Serrania v. LPH, Inc.

• Decision Date: 28 April 2015
• Docket Number: No. DA 14–0085.,DA 14–0085.
• Citation: 2015 MT 113,347 P.3d 1237,379 Mont. 17
• Parties: Karrie Lynn SERRANIA, Plaintiff and Appellant, v. LPH, INC. dba Northwest Collectors, a Montana Corporation, and Discovery Dental Group, Defendants and Appellees.
• Court: Montana Supreme Court

379 Mont. 17

347 P.3d 1237

2015 MT 113

Karrie Lynn SERRANIA, Plaintiff and Appellant

v.LPH, INC. dba Northwest Collectors, a Montana Corporation, and Discovery Dental Group, Defendants and Appellees.

No. DA 14–0085.

Supreme Court of Montana.

Submitted on Briefs March 18, 2015.

Decided April 28, 2015.

For Appellant: Terry A. Wallace, Attorney at Law, Missoula, Montana.

For Appellee: David J. Steele, II., Geiszler Steele, PC, Missoula, Montana.

Opinion

Justice BETH BAKER delivered the Opinion of the Court.

¶ 1 Karrie Lynn Serrania sued LPH, Inc., and Discovery Dental Group, PLLC (DDG), in the Fourth Judicial District Court, Missoula County, over their attempt to collect a disputed dental bill. After months of litigation, the District Court entered judgment and sanctions against Serrania and her counsel, Terry Wallace. Serrania and Wallace appeal. We address the following issues:

1. Whether the appeal is justiciable.

2. Whether the District Court correctly awarded LPH summary judgment on Serrania's Fair Debt Collection Practices Act claim.

3. Whether the District Court abused its discretion in sanctioning Wallace.

¶ 2 We affirm all aspects of the judgment properly before us, with the exception of one portion of the sanctions.

PROCEDURAL AND FACTUAL BACKGROUND

¶ 3 In 2009, Serrania went to DDG with a toothache. She signed a contract before receiving treatment. The contract states, “Payment of all treatment and services rendered are my responsibility and I agree to pay collection and legal fees if any delinquent balance is placed with an agency or attorney for collection of suit.” The contract also states, “I understand that I am responsible for all costs and dental treatment.”

¶ 4 In July 2011, DDG referred Serrania's account to LPH, a debt collection agency. DDG informed LPH that Serrania owed $1,112.13. The debt comprised costs for treatment rendered to Serrania, her then-husband, and her son, along with interest on unpaid amounts, and a fee for a bad check. LPH initiated steps to collect the debt. LPH mailed Serrania a letter that notified her of the debt and explained that if she did not dispute the debt within thirty days, LPH would presume the debt's validity. After thirty days passed without dispute, LPH mailed Serrania a collections placement letter with charges for additional interest and collection fees. Serrania did not immediately pay the debt, nor did she advise LPH of a dispute within thirty days. A few months later, LPH filed a complaint against her in Missoula County Justice Court, but the complaint was eventually dismissed after Serrania filed counterclaims that exceeded the Justice Court's jurisdiction.

¶ 5 In July 2012, Serrania sued LPH and DDG in the Fourth Judicial District Court, alleging that LPH violated the Fair Debt Collection Practices Act (FDCPA), that DDG committed credit defamation, and that both violated the Montana Consumer Protection Act. Serrania sought to recover approximately $650,000 in damages. LPH and DDG counterclaimed for breach of contract and unjust enrichment.

¶ 6 In December 2012 and January 2013, LPH and DDG jointly moved for partial summary judgment on their contract counterclaim, and LPH individually moved for partial summary judgment on Serrania's FDCPA claim. Serrania responded to the joint motion for summary judgment on the contract counterclaim, but failed to respond to LPH's motion on the FDCPA claim.

¶ 7 On February 27, 2013, the District Court held a pretrial conference. Wallace, Serrania's attorney, failed to attend the conference. On LPH and DDG's motion, the District Court ordered Wallace to pay $1,000 in sanctions each to counsel for LPH and DDG for the unwarned absence. The Court also entered summary judgment against Serrania on the contract and FDCPA claims. In the months that followed, Serrania moved to vacate the sanctions and moved for relief from the FDCPA summary judgment order, referring to that order as an “advisory opinion.”

¶ 8 In May 2013, counsel for LPH and DDG informed Serrania that they would move to dismiss their unjust enrichment counterclaim, as they had pled unjust enrichment in the alternative to their breach of contract counterclaim. Serrania nonetheless filed a motion for summary judgment on the unjust enrichment claim. In an e-mail to opposing counsel, Wallace explained this motion by writing that, “Plaintiff wants judgments against LPH and DDG.” LPH and DDG responded by moving to dismiss the unjust enrichment claim, which the District Court did. LPH also moved the court to impose sanctions, arguing that Serrania and Wallace's conduct constituted vexatious litigation.

¶ 9 In July 2013, DDG moved to compel Serrania to respond to discovery requests asking her to identify the name of her employer, her employment position, and the nature of her job duties. LPH joined the motion. Serrania responded by moving to quash the discovery requests.

