Goodrick v. Cavalry Portfolio Services LLC

Filing 39

ORDER denying 19 Plaintiff's Motion for Summary Judgment; granting 31 Defendant's Cross Motion for Summary Judgment. The Clerk of the Court is directed to terminate this action. Signed by Judge David G Campbell on 8/19/13.(TLJ)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Jeremy Goodrick,

No. CIV 12-1822 PHX DGC
Plaintiff,

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v.

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Cavalry Portfolio Services LLC,

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ORDER

Defendant.

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Plaintiff Jeremy Goodrick filed a motion for summary judgment against Defendant

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Cavalry Portfolio Services LLC (“Cavalry”). Doc. 19. Defendant filed a cross motion

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for summary judgment. Doc. 31. The motions are fully briefed. Docs. 20, 29, 30, 31,

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33, 34, 38. For the reasons that follow, the Court will deny summary judgment to

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Plaintiff and grant summary judgment to Defendant.1

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I.

Background.

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In 2003, Jeremy Goodrick obtained a loan from TD Auto Finance, LLC/Chrysler

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Financial (“TD/Chrysler”) to purchase a 2001 Chevy Malibu. Doc. 20, ¶¶ 2-3. The loan

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accrued interest at a rate of 20% per annum. Doc. 29-2 at 7:14-20. In 2012, Defendant

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Cavalry purchased the loan from TD/Chrysler. On February 6, 2012, Defendant mailed

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Plaintiff an initial demand letter stating that it had purchased the loan from TD Auto

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Finance LLC and that the outstanding balance on Plaintiff’s account was $8,397.41.

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The request for oral argument is denied because the issues have been fully
briefed and oral argument will not aid the Court’s decision. See Fed. R. Civ. P. 78(b);
Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998).

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Doc. 1, ¶ 12; see Doc. 20-2 at 3. The letter did not state that the outstanding balance was

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subject to increase due to the accrual of interest. On May 7, 2012, Defendant mailed

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Plaintiff a second demand letter. Doc. 1, ¶ 14. This one stated a new total amount due of

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$8,608.27, which Plaintiff alleges indicated that interest or fees and other charges had

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accrued. Id., ¶¶ 14, 15. Plaintiff filed a complaint on August 29, 2013, alleging that

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Defendant’s failure to advise him of interest accrual in its February 6, 2012 letter is a

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violation of the Fair Debt Collection Practices Act (“FDCPA”) at sections 1692g(a)(1),

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1692e(2)(A), and 1692e(10). Id., ¶¶ 16-19; 21-26.

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II.

Legal Standard.

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A.

Summary Judgment.

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A party seeking summary judgment “bears the initial responsibility of informing

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the district court of the basis for its motion, and identifying those portions of [the record]

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which it believes demonstrate the absence of a genuine issue of material fact.” Celotex

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Corp. v. Catrett, 477 U.S. 317, 323 (1986). Summary judgment is appropriate if the

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evidence, viewed in the light most favorable to the nonmoving party, shows “that there is

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no genuine dispute as to any material fact and the movant is entitled to judgment as a

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matter of law.” Fed. R. Civ. P. 56(a). Summary judgment is also appropriate against a

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party who “fails to make a showing sufficient to establish the existence of an element

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essential to that party’s case, and on which that party will bear the burden of proof at

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trial.” Celotex, 477 U.S. at 322. Only disputes over facts that might affect the outcome

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of the suit will preclude the entry of summary judgment, and the disputed evidence must

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be “such that a reasonable jury could return a verdict for the nonmoving party.”

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Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

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summary judgment motion, the court examines the pleadings, depositions, answers to

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interrogatories, and admissions on file, together with the affidavits, if any. Fed. R. Civ.

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P. 56(c). At summary judgment, the judge’s function is not to weigh the evidence and

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determine the truth, but to determine whether there is a genuine issue for trial. Anderson,

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477 U.S. at 249.
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When considering a

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A.

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The FDCPA was enacted to eliminate abusive debt collection practices, to ensure

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that debt collectors who abstain from such practices are not competitively disadvantaged,

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and to promote consistent state action to protect consumers. 15 U.S.C. § 1692(e);

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McCollough v. Johnson, Rodenburg & Lauinger, LLC, 637 F.3d 939, 948 (9th Cir. 2011).

