Student Loan Fund of Idaho, Inc. v. Duerner, 23262

Decision Date30 December 1997
Docket NumberNo. 23262,23262
Parties, 124 Ed. Law Rep. 413 STUDENT LOAN FUND OF IDAHO, INC., Plaintiff-Counterdefendant-Appellant, v. Jeffrey W. DUERNER, Defendant-Counterclaimant-Respondent. Boise, September 1997 Term
CourtIdaho Supreme Court

Marcus, Merrick & Montgomery, Meridian, for appellant. Wilbur T. Nelson argued.

Uranga, Uranga & Beiter, Boise, for respondent. Jean Uranga argued.

TROUT, Chief Justice.

This is an appeal from a jury verdict and judgment in favor of respondent Jeffrey W. Duerner in a debt collection suit. We affirm.

I. BACKGROUND

Jeffrey W. Duerner (hereinafter "Duerner") obtained $4,000 in student loans between 1979 and 1982. The first two loans were from Idaho First National Bank, for a total of $1,500. The second two loans were from First Security Bank, for a total of $2,500. All four loans were guaranteed by the Student Loan Fund of Idaho, Inc. (hereinafter "S.L.F.I."). The Department of Education contracted with S.L.F.I., pursuant to the Higher Education Act, to guarantee loans made by lenders to qualified students. See 20 U.S.C. § 1072(a). The Department of Education agreed to reimburse S.L.F.I. for certain losses it suffered in acting as guarantor. See 20 U.S.C. § 1078(c)(1)(B).

In 1983, Duerner defaulted on the First Security loans. S.L.F.I. paid First Security the amount due under its guarantee and First Security transferred the loans to S.L.F.I. S.L.F.I. instituted collection proceedings against Duerner. Duerner claims that he paid S.L.F.I. $2,500 in 1984 to pay off these two loans. However, S.L.F.I. has no record of this payment and Duerner cannot produce the receipt of the money order used to pay the loans. Duerner defaulted on the Idaho First National loans in 1984. S.L.F.I. paid Idaho First National the amount due under its guarantee and Idaho First National transferred the loans to S.L.F.I.

In 1987, S.L.F.I. instituted suit against Duerner to collect the amount due under all four loans. Duerner contacted S.L.F.I. and requested the "payoff amount." Duerner sent a check to S.L.F.I. for $1,769.84, the amount S.L.F.I. stated was the "payoff amount." Duerner claimed that he believed this amount would pay off all of the loans because he had already sent the $2,500 check for the First Security loans. Duerner did not file an answer or appear in the litigation because he thought his payment resolved the issue. S.L.F.I. obtained a default judgment against Duerner for $6,572.53, an amount that did not take into account his payments thus far.

In 1990, Duerner contacted S.L.F.I. and was told that the entire debt could be paid off for $70.00. Duerner paid the $70.00 and received a letter from S.L.F.I. informing him that his obligation was paid in full. The letter contained the four promissory notes, stamped "paid in full." Later, S.L.F.I. claimed that Duerner never paid the $2,500 on the First Security loans. Rather, S.L.F.I. stated a computer error caused the promissory notes to be stamped "paid in full."

II. PROCEDURAL HISTORY

The 1987 default judgment obtained by S.L.F.I. was set aside by the district court on On May 24, 1996, after a trial to a jury, the jury returned a verdict denying recovery to S.L.F.I. on the student loan debt; denying recovery to Duerner on his claim under the Fair Credit Reporting Act; awarding actual damages of $2,118 to Duerner on his claim under the Fair Debt Collection Practices Act; awarding Duerner compensatory damages of $19,375 on his defamation claim; and awarding Duerner punitive damages of $101,250 on his defamation claim. On June 12, 1996, S.L.F.I. filed a motion for judgment notwithstanding the verdict and for new trial. The court denied S.L.F.I.'s motions. S.L.F.I. filed a notice of appeal and sought to stay execution of the judgment pending appeal. Pursuant to I.A.R. 13(b)(15), the district court required S.L.F.I. to post a bond which was calculated based on the amount of the entire judgment, including costs and attorney's fees.

March 1, 1993. S.L.F.I. filed an amended complaint and obtained a second default judgment on April 8, 1993. Duerner filed an answer on April 13, 1993. Duerner later amended his answer to include a counterclaim alleging violations of the Fair Debt Collection Practices Act, violations of the Fair Credit Reporting Act, and defamation. The second default judgment was set aside by the district court on May 25, 1993. On January 29, 1996, S.L.F.I. filed a motion for judgment on the pleadings or for summary judgment as to Duerner's counterclaims. The district court denied both motions.

