Reyes v. Julia Place Condominiums Homeowners Association, Inc. et al

Filing 510

ORDER AND REASONS granting 470 Motion for Summary Judgment. Signed by Judge Helen G. Berrigan on 7/27/2015. (kac)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

NICOLE REYES, ET AL.

CIVIL ACTION

VERSUS

NO. 12-CV-2043

JULIA PLACE CONDOMINIUMS
HOMEOWNERS ASSOCIATION INC., ET
AL.

SECTION “C”

ORDER AND REASONS 1
Before the Court is a Motion for Summary Judgment and New Trial by defendants Steeg
Law, LLC and Margaret V. Glass. Rec. Doc. 470. The Motion is opposed by plaintiffs as set out
in their Memoranda in Opposition. Rec. Docs. 477, 498. The Motion is before the Court on the
briefs and without oral argument. Having considered the record, the law, and the submissions of
the parties, IT IS HEREBY ORDERED that defendants’ Motion for Summary Judgment is
GRANTED.

I. BACKGROUND
Plaintiff Nicole Reyes brings this class action lawsuit on behalf of herself and other
condominium owners. Rec. Doc. 325. Plaintiff alleges that she and the other class members have
been subject to excessive fines and fees and debt collection practices by the Steeg Law Firm,
LLC (“Steeg”) and various Condominium Associations throughout the New Orleans area that
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Andrew Lombardo, a second year student at Tulane Law School, helped prepare this order.

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violate the Fair Debt Collection Practices Act (“FDCPA”), Louisiana usury law, and the
Louisiana Condominium Act (“LCA”). Id. The factual background of this case has been
described in greater detail in this Court’s prior orders dated February 5, 2013 and July 3, 2014.
Rec. Docs. 153, 380.
On December 18, 2014, this Court issued an Order granting plaintiffs’ Motion to Certify
Class as to the FDCPA Monetary Relief Class, as narrowed by the Court. Rec. Doc. 464. Now,
defendants move the Court to grant summary judgment on the claims of five (5) members of this
certified class whom defendants assert are corporate entities. According to defendants, these five
claimants, as corporations, cannot be “consumers” as defined under the provisions of the FDCPA
as they are not “natural persons” and, therefore, their claims must be dismissed with prejudice.
Rec. Docs. 470, 495, 503.

II. STANDARD OF REVIEW
The plain language of Rule 56(c) of the Federal Rules of Civil Procedure mandates the
entry of summary judgment, after adequate time for discovery and upon motion, against 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). The party seeking summary judgment always bear the initial
responsibility of informing the district court of the basis for its motion, and identifying those
portions of the pleadings, depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue
of material fact. Id. at 323. If the moving party satisfies the initial burden, the nonmoving party
must “designate specific facts showing there is a genuine issue for trial” using evidence

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cognizable under Rule 56. Id. at 324. Material facts are those that “might affect the outcome of
the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
When considering whether any genuine issue of material fact exists, courts view the
evidence and inferences fairly drawn from that evidence in the light most favorable to the
nonmoving party. Daniels v. City of Arlington, Texas, 246 F.3d 500, 502 (5th Cir. 2001).
Summary judgment does not allow a court to resolve credibility issues or to weigh evidence.
Int’l. Shortstop, Inc. v. Rally’s Inc., 939 F.2d 1257, 1263 (5th Cir. 1991).

III. LAW AND ANALYSIS
1. The FDCPA and its Purpose
The Fair Debt Collection Practices Act, by definition, was adopted by Congress in order
to “eliminate abusive debt collection practices by debt collectors” and to “protect consumers
against debt collections abuses.” 15 U.S.C. §1692(e) (emphasis added). Under the statute, a
‘debt’ is defined 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) (emphasis added). It is clear,
then, that Congress intended for the Act to apply only to the collection of “traditional consumer
debts” and has “no application to the collection of commercial accounts.” Manuel H. Newburger
and Barbara M. Barron, Fair Debt Collection Practice ¶ 1.02[1-2] (Senate Report No. 95-382 on
the FDCPA states: “This bill applies only to debts contracted by consumers for personal, family,
or household purposes; it has no application to the collection of commercial accounts.”).
2. “Consumers” under the FDCPA

