, the file is reviewed for a possible collection lawsuit. The decision to file suit is based on "a combination of client work standards and the firm's standards, and all suit requests are reviewed by a supervisor or manager for approval." (Rathbone Dec. 137) JB & R paralegals prepare the pleadings by inputting information into program templates. The program calculates appropriate follow-up dates and deadlines. A suit against Lee was approved on March 25, 2006.

JB & R attorneys, rotate the responsibility for signing all legal pleadings filed by the firm's collection group. These "signing attorneys" rely almost exclusively on the firm's systems, processes, and trained staff to ensure that the pleadings are appropriate and accurate. In Lee's case, JB & R attorney Brian Block signed the collection complaint which was filed on April 11, 2006 in the Hamilton County Municipal Court. (Doc. 49, Exhibit 14) Certified mail service of the complaint to the Birchridge Drive address was returned "unclaimed" to the court, and regular mail service to the same address was sent on April 24. JB & R obtained a default judgment on June 14.

Rathbone testified that once a judgment is obtained, firm employees contact area banks to see if the judgment debtor has an account at the bank. He described an automated telephone system that can confirm if an account is open that matches the debtor's name and Social Security number, but apparently without revealing additional details about the account. (See Rathbone Deposition pp. 119-120.) On June 26, a JB & R "collector" called National City Bank, who confirmed that "Norma Lee" had an account at that bank. JB & R then prepared a non-wage garnishment affidavit naming NCB as the garnishee. The firm's rotating process for attorneys signing legal pleadings includes the responsibility for executing garnishment affidavits. In Lee's case, attorney Victor Javitch was "on duty" and signed the garnishment affidavit on June 28, 2006.

Non-wage garnishment is governed by Ohio statutes. Ohio Rev.Code 2716.11 requires a judgment creditor or its attorney to execute an affidavit stating:

(A) The name of the judgment debtor whose property, other than personal earnings, the judgment creditor seeks to garnish;

(B) That the affiant has a reasonable basis to believe that the person named in the affidavit as the garnishee may have property, other than personal earnings, of the judgment debtor that is not exempt under the law of this state or the United States;

(C) A description of the property.

Javitch signed an affidavit prepared by JB & R which stated that he

... has a reasonable basis to believe that the person named in the affidavit as the garnishee may have property, other than personal earnings, of the judgment debtor that is not exempt under the law of this state or the United States. The property is described as money, property or credits. The affiant's basis for believing the property is not exempt, is not based on knowledge of circumstances or facts regarding the judgment debtor's account, and is not the result of a legal assessment of the judgment debtor's right to seek/claim an exemption, and may be based in whole or in part on unverified assumptions.

(Doc. 1, Exhibit A) The affidavit was then filed in the municipal court action. A court garnishment order was issued, and NCB responded on July 17 by depositing $493.22 with the court. Plaintiff discovered the garnishment a few days later and contacted JB & R on July 24, stating the money in her account was from Social Security disability payments. These funds are exempt from execution under federal and state law. Lee's attorney then contacted JB & R stating that the collection complaint and notice of the garnishment had been sent to an old address, and that the garnished funds were exempt. JB & R agreed to release the garnishment. Two weeks later, Lee's...