Hammerman v. GB Collects, LLC
Filing
16
MEMORANDUM OPINION (c/m to Plaintiff 10/28/13 sat). Signed by Chief Judge Deborah K. Chasanow on 10/28/13. (sat, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
EVAN HAMMERMAN
:
v.
:
Civil Action No. DKC 13-1606
:
GB COLLECTS, LLC
:
MEMORANDUM OPINION
Presently
pending
and
ready
for
review
in
this
action
alleging violations of the Fair Debt Collection Practices Act
(“FDCPA”), 15 U.S.C. § 1692 et seq., are a motion for summary
judgment (ECF No. 13) and a motion for sanctions (ECF No. 14)
filed
by
Defendant
“Defendant”).
GB
Collects,
LLC
(“GB
the
or
The issues have been fully briefed, and the court
now rules, no hearing being deemed necessary.
For
Collects”
following
reasons,
Defendant’s
Local Rule 105.6.
motion
for
summary
judgment will be granted and the motion for sanctions will be
denied.
I.
Background
A.
Factual Background
The underlying facts of this case are undisputed.
Evan
Hammerman (“Plaintiff”), proceeding pro se, has sued GB Collects
for
damages
resulting
from
Defendant’s
“deceptive,
misleading, and/or unfair debt collection practices.”
2 ¶ 27).
false,
(ECF No.
On July 25, 2006, Hammerman Legal Consultants, PLLC, a
company for which Plaintiff is an owner and managing partner,
filed an application with Aetna Life Insurance Company (“Aetna”)
seeking group insurance coverage for three of its employees.
(ECF No. 13-2).1
The application identifies Hammerman Legal
Consultants, PLLC, a law office, as the applicant for insurance
coverage and lists Plaintiff Evan C. Hammerman as an attorney
and company contact person.
On February 15, 2011, Plaintiff sent a letter to Aetna
informing the company that Hammerman Legal Consultants, PLLC was
expanding its practice from New York to Maryland and Washington,
D.C.
(ECF
February
failed
No.
11,
to
13-3).2
2013,
make
Approximately
after
monthly
Hammerman
premium
two
Legal
payments
years
later,
Consultants,
on
the
group
on
PLLC
life
insurance policy, Aetna placed the account with Defendant for
collection.
(ECF No. 2 ¶¶ 14-15 & ECF No. 13-5 ¶ 2).
Defendant
then sent three debt collection letters, addressed to Hammerman
Legal Consultants, PLLC and to Plaintiff, as the company contact
identified
on
the
application,
seeking
to
collect
on
the
1
The application was signed on July 18, 2006, but Aetna
received it on July 25, 2006.
2
Plaintiff stated in the letter that he was “the managing
partner and owner of Hammerman Legal Consultants, PLLC.
We
currently have a group policy with Aetna Health Insurance.”
(ECF No. 13-3).
2
$1,295.00 delinquent debt on behalf of Aetna.
(See ECF No. 2-
1).3
B.
Procedural Background
On April 1, 2013, Plaintiff commenced this action in the
District Court of Maryland for Montgomery County.
(ECF No. 2).
In the complaint, Plaintiff contends that he is a “consumer”
within the meaning of the FDCPA and that Defendant attempted “to
collect an alleged debt . . . from Plaintiff that arose out of a
transaction in which money, services, or property which was the
subject
of
the
transaction
was
primarily
personal, and/or household purposes.”
used
for
(Id. ¶¶ 5, 8).
family,
Plaintiff
asserts two causes of action for violations of 15 U.S.C. §§
1692e and 1692g.
Specifically, Plaintiff alleges that Defendant
violated the FDCPA by failing to include a thirty-day validation
notice of Plaintiff’s rights in the three collection letters and
“overshadow[ing] Plaintiff’s dispute rights” by including the
following
language
in
each
letter
to
Plaintiff:
“make
[the]
check payable to AETNA in the amount of $1,295.00 and send it to
me immediately.”
(Id. at 3-5).
Plaintiff seeks statutory and
actual damages, as well as all costs and reasonable attorney’s
fees for the alleged violations.
3
The letters are dated February 11 & 12, 2013, and March
25, 2013.
3
Defendant removed the action to this court on June 4, 2013,
citing
federal
question
basis.
