Eger v. Messerli & Kramer, P.A.
Filing
41
MEMORANDUM OPINION AND ORDER. IT IS HEREBY ORDERED that: 1. Plaintiff's Motion for Summary Judgment 29 is GRANTED; 2. Defendant's Motion for Summary Judgment 21 is DENIED; and 3. Defendant shall pay Plaintiff actual damages, cou rt costs and reasonable attorneys fees. Within thirty days from the date of this Order, Plaintiff shall submit a detailed accounting of the attorney's fees incurred. Defendant shall file any objection fourteen days from the date of Plaintiffs submission. LET JUDGMENT BE ENTERED ACCORDINGLY. (Written Opinion). Signed by Chief Judge Michael J. Davis on 6/24/15. (GRR)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
John Eger,
Plaintiff,
v.
MEMORANDUM OPINION
AND ORDER
Civil No. 14‐1424
Messerli & Kramer, P.A.,
Defendant.
________________________________________________________________
Jonathan L. R. Drewes, Drewes Law, PLLC, Counsel for Plaintiff.
Derrick N. Weber and Bradley R. Armstrong, Messerli & Kramer, P.A.,
Counsel for Defendant.
________________________________________________________________
This matter is before the Court on cross motions for summary judgment.
I.
Introduction
Plaintiff incurred a debt to Discover Bank, and judgment was entered in
favor of Discover Bank in the amount of $3,709.76 on April 15, 2011. (Comp., Ex.
A.) Defendant Messerli & Kramer, P.A., is a law firm that was retained by
Discover Bank to collect on Plaintiff’s debt. (Id. ¶¶ 5‐6.) A notice of the entry of
judgment was sent to Plaintiff on or about April 15, 2011. (Id. Ex. B.) This notice
provided that “Costs and interest will accrue on any money judgment amounts
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from the date of entry until the judgment is satisfied.” (Id.) Pursuant to
Minnesota law, interest accrued at the rate of four percent per annum. (Comp. ¶
9; Minn. Stat. § 549.09.)
In an effort to obtain satisfaction of the judgment, Defendant served
garnishment summonses upon financial institutions on six occasions. (Weber
Decl. ¶ 5.) For each garnishment, Defendant submitted a check in the amount of
$15.00 to each financial institution, as required by Minn. Stat. § 571.76. (Weber
Decl. ¶ 5.)
Defendant sent Plaintiff correspondence on or about January 21, 2014
informing him that the current outstanding balance on the judgment was
$4,203.02. (Comp. ¶ 11, Ex. D.) Plaintiff contacted the Winona County court
administrator on April 21, 2014 and May 7, 2014. During those conversations, the
administrator conveyed to the Plaintiff that the judgment balance was $4,157.37
and $4,163.88 respectively. Plaintiff sent correspondence to Defendant, claiming
that Defendant had improperly added attorneys’ fees to the original judgment.
(Weber Aff. Ex. 1.) Defendant asserts it informed Plaintiff that no attorneys’ fees
were added to the judgment balance after judgment was entered, and that the
additional sums were actually comprised of amounts incurred as garnishment
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fees. (Id.)
II.
Standard
Summary judgment is appropriate if, viewing all facts in the light most
favorable to the non‐moving party, there is no genuine dispute 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, 322‐23 (1986). The party seeking
summary judgment bears the burden of showing that there is no disputed issue
of material fact. Celotex, 477 U.S. at 323. “A dispute is genuine if the evidence is
such that it could cause a reasonable jury to return a verdict for either party; a
fact is material if its resolution affects the outcome of the case.” Amini v. City of
Minneapolis, 643 F.3d 1068, 1074 (8th Cir. 2011) (citing Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248, 252 (1986)). The party opposing summary
judgment may not rest upon mere allegations or denials, but must set forth
specific facts showing that there is a genuine issue for trial. Krenik v. County of
Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995).
III.
Discussion
At issue is whether Defendant was authorized, under the FDCPA, to
represent that $90 in post‐judgment disbursements was part of the judgment
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balance in its January 21, 2014 collection letter to Plaintiff.
A.
Violation of Section 1692e(2)(A)
Under the FDCPA, a debt collector cannot “use any false, deceptive, or
misleading representation or means in connection with the collection of any
debt.” 15 U.S.C. § 1692e. Specifically, this provision prohibits, inter alia, “the
false representation of the character, amount or legal status of any debt.” 15
U.S.C. § 1692e(2)(A). “In evaluating whether a debt collection letter is false,
misleading or deceptive, the letter must be viewed through the eyes of the
unsophisticated consumer.” Duffy v. Landberg, 215 F.3d 871, 873 (8th Cir. 2000).
