Shepherd v. Liberty Acquisitions, LLC et al

Filing 40

ORDER granting as to actual damages 17 Motion for Summary Judgment and granting 18 Motion for Summary Judgment by Judge Christine M. Arguello on 7/9/12. Plaintiff is entitled to $1,000 and costs, and this case is dismissed with prejudice.(dkals, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Christine M. Arguello
Civil Action No. 11-cv-00718-CMA-MEH
TRACY SHEPHERD,
Plaintiff,
v.
LIBERTY ACQUISITIONS, LLC,
ROBERT G. BUSCH, P.C. d/b/a BUSCH PROFESSIONAL CORPORATION, and
EQUIFAX INFORMATION SERVICES, LLC,
Defendants.

ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
AS TO DEFENDANTS LIBERTY ACQUISITIONS, LLC AND ROBERT G. BUSCH,
P.C. AND GRANTING IN PART AND DENYING IN PART DEFENDANTS MOTION
FOR SUMMARY JUDGMENT

This matter is before the Court on Plaintiff Tracy Shepherd’s Motion for Partial
Summary Judgment as to Defendants Liberty Acquisitions, LLC (“Liberty”) and Robert
G. Busch P.C. (“Busch”) (Doc. # 18), as well as Liberty and Busch’s Motion for
Summary Judgment (Doc. # 17). Shepherd has alleged that Liberty and Busch violated
two provisions of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., which
imposes civil liability on debt collectors for certain prohibited debt collection practices.
Jurisdiction is proper under 15 U.S.C. § 1692k.

I. BACKGROUND
The following facts are undisputed, unless otherwise noted. The Court will
elaborate, as needed, in its analysis section.
In 2004, Shepherd stopped making payments on a credit card she had obtained
from Household Bank.1 Household Bank then sold Shepherd’s delinquent account to
Liberty. (Doc. ## 1 at 1-2; 9 at 2.) On January 17, 2008, Liberty, with Busch acting as
its attorney, filed a lawsuit against Shepherd in Mesa County Court for the debt she
owed on the Household Bank credit card. (Doc. ## 18 at 3; 21 at 2.) Liberty moved the
court to award it $873.81 in past-due principal, $90 in court costs and fees, $250 in
attorney fees, and $1,067.95 in unpaid interest on the principal, for a total of $2,281.76.
(Doc. ## 17-3 at 1; 19 at 2.) On March 13, 2008, the Mesa County Court entered
default judgment against Shepherd for the total amount requested by Liberty. (Doc.
# 18-5.) As to the amount of interest awarded, the judgment merely states, “Interest
(23.90% per annum)” and lists $1,067.95 as the amount of interest due. (Id.) Liberty
collected on the judgment through a series of lawful garnishments against Shepherd’s
wages in 2008 and 2009, and as of June 16, 2009, had collected $2,443.14. (Doc.
## 18 at 3; 21 at 2.)

1

Although the parties refer to the credit card as having originated with “Orchard Bank,”
that name appears interchangeable in the record with “Household Bank.” (See, e.g.,
Doc. # 17-1 at 2 (referring to Shepherd’s credit account as “originally held by Household
Bank (Sb), N.A. / Orchard Bank”).) Accordingly, the Court will continue to refer to the
account as having originated with Household Bank.
2

