Hagy et al v. Demers & Adams, LLC et al
Filing
95
OPINION AND ORDER denying 59 Motion to Continue Deadline to Conduct Discovery and to File for Summary Judgment; granting 60 Motion to Quash; granting in part and denying in part 65 Motion for Summary Judgment; denying 70 Motion for Extension of Time to Complete Discovery & granting 83 Motion for Partial Summary Judgment. Signed by Magistrate Judge Terence P Kemp on 2/5/2013. (kk2)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
James R. Hagy, III, et al.,
Plaintiffs,
:
:
v.
:
Case No. 2:11-cv-530
:
Demers & Adams, LLC, et al.,
Magistrate Judge Kemp
:
Defendants.
OPINION AND ORDER
This matter is before the Court on the motion for summary
judgment filed by Defendants Demers & Adams, LLC and David J.
Demers (“the Law Firm Defendants”)(Doc. #65), and the crossmotion for partial summary judgment filed by Plaintiff James R.
Hagy, III, on behalf of himself and Patricia R. Hagy1 (“the
Hagys”) (Doc. #83).
Also before the Court are the Hagys’ motions
to continue discovery deadlines and extend summary judgment
deadlines (Docs. ##59, 70), and the motion to quash filed by
Green Tree Servicing, LLC (“Green Tree”) (Doc. #60).
For the
reasons that follow, this Court grants in part and denies in part
the Law Firm Defendants’ motion for summary judgment, grants the
Hagys’ partial motion for summary judgment, denies the Hagys’
motions to continue discovery deadlines and extend summary
judgment deadlines, and grants Green Tree’s motion to quash the
subpoena.
I. Background
This case arises from a foreclosure action initiated by the
Law Firm Defendants on behalf of Green Tree against the Hagys.
Most of the facts of this case are undisputed.
1
The minor
On February 9, 2012, this Court granted James R. Hagy’s
motion requesting that he be substituted for his wife, Patricia
R. Hagy, following Mrs. Hagy’s death. (Doc. #47).
disputes of fact are not relevant to the outcome of this case,
and they are set forth below for purposes of background only.
On September 26, 2002, the Hagys executed a fixed-rate note
and mortgage for the purchase of a mobile home, securing payment
of that note with Conseco Finance Servicing Corp. (“Conseco”).
Conseco was subsequently converted to Green Tree.
On April 28,
2010, the Law Firm Defendants filed a foreclosure action against
the Hagys on behalf of Green Tree in the Carroll County Court of
Common Pleas. (Doc. #18-1).
There appears to be some disagreement between the parties as
to whether Ms. Hagy then called the Law Firm Defendants and asked
whether some type of settlement could be reached, or whether she
talked to someone at Green Tree about settlement.
43-45; Doc. #67 at 37-39).
(Doc. #69 at
Either way, on June 8, 2010, David
Demers sent the Hagys a letter and warranty deed in lieu of
foreclosure. (Doc. #65, Ex. C).
The June 8 letter stated in
relevant part, “This letter is to advise you that my office has
been retained to represent Green Tree . . . in regards to your
delinquent account. . . . In return for executing the Deed in
Lieu Green Tree has advised me that it will waive any deficiency
balance.”
(Id.).
On June 24, 2010, the Hagys signed the warranty deed in lieu
of foreclosure. (Doc. #18, Ex. 4).
On June 28, 2010, Green Tree
confirmed to Mr. Demers that Green Tree would not seek a
deficiency balance if the Hagys signed the deed in lieu of
foreclosure. (Doc. #65, Ex. F).
On June 30, 2010, Mr. Demers
confirmed in a letter to the Hagys’ counsel, James Sandy, Esq.,
that he had received the warranty deed in lieu of foreclosure and
that in return for the Hagys “executing the Warranty Deed in Lieu
of Foreclosure Green Tree will not attempt to collect any
deficiency balance which may be due and owing after the sale of
the collateral.”
(Id., Ex. E).
2
On July 19, 2010, the Law Firm Defendants dismissed the
foreclosure complaint.
(Doc. #18, Ex. 2).
After the warranty
deed in lieu of foreclosure was executed, Green Tree began
contacting the Hagys by telephone for the collection of an
alleged deficiency.
(Doc. #67 at 25-32; Doc. #69, Ex. 12).
