Reyes v. Julia Place Condominiums Homeowners Association, Inc. et al
Filing
784
ORDER & REASONS: granting 675 Defendant Parkview Condominium Homeowners Association's Motion for Summary Judgment. Plaintiffs' claims against Parkview Condominium Homeowners Association, Inc. are hereby DISMISSED WITH PREJUDICE. Signed by Judge Carl Barbier on 10/7/16. (Reference: 12-2043)(sek)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
NICOLE REYES, ET AL.
CIVIL ACTION
VERSUS
NO: 12-2043
JULIA PLACE CONDOMINIUMS
HOMEOWNERS ASSOCIATION,
INC., ET AL.
SECTION: “J”(3)
ORDER & REASONS
Before the Court is Defendant Parkview Condominium Homeowners
Association’s (Parkview) Motion Summary Judgment (R. Doc. 675), an
opposition thereto filed by Plaintiffs (R. Doc. 706), along with
Parkview’s Reply. (R. Doc. 758.) Having considered the motion and
legal memoranda, the record, and the applicable law, the Court
finds
that
Parkview’s
Motion
for
Summary
Judgment
should
be
GRANTED.
FACTS AND PROCEDURAL BACKGROUND
The facts of this case are set forth in detail in previously
issued Orders and Reasons (see, e.g., Rec. Doc. 464); therefore,
the Court will only briefly recount them here. This is a class
action lawsuit brought by Plaintiffs Nicole Reyes and Mike Sobel
on behalf of themselves and other condominium owners at various
properties
throughout
New
Orleans
against
their
respective
condominium associations, as well as Steeg Law, LLC (Steeg).
Plaintiff Patrick Andras was also added to this lawsuit after class
certification. 1 Plaintiffs allege that the Defendants have engaged
in debt collection practices that violate state and federal law.
On May 23, 2014, Plaintiffs filed a motion to certify three
classes of condominium owners. (R. Doc. 351.) The first class
consists of condominium owners who were subjected to alleged
violations of the Fair Debt Collection Practices Act (FDCPA).
Plaintiffs allege that Steeg utilizes a standard form collection
letter that violates the FDCPA on its face by demanding payment of
unpaid assessments within seven days, and that Steeg violated the
FDCPA by filing excessive liens on condominium owners’ properties.
The second class consists of condominium owners who were charged
excessive late fees and interest rates for delinquent payment of
assessments that allegedly violated Louisiana’s usury laws. The
third class consists of those who were charged late fees allegedly
in violation of the Louisiana Condominium Act (LCA).
On December 18, 2014, the Court certified a FDCPA class
limited to claims for monetary relief against Steeg. The Court
narrowly defined the FDCPA monetary relief class as “consisting of
unit
owners
who
received
letters
identical
or
substantially
similar to those attached as Exhibits ‘A’ and ‘D’ of the original
complaint during the year prior to the filing of the action.” (R.
Doc. 464 at 16.) The Court denied certification of a FDCPA class
1
After the usury class was certified on August 20, 2015, Plaintiffs were granted
leave to file their fourth amended complaint. (R. Doc. 553.) This fourth amended
complaint added Mr. Andras as a named defendant.
2
for
injunctive
relief
and
denied
certification
of
the
FDCPA
monetary relief class for claims against the various condominium
associations. Id. at 6, 15. The Court also denied certification of
the LCA class and deferred ruling on whether certification was
appropriate for the proposed usury class because a portion of the
proposed class had not actually paid the late fees that had been
charged to them.
On August 20, 2015, the Court certified a narrowed version of
the usury class, divided into two subclasses. Specifically, the
Court certified “a class of past and present condominium owners
who have paid allegedly usurious late fees. The class shall be
divided into two subclasses, one seeking monetary relief and
another seeking injunctive relief for purported violations of the
usury law.” (R. Doc. 529 at 16.) On August 9, 2016, Parkview filed
a motion for summary judgment. (R. Doc. 675.) In short, Parkview
argues that “no past or present Parkview condominium owner is
member [sic] of the Usury Class and no past or present Parkview
condominium owner has been charged with or has paid late fees or
interest.” Id. at 1. Thus, Parkview argues that it should be
dismissed
from
this
lawsuit.
(R.
Doc.
675-1.)
In
response,
Plaintiffs argue that at least one unit owner was charged a late
fee at Parkview, and that a lien was recorded with an allegedly
usurious fee. (R. Doc. 706 at 1.) Parkview’s motion for summary
3
judgment is now before the Court on the briefs and without oral
argument.
