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)

Download PDF
    1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Jeremy Goodrick, No. CIV 12-1822 PHX DGC Plaintiff, 10 11 v. 12 Cavalry Portfolio Services LLC, 13 ORDER Defendant. 14 Plaintiff Jeremy Goodrick filed a motion for summary judgment against Defendant 15 Cavalry Portfolio Services LLC (“Cavalry”). Doc. 19. Defendant filed a cross motion 16 for summary judgment. Doc. 31. The motions are fully briefed. Docs. 20, 29, 30, 31, 17 33, 34, 38. For the reasons that follow, the Court will deny summary judgment to 18 Plaintiff and grant summary judgment to Defendant.1 19 I. Background. 20 In 2003, Jeremy Goodrick obtained a loan from TD Auto Finance, LLC/Chrysler 21 Financial (“TD/Chrysler”) to purchase a 2001 Chevy Malibu. Doc. 20, ¶¶ 2-3. The loan 22 accrued interest at a rate of 20% per annum. Doc. 29-2 at 7:14-20. In 2012, Defendant 23 Cavalry purchased the loan from TD/Chrysler. On February 6, 2012, Defendant mailed 24 Plaintiff an initial demand letter stating that it had purchased the loan from TD Auto 25 Finance LLC and that the outstanding balance on Plaintiff’s account was $8,397.41. 26 27 28 1 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).     1 Doc. 1, ¶ 12; see Doc. 20-2 at 3. The letter did not state that the outstanding balance was 2 subject to increase due to the accrual of interest. On May 7, 2012, Defendant mailed 3 Plaintiff a second demand letter. Doc. 1, ¶ 14. This one stated a new total amount due of 4 $8,608.27, which Plaintiff alleges indicated that interest or fees and other charges had 5 accrued. Id., ¶¶ 14, 15. Plaintiff filed a complaint on August 29, 2013, alleging that 6 Defendant’s failure to advise him of interest accrual in its February 6, 2012 letter is a 7 violation of the Fair Debt Collection Practices Act (“FDCPA”) at sections 1692g(a)(1), 8 1692e(2)(A), and 1692e(10). Id., ¶¶ 16-19; 21-26. 9 II. Legal Standard. 10 A. Summary Judgment. 11 A party seeking summary judgment “bears the initial responsibility of informing 12 the district court of the basis for its motion, and identifying those portions of [the record] 13 which it believes demonstrate the absence of a genuine issue of material fact.” Celotex 14 Corp. v. Catrett, 477 U.S. 317, 323 (1986). Summary judgment is appropriate if the 15 evidence, viewed in the light most favorable to the nonmoving party, shows “that there is 16 no genuine dispute as to any material fact and the movant is entitled to judgment as a 17 matter of law.” Fed. R. Civ. P. 56(a). Summary judgment is also appropriate against a 18 party who “fails to make a showing sufficient to establish the existence of an element 19 essential to that party’s case, and on which that party will bear the burden of proof at 20 trial.” Celotex, 477 U.S. at 322. Only disputes over facts that might affect the outcome 21 of the suit will preclude the entry of summary judgment, and the disputed evidence must 22 be “such that a reasonable jury could return a verdict for the nonmoving party.” 23 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). 24 summary judgment motion, the court examines the pleadings, depositions, answers to 25 interrogatories, and admissions on file, together with the affidavits, if any. Fed. R. Civ. 26 P. 56(c). At summary judgment, the judge’s function is not to weigh the evidence and 27 determine the truth, but to determine whether there is a genuine issue for trial. Anderson, 28 477 U.S. at 249. ‐ 2 ‐  When considering a     1 A. 2 The FDCPA was enacted to eliminate abusive debt collection practices, to ensure 3 that debt collectors who abstain from such practices are not competitively disadvantaged, 4 and to promote consistent state action to protect consumers. 15 U.S.C. § 1692(e); 5 McCollough v. Johnson, Rodenburg & Lauinger, LLC, 637 F.3d 939, 948 (9th Cir. 2011). 6 Whether a debt collector’s behavior violates the FDCPA “depends on whether it is likely 7 to deceive or mislead a hypothetical ‘least sophisticated debtor.’” Terran v Kaplan, 109 8 F.3d 1428, 1431 (9th Cir. 1997). “The objective least sophisticated debtor standard is 9 ‘lower than simply examining whether particular language would deceive or mislead a 10 reasonable debtor.’” Id., at 1431-32 (citation omitted). “Most courts agree that although 11 the least sophisticated debtor may be uninformed, naive, and gullible, nonetheless her 12 interpretation of a collection notice cannot be bizarre or unreasonable.” Evon v. Law 13 Offices of Sidney Mickell, 688 F.3d 1015, 1027 (9th Cir. 2012) (citations omitted). The 14 FDCPA is a remedial statute which should be interpreted “liberally” to “protect debtors 15 from abusive debt collection practices.” Id. at 1025 (9th Cir. 2012). 