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

Filing 533

ORDER AND REASONS deferring ruling on 505 Motion for Partial Summary Judgment for 30 days. Signed by Judge Helen G. Berrigan on 9/14/2015. (kac)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

NICOLE REYES, ET AL

CIVIL ACTION

v.

No. 12-2043

JULIA PLACE CONDOMINIUMS, ET AL

Section “C”

ORDER AND REASONS
Before the Court is plaintiff’s Motion for Partial Summary Judgment on FDCPA Claims
Rec. Doc. 505. Defendants, Steeg Law, LLC and Margaret V. Glass (“Steeg”), oppose the
motion. Rec. Doc. 517. The parties have also filed further briefs in support and opposition to the
motion. Rec. Docs. 523, 526, 528.
Reyes, individually and on behalf of the previously certified class of condominium
owners alleging violations of the Fair Debt Collection Practices Act (“FDCPA class”), seeks
summary judgment finding that Steeg are “debt collectors” under the FDCPA and that Steeg is
liable for violations of the FDCPA. Rec. Doc. 505-1.
As a threshold matter, the Court must determine whether Steeg is in fact a “debt
collector” as defined by the FDCPA before it can rule on whether Steeg is liable for violations of
the FDCPA. Under the FDCPA, a debt collector is “any person who uses any instrumentality of
interstate commerce or the mails in any business the principal purpose of which is the collection
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of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or
due or asserted to be owed or due another.” 15 U.S.C. §1692a(6). The Fifth Circuit has held that
the “principal purpose” prong of the statute differs from the “regularly prong,” such that “a
person may regularly render debt collection services, even if these services are not a principal
purpose of his business.” Garrett v. Derbes, 110 F.3d 317, 318 (5th Cir. 1997). Debt collection
activity includes litigation on behalf of a creditor client. Hester v. Graham, Bright & Smith, P.C.,
289 Fed. Appx. 35, 41 (5th Cir. 2008). “Whether a party regularly attempts to collect debts is
determined, of course, by the volume or frequency of its debt-collection activity.” Id. (citing
Brown v. Morris, 243 Fed.Appx. 31, 35 (5th Cir. 2007). However, the Fifth Circuit has held that
“no bright-line rule identifies when an attorney or law firm ‘regularly’ collects or attempts to
collect debts, so courts must make this determination a case-by-case basis.” Id. (citing Goldstein
v. Hutton, Ingram, Yuzek, Gainen, Carrooll & Bertolotti, 374 F.3d 56, 62 (2d Cir. 2004)).
Plaintiff insists that Steeg is a debt collector because it regularly engages in debt
collection activity and identifies itself as collecting consumer debts in letters sent to members of
the FDCPA class. Rec. Docs. 505-1 at 30; 523 at 4. However, central to plaintiff’s argument that
summary judgment is warranted on this issue is her claim that Steeg has refused to disclose
evidence relevant to its contention that it is not a debt collector, in violation of Federal Rule of
Civil Procedure Rule 25(a)(1)(A)(ii). According to plaintiff, Steeg failed to respond to
interrogatories requesting an explanation of its factual basis for claiming not to be a debt
collector, failed to identify evidence for this claim, and refused to produce documents on this
point. Rec. Doc. 505-1 at 33-34. Plaintiff contends that due to Steeg’s refusals, it is barred under
Rule 37 from relying on information it did not produce in the instant motion. Id. at 32.

