LVNV Funding, LLC v. Mavaega

• Decision Date: 29 August 2017
• Docket Number: WD 80294.
• Citation: 527 S.W.3d 128
• Parties: LVNV FUNDING, LLC, Respondent, v. Linda A. MAVAEGA, Appellant.
• Court: Missouri Court of Appeals

527 S.W.3d 128

LVNV FUNDING, LLC, Respondent,

v.Linda A. MAVAEGA, Appellant.

WD 80294.

Missouri Court of Appeals, Western District.

OPINION FILED: August 29, 2017

Joshua C. Dickinson, Bryant T. Lamer and Kersten L. Holzhueter, Kansas City, MO, for respondent.

A.J. Stecklein, Kansas City, KS, for appellant.

Before Division Three: Alok Ahuja, Presiding Judge, Thomas H. Newton, Judge and Cynthia L. Martin, Judge

Cynthia L. Martin, Judge

Linda Mavaega ("Mavaega") appeals from the trial court's entry of summary judgment in favor of LVNV Funding, LLC ("LVNV Funding") and from the trial court's denial of her motion for class certification. Mavaega asserts that the trial court erred in three respects: (1) in denying her motion for summary judgment and in granting LVNV Funding's motion for summary judgment on Mavaega's claim asserting LVNV Funding violated the Fair Debt Collection Practices Act ("FDCPA")¹ ; (2) in denying her motion for class certification; and (3) in granting LVNV Funding's motion for summary judgment on its claim against Mavaega to collect a debt. We affirm.

Factual and Procedural Background

In March 2012, Mavaega entered into a credit agreement with Credit One Bank, N.A. ("Credit One"). Credit One extended credit pursuant to the terms and conditions of the credit agreement. Mavaega, in exchange, agreed to pay Credit One for all amounts due resulting from the authorized use of the credit, including any interest and other charges due pursuant to the terms and conditions of the credit agreement. The terms and conditions of the credit agreement provided that interest would accrue at the rate of 23.9 percent.

Credit One issued Mavaega monthly periodic statements. The May 4, 2012 periodic statement indicated that Mavaega was required to make a minimum payment of $51.00 by May 28, 2012. Mavaega made no payments toward the account following the May 4, 2012 periodic statement, and Credit One recorded the first day of default as June 4, 2012. The December 4, 2012 periodic statement indicated that the account had a balance of $826.83 and warned that Mavaega's "account is scheduled to be charged off."² Credit One charged off the account on December 5, 2012.

In January 2013, LVNV Funding gained ownership of the account and has owned the account since that time.³ From March 2013 to June 2014, LVNV Funding charged interest on the balance due on the account at a rate of 20 percent per annum. However, LVNV Funding then deducted the interest it had accrued during that time frame from the account balance. Thereafter, LVNV Funding began charging interest on the balance due on the account at the rate of 9 percent per annum.

Pursuant to section 408.020,⁴ creditors are allowed "to receive interest at the rate of nine percent per annum, when no other rate is agreed upon."

On October 21, 2014, LVNV Funding filed suit against Mavaega to collect $826.83, the amount outstanding on the credit account, plus interest from and after July 21, 2014. LVNV Funding did not seek to recover interest from the date of its acquisition of the credit account to July 21, 2014. Mavaega filed an answer and counterclaim on April 8, 2015. Mavaega's counterclaim alleged that LVNV Funding violated the FDCPA in three respects: (1) LVNV Funding assessed an interest rate not allowed by law or agreement; (2) LVNV Funding falsely stated the character, amount, or legal status of the debt; and (3) LVNV Funding communicated credit information which it knew or should have known to be false. Underlying Mavaega's counterclaim was her assertion that once Credit One charged off her account, no contractual interest could be assessed as a matter of law, and that LVNV Funding had nonetheless charged interest on the account at a rate in excess of Missouri's statutory rate.

Further, Mavaega's counterclaim sought an order certifying her suit as a class action, with the proposed class to include "[a]ll Missouri persons whose charged-off accounts were purchased by LVNV Funding LLC wherein LVNV reported a growing balance to a credit reporting agency with interest rate over 9% within one year of filing this class counterclaim." Mavaega filed a motion for class certification detailing why class certification was appropriate. Following briefing by the parties, the trial court denied Mavaega's motion seeking class certification because "Mavaega's proposed class definition is overly broad and, in its current state, does not allow for class certification."

