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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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 10 11 12 13 14 ) ) ) Plaintiff, ) ) vs. ) ) Coface Collections North America, Inc., ) ) ) Defendant. ) ) Andrew Peters, No. CV-12-02600-PHX-FJM ORDER 15 16 17 The court has before it defendant’s motion for summary judgment (doc. 31), plaintiff’s 18 response (doc. 35), and defendant’s reply (doc. 39). We also have before us plaintiff’s 19 motion for summary judgment (doc. 33), defendant’s response (doc. 37), and plaintiff’s reply 20 (doc. 41). 21 Plaintiff purchased software from Media Cybernetics/Princeton Instruments 22 (“Princeton”) using the business name Multi Media Plus. When plaintiff did not pay for the 23 software, Princeton placed the account with defendant Coface Collections North America, 24 Inc. for collection (the “Debt”). Plaintiff filed this action under the Fair Debt Collection 25 Practices Act (“FDCPA”), 15 U.S.C. §§ 1692b, 1692c, alleging that Coface collected the 26 Debt in an unfair and harassing manner in violation of the Act. Both parties now move for 27 summary judgment. 28 1 The FDCPA protects consumers from unlawful debt collection practices, and 2 therefore, “applies to consumer debts and not business loans.” Bloom v. I.C. System, Inc., 3 872 F.2d 1067, 1068 (9th Cir. 1992) (emphasis added). The Act defines a consumer debt as 4 “any obligation or alleged obligation of a consumer to pay money arising out of a transaction 5 in which the . . . property . . . which [is] the subject of the transaction [is] primarily for 6 personal, family, or household purposes.” 15 U.S.C. § 1692a(5) (emphasis added). In 7 classifying a debt, we will “examine the transaction as a whole, paying particular attention 8 to the purpose for which the credit was extended in order to determine whether [the] 9 transaction was primarily consumer or commercial in nature.” Slenk v. Transworld Systems, 10 Inc., 236 F.3d 1072, 1075 (9th Cir. 2001) (citation omitted). “We must therefore ‘look to the 11 substance of the transaction and the borrower’s purpose in obtaining the loan, rather than the 12 form alone.’” Id. (quoting Riviere v. Banner Chevrolet, Inc., 184 F.3d 457, 462 (5th Cir. 13 1999)). 14 When plaintiff purchased the software from Princeton, he listed the name “Multi 15 Media Plus” as the purchaser. He asserts that he used the business name to purchase the 16 software because Princeton only sells to businesses. It is undisputed that if plaintiff had not 17 represented himself as a business, the sale would not have occurred. 18 Plaintiff also asserts that he would typically use the name Multi Media Plus when he 19 bought products that sold or marketed only to businesses. Plaintiff also used Multi Media 20 Plus to gain access to websites that catered to businesses only. In these various transactions, 21 plaintiff held himself out as the “president” or “head” of Multi Media Plus. DSOF ¶ 8. He 22 also developed the email addresses of and, the 23 latter which he used for the Princeton transaction. 24 Plaintiff, a former teacher, contends that he purchased the software for the purpose 25 of making educational 3-D images for use in his classroom and to share with other educators, 26 and that he generally creates images as a hobby. He argues that he has never sold or made 27 a profit on any of the images. He further contends that “[e]ven though [he] stated that 28 MultiMedia Plus was the business purchasing the Software, MultiMedia Plus is not actually -2- 1 a business.” PMSJ at 6. He contends that, notwithstanding his representations that 2 MultiMedia Plus was the purchaser, the Princeton software was for personal, family and 3 household purposes only, and therefore he is entitled to the protections of the FDCPA. 4 Defendant argues that, as evidenced by the transaction documents as well as the actual 5 intended use of the software, the Debt was a commercial, not a consumer debt and therefore 6 the FDCPA is not applicable. We agree. 7 The undisputed evidence shows that plaintiff represented to Princeton that Multi 8 Media Plus was the business purchasing the software and incurring the Debt. By holding 9 himself out as a business, he is estopped from now asserting that he purchased the software 10 as a consumer. Coface contends that in pursuing its collection efforts it relied on the 11 information provided by Princeton that the Debt was owed by Multi Media Plus. During the 12 relevant period, Coface was in the business of collecting commercial debts only. If it learned 13 that a debt was consumer in nature, it would immediately cease all collection efforts. It 14 would work an injustice to allow a debtor to expressly hold itself out as a business at the 15 inception of a debt, only to later contradict that characterization for the purpose of claiming 16 FDCPA protection. 17 In addition, according to plaintiff’s own admissions, the intended use of the software 18 cannot be characterized as “primarily for personal, family, or household purposes.” 15 19 U.S.C. § 1692a(5). Although plaintiff asserts that he made educational 3-D images as a 20 “hobby,” it is undisputed that he intended to use the images beyond his personal use. He 21 acknowledges that he primarily intended to use the images in his classroom and to share the 22 images with the education community. Therefore, plaintiff intended to use the software to 23 create images that would extend beyond his own personal, family, or household use. 24 Accordingly, the evidence establishes that the Debt is not a consumer debt and the FDCPA 25 does not apply. 26 ... 27 28 -3- 1 IT IS ORDERED GRANTING defendant’s motion for summary judgment (doc. 31). 2 IT IS FURTHER ORDERED DENYING plaintiff’s motion for summary judgment 3 4 (doc. 33). DATED this 27th day of March, 2014. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -4-

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