Lehmkuhl v. Bonneville Billing & Collections, Inc.
| Decision Date | 15 May 2018 |
| Docket Number | Case No. 4:17-cv-00503-DCN |
| Parties | ZACHARY LEHMKUHL, individually, and on behalf of others similarly situated, Plaintiff, v. BONNEVILLE BILLING AND COLLECTIONS, INC., a Utah corporation, Defendant. |
| Court | U.S. District Court — District of Idaho |
Defendant Bonneville Billing and Collections, Inc. ("BBC") seeks leave of the Court to add a statute of limitations affirmative defense to its Answer. Dkt. 15. Plaintiff Zachary Lehmkuhl opposes the proposed amendment, claiming the amendment is futile.
Having reviewed the record and briefs, the Court finds that the facts and legal arguments are adequately presented. Accordingly, in the interest of avoiding further delay, and because the Court finds that the decisional process would not be significantly aided by oral argument, the Court will decide the motion without oral argument. Dist. Idaho Loc. Civ. R. 7.1(d)(2)(ii). For the reasons set forth below, the Court DENIES the Motion.
In the fall of 2015, Lehmkuhl received treatment for pneumonia at Mountain View Hospital ("the Hospital"), in Idaho Falls, Idaho. The Hospital charged Lehmkuhl $554.50 for his visit. Thereafter, the Hospital sent Lehmkuhl notice seeking payment in full. According to Lehmkuhl, because he is a disabled veteran, he has lifetime medical insurance provided by Tricare that covers 80 percent of all medical treatment he receives. Lehmkuhl asserts that he explained this to the Hospital and said he was willing to pay his 20 percent. It is not clear from the Complaint, but either the Hospital failed to submit a claim to Tricare or Tricare simply failed to pay on the claim. Ultimately, the Hospital continued to request the full amount of the bill from Lehmkuhl. When the Hospital failed to receive payment after approximately 18 months, the Hospital sent Lehmkuhl's bill to a collection agency—BBC.
On May 17, 2017, Lehmkuhl received a demand letter (the "May 2017 letter") from BBC notifying him that unless he remitted payment, or disputed the debt in writing within 30 days, BBC would report the delinquent debt to the appropriate credit reporting agencies. Lehmkuhl and his wife called BBC to dispute the debt. However, in September 2017, Lehmkuhl reviewed his credit report and noticed that TransUnion—a credit reporting agency—listed the Hospital debt as "in collections," but not that it was disputed. This report negatively affected Lehmkuhl's credit score.
On November 14, 2017, Lehmkuhl filed suit in state court alleging two violations of the Fair Debt Collection Practices Act ("FDCPA"). First, Lehmkuhl contends thatcertain language contained in the May 2017 letter—specifically that individuals must dispute errors in writing—violates Ninth Circuit precedent and FDCPA practices that recognize oral disputes. Second, Lehmkuhl alleges BBC violated FDCPA when it reported his debt to TransUnion, but failed to report that Lehmkuhl disputed the debt. Both of Lehmkuhl's causes of action reference the May 2017 letter, which in turn references the $554.50 Hospital bill from the fall of 2015. On December 7, 2017, BBC removed the case to this Court.
On February 22, 2018, the parties exchanged initial disclosures. While preparing its initial disclosures, BBC discovered that it had sent a prior letter to Lehmkuhl—dated October 28, 2016 (the "October 2016 letter")—demanding payment of a debt of $56.04. Further investigation revealed that this bill was for the Radiologist services performed in connection with the pneumonia visit to the Hospital in the fall of 2015. Because Lehmkuhl filed suit on November 14, 2017—more than one year after BBC apparently sent the October 2016 radiologist letter—BBC contends the applicable FDCPA one-year statute of limitations bars this suit. Consequently, BBC seeks to add a statute of limitations affirmative defense to its Answer.
Federal Rule of Civil Procedure 15(a) states that leave to amend "shall be freely given when justice so requires." Leave to amend lies within the sound discretion of the trial court, which "must be guided by the underlying purpose of Rule 15 to facilitate decisions on the merits, rather than on the pleadings or technicalities." United States v.Webb, 655 F.2d 977, 979 (9th Cir. 1981). The Rule 15 "policy is 'to be applied with extreme liberality.'" Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (citation omitted). "A district court, however, may in its discretion deny leave to amend due to undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of amendment." Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 1007 (9th Cir. 2009), as amended (Feb. 10, 2009) (internal quotation marks and citation omitted). The party opposing amendment bears the burden of showing why the Court should not grant leave to amend. See DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987).