16 II. 17 18 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. 19 A. Plaintiff’s Claim under 15 U.S.C. § 1692g(a)(1). 20 Section 1692g(a)(1) of the FDCPA provides that “[w]ithin five days after the 21 initial communication with a consumer in connection with the collection of any debt, a 22 debt collector shall . . . send the consumer a written notice containing the amount of the 23 debt.” 15 U.S.C. § 1692g(a)(1). Plaintiff argues that “the amount of the debt” should 24 include a statement advising the debtor that his outstanding balance is subject to accrual 25 of interest. In the absence of such a statement, Plaintiff argues that the collector has not 26 satisfied the requirements of 1692g(a)(1). Doc. 19 at 6-11; 14. 27 Plaintiff cites to cases of varying relevance from the Seventh Circuit and an 28 assortment of district courts. Id. at 6-11. One consistent feature of these cases is that the ‐ 3 ‐      1 loan was new to the debtor. In each case, the debtor was receiving notice of a newly 2 incurred financial obligation, making a clear statement of the terms of the loan very 3 important. 4 In Plaintiff’s case, the loan had been outstanding for nine years. Plaintiff had 5 received statements during this time, and even the most unsophisticated debtor in his 6 position would have known that the loan was accruing interest. Nothing about the loan 7 had changed except the administrator – the terms were the same, the interest rate was the 8 same, and the outstanding balance at the time of assignment was the same. Confusion 9 caused by a purported misrepresentation is measured by an objective standard, and even 10 the most unsophisticated debtor would not have been confused by Defendant’s failure to 11 say that Plaintiff’s longstanding loan was continuing to accrue interest. 12 Plaintiff argues that he knew his original lender, TD Auto Finance, LLC, charged 13 interest on his loan, but he did not know that Defendant Cavalry would do so. Doc. 33 at 14 2-6. Plaintiff puts forth several reasons why he could have concluded that Cavalry would 15 not charge interest, including that the assignee of a loan may not acquire all the loan 16 rights or may waive its right to collect interest. Id. Defendant argues, and the Court 17 agrees, that the mere possibility of an atypical situation is not enough to create confusion 18 in the mind of the least sophisticated debtor. Plaintiff cannot claim that he assumed 19 something highly unusual was at work and was misled because Defendant failed to 20 disabuse him of that idea. Courts have rejected fanciful arguments made on behalf of 21 debtors to challenge collections under the FDCPA. See, e.g., White v. Goodman, 200 22 F.3d 1015, 1020 (7th Cir. 200) (rejecting argument that a collection letter was deceptive 23 because it listed rights conferred by the state of Colorado and therefore inaccurately 24 implied that residents of other states did not have similar rights: “The Act is not violated 25 by a dunning letter that is susceptible of an ingenious misreading, for then every dunning 26 letter would violate it. The Act protects the unsophisticated debtor, but not the irrational 27 one.”) (citing cases); c.f. Gonzales v. Arrow Fin. Servs., LLC, 660 F.3d 1055, 1064 (9th 28 Cir. 2011) (holding debt collector liable under the FDCPA where the debtor’s ‐ 4 ‐      1 interpretation that its demand letter contained an implied threat was not “bizarre or 2 idiosyncratic.”). Here, Defendant provided the full amount due as required by the statute. 3 This amount included interest already accrued, and even unsophisticated debtors would 4 understand that interest would continue to accrue. 5 B. Plaintiff’s Claims under 15 U.S.C. § 1692e. 6 Section 1692e of the FDCPA prohibits any false representation of the “character, 7 amount, or legal status of any debt,” including but not limited to “[t]he use of any false 8 representation or deceptive means to collect or attempt to collect any debt or to obtain 9 information concerning a consumer.” 15 U.S.C § 1692e(2)(A), 15 U.S.C § 1692e(10). 10 Plaintiff argues that Defendant violated this section because the failure of its collection 11 letters to say that interest and other charges would continue to accrue would “frustrate a 12 consumer’s ability to intelligently choose his or her response.” Doc. 19 at 12 (quoting 13 Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1034 (9th Cir. 2010)). 14 Plaintiff cites a number of cases in support of the position that a failure to notify a 15 debtor that interest will accrue on the loan is a violation of § 1692e. Doc. 19 at 6-13. 