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Whether a debt collector’s behavior violates the FDCPA “depends on whether it is likely

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to deceive or mislead a hypothetical ‘least sophisticated debtor.’” Terran v Kaplan, 109

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F.3d 1428, 1431 (9th Cir. 1997). “The objective least sophisticated debtor standard is

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‘lower than simply examining whether particular language would deceive or mislead a

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reasonable debtor.’” Id., at 1431-32 (citation omitted). “Most courts agree that although

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the least sophisticated debtor may be uninformed, naive, and gullible, nonetheless her

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interpretation of a collection notice cannot be bizarre or unreasonable.” Evon v. Law

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Offices of Sidney Mickell, 688 F.3d 1015, 1027 (9th Cir. 2012) (citations omitted). The

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FDCPA is a remedial statute which should be interpreted “liberally” to “protect debtors

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from abusive debt collection practices.” Id. at 1025 (9th Cir. 2012).

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II.

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The FDCPA.

Discussion.
The parties agree that there are no genuine issues of material fact, and each party

claims to be entitled to judgment as a matter of law.

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A.

Plaintiff’s Claim under 15 U.S.C. § 1692g(a)(1).

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Section 1692g(a)(1) of the FDCPA provides that “[w]ithin five days after the

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initial communication with a consumer in connection with the collection of any debt, a

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debt collector shall . . . send the consumer a written notice containing the amount of the

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debt.” 15 U.S.C. § 1692g(a)(1). Plaintiff argues that “the amount of the debt” should

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include a statement advising the debtor that his outstanding balance is subject to accrual

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of interest. In the absence of such a statement, Plaintiff argues that the collector has not

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satisfied the requirements of 1692g(a)(1). Doc. 19 at 6-11; 14.

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Plaintiff cites to cases of varying relevance from the Seventh Circuit and an

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assortment of district courts. Id. at 6-11. One consistent feature of these cases is that the
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loan was new to the debtor. In each case, the debtor was receiving notice of a newly

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incurred financial obligation, making a clear statement of the terms of the loan very

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important.

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In Plaintiff’s case, the loan had been outstanding for nine years. Plaintiff had

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received statements during this time, and even the most unsophisticated debtor in his

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position would have known that the loan was accruing interest. Nothing about the loan

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had changed except the administrator – the terms were the same, the interest rate was the

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same, and the outstanding balance at the time of assignment was the same. Confusion

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caused by a purported misrepresentation is measured by an objective standard, and even

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the most unsophisticated debtor would not have been confused by Defendant’s failure to

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say that Plaintiff’s longstanding loan was continuing to accrue interest.

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Plaintiff argues that he knew his original lender, TD Auto Finance, LLC, charged

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interest on his loan, but he did not know that Defendant Cavalry would do so. Doc. 33 at

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2-6. Plaintiff puts forth several reasons why he could have concluded that Cavalry would

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not charge interest, including that the assignee of a loan may not acquire all the loan

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rights or may waive its right to collect interest. Id. Defendant argues, and the Court

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agrees, that the mere possibility of an atypical situation is not enough to create confusion

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in the mind of the least sophisticated debtor. Plaintiff cannot claim that he assumed

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something highly unusual was at work and was misled because Defendant failed to

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disabuse him of that idea. Courts have rejected fanciful arguments made on behalf of

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debtors to challenge collections under the FDCPA. See, e.g., White v. Goodman, 200

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F.3d 1015, 1020 (7th Cir. 200) (rejecting argument that a collection letter was deceptive

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because it listed rights conferred by the state of Colorado and therefore inaccurately

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implied that residents of other states did not have similar rights: “The Act is not violated

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by a dunning letter that is susceptible of an ingenious misreading, for then every dunning

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letter would violate it. The Act protects the unsophisticated debtor, but not the irrational

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one.”) (citing cases); c.f. Gonzales v. Arrow Fin. Servs., LLC, 660 F.3d 1055, 1064 (9th

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Cir. 2011) (holding debt collector liable under the FDCPA where the debtor’s
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interpretation that its demand letter contained an implied threat was not “bizarre or

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idiosyncratic.”). Here, Defendant provided the full amount due as required by the statute.

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This amount included interest already accrued, and even unsophisticated debtors would

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understand that interest would continue to accrue.

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B.

Plaintiff’s Claims under 15 U.S.C. § 1692e.

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Section 1692e of the FDCPA prohibits any false representation of the “character,

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amount, or legal status of any debt,” including but not limited to “[t]he use of any false

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representation or deceptive means to collect or attempt to collect any debt or to obtain

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information concerning a consumer.” 15 U.S.C § 1692e(2)(A), 15 U.S.C § 1692e(10).

