Golden v. Prosser et al
Filing
88
ORDER granting 40 Motion for Summary Judgment; denying 29 Motion for Summary Judgment; granting 33 Motion for Summary Judgment (Written Opinion). Signed by Senior Judge David S. Doty on 9/15/2014. (PJM)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 13-3553(DSD/TNL)
Kimberly Golden,
Plaintiff,
ORDER
v.
John W. Prosser, individually,
Prosser Holdings LLC, d/b/a
A.C. Financial, Automotive
Restyling Concepts, Inc. d/b/a
Automotive Concepts and William
H. Henney Law Office,
Defendants.
Thomas J. Lyons, Jr., Esq. and Consumer Justice Center,
P.A., 367 Commerce Court, Vadnais Heights, MN 55127,
counsel for plaintiff.
William H. Henney, Esq. 5101 Thimsen Avenue, Suite 200,
Minnetonka, MN 55345; Stephen P. Watters, Esq. and
Watters Law Office, 5101 Thimsen Avenue, Suite 200,
Minnetonka, MN 55345, counsel for defendants.
This matter is before the court upon the cross-motions for
partial summary judgment by plaintiff Kimberly Golden, defendants
John W. Prosser and Prosser Holdings, LLC, d/b/a A.C. Financial
(collectively, A.C. Financial), defendant Automotive Restyling
Concepts, Inc. d/b/a Automotive Concepts (ARC) and William H.
Henney Law Office (Henney).1
1
Based on a review of the file, record
Defendants call their motions “partial” summary judgment
motions, but they seek judgment as to all of the claims against
them. Golden seeks summary judgment on all counts except Count IV.
and proceedings herein, and for the following reasons, the court
denies Golden’s motion and grants defendants’ motions.
BACKGROUND
This debt-collection dispute arises out of Golden’s purchase
of a used 2006 BMW from ARC in September 2014.
Golden and ARC
executed a Simple Motor Vehicle Contract and Security Agreement
(Agreement) in connection with the sale.
Spinler Aff. Ex. 1.
The
Agreement indicates that Golden made a $2,000 down payment on the
car and that she agreed to finance the remaining $14,199.
1.
Id. at
ARC immediately assigned its rights under the Agreement –
including the right to “all moneys due and to become due” - to
JPMorgan Chase Bank, N.A. (Chase).
Id. at 3.
Golden and ARC
simultaneously executed a Check Pledge and Note (Note) stating that
if Golden’s $2,000 down payment check is not negotiable, Golden
will make immediate payment in full.
Id. Ex. 3.
The Note further
states that ARC has a security interest in the car and that if
payment is not made, ARC may “immediately repossess the car ...
without notice.”
Id.
Golden’s title application, however, states
that Chase is the only secured party with respect to the car.
Id.
Ex. 2, at 1.
The parties dispute whether Golden has made the $2,000 down
payment.
Golden asserts that she made payment on the day she
purchased the car and defendants assert that Golden orally agreed
2
to make the payment soon thereafter.2
On February 4 2013, Henney
sent a letter to Golden on behalf of A.C. Financial3 “regarding a
$2,000.00 balance due to A.C. Financial for [her] recent purchase
of a 2006 BMW.”
Lyons Decl. Ex. 5, ECF. No. 31-5.
Henney
identifies himself as a “debt collector” and states that the letter
is an “attempt to collect a debt.”
Id.
The letter further advises
Golden that she has 30 days to dispute the validity of the debt and
that if she fails to do so, A.C. Financial will assume the debt to
be valid.
Id.
Golden did not respond to the letter.
Then, on March 6, 2013, Prosser - chief manager of A.C.
Financial and president of ARC - sent a letter to Golden on behalf
of A.C. Financial stating as follows:
This letter is a formal notification that you are in
default of your obligations to make payment on your loan,
account #11677C. This account currently holds the sum of
$2,000.00 payable by October 14, 2012. This amount has
been overdue since October 15, 2012 and you have ignored
multiple requests to make payment.
Unless the full
amount is received immediately upon receipt of this
letter, we have no choice but to begin the repossession
process to secure our financial interest in the vehicle.
