West v. [Last Name Omitted] et al

Filing 20

ORDER granting 14 Motion for Summary Judgment. The trial of this case, scheduled for begin 6/29/15, is hereby canceled. The Clerk of Court shall enter judgment in favor of defendant Abendroth and Russell Law Firm and against plaintiff Katrina C West and shall close this case. Signed by Magistrate Judge Leonard T Strand on 9/16/14. (copy w/nef mailed to plaintiff) (djs)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
CENTRAL DIVISION
KATRINA C. WEST,
Plaintiff,

No. C14-03030-LTS

vs.
ABENDROTH & RUSSELL LAW
FIRM,

ORDER ON MOTION
FOR SUMMARY JUDGMENT

Defendant.
____________________
TABLE OF CONTENTS
I.

INTRODUCTION ...................................................................... 2

II.

RELEVANT FACTS ................................................................... 3

III.

SUMMARY JUDGMENT STANDARDS .......................................... 6

IV.

ANALYSIS ............................................................................... 8
A. Does West’s FDCPA Claim Fail as a Matter of Law? ....................... 8
1. The Alleged Violation .......................................................... 8
2. The Statutory Defense ........................................................11
B. Do West’s State Law Claims Fail as a Matter of Law? ....................13

V.

CONCLUSION .........................................................................14

I.

INTRODUCTION

On April 25, 2014, plaintiff Katrina C. West (West) filed a pro se lawsuit in the
Iowa District Court for Webster County against Abendroth and Russell Law Firm (Law
Firm) and a defendant identified as “Jill (last name omitted).” Doc. No. 3. In her state
court petition, West asserted the following causes of actions based on a conversation
between a Law Firm employee and an employee of a debt solutions company regarding
West:
Count 1:

Violation of the Fair Debt Collection Practices Act (FDCPA)

Count 2:

Negligent hiring

Count 3:

Negligent training

Count 4:

Negligent retention

Count 5:

Negligent supervision

Id. The defendant identified as “Jill (last name omitted)” was not served, did not appear
and is no longer a party to this action.1
On May 13, 2014, the Law Firm filed a notice (Doc. No. 1) of removal to this
court, invoking federal question jurisdiction over Count 1 and (by implication)
supplemental jurisdiction over the remaining, state law claims. This case was referred
to me by order (Doc. No. 12) entered June 23, 2014, after the parties unanimously
consented to trial, disposition and judgment by a United States Magistrate Judge pursuant
to 28 U.S.C. § 636(c)(3).
On July 29, 2014, the Law Firm filed a motion (Doc. No. 14) for summary
judgment in which it contends that West’s claims fail as a matter of law. West filed a

1

West’s 120-day deadline for service on “Jill (last name omitted)” pursuant to Federal Rule of
Civil Procedure 4(m) expired on September 10, 2014, 120 days after this action was removed to
this court. See, e.g., See Uzoukwu v. Prince George's Cnty. Coll. Bd. of Trustees, No. DKC–
12–3228, 2013 WL 3072373, at *2 (D. Md. June 17, 2013); Eccles v. National Semiconductor
Corp., 10 F. Supp. 2d 514, 519 (D. Md. 1998). For that reason, an order (Doc. No. 19) was
entered on September 15, 2014, that dismissed “Jill (last name omitted)” from this action without
prejudice. This leaves the Law Firm as the sole defendant.

2

resistance (Doc. No. 15) and the Law Firm filed a reply (Doc. No. 16). West then filed
a response to the reply, without seeking leave of court to do so. Typically, the movant’s
reply is the final document either party may file with regard to a motion for summary
judgment. See, e.g., Local Rule 56. While West’s response to the reply could be stricken
on that basis, I have elected to consider it in light of West’s status as a pro se litigant.
Neither party has requested oral argument. I find that oral argument is not necessary.
See Local Rule 7(c). The motion is fully submitted.
II.

