Reyes v. Kenosian & Miele, Llp

• Decision Date: 18 January 2008
• Docket Number: No. C07-00253 MJJ.,C07-00253 MJJ.
• Citation: 619 F.Supp.2d 796
• Court: U.S. District Court — Northern District of California
• Parties: Manuel Lopez REYES, Plaintiff, v. KENOSIAN & MIELE, LLP, et al, Defendants.

619 F.Supp.2d 796

Manuel Lopez REYES, Plaintiff, v. KENOSIAN & MIELE, LLP, et al, Defendants.

No. C07-00253 MJJ.

United States District Court, N.D. California.

January 18, 2008.

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Fred W. Schwinn, San Jose, CA, for Plaintiff.

Tomio Buck Narita, Simmonds & Narita LLP, Jeffrey A. Topor, Attorney at Law, Simmonds & Narita LLP, San Francisco, CA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART CROSS MOTIONS FOR SUMMARY JUDGMENT

MARTIN J. JENKINS, District Judge.

INTRODUCTION

Before the Court are cross Motions for Summary Judgment, one brought by Defendants Kenosian & Miele, LLP, and Kenneth Miele (collectively, "Defendants") and the other brought by Plaintiff Manuel Reyes ("Plaintiff" or "Reyes"). (Docket Nos. 29, 83.) Both Motions are opposed. For the following reasons, the Court GRANTS in part and DENIES in part Defendants' and Plaintiff's Motion for Summary Judgment.

FACTUAL BACKGROUND

The instant action presents a debt collection dispute. The following facts are undisputed unless noted.

On January 25, 2006, Defendants filed a debt collection action on behalf of their client, Unifund CCR Partners ("Unifund"), against Plaintiff in San Mateo County Superior Court ("state court action").¹ In the state court action, Defendants claimed that Unifund purchased, or was otherwise assigned, an alleged debt that Plaintiff owed to his credit card company, First USA Bank, N.A ("First USA"). Defendants, on behalf of Unifund, sought to collect $3,985.85 in damages, pre-judgment interest at twenty-two percent per year and an award of reasonable attorney's fees of at least $293.15 "by the card holder agreement, local court rules and/or Civil Code § 1717.5 plus attorney fees according to proof, for motions, mediation, arbitration or trial." (See Complaint, Exh. 1, State Court Complaint ("State Court Complaint") at 3-4.)

Following a state court trial, judgment was entered in Plaintiff's favor. (Defs.' Motion, Miele Decl., Exh. C ("State Court Judgment") at 2.) The court found that Unifund failed to submit credible evidence that it was assigned the debt or that it was the proper party in the case. (Id.) The court further found that Unifund violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692e(2)(A) by falsely representing the legal status of the debt and the California Rosenthal Fair Debt Collection Practices Act, Cal. Civil Code § 1788.13(1) by falsely representing that the debt was actually assigned to Unifund when it was not. (Id.)

Shortly thereafter, Plaintiff filed the operative Complaint in this case against the firm and lawyer that represented Unifund in the state court action. Plaintiff incorporates the underlying Unifund v. Reyes complaint in his current Complaint and alleges that Defendants' allegations in the state action complaint violated: (1) the Federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692(a) ("FDCPA"); and (2) the Rosenthal Fair Debt Collection Practices Act, California Civil Code section 1788 et seq. ("Rosenthal Act"). The Court granted Defendants' Motion for Judgment on the Pleadings as to Plaintiff's Rosenthal Act claims, on the grounds that they are based solely upon statements made in pleadings filed in state court, and are therefore barred by the litigation privilege, Cal. Civ.Code § 47.

Plaintiff's remaining claims, under the FDCPA, allege that Defendants: (1) misrepresented the character, amount or legal status of the alleged debt, in violation of 15 U.S.C. § 1692e(2)(A); (2) misrepresented the compensation which may be lawfully received by Defendants for the collection of the alleged debt in violation of 15 U.S.C. § 1692e(2)(B); (3) threatened to collect attorney's fees from Plaintiff pursuant to Cal. Civil Code § 1717.5, an action that cannot legally be taken or that was not intended to be taken, in violation of 15 U.S.C. § 1692e(5); (4) misrepresented that Unifund was lawfully entitled to attorney's fees pursuant to Cal. Civil Code § 1717.5 in violation of 15 U.S.C. § 1692e(1); (5) misrepresented that Unifund was lawfully entitled to collect the debt allegedly owed to First USA Bank, N.A., in violation of 15 U.S.C. §§ 1692e and 1692e(1); and (6) attempted to collect interest, fees or other charges from Plaintiff that are not expressly authorized by the agreement creating the alleged debt or otherwise permitted by law, in violation of 15 U.S.C. § 1692f(1). (Complaint ¶ 26.) Plaintiff further claimed that he is entitled to an award of statutory damages, costs and reasonable attorney's fees, pursuant to 15 U.S.C. § 1692k. (Id.)

