Carpenter v. Alessi & Koenig, LLC

Filing 60

ORDER Denying 53 Plaintiff's Motion for Partial Summary Judgment and Granting 54 Defendant's Motion for Summary Judgment. Judgment is hereby entered in favor of Defendant Alessi & Koenig, LLC and against Plaintiff Alwin Carpenter. Signed by Judge Philip M. Pro on 9/15/2013. (Copies have been distributed pursuant to the NEF - SLD)

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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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ALWIN CARPENTER,
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Plaintiff,
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v.
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ALESSI & KOENIG, LLC,
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Defendant.
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2:11-cv-01495-PMP-GWF

ORDER

Presently before the Court is Plaintiff Alwin Carpenter’s Motion for Partial

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Summary Judgment (Doc. #53), filed on February 20, 2013. Defendant Alessi & Koenig,

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LLC filed an Opposition (Doc. #57) on March 13, 2013. Plaintiff filed a Reply (Doc. #58)

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on April 1, 2013.

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Also before the Court is Defendant’s Motion for Summary Judgment (Doc. #54),

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filed on February 21, 2013. Plaintiff filed an Opposition (Doc. #56) on March 13, 2013.

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Defendant filed a Reply (Doc. #59) on April 1, 2013.

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I. BACKGROUND

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Plaintiff Alwin Carpenter owns property in Henderson, Nevada. (Pl.’ s Mot.

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Summ. J. (Doc. #53), Ex. 1 at 7, Ex. 4 at 31.) Plaintiff’s property is subject to the

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covenants, restrictions, and reservations (“CC&Rs”) of the Crystal Glen Landscape

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Maintenance Association, Inc. (the “Association”). (Id., Ex. 1 at 7-9, Ex. 4 at 32.) Pursuant

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to the CC&Rs, property owners must pay semi-annual assessments, as well as “interest,

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costs, and reasonable attorneys’ fees for the collection thereof,” and any such unpaid

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amounts “shall be a continuing lien” upon the property until paid. (Id., Ex. 2 at 26.)

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The Association hired Defendant Alessi & Koenig, LLC to collect unpaid

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assessments from Plaintiff and enforce the Association’s lien against Plaintiff’s property.

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(Id., Ex. 1 at 8-9; Def.’s Mot. Summ. J. (Doc. #54), Aff. of Thomas Bayard at ¶ 5.)

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Defendant is a law firm which engages in the collection of unpaid homeowner assessments

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as part of its business. (Pl.’s Mot. Summ. J., Ex. 3.)

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Defendant sent several communications to Plaintiff, beginning with a Notice of

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Intent to Lien on June 17, 2010, which listed the total amount due as $435. (Pl.’s Mot.

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Summ. J., Ex. 4 at 25.) Defendant next sent a Notice of Delinquent Assessment (Lien) on

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July 6, 2010, which listed a balance of $875. (Id. at 26.) Defendant sent a Pre-Notice of

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Default on August 11, 2010, which listed a balance of $1,015. (Id. at 29.) Defendant then

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sent a Notice of Default and Election to Sell Under Homeowners Association Lien on

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August 26, 2010. (Id., Ex. 1 at 4.) Defendant recorded a Notice of Default and Election to

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Sell on October 7, 2010. (Id., Ex. 4 at 35.) Defendant sent to Plaintiff a Pre-Notice of

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Trustee’s Sale on February 8, 2011, which listed a balance of $2,120. (Id. at 36.)

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On April 29, 2011, Defendant sent Plaintiff a breakdown of fees, interest, and

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costs Plaintiff owed to the Association for a total of $2,120. (Id. at 11.) The breakdown

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showed $435 for unpaid assessments, $1,050 for attorney’s fees, $200 for “Notary,

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Recording, Copies, Mailings, and PACER,” along with other charges. (Id.) The notice

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advised Plaintiff to pay Defendant the listed amount and the lien would be released from the

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property. (Id. at 12.)

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Prior to the Trustee Sale, Plaintiff went to Defendant’s office where he received a

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similar breakdown listing the amount due as $3,785. (Def.’s Mot. Summ. J., Ex. 7, Aff. of

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Thomas Bayard at ¶ 8.) The increase was due to additional attorney’s fees, additional

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“Notary, Recording, Copies, Mailings, and PACER” costs, an increase in the amount owed

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to the Association, and other charges. (Id., Ex. 7.) Plaintiff disputed the amount owed, and

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Defendant agreed to reduce the amount to $3,020, which Plaintiff paid. (Id., Aff. of
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Thomas Bayard at ¶ 8.) Defendant thereafter canceled the Trustee Sale and recorded a

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release of lien on the property. (Id.)