We have given you more than adequate notice on this issue
and we have no other choice. Please act accordingly[.]
2
The court need not determine whether Golden paid the $2,000
for purposes of the instant motions, and thus will not recite the
parties’ competing versions of events.
3
Prosser states that he assigned the debt from ARC to A.C.
Financial, which is ARC’s “in-house finance company.” Prosser Aff.
¶¶ 1, 5-6. There are no documents in the record evidencing the
purported assignment.
3
Id. Ex. 6.
The letter does not identify Prosser or A.C. Financial
as a debt collector, nor does it contain a recitation of debtor
rights.
On December 17, 2013, Golden filed this action, alleging
violations of the Fair Debt Collection Practices Act (FDCPA), Minn.
Stat. § 53C.08 and Minn. Stat. § 336.9-609.
The parties now cross-
move for summary judgment.
DISCUSSION
I.
Standard of Review
“The court shall grant summary judgment if the movant shows
that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed. R. Civ.
P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
A fact is material only when its resolution affects the outcome of
the case.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). A dispute is genuine if the evidence is such that it could
cause a reasonable jury to return a verdict for either party.
Id.
at 252.
On a motion for summary judgment, the court views all evidence
and inferences in a light most favorable to the nonmoving party.
Id. at 255.
The nonmoving party, however, may not rest upon mere
denials or allegations in the pleadings but must set forth specific
facts sufficient to raise a genuine issue for trial.
4
Celotex, 477
U.S. at 324.
A party asserting that a genuine dispute exists — or
cannot exist — about a material fact must cite “particular parts of
materials in the record.”
Fed. R. Civ. P. 56(c)(1)(A).
If a
plaintiff cannot support each essential element of a claim, the
court must grant summary judgment because a complete failure of
proof regarding an essential element necessarily renders all other
facts immaterial.
II.
Celotex, 477 U.S. at 322-23.
FDCPA
Congress enacted the FDCPA to protect consumers “in response
to abusive, deceptive, and unfair debt collection practices.”
Schmitt v. FMA Alliance, Ltd., 398 F.3d 995, 997 (8th Cir. 2005).
“A
violation
of
the
FDCPA
is
reviewed
utilizing
the
unsophisticated-consumer standard which ... protects the uninformed
or naive consumer, yet also contains an objective element of
reasonableness
to
protect
debt
collectors
from
liability
peculiar interpretations of collection [attempts].”
for
Strand v.
Diversified Collection Serv., Inc., 380 F.3d 316, 317–18 (8th Cir.
2004) (citations and internal quotation marks omitted).
“The
unsophisticated consumer test is a practical one, and statements
that are merely susceptible of an ingenious misreading do not
violate the FDCPA.”
Peters v. Gen. Serv. Bureau, Inc., 277 F.3d
1051, 1056 (8th Cir. 2002) (citations and internal quotation marks
omitted).
5
A.
FDCPA Claims Against Henney
Golden claims that Henney’s February 4, 2013, letter violated
§§ 1692e(2)(A) and 1692f(1) of the FDCPA.
Section 1692e(2)(A)
prohibits debt collector from using any “false, deceptive, or
misleading
misrepresentation
or
means
in
connection
with
the
collection of any debt” including “[t]he false representation of
... the character, amount, or legal status of any debt.”
Golden first argues that Henney violated § 1692e(2) because
she does not owe the $2,000 at issue.
The allegation that a debt
is not owed, however, “cannot form a basis for a false and
misleading practices claim under the FDCPA.”
Bleich v. Revenue
Maximization Grp., Inc., 233 F. Supp. 2d 496, 500 (E.D.N.Y. 2002);
see also Carpenter v. RJM Acquisitions, LLC, 787 F. Supp. 2d 971,
974-75 (D. Minn. 2011))(citing Richmond v. Higgins, 435 F.3d 825,
829 (8th Cir. 2006)) (“A consumer cannot circumvent the [FDCPA’s]
procedural device to dispute the validity of a debt by filing an
action pursuant to § 1692e on the sole basis that the debt is
invalid.”).
