Peters v. Coface Collections North America Incorporated

Filing 45

ORDER, granting Defendant's 31 Motion for Summary Judgment; denying Plaintiff's 33 Motion for Summary Judgment. Signed by Senior Judge Frederick J Martone on 3/27/14.(REW)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Plaintiff,
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vs.
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Coface Collections North America, Inc., )
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Defendant.
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Andrew Peters,

No. CV-12-02600-PHX-FJM
ORDER

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The court has before it defendant’s motion for summary judgment (doc. 31), plaintiff’s

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response (doc. 35), and defendant’s reply (doc. 39). We also have before us plaintiff’s

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motion for summary judgment (doc. 33), defendant’s response (doc. 37), and plaintiff’s reply

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(doc. 41).

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Plaintiff purchased software from Media Cybernetics/Princeton Instruments

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(“Princeton”) using the business name Multi Media Plus. When plaintiff did not pay for the

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software, Princeton placed the account with defendant Coface Collections North America,

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Inc. for collection (the “Debt”). Plaintiff filed this action under the Fair Debt Collection

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Practices Act (“FDCPA”), 15 U.S.C. §§ 1692b, 1692c, alleging that Coface collected the

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Debt in an unfair and harassing manner in violation of the Act. Both parties now move for

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summary judgment.

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The FDCPA protects consumers from unlawful debt collection practices, and

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therefore, “applies to consumer debts and not business loans.” Bloom v. I.C. System, Inc.,

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872 F.2d 1067, 1068 (9th Cir. 1992) (emphasis added). The Act defines a consumer debt as

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“any obligation or alleged obligation of a consumer to pay money arising out of a transaction

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in which the . . . property . . . which [is] the subject of the transaction [is] primarily for

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personal, family, or household purposes.” 15 U.S.C. § 1692a(5) (emphasis added). In

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classifying a debt, we will “examine the transaction as a whole, paying particular attention

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to the purpose for which the credit was extended in order to determine whether [the]

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transaction was primarily consumer or commercial in nature.” Slenk v. Transworld Systems,

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Inc., 236 F.3d 1072, 1075 (9th Cir. 2001) (citation omitted). “We must therefore ‘look to the

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substance of the transaction and the borrower’s purpose in obtaining the loan, rather than the

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form alone.’” Id. (quoting Riviere v. Banner Chevrolet, Inc., 184 F.3d 457, 462 (5th Cir.

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1999)).

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When plaintiff purchased the software from Princeton, he listed the name “Multi

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Media Plus” as the purchaser. He asserts that he used the business name to purchase the

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software because Princeton only sells to businesses. It is undisputed that if plaintiff had not

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represented himself as a business, the sale would not have occurred.

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Plaintiff also asserts that he would typically use the name Multi Media Plus when he

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bought products that sold or marketed only to businesses. Plaintiff also used Multi Media

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Plus to gain access to websites that catered to businesses only. In these various transactions,

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plaintiff held himself out as the “president” or “head” of Multi Media Plus. DSOF ¶ 8. He

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also developed the email addresses of [e-mail] and [e-mail], the

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latter which he used for the Princeton transaction.

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Plaintiff, a former teacher, contends that he purchased the software for the purpose

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of making educational 3-D images for use in his classroom and to share with other educators,

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and that he generally creates images as a hobby. He argues that he has never sold or made

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a profit on any of the images. He further contends that “[e]ven though [he] stated that

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MultiMedia Plus was the business purchasing the Software, MultiMedia Plus is not actually
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a business.” PMSJ at 6. He contends that, notwithstanding his representations that

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MultiMedia Plus was the purchaser, the Princeton software was for personal, family and

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household purposes only, and therefore he is entitled to the protections of the FDCPA.

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Defendant argues that, as evidenced by the transaction documents as well as the actual

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intended use of the software, the Debt was a commercial, not a consumer debt and therefore

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the FDCPA is not applicable. We agree.

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The undisputed evidence shows that plaintiff represented to Princeton that Multi

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Media Plus was the business purchasing the software and incurring the Debt. By holding

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himself out as a business, he is estopped from now asserting that he purchased the software

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as a consumer. Coface contends that in pursuing its collection efforts it relied on the

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information provided by Princeton that the Debt was owed by Multi Media Plus. During the

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relevant period, Coface was in the business of collecting commercial debts only. If it learned

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that a debt was consumer in nature, it would immediately cease all collection efforts. It

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would work an injustice to allow a debtor to expressly hold itself out as a business at the

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inception of a debt, only to later contradict that characterization for the purpose of claiming

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FDCPA protection.

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In addition, according to plaintiff’s own admissions, the intended use of the software

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cannot be characterized as “primarily for personal, family, or household purposes.” 15

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U.S.C. § 1692a(5). Although plaintiff asserts that he made educational 3-D images as a

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“hobby,” it is undisputed that he intended to use the images beyond his personal use. He

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acknowledges that he primarily intended to use the images in his classroom and to share the

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images with the education community. Therefore, plaintiff intended to use the software to

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create images that would extend beyond his own personal, family, or household use.

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Accordingly, the evidence establishes that the Debt is not a consumer debt and the FDCPA

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does not apply.

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...

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IT IS ORDERED GRANTING defendant’s motion for summary judgment (doc. 31).

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IT IS FURTHER ORDERED DENYING plaintiff’s motion for summary judgment

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(doc. 33).
DATED this 27th day of March, 2014.

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