Mendoza v. Collection Bureau Incorporated

Filing 10

MEMORANDUM DECISION AND ORDER - NOW THEREFORE IT IS HEREBY ORDERED that Plaintiffs Motion to Enforce Judgement (Dkt. 6 ) is DENIED. Signed by Judge Edward J. Lodge. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

MICHELLE MENDOZA,
Plaintiff,
Case No. 1:15-CV-00511-EJL
v.
COLLECTION BUREAU, INC., an
Idaho corporation,

MEMORANDUM DECISION AND
ORDER

Defendant.

INTRODUCTION
Before the Court in the above-entitled matter is Plaintiff’s Motion to Enforce Judgment.
(Dkt. 6.) The Motion is ripe for the Court’s consideration. Having fully reviewed the record herein,
the Court finds that the facts and legal arguments are adequately presented in the briefs and record.
Accordingly, in the interest of avoiding further delay, and because the Court conclusively finds
that the decisional process would not be significantly aided by oral argument, the Motions are
decided on the record without oral argument.

ORDER - 1

FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Michelle Mendoza brought this action against Defendant Collection Bureau,
Incorporated (“CBI”) alleging violations of the Fair Debt Collection Practices Act (“FDCPA”), 15
U.S.C. § 1692 et seq. The claim alleges an employee of Defendant’s contacted Plaintiff directly to
attempt to arrange payment of a debt knowing Plaintiff was represented by an attorney. (Dkt. 1.)
The underlying debt owed by Plaintiff was originally due to Lasher Development Company
(“Lasher”). On July 12, 2013, Lasher obtained a Judgment against Plaintiff in Idaho state court for
the debt. (Dkt. 8, Aff. Heck.) Lasher assigned that Judgment to CBI on August 6, 2013. Id. CBI
has attempted to collect the debt from Plaintiff since that time. The event giving rise to this action
occurred in 2015.
Shortly after the Complaint in this case was filed, Plaintiff filed a Notice of Acceptance of
a Rule 68 Offer of Judgment wherein the Plaintiff accepted Defendant’s Offer of Judgment for
$1,001 in statutory damages, plus costs and reasonable attorney fees. (Dkt. 3.) In December of
2015, a writ of execution was issued by the state court against Plaintiff for payment of the
underlying debt and defense counsel sent a notice of garnishment on behalf of Lasher to CBI for
collection of the debt CBI owed to Plaintiff resulting from the Judgement in this case as payment
on the underlying debt owed by Plaintiff in the state court case. (Dkt. 6-5, Ex. C) (Dkt. 8, Aff.
Heck.)
On January 21, 2016, this Court entered a Judgment consistent with the offer and notice.
(Dkt. 5.) The parties agreed that $1,400.00 was a reasonable amount for Plaintiff’s costs and
attorney’s fees which Defendant paid to Plaintiff’s counsel directly. (Dkt. 6-3, Ex. A.) As to the
ORDER - 2

statutory damages, the parties disputed the method of payment for the $1,001.00. (Dkt. 6-2, Aff.
Smith.) Ultimately, the Defendant credited the account it held for Plaintiff’s underlying debt in the
amount of $1,001.00 in satisfaction of the Judgement CBI owed to Plaintiff in this case. Plaintiff
has now filed this Motion to Enforce Judgment demanding that the statutory damages be paid to
her and disputing that Defendant’s credit to her account for the underlying debt constitutes
satisfaction of the Judgement in this case. (Dkt. 6.) The Court finds as follows.
DISCUSSION
Under Federal Rule of Civil Procedure 69, “a money judgment is enforced by a writ of
execution, unless the court directs otherwise. The procedure on execution—and in proceedings
supplementary to and in aid of judgment or execution—must accord with the procedure of the state
where the court is located, but a federal statute governs to the extent it applies.” Fed. R. Civ. P.
69(a)(1). No federal statute governs here. Therefore, Idaho’s procedure controls.
In Idaho, a final judgment for the payment of money is enforced by “a writ of execution
unless the court directs otherwise.” Idaho R. Civ. P. 69(a). A “writ of execution” is a “formal
process issued by a court generally evidencing the debt of the defendant to the plaintiff and
commanding the officer to take the property of the defendant in satisfaction of the debt....” City of
Idaho Falls v. Beco Const. Co., Inc., 850 P.2d 165, 175 (Idaho 1993) (quoting Black’s Law
Dictionary 510 (5th ed. 1979) (holding statutes take precedence over Rule 69’s process)).
Essentially, a writ of execution is the process whereby the Court can enforce its judgments by
ordering seizure of an asset from the judgment debtor or other appropriate specific performance in
order to satisfy the judgment.
ORDER - 3