LVNV Funding filed a motion for summary judgment on September 9, 2016. LVNV Funding argued that summary judgment in its favor and against Mavaega was appropriate on its affirmative claim to collect the debt owed by Mavaega, and on Mavaega's FDCPA counterclaim. With respect to the collection claim, LVNV Funding's motion for summary judgment argued that the uncontroverted facts established that Mavaega incurred the debt; that the debt was subject to a 23.9 percent contractual interest rate; that Mavaega failed to make payments when due; and that LVNV Funding is the current owner of the debt. LVNV Funding thus asserted that it was entitled to judgment in the sum of $826.83, plus statutory interest as pleaded in its petition, as a matter of law. LVNV Funding's motion for summary judgment also asserted that Mavaega's FDCPA counterclaim failed as a matter of law for two reasons. First, LVNV Funding argued that Credit One's failure to mail periodic statements to Mavaega did not prohibit the accrual of interest on the debt and that Credit One did not otherwise waive its right to collect interest on the debt. Second, LVNV Funding contended that Mavaega's FDCPA counterclaim relies entirely on LVNV Funding's alleged failure to comply with the Truth in Lending Act ("TILA")⁵ and its implementing regulation, Regulation Z,⁶ neither of which apply to LVNV Funding because LVNV Funding is not a "creditor" as defined by TILA.

Mavaega filed a response to LVNV Funding's motion for summary judgment.

With respect to LVNV Funding's collection claim, Mavaega argued that LVNV Funding is not entitled to summary judgment because it has not established a chain of title to the debt in question and because LVNV Funding sought damages in an amount that is unlawful. With respect to Mavaega's FDCPA counterclaim, Mavaega argued that LVNV Funding is not entitled to summary judgment because the uncontroverted facts established that LVNV Funding engaged in two violations of the FDCPA: (1) LVNV Funding attempted to collect a debt by threatening the accrual of interest at a rate greater than the statutory rate; and (2) LVNV Funding reported a balance on Mavaega's account to national credit bureaus that grew at a rate greater than that allowed by law or agreement. Both alleged violations depended on the truth of Mavaega's assertion that contractual interest of 23.9 percent could no longer be charged by Credit One or its assignee once Credit One charged off Mavaega's credit account in December 2012.

Mavaega filed her own motion for summary judgment on her FDCPA counterclaim. Mavaega's motion asserted that she was entitled to summary judgment because: (1) when LVNV Funding took possession of the account, it had no greater rights than that of Credit One; (2) Credit One's rights to collect against Mavaega were limited by TILA and Regulation Z, which limited the collection of interest to 9 percent (the statutory rate) once Credit One charged off Mavaega's account; and (3) LVNV Funding charged Mavaega in excess of 9 percent when it had no contractual or statutory right to do so because Mavaega's account was previously charged-off and periodic statements had ceased.

Following extensive briefing by the parties, the trial court denied Mavaega's motion for summary judgment on her FDCPA counterclaim, and granted LVNV Funding's motion for summary judgment both on its affirmative collection claim and in defense of the FDCPA counterclaim. The trial court explained its decision:

The original creditor charged off its account with Linda Mavaega on 5 December 2012 when she had an outstanding balance of $826.83. LVNV Funding LLC was assigned Linda Mavaega's account on 31 January 2013. LVNV Funding LLC charged 20% interest on the account from March 2013 to June 2014, deducted same from the account for that time period, and beginning July 2014 charged 9% interest on the account. Once the original creditor charged off the account on 5 December 2012, the original creditor and any subsequent assignees were precluded from charging interest at the contractual rate. Pursuant to Section 408.020, creditors are allowed to receive interest at the rate of 9% per annum.

(Citation omitted.) The trial court thus found that LVNV Funding was limited to the recovery of interest at the statutory rate, and effectively found that the earlier assessment of a higher rate of interest did not violate the FDCPA because of the reversal of that charge.

Mavaega appeals.

Standard of Review

The trial court's decision to grant summary judgment is one based on the pleadings, the record submitted, and the law. Goerlitz v. City of Maryville , 333 S.W.3d 450, 452 (Mo. banc 2011). Thus, we need not defer to the trial court's determination. Id. Instead, we review the grant of summary judgment de novo , applying the same standard as the trial court in determining whether summary judgment was proper. Id.

Summary judgment is only proper if the moving party establishes that there is no genuine issue as to the material facts and that the movant is entitled to judgment as a matter of law. The facts contained in affidavits or otherwise in support of a party's motion are accepted as true unless contradicted by the non-moving party's response to the summary judgment motion. Only genuine disputes as to material facts preclude summary judgment. A material fact in the context of summary judgment is one from which the right to judgment flows.

Id. at 452-53 (internal quotation marks and citations omitted).

The moving party's right to "judgment as a...