On March 23, 2010, Liberty petitioned the Mesa County Court for a new writ of
garnishment, seeking an additional $816.04 in post-judgment interest. (Doc. # 18-7.)
The next day, the court issued the requested writ to the Grand Junction Federal Credit
Union, where Shepherd held a savings account. (Doc. # 18-8.)
On May 27, 2010, Shepherd filed a motion for relief from the 2008 judgment,
asserting that the judgment had been satisfied. (Doc. # 17 at 5; 19 at 3.) Liberty
responded to the motion for relief and, as part of the response, requested that the court
award it attorneys’ fees under Colorado Rule of Civil Procedure 11(a), for defending
what it characterized as Shepherd’s “groundless motion.” (Doc. # 17-8 at 2.)
On June 16, 2010, the Mesa County Court entered an order granting Shepherd’s
motion for relief from judgment. (Doc. # 17-10.) The order consists of two pages, the
first of which is a copy of a proposed order filed by Liberty. The court stamped
“DENIED” at the top of Liberty’s proposed order. The second page of the order
contains the following statement: “For the reasons stated in [Shepherd’s] reply and in
her original motion, the Court denies [Liberty’s] request and re-instates its previous
order stating that this judgment is satisfied, [Liberty] shall take nothing further from
[Shepherd] for this satisfied judgment and this case is closed.” (Id.) On June 18, 2010,
the Mesa County Court released the Grand Junction garnishment. (Doc. # 18-1 at 2.)
Shepherd filed this action on March 21, 2011. (Doc. # 1.) She moved for partial
summary judgment as to Liberty and Busch on January 20, 2012. (Doc. # 18.) That

3

same day, Liberty and Busch moved for summary judgment against her. (Doc. # 17.)
Both motions are ripe.2
II. STANDARD OF REVIEW
Summary judgment is appropriate if the moving party demonstrates that there is
Ano genuine dispute as to any material fact@ and that it is Aentitled to judgment as a
matter of law.@ Fed. R. Civ. P. 56(a). In applying this standard, the Court views the
evidence and all reasonable inferences therefrom in the light most favorable to the
nonmoving party. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998)
(citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587
(1986)). A fact is Amaterial@ if, under the applicable substantive law, it is Aessential
to the proper disposition of the claim.@ Id. (citing Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986)). A dispute of fact is Agenuine@ if Athere is sufficient evidence on
each side so that a rational trier of fact could resolve the issue either way.@ Id. (citing
Anderson, 477 U.S. at 248).
The moving party bears the initial burden of demonstrating an absence of a
genuine dispute of material fact and entitlement to judgment as a matter of law. Id. at
670-71. In attempting to meet that standard, a movant who does not bear the ultimate
burden of persuasion at trial does not need to disprove the other party's claim; rather,
the movant need simply point out to the court a lack of evidence for the other party on
2

Liberty and Busch responded to Shepherd’s motion on February 10, 2012 (Doc. # 21),
and she replied on February 24, 2012 (Doc. # 23). Shepherd responded to Liberty and
Busch’s motion on February 7, 2012 (Doc. # 19), and they replied on February 21, 2012
(Doc. # 22).
4

an essential element of that party's claim. Id. at 671 (citing Celotex Corp. v. Catrett,
477 U.S. 317, 325 (1986)). However, if the movant will bear the ultimate burden of
persuasion at trial, it must support its motion with sufficient evidence to establish its right
to a judgment after trial if the non-movant were to fail to rebut the evidence. See
Anderson v. Dept. of Health & Human Servs., 907 F.2d 936, 947 (10th Cir. 1990).
Once the movant has met its initial burden, the burden shifts to the nonmoving
party to Aset forth specific facts showing that there is a genuine issue for trial.@
Anderson, 477 U.S. at 256. The nonmoving party may not simply rest upon its
pleadings to satisfy its burden. Id. Rather, the nonmoving party must Aset forth specific
facts that would be admissible in evidence in the event of trial from which a rational trier
of fact could find for the nonmovant.@ Adler, 144 F.3d at 671. ATo accomplish this, the
facts must be identified by reference to affidavits, deposition transcripts, or specific
exhibits incorporated therein.@ Id. Notably, Ageneralized, conclusionary, unsubstantiated, non-personal affidavits are insufficient to successfully oppose a motion for
summary judgment.@ Stevens v. Barnard, 512 F.2d 876, 879 (10th Cir. 1975); see also
Garret v. Hewlett-Packard Co., 305 F.3d 1210, 1213 (10th Cir. 2002) (AWe do not
consider conclusory and self-serving affidavits.@); 11 James Wm. Moore et al., Moore’s
Federal Practice ' 56.41[1][c] (3d ed. 2011) (AMerely restating a pleading, submitting
new pleadings, or making bald assertions in a legal memorandum, or even in an
affidavit, will not enable the nonmovant to withstand a properly supported summary
judgment motion.@).
5

