Alpine Asset Management Group, LLC v. Hickman
Filing
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ORDER granting 15 motion for summary judgment and dismissing claims of Joy Hickman. Signed on 9/14/2012 by Magistrate Judge Matt J. Whitworth. (Bode, Kay)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
SOUTHERN DIVISION
JOY HICKMAN,
Plaintiff,
v.
ALPINE ASSET MANAGEMENT
GROUP, LLC,
Defendant.
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No. 11-1236-CV-S-MJW
ORDER
This case arises from a Missouri state law action filed by defendant Alpine Asset
Management Group, LLC (hereinafter “Alpine”), against plaintiff Joy Hickman (hereinafter
“Hickman”). Alpine, as plaintiff in the Missouri state law case, alleges that Hickman had a
credit card account with original creditor and predecessor HSBC Bank Nevada NA; that
Hickman failed to pay for charges incurred on the account; and that Hickman was liable for an
outstanding balance. The Petition was accompanied by an Affidavit in Support of Alpine’s
claim. Hickman answered by denying Alpine’s allegations and raising a number of affirmative
defenses.
The parties then exchanged discovery. In response to Hickman’s discovery requests,
Alpine acknowledged it was not the original creditor and, as such, did not have at the time of
filing all of the account’s documentation within its possession. Thereafter, Hickman filed a
counterclaim in Missouri state court alleging, among other things, that Alpine had violated the
Fair Debt Collection Practices Act (hereinafter “FDCPA”) by failing to undertake a reasonable
investigation into the account records underlying the claim by filing suit when it knew it could
not prove the allegations, and by using false, deceptive, and misleading affidavits to prosecute
collection actions. Hickman alleged violations of sections 1692(d), 1692(e), and 1692(f) of Title
15, United States Code. Hickman also requested class certification.1
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With the consent of the parties, this case was transferred to the United States Magistrate
Judge, pursuant to the provisions of 28 U.S.C. § 636(c).
On December 7, 2011, Alpine moved to dismiss, without prejudice, its underlying claim
in Missouri state court. On December 9, 2011, Alpine filed in the United States District Court
for the Western District of Missouri its Notice of Removal, resulting in the instant case. On
December 20, 2011, Alpine filed an answer denying Hickman’s allegations and the propriety of
class certification. Alpine also raised several affirmative defenses. On December 21, 2011,
Alpine filed a motion to realign the parties, advising the Court that the nominal position of the
parties had changed due to the dismissal of the underlying claim brought by Alpine and the
continued existence of only Hickman’s counterclaim. On April 16, 2012, this Court granted the
motion, thereby designating Hickman as the plaintiff in this action and Alpine as the defendant.
Currently before the Court is Alpine’s June 6, 2012 motion for summary judgment.
Hickman has filed suggestions in opposition and Alpine has filed reply suggestions in support.
Discussion
Plaintiff Hickman’s complaint alleges that defendant Alpine violated the FDCPA when it
used false, misleading, and aggressive tactics to collect on Hickman’s alleged debt and that
Alpine cannot prove that the debt is due and owing. Hickman alleges that not only did Alpine
not have the original documents verifying the debt at the time it filed a collection suit in state
court, it never intended nor could corroborate and prove its case against Hickman. Hickman also
asserts the documents submitted by Alpine in support of its claims are inadmissible because they
are hearsay.
Defendant Alpine’s motion for summary judgment argues that it did not violate the
FDCPA by filing a collection suit with only minimal proof in hand at the time of the filing.
Defendant argues that case law supports that filing of a debt-collection lawsuit without the
immediate means of proving the debt does not violate the FDCPA. Defendant also argues the
affidavits provided in support of its motion for summary judgment and in support of its right to
file a debt-collection lawsuit against Hickman are not barred as hearsay. Defendant argues that
there is no dispute of material fact, and it is entitled to judgment as a matter of law on Hickman’s
FDCPA claims.
Summary Judgment Standard
Rule 56(c) of the Federal Rules of Civil Procedure requires "the entry of summary
judgment . . . against a party who fails to make a showing sufficient to establish the existence of
an element essential to that party's case, and on which that party will bear the burden of proof at
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trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The burden on the party moving for
summary judgment "is only to demonstrate . . . that the record does not disclose a genuine
dispute on a material fact." City of Mt. Pleasant, Iowa v. Associated Elec. Co-Op., 838 F.2d
268, 273 (8th Cir. 1988).