RELEVANT FACTS

The following facts are undisputed for purposes of the Law Firm’s motion:
On January 22, 2014, the Law Firm commenced a small claims lawsuit against
West on behalf of Capital One Bank (USA), N.A. (Capital One). The lawsuit was filed
in the Iowa District Court for Webster County as Case No. SCSC058505 (the Small
Claims Action). In the Small Claims Action, which is public record, Capital One alleged
that West owed a debt and costs totaling approximately $1,641.00.
West had previously retained Ultimate Debt Solutions (UDS) to assist her with
financial matters and resolve her outstanding debts, including the debt that became the
subject of the Small Claims Action. Throughout her relationship with UDS, West
informed UDS about her financial situation, outstanding debts and other personal
information. She also executed a power of attorney authorizing UDS to contact the Law
Firm in order to settle or otherwise resolve the debt at issue. This power of attorney in
favor of UDS was not submitted to the Law Firm. However, two powers of attorney
West executed in favor of other debt solution companies were on file with the Law Firm.
On February 10, 2014, UDS representative Cathy Zebarth (Cathy) called the Law
Firm and left a voicemail message stating she was calling on behalf of West. Later that
day, Jill Christiansen (Jill) returned the call on behalf of the Law Firm. All incoming
and outgoing collections-related calls at the Law Firm are recorded. This particular call
was recorded as follows:
3

Cathy:

Customer service, this is Cathy.

Jill:

Cathy, my name is Jill. I’m returning your call from Abendroth and
Russell Law Firm regarding your client, Katrina West.

Cathy:

Yes. Okay, what did you need from me a social?

Jill:

I need to verify social and date of birth.

Cathy:

Social [omitted].

Jill:

M-hmm.

Cathy:

Date of birth [omitted].

Jill:

Okay, and I do need to advise you that I am not an attorney, I’m a
debt collector attempting to collect a debt, any information obtained
will be for that purpose, and this call is being recorded. Okay.
Capital One with a balance of $1,641.01. How can I help you with
that?

Cathy:

Okay – um – calling because she is interested in possibly settling this
debt. Should I make a settlement offer to you, how do you . . .?

Jill:

I’ll tell you what I can settle for. I can settle for $1394.

Cathy:

How many payments can we do that?

Jill:

It would have to be a lump sum payment.

Cathy:

Okay. I think I just wrote down wrong - what did you say $13. . .

Jill:

One thousand three ninety-four eighty-five.

Cathy:

Eighty-five, and it has to be a lump sum. Okay. I will check with the
customer and get back to you. Did you have my power of attorney
on file?

Jill:

Uh, we do - let me just double-check. We have two on file, I think.
Clear Our Debt Defense, Clear Solutions, is that correct?
4

Cathy:

We’re Ultimate Debt Solutions.

Jill:

Ultimate Debt? We have two on file already. I guess you can fax it
over to me at 515-278-0091.

Cathy:

Okay, I’ll get ours over there to you.

Jill:

And you calling from Marilyn Mauz’s office?

Cathy:

Nope. No, we are Ultimate Debt Solutions - we’re in Arizona Scottsdale, Arizona. I believe she’s with a company called DBS
before she came over here.

Jill:

Okay. All right, thank you.

Cathy:

Okay, thank you.

West admits that at the time of this call, UDS had a valid power of attorney to act on her
behalf with regard to the debt at issue.2 However, UDS never provided that document
to the Law Firm, even after the call. Nor has West produced the document in this lawsuit,
as she states that she suffered damage to her computer such that she is not able to retrieve
documents that had been stored on that computer.
The Law Firm maintains procedures designed to prevent the erroneous disclosure
of debt information to unauthorized third parties. Those procedures include:
a.

the Law Firm ensures its employees are properly trained on the
FDCPA and its requirements and obligations before it allows them
to take or receive calls related to debt collection;

b.

the Law Firm requires that it have a copy of a power of attorney in
its file before discussing debts with individuals other than the debtor;

c.

when the Law Firm receives information from a debtor that a person
other than the debtor has a power of attorney to discuss the debt, the

2

Among other things, West admitted the following request for admission: “You gave UDS a
power of attorney to act on your behalf to resolve or settle your debt or alleged debt before it
contacted [the Law Firm] on February 10, 2014.” Doc. No. 14-3 at 9, no. 11.