PARTIES’ ARGUMENTS
1.
Parkview’s Motion for Summary Judgment
Parkview argues that summary judgment is appropriate, because
there is no genuine issue of material fact that none of its past
or present condominium owners have paid an allegedly usurious late
fee. (R. Doc. 675-1 at 1-2.) Parkview argues that due to the
Court’s previous orders, the only potential claim that Plaintiffs
may assert against it are under Louisiana usury law. Id. at 2.
Further, this Court’s previous order made clear that the usury
class was limited only to those unit owner who paid allegedly
usurious fees, not merely charged allegedly usurious fees. Id.
Parkview has submitted the affidavit of G. Platt Provosty, the
President of Parkview from approximately October 2010 to May 2014,
and the declaration of Pamela Harrelson, Parkview’s President
immediately succeeding Mr. Provosty. (R. Docs. 675-2; 675-3.) Mr.
Provosty and Ms. Harrelson both state that Parkview has never
charged late fees or interest on its association’s dues. See id.
Parkview argues that Plaintiffs have not introduced any evidence
that a current or former Parkview unit owner paid an allegedly
usurious fee. Consequently, Parkview argues that it is entitled to
summary judgment and should be dismissed from this lawsuit.
4
2.
Plaintiffs’ Motion in Opposition
Plaintiffs argue that factual issues exist as to whether
Parkview unit owners were charged and paid late fees and interest.
(R.
Doc.
706
at
5.)
First,
Plaintiffs
argue
that
Parkview
“unquestionably sought excessive fees.” Id. Plaintiffs point to
collection letters sent by Parkview to the owner of Parkview Unit
205 in support of this contention. Second, Plaintiffs argue that
Parkview has not turned over ledgers of condominium amounts owed
and paid for the two years prior to this litigation. Id. at 6.
Parkview informed Plaintiffs that it was not in possession of that
information, because the documents were “inadvertently destroyed
prior to the commencement of this litigation. There were no backups
of any of the files that were located on the damaged computer and
hard drive.” Id. As a result, Plaintiffs now ask this Court for an
adverse inference instruction on the basis of spoliation. Id. at
11. Specifically, Plaintiffs argue that the adverse inference
should be considered at trial and for purposes of this summary
judgment motion. Third, Plaintiffs argue that without the actual
ledgers, “it is impossible to actually tell what portions of
outstanding balances reflect a late [fee] that was charged.” Id.
at 6. Plaintiffs argue that because it is impossible to determine
whether a late fee was paid, “coupled with evidence of spoliation
and concrete evidence of late fees charged and a lien recorded,”
that summary judgment is inappropriate. Id. at 7.
5
3.
Parkview’s Reply to Plaintiffs’ Opposition
In response to Plaintiffs’ opposition, Parkview argues that
Plaintiffs have mischaracterized the lien that was filed on Unit
205.
(R.
Doc.
758.)
Parkview
argues
that
the
lien
and
its
accompanying ledger do not show that any late fees were charged to
the owner of Unit 205. Id. Further, while Plaintiffs argue that
the overdue assessment on Unit 205 is usurious on its face,
Parkview argues that this is not a late charge, but a charge for
past condominium dues. Id. As to Plaintiffs’ spoliation argument,
Parkview argues that Plaintiffs never requested Parkview retain
its ledgers prior to the commencement of this litigation, and that
Parkview was under no duty to retain such ledgers. Id. at 2-3.
Finally, Parkview reiterates that Plaintiffs have not presented
any evidence of a past or present Parkview condominium owner who
has paid an allegedly usurious late fee. Id. at 3-4.
LEGAL STANDARD
1.
Spoliation and Adverse Inferences
Federal district courts have the inherent power, as well as
the authority expressly granted under the Federal Rules of Civil
Procedure, to impose sanctions where warranted. See Connelly v.
Veterans Admin. Hosp., No. 12-2660, 2014 WL 2003093, at *3 (E.D.
La. May 15, 2004) (citing cases). Rule 37(b) of the Federal Rules
of Civil Procedure provides that for failure “to obey an order to
provide or permit discovery,” a court “may issue further just
6
orders.” Fed. R. Civ. P. 37(b)(2)(A). The actions a court may take
include “directing that the matters embraced in the order or other
designated facts be taken as established for purposes of the
action, as the prevailing party claims” and “rendering a default
judgment
against
the
disobedient
party.”
Fed.
R.
Civ.
P.