(ECF No. 1).
jurisdiction
as
the
jurisdictional
Defendant answered the complaint on June
11, 2013 (ECF No. 10).
Defendant then filed two motions on July
26, 2013: (1) motion for summary judgment (ECF No. 13); and (2)
motion for sanctions against Plaintiff pursuant to Rule 11 of
the Federal Rules of Civil Procedure and 28 U.S.C. § 1927 (ECF
No. 14).
Plaintiff was provided with a Roseboro notice, which
advised him of the pendency of the motions and his entitlement
to
respond
letter.
within
seventeen
(17)
days
from
the
date
of
the
Roseboro v. Garrison, 528 F.2d 309, 310 (4th Cir. 1975)
(holding pro se plaintiffs should be advised of their right to
file responsive material to a motion for summary judgment).4
Plaintiff
judgment.5
did
not
Given
oppose
that
the
Defendant’s
time
for
motion
for
Plaintiff
to
summary
oppose
Defendant’s summary judgment motion has elapsed, this matter is
now ripe for resolution.
4
The record reflects that a Roseboro notice was sent to
Plaintiff on July 26, 2013. (ECF No. 15).
5
Consistent with Local Rule 105.8, Plaintiff was not
required to respond to the Rule 11 and Section 1927 motion
unless directed to do so by the court. The court may not grant
sanctions without requesting a response.
4
II.
Analysis
A.
Defendant’s Motion for Summary Judgment
Summary judgment may be entered only if there is no genuine
issue as to any material fact and the moving party is entitled
to judgment as a matter of law.
Fed.R.Civ.P. 56(a); Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986); Emmett v. Johnson,
532
F.3d
291,
297
(4th
Cir.
2008).
Summary
judgment
is
inappropriate if any material factual issue “may reasonably be
resolved in favor of either party.”
Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 250 (1986); JKC Holding Co. LLC v. Wash.
Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir. 2001).
“A party opposing a properly supported motion for summary
judgment ‘may not rest upon the mere allegations or denials of
[her]
pleadings,’
but
rather
must
‘set
forth
specific
showing that there is a genuine issue for trial.’”
facts
Bouchat v.
Balt. Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir.
2003) (quoting former Fed.R.Civ.P. 56(e)).
proof
.
.
.
will
not
suffice
to
prevent
“A mere scintilla of
summary
Peters v. Jenney, 327 F.3d 307, 314 (4th Cir. 2003).
judgment.”
“If the
evidence is merely colorable, or is not significantly probative
. . . summary judgment may be granted.”
at 249-50 (citations omitted).
Liberty Lobby, 477 U.S.
At the same time, the facts that
are presented must be construed in the light most favorable to
5
the party opposing the motion.
Scott v. Harris, 550 U.S. 372,
378 (2007); Emmett, 532 F.3d at 297.
Plaintiff
alleges
that
Defendant
violated
various
provisions of the FDCPA, which protects consumers from “abusive
and
deceptive
Akalwadi
(D.Md.
v.
debt
Risk
2004).
collection
Mgmt.
The
practices
Alts.,
FDCPA
Inc.,
“forbids
by
336
the
debt
F.Supp.2d
use
any
false,
misleading
collection
and
provides
conduct.”
United States v. Nat’l Fin. Servs., Inc., 98 F.3d
a
Plaintiff
must
prove
non-exhaustive
means
500
or
a
or
of
492,
deceptive,
131, 135 (4th Cir. 1996).
representation
collectors.”
list
of
in
debt
prohibited
In order to prevail on a FDCPA claim,
that:
“(1)
the
defendant
was
a
debt
collector, (2) the defendant’s conduct in attempting to collect
a debt was prohibited by the Act and (3) the debt was a consumer
debt.”
In re Creditrust Corp., 283 B.R. 826, 830 (Bankr.D.Md.
2002).
Assuming the first two prongs could be met, Plaintiff
cannot
establish
involves
a
the
third
commercial,
not
because
a
the
transaction
consumer,
debt.
at
issue
The
FDCPA
explicitly states:
(5) The term “debt” means 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.