Finally, the Court notes that summary judgment is not a Adisfavored procedural
shortcut@; rather, it is an important procedure Adesigned >to secure the just, speedy and
inexpensive determination of every action.=@ Celotex, 477 U.S. at 327 (quoting Fed. R.
Civ. P. 1).
III. ANALYSIS
In 1977, Congress enacted the FDCPA to “eliminate abusive debt collection
practices by debt collectors, to insure that those debt collectors who refrain from using
abusive debt collection practices are not competitively disadvantaged, and to promote
consistent State action to protect consumers against debt collection abuses.” 15 U.S.C.
§ 1692(e). As relevant here, the FDCPA prohibits debt collectors from using “unfair or
unconscionable means to collect or attempt to collect any debt.” § 1692(f). Debt
collectors may collect only those amounts that are “expressly authorized by the
agreement creating the debt or permitted by law.” § 1692f(1). Further, debt collectors
may not “use any false, deceptive, or misleading representation or means in connection
with the collection of any debt.” § 1692e.
The FDCPA provides for a civil cause of action to enforce its provisions, with
debt collectors who violate it liable for actual damages, statutory damages up to $1,000,
and reasonable attorney’s fees and costs. § 1692k(a)(1)–(3); see, e.g., Edwards v.
Niagara Credit Solutions, Inc., 584 F.3d 1350, 1352 (11th Cir. 2009). Because the
FDCPA is a strict liability statute, a plaintiff need only demonstrate one violation of the

6

statute to be entitled to a favorable judgment. See Doshay v. Global Credit Collection
Corp., 796 F. Supp. 2d 1301, 1304 (D. Colo. 2011).
In the instant case, Shepherd alleges that Liberty and Busch violated §§ 1692f(1)
& 1692e by attempting to collect, and representing to the Mesa County Court that they
were entitled to, post-judgment interest at the rate of 23.9% on Shepherd’s defaulted
account. (Doc. # 1 at 4-5.) She also alleges that Liberty and Busch violated these
provisions by seeking untaxed costs and attorneys’ fees in the state court. Because the
Court agrees with Shepherd’s former assertion, it need not address the latter. See
Doshay, 796 F. Supp. 2d at 1304 (“although Plaintiff alleges numerous statutory
violations, the Court need only address one violation”).
A.

THRESHOLD ISSUES
Before analyzing Shepherd’s claims under the FDCPA, the Court will address

several threshold issues that both sides have raised.
1.

Dismissal of Busch Is Unwarranted

Liberty and Busch assert that, because Shepherd did not include Busch in the
title, prefatory language, and “wherefore” clause in Count One of the Complaint, she
has “fail[ed] to identify any cause of action against Defendant Busch” and, accordingly,
Busch should be dismissed as a defendant. (Doc. # 17 at 6.) The Court disagrees for
three reasons.
First, as Shepherd notes, the Complaint is “replete with facts allegedly committed
by Liberty and Busch which clearly state a cause of action.” (Doc. # 19 at 6 (emphasis
7

added).) Additionally, and in evident response to such factual allegations, Liberty and
Busch repeatedly refer to themselves as “Defendants” in their factual recitations. (See
Doc. ## 17 at 3-6; 21 at 2-3.) Second, even if the occasional absence of Busch’s name
in the Complaint were to cast doubt on whether Shepherd intended to include Busch in
Count One, the Court would be inclined to grant her leave to amend the Complaint in
light of its context, which indicates that Count One was also directed at Busch. See
Fed. R. Civ. P. 15(a)(2) (“The court should freely give leave [to amend] when justice so
requires.”). Third, Busch did not move for a more definite statement under Rule 12(e)
or to be dismissed under Rule 12(b)(6). Although the Court disagrees with Shepherd’s
characterization of what occurred as an “obvious typographical error” (Doc. # 19 at 6),
the occasional omission of Busch’s name does not cast serious doubt on whether Count
One includes Busch, who is specifically named with Liberty in the body of that count.
2.