Once the moving party has done so, the burden shifts to the nonmoving party to go
beyond his pleadings and show, by affidavit or by "depositions, answers to interrogatories, and
admissions on file," that there is a genuine issue of fact to be resolved at trial. Celotex, 477 U.S.
at 323. Evidence of a disputed factual issue which is merely colorable or not significantly
probative, however, will not prevent entry of summary judgment. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986).
Summary judgment, however, "is an extreme remedy, to be granted only if no genuine
issue exists as to any material fact." Hass v. Weiner, 765 F.2d 123, 124 (8th Cir. 1985). In
ruling on a motion for summary judgment, this court must view all facts in a light most favorable
to the nonmoving party, and that party must receive the benefit of all reasonable inferences
drawn from the facts. Robinson v. Monaghan, 864 F.2d 622, 624 (8th Cir. 1989).
If "there is no genuine issue as to any material fact and . . . the movant is entitled to
judgment as a matter of law," the court must grant summary judgment. Fed. R. Civ. P. 56(c).
Federal Debt Collection Practices Act
“The purpose of the FDCPA is to ‘eliminate abusive debt collection practices by debt
collectors,’. . . and debt collectors are liable for failure to comply with ‘any provision’ of the
Act.” Dunham v. Portfolio Recovery Associates, LLC., 663 F.3d 997, 1000 (8th Cir. 2011). See
also 15 U.S.C. § 1692 (purpose of the act) and § 1692k (civil liability by debt collectors for
violation).
Here, the provisions of the FDCPA that are alleged to have been violated by defendant
are those which preclude harassment and abuse, false or misleading representations in attempt to
collect a debt, and unfair practices in attempt to collect a debt. 15 U.S.C. §§ 1692d-f. When
interpreting the FDCPA, the Court begins with the language of the statute itself. Harvey v. Great
Seneca Financial Corp., 453 F.3d 324, 329 (6th Cir. 2006).
Title 15 U.S.C. § 1692d is the section of the FDCPA which discusses what constitutes
harassment and abuse and thus violates the FDCPA. Specifically section 1692d states:
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A debt collector may not engage in any conduct the natural consequence of which
is to harass, oppress, or abuse any person in connection with the collection of a
debt. Without limiting the general application of the foregoing, the following
conduct is a violation of this section:
(1) The use or threat of use of violence or other criminal means to harm
the physical person, reputation, or property of any person.
(2) The use of obscene or profane language or language the natural
consequence of which is to abuse the hearer or reader.
(3) The publication of a list of consumers who allegedly refuse to pay
debts, except to a consumer reporting agency or to persons meeting the
requirements of section 1681a(f) or 1681b(3) of this title.
(4) The advertisement for sale of any debt to coerce payment of the debt.
(5) Causing a telephone to ring or engaging any person in telephone
conversation repeatedly or continuously with intent to annoy, abuse, or
harass any person at the called number.
(6) Except as provided in section 1692b of this title, the placement of
telephone calls without meaningful disclosure of the caller's identity.
The relevant section of Title 15 U.S.C. § 1692e precluding false or misleading
representations in attempt to collect a debt specifically states:
A debt collector may not use any false, deceptive, or misleading representation
or means in connection with the collection of any debt. Without limiting the
general application of the foregoing, the following conduct is a violation of this
section:
...
(2) The false representation of—
(A) the character, amount, or legal status of any debt; or
...
(10) The use of any false representation or deceptive means to collect or
attempt to collect any debt or to obtain information concerning a
consumer. . . .
The relevant section of Title 15 U.S.C. § 1692f precluding unfair practices in collection
of a debt states:
A debt collector may not use unfair or unconscionable means to collect or attempt
to collect any debt. Without limiting the general application of the foregoing, the
following conduct is a violation of this section:
(1) The collection of any amount (including any interest, fee, charge, or
expense incidental to the principal obligation) unless such amount is
expressly authorized by the agreement creating the debt or permitted by
law. . . .
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In determining whether any particular conduct violates the provisions of FDCPA, the
courts have used an objective test based on the least sophisticated consumer. Harvey at 329.
Section 1692d
Plaintiff Hickman alleges defendant Alpine violated section 1692d when it filed a
collection lawsuit against her, as well as other collection suits, under circumstances in which
defendant knew it would be unable to prove its claims. Plaintiff alleges defendant repeatedly
fails to conduct reasonable inquires into the veracity and validity of its information it purchases
from original creditors, and filed the collection suit against plaintiff before having the immediate
means of proving the debt. Plaintiff alleges this is harassing and abusive behavior, in violation
of section 1692d.