On June 15, 2011, the Hagys filed this case against the Law
Firm Defendants and Green Tree alleging violations of the Fair
Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§1692, et
seq., the Ohio Consumer Sales Practices Act (“OCSPA”), O.R.C.
§§1345.01 et seq., and common law invasion of privacy.
On
December 7, 2011, this Court granted the Law Firm Defendants’
motion to dismiss the Hagys’ claims under 15 U.S.C. §1692g on the
grounds that those claims were based on the June 8 letter and
thus were barred by the FDCPA’s one-year statute of limitations.
(Doc. #42).
On February 2, 2012, this Court granted Green Tree’s
motion to compel arbitration and stay the case against the Green
Tree defendants. (Doc. #44).
The Court now turns to the pending motions.
In their motion
for summary judgment, the Law Firm Defendants argue that 15
U.S.C. §1692f(6) is the only FDCPA provision applicable to them
because they sought only to foreclose on a security interest,
rather than to collect a debt.
(Doc. #65 at 5-9).
Because the
Hagys have not alleged a violation of §1692f(6), the Law Firm
Defendants assert that they are entitled to summary judgment on
the Hagy’s FDCPA claims.
Alternatively, the Law Firm
(Id.)
Defendants argue that, even assuming that they are subject to the
entirety of the FDCPA, the June 30 letter was not an attempt to
collect a debt and thus does not violate any provision of the
statute.
(Id. at 8.)
Finally, the Law Firm Defendants argue
that they did not violate the OCSPA because they never made a
false or deceptive communication.
(Id. at 10.)
In their cross–motion, the Hagys argue that they are
3
entitled to judgment in their favor because the Law Firm
Defendants are debt collectors within the meaning of the FDCPA,
and their failure to provide the mandatory warning in the June 30
letter violated the statute.
(Doc. #83 at 6-7, 13.)
The Hagys
further argue that they are entitled to summary judgment on their
OCSPA claim because the violation of the FDCPA arising from the
June 30 letter results in a valid claim under the OCSPA.
13.)
(Id. at
The Hagys also contend that they are entitled to judgment
as a matter of law on the OCSPA claim based on the June 8 letter,
despite the fact that claims based on that letter are barred by
the statute of limitations under the FDCPA.
(Id. at 9-13.)
The Court first considers the cross-motions for summary
judgment. In particular, the Court first examines the motions as
they pertain to the Hagy’s claims under the FDCPA and next turns
to the claims arising under the OCSPA.
Finally, the Court
considers the motions to continue discovery and summary judgment
deadlines and the motion to quash.
II. Motion for Summary Judgment Standard
Summary judgment is not a substitute for a trial when facts
material to the Court’s ultimate resolution of the case are in
dispute. It may be rendered only when appropriate evidentiary
materials, as described in Fed.R.Civ.P. 56(c), demonstrate the
absence of a material factual dispute and the moving party is
entitled to judgment as a matter of law.
Poller v. Columbia
Broadcasting Systems, Inc., 368 U.S. 464 (1962).
The moving
party bears the burden of demonstrating that no material facts
are in dispute, and the evidence submitted must be viewed in the
light most favorable to the nonmoving party.
Kress & Co., 398 U.S. 144 (1970).
Adickes v. S.H.
Additionally, the Court must
draw all reasonable inferences from that evidence in favor of the
nonmoving party.
(1962).
United States v. Diebold, Inc., 369 U.S. 654
The nonmoving party does have the burden, however, after
4
completion of sufficient discovery, to submit evidence in support
of any material element of a claim or defense on which that party
would bear the burden of proof at trial, even if the moving party
has not submitted evidence to negate the existence of that
material fact.
See Celotex Corp. v. Catrett, 477 U.S. 317
(1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986).
Of
course, since “a party seeking summary judgment . . . bears the
initial responsibility of informing the district court of the
basis for its motion, and identifying those portions of [the
record] which it believes demonstrate the absence of a genuine
issue of material fact,”
Celotex, 477 U.S. at 323, the
responding party is only required to respond to those issues
clearly identified by the moving party as being subject to the
motion.
It is with these standards in mind that the instant
cross-motions must be decided.
III. Discussion
“Congress enacted the FDCPA in order ‘to eliminate abusive
debt collection practices by debt collectors, to insure that
those debt collectors who refrain from using abusive debt
collection practices are not competitively disadvantaged, and to
promote consistent State action to protect consumers against debt
collection abuses.’”
