Olson v. Carter-Jones Collections

• Decision Date: 02 October 2020
• Docket Number: C085538
• Court: California Court of Appeals Court of Appeals
• Parties: KIMBERLY R. OLSON, Plaintiff and Appellant, v. CARTER-JONES COLLECTIONS et al., Defendants and Respondents.

KIMBERLY R. OLSON, Plaintiff and Appellant, v. CARTER-JONES COLLECTIONS et al., Defendants and Respondents.

C085538

COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Siskiyou)

October 2, 2020

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super. Ct. No. SC CV CV 09-0450)

In 2009, as she was attempting to refinance her home, plaintiff Kimberly R. Olson discovered that a collections account appeared on her credit reports. The account, reported by defendant Carter-Jones Collections (Carter-Jones), doing business as Northern Credit Service (NCS), a collections agency, listed the allegedly delinquent debt, originally owed to defendant Mortgage Center, in the amount of $455.

Plaintiff, appearing in propria persona, sued Carter-Jones, NCS, Mortgage Center, Kent Pederson, president of Carter-Jones, and Marsha Pitkin, manager of NCS. Following the close of plaintiff's case at a bench trial, defendants moved for nonsuit. The trial court converted the motion to one for judgment pursuant to Code of Civil Procedure section 631.8,¹ and granted defendants' motion as to all causes of action, concluding that plaintiff's allegations "were so lacking in merit that the action is frivolous as a matter of law and therefore lacking in good faith." Based on this conclusion, the trial court awarded attorney fees and costs to defendants pursuant to Civil Code section 1788.30. Thereafter, plaintiff submitted a settled statement, which the trial court certified. However, it subsequently considered defendants' objections and issued an amended settled statement.

On appeal, plaintiff asserts the trial court erred in (1) its process leading to the second modified settled statement; (2) considering defense evidence but refusing to afford her the opportunity to present additional evidence and to rehabilitate witnesses before granting defendants' motion for judgment in violation of subdivision (a) of section 631.8; (3) granting defendants' motion for judgment; and (4) awarding attorney fees.

We conclude that the record does not support the award of attorney fees pursuant to Civil Code section 1788.30, subdivision (c). Accordingly, we shall modify the judgment by vacating the award of attorney fees and modify the order awarding attorney fees. Otherwise, we affirm the judgment and orders appealed from.

FACTUAL AND PROCEDURAL BACKGROUND

First Amended Complaint

In her first amended complaint, plaintiff asserted 19 causes of action. The basis for all causes of action was defendants' "actions relating to an alleged debt they represent as being assigned to them by Mortgage Center, and to which they illegally added interest and fees, and reported (on multiple occasions) to the three major credit reporting agencies as delinquent and defaulted." Plaintiff had applied for a home refinancing loan with nonparty the Peoples Bank in February 2009. The Peoples Bank obtained plaintiff'scredit report, which contained an account, reported by NCS, with a status of "defaulted/delinquent" attributed to Mortgage Center in the amount of $455. Plaintiff contacted the three major credit reporting agencies to dispute the account and, on March 16, 2009, sent a letter by fax to NCS disputing the debt. Defendants continued reporting the account to the credit reporting agencies and they did not notify the reporting agencies that the debt was disputed. Plaintiff asserted that as a result of defendants' action (or inaction), her credit score dropped below the threshold needed to obtain the loan and she was unable to refinance her home.

Plaintiff asserted that defendants' actions violated multiple provisions of the federal Fair Debt Collections Practices Act (FDCPA; 15 U.S.C. § 1692 et seq.) and California's Rosenthal Fair Debt Collection Practices Act (RFDCPA; Civ. Code, § 1788 et seq.), and that each violation also was an unlawful business practice under Business and Professions Code section 17200 et seq. (first through 14th causes of action). Plaintiff further asserted causes of action for defamation (15th cause of action), seeking punitive damages (16th cause of action), for willful and reckless misrepresentation to a third party (17th cause of action), for negligence (18th cause of action), and for restitution and injunctive relief (19th cause of action).

The Trial²

Plaintiff

Plaintiff testified that at the beginning of February 2009, she sought to refinance her home with the Peoples Bank. She discovered in March 2009 that the refinance could not proceed because there was a collections account on her credit report which reduced her credit score by approximately 60 points. Therefore, she did not qualify for the loan.The only negative factor on plaintiff's credit report was reported by NCS in the original amount of $412. This issue was first reported in May 2008, with a balance of $455 as of February 2009.