5

file is electronically marked in a database to not contact the debtor
directly, and to obtain a power of attorney;
d.

the Law Firm records all incoming and outgoing telephone calls and
messages;

e.

the Law Firm requires that call logs be kept for all calls;

f.

the Law Firm requires that all copies of all papers, pleadings, faxes,
emails and other paper and electronic documents created, sent or
received be kept;

g.

the Law Firm regularly tests its call staff to ensure compliance with
the FDCPA;

h.

the Law Firm randomly audits calls made to debtors by the staff to
ensure compliance with the FDCPA;

i.

the Law Firm requires all parties who call related to debts to provide
confidential verifying information, including social security number
and birth date, before discussing the debt;

j.

the Law Firm’s attorneys annually participate and attend continuing
legal education courses related to the FDCPA and take that
information to continually evaluate the process and procedures to
determine whether changes or revisions need to be made.

This case presents the only instance in which the Law Firm has been sued for the alleged
disclosure of debt information to a third party.
III.

SUMMARY JUDGMENT STANDARDS

Any party may move for summary judgment regarding all or any part of the claims
asserted in a case. Fed. R. Civ. P. 56(a). Summary judgment is appropriate when “the
pleadings, depositions, answers to interrogatories, and admissions on file, together with
affidavits, if any, show that there is no genuine issue of material fact and that the moving
party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). Summary
judgment should be granted, “after adequate time for discovery and upon motion, against
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a party who fails to make a showing sufficient to establish the existence of an element
essential to that party’s case, and on which that party will bear the burden of proof at
trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
A material fact is one that “‘might affect the outcome of the suit under the
governing law.’” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Thus,
“the substantive law will identify which facts are material.” Id. Facts that are “critical”
under the substantive law are material, while facts that are “irrelevant or unnecessary”
are not. Id.
An issue of material fact is genuine if it has a real basis in the record, Hartnagel
v. Norman, 953 F.2d 394, 395 (8th Cir. 1992) (citing Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)), or when “‘a reasonable jury could
return a verdict for the nonmoving party’ on the question,” Woods v. DaimlerChrysler
Corp., 409 F.3d 984, 990 (8th Cir. 2005) (quoting Anderson, 477 U.S. at 248). Evidence
that only provides “some metaphysical doubt as to the material facts,” Matsushita, 475
U.S. at 586, or evidence that is “merely colorable” or “not significantly probative,”
Anderson, 477 U.S. at 249-50, does not make an issue of material fact genuine.
As such, a genuine issue of material fact requires “sufficient evidence supporting
the claimed factual dispute” so as to “require a jury or judge to resolve the parties'
differing versions of the truth at trial.” Anderson, 477 U.S. at 248-49. The party moving
for entry of summary judgment bears “the initial responsibility of informing the court of
the basis for its motion and identifying those portions of the record which show a lack of
a genuine issue.” Hartnagel, 953 F.2d at 395 (citing Celotex, 477 U.S. at 323). Once
the moving party has met this burden, the nonmoving party must go beyond the pleadings
and by depositions, affidavits, or otherwise, designate specific facts showing that there
is a genuine issue for trial. Mosley v. City of Northwoods, 415 F.3d 908, 910 (8th Cir.
2005). The nonmovant must show an alleged issue of fact is genuine and material as it
relates to the substantive law. If a party fails to make a sufficient showing of an essential
element of a claim or defense with respect to which that party has the burden of proof,
7

then the opposing party is entitled to judgment as a matter of law. Celotex, 477 U.S. at
322.
In determining if a genuine issue of material fact is present, I must view the
evidence in the light most favorable to the nonmoving party. Matsushita, 475 U.S. at
587-88. Further, I must give the nonmoving party the benefit of all reasonable inferences
that can be drawn from the facts. Id. However, “because we view the facts in the light
most favorable to the nonmoving party, we do not weigh the evidence or attempt to
determine the credibility of the witnesses.” Kammueller v. Loomis, Fargo & Co., 383
F.3d 779, 784 (8th Cir. 2004). Instead, “the court's function is to determine whether a
dispute about a material fact is genuine.” Quick v. Donaldson Co., Inc., 90 F.3d 1372,
1376-77 (8th Cir. 1996).
IV.
A.