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Steeg counters that plaintiff failed to appear for a Rule 37 conference to discuss the
parties’ discovery disputes, and therefore cannot opine about Steeg’s lack of disclosure. Rec.
Doc. 517 at 3. Steeg has also provided affidavits from Randy Opotowski, a partner at Steeg, and
Nicolle Jene, a paralegal at Steeg. Rec. Docs. 517-2, 517-3. These affidavits attest that Steeg
derives less than 1.5% of its annual revenue from files involving debt collection, does not
employ any fulltime employees for the purpose of debt collection, and obtained all its collection
business from its condominium association clients. Id. Steeg further attests that its collection
work amounted to less than 1% of its case load in 2010, 2011, and 2012. Id. at 7.
In response to this showing by Steeg, plaintiff argues that although there are no staff
members assigned to work only on debt collection activity, more than half the attorneys on its
staff are identified in their collection letters. Rec. Doc. 523 at 13. Plaintiff also claims that
although the percentage of revenue that Steeg derives from debt collection is small, it has
uncovered a minimum of 66 lien letters to condominium owners and 34 liens prepared against
condominium units, which were subsequently filed, and that this number demonstrates that its
collection activities are sufficiently regular. Rec. Docs. 523 at 12-13; 512-1 in globo. Plaintiff
also points to Steeg’s own website, which advertises its services in collecting unpaid
condominium fees. Rec. Docs. 523 at 16; 505-7 at 3. In addition, plaintiff challenges the validity
of Steeg’s affidavits, pointing to the fact that neither Jene nor Opotowsky based their assertions
on firsthand knowledge, but rather on their review of documents that Steeg has not provided to
plaintiffs or the Court. Rec. Doc. 523 at 5. However, as far as the Court can discern, Steeg has
provided the documents upon which the affidavits are based. Rec. Docs. 517-10, 517-11 (filed
under seal).

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Finally, plaintiff points to the fact that other courts have found debt collector status when
debt collection made up only a small portion of a firm’s revenue. Rec. Doc. 523 at 9. In
Goldstein v. Hutton, Ingram, Yuzek, Gainen, Carroll & Bertollotti, the Second Circuit found that
a defendant was a debt collector although its debt collection activities contributed only $5,000 to
its roughly $10 million revenue over the period in question—roughly 0.05%. 374 F.3d 56, 60 (2d
Cir. 2004). In Garrett v. Derbes, the Fifth Circuit found that attempts to collect debts owed to
639 different individuals within a nine-month period rendered a person a debt collector, although
this activity accounted for less than 0.5% of the defendant’s practice. 110 F.3d at 318. Thus,
plaintiff urges that a finding that Steeg is a debt collector is appropriate despite the fact that debt
collection activities account for a small percentage of Steeg’s overall revenue.
Given the ongoing discovery dispute in this case, the Court finds that a ruling on this
motion is premature. While debt collection accounts for a small percentage of Steeg’s revenue,
Steeg appears to market itself as having debt collection expertise, and the representation of
creditor clients—in this case, condominium associations—constitutes a significant part of
Steeg’s practice. In addition, given the similarity in the collection letters issued, 1 Steeg appears
likely to have systems in place for its collection activities. 2 However, due to Steeg’s failure to
answer plaintiff’s discovery requests and plaintiff’s failure to participate in a Rule 37 conference,
these and other factors relevant to the Court’s inquiry have not been fully developed for the
record. As defendants point out, a motion for summary judgment is not the appropriate vehicle
for resolving discovery disputes. Rec. Doc. 517 at 13. Thus, the Court defers consideration of the
motion for thirty (30) days so that plaintiff may either file motions to compel or confer in good
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The Court has previously discussed the similarity of Steeg’s letters in its Order and Reasons of December 18,
2014. Rec. Doc. 464 at 15.
2
These factors have been acknowledged by other federal courts as relevant to the determination of whether a
defendant qualifies as a debt collector under the FDCPA. See, e.g., Goldstein, 374 F.3d at 62-63; Kirkpatrick v.
Dover & Fox, P.C., Civ. A. 13-123, 2013 WL 5723077 (S.D. Tex. Oct. 21, 2013).

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faith to resolve the outstanding discovery disputes. At the end of thirty days from the date of this
order, plaintiff may re-urge its motion and submit supplemental briefing, if necessary.

New Orleans, Louisiana this 14th day of September, 2015.

_____________________________________
UNITED STATES DISTRICT JUDGE

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