Federal Home Loan Mortg. Corp. v. Lamar,
503 F.3d 504, 508 (6th Cir. 2007) (quoting 15 U.S.C. §1692(e)).
The FDCPA is “extraordinarily broad” and was crafted in response
to what Congress perceived “to be a widespread problem.”
Gangwish, 970 F.2d 1516, 1521 (6th Cir. 1992).
Frey v.
The FDCPA is a
“strict liability” statute, and a consumer may recover damages
under the statute even if he or she suffered no actual damages.
See Federal Home Loan Mortgage Corp., 503 F.3d at 513.
The Hagys allege that the Law Firm Defendants violated the
FDCPA by failing to “consummate the deed in lieu settlement with
Green Tree” in violation of 15 U.S.C. §§1692e and/or 1692f,
5
engaging in conduct the natural consequence of which is to
“harass and/or oppress” in violation of 15 U.S.C. §1692d, using
“false, deceptive, and/or misleading” representations or means in
connection with the collection of any debt in violation of 15
U.S.C. §1692e, and failing to provide the mandatory notices in
violation of 15 U.S.C. §1692e(11).
For the reasons set forth
below, the first three of these allegations appear to be readily
resolved on summary judgment, leaving only §1692e(11), the
mandatory notice provision, as a separate basis for liability
against the Law Firm Defendants under the FDCPA.
A. Alleged Liability Under §§1692d, 1692e (Unrelated to the
Mandatory Notice Provision of Subsection (11)), and 1692f
The Hagys allege that the Law Firm Defendants violated 15
U.S.C. §§1692d, 1692e, and 1692f.
The Law Firm Defendants moved
for summary judgment as to each of these claims.
3).
(Doc. #89 at
Under §1692d, 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.
The statute’s examples of such behavior include threatening
violence, using obscene or profane language, publishing a list of
consumers who allegedly refuse to pay debts, advertising the sale
of a debt to coerce payment, calling someone repeatedly, or
calling someone without disclosing the caller’s identity. 15
U.S.C. §1692d(1)-(6).
Tactics qualifying as a violation under
§1692d are those that “embarrass, upset, or frighten” a debtor or
concern “coercion, scare tactics, or fraud.”
Harvey v. Great
Seneca Fin. Corp., 453 F.3d 324, 330 (6th Cir. 2006).
Under §1692e, a debt collector may not use any “false,
deceptive, or misleading” representation or means in connection
with the collection of any debt.
The Court of Appeals has held
that a collection notice is deceptive if it can have two or more
different meanings, one of which is inaccurate.
6
See Federal Home
Loan Mortg. Corp., 503 F.3d at 512.
Each example of this type of
behavior listed by §1692e (save subsection (11)) requires some
type of affirmative false representation or false implication
made by the debt collector.
15 U.S.C. §1692(e)(1)-(10), (12)-
(16).
Finally, under §1692f, a debt collector may not use any
“unfair or unconscionable” means to collect or attempt to collect
any debt.
Examples of violations include collecting amounts not
expressly authorized by the agreement or permitted by law,
depositing or threatening to deposit postdated checks prior to
the date on the check, or communicating with a consumer regarding
a debt by post card.
15 U.S.C. §1692f(1),(4),(7).
There is no evidence in the record to suggest that the Law
Firm Defendants engaged in any behavior that would constitute a
violation of these sections of the FDCPA.
these claims are undisputed.
The facts relevant to
The Law Firm Defendants
communicated to the Hagys that the warranty deed in lieu would
satisfy the entire debt and that Green Tree would not seek any
deficiency.
The Law Firm Defendants have produced emails from
Green Tree confirming that the Law Firm Defendants were told that
Green Tree would not attempt to collect the deficiency from the
Hagys if they signed the deed in lieu.
The record reflects that
Law Firm Defendants accurately conveyed the information they had
at the time to the Hagys.
Although the amended complaint alleges that the Law Firm
Defendants violated §§1692e and/or 1692f by failing to
“consummate the deed in lieu settlement with Green Tree,” the
undisputed evidence produced by the Law Firm Defendants
demonstrates that Green Tree was aware of the deed in lieu and
directed the Law Firm Defendants to tell the Hagys that no
deficiency would be sought.
Thus, the Law Firm Defendants acted
under Green Tree’s authority when producing the deed in lieu to
7
the Hagys and in agreeing that no deficiency would be sought.