Rooker-Feldman and Collateral Estoppel Doctrines Do Not Apply

The parties invoke the doctrines of Rooker-Feldman and collateral estoppel,
although naturally enough they urge the Court to reach opposite conclusions under both
doctrines. However, neither doctrine is necessary or helpful to the Court’s analysis.
a)

Rooker-Feldman

“The Rooker-Feldman doctrine precludes a losing party in state court who
complains of injury caused by the state-court judgment from bringing a case seeking
review and rejection of that judgment in federal court.” In re Miller, 666 F.3d 1255, 1261
(10th Cir. 2012). In the instant case, as is evident from her pleadings, Shepherd is not
8

complaining of injury caused by the Mesa County Court’s judgment, nor is she seeking
to have this Court review such judgment. Rather, she succeeded in the state court in
gaining relief from the 2008 judgment and, as discussed below, asserts that the state
court’s judgment controls the outcome of this case. As such, application of the RookerFeldman doctrine would be inapposite here.
b)

Collateral estoppel

Collateral estoppel, which is also known as issue preclusion, means “that when
an issue of ultimate fact has once been determined by a valid and final judgment, that
issue cannot again be litigated between the same parties in any future lawsuit.” Ashe v.
Swenson, 397 U.S. 436, 443 (1970). It is “designed to prevent needless relitigation and
bring about some finality to litigation.” Moss v. Kopp, 559 F.3d 1155, 1161 (10th Cir.
2009). Collateral estoppel will bar a claim if the following elements are met:
(1) the issue previously decided is identical with the one presented in the
action in question, (2) the prior action has been finally adjudicated on the
merits, (3) the party against whom the doctrine is invoked was a party or in
privity with a party to the prior adjudication, and (4) the party against
whom the doctrine is raised had a full and fair opportunity to litigate the
issue in the prior action.
Id.
Liberty and Busch argue that the Mesa County Court rejected the claims
Shepherd brings here.3 They assert that Shepherd’s May 27, 2010 motion for relief
3

“Issue preclusion is an affirmative defense and must be pleaded and proved.” Valley
View Angus Ranch, Inc. v. Duke Energy Field Servs., Inc., 497 F.3d 1096, 1106 (10th
Cir. 2007) (quotation marks and citation omitted). Liberty and Busch did not plead issue
preclusion in their Answer. (See Doc. # 9 at 4-5.) Nonetheless, the Court will address
Liberty and Busch’s assertion because, as discussed below, doing so helps illustrate
why the doctrine is inapplicable here.
9

urged the state court to find that Liberty and Busch had engaged in unconscionable
debt collection practices. They reason that, because the court granted Shepherd’s
request but without specifically finding that Liberty and Busch acted unconscionably,
the court’s action “can only be considered a denial of [Shepherd’s] request.” (Doc. # 17
at 8.) Conversely, Shepherd argues that, because her motion was granted, “any
explanation of the state court’s ruling quite simply determines the money was not owed,
[which is] the lynchpin of a 15 U.S.C. § 1692(f) violation.” (Doc. # 23 at 4.) However,
both arguments miss the mark.
As noted previously, the Mesa Count Court merely stated that Shepherd’s
“judgment is satisfied, [Liberty] shall take nothing further from [Shepherd] for this
satisfied judgment and this case is closed.” The state court made no explicit
finding—one way or the other—on Shepherd’s assertion that Liberty and Busch had
acted unconscionably. Such silence precludes the Court from agreeing with either of
the conclusions drawn by the parties here.
More importantly, though, despite the parties’ apparent agreement that all the
elements of collateral estoppel are satisfied, no real argument is advanced, nor is the
Court persuaded that, the issue presented to the Mesa County Court is identical to the
one Shepherd brings here. To the contrary, Liberty and Busch concede that
Shepherd’s arguments before the state court were premised on Colorado state law,
while her claims in this Court are under a “different, yet similar, federal statute.” (Doc.
# 17 at 7-8.) Likewise, Shepherd asserts that, when she requested relief from the 2008
10