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Plaintiff brought suit in this Court on September 16, 2011, alleging Defendant

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violated the Fair Debt Collection Practices Act (“FDCPA”) by mailing to Plaintiff a demand

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that Plaintiff pay costs above and beyond the principal debt which are not authorized by the

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CC&Rs or by law. (Compl. (Doc. #1) at 3-4.) Plaintiff also alleges Defendant violated the

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FDCPA by falsely representing the amount owed. (Id. at 4-5.) Additionally, the Complaint

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asserts a claim for violating the Nevada Deceptive Trade Practices Act (“NDTPA”) because

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Defendant acts as a collection agency without a license. (Id. at 5-6.)

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Plaintiff now moves for summary judgment, asserting the FDCPA governs

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Defendant’s collections activity because the collection of past-due assessments is the

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collection of a consumer debt under the FDCPA. Plaintiff contends Defendant’s

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communications are covered by the FDCPA because Defendant was not engaged in the

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collection of a secured interest when it sent certain notices to Plaintiff that were outside the

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nonjudicial foreclosure process. Plaintiff argues Defendant violated the FDCPA by

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attempting to collect fees and costs which were not authorized by any agreement between

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Plaintiff and the Association or permitted by law because Defendant attempted to charge

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unreasonable attorney’s fees and costs. Plaintiff argues Defendant violated the FDCPA by

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falsely representing the amount due on this same basis. Plaintiff asserts the fact that the

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amount due increased so much in such a short time between each letter, with no evidence

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that such costs were reasonable, establishes Defendant violated the FDCPA.

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Defendant responds by arguing Plaintiff has not met his initial burden on

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summary judgment to establish the fees charged were not reasonable, and therefore the

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Court should deny Plaintiff’s Motion. Additionally, Defendant cross-moves for summary

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judgment, arguing the fees are reasonable as consistent with a fee schedule set forth in the

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Adopted Regulation of the Commission for Common-Interest Communities and
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Condominium Hotels. Defendant also moves for summary judgment on the issue of

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whether the FDCPA applies to Defendant. Defendant argues that because Defendant was

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engaged in the lien enforcement process, only a more limited provision of the FDCPA

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applies to its conduct, and Plaintiff has not established Defendant violated any provision of

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that section. Defendant argues the breakdowns and other notices were part of the lien

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enforcement process and give the homeowner information about how much he owes and

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what he must pay to avoid foreclosure. Defendant also moves for summary judgment on

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Plaintiff’s NDTPA claim, arguing a law firm acting in the usual course of its practice is

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exempt from the licensing requirement. Plaintiff responds that Defendant is acting as a

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collection agency, and thus the exception to the licensing requirement does not apply.

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II. DISCUSSION

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Summary judgment is appropriate if the pleadings, the discovery and disclosure

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materials on file, and any affidavits show that “there is no genuine dispute as to any

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material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.

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56(a), (c). A fact is “material” if it might affect the outcome of a suit, as determined by the

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governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An

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issue is “genuine” if sufficient evidence exists such that a reasonable fact finder could find

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for the non-moving party. Villiarmo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th

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Cir. 2002).

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Initially, the moving party bears the burden of proving there is no genuine issue

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of material fact. Leisek v. Brightwood Corp., 278 F.3d 895, 898 (9th Cir. 2002). The

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moving party may discharge its burden by “either produc[ing] evidence negating an

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essential element of the nonmoving party’s claim or defense or show[ing] that the

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nonmoving party does not have enough evidence of an essential element to carry its

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ultimate burden of persuasion at trial.” Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210

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F.3d 1099, 1102 (9th Cir. 2000); see also Fairbank v. Wunderman Cato Johnson, 212 F.3d
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528, 531 (9th Cir. 2000). After the moving party meets its burden, the burden shifts to the

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non-moving party to produce evidence that a genuine issue of material fact remains for trial.

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Leisek, 278 F.3d at 898. The Court views all evidence in the light most favorable the non-

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moving party. Id.

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A. FDCPA

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Count one of the Complaint alleges Defendant violated the FDCPA, 15 U.S.C.