37(b)(2)(A)(i),(vi). For a court to impose sanctions under Rule
37(b), however, there must be a violation of a discovery order
issued pursuant to Rule 37(a). Connelly, 2014 WL 2003093, at *3
(citing 8B Charles Alan Wright, Arthur R. Miller, et al. Federal
Practice and Procedure § 2282).
Apart from the Federal Rules of Civil Procedure, federal
district courts have the inherent power to issue sanctions, but
such power “must be exercised ‘with restraint and discretion.’”
Id. (citing Nat. Gas Pipeline Co. of Am. v. Energy Gathering, Inc.,
2 F.3d 1397, 1410-11 (5th Cir. 1993)). As the Fifth Circuit
explained in NASCO, Inc. v. Calcasieu Television & Radio, Inc.,
inherent power “is not a broad reservoir of power, ready at an
imperial hand, but a limited source; an implied power squeezed
from the need to make the court function.” 894 F.2d 696, 702 (5th
Cir. 1990). Under the spoliation of evidence doctrine, if evidence
is intentionally destroyed, the trial court may exercise its
discretion to impose sanctions on the responsible party. Connelly,
2014 WL 2003093, at *4 (citing cases). The preferred sanction is
“the well-established and long-standing principle of law that a
7
party’s intentional destruction of evidence relevant to proof of
an issue at trial can support an inference that the evidence would
have
been
unfavorable
destruction.”
Id.
to
(citing
the
cases)
party
This
responsible
adverse
for
its
inference
rule
“derives from the common sense notion that a party’s destruction
of evidence which it has reason to believe may be used against it
in litigation suggests that the evidence was harmful to the party
responsible for its destruction.” Id. (citing Kronisch v. United
States, 150 F.3d 112, 126 (2d Cir. 1998)). Accordingly, to restore
the prejudiced party, an adverse inference “plac[es] the risk of
an erroneous judgment on the party that wrongfully created the
risk.” Id.
Before a court may provide for an adverse inference in light
of the destruction of evidence, “the party having control over the
evidence must have had an obligation to preserve it at the time it
was destroyed.” Id. Such a duty “arises when the party has notice
that
the
evidence
is
relevant
to
litigation.”
Id.
(quoting
Kronisch, 150 F.3d at 126). Once a court concludes that a party
was obliged to preserve the evidence, it must then consider whether
the
evidence
was
intentionally
destroyed.
Id.
The
adverse-
inference sanction may not be imposed unless there is evidence of
bad faith, and “mere negligence is not enough” to warrant the
invocation of the spoliation of evidence doctrine. Id. (citing
cases). Finally, the court must consider the likely contents of
8
the destroyed evidence. Id. (citing Kronisch, 150 F.3d at 126).
That
is,
before
inference,
there
a
court
must
be
permits
“some
the
drawing
showing
of
an
indicating
adverse
that
the
destroyed evidence would have been relevant to the contested
issue.” Id.
2.
Summary Judgment
Summary judgment is appropriate when “the pleadings, the
discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.”
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed. R.
Civ. P. 56(c)); Little v. Liquid Air Corp., 37 F.3d 1069, 1075
(5th Cir. 1994). When assessing whether a dispute as to any
material fact exists, a court considers “all of the evidence in
the record but refrains from making credibility determinations or
weighing
the
evidence.”
Delta
&
Pine
Land
Co.
v.
Nationwide
Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir. 2008). All
reasonable inferences are drawn in favor of the nonmoving party,
but
a
party
cannot
defeat
summary
judgment
with
conclusory
allegations or unsubstantiated assertions. Little, 37 F.3d at
1075. A court ultimately must be satisfied that “a reasonable jury
could not return a verdict for the nonmoving party.” Delta, 530
F.3d at 399.
9
If the dispositive issue is one on which the moving party
will bear the burden of proof at trial, the moving party “must
come forward with evidence which would ‘entitle it to a directed
verdict if the evidence went uncontroverted at trial.’” Int’l
Shortstop, Inc. v. Rally’s, Inc., 939 F.2d 1257, 1264-65 (5th Cir.
1991). The nonmoving party can then defeat the motion by either
countering with sufficient evidence of its own, or “showing that
the moving party’s evidence is so sheer that it may not persuade
the reasonable fact-finder to return a verdict in favor of the
moving party.” Id. at 1265.