On appeal, S.L.F.I. argues that the district court erred in: (1) denying S.L.F.I.'s motion for judgment on the pleadings or for summary judgment; (2) denying S.L.F.I.'s motion for directed verdict; (3) submitting the issue of punitive damages to the jury; (4) giving Jury Instruction No. 7, which instructed the jury on the effect of a creditor erroneously returning a promissory note to a debtor; (5) denying S.L.F.I.'s motion for judgment notwithstanding the verdict; (6) denying S.L.F.I.'s motion for new trial; and (7) calculating the required bond for staying execution of the judgment pending appeal. Also, both S.L.F.I. and Duerner seek attorney's fees on appeal.

III.

THE DISTRICT COURT DID NOT ERR IN DENYING S.L.F.I.'S MOTION FOR JUDGMENT ON THE PLEADINGS AND MOTION FOR SUMMARY JUDGMENT ON THE ISSUE OF THE APPLICABILITY OF THE FAIR DEBT COLLECTION PRACTICES ACT AND THE FAIR CREDIT REPORTING ACT TO S.L.F.I.

A. Standard of Review

We review a trial court's ruling on a motion for judgment on the pleadings de novo. Trimble v. Engelking, 130 Idaho 300, 302, 939 P.2d 1379, 1381 (1997) (citing Orthman v. Idaho Power Co., 126 Idaho 960, 962, 895 P.2d 561, 563 (1995)); McGann v. Ernst & Young, 102 F.3d 390, 392 (9th Cir.1996), cert. denied, --- U.S. ----, 117 S.Ct. 1460, 137 L.Ed.2d 564 (1997) (citations omitted). A judgment on the pleadings is properly granted when, taking all allegations in the pleading as true, the moving party is entitled to judgment as a matter of law. Sterling v. Bloom, 111 Idaho 211, 212, 723 P.2d 755, 756 (1986); McGann, 102 F.3d at 392 (citation omitted).

When reviewing a trial court's ruling on a summary judgment motion, we employ the same standard properly employed by the district court when originally ruling on the motion. Lamb v. Manweiler, 129 Idaho 269, 271-72, 923 P.2d 976, 978-79 (1996) (citing Friel v. Boise City Hous. Auth., 126 Idaho 484, 485, 887 P.2d 29, 30 (1994)). Summary judgment is proper only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Id. at 271, 923 P.2d at 978 (citing I.R.C.P. 56(c); Mutual of Enumclaw v. Box, 127 Idaho 851, 852, 908 P.2d 153, 154 (1995)). Also, the record must be liberally construed in favor of the party opposing the motion for summary judgment, drawing all reasonable inferences and conclusions supported by the record in favor of that party. Id. at 272, 923 P.2d at 979 (citing City of Chubbuck v. City of Pocatello, 127 Idaho 198, 200, 899 P.2d 411, 413 (1995)).

B. Fair Debt Collection Practices Act

S.L.F.I. claims the district court erred in ruling that the Fair Debt Collection Practices Act (hereinafter "F.D.C.P.A.") applies to S.L.F.I. S.L.F.I. asserts it is not subject to the F.D.C.P.A. because it is not a "debt collector" within the meaning of the F.D.C.P.A. A "debt collector" is defined as

any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another....

....

The term does not include ... any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity (i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement; (ii) concerns a debt which was originated by such person; (iii) concerns a debt which was not in default at the time it was obtained by such person; or (iv) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor.

15 U.S.C. § 1692a(6)(F).

We examine only that portion of 15 U.S.C. § 1692a(6) which defines a "debt collector" as one who regularly collects debts owed to another, as it is dispositive of this issue. This section excludes from the definition of "debt collector" entities seeking to collect a debt which they originated. See 15 U.S.C. § 1692a(6)(F)(ii). Also, this section excludes entities seeking to collect debts which were not in default when they were obtained by such entities. See 15 U.S.C. § 1692a(6)(F)(iii). Thus, by definition, "debt collector" must include entities seeking to collect a debt which originated with another entity, and which was obtained by the entity now seeking to collect on the debt after the debt was in default.

In this case, the record supports the district court's finding that S.L.F.I. regularly collects debts owed to another. First, S.L.F.I. did not originate Duerner's loans. Rather, the loans were originated by Idaho First National Bank and First Security Bank. Second, S.L.F.I. did not obtain possession of Duerner's loans until after Duerner had defaulted on those loans. Third, an S.L.F.I. employee testified that S.L.F.I. regularly obtains defaulted loans from other entities and attempts to collect these loans. Therefore, S.L.F.I. is a "debt collector" for the purpose of the F.D.C.P.A. because S.L.F.I. regularly collects debts owed to another.

S.L.F.I. argues that even if it regularly collects debts owed to another, it is excepted from the definition of a "debt collector" under 15 U.S.C. § 1692a(6)(C). The F.D.C.P.A. excepts from the definition of a debt collector "any officer or employee of the United States or any...

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