Rose v. FMS, Inc., 32284-0-III

• Decision Date: 27 October 2015
• Docket Number: 32284-0-III
• Court: Washington Court of Appeals
• Parties: GREGORY ROSE and CATHERINE ROSE, and the marital community composed thereof, Plaintiffs, v. FMS, INC., d/b/a OKLAHOMA FMS, INC., an Oklahoma Corporation, Respondent. ROBERT MITCHELL, Appellant,

GREGORY ROSE and CATHERINE ROSE, and the marital community composed thereof, Plaintiffs, ROBERT MITCHELL, Appellant, v. FMS, INC., d/b/a OKLAHOMA FMS, INC., an Oklahoma Corporation, Respondent.

No. 32284-0-III

Court of Appeals of Washington, Division 3

October 27, 2015

UNPUBLISHED OPINION

FEARING, J.

We review for the second time a challenge to sanctions Imposed on Robert Mitchell, the attorney for plaintiff Catherine and Gregory Rose, for frivolous pleadings and bad faith and harassing litigation conduct. The trial court granted sanctions of $66, 399.93 In the form of reasonable attorney fees and costs Incurred by the Roses' opponent, FMS, Inc.

Because this case comes to us for a second time and because the trial judge has been retired for three years, our decision includes an extensive review of the accounting for attorney fees incurred by FMS. The review is in three appendices. In turn we issue a comprehensive ruling about the fees to be awarded to FMS against attorney Robert Mitchell. Once again, we affirm in part and reverse in part the award. We reduce the amount of the sanctions to $11, 416.80.

FACTS

Appellant attorney Robert Mitchell, represented plaintiffs Catherine and Gregory Rose in an unfair debt collection lawsuit against FMS, a debt collection company. Catherine Rose purchased goods from Kohl's Department Store with a store credit card. In early 2010, the Roses filed bankruptcy and stopped making payments to Kohl's. Kohl's assigned the debt to FMS, a debt collection agency based in Oklahoma, to collect on missed payments. In March 2010, FMS initiated dunning calls and letters. FMS' call log showed 149 calls made to reach the Roses by telephone. The Roses retained attorney Robert Mitchell, who represented them in another matter, to demand that FMS cease calling.

On April 22, 2010, attorney Robert Mitchell addressed and sent a letter to FMS' headquarters in Tulsa. Enclosed with the letter was a copy of an unfiled summons and complaint that asserted violations of the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692, breaches of the Washington Collection Agency Act, ch. 19.16 RCW infringements of Washington's Consumer Protection Act ch. 19.86 RCW, and tort claims for emotional distress. Mitchell's letter informed FMS that Catherine and Gregory Rose had yet to file the lawsuit, but that FMS needed to respond to avoid a default. Mitchell mentioned the Roses' desire to resolve the dispute without the need for prolonged litigation, and he recommended that FMS forward a reasonable proposal to settle. Mitchell included the following paragraph in his April 22 letter:

If this dispute cannot be resolved, and if it becomes necessary to file this complaint with the Court, I will be bound by RCW 19.86.095 to file a copy of the complaint with the Washington State Attorney General's office. Harumi Tolbert at the Department of Licensing has also requested that I provide her with copies of all complaints filed with the Attorney General's office.

Clerk's Papers (CP) (303802)^[1] at 315.

Kathryn Martin, FMS' general counsel, responded on June 15, 2010 via a letter attached to an e-mail message to Robert Mitchell. The message denied engaging in harassing debt collection behavior. Martin claimed that Catherine and Gregory Rose's debt to Kohl's was not in "default, " but was instead "outstanding." CP (303802) at 320. The message did not explain any distinction between an "outstanding" debt and a debt in "default." The message informed Mitchell that FMS had returned the account to Kohl's. Martin did not offer any settlement of the dispute.

On June 15, 2010, Robert Mitchell replied, by e-mail message, to Kathryn Martin's e-mail. Mitchell asked if FMS wished to tender an offer to settle before the Roses proceeded with discovery and motions. Within minutes, Martin responded that FMS' president was out of the country for one week. Martin asked Mitchell for a demand from the Roses. Mitchell responded ten minutes later:

In cases of this type (too many telephone contacts) my office typically shoots for damages, costs, and attorney's fees of $5, 000, plus a letter promising to cease similar violations in this state.

In exchange, the case will not be filed with the Court, the Attorney General's Office, or the Department of Licensing. Plaintiffs will waive all claims and commit to confidentiality.