ANALYSIS

Does West’s FDCPA Claim Fail as a Matter of Law?

Count 1 is based on West’s allegation that Jill’s conversation with Cathy on
February 10, 2014, violated the FDCPA. In seeking entry of summary judgment, the
Law Firm argues that as a matter of law (1) the conversation did not violate the FDCPA
and, in any event, (2) a statutory defense applies. As I will discuss below, both arguments
are correct.
1.

The Alleged Violation

West alleges that the Law Firm violated the FDCPA because it did not have the
UDS power of attorney in its possession when the conversation between Jill and Cathy
took place. The Law Firm argues that West’s claim fails as a matter of law because a
valid power of attorney existed at the time of the conversation. Doc. No. 14-2 at 6.
West’s claim is based on 15 U.S.C. § 1692c(b), which states:

8

COMMUNICATION WITH THIRD PARTIES. Except as provided in
section 1692b of this title, without the prior consent of the consumer given
directly to the debt collector, or the express permission of a court of
competent jurisdiction, or as reasonably necessary to effectuate a
postjudgment judicial remedy, a debt collector may not communicate, in
connection with the collection of any debt, with any person other than the
consumer, his attorney, a consumer reporting agency if otherwise permitted
by law, the creditor, the attorney of the creditor, or the attorney of the debt
collector.
15 U.S.C. § 1692c(b) [emphasis added]. The underlined portion makes it clear that a
debt collector is permitted to communicate with the consumer and consumer’s attorney
regarding the debt at issue. Moreover, subpart (d) of Section 1692c states: “For the
purpose of this section, the term ‘consumer’ includes the consumer's spouse, parent (if
the consumer is a minor), guardian, executor, or administrator.” 15 U.S.C. § 1692c(d).
The question here is whether UDS, having received a valid power of attorney from
West, was a “consumer” within the meaning of Section 1692c(b). If so, then the Law
Firm’s February 10, 2014, communication with UDS about the debt could not have
violated FDCPA. The Eighth Circuit Court of Appeals does not appear to have addressed
the question of whether a power of attorney provided by a consumer to another party
renders the recipient a “consumer” within the meaning of Section 1692c(b). In general,
a power of attorney is simply a writing by which one party, a principal, appoints another
as attorney-in-fact and confers upon the latter the authority to perform certain specified
acts on behalf of the principal. See, e.g., Figgins v. Cochrane, 972 A.2d 736, 749 (Md.
2008). Under Iowa law, a power of attorney creates a principal-agent relationship and
appoints an agent to act on behalf of the principal, but only with regard to the powers
specified in the document. Matter of Estate of Crabtree, 550 N.W.2d 168, 170 (Iowa
1996). An agent is a fiduciary to the principal and as such, must act for the benefit of
the principal. Miller v. Berkoski, 297 N.W.2d 334, 339 (Iowa 1980) (citing Darling v.
Nineteen-Eighty Corp., 176 N.W.2d 765, 768 (Iowa 1970)).

9

Here, by her own admission, West executed a valid power of attorney to UDS
granting UDS authority to contact the Law Firm to discuss settlement terms, enter into a
settlement agreement and resolve the debt. Doc. No. 14-3 at 9.