6
15 U.S.C. § 1692a(5) (emphasis added).
natural
debt.”
must
person
obligated
Id. § 1692a(3).
show
that
or
A “consumer” is “any
allegedly
obligated
to
pay
any
Thus, as a threshold matter, Plaintiff
Defendant’s
collection
efforts
arose
from
a
consumer debt for FDCPA purposes, as opposed to commercial or
business debt – which Plaintiff plainly fails to show here.
“[I]n
determining
whether
debt
is
consumer
debt,
court
should ‘examine the transaction as a whole’ and ‘look to the
substance
of
the
transaction
and
the
borrower’s
purpose
obtaining the loan, rather than the form alone.’”
Providence
Dane
LLC,
462
F.App’x,
331,
335
in
Boosahda v.
(4th
Cir.
2012)
(quoting Slenk v. Transworld Sys., Inc., 236 F.3d 1072, 1075 (9th
Cir. 2001)); see also Miller v. McCalla, Raymer, Padrick, Cobb,
Nichols,
&
Clark,
LLC,
214
F.3d
872,
875
(7th
Cir.
2000)
(observing that whether debt is consumer debt depends on “the
transaction out of which the obligation to repay arose, not the
obligation itself”).
The debt at issue here was incurred by a
legal
consumer.
entity,
explicitly
Aetna
not
a
acknowledging
regarding
its
in
change
Plaintiff
the
of
February
address
admits
15,
that
2011
much
by
letter
to
Hammerman
Consultants, PLLC has a group policy with Aetna.
3).
as
Legal
(ECF No. 13-
Specifically, “[t]he obligation arose from Hammerman Legal
Consultants, PLLC’s failure to make payments on its employee
group
health
insurance
plan
with
7
Aetna.”
(ECF
No.
13-5,
Affidavit of Gilbert Fisher).
relates
which
to
was
the
company’s
not
sought
household purposes.”
group
coverage,
Furthermore, the incurred debt
group
insurance
“primarily
for
policy
with
personal,
Aetna,
family,
As stated in Plaintiff’s application for
Hammerman
Legal
Consultants,
PLLC
applied
Aetna for insurance coverage for three of its employees.
ECF No. 13-2, at 3).
or
to
(See
The fact that Hammerman Legal Consultants,
PLLC is clearly identified as the applicant on the application
further evidences a commercial transaction and the business as
the proposed policyholder.
(See ECF No. 13-5 ¶ 6, Affidavit of
Gilbert Fisher (“[a]ll of Defendant’s collection activities on
the account at issue were directed only to the policyholder,
Hammerman Legal Consultants, PLLC.”)).
The three collection letters Defendant sent to Plaintiff
evidence Defendant’s attempt to collect on a debt incurred by
Plaintiff’s
business
premium payments.
as
a
result
of
its
default
on
monthly
The letters are addressed to Evan Hammerman,
in addition to the legal entity, because Mr. Hammerman listed
himself as the company contact on the application when he sought
group coverage for the employees at his firm.
(See ECF No. 13-
2, at 2; see also ECF No. 13-5 ¶ 7 (“Plaintiff was listed as the
contact
on
Hammerman
Legal
Consultants,
PLLC’s
group
health
insurance policy, and therefore, Defendant’s collection letters
were addressed to him as the representative of the company.”)).
8
In any event, even if Defendant directed its debt collection
efforts
at
Plaintiff,
this
does
existence of a consumer debt.
not
necessarily
suggest
the
See Boosahda, 462 F.App’x at 335
(“a person can be sued in his or her individual capacity even
for business debts.”).
Finally, as Defendant points out, “[t]he
only accounts Aetna places with Defendant for collection are
commercial group health insurance accounts in default.”
(ECF
No. 13-6 ¶ 4).6
Accordingly,
Plaintiff
fails
to
carry
his
burden
of
establishing an essential element of his FDCPA claims - that the
debt
on
which
Defendant
sought
to
collect
was
consumer
as
opposed to business or commercial debt.7
B.
Defendant’s Motion for Sanctions
On July 26, 2013, Defendant filed a motion for sanctions
against
Plaintiff
pursuant
to
Rule
11
and
28
U.S.C.
§
1927
6
Defendant further notes that GB Collects “only uses the
collection letters at issue in connection with the collection of
commercial accounts.” (ECF No. 13-5 ¶ 12). “When collecting on
consumer accounts, Defendant uses collection letters that
contain the validation notice and disclosures required by
Sections 1692g and 1692e(11) of the FDCPA.” (Id. ¶ 13).