¶ 10 On December 2, 2013, the District Court issued an order resolving a number of outstanding motions and issues, some of which are recounted above, but many of which are not for the sake of brevity. The court's order set a show cause hearing for December 19, 2013, for Wallace to explain why the court should not sanction Serrania and Wallace for their conduct in the course of litigation. After that hearing, on January 7, 2014, the court sanctioned Serrania and Wallace in the amount of $42,113.32 to be paid to LPH, and $32,647.94 to be paid to DDG. Additionally, the court sanctioned Wallace $10,000 for “his blatant lack of candor and his disrespectful conduct toward the Court and the legal process and his egregious abuses of the legal rights of the Defendants.”

¶ 11 Serrania underwent bankruptcy after the District Court issued judgment. Her debts resulting from the dental bill and the District Court's orders were discharged. Nonetheless, Serrania now appeals the sanctions orders, as well as the contract and FDCPA summary judgment orders, and Wallace, through Serrania, appeals the sanctions against him.

STANDARDS OF REVIEW

¶ 12 Whether an appeal is justiciable is a threshold question that this Court determines before proceeding to the merits. Progressive Direct Ins. Co. v. Stuivenga, 2012 MT 75, ¶ 16–17, 364 Mont. 390, 276 P.3d 867. This Court reviews summary judgment orders de novo. Albert v. City of Billings, 2012 MT 159, ¶ 15, 365 Mont. 454, 282 P.3d 704. Summary judgment is appropriate when the moving party demonstrates an absence of a genuine issue of material fact and entitlement to judgment as a matter of law. M.R. Civ. P. 56(c)(3) ; Albert, ¶ 15. This Court reviews sanctions orders for abuse of discretion. Johnson v. Booth, 2008 MT 155, ¶ 13, 343 Mont. 268, 184 P.3d 289.

DISCUSSION

¶ 13 1. Whether Serrania's appeal is justiciable.

¶ 14 The judicial power of Montana's courts encompasses only live controversies. Stuivenga, ¶ 17. An appeal is moot and non-justiciable when “an intervening event or change in circumstances” renders this Court unable “to grant effective relief or to restore the parties to their original position.” Stuivenga, ¶ l7.

¶ 15 LPH argues that a change in circumstances has mooted Serrania's appeal. Specifically, in October 2014, a United States Bankruptcy Court discharged the District Court's judgments against Serrania. Thus, the sanctions and contract judgments no longer may be collected against Serrania. Because this Court cannot grant effective relief to Serrania with respect to appeals on those issues, those appeals are moot.

¶ 16 By contrast, it appears that the bankruptcy trustee abandoned Serrania's FDCPA claim against LPH. Serrania possesses that claim and stands to benefit if this Court were to reverse the District Court on it. Serrania's appeal of the District Court's summary judgment order on her FDCPA claim is live, and we will examine its merits.

¶ 17 Finally, while Serrania no longer has an interest in the sanctions orders, Wallace does. The general rule is that only a party to a case has standing to appeal an adverse judgment in the case. Marino v. Ortiz, 484 U.S. 301, 304, 108 S.Ct. 586, 587, 98 L.Ed.2d 629 (1988) (“The rule that only parties to a lawsuit ... may appeal an adverse judgment is well settled.”). Courts recognize an exception to this rule, however, for a party's attorney who has been sanctioned and seeks to appeal those sanctions. Nisus Corp. v. Perma–Chink Sys., Inc., 497 F.3d 1316, 1319 (Fed.Cir.2007) (“As an exception to [the] general rule, a nonparty such as an attorney who is held in contempt or otherwise sanctioned by the court in the course of litigation may appeal from the order imposing sanctions....”); Bartels v. Sports Arena Emps. Local 137, 838 F.2d 101, 104 (3rd Cir.1988) (“[T]here is no doubt at all but that at some point an attorney subject to sanction may appeal.”). Indeed, in In re Estate of Bayers, 2001 MT 49, 304 Mont. 296, 21 P.3d 3, an attorney representing a party appealed sanctions that were entered against him, and we reviewed that appeal. Bayers, ¶¶ 1–2. Like the attorney in Bayers, Wallace has an interest in overturning the sanctions entered against him. Accordingly, we will review the merits of the sanctions against him.

¶ 18 2. Whether the District Court correctly awarded LPH summary judgment on the FDCPA claim.

¶ 19 The FDCPA prohibits a debt collector from collecting a debt through “any false, deceptive, or misleading representation or means,” 15 U.S.C. § 1692e, or through “unfair or unconscionable means,” 15 U.S.C. § 1692f. Further, the FDCPA imposes an affirmative duty on a debt collector to, within five days of initial communication with a consumer, inform the consumer that she has thirty days to contest the debt or else the collector will presume that the debt is valid. 15 U.S.C. § 1692g(a). If the consumer disputes the debt within thirty days, the collector must cease collection efforts and take steps to verify the debt. 15 U.S.C. § 1692g(b).

¶ 20 The District Court granted summary judgment to LPH on Serrania's FDCPA claim because it...