West thus appointed

UDS as her agent and attorney-in-fact. UDS effectively stepped into West’s shoes, could
act for West’s benefit, bind West to a settlement and, therefore, was no longer a third
party to the debt communications.
This situation is similar, in many ways, to that in Bible v. Allied Interstate, Inc.,
No. 00-323-DWF/RLE, 2001 WL 1618494 (D. Minn. May 14, 2001). In that case,
Caroline Bible admitted that her son, Paul Bible, handled all her business matters because
she was deaf and it was difficult for her to speak on the phone. Id. at *1. When the
defendant (Allied) attempted to contact Caroline, Paul answered the phone and correctly
stated he represented Caroline. Id. Allied then spoke to Paul about Caroline’s debt. Id.
Caroline sued Allied, claiming its communication with Paul was an improper
communication about the debt with a third party in violation of Section 1692c(b). Id. at
*2. The court entered judgment in Allied’s favor as a matter of law, holding that Paul
was Caroline’s bona fide representative and, therefore, any communication with Paul was
the legal equivalent of a communication with Caroline. Id. at *3. The court explained:
[T]he statute goes on to define “consumer,” for purposes of the prohibition
on third-party communications, as including the consumer's administrator.
In this case, the undisputed evidence in the record indicates that Paul Bible
represented himself as the administrator of Caroline Bible's affairs; he
further represented that Caroline Bible was incapable of communicating by
phone, and thus Caroline Bible was incapable of verifying or refuting Paul
Bible's status as her administrator. Indeed, Plaintiffs do not refute Paul
Bible's contention that he administers Caroline Bible's affairs. Thus,
Allied's statements to Paul Bible were, under the terms of the statute, the
equivalent of statements to Caroline Bible.
Id.
Just as Allied’s communication with Paul Bible did not violate Section 1692c(b),
even absent an executed power of attorney, the Law Firm’s communication with UDS,
10

which had a valid power of attorney, was not a violation. The power of attorney West
provided to UDS made the Law Firm’s communications with UDS the legal equivalent
of communications with West.
The fact that the Law Firm did not have physical possession of the power of
attorney at the time of the communication is of no legal import. It is undisputed that
West had already provided the power of attorney to UDS when the communication took
place and that its scope included resolution of the debt with the Law Firm. UDS was
West’s lawfully-appointed representative, meaning the Law Firm was entitled to discuss
the debt with UDS without first obtaining West’s express permission. As a matter of
law, the February 10, 2014, communication between the Law Firm and UDS did not
violate Section 1692c(b). The Law Firm’s motion for summary judgment will be granted
with regard to Count I of West’s complaint.
2.

The Statutory Defense

The Law Firm argues in the alternative that even if it violated Section 1692c(b),
it would be entitled to invoke the following statutory defense:
A debt collector may not be held liable… if the debt collector shows by
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.
15 U.S.C. § 1692k(c). The Eighth Circuit Court of Appeals has acknowledged that while
the Section 1692k(c) defense is a fact-intensive inquiry, it may be resolved by summary
judgment when a reasonable jury could only conclude (1) the violation was unintentional,
(2) the violation was a bona fide error and (3) that reasonable precautions to avoid bona
fide errors were in place. Wilhelm v. Credico, 519 F.3d 416, 420-421 (8th Cir. 2008).
The burden is on the debt collector to prove the elements of the defense. Eide v. Colltech,
Inc., 987 F. Supp. 2d 951, 966 (D. Minn. 2013) (citing Owen v. I.C. Sys., Inc., 629
F.3d 1263, 1271 (11th Cir. 2001).
11

The Eighth Circuit has not interpreted the precise scope of each element, so I will
look to other courts for guidance. The Sixth Circuit has held that to satisfy the first
element, “the debt collector must only show that the violation was unintentional, not that
the communication itself was unintentional.” Lewis v. ACB Bus. Servs., Inc., 135 F.3d
389, 42 (6th Cir. 1998). Meanwhile, the Seventh Circuit has defined a bona fide error
as an error made in good faith or that is a genuine mistake. Kort v. Diversified Collection
Servs., Inc., 394 F.3d 530, 538 (7th Cir. 2005). The third element requires only that
reasonable precautions are taken, not that every conceivable precaution to avoid the bona
fide error is taken. Id. at 539.
Here, any violation was clearly unintentional. It is undisputed that UDS had a
valid power of attorney on February 10, 2014, when the telephone conversation between
Jill and Cathy occurred. It is also undisputed that Cathy, acting for UDS, initiated the
contact by calling the Law Firm about the debt. Jill returned the call and required that
Cathy verify West’s social security number and birth date before proceeding with the
conversation. Cathy represented to Jill that UDS had a power of attorney from West.
At the time of this conversation, the Law Firm had powers of attorney from West on file
that authorized the Law Firm to speak with other debt solutions companies.