Golden
next
argues
that
Henney’s
letter
was
false
and
misleading because ARC, not A.C. Financial, was her original
creditor.4
The law is clear that a false statement must be
4
Golden also argues that Chase is her only creditor given
the assignment from ARC to Chase. It is unclear, however, whether
the down payment was included in the assignment because it is
excluded from the amount Chase loaned to Golden. See Spinler Aff.
(continued...)
6
material in order to be actionable under 1693e(2).
Neill v.
Bullseye Collection Agency, Inc., No. 08–5800, 2009 WL 1386155, at
*2 (D. Minn. May 14, 2009).
Representations are material if they
“frustrate a consumer’s ability to intelligently choose his or her
response.”
Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1034
(9th Cir. 2010). Golden has not pleaded that any misrepresentation
affected her ability to intelligently respond to the letter.
Indeed the letter, even if inaccurate as to her creditor, plainly
states that the debt owed relates to Golden’s “recent purchase of
a 2006 BMW.”
Lyons Decl. Ex. 5, ECF No. 31-5.
This information
was sufficient to allow Golden to understand the letter and submit
a response.
Her decision not to respond does not affect the
court’s analysis.
Golden also claims that Henney’s letter violated § 1692f(1),
which
prohibits
debt
collectors
from
using
“unfair
or
unconscionable means to collect or attempt to collect any debt.”
Included among such means is an attempt to collect an amount
“unless such amount is expressly authorized by the agreement
creating the debt or permitted by law.”
15 U.S.C. § 1692f(1).
Henney’s letter does not violate that provision.
Although Golden
disputes the debt, the debt amount - as set forth in Henney’s
4
(...continued)
Ex. 1, at 1. Golden subpoenaed Chase for documents and is still
awaiting a full response. ECF No. 87. Because the court does not
rely on Chase’s security interest in deciding this matter, it does
not require the parties to further supplement to record.
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letter - is unquestionably the amount at issue.
As a result, the
claims against Henney must be dismissed.
B.
FDCPA Claims against A.C. Financial
Golden claims that the March 6, 2013, letter violated various
provisions of the FDCPA.
A.C. Financial responds that the FDCPA
does not apply because it was acting as a creditor, rather than as
a debt collector.
The FDCPA “regulates the activities of, and
imposes liability upon, debt collectors, not creditors.”
Hartley
v. Suburban Radiologic Consultants, Ltd., 295 F.R.D. 357, 370 (D.
Minn. 2013); see Williams v. Citibank, N.A., 565 F. Supp. 2d 523,
528 n.6 (S.D.N.Y. 2008)(“The FDCPA applies to debt collectors and
not ‘creditors’ because debt collectors, unlike creditors, are not
constrained in their actions by the risk that a negative reputation
regarding debt collection practices might threaten their continued
access to new borrowers.”). A “creditor” is defined as “any person
who offers or extends credit creating a debt or to whom a debt is
owed[.]”
15 U.S.C. § 1692a(4).
A.C. Financial maintains that it acted as a creditor in this
matter because it handles ARC in-house financing needs.
A.C.
Financial also references the purported assignment of the debt from
ARC.
Golden responds that A.C. Financial should not be deemed a
creditor because it acted as an assignee of a debt already in
default, and thus is a debt collector for purposes of the FDCPA.
See 15 U.S.C. § 1692a(4) (providing that the term creditor “does
8
not include any person to the extent that he receives an assignment
or transfer of a debt in default solely for the purpose of
facilitating collection of such debt for another”).
There is no
evidence in the record that the assignment, assuming it occurred,
was for
the
purpose of
facilitating collection
of
the
debt.
Rather, A.C. Financial was responsible for handling Golden’s down
payment obligation because it was ARC’s financing arm.
not established to the contrary.
Golden has
Thus, the court cannot conclude
that § 1692a(4) undermines A.C. Financial’s status as a creditor.