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§ 1692f, by mailing to Plaintiff a demand that Plaintiff pay costs above and beyond the

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principal debt which are not authorized by the CC&Rs or by law. (Compl. at 3-4.) Count

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two alleges Defendant violated the FDCPA, 15 U.S.C. § 1692e(2), by falsely representing

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the amount owed. (Id. at 4-5.) Plaintiff moves for summary judgment on these two claims,

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arguing the CC&Rs and the law allow Defendant to charge only reasonable attorney’s fees

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and to charge some items for only their actual cost without any markup. Plaintiff contends

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the fees Defendant charged for collection costs were unreasonable because the costs

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doubled and then quadrupled within a short period of time without any proof the fees were

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reasonable or the costs were charged without markup. Defendant responds that Plaintiff has

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failed to present evidence the charges were unreasonable, and the Court therefore should

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deny Plaintiff’s Motion. Defendant also countermoves for summary judgment, arguing it

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charged fees in line with those set forth by the Commission for Common-Interest

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Communities and Condominium Hotels, and therefore its charges were reasonable.

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The FDCPA prohibits debt collectors from collecting a debt, including incidental

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fees, interest, and other charges, “unless such amount is expressly authorized by the

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agreement creating the debt or permitted by law.” 15 U.S.C. § 1692f(1). It also prohibits

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debt collectors from falsely representing “the character, amount, or legal status of any

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debt.” Id. § 1692e(2)(A).

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Here, the CC&Rs permit the Association to collect assessments as well as
“interest, costs, and reasonable attorneys’ fees for the collection thereof.” (Pl.’s Mot.
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Summ. J., Ex. 2 at 26.) Additionally, Nevada Administrative Code § 116.470 sets forth

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limits on the amount an association or person acting on the association’s behalf may charge

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a delinquent homeowner. For example, an association may not charge more than $150 for a

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demand or intent to lien letter or more than $325 for a notice of delinquent lien assessment.

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Nev. Admin. Code § 116.470(2)(a)-(e). An association also may recover “[r]easonable

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attorney’s fees and actual costs, without any increase or markup, incurred by the association

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for any legal services which do not include an activity described in” the schedule of fees.

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Id. § 116.470(4)(b). Additionally, an association may charge for certain related collection

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costs, such as publishing, recording, and mailing, but the association may recover only “the

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actual costs incurred without any increase or markup.” Id. § 116.470(3). Thus, both the

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agreement creating the debt and the law allow Defendant, acting on the Association’s

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behalf, to collect attorney’s fees and costs, so long as the fees are reasonable and the costs

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are actual costs without any markup. Likewise, in the context of this case, Defendant

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falsely represented its fees and costs only if its fees were not reasonable and its costs were

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not actual costs without markup.

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Viewing the facts in the light most favorable to Defendant on Plaintiff’s Motion

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for Summary Judgment, Plaintiff has failed to meet his initial burden of establishing that

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any fees were unreasonable. Plaintiff’s only argument is that the fees grew exponentially in

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amount in a short period of time. However, Plaintiff presents no evidence in support of his

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Motion that any particular charge was unwarranted, unreasonable, or did not reflect the

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actual cost. The mere fact that the fees and costs rose quickly does not raise an issue of fact

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that they were unreasonable or do not reflect actual costs. In response to Defendant’s

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Motion for Summary Judgment on this same issue, Plaintiff presents no additional evidence

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that any particular charge was unreasonable or that any particular cost does not reflect the

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actual cost incurred without any markup. Plaintiff therefore has failed to present evidence

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showing it will be able to meet its burden of proof at trial.1 Accordingly, the Court will

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deny Plaintiff’s Motion for Summary Judgment, and will grant Defendant’s Motion for

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Summary Judgment on the FDCPA claims in counts one and two of the Complaint.

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B. NDTPA

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Under the NDTPA, a person engages in a deceptive trade practice if he

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knowingly “[c]onducts the business or occupation without all required state, county or city

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licenses.” Nev. Rev. Stat. § 598.0923(1). Nevada requires a person operating a collection

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agency or who is engaged in collecting claims on another’s behalf to obtain a license from

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the Commissioner of Financial Institutions. Id. §§ 649.075(1), 649.026. A “collection

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agency” is defined as:
all persons engaging, directly or indirectly, and as a primary or a
secondary object, business or pursuit, in the collection of or in
soliciting or obtaining in any manner the payment of a claim owed or
due or asserted to be owed or due to another.