The record suggests that it was Green Tree, not the Law Firm
Defendants, who then allegedly failed to honor that agreement.
The remaining allegations in the complaint simply restate
the language of the statute, and the evidence submitted by the
Hagys on summary judgment gives this Court no reason to believe
that the Law Firm Defendants engaged in any conduct that would
violate §§1692d, 1692e (save subsection (11)), or 1692f.
No
reasonable person, not even the least sophisticated consumer,
would have any reason to believe the Law Firm Defendants acted in
violation of these sections.
See Miller v. Javitch, Block &
Rathbone, 561 F.3d 588, 592 (6th Cir. 2009)(describing least
sophisticated consumer standard).2
Thus, the Law Firm Defendants
are entitled to summary judgment on the Hagys’ claims under
§§1692d, 1692e (with the exception of subsection (11)), and
1692f.
B. Alleged Failure to Provide the Mandatory Notice
in Violation of §1692e(11)
The sole remaining FDCPA claim arises under 15 U.S.C.
§1692e, which states that “a debt collector may not use any
false, deceptive, or misleading representation or means in
connection with the collection of any debt.”
Examples of conduct
that violates §1692e are set forth in the statute and include
“the failure to disclose in subsequent communications that the
communication is from a debt collector . . . .”
§1692e(11).
15 U.S.C.
The Hagys argue that the Law Firm Defendants
violated §1692e(11) by sending the June 30 letter to their
attorney, James Sandy, without putting in the required disclosure
that the communication was from a debt collector.
2
Before the
See also this Court’s December 2011 Order on the motion to
dismiss for a detailed discussion of the least sophisticated
consumer standard. (Doc. #42 at 15-16).
8
Court can resolve this issue, it must first analyze whether
§1692e applies to the Law Firm Defendants and the June 30 letter.
1. Debt Collector
Section 1692e applies only to debt collectors.
Under 15
U.S.C. §1692a(6) a “debt collector” is “any person who uses any
instrumentality of interstate commerce or the mails in any
business the principal purpose of which is the collection of any
debts, or who regularly collects or attempts to collect, directly
or indirectly, debts owed or due or asserted to be owed or due
another . . . .”
The statute specifies that the term includes
those individuals who enforce security interests for purposes of
section 15 U.S.C. §1692f(6), a section the Hagys have not alleged
that the Law Firm Defendants violated.
The Court of Appeals has
held that, because the statute specifically mentions §1692f(6) in
relation to those enforcing security interests only, “an enforcer
of a security interest, such as a repossession agency, does not
meet the statutory definition of a debt collector under the
FDCPA” except for purposes of §1692f(6).
Montgomery v.
Huntington Bank, 346 F.3d 693, 700-701 (6th Cir. 2003).
Here, the Law Firm Defendants argue they are not debt
collectors under the statute because they simply enforce security
interests instead of collecting debts, based on the language
quoted above from Montgomery v. Huntington Bank, 346 F.3d 693
(6th Cir. 2003).
More specifically, the Law Firm Defendants
argue that, because they were enforcing a security interest
against the Hagys through foreclosure, they are exempt from the
definition of debt collector.
Some cases from this Circuit’s district courts have found
that seeking a deficiency judgment in a foreclosure action goes
beyond enforcing a security interest and constitutes debt
collection activity for purposes of the FDCPA.
See, e.g.,
Goodson v. Shapiro & Kirsch, L.L.P., No. 1:11-0031, 2012 U.S.
9
Dist. LEXIS 9739, at *7-8 (M.D. Tenn. Jan. 27, 2012) (finding it
significant for purposes of determining whether defendant was a
debt collector that plaintiff had alleged, among other things,
that the defendant went beyond enforcement of security interests
and threatened or filed deficiency judgments); see also Hunter v.
Washington Mut. Bank, No. 2:08-cv-069, 2010 U.S. Dist. LEXIS
59917, at *12 (E.D. Tenn. June 16, 2010)(finding a genuine issue
of material fact as to whether defendant was a debt collector
where plaintiff produced evidence that defendant engaged in,
among other things, deficiency judgments and suits on notes);
Stamper v. Wilson & Assoc., P.L.L.C., No. 3:09-cv-270, 2010 U.S.