If the dispositive issue is one on which the nonmoving party
will bear the burden of proof at trial, the moving party may
satisfy its burden by merely pointing out that the evidence in the
record is insufficient with respect to an essential element of the
nonmoving party’s claim. See Celotex, 477 U.S. at 325. The burden
then shifts to the nonmoving party, who must, by submitting or
referring to evidence, set out specific facts showing that a
genuine issue exists. See id. at 324. The nonmovant may not rest
upon the pleadings, but must identify specific facts that establish
a genuine issue for trial. See, e.g., id. at 325; Little, 37 F.3d
at 1075.
DISCUSSION
The issue before the Court is whether, considering the Court’s
previous rulings and the evidence presented, Parkview is entitled
10
to judgment as a matter of law dismissing the putative class claims
asserted against it. Plaintiffs brought claims under the FDCPA,
Louisiana usury law, and the LCA alleging that Parkview engaged in
an unlawful scheme with the help of Steeg to collect usurious late
fees. None of the named Plaintiffs owned or rented a condominium
unit at Parkview. Instead, Plaintiffs seek to represent a class of
condominium unit owners at Parkview who paid usurious fees or
received form letters from Steeg which allegedly violate the FDCPA.
This Court’s previous orders have eliminated all possible
avenues of recovery and relief for Plaintiffs against Parkview,
except under Louisiana usury law. (R. Doc. 464, at 6, 15, 17; R.
Doc. 529 at 16.) Further, this Court’s prior order limited the
usury class, for purposes of both monetary and injunctive relief,
to “past and present condominium owners who have paid allegedly
usurious
late
fees.”
Id.
at
16
(emphasis
added).
In
short,
Plaintiffs’ usury claims against Parkview depend on whether any
condominium unit owners actually paid allegedly usurious late
fees. If Plaintiffs are unable to produce evidence of a past or
present Parkview condominium owner who has paid an allegedly
usurious late fee, Parkview must be dismissed from this litigation
with prejudice.
1.
Spoliation and Adverse Inference
First, Plaintiffs argue that they are entitled to an adverse
inference due to Parkview’s spoliation of relevant evidence. (R.
11
Doc. 706 at 11.) Specifically, Plaintiffs argue that Parkview
intentionally destroyed ledgers that would have proven Parkview
condominium unit owners paid allegedly usurious late fees. It
should be noted, however, that Plaintiffs made a similar request
for these ledgers and an adverse inference in a motion to compel
before Magistrate Judge Knowles. (R. Doc. 697.) Judge Knowles
denied Plaintiffs’ motion. (R. Doc. 767.) Because there is no court
order requiring Parkview to disclose the requested information,
any sanction imposed by this Court would arise from its limited
inherent power. See NASCO, 894 F.2d at 702.
For the spoliation of evidence doctrine to apply, Plaintiffs
must prove two elements: (1) the party having control over the
evidence had a duty to preserve the evidence at the time it was
destroyed; and (2) the destruction of evidence was intentional.
Garnett v. Pugh, No. 14-479, 2015 WL 1245672, at *4 (E.D. La. Mar.
18, 2015); Menges v. Cliffs Drilling Co., No. 99-2159, 2000 WL
765082, at *2 (E.D. La. June 12, 2000). “A duty to preserve arises
when a party knows or should know that certain evidence is relevant
to pending or future litigation.” Ralser v. Winn Dixie Stores,
Inc., 309 F.R.D. 391, 396 (E.D. La. 2015) (quoting Premier Dealer
Servs., Inc. v. Duhan, No. 12-1498, 2013 WL 6150602, at *3 (E.D.
La. Nov. 22, 2013)). Further, “it is well settled within the Fifth
Circuit that an adverse inference drawn from the destruction of
records
is
predicated
on
bad
12
faith.”
Id.
(citing
cases).
“Culpability is not established by any bright line test, but
rather, analyzed on a case-by-case basis.” Id. (quoting Premier
Dealer Servs., 2013 WL 6150602, at *5).
Plaintiffs argue that correspondence with Parkview’s counsel
demonstrates Parkview destroyed its ledgers after the commencement
of this litigation and after such information was requested by
Plaintiffs. (R. Doc. 706 at 11.) Plaintiffs claim that they first
requested this information on September 25, 2012. Id. According to
Plaintiffs, in response to this request, “Parkview threatened
sanctions . . . but never provided this critical evidence.” Id. at
11-12. Further, Plaintiffs argue that Parkview did not initially
contend that the documents were lost or otherwise unavailable;
rather,
Parkview
simply
refused
to
comply
with
Plaintiffs’
request. Id. at 12. Based on these events, Plaintiffs argue that
an adverse inference instruction should be considered to defeat
Parkview’s motion and used at trial.” 2 Id. at 14.