The leading case on the claim asserted by Hickman is Harvey v. Great Seneca Financial
Corp., 453 F.3d 324 (6th Cir. 2006). The Harvey case discusses the standard for determining
whether a debt collector’s conduct is such that the natural consequence of it is to harass, oppress,
or abuse any person in connection with the collection of a debt. Further, Harvey addresses the
issue of whether a jury trial is required in order to determine whether the debt collector’s conduct
meets the standard. The Harvey court, while recognizing that the question of whether conduct
harasses or oppresses or abuses is ordinarily a question for the jury, determined that summary
judgment could nonetheless be granted if the alleged facts fail to have the natural consequence of
harassing or abusing the debtor. 453 F.3d at 330. Applying this standard, the Harvey court
found that summary judgment should be granted to the defendant debt collector. The court
found that “[e]ven when viewed from the perspective of an unsophisticated consumer, the filing
of a debt-collection lawsuit without the immediate means of proving the debt does not have the
natural consequence of harassing, abusing, or oppressing a debtor.” Id. This determination
precluded the claim of the plaintiff (debtor) under section 1692d.
Other courts have agreed with the holding of Harvey. In Mansfield v. Midland Funding
LLC, 2011 WL 1212939 *5 (S.D. Cal. March 30, 2011), the court found that “a debt collector
may file a debt collection action even if the debt collector does not at the time of filing have
adequate proof to support the claim.” The court noted that the plaintiff could not provide the
court with any case law that supports a cause of action under the FDCPA for failure to conduct a
reasonable pre-suit investigation to ensure that the debt claim was not time barred. Id. A
Michigan Court, in Lipa v. Asset Acceptance, LLC., 572 F. Supp. 2d 841, 850 (E.D. Mich.
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2008), cited to Harvey in support of its decision dismissing an FDCPA action for failure to state
a claim. The court found the debtor’s allegations that the debt collector, who filed suit against
the debtor without having a copy of the credit agreement, did not violate the FDCPA. The court
found that these actions, without more, did not amount to harassing or an oppressive act in
violation of 15 U.S.C. § 1692d.
Here, the allegations of Hickman are virtually identical to those alleged in Harvey and
this Court finds the Harvey decision persuasive; the mere filing of a collection lawsuit against a
debtor prior to obtaining sufficient evidence to prove the claim, does not violate the FDCPA,
section 1692d. As set forth in Rule 11 of the Federal Rules of Civil Procedure, an attorney is not
required to ensure that their client can prove its case before filing; rather, the rule mandates only
that “the allegations and other factual contentions have evidentiary support, or if specifically so
identified, are likely to have evidentiary support after reasonable opportunity for further
investigation or discovery.” This Court sees no reason to require otherwise in a debt-collection
suit. Moreover, the Court does not believe the filing of a lawsuit to collect a debt, based on
documents bought and received from the creditor and/or another debt-collection agency, is
harassment or abuse of a debtor. Hickman does not allege any specific acts of harassment or
abuse perpetrated by Alpine. Instead, like the plaintiff in Harvey, Hickman alleges that Alpine
engaged in harassing and abusive conduct by filing suit against her with only minimal proof.
Like the defendant in Harvey, Alpine admitted it did not immediately have all the documentation
it would need to prove its claim at the time it filed suit.
This Court finds there is no dispute of material fact. Although Alpine concedes it did not
have in its possession at the time it filed the lawsuit, sufficient evidence to prove its claim,
Alpine did have a good faith basis and prima facia evidence to support the filing of the suit. In
fact, Alpine had more evidence to support its claim than that held by the defendant in Harvey.
Alpine supported its claim with an affidavit from one of its own representatives stating he was
the custodian of Alpine’s business records and that according to the records received from the
original creditor, Hickman was indebted to Alpine for a certain balance. This signed, sworn
affidavit is more probative of Hickman’s indebtedness than the minimal post hoc documents
submitted by the debt collector in Harvey. Accordingly, because Hickman has failed to come
forward with evidence to support a viable claim under section 1692d, Alpine’s summary
judgment motion on Hickman’s section 1692d claims is granted.
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Section 1692e
This section of the FDCPA prohibits the use of misrepresentations or deception to collect
or attempt to collect a debt. Hickman alleges that by filing suits with only minimal evidence;
filing suits prior to conducting a reasonable investigation into the information it obtains from the
original creditors; and filing false or misleading affidavits in the suits it files, violates section
1692e.
In a recent case in the District of Nebraska, the court applied the standard of Harvey to
claims that the debt collector used deceptive means to collect the debt. See Carlson v. Credit
Management Services, Inc., 2012 WL 869946 *4 (D. Neb. March 14, 2012). In applying this
standard, the Nebraska court held that the debtor’s claims that the debt collector needed to offer
proof that it owned the debt at the time it filed a state court collection suit was without merit. Id.