Dist. LEXIS 31770, at *17 (E.D. Tenn. Mar. 31, 2010)
(distinguishing judicial foreclosures from non-judicial
foreclosures and noting that non-judicial foreclosures do not
involve deficiency judgments against the debtor and thus are not
debt collection activity). Other courts, however, have found that
mortgage foreclosure is not debt collection.
See, e.g., Rosado
v. Taylor, 324 F. Supp. 2d 917, 924 (N.D. Ind. 2004) (finding
that security enforcement activities, including those involving
real property, fall outside the scope of the FDCPA because they
are not debt collection practices).
To the extent that there
exists a conflict in the decisions, the Court of Appeals
clarified the issue recently in Glazer v. Chase Home Finance LLC,
__ F.3d __, 2013 WL 141699 (6th Cir. Jan. 14, 2013).
(Doc. #93,
Ex. 1).
In Glazer, the plaintiff brought suit against a mortgage
servicing company and the lawyers it hired to foreclose on
property that the plaintiff inherited.
Id. at *1.
Among the
allegations were that the defendants violated various provisions
of the FDCPA, all of which apply solely to “debt collectors” as
defined in the statute.
Id. at *2.
In finding that the
defendants were debt collectors, the Court reasoned:
10
[E]very mortgage foreclosure, judicial or otherwise, is
undertaken for the very purpose of obtaining payment on
the underlying debt, either by persuasion (i.e., forcing
a settlement) or compulsion (i.e., obtaining a judgment
of foreclosure, selling the home at auction, and applying
the proceeds from the sale to pay down the outstanding
debt). As one commentator has observed, the existence of
redemption rights and the potential for deficiency
judgments demonstrate that the purpose of foreclosure is
to obtain payment on the underlying home loan.
Such
remedies would not exist if foreclosure were not
undertaken for the purpose of obtaining payment.
Id. at *6 (emphasis in original).
Thus, Glazer holds that
mortgage foreclosure is debt collection under the FDCPA.
Id.
In Glazer, the court specifically rejected the position that
15 U.S.C. §1692f(6) is the only FDCPA provision applicable to
lawyers engaged in mortgage foreclosure on the grounds that those
individuals seek only to foreclose on a security interest, rather
than to collect a debt.
In doing so, the court stated that
§1692(f) applies “to those whose only role in the debt collection
process is enforcement of a security interest.”
Id. at *9
(emphasis in original) (quoting Wilson v. Draper & Goldberg,
P.L.L.C., 443 F.3d 373, 378 (4th Cir. 2006)).
The court found
that provision to be applicable to repossession agencies and
their agents, who typically enforce the security interest by
repossessing or disabling the property in the debtor’s absence.
Id.
Such was the case in Montgomery, the decision relied upon by
the Law Firm Defendants, where the defendant “was seeking
recovery of the BMW that was posted as collateral for the
personal loan” and the defendant “was simply acting as a
repossession agency when it seized his mother’s BMW.”
Montgomery, 346 F.3d at 701.
In contrast, lawyers engaged in
foreclosure proceedings necessarily communicate with the debtor
regarding the debt during the proceedings.
See Glazer, 2013 WL
141699, at *9.
Under the relevant law, the Law Firm Defendants have gone
11
beyond simply enforcing security interests and have sought to
collect debts.
Hence, there remains no question that the Law
Firm Defendants are debt collectors under the FDCPA.
If the Law
Firm Defendants engaged in these activities with enough frequency
to constitute regular debt collection activity under the statute,
they are considered debt collectors under the FDCPA.
In order to be covered by the FDCPA’s definition of “debt
collector,” the Law Firm Defendants must either have debt
collection as the principal purpose of their business or
regularly engage in debt collection. “[R]egularly” engaging in
debt collection activity under the FDCPA means having more than
“occasional” involvement.
1174 (6th Cir. 1999).
Schroyer v. Frankel, 197 F.3d 1170,
“[F]or a court to find that an attorney or
law firm ‘regularly’ collects debts for purposes of the FDCPA, a
plaintiff must show that the attorney or law firm collects debts
as a matter of course for its clients or for some clients, or
collects debts as a substantial, but not principal, part of his
or its general law practice.”
Id. at 1176. “Whether a party
‘regularly’ attempts to collect debts is determined by the volume
or frequency of its debt-collection activities.”
Stamper, 2010
U.S. Dist. LEXIS 31770 at 21; See also Derenick v. Cohn, No.