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Id. § 649.020(1). Nevada excludes from the definition of a “collection agency” Nevada

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licensed attorneys “so long as they are retained by their clients to collect or to solicit or

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obtain payment of such clients’ claims in the usual course of the practice of their

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profession.” Id. § 649.020(2)(g). However, this exception does not apply if the attorneys

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“are conducting collection agencies.” Id. § 649.020(2).
The Nevada Supreme Court has not interpreted § 649.020’s application to

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attorneys. The Court therefore must predict how Nevada’s highest court would resolve the

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issue. Giles v. Gen. Motors Acceptance Corp., 494 F.3d 865, 872 (9th Cir. 2007). The

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Financial Institutions Division, which is charged with licensing collection agencies, has

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interpreted this statute to mean that a person who operates a collection agency who happens

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The Court therefore need not reach the issue of whether §§ 1692e(2) and 1692f apply to
Defendant because even if they do, Plaintiff has failed to present evidence raising a genuine issue of
material fact that Defendant violated those sections.
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to be an attorney is not exempt from the licensing requirement. Advisory Op. Regarding

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Attorneys Acting as Collection Agencies at 2 (Fin. Inst. Div. Mar. 22, 2012), available at

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http://fid.state.nv.us/AdvisoryOpinion/2012/2012-03-22_OPINION_AttorneyActingAsColl

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ectionAgency.pdf (last visited Sept. 9, 2013). However, “attorneys licensed by the State

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Bar of Nevada are not required to be licensed as a collection agency even though in the

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course of their practice they may negotiate settlement of claims, pursue payment and

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receive judgments.” Id. at 1. The Financial Institutions Division noted that in 2007, the

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Nevada Legislature amended § 649.020(2)(g) to remove language which exempted

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attorneys only if the collection activity was “incidental to the usual course of the practice of

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their profession.” Id. at 2. The Financial Institutions Division concluded from the deletion

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of this language and attendant legislative history that “attorneys whose primary practice is

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the collection of claims are exempt from the requirements of NRS Chapter 649,” because

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“where legal services were provided, the State Bar Association was the appropriate

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regulatory body to oversee the attorney’s conduct.” Id. However, attorneys are exempt

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only if they are “soliciting or receiving payment of a claim for a retained legal client” and if

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the activity is in the “usual course of the practice of their profession.” Id.

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The Financial Institutions Division’s interpretation is consistent with the

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legislative history, which shows the statute previously exempted attorneys from the

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licensing requirement only if the collections activity was “incidental to the usual course of

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the practice of their profession.” Nev. Rev. Stat. § 649.020(2)(g) (2006). However, the

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Nevada Legislature deleted this language from the statute in 2007. Nev. Laws 2007, c. 3,

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§ 1. As stated at a hearing before the Nevada Senate Committee on Commerce and Labor,

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the legislative purpose of deleting the “incidental” language was to make clear that

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attorneys engaged in collections would be governed by the State Bar, and not by the

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Financial Institutions Division, even if the attorneys’ collections activities were more than

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incidental to their law practice. Mins. of Sen. Comm. on Commerce & Labor, 2007 Leg.
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74th Session 2 (March 13, 2007), available at https://leg.state.nv.us/Session/74th2007/

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Minutes/Senate/CL/Final/544.pdf (last visited Sept. 10, 2013). Consequently, attorneys

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hired by a client to perform legal work that involves collections are not required to be

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licensed by the Financial Institutions Division, so long as the work is performed for a

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retained legal client in the usual course of the attorneys’ practice and profession.
Here, no genuine issue of material fact remains that the Association hired

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Defendant to perform legal work on the Association’s behalf in the context of an attorney-

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client relationship in the usual course of Defendant’s legal practice. (Def.’s Mot. Summ. J.,

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Aff. of Thomas Bayard at ¶ 5, Aff. of Sue Naumann at ¶ 4.) Accordingly, Defendant was

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not required to obtain a license from the Financial Institutions Division, and thus no

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genuine issue of material fact remains that Defendant did not violate the NDTPA. The

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Court therefore will grant summary judgment in Defendant’s favor on Plaintiff’s NDTPA

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claim.

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III. CONCLUSION

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IT IS THEREFORE ORDERED that Plaintiff Alwin Carpenter’s Motion for
Partial Summary Judgment (Doc. #53) is hereby DENIED.
IT IS FURTHER ORDERED that Defendant Alessi & Koenig’s Motion for
Summary Judgment (Doc. #54) is hereby GRANTED.
IT IS FURTHER ORDERED that Judgment is hereby entered in favor of
Defendant Alessi & Koenig, LLC and against Plaintiff Alwin Carpenter.

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DATED: September 15, 2013
_______________________________
PHILIP M. PRO
United States District Judge

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