Derbin v. Keith M. Nathanson, PLLC
Filing
36
OPINION AND ORDER granting 23 Motion for summary judgment; denying Motion for Sanctions and Costs. Summary judgment is entered in favor of defendant and plaintiff shall take nothing. The Clerk shall enter judgment accordingly, terminate all deadlines, and close the file. Signed by Judge John E. Steele on 9/30/2013. (RKR)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
STEVEN DERBIN,
Plaintiff,
vs.
Case No.
2:12-cv-670-FtM-29DNF
KEITH M. NATHANSON, PLLC,
Defendant.
___________________________________
OPINION AND ORDER
This matter comes before the Court on defendant’s Motion for
Summary Judgment Pursuant to Fed. R. Civ. P. 56 and for Sanctions
and Costs Pursuant to Fed. R. Civ. P. 11 and 15 U.S.C. 1692k(a)(3)
(Doc.
#23)
filed
on
February
26,
2013.
Defendant
Affidavit (Doc. #26) in support on March 8, 2013.
filed
an
Plaintiff filed
an Answer to Defendant’s Motion for Summary Judgment (Doc. #28) on
March 15, 2013.
With leave of Court, see Doc. #32, defendant filed
a “Further Memorandum of Legal Authority” (Doc. #33) and plaintiff
filed a Reply to Defendant’s Further Memorandum (Doc. #35).
I.
Summary
judgment
is
appropriate
only
when
the
Court
is
satisfied that “there is no genuine issue as to any material fact
and that the moving party is entitled to judgment as a matter of
law.”
Fed. R. Civ. P. 56(c).
“An issue of fact is ‘genuine’ if
the record taken as a whole could lead a rational trier of fact to
find for the nonmoving party.”
Baby Buddies, Inc. v. Toys “R” Us,
Inc., 611 F.3d 1308, 1314 (11th Cir. 2010).
A fact is “material”
if it may affect the outcome of the suit under governing law.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
In
ruling on a motion for summary judgment, the Court views all
evidence and draws all reasonable inferences in favor of the nonmoving party.
Scott v. Harris, 550 U.S. 372, 380 (2007); Tana v.
Dantanna’s, 611 F.3d 767, 772 (11th Cir. 2010).
II.
In or about February 2009, plaintiff Steven Derbin (plaintiff
or Derbin) was sued by his former employer in a Michigan state
court for conversion, breach of contract, unjust enrichment, and
fraud in a case captioned Effective Mailers, Inc. v. Derbin. (Doc.
#33-1.)
All counts arose out of Derbin’s alleged conduct as an
employee of Effective Mailers, Inc.
court
issued
an
Order
for
On July 7, 2010, the Michigan
Binding
Arbitration
(Doc.
#23-3)
appointing attorney Edward M. Olson of the Olson Law Firm as
arbitrator
and
requiring
arbitration fees.
each
party
to
pay
one-half
of
the
The arbitration proceeding was never held, but
Mr. Olson nonetheless claimed a fee for unspecified services
rendered.
(Doc. #23, p. 7.)
Defendant Keith M. Nathanson, PLLC, (Nathanson), a law firm in
Waterford, Michigan1, was retained by the Olson Law Firm to collect
arbitration fees stemming from Effective Mailers, Inc. v. Derbin.
1
Doc. #16, ¶¶ 3, 4.
-2-
Nathanson asserts that, on or about March 30, 2012, it sent an
initial demand letter to plaintiff at his Shelby Township, Michigan
address.
(Doc. #23-2; Doc. #26, ¶ 6.)
moved to Florida in 2011.
Plaintiff, however, had
(Doc. #28-1, ¶ 3.)
Nathanson asserts
that on or about May 1, 2012, it sent the same letter to plaintiff
at a Romeo, Michigan address providing the following:
. . .
PLEASE BE ADVISED THAT THIS CORRESPONDENCE IS AN ATTEMPT
TO COLLECT A DEBT, AND ANY AND ALL INFORMATION OBTAINED
BY THIS OFFICE WILL BE USED FOR THAT PURPOSE.