Jill

mistakenly assumed that one of those powers of attorney related to UDS. However, upon
realizing her mistake, she requested that Cathy provide a copy of the power of attorney
in favor of UDS, which Cathy agreed to do. Based on these undisputed facts, no
reasonable juror could conclude that Jill intended to violate the FDCPA.
These same facts likewise establish the second element, as the violation (if any)
was genuine and made in good faith. Jill mistakenly assumed that the Law Firm already
had a power of attorney on file in favor of UDS. When she attempted to confirm that
Cathy was a representative of the debt solution company listed in the previously-filed
powers of attorney, she discovered her error and asked Cathy to send a copy of the
correct power of attorney. Again, there is no evidence suggesting that Jill acted in bad
faith or that her mistake was not genuine.
12

The final element of the defense is also met. As detailed earlier, it is undisputed
that the Law Firm employs numerous precautions and policies with regard to debt
collection communications. These include recording conversations and auditing those
recordings, requiring employee training, requiring a consumer’s file to be marked when
a power of attorney is on file and requiring verification in the form of personal
information (such as the consumer’s birth date and social security number). No evidence
suggests that these precautions are unreasonable to avoid bona fide errors. Indeed, it is
undisputed that the Law Firm has never previously been sued for the alleged disclosure
of debt information to a third party.
The undisputed facts in the summary judgment record demonstrate, as a matter of
law, that the Law Firm is entitled to the defense set forth in Section 1692k(c). This
provides an alternative basis for granting the Law Firm’s motion for summary judgment
with regard to Count I.
B.

Do West’s State Law Claims Fail as a Matter of Law?
In Counts 2 through 5, West asserts state law tort claims for negligent hiring,

negligent training, negligent retention, and negligent supervision. As the Law Firm
correctly notes, all of these claims are based on the alleged FDCPA violation. It is wellestablished under Iowa law that “a necessary element” of such claims “is an underlying
tort or wrongful act committed by the employee.” Kiesau v. Bantz, 686 N.W.2d 164,
172 (Iowa 2004) (citing Schoff v. Combined Ins. Co. of America, 604 N.W.2d 43, 53
(Iowa 1999)). Here, for the reasons discussed above, there was no underlying tort or
wrongful act. As such, West’s various negligence theories necessarily fail as a matter of
law.3 The Law Firm’s motion for summary judgment will be granted on Counts 2, 3, 4
and 5.
3

I note that the record likewise does not support other essential elements of these negligence
theories. To prevail, West would have to present evidence showing that the Law Firm acted
negligently or recklessly in hiring, training supervising and/or retaining Jill and that this

13

V.

CONCLUSION

For the reasons set forth herein:
1.

Defendant Abendroth and Russell Law Firm’s motion (Doc. No. 14) for

summary judgment is granted with regard to all counts.
2.

The trial of this case, scheduled to begin June 29, 2015, is hereby canceled.

3.

The Clerk of Court shall enter judgment in favor of defendant Abendroth

and Russell Law Firm and against plaintiff Katrina C. West and shall close this case.
IT IS SO ORDERED.
DATED this 16th day of September, 2014.

________________________________
LEONARD T. STRAND
UNITED STATES MAGISTRATE JUDGE

negligence or recklessness caused injury to West. Id. at 171-72 (quoting Restatement (Second)
of Agency § 213 (1957)). Even if an underlying tort or wrongful act occurred, West has not
submitted evidence giving rise to any genuine issues of material fact as to those elements.

14