1:04-cv-11, 2004 U.S. Dist. LEXIS 25548, at *9-11 (E.D. Tenn.
Aug. 10, 2004)(finding a genuine issue of material fact as to
whether defendant was a debt collector within the meaning of the
FDCPA).
In order to identify whether an attorney is acting as a debt
collector, courts can look to the volume of the attorney’s
collection activities, the frequent use of a particular debt
collection document or letter, whether there exists a steady
relationship between the attorney and the collection agency or
creditor represented, what portion of the overall caseload debt
collection cases constitute, and what percentage of revenues are
12
attributable to debt collection activities.
F.3d at 1176.
See Schroyer, 197
Even where debt collection constitutes a minor
portion of a law practice, liability may still lie where the
defendant has a continuing relationship with a client who is
substantially involved in debt collection.
See id.
In Schroyer, the Court of Appeals found that the defendants
were not debt collectors where only a small percentage of the
their overall practice consisted of debt collection cases and one
of the firms did not employ individuals full-time for the purpose
of collecting debts.
The Schroyer plaintiffs failed to offer
evidence demonstrating that fees generated or collected from debt
collection activities constituted a great portion of the overall
revenues and failed to offer proof that defendants handled debt
collection cases as part of an ongoing relationship with a major
creditor or business client with substantial debts for
collection.
While the facts offered by the Schroyer plaintiffs
indicated that the defendants’ performance of debt collection
work was not unusual, it did not support a claim that defendants
were “in the business” of debt collection.
Id. at 1176-77.
Rather, the defendants’ debt collection activity was merely
incidental to their larger practice.
Id.
In this case, although the Law Firm Defendants have sworn
that they do not, on behalf of third parties, engage in consumer
collections, send letters requesting payments on consumer debts,
collect on a consumer debts, or attempt to collect deficiency
balances, they admit that the foreclosure action against the
Hagys, where a monetary judgment was sought in addition to
foreclosure, is a typical example of their practice.
Moreover,
the Hagys have produced evidence indicating that in several cases
filed in Tuscarawas, Franklin, and Coschocton Counties Mr. Demers
sought deficiency judgments in foreclosure cases.
84).
(Docs. ##75,
In addition, Mr. Demers admitted in his deposition that he
13
has represented Green Tree for 20 years, has finalized
approximately 50 deed in lieu agreements before June 8, 2010
pursuant to Green Tree’s “standing position,” and has filed at
least 100 foreclosures on its behalf.
(Doc. #69-1, pp. 46-47,
61).
Even without particular information concerning what
percentage of revenues the Law Firm Defendants derive from debt
collection activities, it appears from the undisputed evidence
that the Law Firm Defendants have been regularly engaged in debt
collection.
The record reflects that the Law Firm Defendants
have a long-standing relationship with Green Tree, a company that
presumably has many overdue accounts, and they negotiate deeds in
lieu on Green Tree’s behalf on a regular basis.
Based upon these
facts, the Court finds there is sufficient record evidence to
demonstrate that the Law Firm Defendants are regularly engaged in
debt collection activities and therefore are debt collectors
within the meaning of the FDCPA.
2. Made in Connection with a Debt
In the Order on the Law Firm Defendants’ motion to dismiss,
this Court determined that the June 30 letter was sent “in
connection with the collection of any debt” as required by §1692e
because the “animating purpose of the foreclosure action” and the
settlement discussions contained in the June 30 letter “was to
induce the Hagys to pay the Green Tree defendants, at least in
part, on the unpaid note.”
(Doc. #42 at 13-14).
The Court also
found that the June 30 letter was “part of a strategy to make
payment more likely.”
(Id.)
That is, the warranty deed in lieu
of foreclosure allowed the Law Firm Defendants to collect at
least part of the debt owed to Green Tree and settle the
foreclosure action.
(Id.)
In their motion for summary judgment, the Law Firm
Defendants again argue that the June 30 letter was not made in
14
connection with a debt, but they do not raise any new legal
arguments which would cause this Court to change the findings set
forth in the Order on the motion to dismiss.
Instead, the Law
Firm Defendants simply offer evidence that the Hagys’ attorney,
who received the letter, did not view it as an attempt to collect
a debt.
Such evidence, without legal reasoning, is not
sufficient to change this Court’s decision.