judgment, she “certainly could not have raised her FDCPA claim or any other affirmative
claim for damages [because] . . . the court lacked jurisdiction.” (Doc. # 23 at 4.)
Accordingly, the Court determines that the issues Shepherd brings here are not
identical to any issue that may have been previously decided by the state court; thus,
the doctrine of collateral estoppel does not apply.
B.

COLLECTION OF POST-JUDGMENT INTEREST
Shepherd’s primary argument in this case is that Liberty and Busch attempted to

collect an amount of post-judgment interest not “expressly authorized by the agreement
creating the debt or permitted by law,” in violation of § 1692f(1).4 On this point, and
in light of the FDCPA being a strict-liability statute, the Court agrees. The Court also
agrees with Shepherd’s assertion that Liberty and Busch have not meet their burden
of setting forth specific facts to establish a genuine issue for trial on their affirmative
defense of bona fide error.

4

Although the statute appears to prohibit only the actual collection of amounts not
expressly authorized, courts have regularly interpreted § 1692f(1) to prohibit the
attempted collection of such amounts. See Williams v. Edelman, 408 F. Supp. 2d 1261,
1268-69 (S.D. Fla. 2005); Sandlin v. Shapiro & Fishman, 919 F. Supp. 1564, 1568 (M.D.
Fla. 1996); Gigli v. Palisades Collection, L.L.C., No. 3:CV-06-1428, 2008 WL 3853295,
at *5 (M.D. Pa. Aug. 14, 2008) (unpublished). The Court agrees with the reasoning in
these cases and follows it here.
11

1.

Liability Under § 1692f(1)

As an initial matter, Liberty and Busch have not argued, nor has the Court found
any evidence indicating, that the cardholder agreement Shepherd entered into with
Household Bank expressly authorized collection of post-judgment interest at the rate of
23.9% (or any other rate, for that matter).5 (See Doc. # 17-11.) Instead, Liberty and
Busch argue that such a rate was proper because the agreement states, “if we must
bring legal action, [we will] require you to pay all of our costs of collection, including
arbitration, court costs, and attorneys’ fees.” (See Doc. # 17 at 10.) However, Liberty
and Busch cite no case, nor is the Court aware of any, holding that post-judgment
interest is to be considered a “cost of collection.” To the contrary, the terms appear to
be mutually exclusive. See, e.g., In re Indian Motorcycle Mfg., Inc., No. 95-CV-00777,
2005 WL 4685044, at *4 (D. Colo. Dec. 14, 2005) (unpublished) (“Judgment will include
post-Judgment interest . . . plus all costs of collection”).
Further, Shepherd argues, Liberty and Busch do not dispute, and the Court
agrees that post-judgment interest at 23.9% was not “permitted by law” under Colorado
statutes governing Liberty and Busch’s conduct before the Mesa County Court. (See
Doc. ## 18 at 6; 19 at 12-13.) Section 5-12-102(4) of the Colorado Revised Statutes
states that, absent an exception for interest on appealed judgments that is inapplicable
here,
5