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The FDCPA defines a “consumer”, for purposes of the Act’s protections, as “any natural
person obligated or allegedly obligated to pay any debt.” 15 U.S.C. §1692a(3) (emphasis added).
It is defendants’ assertion and the Court’s finding that Congress’ use of this specific “natural
person” language is of central importance to the resolution of the question presently before the
Court – that is, whether a corporate entity may be held to be a “consumer” for purposes of the
FDCPA.
Plaintiff’s argument points to what she calls the “broad purpose” of the Act and rests on
the central assertion that, despite the statute’s explicit use of the “natural person” language, it
was not Congress’ intent to so narrowly prescribe who may recover under the FDCPA. Rec. Doc.
477 at 2. Plaintiff argues instead that Congress intended to allow “any person” to recover under
the Act. Rec. Doc. 477 at 6-7. To support this, plaintiff points to discrete use of this “any person”
phrasing in other parts of the statute. 2 The Court draws a different conclusion from this
occurrence. The Court finds the fact that the legislature deliberately chose to use the more
specific “natural person” language in the “consumer” definition instead of the “any person”
phrasing found elsewhere in the statute to be strong evidence of Congress’ precise intent to limit
applicability of the Act to only “natural persons.” Additionally, plaintiff cites to the Fair Debt
Collection Practice treatise for the assertion that “it appears that Congress intended that word
[person] to have its broadest legal meaning and not be limited to ‘natural’ persons.” Manuel H.
Newburger and Barbara M. Barron, Fair Debt Collection Practice ¶ 1.02[2]. While this Court
admittedly entertained this argument in its class certification Order (Rec. Doc. 464 at 8), it finds

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The “any person” language to which plaintiffs refer is found in the FDCPA’s statutory definitions of the terms
“communication” (“conveying the information regarding a debt directly or indirectly to any person. . .”), “creditor”
(“any person who offers or extends credit. . .”), and “debt collector” (“any person who uses any instrumentality of
interstate commerce or the mails in any business the principal purpose of which is the collection of any debts. . .”)
(emphasis added). 15 U.S.C. §1692a(2, 4, 6).

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now that closer inspection and an expounding of the full quote with the aid of the surrounding
context yields a different conclusion:
The FDCPA defines the term “consumer” as “any natural person obligated or allegedly
obligated to pay any debt.” This definition clearly excludes all corporations,
partnerships, trusts, and other legal entities that are not natural persons. It must be
noted, however, that regardless of consumer status, any “person” who comes into contact
with a violation of the FDCPA may maintain an action under the Act. Given the way that
“person” is used in the definitions of creditor and debt collector, it appears that Congress
intended that word to have its broadest legal meaning and not be limited to “natural”
persons. Thus, while a corporation could not be a “consumer” for FDCPA purposes,
it certainly could be a plaintiff in a fair-debt suit if it were damaged by a debt
collector’s violations of the Act while collecting from a consumer.
Fair Debt Coll. Prac. ¶ 1.02[2] (emphasis added). What this portion of the treatise contemplates
is a situation where a corporation has been harmed by a debt collector’s actions toward collecting
a debt against a natural-person “consumer” and not the corporation itself. The underlying debt,
in all circumstances, must always be to a “consumer”, and therefore a natural-person as provided
by the Act. Thus, with the benefit of context it is apparent that this portion of the treatise
addresses a discrete set of circumstances not present in plaintiffs’ case and, further, does not
disrupt the usual requirement of “consumer status” in order to recover under the Act.
For further support, plaintiff cites to unreported and non-binding authority 3 which they
claim supports the finding that a claimant need not be a consumer in order to sustain a cause of
action under the FDCPA. Rec. Doc. 477 at 6. However, upon inspection, the Court finds that a
fair reading of the court’s opinion there does not support such a broad conclusion. While the
court in Walker v. Gallegos came to the conclusion that “. . . plaintiff need not be a ‘consumer’
to have standing under the FDCPA to bring this action” by pointing to the “any person” language
used in the so-called “enforcement section” of the Act, Section ‘k’, it was careful to
acknowledge that this catch-all language could not be read into sections that were clearly
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Plaintiffs cite to Walker v. Gallegos, CV 00-1231, 2002 U.S. Dist. LEXIS 25682 (D. Az. 2002).