The relief sought by Plaintiff in this case is to enforce the Judgment by demanding that the
Defendant remit payment of the statutory damages directly to Plaintiff, i.e., asking that Defendant
be ordered to satisfy the Judgment in a specific manner. Plaintiff argues the Offer of Judgment in
this case clearly states the parties’ intention was for Judgment to be taken against CBI in favor of
Plaintiff and that Defendant’s conduct in crediting the statutory damages against the underlying
debt violates the purpose and public policy of the FDCPA. (Dkt. 6, 9.) Defendant objects arguing
the Judgement did not require that payment of the statutory damages be made directly to Plaintiff.
(Dkt. 7.) Instead, Defendant argues, it has satisfied the Judgment by crediting, aka setting off, the
$1,001.00 in statutory damages CBI owes in this case against what Plaintiff owes on the underlying
debt. (Dkt. 7.) Plaintiff maintains the Defendant’s setoff method of payment violates the policies
underlying FDCPA and is contrary to the parties’ intent in the Offer of Judgment.
The Offer of Judgment in this case uses only general language which does not clearly
indicate the parties’ had a specific intention with regard to payment. (Dkt. 3.) As to the FDCPA
policy argument, Plaintiff argues the case of Isa v. Law Office of Timothy Baxter & Associates is
directly on point. (Dkt. 6, 9.) Defendant cites to Brown v. Mandarich Law Group, LLP in support
of its position. (Dkt. 7.) The Court finds the setoff by Defendant does not violate FDCPA policy.
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). The FDCPA provides that a

ORDER - 4

plaintiff who successfully prosecutes a FDCPA claim shall be awarded statutory damages and
reasonable attorney fees. 15 U.S.C. § 1692(a)(3).
In Isa, the court held that a judgment debtor in a FDCPA case could not setoff that judgment
by paying the FDCPA plaintiff’s underlying creditor. Isa, No. 13-cv-11284, 2013 WL 5692850
(E.D. Mich. Oct. 21, 2013). The court reasoned that the FDCPA debtor’s payment to the thirdparty creditor on the underlying debt was not a “setoff” but was instead a transfer of money to the
FDCPA plaintiff’s creditor instead of a payment of damages for the FDCPA violation. Such a
transaction, the court held, violates the FDCPA’s purpose of “eliminate[ing] abusive debt
collection practices by debt collectors” by allowing a collector to violate the FDCPA and then pay
the penalties to the underlying creditors. Id. at *3. Such an outcome would encourage violations
by debt collectors.
The court in Brown, on the other hand, upheld an offset by a FDCPA defendant against the
underlying debt. Brown v. Mandarich Law Grp., LLP, No. 13-CV-04703, 2014 WL 2860631 (N.D.
Cal. June 23, 2014). There, the FDCPA defendant had been assigned the FDCPA plaintiff’s
underlying debt. Therefore, the court reasoned, the offset did not violate FDCPA policy because
the FDCPA defendant incurs the statutory penalty by collecting less of the underlying debt it was
owed as reduced by the setoff amount. Id. at 2-3. The facts in this case are akin to those in Brown.
As in Brown, Defendant in this case was assigned the state court judgment against Plaintiff.
As the holder of the state court judgment, Defendant is the judgment creditor to whom Plaintiff
owes the underlying debt. Consistent with the reasoning in Brown, this Court finds the Defendant’s
offset of the FDCPA statutory damages awarded in this action against the underlying debt owed
ORDER - 5

by Plaintiff is in accord with FDCPA policy. Brown, 2014 WL 2860631, at *2-3; see also Lundsted
v. JRV Holdings, LLC, Case No. 14-cv-13981, 2016 WL 1665154 (E.D. Mich. April 27, 2016)
(distinguishing Isa and Brown).1
The procedural posture of this case, however, is somewhat different than Brown. Here, the
Defendant did not file a motion asking for leave to offset the statutory damages before doing so.
Instead, Defendant effectively offset the judgements on its own by crediting Plaintiff’s account on
the underlying debt in the amount of the statutory penalty awarded in this case. It is the Plaintiff
in this case who has filed the Motion to Enforce Judgment seeking to challenge Defendant’s
method of satisfying the judgment. Having considered that circumstance, the Court concludes that
despite the fact that Defendant should have requested leave to offset the judgment prior to doing
so, the end result is correct. For the reasons articulated in Brown and stated herein, setoff is
appropriate in this case and the Plaintiff’s Motion is denied. That being said, the Court does not
approve of the defense proceeding with the offset in this case without filing a proper motion to
offset the judgment. Given the obvious disagreement between the parties concerning the matter,

1Plaintiff argues this case is distinct from Brown because the debt buyer in that case had “clean
hands” whereas, in this case, CBI clearly violated the FDCPA. (Dkt. 9 at 4-5.) The Court disagrees.
The Brown court concluded that offset of the statutory damages does not violate the FDCPA where,
as here, the FDCPA defendant owned the underlying debt. The part of the motion to offset that
was denied in Brown concerned the award of attorney fees. That is not at issue here as the
Defendant has not offset the attorney fees in this case.

ORDER - 6

the appropriate procedure was for Defendant to have sought a ruling from the Court before
offsetting the Judgment.
ORDER
NOW THEREFORE IT IS HEREBY ORDERED that Plaintiff’s Motion to Enforce
Judgement (Dkt. 6) is DENIED.

DATED: February 21, 2017

_________________________
Edward J. Lodge
United States District Judge

ORDER - 7