In fact, where interest rates (such as “monthly periodic rates” and “annual percentage
rates”) are discussed in the cardholder agreement, there appears a cross-reference to
“the accompanying sheet entitled ‘Important Information Regarding Your Account’”:
a document found nowhere in the record. (See, e.g., Doc. # 17-11 at 3.)
12

creditors shall be allowed to receive interest on any judgment recovered
before any court authorized to enter the same within this state from the
date of entering said judgment until satisfaction thereof is made either:
(a) [a]t the rate specified in a contract or instrument in writing which
provides for payment of interest at a specified rate until the obligation is
paid . . . ; or (b) [i]n all other cases where no rate is specified, at the rate
of eight percent per annum compounded annually.
Again, because Liberty and Busch have produced no “contract or instrument in writing”
that provides a specified rate for post-judgment interest, their attempt to collect postjudgment interest from Shepherd at the rate of 23.9% was not “permitted by law” under
§ 1692f(1) of the FDCPA.6
2.

Bona Fide Error Defense

Because the Court has determined that Liberty and Busch violated the FDCPA
by requesting an amount that was neither expressly authorized by the agreement
creating Shepherd’s debt nor permitted by law, the Court will next address Liberty and
Busch’s bona fide error defense.
“The bona fide error defense is an affirmative defense that insulates debt
collectors from liability even when they have violated the FDCPA.” Johnson v. Riddle,

6

To the extent Liberty and Busch argue that attempting to collect post-judgment interest
at 23.9% was “permitted by law” because the state court’s March 13, 2008 judgment
stated, “Interest (23.90% per annum),” the Court is not persuaded. As Liberty and
Busch admit, “The Court Order does not distinguish between pre-judgment and postjudgment; rather it awards Liberty interest at 23.9%.” (Doc. # 17 at 11.) Shepherd did
not attack in the state court, nor has she challenged here, the amount of pre-judgment
interest awarded by the state court, which she paid. Regardless, the state court based
its order on Liberty and Busch’s request. (See Doc. # 17-3.) As such, agreeing with
their argument would mean that debt collectors could escape liability any time they could
convince a court to enter a prepared order for collection of an amount not expressly
authorized by the agreement creating the debt.
13

443 F.3d 723, 727 (10th Cir. 2006); see Owen v. I.C. Sys., Inc., 629 F.3d 1263, 1271
(11th Cir. 2011) (describing the bona fide error defense as a “narrow carve out to the
general rule of strict liability” under the FDCPA). Specifically, the FDCPA’s bona fide
error provision states:
A debt collector may not be held liable in any action brought under this
subchapter if the debt collector shows by a preponderance of evidence
that the violation was not intentional and resulted from a bona fide error
notwithstanding the maintenance of procedures reasonably adapted to
avoid any such error.
§ 1692k(c). Accordingly, and as the Tenth Circuit explained in Riddle, “an FDCPA
defendant seeking the protection of the bona fide error defense carries the burden of
proving that the violation was 1) unintentional, 2) a bona fide error, and 3) made despite
the maintenance of procedures reasonably adapted to avoid the error.” 443 F.3d at
727. However, since Riddle was decided, the Supreme Court has held that the bona
fide error defense does not apply to mistakes of law. Jerman v. Carlisle, McNellie, Rini,
Kramer & Ulrich LPA, 130 S. Ct. 1605, 1611 (2010). In the instant case, because the
parties disagree primarily as to whether the third prong of the bona fide error test was
satisfied, the Court will focus its analysis on whether Liberty and Busch maintained
procedures reasonably adapted to avoid the error Shepherd asserts.
Analysis of the “procedures” prong of the bona fide error defense involves a twostep inquiry: “first, whether the debt collector ‘maintained’—i.e., actually employed or
implemented—procedures to avoid errors; and, second, whether the procedures were
‘reasonably adapted’ to avoid the specific error at issue.” Riddle, 443 F.3d at 729. This
14