The Harvey court, as set forth above, was faced with similar circumstances as the case
here. The Harvey court, quoting Deere v. Javitch, Block, and Rathbone, L.L.P., 413 F. Supp. 2d
886, 890 (S.D. Ohio 2006), held that:
filing a lawsuit supported by the client’s affidavit attesting to the existence and
amount of a debt, is not a false representation about the character or legal status of
the debt, nor is it unfair or unconscionable. A defendant in any lawsuit is entitled
to request more information and detail about a plaintiff’s claim, either through
formal pleadings challenging a complaint, or through discovery. [The debtor]
does not allege that anything in the state court complaint was false, or that the
complaint was baseless. [The debtor] essentially alleges that more of a paper trail
should have been in the lawyers’ hands or attached to the complaint. The FDCPA
imposes no such obligation.
453 F.3d at 331.
Here, like the plaintiffs in Harvey and Deere, Hickman does not deny owing the debt, nor
does she claim the amount was inflated or misstated. Plaintiff makes only generalized
allegations of deception unsupported by fact and well short of the level of deceptive practices
which courts have found violate the FDCPA. See Harvey at 331 (examples of conduct that other
courts of appeals have deemed deceptive include impersonating a public official, and falsely
representing that unpaid debts will be referred to an attorney).
There is one distinction in this suit from that of Harvey. Plaintiff here alleges that Alpine
filed false or misleading affidavits. Specifically, Hickman alleges that Alpine’s original affidavit
filed in support of the lawsuit stated that the debt was purchased from the original creditor, when,
in fact, later in the discovery process it was determined that the debt was purchased from another
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debt-collection company. This court finds that such allegation of deception certainly is not the
kind referenced section 1692e. While the original affidavit was incorrect and/or misrepresented
from whom Alpine purchased the debt, the affidavit provided correct information as to the
account on which it sought to collect, namely who the original creditor was and what the account
number was and the amount owed. Accordingly, the misrepresentation by Alpine that the
account was purchased from the original creditor, HCC, is not a material issue. Misstatements
which are not material cannot mislead even an unsophisticated consumer and, therefore, do not
violate FDCPA. See Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1033-34 (9th Cir. 2010)
(holding that false and misleading statement does not violate FDCPA unless the statement is
material).
To the extent that Alpine’s complaint filed with the Circuit Court of Polk County,
Missouri, sought a judgment in the amount of $5,092.22, plus pre-petition interest, while the
demand letter requested such amount differently (the demand letter sought payment of $5,792.85
which is the total due and owing on the debt, plus 9 percent prejudgment interest), it does not
support a violation of the FDCPA. This allegation is not the kind of misrepresentation set forth
in section 1692d or consistent with the kind of misrepresentation that courts have found violate
the FDCPA.
Section 1692f
This section of the FDCPA prohibits debt collectors from using “unfair or
unconscionable means to collect or attempt to collect any debt.” 15 U.S.C. § 1692f. Here,
Hickman alleges that by failing to conduct a reasonable inquiry into information received from
the original creditor, by attempting to collect amounts in excess of the principal balance owed by
Hickman in the absence of an express agreement, and by using false or misleading affidavits,
Alpine violated section 1692f.
Just as with Hickman’s other claims under sections 1692d and 1692e, there is no law or
case law supporting her claims. The filing of a lawsuit, supported by the affidavit of Alpine
attesting as to how and from whom the debtor’s account was purchased, including account
number, original creditor and the amount of the debt, is not a false representation about the
character or legal status of a debt, nor is it unfair or unconscionable. A defendant in any lawsuit
is entitled to request more information or details about a plaintiff's claim, either through formal
pleadings challenging a complaint, or through discovery. Although Hickman alleges the
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affidavits were false in that there were several inconsistencies in the documents received during
discovery as to whether Alpine purchased the debt from the original creditor or from other credit
collection agencies, such conflicting information is not material to whether Alpine could legally
collect the debt. Further, as asserted by Alpine, if the discovery process would have been
completed in the state court collection action, this incorrect information would have been
corrected during and through the discovery process. This is supported by the fact that at
completion of discovery in this case, Alpine has obtained and provided documents supporting its
case. Alpine has provided documents showing Hickman’s account with the original creditor
which would have supported its case in the state court collection case. These documents show
Hickman’s account with the original creditor and assignor HSBC, the transfer of Hickman’s
account, and affidavits describing the process of acquiring and examining records kept in the
business of debt purchasing.