Parkview argues that it had no duty to retain its ledgers
from the two years prior to the commencement of this litigation,
2
Plaintiffs have not provided any authority for the position that an adverse
inference may be used by a non-moving party to defeat a motion for summary
judgment. See R. Doc 706 at 11-14. It appears, however, that although a jury
may consider an adverse inference for the purpose of rendering a verdict, an
adverse inference, alone, cannot satisfy a non-moving party’s burden on summary
judgment to make a sufficient showing on an essential element of its case with
respect to which it has the burden of proof. See Jay E. Grening & Jeffrey S.
Kinsley, Handbook of Federal Civil Discovery & Disclosure, § 16:8 (3d ed.)
(citing Gill v. Arab Bank, PLC, No. 11-3706, 2012 WL 5395746, at *8 (E.D.N.Y.
Nov. 6, 2012). Nevertheless, Plaintiffs’ request for an adverse inference is
denied.
13
nor did Parkview have a reasonable belief that it would be involved
in this litigation. (R. Doc. 758 at 2-3.) Parkview argues that it
is unreasonable to believe that the originally named plaintiff,
who was never an owner at Parkview, would sue Parkview and seek
ledgers for the two years preceding the litigation. Id. at 3.
Further, Parkview claims that the computer and hard drive that
contained these ledgers was “inadvertently destroyed prior to the
commencement of this litigation.”
Plaintiffs have failed to produce sufficient evidence proving
that Parkview had a duty to preserve the ledgers, that Parkview
acted
in
bad
faith
in
destroying
the
ledgers,
and
that
the
destroyed evidence was relevant to Plaintiffs’ claim. Plaintiffs
ask this Court to infer that Parkview intentionally, and in bad
faith, destroyed its ledgers solely because Parkview did not
initially tell Plaintiffs that it had inadvertently destroyed the
ledgers prior to litigation. (R. Doc. 706 at 11-12.) This is a
leap this court is unwilling to make. Accordingly, the Court finds
that Plaintiffs are not entitled to an adverse inference for
purposes of this motion nor trial.
2.
Summary Judgment
Judge Berrigan’s August 20, 2015 Order narrowly defined the
usury class for monetary and injunctive relief and limited the
class to
“past
and
present
condominium
owners
who
have
paid
allegedly usurious fees.” (R. Doc. 529 at 16.) Parkview argues
14
that Plaintiffs have presented no evidence of any past or present
Parkview condominium unit owner who has paid an allegedly usurious
late fee. Therefore, Plaintiffs must present evidence that at least
one past or present condominium owner at Parkview paid an allegedly
usurious fee or Parkview must be dismissed.
The only evidence Plaintiffs have presented is a lien recorded
against Parkview Unit 205, and copies of collection letters sent
by Parkview. (R. Doc. 706-2; R. Doc. 706-6.) In conjunction with
this evidence, Plaintiffs rely on the Court supplying an adverse
inference due to spoliation, which this Court has denied. Notably
absent from Plaintiffs’ evidence is anything demonstrating that a
past or present condominium unit owner has paid an allegedly
usurious late fee. Plaintiffs have not produced a ledger, bank
statement, nor affidavit demonstrating that any past or present
Parkview condominium unit owner has paid an allegedly usurious
late fee. Rather, at best, the evidence Plaintiffs presented shows
that a past or present condominium unit owner may have been charged
with a late fee. The absence of such evidence is significant,
because it is Plaintiffs’ burden to prove that a condominium unit
owner
at
Parkview
has
paid
an
allegedly
usurious
late
fee.
Consequently, because the only claims Plaintiffs have remaining
against Parkview are under Louisiana usury law, and Plaintiffs has
not
produced
any
evidence
that
15
a
past
or
present
Parkview
condominium unit owner has paid an allegedly usurious fee, Parkview
must be dismissed from this lawsuit. 3
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Parkview’s Motion for Summary
Judgment (R. Doc. 675) is GRANTED. Plaintiffs’ claims against
Parkview
Condominium
Homeowners
Association,
Inc.
are
hereby
DISMISSED WITH PREJUDICE.
New Orleans, Louisiana this 7th day of October, 2016
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE
3 The “juridical link” doctrine has no application to this issue. As discussed
above, there is no genuine issue of fact that no class members exist with causes
of action against Parkview.
16
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