I understand if you have to wait until Monday to respond.

CP (303802) at 322.

On June 25, 2010, Kathryn Martin, on behalf of FMS, offered to settle the claims of Catherine and Gregory Rose for $500. Martin reiterated that FMS had not violated the law. Martin ended her settlement offer letter:

If this offer is not acceptable to your client, FMS is prepared to vigorously defend its position in court.

CP (303802) at 325.

On Sunday, June 27, 2010, Robert Mitchell sent Kathryn Martin by e-mail, a copy of a letter to the court clerk requesting filing of the summons and complaint, a copy of a letter to the Washington Attorney General's Office informing it of the lawsuit against FMS, a copy of a letter to the state Department of Licensing informing it of the lawsuit, requests for admission, a corporation deposition notice, interrogatories, and requests for production of documents. The deposition notice scheduled the corporate deposition for August 6, 2010, in Spokane. The e-mail message informed Martin that Mitchell intended to mail the letters and discovery requests on Monday.

Robert Mitchell's June 27 e-mail message also attached a letter of the same date to Kathryn Martin. The letter read, in part:

. . . Finally, you should note that your answer to Plaintiffs' complaint is overdue. Therefore, if I do not receive an answer by the close of business on Friday, July 2, 2010, I intend to file a motion for default and default judgment.

Your position that: "'Merely dialing a telephone without making contact or leaving a message does not a communication make" is untenable. Using that same logic, if a debt collector telephones a debtors' home 100 times in one day, but only actually speaks to the Debtor or leaves a message once, then the collector has not communicated with the debtor in such a manner as to harass, intimidate, threaten or embarrass. Your logic is unsound and not based on any published case I am aware of. Moreover, I am confident that Plaintiff will have absolutely no problem convincing the Court that 32 telephone calls in a 17 day period Is excessive and made for the sole purpose of harassment, especially where this case involves an out-of-state collection agency harassing local citizens and illustrating contempt for this State's consumer protection laws.

In this case, Defendant telephoned Plaintiffs and discussed the debt with Plaintiffs. At that time, Plaintiffs noted Defendant's telephone number(s). Therefore, each and every one of Defendant's subsequent telephone calls "communicated" who was calling (a debt collector), and why they were calling (to collect a debt). Because Plaintiffs knew that it was Defendant telephoning to collect a debt, each telephone call made to Plaintiffs represented a "communication, " Moreover, Defendant's communications were excessive where Defendant telephoned Plaintiffs at least 32 times in a 17 day period.

Plaintiffs were extremely insulted by the fact that Defendant made a nuisance offer $500 after clearly violating Plaintiffs' rights while engaging In unfair collection practices in violation of state and federal statute. Plaintiffs were even more insulted by the defense proffered because it cemented Plaintiffs' suspicions that Defendant has absolutely no intention of ceasing the abusive collection practices In the future, and that Defendant has no respect for Washington collection laws or Washington consumers.

As a result, Plaintiffs have instructed me to vigorously prosecute this case and attempt to obtain an injunction preventing Defendant from blatantly violating our state collection and consumer protection statutes in the future. To that end, I have filed the complaint with the Court, the Attorney General's Office, and the Department of Licensing.

If your client would like to change its position and avoid having to defend this matter, avoid having to tender the matter to its insurance carrier, or avoid having to deal with the unintended consequences of this litigation, Plaintiffs would be willing to settle this matter in exchange for a promise that Defendant will stop telephoning Washington debtors more than 3 times In a given week, plus $4, 950 damages, costs, and attorney's fees.

CP (303802) at 379-80.

On Monday, June 28, 2010, FMS general counsel Kathryn Martin responded to Robert Mitchell's June 27 message. She stated that she does not accept service on behalf of her client and Catherine and Gregory Rose would need to serve process on the company's registered agent. Mitchell replied:

I do not understand the purpose or Intent of your email. Service of process of the summons and complaint was made upon FMS's registered agent for service of process in April. If you believe the case needs to be reserved after it is filed with the Court you are mistaken.

You appeared on behalf of FMS through your communications with my office. Therefore, discovery was mailed and emailed to you. If you do not consider your communications with my office to represent an "appearance" in this case (which would be completely contrary to Washington law) then please Inform me immediately and I will default FMS today for failure to appear. The motion will not require any notice to you or FMS if you have not "appeared" in this case.

Additionally, you should note that requests for admissions are deemed admitted if not answered within 30 days. Therefore, if you choose to simply ignore the discovery because

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