Lowe v. Surpas Resource Corp.
| Decision Date | 27 March 2003 |
| Docket Number | No. 01-2149-JWL.,01-2149-JWL. |
| Citation | 253 F.Supp.2d 1209 |
| Parties | Dorothy M. LOWE, Plaintiff, v. SURPAS RESOURCE CORPORATION, Ray Cash, and U.S. Bank, Defendants |
| Court | U.S. District Court — District of Kansas |
Blair K. Drazic, Creve Coeur, MO, James F. Adler, Adler & Manson, Kansas City, MO, Robert Behan, Law Office of Robert Behan, Elm Mott, TX, James L. Renne, Arlington, VA, for Dorothy M. Lowe.
John C. Aisenbrey, Ann Michele Scarlett, Stinson Morrison Hecker, LLP, Kansas City, MO, for Ray Cash.
Sonya L. Allen, Office of State Bank Commissioner, Topeka, KS, Craig Raby, Consumer Protection & Adviocacy Section, Phoenix, AZ, for Arizona State Banking Dept.
Jeffrey D. Hanslick, John R. Phillips, Julia R. Somora, Blackwell Sanders Peper Martin LLP, Kansas City, MO, for Surpas Resource Corp.
Celia K. Garrett, Shook, Hardy & Bacon, L.L.P., Overland Park, KS, for US Bank N.A., N.D.
Michael T. Metcalf, David R. Vandeginste, Miller Law Firm, P.C., Kansas City, MO, for Experian Infromation Solutions, Inc.
Plaintiff Dorothy M. Lowe brought this action against Defendants Surpas Resource Corporation ("SRC" or "Surpas"), Ray Cash ("Mr.Cash"), and U.S. Bank (formerly "Mercantile" and "Firstar"). In the Final Pretrial Order ("PTO"), she alleges that defendants violated the Kansas Consumer Protection Act ("KCPA") and committed various torts and acts of negligence under Kansas common law in their attempts to collect debt from Ms. Lowe. Additionally, Ms. Lowe contends that U.S. Bank violated the federal Fair Credit Reporting Act by failing to investigate adequately her claims of identity theft and fraud.
On March 25, 2003, the court issued a summary order on defendants' summary judgment motions (Docs. 170, 172, 175). Therein, the court granted in part and denied in part the motions filed by SRC and Mr. Cash. The court granted U.S. Bank's motion in its entirety. This Memorandum Opinion supplements the court's March 25, 2003 order.
The following facts are either uncontroverted or construed in the light most favorable to Ms. Lowe, the nonmoving party. In June of 1994, Mercantile 1 received a credit card application, which identified plaintiff Dorothy M. Lowe as the primary applicant and her daughter Judith Figiel as the secondary applicant. The application appears to contain the signatures of both the primary and secondary applicants. Mercantile issued a Mercantile Visa Account and a Mercantile Master-Card Account in Ms. Lowe's name, in response to the application. From 1994 through 1997, charges were incurred and payments were made on both credit card accounts. All payments on the accounts stopped on November 7, 1997 and October 21, 1997 respectively, despite a remaining balance of $4,561.31 on the Visa account and $5,291.00 on the MasterCard account. Ms. Lowe contends that she is a victim of identity theft and fraud. She offers evidence suggesting that her daughter, Judith Figiel, and her son-in-law, Bernard Figiel (Judith's husband), opened these two accounts and incurred charges without her consent or authorization.2
When payments ceased on the credit card accounts in late 1997, Mercantile attempted to collect the past due balances from Ms. Lowe. On September 17, 1997, James L. Renne (Ms. Lowe's grandson and formerly lead counsel in this litigation), acting as Ms. Lowe's durable power of attorney, drafted a letter disputing the validity of the charges on one of the Mercantile accounts.3 In that letter, he states that "Ms. Lowe did not open or make purchases on this account nor has she authorized the opening of this account by another in her name ... Any transaction in her name is fraudulent."4 In a sworn affidavit, Mr. Renne states that he mailed the correspondence, by first class mail postage prepaid on that same day. Also in September of 1997, Janet Woodall answered a Mercantile collection call at Ms. Lowe's residence. Ms. Woodall told the Mercantile collector, Tina Jones, that Ms. Lowe disputed the validity of the accounts. In 1998, Ms. Woodall similarly disputed the validity of the debt with another Mercantile representative after the representative threatened to file charges against Ms. Lowe.5
When Mercantile's collection efforts failed, it assigned one of the accounts to Client Services, a debt collection agency, on July 6, 1998. Mercantile assigned the second account to Client Services on August 4,1998.