Additionally, had Alpine alternatively discovered in the state court action, through the
documents produced, that it lacked sufficient factual basis upon which to proceed in that action,
Missouri state court rules would have allowed Alpine to dismiss the case, with or without
prejudice. Such opportunity for dismissal supports that the filing of the collection suit in state
court by Alpine was not unfair or an unconscionable means to collect or attempt to collect a debt.
Hickman’s allegations in this case are that Alpine should be required to have had more of
a paper trail attached to the complaint filed in the state court debt collection action. The FDCPA
does not impose such an obligation. See Deere, 413 F. Supp. 2d at 891. Here, plaintiff has
failed to come forward with evidence to show the conduct of Alpine in filing the state court
collection action was unfair or unconscionable. As set forth above, Alpine has shown it did have
sufficient documents to support its collection claim against Hickman in state court proceedings;
and moreover, if, alternatively, Alpine discovered it lacked sufficient factual basis upon which to
proceed in that action, Missouri state court rules would have allowed Alpine to dismiss the case,
with or without prejudice. These undisputed facts are insufficient to support that the filing of the
state court collection action by Alpine violated section 1692f.
Admissibility of Affidavits
Upon review, Hickman’s assertion that Alpine failed to authenticate the business records
of HSBC Retail Services because no supporting affidavits were signed by the original creditor
HSBC Retail Services is without merit. First, the documents are submitted in this action not to
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show that Hickman actually owes the debt, but rather to show that Alpine did not violate the
FDCPA; therefore, the documents are not submitted for the truth of the matter asserted in the
documents and are not hearsay. See Krawczyk v. Centurion Capital Corp., 2009 WL 395458 *34 (N.D. Ill. 2009) (unpublished) (to extent the information in the documents showed state of
mind of collection company in instituting debt-collection proceedings, the documents were not
hearsay).
Moreover, this Court finds that the documents also fall under the business records
exception to the hearsay rule. To lay an adequate foundation under the business records
exception, the custodian of records need not have personal knowledge of the circumstances in
which acquisition, use and filing occurred. See United States v. Adefehinti, 510 F.3d 319, 326
(D.C. Cir. 2007). In Adefehinti, the court determined that although the bank certificate of
authenticity for documents was not based on familiarity with the specific transaction, but rather
on knowledge of the bank’s processes and relationship with mortgage brokers and on the fact
that the documents were in the bank file, the documents were admissible under the business
records exception. Id. The affidavits in this case are of the same nature as those in Adefehinti.
While the affidavits are not directly from the original creditor, they are provided by company
persons who have knowledge of company processes and relationship with original creditors, and
how charged-off receivables are sold and purchased from original creditors. Specifically, the
affidavits of Adam Schoener and Holly Kerns were made in the regular course of business, were
made at or near the time of the events recorded, and the records were transferred to both CACH
and Alpine in the regular course of their respective businesses. This fulfills the elements of the
business records exception set forth in Federal Rule of Civil Procedure 803. This Court finds
that the records of Alpine were sufficiently authenticated under the business records exception to
the hearsay rule. Fed. R. Civ. P. 803. See Beal Bank, SSB v. Eurich, 444 Mass. 813, 819 (Mass.
Sup. Ct. 2005) (“the bank need not provide testimony from a witness with personal knowledge
regarding the maintenance of the predecessors' business records. The bank's reliance on this type
of record-keeping by others renders the records the equivalent to the bank's own records. To
hold otherwise would severely impair the ability of assignees of debt to collect the debt due
because the assignee's business records of the debt are necessarily premised on the payment
records of its predecessors.”).
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Conclusion
Although Hickman is disputing the collection action against her under the FDCPA, there
are no material facts which dispute the account is Hickman’s, the amount owed by Hickman on
the account, or that Alpine properly owns the account. The fact that Alpine filed a state court
collection claim against Hickman attempting to collect on the charged-off receivable account of
Hickman, with only an affidavit in support of the claim, does not change Alpine’s prima facia
collection case to a violation of the FDCPA. As set forth above, there is no dispute of material
facts, and the facts fail to establish that Alpine violated the FDCPA in filing the state court
collection lawsuit against Hickman. A reasonable jury could not conclude, based on the
undisputed material facts in this case, that the actions of Alpine constituted harassment,
oppression, or abuse of Hickman in connection with Alpine’s collection of Hickman’s debt.
IT IS, THEREFORE, ORDERED that the motion of defendant Alpine Asset
Management Group, LLC, for summary judgment is granted and the claims of plaintiff Joy
Hickman are dismissed. [15]
Dated this 14th day of September, 2012, at Jefferson City, Missouri.
/s/
Matt J. Whitworth
MATT J. WHITWORTH
United States Magistrate Judge
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