Newman v. Checkrite California, Inc.

• Decision Date: 19 December 1995
• Docket Number: No. Civ. S-93-1557 LKK.,Civ. S-93-1557 LKK.
• Citation: 912 F. Supp. 1354
• Court: U.S. District Court — Eastern District of California
• Parties: Debbie NEWMAN, et al., Plaintiffs, v. CHECKRITE CALIFORNIA, INC., et al., Defendants.

912 F. Supp. 1354

Debbie NEWMAN, et al., Plaintiffs, v. CHECKRITE CALIFORNIA, INC., et al., Defendants.

No. Civ. S-93-1557 LKK.

United States District Court, E.D. California.

December 19, 1995.

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Sharon Grace, Law Offices of Paul Arons, Redding, CA, for plaintiffs.

Mark Ewell Ellis, Murphy Pearson Bradley and Feeney, Sacramento, CA, Michael Karl Pazdernik, Murphy Pearson Bradley and Feeney, Sacramento, CA, for defendants CheckRite of California, Inc., CheckRite, Ltd., Inc., and Reed Benson.

Thomas Wood, Wood and Associates, Midvale, UT, for defendant Wood & Riddle.

Alvin Lundgren, Lundgren and Associates, Sacramento, CA.

Scott H. Sweat, Payson, UT, in pro. per.

ORDER

KARLTON, Chief Judge Emeritus.

Plaintiffs brought suit under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., and California Business & Professions Code § 17200 et seq.¹ The parties cross moved for summary judgment. The motions were taken under submission after oral argument and are disposed of herein.

I. FACTS²

Plaintiffs Newman, Benefield and Reeves are individuals who wrote bad checks for retail purchases ranging in amount from four to forty six dollars. The checks were turned over to defendant CheckRite, a debt collection agency.³ Defendant CheckRite and its in-house counsel, defendant Reed Benson, sent notices to plaintiffs demanding payment on the bounced checks and an additional service charge of twenty five to thirty dollars. When plaintiffs did not respond to these demands, their names were turned over to outside attorneys, defendants Lundgren, Kling⁴, Sweat, and Wood & Riddle, who had contracted with CheckRite to recover the debts. The outside attorneys sent their own notices, which contained so called "settlement offers," premised on payment of amounts in excess of the face value of the checks. The notices threatened litigation if these payments were not made.

Plaintiffs sued, contending that defendants' debt collection practices including, inter alia, demanding more than the face value of the checks and threatening litigation where none was actually anticipated, violated the FDCPA and provisions of California's statutory and common law. Defendants maintain, inter alia, that their conduct is lawful and that, in any event, plaintiffs are not entitled to the protection of the statutes.

II. SUMMARY JUDGMENT STANDARDS UNDER FED.R.CIV.P. 56

Summary judgment is appropriate when it is demonstrated that there exists no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970); Jung v. FMC Corp., 755 F.2d 708, 710 (9th Cir.1985); Loehr v. Ventura County Community College Dist., 743 F.2d 1310, 1313 (9th Cir.1984).

Under summary judgment practice, the moving party

Always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," which it believes demonstrate the absence of a genuine issue of material fact.

Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986).

Where the nonmoving party will bear the burden of proof at trial on a dispositive issue, a summary judgment motion may properly be made in reliance solely on the "pleadings, depositions, answers to interrogatories, and admissions on file."

Id. at 324, 106 S.Ct. at 2553. Indeed, summary judgment should be entered, after adequate time for discovery and upon motion, against a party who fails to sufficiently establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. Id. at 322, 106 S.Ct. at 2552. "A complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. In such a circumstance, summary judgment should be granted, "so long as whatever is before the district court demonstrates that the standard for entry of summary judgment, as set forth in Rule 56(c), is satisfied." Id. at 323, 106 S.Ct. at 2553.

If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually does exist. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986); First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288-89, 88 S.Ct. 1575, 1592-93, 20 L.Ed.2d 569 (1968); Ruffin v. County of Los Angeles, 607 F.2d 1276, 1280 (9th Cir. 1979), cert. denied, 445 U.S. 951, 100 S.Ct. 1600, 63 L.Ed.2d 786 (1980).