is a “fact-intensive inquiry,” which proceeds on a “case-by-case basis and depend[s]
upon the particular facts and circumstances of each case.” Owen, 629 F.3d at 1274
(granting summary judgment for debtor because the debt collector’s “limited procedures
placed in [the] record were not reasonably adapted to avoid the type of . . . errors”
raised by the debtor).
As to the first step, Liberty and Busch have provided some evidence
demonstrating that procedures were actually employed to avoid violating the FDCPA.
(See Doc. # 17-5.) For example, Defendant Busch, in his affidavit, avers that: “[e]ach
employee at Liberty . . . is trained to review the creditor’s records and input the
outstanding balance and interest rate into the system”; and “[p]rior to initiating a lawsuit
against a debtor in default, the original creditor’s records are reviewed to determine the
outstanding balance and interest rate.” (Id.) In this case, Busch states that “[t]he
original creditor’s records were reviewed prior to initiating a lawsuit against [Shepherd]
in Mesa County Court.” (Id. at 4.) This evidence satisfies the “low threshold” required
by the first step of the inquiry. See Owen, 629 F.3d at 1274.
However, the Court agrees with Shepherd that Liberty and Busch fail at the
second step. To begin with, Liberty and Busch’s response to Shepherd’s motion
appears to misapprehend the nature of the error she asserts. Shepherd does not allege
that Liberty and Busch failed to maintain safeguards for accurately reporting the
information creditors give them. Rather, the error she asserts is that no procedures
exist to ensure that such information is expressly authorized in the agreement creating
15

the debt. Accordingly, Liberty and Busch’s response evinces either a misunderstanding
of the FDCPA’s requirements or the crux of Shepherd’s argument. Because mistakes
of law do not constitute bona fide errors, the Court will treat Liberty and Busch’s
response as attempting to articulate a factual or clerical mistake. As explained below,
however, their response is unavailing.
The primary deficiency in Liberty and Busch’s argument is that their
procedures—of ensuring that what they say in court matches what they have been told
by creditors—are not aimed at ascertaining anything from the underlying agreement or,
for that matter, ensuring that such an agreement exists. Specifically, their procedures
do not reflect the ability to verify, in the agreement creating the debt, the information
contained in the creditor’s reports. Such inability is particularly problematic where, as
here, the debtor specifically asserts that the amount at issue was not authorized by the
underlying agreement. Once Shepherd filed her motion for relief from the 2008
judgment, Liberty and Busch were on notice as to her specific assertion that their claims
of 23.9% post-judgment interest were not supported by any written agreement. (See
Doc. # 18-10.) No evidence indicates that Liberty and Busch investigated her claim or
had any procedures in place to do so. Instead, they responded to her motion by again
asserting entitlement to that amount of post-judgment interest and requesting attorneys’
fees. (See Doc. # 18-12 at 2-3.) Although Liberty and Busch now state that reliance on
the creditor’s information “allowed [Shepherd’s] account to escape the safeguards put in
place by [them]” (Doc. # 17 at 14), they have provided no evidence of safeguards which
16

warn them of creditor information that is unsupported by the underlying credit
agreement.7
Accordingly, the Court is not persuaded by Liberty and Busch’s argument that
“[i]n general, a collection agency may rely upon the information provided by a creditor
. . . .” (Doc. # 17 at 11.)8 Without provisions in place that are reasonably adapted to
avoid the error committed here, such reliance is unreasonable. Moreover, in the instant
case, the pertinent information provided by Household Bank simply stated, “Interest
Rate: 23.9.” (Doc. # 17-2.) No specific mention was made as to the rate of postjudgment interest. Thus, Liberty and Busch’s purported reliance on such information
was unreasonable.
To be sure, the Court recognizes that the FDCPA does not require debt
collectors to independently investigate and verify the validity of every debt to qualify
7

Liberty and Busch also attempt to shift the burden to Shepherd to disprove their
affirmative defense. (See, e.g., Doc. # 21 at 6 (“Plaintiff has provided no undisputed
facts to refute Defendants’ claim of bona fide error.”).) Shepherd, as a movant who does
not bear the ultimate burden of persuasion on Liberty and Busch’s affirmative defense,
pointed out to the Court a lack of evidence essential to Liberty and Busch’s defense—
i.e., the absence of a procedure to ensure that amounts requested are expressly
authorized by the agreements creating the debt. As such, Liberty and Busch were
required to set forth specific facts showing that such a procedure existed. They have
failed to do so.