We have been retained in [Olson Law Firm v. Steven
Derbin] with reference to an outstanding balance due and
owing to Olson Law Firm, in the amount of $500.00.
Unless you, within thirty (30) days after receipt of this
notice, dispute the validity of the debt, or any portion
thereof, the debt will be assumed to be valid by this
office. If you notify this office, in writing, within
the thirty (30) day period, that the debt, or any portion
thereof is disputed, this will obtain a verification of
the debt or a copy of a judgment against you, and a copy
of such verification or judgment will be mailed to you by
this office. In addition, upon your written request,
within thirty (30) day period, this office will provide
you with the name and address of the original creditor,
if different from the current creditor.
. . .
This office is a debt collector,
communication from a debt collector.
CC: Olson Law Firm
and
(Doc. #16, ¶ 5; Doc. #23-2; Doc. #28-3, Exh. C.)
-3-
this
is
a
On or about June 13, 2012, plaintiff responded2 that he did
not have notice of the letter until June 5, 2012, when a family
member who resides at the Romeo, Michigan address delivered the
letter to him in person, and that he in fact disputed any claims of
a debt by defendant.
Plaintiff also requested validation of the
debt in his responsive letter.
(Doc. #28-4, Exh. D.)
In response, Nathanson sent an invoice dated November 1, 2011,
reflecting a balance of $1,109.78 on the letterhead of Olson Law
Firm.
(Doc. #28-5, Exh. E.)
No description of the services
rendered was contained in the invoice.
On or about July 6, 2012, plaintiff sent a letter response
stating that the invoice was unclear and failed to validate the
debt, and more information was required or a suit would be filed
under the FDCPA.
(Doc. #28-6, Exh. F.)
No additional information
was forthcoming.
On November 28, 2012, plaintiff filed a Complaint for Damages
and Attorney’s Fees (Doc. #2) in Lee County, Florida Small Claims
Court
against
Keith
M.
Nathanson,
PLLC.
In
the
Complaint,
plaintiff alleges that defendant violated the Fair Debt Collection
Practices Act (FDCPA) by failing to provide proper validation
notice, failing to include a debt collection warning, failing to
cease communication upon notification that the debt was disputed,
harassing plaintiff, using false or deceptive means to collect,
2
Doc. #16, ¶ 6.
-4-
making false representations as to the character, amount, or legal
status of the debt, threatening plaintiff, using unconscionable
means to collect, and communicating with plaintiff while knowing he
was represented by counsel.
Plaintiff seeks damages not exceeding
$1,000, plus costs and attorney’s fees. Defendant removed the case
to federal court on December 17, 2012.
On January 16, 2013, the Michigan court issued an Order
Granting
in
Part
Defendant’s
Motion
Arbitration (Doc. #28-2, Exh. B.)
to
Set
Aside
Order
for
This Order struck Mr. Olson as
the arbitrator, directed the parties to agree on a new arbitrator,
and to proceed to arbitration.
The Order concluded by stating:
“There are no costs or fees to either party.”
(Id.)
The parties
dispute whether costs or fees incurred by the arbitrator before Mr.
Olson was stricken are still owed under the first Order.
III.
Defendant seeks summary judgment because the arbitration fees
are not a “consumer debt” under the Fair Debt Collection Practices
Act
(FDCPA),
Alternatively,
ands
therefore
defendant
the
argues
FDCPA
that
even
does
if
not
apply.
considered
a
qualifying consumer debt, defendant voluntarily complied with the
statutory requirements of the FDCPA.
Plaintiff responds that the
debt is a “consumer debt” because he was sued individually by his
former employer, Effective Mailers.
-5-
Plaintiff further argues that
he does not owe the debt, since he did not agree to the services of
the arbitrator.
A.
Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act (FDCPA) was created in
part to “eliminate abusive debt collection practices by debt
collectors.”