In attempting to establish the existence of this factual dispute, the opposing party may not rely upon the denials of its pleadings, but is required to tender evidence of specific facts in the form of affidavits, and/or admissible discovery material, in support of its contention that the dispute exists. See Fed. R.Civ.P. 56(e); Matsushita, 475 U.S. at 586 n. 11, 106 S.Ct. at 1355 n. 11; First Nat'l Bank, 391 U.S. at 289, 88 S.Ct. at 1592-93; Strong v. France, 474 F.2d 747, 749 (9th Cir.1973). The opposing party must demonstrate that the fact in contention is material, i.e., a fact that might affect the outcome of the suit under the governing law, see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986); T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.1987), and that the dispute is genuine, i.e., the evidence is such that a reasonable jury could return a verdict for the nonmoving party. See Anderson, 477 U.S. at 248-49, 106 S.Ct. at 2510-11; Wool v. Tandem Computers, Inc., 818 F.2d 1433, 1436 (9th Cir. 1987).

In the endeavor to establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that "the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial." First Nat'l Bank, 391 U.S. at 290, 88 S.Ct. at 1593; T.W. Elec. Serv., 809 F.2d at 631. Thus, the "purpose of summary judgment is to `pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.'" Matsushita, 475 U.S. at 587, 106 S.Ct. at 1356 (quoting Fed.R.Civ.P. 56(e) Advisory Committee's note on 1963 amendments); International Union of Bricklayers & Allied Craftsman Local Union No. 20 v. Martin Jaska, Inc., 752 F.2d 1401, 1405 (9th Cir.1985).

In resolving the summary judgment motion, the court examines the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any. Rule 56(c); S.E.C. v. Seaboard Corp., 677 F.2d 1301, 1305-06 (9th Cir.1982). The evidence of the opposing party is to be believed, see Anderson, 477 U.S. at 255, 106 S.Ct. at 2514, and all reasonable inferences that may be drawn from the facts placed before the court must be drawn in favor of the opposing party. See Matsushita, 475 U.S. at 587, 106 S.Ct. at 1356 (citing United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962) (per curiam)); Abramson v. University of Hawaii, 594 F.2d 202, 208 (9th Cir.1979). Nevertheless, inferences are not drawn out of the air, and it is the opposing party's obligation to produce a factual predicate from which the inference may be drawn. See Richards v. Nielsen Freight Lines, 602 F.Supp. 1224, 1244-45 (E.D.Cal.1985), aff'd, 810 F.2d 898, 902 (9th Cir.1987).

Finally, to demonstrate a genuine issue, the opposing party "must do more than simply show that there is some metaphysical doubt as to the material facts.... Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no `genuine issue for trial.'" Matsushita, 475 U.S. at 586-587, 106 S.Ct. at 1356 (citation omitted).

Under the federal rules, either plaintiff or defendant may move for summary judgment upon the entire claim or any part thereof. See Fed.R.Civ.P. 56(a) and (b). Upon such motion, the court is free to dispose of individual claims and specify what facts are not genuinely in dispute. Given the multiple claims and defenses, the court has concluded that it can only address these motions rationally by addressing the individual causes of action or defenses seriatim.

III. DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

A. FAIR DEBT COLLECTION PRACTICES ACT CAUSES OF ACTION

1. Attorney Exemption from FDCPA

a. Definition of Debt Collectors

Defendants Lundgren, Kling, Wood & Riddle, and Sweat, contend that, as attorneys working within their professional capacity, they are not debt collectors within the meaning of the statute and thus, as a matter of law, cannot be sued for violations of the statute.⁵ See 15 U.S.C. § 1692a(6).⁶ Accordingly, they seek summary judgment.⁷ Plaintiffs assert that all defendants are debt collectors within the meaning of the FDCPA and ask for summary adjudication of this issue in their favor.

As with any question of statutory interpretation, the court's first determination is whether there is binding authority that construes the statute in question. See Tello v. McMahon, 677 F.Supp. 1436, 1441 (E.D.Cal. 1988). In the matter at bar, defendants' argument that attorneys do not fall within the scope of the FDCPA is foreclosed by the Supreme Court's recent holding that the FDCPA applies to lawyers engaging in litigation. See Heintz et al v. Jenkins, ___ U.S. ___, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995). Accordingly, summary judgment as to this issue must be granted...