Even if it was a debt collector acting on ARC’s behalf,
however, A.C. Financial still would be exempt from the FDCPA under
the “affiliate exemption,” which provides:
The term [debt collector] does not include - any person
while acting as a debt collector for another person, both
of whom are related by common ownership or affiliated by
corporate control, if the person acting as a debt
collector does so only for persons to whom it is so
related or affiliated and if the principal business of
such person is not the collection of debts[.]
15 U.S.C. § 1692a(6)(B).
The record supports a finding that ARC and A.C. Financial are
sufficiently affiliated to trigger § 1692a(6)(B).
Both entities
are managed by Prosser, and Prosser attests that A.C. Financial is
ARC’s “in-house finance company.”
Prosser Aff. ¶¶ 1, 6.
Golden
does not dispute these facts, nor does she contend that ARC or A.C.
9
Financial are in the “principal business” of collecting debts.
As
a result, A.C. Financial is exempt from the FDCPA under these
circumstances.
III.
Minn. Stat. § 53C.08
Golden claims that A.C. Financial and ARC violated the Motor
Vehicle Retail Installment Contract Act, Minn. Stat. § 53C.08
(Act).
Section 53C.08, subd. 1(a) provides that “[e]very retail
installment contract shall be in writing, shall contain all the
agreements of the parties, shall be signed by the retail buyer and
seller, and a copy signed by the retail buyer shall be furnished to
such retail buyer at the time the retail buyer executes the
contract.”
Golden argues that because the Agreement does not
include the
alleged
oral
agreement
to
defer
the
$2,000
down
payment, defendants are precluded from collecting that amount and
from defending this lawsuit.
Golden is incorrect.
The purpose of the Act is to “require disclosure to consumers
of the cost of credit extended to them, including sale price,
amount of down payment, insurance charges, and finance charges.”
Scott v. Forest Lake Chrysler-Plymouth-Dodge, 611 N.W.2d 346, 351
(Minn. 2000) (citation omitted).
clause
serves
to
prohibit
“The ‘agreement of the parties’
dealers
from
relying
on
separate
agreements containing additional or contradictory financing terms.”
Id.
Thus, the Act is not designed to serve as a statutory
integration clause, but rather to ensure that buyers are not
10
surprised by financing costs not set forth in the installment
contract. Here, the Agreement complies with the Act by listing the
sale price, applicable taxes and fees, and the $2,000 down payment
amount, among other things.
See Minn. Stat. § 53C.08, subd. 2
(listing required content); Spinler Aff. Ex. 3.
The parties’
dispute about whether Golden has actually paid the $2,000 does not
change the financial terms set forth in the Agreement.
As a
result, Golden does not have a claim under the Act.
IV.
Minn. Stat. § 336.9-609
Golden also argues that A.C. Financial and ARC violated Minn.
Stat. § 336.9-609 by threatening to repossess her vehicle in the
March
6,
2013,
letter.
Section
336.9-609
provides
the
circumstances under which a secured party may repossess collateral
after a default.
Golden cites to no authority for the proposition
that a mere threat to repossess, absent a breach of the peace,
violates § 336.9-609.
See Williams v. Republic Recovery Serv.,
Inc., No. 09-6554, 2010 WL 3732107, at *3 (N.D. Ill. Sept. 16,
2010) (allowing a claim under a materially identical statute
because the creditor breached the peace during an unsuccessful
repossession attempt).
has
not
been
repossess.5
Here, it is undisputed that Golden’s car
repossessed
and
there
has
been
no
attempt
to
As a result, Golden’s claim fails.
5
Golden suggests that someone on behalf of A.C. Financial
may have come to her home to repossess the vehicle, but the record
(continued...)
11
CONCLUSION
Accordingly, based on the above, IT IS HEREBY ORDERED that:
1.
Plaintiff’s motion for partial summary judgment [ECF No.
29] is denied;
2.
The motion for partial summary judgment of defendants
Prosser, A.C. Financial and ARC [ECF No. 33] is granted; and
3.
Defendant Henney’s motion for summary judgment [ECF No.
40] is granted.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated:
September 15, 2014
s/David S. Doty
David S. Doty, Judge
United States District Court
5
(...continued)
does not substantiate this allegation.
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