Defendants now seek summary judgment on Plaintiff's FDCPA claims, arguing that: (1) a state court complaint is not subject to the FDCPA pursuant to case law, public policy and the First Amendment; (2) Unifund owned the account at the time the suit was filed thus Defendants were authorized to collect the debt; and (3) Defendants' prayer for attorney's fees under Cal. Civil Code § 1717.5 did not violate the FDCPA. (See Defs.' Motion.) Plaintiff seeks summary judgment on all claims, arguing that: (1) Defendants misrepresented the amount of the debt owed by Plaintiff; (2) Defendants attempted to collect attorney's fees pursuant to Cal. Civil Code § 1717.5, which is not a lawfully authorized action; and (3) Defendants attempted to collect a consumer debt which was not assigned to their client, Unifund.² (See Plf.'s Motion.)

LEGAL STANDARD

Rule 56(c) of the Federal Rules of Civil Procedure authorizes summary judgment if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party bears the initial burden of demonstrating the basis for the motion and identifying the portions of the pleadings, depositions, answers to interrogatories, affidavits, and admissions on file that establish the absence of a triable issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party meets this initial burden, the burden then shifts to the non-moving party to present specific facts showing that there is a genuine issue for trial. Fed.R.Civ.P. 56(e); Celotex, 477 U.S. at 324, 106 S.Ct. 2548; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The non-movant's bare assertions, standing alone, are insufficient to create a material issue of fact and defeat a motion for summary judgment. Anderson, 477 U.S. at 247-48, 106 S.Ct. 2505. An issue of fact is material if, under the substantive law of the case, resolution of the factual dispute might affect the case's outcome. Id. at 248, 106 S.Ct. 2505. Factual disputes are genuine if they "properly can be resolved in favor of either party." Id. at 250, 106 S.Ct. 2505. Thus, a genuine issue for trial exists if the non-movant presents evidence from which a reasonable jury, viewing the evidence in the light most favorable to that party, could resolve the material issue in its favor. Id. However, "[i]f the [non-movant's] evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Id. at 249-50, 106 S.Ct. 2505 (internal citations omitted).

ANALYSIS

Defendants' Motion, and Plaintiff's response thereto, focuses on the issue of whether state court complaints are subject to the FDCPA. Plaintiff's Motion, and Defendants' response thereto, focuses more directly on whether there is a triable issue of material fact as to any of Plaintiff's claims in this matter. The Court, therefore, first addresses the legal question of the application of the FDCPA to this case, then turns to the evidence before the Court on each of Plaintiff's claims.

I. State Court Complaints are Subject to the FDCPA.

Defendants urge the Court to find that state court complaints are not, as a matter of law, subject to the FDCPA. The Court finds that while Defendants' position has surface appeal, the current legal landscape does not ultimately provide support for dismissal of Plaintiff's claims on the grounds that state court complaints, as a matter of law, are not subject to FDCPA regulation.

As an initial matter, in rejecting Defendant's legal contention, the Court notes that the statutory language of the FDCPA does not support a finding that state court complaints are, as a matter of law, excluded from its reach. The FDCPA is the primary federal legislation dealing with unfair and deceptive consumer debt collection practices. The FDCPA prohibits debt collectors from making false or misleading representations and from engaging in various abusive and unfair practices. See 15 U.S.C. § 1692 et seq.; Heintz v. Jenkins, 514 U.S. 291, 292-93, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995). The FDCPA does not explicitly regulate the content of complaints or other pleadings that are transmitted in connection with an actual legal proceeding and only prohibits the use of the courts as a means to collect a debt in a few specific ways, none of which are at issue here. See e.g., 15 U.S.C. § 1692i(a) (proscribing the debt collector's use of judicial proceedings in judicial districts other than where the real property is located, where the consumer signed the contract sued upon or where the consumer resides); 15 U.S.C. § 1692e(13) (proscribing a debt collector's false representation that documents are, or are not, legal process). However, there is also no express indication in the statutory language that state court complaints are, as a matter of law, excluded from the statute's reach.

Turning to the case law cited by both parties, the Court notes that the issue before it appears to be one of first impression as neither the Supreme Court nor the Ninth Circuit have addressed the specific question of whether state court complaints are subject to FDCPA regulation. However, a review of...