Plaintiff concedes that garnishment fees are allowable disbursements by
the creditor pursuant to Minn. Stat. § 571.76. Plaintiff nonetheless argues that
even though such disbursements are allowed, by including the disbursements
into the outstanding balance of the judgment in the dunning letter, Defendant
violated this provision of the FDCPA. The Court agrees.
The Defendant submits a number of arguments in support of its position
that it was allowed to recover additional interest and garnishment fees, but those
arguments miss the point, which is whether a debt collector can include the
disbursements in the outstanding judgment or whether such amounts should be
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listed separately.
Minnesota law distinguishes between disbursements and costs; costs are
monies charged by the court, while disbursements are monies that parties pay to
sources outside the court, such as payment to a process server. Minn. Stat. §§
549.02, 549.04. The difference between the two is that the court assesses costs,
because it is the entity that charges them to the party, while disbursements are
incurred by the judgment creditor or its attorney.
Defendant argues that it is entitled to add garnishment fees to the amount
of outstanding judgment. In support, Defendant cites to Minn. Stat. § 549.09,
subd. 3 and 4, which provides:
Subd. 3. Deductions. If an affidavit is filed pursuant to subdivision
4, a judgment creditor, or the judgment creditorʹs attorney or agent, is
entitled to deduct from any payment made upon a judgment, whether the
payment is made voluntarily by or on behalf of the judgment debtor, or is
collected by legal process, all disbursements that are made taxable by
statute or by rule of court, that have been paid or incurred by the judgment
creditor or the judgment creditorʹs attorney, after the entry of judgment.
Any remaining portion of the payment must be applied to the interest that
has accrued upon the unpaid principal balance of the judgment before any
remaining part is applied to reduce the unpaid principal balance of the
judgment.
Subd. 4. Affidavit. A judgment creditor, or the judgment creditorʹs
attorney, may file an affidavit specifying the nature and amount of taxable
disbursements paid or incurred by the judgment creditor, or the judgment
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creditorʹs attorney, after the entry of judgment. An execution issued by the
court administrator must include increased disbursements as are included
in the affidavit filed with the court administrator.
As these statutory provisions make clear, a judgment creditor or its
attorney may seek reimbursement for taxable disbursements, which include
garnishment fees, but must first file an affidavit specifying the nature and
amount of such disbursements. Minn. Stat. § 549.09, subd.3. There is no
evidence in the record that such an affidavit has been filed. More importantly,
there is no language in either of the above provisions that allows a judgment
creditor or its attorney to automatically include such taxable disbursements when
representing the outstanding judgment amount in a letter to a debtor. To satisfy
the FDCPA, the judgment creditor must inform the debtor of the outstanding
judgment balance and, in a separate line, inform the debtor that disbursements
have been incurred, including the amount, to which the judgment creditor is
entitled to reimbursement. See Fields v. Wilber Law Firm, P.C., 383 F.3d 562, 565
(7th Cir. 2004) (“Even if attorney’s fees are authorized by contract, as in this case,
and even if the fees are reasonable, debt collectors must still clearly and fairly
communicate information about the amount of debt to debtors.”)
Accordingly, by including the garnishment fees in the outstanding balance
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of the judgment in its January 21, 2014 letter to Plaintiff without explanation, the
Court finds that under the unsophisticated consumer standard, Defendant falsely
represented the actual amount of the outstanding judgment.
B.
Violation of Section 1692e(9)
Plaintiff further argues that Defendant violated the FDCPA by including
the garnishment fees in the outstanding judgment balance, because it created a
“false impression as to its source, authorization, or approval.” 15 U.S.C. §
1692e(9). As Magistrate Judge Noel reasoned in his Report and
Recommendation, “it is plausible that merely by stating that a judgment balance
is outstanding, an unsophisticated consumer could assume that a court has
approved of the quoted amount because the word ‘judgment’ denotes an entry
by a court.” (Doc. No. 20 at 8.) To an unsophisticated consumer, Defendant’s
January 21, 2014 letter, which increased the judgment balance without any legal
authorization to do so, falsely represented the amount of judgment as including
garnishment fees and therefore its authority to add to the judgment balance
without court involvement.
IT IS HEREBY ORDERED that:
1.
Plaintiff’s Motion for Summary Judgment [Doc. No. 29] is
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GRANTED;
2.
Defendant’s Motion for Summary Judgment [Doc. No. 21] is
DENIED; and
3.
Defendant shall pay Plaintiff actual damages, court costs and
reasonable attorney’s fees. Within thirty days from the date of this
Order, Plaintiff shall submit a detailed accounting of the attorney’s
fees incurred. Defendant shall file any objection fourteen days from
the date of Plaintiff’s submission.
LET JUDGMENT BE ENTERED ACCORDINGLY
Date: June 24, 2015
s/ Michael J. Davis
Michael J. Davis
Chief Judge
United States District Court
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