16 Plaintiff asks the Court to consider a Seventh Circuit opinion, Miller v. McCalla, Raymer, 17 Padrick, Cobb, Nichols, & Clark, LLC, 214 F.3d 872, 875-76 (7th Cir. 2000), as 18 persuasive because that opinion notes that a collector should state “the total amount due – 19 interest and other charges as well as principal – on the date the dunning letter was sent.” 20 Id. The plaintiff in Miller received a statement containing only the unpaid principal and 21 stating that the amount provided did not include accrued unpaid interest and other fees 22 authorized by the loan agreement. 23 outstanding balance shown in the letter without inquiring further about the interest and 24 other charges that had accrued, the collector would not have considered the debt satisfied. 25 Id. Id. at 875. Thus, if the debtor paid only the 26 Miller differs from this case in a crucial respect: here, there was no risk of 27 confusion as to the total outstanding balance due because Defendant included the total 28 amount due on the date the collection letters were sent. Unlike Miller, Plaintiff could ‐ 5 ‐      1 have paid the debt in full simply by tendering the amount listed on the most recent letter. 2 While Defendant’s letters could have included additional clarifying language to itemize 3 the principal and the interest portions of the debt or to reiterate the interest rate, the Court 4 does not believe that the lack of those details can be considered false, deceptive, or 5 misleading. The statute does not require itemization of the debt in every communication, 6 but rather a clear and accurate statement of the total amount due. Plaintiff received that 7 information. 8 Even if the Court were to find that the lack of specificity in this case could mislead 9 a debtor as to what portion of his total debt was principal and what portion was interest 10 and other fees, the Court does not agree, as Plaintiff argues, that this would “frustrate a 11 consumer’s ability to intelligently choose his or her response.” Donohue, 592 F.3d at 12 1034. Donohue considered whether a collector had violated § 1692e when its demand for 13 payment stated the correct total due but mislabeled some charges as “interest” when they 14 included finance charges. Id. The Ninth Circuit concluded that the technical falsehood 15 regarding the additional charges was not material and therefore not actionable under 16 § 1692e because “it did not undermine Donohue’s ability to intelligently choose her 17 action concerning her debt.” Id. Her actions, the court reasoned, could have included 18 challenging the debt or settling it by paying in full. Id. Plaintiff had the same options 19 here. If erroneously reporting additional charges is not sufficient to trigger a § 1692e 20 violation when the statement of total debt is correct, then failing to itemize principal, 21 interest, and other charges does not trigger § 1692e liability when the statement of the 22 total debt is correct. 23 Plaintiff argues for the first time in his opposition to Defendant’s cross motion for 24 summary judgment that he called Cavalry after getting each of its two demand letters 25 because he was confused about the basis for the debt. Doc. 33 at 8. Plaintiff states that 26 Cavalry promised to send him verification of the amount due but never did. Id. This 27 violation is not alleged in the complaint. The sole claim in Plaintiff’s complaint is that 28 the letters Plaintiff received from Defendant – in particular, the February 6, 2012 letter – ‐ 6 ‐      1 violated the FDCPA for failing to state that the outstanding balance of the loan was 2 subject to increase due to accrual of interest. Defendant provided an accurate statement 3 of the amount due in both demand letters, as required by the FDCPA, and the Court 4 therefore finds for Defendant on this claim. 5 III. Conclusion. 6 Plaintiff has failed to show as a matter of law that Defendant’s communications in 7 its debt collections letters violated sections 1692g(a)(1), 1692e(2)(A), and 1692e(10) of 8 the FDCPA, as alleged in the complaint, The Court will deny summary judgment to 9 Plaintiff and grant summary judgment to Defendant. 10 IT IS ORDERED: 11 1. 12 13 14 Plaintiff Jeremy Goodrick’s motion for summary judgment (Doc. 19) is denied. 2. Defendant Cavalry Portfolio Services, LLC’s cross motion for summary judgment (Doc. 31) is granted. 15 3. The Clerk of the Court is directed to terminate this action. 16 Dated this 19th day of August, 2013. 17 18 19 20 21 22 23 24 25 26 27 28 ‐ 7 ‐ 

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?