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Plaintiff argues that Defendant violated this section because the failure of its collection

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letters to say that interest and other charges would continue to accrue would “frustrate a

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consumer’s ability to intelligently choose his or her response.” Doc. 19 at 12 (quoting

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Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1034 (9th Cir. 2010)).

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Plaintiff cites a number of cases in support of the position that a failure to notify a

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debtor that interest will accrue on the loan is a violation of § 1692e. Doc. 19 at 6-13.

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Plaintiff asks the Court to consider a Seventh Circuit opinion, Miller v. McCalla, Raymer,

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Padrick, Cobb, Nichols, & Clark, LLC, 214 F.3d 872, 875-76 (7th Cir. 2000), as

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persuasive because that opinion notes that a collector should state “the total amount due –

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interest and other charges as well as principal – on the date the dunning letter was sent.”

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Id. The plaintiff in Miller received a statement containing only the unpaid principal and

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stating that the amount provided did not include accrued unpaid interest and other fees

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authorized by the loan agreement.

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outstanding balance shown in the letter without inquiring further about the interest and

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other charges that had accrued, the collector would not have considered the debt satisfied.

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Id.

Id. at 875.

Thus, if the debtor paid only the

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Miller differs from this case in a crucial respect: here, there was no risk of

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confusion as to the total outstanding balance due because Defendant included the total

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amount due on the date the collection letters were sent. Unlike Miller, Plaintiff could
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have paid the debt in full simply by tendering the amount listed on the most recent letter.

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While Defendant’s letters could have included additional clarifying language to itemize

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the principal and the interest portions of the debt or to reiterate the interest rate, the Court

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does not believe that the lack of those details can be considered false, deceptive, or

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misleading. The statute does not require itemization of the debt in every communication,

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but rather a clear and accurate statement of the total amount due. Plaintiff received that

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information.

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Even if the Court were to find that the lack of specificity in this case could mislead

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a debtor as to what portion of his total debt was principal and what portion was interest

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and other fees, the Court does not agree, as Plaintiff argues, that this would “frustrate a

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consumer’s ability to intelligently choose his or her response.” Donohue, 592 F.3d at

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1034. Donohue considered whether a collector had violated § 1692e when its demand for

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payment stated the correct total due but mislabeled some charges as “interest” when they

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included finance charges. Id. The Ninth Circuit concluded that the technical falsehood

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regarding the additional charges was not material and therefore not actionable under

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§ 1692e because “it did not undermine Donohue’s ability to intelligently choose her

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action concerning her debt.” Id. Her actions, the court reasoned, could have included

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challenging the debt or settling it by paying in full. Id. Plaintiff had the same options

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here. If erroneously reporting additional charges is not sufficient to trigger a § 1692e

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violation when the statement of total debt is correct, then failing to itemize principal,

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interest, and other charges does not trigger § 1692e liability when the statement of the

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total debt is correct.

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Plaintiff argues for the first time in his opposition to Defendant’s cross motion for

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summary judgment that he called Cavalry after getting each of its two demand letters

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because he was confused about the basis for the debt. Doc. 33 at 8. Plaintiff states that

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Cavalry promised to send him verification of the amount due but never did. Id. This

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violation is not alleged in the complaint. The sole claim in Plaintiff’s complaint is that

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the letters Plaintiff received from Defendant – in particular, the February 6, 2012 letter –
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violated the FDCPA for failing to state that the outstanding balance of the loan was

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subject to increase due to accrual of interest. Defendant provided an accurate statement

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of the amount due in both demand letters, as required by the FDCPA, and the Court

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therefore finds for Defendant on this claim.

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III.

Conclusion.

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Plaintiff has failed to show as a matter of law that Defendant’s communications in

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its debt collections letters violated sections 1692g(a)(1), 1692e(2)(A), and 1692e(10) of

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the FDCPA, as alleged in the complaint, The Court will deny summary judgment to

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Plaintiff and grant summary judgment to Defendant.

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IT IS ORDERED:

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1.

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Plaintiff Jeremy Goodrick’s motion for summary judgment (Doc. 19) is

denied.
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Defendant Cavalry Portfolio Services, LLC’s cross motion for summary

judgment (Doc. 31) is granted.

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3.

The Clerk of the Court is directed to terminate this action.

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Dated this 19th day of August, 2013.

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