On March 1, 1999, Client Services received a letter from James L. Renne, which stated that and that "[s]he does not accept any responsibility for balances on these accounts."6 Client Services notified Mercantile of the dispute on March 3,1999.
On March 18, 1999 Mercantile sent Client Services a fraud affidavit for Ms. Lowe to sign and return. Mercantile requested Client Services forward the signed affidavit, once completed, so it could compare Ms. Lowe's signature on the affidavit with the one on the original credit card applications. Mercantile also requested that Client Services inquire whether Ms. Lowe knew the secondary cardholder, Judith Figiel. Mercantile also forwarded to Client Services copies of credit card statements that reflected the history of transactions on the two credit card accounts.
On August 25, 1999, Mr. Renne mailed another letter disputing the validity of the credit card debt (signed by Dorothy M. Lowe) to Mercantile. Mr. Renne also attached an affidavit executed by Ms. Lowe on July 16, 1998, describing the fraudulent scheme allegedly employed by her daughter and son-in-law to acquire the Mercantile accounts.7
Also on August 25, 1999, Ms. Lowe sent letters to several credit reporting agencies disputing the validity of several reported debts, including the Mercantile accounts. After investigating Ms. Lowe's claims, the credit reporting agencies removed several debts from her credit report. Some of the credit reporting agencies indicated the Mercantile accounts would be deleted.
On October 14, 1999, after Consumer Resources failed to collect on the accounts, Mercantile assigned the accounts to Surpas Resources Corporation, another debt collection agency. At the time SRC received the accounts, Mercantile records did not indicate that Ms. Lowe had disputed the debt.
The relationship between SRC and Mercantile was governed by the Collection Agency Agreement. The Agreement provides that:
The Agency shall perform all collection services under this Agreement as an independent contractor, and nothing contained herein shall be deemed to create any association, partnership, joint[] venture or relationship of employer or employee or principal and agent between the Agency and the Client.
Under the Agreement, Mercantile agreed to pay SRC a percentage of any amount they recovered from Ms. Lowe. SRC was not compensated based upon the number of hours devoted to collecting the accounts. Mercantile did not provide any office supplies or equipment to SRC, did not share a computer system with SRC, did not assist SRC in hiring employees or monitoring their work performance, and did not train or test Surpas' employees. Mercantile, however, was allowed to log onto SRC's computer system to view telephone records detailing SRC's collection efforts.
On October 16, 1999, SRC first initiated its efforts to collect from Ms. Lowe on the Mercantile accounts. From that date through January 21, 2000, SRC made approximately 20 direct contacts with the plaintiff, 2 direct contacts with her attorney and grandson James Renne, 5 direct contacts with members of her family, and left 9 voice messages at her residence. During this time, defendant Ray Cash was employed by SRC as an assistant manager. SRC did not conduct a background check or investigation prior to hiring Mr. Cash. Mr. Cash misrepresented the extent of his education in his resume.
As to the direct collection calls Ms. Lowe received during this time period, she does not specifically recall the identity of the collection callers or the agencies that they represented. SRC, however, was the only collection agency attempting to collect debt from Ms. Lowe during this time period.8 As to the substance of the conversations and the tactics employed during the course of these collection efforts, Ms. Lowe specifically recalls that the collectors threatened her with aggressive legal action and threatened to take her home from her. On two occasions, one in November of 1999 and the other in January of 2000, another grandson of Ms. Lowe, Mark Renne, listened in on the collection calls. Mark Renne testified that during the course of these collection calls SRC employee Ray Cash called Ms. Lowe a "low life" and a "thief," threatened to take her home and threatened to personally come to her house to take care of the situation.9 SRC caught Mr. Cash making similar threats to other debtors in January and February of 2000, resulting in his discipline and subsequent termination. Finally, during the course of many of these collection calls, Ms. Lowe disputed the validity of the debt, informed the callers that her attorney and grandson James Renne was handling the matter, and requested they cease their collection efforts.
As to the direct contacts with Ms. Lowe's family members and her grandson, SRC communicated that it would pursue aggressive legal tactics against Ms. Lowe if she did not make payment on the accounts. Family members communicated to SRC that Ms. Lowe was a victim of fraud. Also, on two occasions, Mr. James L. Renne contacted SRC employees Cassandra Bailey and Ray Cash. On November 15, 1999 he spoke...
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