15 U.S.C. § 1692(e).
For the FDCPA to apply, “a
plaintiff must make a threshold showing that the money being
collected qualifies as a ‘debt.’”
Oppenheim v. I.C. Sys., Inc.,
627 F.3d 833, 837 (11th Cir. 2010).
The mere obligation to pay
money does not constitute a “debt” under the FDCPA.
Id. at 837.
Rather, a “debt” is defined by statute as:
any obligation or alleged obligation of a consumer to pay
money arising out of a transaction in which the money,
property, insurance, or services which are the subject of
the transaction are primarily for personal, family, or
household purposes, whether or not such obligation has
been reduced to judgment.
15 U.S.C. § 1692a(5).
Thus the FDCPA applies “only to payment
obligations of a (1) consumer arising out of a (2) transaction in
which the money, property, insurance, or services at issue are (3)
primarily for personal, family, or household purposes.” Oppenheim,
627 F.3d at 837 (emphasis in original).
See also Hawthorne v. Mac
Adjustment, Inc., 140 F.3d 1367, 1371 (11th Cir. 1998).
B.
Application to This Case
In this case, plaintiff was sued individually in a lawsuit
arising out of his employment, during which (viewing the facts in
the light most favorable to the non-moving party) he did not agree
-6-
to pay for the services of an arbitrator.
collect an arbitration fee.
The arbitrator seeks to
That alleged obligation to pay is not
a “debt” within the meaning of the FDCPA because it satisfies none
of the three requirements.
plaintiff’s
activities
as
The money at issue was not from
a
consumer,
but
from
his
alleged
activities as an employee. Additionally, the alleged obligation to
pay money did not arise from a “transaction” because, at least from
plaintiff’s perspective, there was no business dealing or other
consensual obligation to pay.
Oppenheim, 627 F.3d at 837-38.
In
fact, the debt was imposed by a court order and therefore could not
constitute a transaction.
Finally, nothing about the state court
case was primarily for personal, family or household purposes. The
state court case involved allegations of breach of a business
contract and various torts.
The Court finds that summary judgment
is appropriate because the undisputed facts show the alleged
obligation to pay is not a “debt” within the FDCPA.
Summary
judgment will therefore be entered in favor of defendant.
C.
Sanctions and Costs
Defendant seeks costs and fees pursuant to Federal Rule of
Civil
Procedure
frivolous.
11
asserting
that
the
Complaint
(Doc. #23, ¶¶ 9, 12, 15, 16.)
patently
Defendant provided
plaintiff the requisite notice under Rule 11(c)(2).
11.)
is
(Id., ¶¶ 10-
Neither side has cited a factual pattern which is the same or
similar to this case, and plaintiff’s Complaint does not violate
-7-
Fed. R. Civ. P. 11(b).
Simply being incorrect is not subject to
sanctions under Rule 11.
The Court also finds that the case is not clearly brought in
bad faith or for purposes of harassment.
Therefore, defendant is
also not entitled to an award under 15 U.S.C. § 1692k(a)(3).
The
request for attorney’s fees and costs pursuant to 15 U.S.C. §
1692k(a)(3) and/or Fed. R. Civ. P. 11 is denied.
Accordingly, it is now
ORDERED:
1.
Defendant’s Motion for Summary Judgment Pursuant to Fed.
R. Civ. P. 56 and for Sanctions and Costs Pursuant to Fed. R. Civ.
P. 11 and 15 U.S.C. 1692k(a)(3) (Doc. #23) is GRANTED IN PART AND
DENIED IN PART.
Summary judgment is entered in favor of defendant
Keith M. Nathanson, PLLC, and plaintiff shall take nothing.
The
request for sanctions, attorney fees, and costs is denied.
2.
The Clerk of the Court shall enter judgment accordingly,
terminate all deadlines, and close the file.
DONE AND ORDERED at Fort Myers, Florida, this
September, 2013.
Copies:
Parties of record
-8-
30th
day of
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