In this case, Lehmkuhl opposes BBC's Motion only on the grounds that amendment would be futile. "An amendment is futile when 'no set of facts can be proved under the amendment to the pleadings that would constitute a valid and sufficient claim or defense.'" Missouri ex rel. Koster v. Harris, 847 F.3d 646, 656 (9th Cir. 2017) (quoting Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988)). "When a motion to amend is opposed on the grounds that amendment would be futile, the standard of review in considering the motion is akin to that undertaken by a court in determining the sufficiency of a complaint which is challenged for failure to state a claim under the Federal Rules of Civil Procedure, Rule 12(b)(6)." Arbon Valley Solar LLC v. Thomas & Betts Corp., No. 4:16-cv-00070-DCN, 2017 WL 5613009 (D. Idaho Nov. 21, 2017) (quoting Doe v. Nevada, 356 F. Supp. 2d 1123, 1125 (D. Nev. 2004)).
"A Rule 12(b)(6) dismissal may be based on either a 'lack of a cognizable legal theory' or 'the absence of sufficient facts alleged under a cognizable legal theory.'" Johnson v. Riverside Healthcare Sys., LP, 534 F.3d 1116, 1121 (9th Cir. 2008) (citation omitted). "[I]n considering a Rule 12(b)(6) motion, the Court must view the "complaint in the light most favorable to" the claimant and "accept[] all well-pleaded factual allegations as true, as well as any reasonable inference drawn from them." Id. at 1122.
Lehmkuhl claims that BBC's amendment would be futile because the statute of limitations did not begin to run until May 17, 2017, when Lehmkuhl received the demand letter that is the subject of this lawsuit. Thus, Lehmkuhl argues his November 14, 2017, filing was well within the one-year timeframe FDCPA requires. BBC counters that because Lehmkuhl's Complaint alleges unlawful collection practices, the October 2016 letter—which is identical in language to the May 2017 letter (except for the creditor and amount due)—put Lehmkuhl on notice of his claims and triggered the one year statute of limitations. In other words, BBC maintains that the October 2016 letter is when the claim actually accrued and Lehmkuhl's November 14, 2017, filing was approximately two weeks late. Lehmkuhl argues that because the October 2016 letter notified Lehmkuhl of a different debt owed to a different creditor it did not trigger the statute of limitations for the claim Lehmkuhl now asserts.
The FDCPA requires that "an action to enforce any liability created by this subchapter may be brought in any appropriate United States district court without regardto the amount in controversy, or in any other court of competent jurisdiction, within one year from the date on which the violation occurs." 15 U.S.C. § 1692k(d) (emphasis added).
BBC relies on a District Court decision from the Southern District of Maryland to support its position that the violation in this case occurred on October 28, 2016, not May 17, 2017. In Bey v. Shapiro Brown & Alt, LLP, the court had to determine, for statute of limitations purposes, when a FDCPA claim accrued in a mortgage collection and foreclosure action. Because all the collections efforts were for the same debt, the Bey court found that the "limitations period for FDCPA claims commences from the date of the first violation, and subsequent violations of the same type do not restart the limitations period." 997 F. Supp. 2d 310, 316 (D. Md.), aff'd, 584 F. App'x 135 (4th Cir. 2014) (emphasis added) (internal quotation marks and citations omitted).1 Relying on this holding, BBC argues that the first violation in this case was the October 2016 letter, and though not mentioned in Lemhkuhl's Complaint, it is the true commencement date of Lehmkuhl's claim. Thus, the May 2017 letter is simply a subsequent violation "of the same type." The Court is not as convinced.
BBC claims the Bey court's reasoning is logical and illustrates why a statute of limitations defense is necessary here. A closer reading of the case, however, calls intoquestion BBC's assertion. Immediately following the paragraph BBC cites, the court clarified its holding. True, the Bey court concluded that there is no recognized rotating violation of FDCPA; however, the Court made clear that the statute of limitations does not restart with each communication "of the same type" where "(1) the subsequent communications are continued efforts to collect the same debt, and (2) the validity of the debt itself is not challenged." Id, at 316-17 (emphasis added) (internal quotation marks and citations omitted). Even recognizing the Bey court's analysis, it would not help BBC here because, although the debts came out of the same underlying circumstances, the October 2016 letter and the May 2017 letter were for different debts2 owed to different creditors. In short, applying the Bey standards to the facts of this case, BBC cannot prevail on a statute...
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