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intended to be applicable to “consumers” only. Walker v. Gallegos, CV 00-1231, 2002 U.S. Dist.
LEXIS 25682 (D. Az. 2002). Of note, the Walker decision has been followed by only one other
court in an unreported opinion and is not controlling on this Court.
The Court has discovered a line of cases focusing on the purpose of the underlying debt
rather than the nature of the indebted entity when evaluating whether a claimant may sustain a
cause of action under the FDCPA. In Sluys v. Hand, the court held that although relief under the
FDCPA is limited by statute to “consumers” only, business debts are covered if incurred by a
sole proprietorship. 831 F.Supp. 321, 323 (S.D.N.Y. 1993). This narrow holding, however, has
been sharply criticized and discredited by subsequent cases, most directly in Slenk v. Transworld
Systems, Inc. In Slenk, the court expressly overruled the holding in Sluys that debt incurred by a
sole proprietorship was a de facto consumer debt 4, and held instead that the determination hinged
on the purpose for which the credit was extended – whether primarily consumer or commercial
in nature. Slenk v. Transworld Systems, Inc., 236 F.3d 1072, 1075 (9th Cir. 2001); see also
DepoLink Court Reporting & Litigation Support Services v. Rochman, 430 N.J. Super. 325, 33436 (App. Div. 2013); see also Fisher v. O’Brien, 2010 WL 1269793 at *10 (E.D.N.Y. Mar 9,
2010). However, the Court notes that none of these cases is binding authority upon this Court
and, further, stand in the face of a straightforward reading of the statute which clearly defines a
consumer as “any natural person”. In addition, the Court finds that each case fails to address and
track the actual language and provisions of the FDCPA statute with regard to “consumer debts.”.

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The court in Slenk offered the following: “[Plaintiff's] reliance on Sluys is misplaced. The opinion in Sluys has
been sharply criticized—and rightly so—by courts and academic commentators due to its abandonment of the
FDCPA's definition of a consumer debt. The United States District Court for the Western District of Oklahoma
in Beaton v. Reynolds, Ridings, Vogt and Morgan, P.L.L.C., 986 F.Supp. 1360 (W.D.Okla.1998), found the result
in Sluys to be “plainly wrong,” stating that “to the extent Sluys stands for the proposition that the Act does not
require proof [that a transaction was entered into primarily for personal, family, or household purposes], the decision
is in error.” 236 F.3d at 1076 (2001).

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Both parties agree that past-due condominium assessments are “consumer debts.” Rec.
Docs. 498, 503. However, as defendants correctly observed, “consumer debts”, by statute, may
only be held by natural persons. Rec. Doc. 503. If a debt is held by a corporate entity, then by
definition it is not, and cannot be, a “consumer debt.” Plaintiffs have argued – and asked the
Court to accept – that because the five corporate entities in question did in fact incur debt in the
form of past-due condominium assessments that they are therefore proper claimants under the
FDCPA. The Court declines to make this leap. To be sure, past-due condominium assessments
would yield a cognizable claim under the FDCPA if the party who had incurred them were a
“natural person.” The mere fact that past-due condominium assessments qualify as “consumer
debts” in the abstract may not abrogate the plain fact that these five corporate claimants fail to
meet the initial and most fundamental requirement for recovery under the FDCPA: that they be
“consumers” as defined by the Act and, thus, “natural persons.”

IV. CONCLUSION
The plaintiffs here bear the burden of proving a genuine issue of material fact in order to
preclude summary judgment and the Court finds that they have failed to do so. As defendants
correctly observed, the only factual question to be determined at the present time is whether the
five identified corporate claimants – Vanderbilt New Orleans, LLC; Penthouse at New Jax, LLC;
New Jax Commercial, LLC; Bank of America; and Wells Fargo – are “consumers” as defined by
the FDCPA and thus entitled to join claims as part of the certified FDCPA Monetary Relief
Class. As discussed above, a clear reading of the statute itself and the weight of relevant case law
unambiguously militate against allowing corporate entities to recover as claimants under the
FDCPA. As defendants have pointed out, plaintiffs have admitted that the five claimants at issue

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are in fact non-natural persons (Rec. Doc. 503 at 6) and, therefore, the Court finds that there
exists no genuine issue as to this evident fact. Therefore, defendants are entitled to summary
judgment on this matter. The Court notes that this holding does not disrupt the previous
certification of the FDCPA Monetary Relief Class.
Accordingly,
IT IS HEREBY ORDERED that defendants’ Motion for Summary Judgment and New
Trial (Rec. Doc. 470), construed by this Court as a Motion for Summary Judgment, is
GRANTED.

New Orleans, Louisiana, this 27th day of July, 2015.

____________________________________
HELEN G. BERRIGAN
UNITED STATES DISTRICT JUDGE

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