7
Defendant makes two additional arguments for summary
judgment. First, Defendant argues that Plaintiff lacks standing
to bring claims under the FDCPA for violations related to
communications
between
Defendant
and
Hammerman
Legal
Consultants, PLLC. Defendant also argues that even if the debt
at issue qualified as consumer debt, the action is not viable
because any violation resulted from a bona fide error. Because
the FDCPA does not apply to Plaintiff’s claims, these arguments
will not be addressed.
9
relating
to
Plaintiff’s
complaint
alleging
violations
of
the
FDCPA.8
“[T]he central purpose of Rule 11 is to deter baseless
filings
in
District
Court
and
thus
.
.
.
streamline
administration and procedure of the federal courts.”
Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990).
the
Cooter &
Under Rule
11, by presenting a pleading or written motion to the court, an
attorney or unrepresented party “is certifying that to the best
of the person’s knowledge, information, and belief, formed after
an inquiry reasonable under the circumstances,” the pleading or
motion is, among other things, “warranted by existing law or by
a
nonfrivolous
argument
for
the
extension,
modification,
or
reversal of existing law or the establishment of new law” and
that
its
“allegations
evidentiary
support.”
and
other
factual
Fed.R.Civ.P.
contentions
have
Section
1927
11(b).
provides that an attorney “who so multiplies the proceedings in
any case unreasonably and vexatiously may be required by the
court
to
satisfy
personally
the
excess
costs,
expenses,
and
attorneys’ fees reasonably incurred because of such conduct.”
28 U.S.C. § 1927.
also
requires
“a
Section 1927 is distinct from Rule 11, but
finding
of
counsel’s
precondition to the imposition of fees.”
bad
faith
as
a
Brubaker v. City of
Richmond, 943 F.2d 1363, 1382 n.25 (4th Cir. 1991).
8
The motion recites that it was served on Plaintiff on June
18, 2013, more than twenty-one (21) days previously.
(See ECF
No. 14 & 14-2).
10
Here, Plaintiff, apparently an attorney who is representing
himself,
filed
the
complaint
in
state
court,
the
case
was
removed by Defendant, and Plaintiff has not filed anything in
this court or taken any action here to advocate on behalf of the
complaint.
Thus,
it
is
arguable
that
Plaintiff
has
not
presented to the court “a pleading, written motion, or other
paper”
under
Rule
11(b).
Defendant
argues
that
because
“Plaintiff is an attorney who is a shareholder in Hammerman
Legal
Collections,
PLLC,
a
professional
limited
liability
company which specializes in debt collection and the practice of
law,” he should know that “his claims do not establish a legal
or factual basis for claims under the FDCPA.”
5)
(emphasis
in
“Plaintiff’s
original).
specialized
Defendant
knowledge
(ECF No. 14, at
concludes
this
in
thus
field
that
of
law
indicates that he has filed this frivolous claim for no reason
other than to impede Defendant’s debt collection efforts against
Hammerman Legal Consultants, PLLC.”
difference
between
a
losing
case
(Id.).
and
a
But there is a
frivolous
case,
and
Plaintiff’s refusal to withdraw the complaint, which he did not
even
file
in
sanctionable
“allegation
this
court,
conduct.
merely
does
not
Moreover,
must
be
rise
to
supported
to
avoid
by
the
level
of
sanctions,
an
some
Brubaker, 943 F.2d at 1377 (emphasis in original).
fact
that
Plaintiff
cannot
successfully
11
evidence.”
Despite the
establish
FDCPA
liability on any of the asserted claims, there is no indication
on the record that Plaintiff acted with a dishonest purpose or
with ill will, or that Plaintiff’s claims were “utterly without
factual foundation.”
(4th Cir. 1991).
Chaudhry v. Gallerizzo, 174 F.3d 394, 411
Given that Plaintiff has not filed anything in
this court, the high standard required for the imposition of
sanctions, and the fact that all claims raised in the complaint
will be dismissed, the court will exercise discretion not to
award sanctions at this time.
III. Conclusion
For the foregoing reasons, the motion for summary judgment
will be granted and the motion for sanctions will be denied.
separate order will follow.
/s/
DEBORAH K. CHASANOW
United States District Judge
12
A
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