Plaintiff claimed that before receiving the report from the Peoples Bank, she had never been given notice of the debt. Plaintiff faxed a letter to NCS disputing the debt. After receiving a response from NCS, plaintiff telephoned Pitkin on March 31, 2009. According to plaintiff, Pitkin told her that she and Pitkin had previously spoken on the phone and in person about a year earlier, Pitkin said plaintiff had agreed to pay the debt, and a payment plan was established. Plaintiff disputed having previously spoken to Pitkin, claiming that she had never heard of NCS before. Plaintiff told Pitkin that she did not owe any money because the alleged agreement she had with Mortgage Center did not give rise to a binding obligation. Plaintiff claimed that she notified the owner of Mortgage Center in writing that she would not pay the claimed amount, and that he would "have to sue her for it." According to plaintiff, Pitkin responded that plaintiff's dispute was " 'invalid,' " and refused to remove the account from plaintiff's credit report.

NCS continued to report the debt on subsequent credit reports and did not report that it was disputed. The amount of the debt increased as additional fees were assessed. Plaintiff testified that NCS wrongfully charged her interest "other than as provided by law." Plaintiff continued to dispute the debt.

Defendant Marsha Pitkin

Plaintiff called Pitkin to testify in her case-in-chief as a hostile witness. Pitkin testified that NCS was a debt collection business in Yreka, owned and operated by Carter-Jones. Pitkin was the manager at NCS. She was hired, trained, and named manager by defendant Pederson, Pitkin's boss. She also was the debt collector assigned to plaintiff's account.

Pitkin testified that all collection accounts handled by NCS are administered by its computer system. All actions on an account are logged into the system. Pitkin had nocontrol over the programming of the computer system. Those matters were handled by Carter-Jones.

Initial notice letters to consumers are automatically generated by NCS's computer system. Each account NCS handled that was subject to reporting to the three major credit reporting agencies would be automatically reported by the computer system each month. Each report included the automatic assessment of interest. When NCS receives a new account subject to reporting, it will begin reporting the account to the credit reporting agencies after 30 days.

Pitkin testified that NCS received assignment of plaintiff's account from Mortgage Center on May 2, 2008. The original charges were for an appraisal and credit report that arose out of a contract plaintiff had with Mortgage Center.³ The original amount was $412.63. However, this amount increased over time as the result of the accrual of interest calculated at the lawful rate in California beginning on January 18, 2008, the date the original invoice " 'became due.' " Pitkin testified that she did not personally draft or send any notification letters to plaintiff in 2008, and she never saw the initial notification letter sent to plaintiff. NCS did not have a copy of any computer-generated letter sent to plaintiff.

Pitkin called plaintiff on May 13, 2008. In the conversation, Pitkin determined that plaintiff had not received any communications from NCS about the account because the notice was sent to an incorrect address. Pitkin testified that plaintiff agreed to pay the debt. That day, Pitkin sent plaintiff a letter and payment form. However, the letter was returned unopened and placed in plaintiff's file. A second letter sent to plaintiff also was returned with a notation meaning " 'no such number.' " That correspondence was alsoplaced in plaintiff's file. However, by the time of trial, NCS no longer had the letters. Pitkin did not know what happened to them.⁴

Pitkin testified that the e-Oscar system was an automated reporting system "that notifies NCS when a dispute concerning an NCS account has been filed with one or more of the three major credit reporting agencies." The NCS computer system "handles" e-Oscar notifications automatically. An entry on plaintiff's account indicated that on March 13, 2009, e-Oscar notified NCS of a dispute pertaining to plaintiff's account. Upon that notification, NCS's system automatically verified the disputed account " 'as reported' " to the three major credit reporting agencies through the e-Oscar system.

NCS received plaintiff's written dispute by fax on March 16, 2009. According to the NCS procedures manual, when NCS receives a debt dispute from a consumer, the dispute is supposed to be entered into the NCS computer as " '3dis.' " That entry "flags" the computer system to automatically report the account as disputed to the credit reporting agencies. However, neither Pitkin nor anyone else made a " '3dis' " entry into the computer system on plainti...