8

Liberty and Busch string-cite several cases to support their argument. Having reviewed
those cases, however, the Court finds them distinguishable for various reasons and
rebutted by other cases that have reached contrary conclusions. See McCollough v.
Johnson, Rodenburg & Lauinger, LLC, 637 F.3d 939 (9th Cir. 2011); Owen, 629 F.3d
1263; Reichert v. Nat’l Credit Sys. Inc., 531 F.3d 1002 (9th Cir. 2008). Essentially,
looking to other cases is of only limited utility in addressing the bona fide error defense.
See Owen, 629 F.3d at 1274 (“Despite surveying the case law, we have located no
definitive list of procedures, or even universally applicable parameters, by which to
assess the third element [of the bona fide error defense].”).
17

for the bona fide error defense. See, e.g., Hyman v. Tate, 362 F.3d 965, 968 (7th Cir.
2004). However, debt collectors cannot fulfill their obligation to refrain from collecting
amounts not expressly authorized by the agreement creating the debt by maintaining
procedures that entirely delegate responsibility for reviewing such agreements to
creditors, at least not in the absence of safeguards by which they can review such
agreements when the information conveyed is explicitly refuted by the debtor.
Accordingly, on the facts and evidence as presented here, the procedures
maintained by Liberty and Busch were not reasonably adapted to avoid the error that
occurred and, thus, the bona fide error defense does not shield Liberty and Busch from
liability.
C.

DAMAGES
Because the Court has determined that Shepherd is entitled to summary

judgment in her favor on liability, the Court will award her statutory damages of $1,000
under § 1692k(2)(A), as well as reasonable attorney’s fees and costs under § 1692k(3).
However, for the reasons stated by the Court in its Order Granting Defendant Equifax
Information Services LLC’s Motion for Summary Judgment (Doc. # 39), Shepherd is not
entitled to actual damages under § 1692k(1) for the “emotional distress” she allegedly
suffered.9 As such, contrary to Shepherd’s assertion, the issue of causation need not
be presented to a jury.
9

“The FDCPA does not require proof of actual damages as a precursor to the recovery
of statutory damages.” Keele v. Wexler, 149 F.3d 589, 593 (7th Cir. 1998); see also
Baker v. G.C. Servs. Corp., 677 F.2d 775, 780 (9th Cir. 1982) (“There is no indication in
the statute that award of statutory damages must be based on proof of actual
damages.”).
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IV. CONCLUSION
For the foregoing reasons, it is ORDERED that Plaintiff’s Motion for Partial
Summary Judgment as to Defendants Liberty Acquisitions, LLC and Robert G. Busch
P.C. (Doc. # 18) is GRANTED, and Defendants Liberty Acquisitions, LLC’s and Robert
G. Busch, P.C.’s, Motion for Summary Judgment (Doc. # 17) is GRANTED IN PART as
to actual damages and DENIED in all other respects.
Pursuant to this ORDER, Plaintiff is entitled to statutory damages of $1,000, as
well as reasonable attorney’s fees and costs. As such, it is
FURTHER ORDERED that Plaintiff shall have her costs by the filing of a Bill of
Costs with the Clerk of the Court within fourteen days of the entry of judgment, and she
shall file a motion for reasonable attorney’s fees with this Court within fourteen days of
the entry of judgment. It is
FURTHER ORDERED that the Final Trial Preparation Conference set for July 13,
2012, and the four-day Jury Trial set for July 23, 2012, are VACATED.
Accordingly, this case is now DISMISSED WITH PREJUDICE.
DATED: July

09

, 2012
BY THE COURT:

_______________________________
CHRISTINE M. ARGUELLO
United States District Judge

19