The Law Firm Defendants also point to the factors from
§1692g(a) that must be included in a debt collector’s initial
communication and argue that including such factors would have
rendered the June 30 letter nonsensical.3
According to its plain
language, §1692g relates to initial communications from debt
collectors.
See 15 U.S.C. §1692g.
As this Court has observed
previously, the June 30 letter was not the initial communication
from the Law Firm Defendants; rather, the June 8, 2010 letter
was.
However,15 U.S.C. §1692e(11) requires that in subsequent
communications made in connection with a debt, the debt collector
must disclose that the communication is from a debt collector.
This Court finds nothing nonsensical about including such
language in the June 30 letter.
Because this Court finds that the Law Firm Defendants are
debt collectors and that the June 30 communication was made in
connection with a debt, the Law Firm Defendants violated the
FDCPA by failing to include in the letter that the communication
was from a debt collector.
Thus, the Hagys’ motion for summary
judgment is granted on the claims related to §1692e(11).
3
In their reply brief, the Law Firm Defendants also make
the assertion that the June 30 letter was not in violation of the
FDCPA because the communication was to an attorney. (Doc. #80 at
2-3). The Court addressed this argument previously in its Order
on the motion to dismiss and found it to be without merit. (Doc.
#42 at 11). As such, the Court shall not revisit the issue here.
15
C. Alleged Violations of the OCSPA
The Court now turns to the Hagys’ OCSPA claims.
The Hagys
allege that the Law Firm Defendants knowingly committed unfair,
deceptive, and unconscionable acts and/or practices in violation
of O.R.C. §§1345.02 and/or 1345.03, and they are therefore
entitled to relief under O.R.C. §1345.09. (Amend. Compl., #18,
¶¶28-31).
Under O.R.C. §1345.02(A), “[n]o supplier shall commit an
unfair or deceptive act or practice in connection with a
consumer transaction.”
Section 1345.03, which pertains to
unconscionable acts or practices, provides that “[n]o supplier
shall commit an unconscionable act or practice in connection with
a consumer transaction.” O.R.C. §1345.03(A).
Both sections
indicate that such acts or practices violate the section “whether
[they] occur[] before, during, or after the transaction.”
O.R.C.
§§1345.02(A) and 1345.03(A).
In its Order on the motion to dismiss, this Court determined
that the Hagys adequately alleged that the Law Firm Defendants
are “suppliers” within the meaning of the OCSPA.
20).
(Doc. #42 at
As such, this Court need only consider whether they
committed “unfair or deceptive” or “unconscionable” acts or
practices in connection with the consumer transaction.
§§1345.02(A) and 1345.03(A).
O.R.C.
As the Court also noted in the
Order on the motion to dismiss, the OCSPA has a two-year statute
of limitations, allowing both the June 8 letter and the June 30
letter from the Law Firm to form the basis of the OCSPA
violation.
(Doc. #42 at 17).
The Hagys argue, inter alia, that a violation of the FDCPA
necessarily results in a violation of the OCSPA.
13).
(Doc. #83 at
In particular, the Hagys argue that the Law Firm
Defendants’ failure to disclose that they are debt collectors in
the June 30 letter violates both the FDCPA and the OCSPA.
16
Id.
As to the June 8 letter, the Hagys argue that the Law Firm
Defendants violated 15 U.S.C. §1692(e)(11) by failing to disclose
that they are debt collectors, and by failing to provide the
“mini-Miranda warning” that they are “attempting to collect a
debt and that any information obtained will be used for that
purpose.”
(Doc. #83 at 10).
The Hagys likewise allege that the
Law Firm Defendants violated §1692(g) of the FDCPA by failing to
provide them with what is known as the “civil Miranda” warning
within five days of the June 8 letter.4
(Id. at 11).
Courts have that a violation of the FDCPA also constitutes a
violation of the OCSPA.
See Becker v. Montgomery, Lynch, No.
Civ. A 1:02CV874, 2003 WL 23335929, at *2 (N.D. Ohio Feb. 26,
2003); see also Federal Home Loan Mortg. Corp. v. Lamar, 503 F.3d
504, 513 (6th Cir. 2007) (finding that absent a FDCPA violation,
there was nothing to sustain the alleged OCSPA claim). In Becker
v. Montgomery, Lynch, the court noted that the FDCPA and OCSPA
share the common purpose of prohibiting both unfair and deceptive
acts.
Id.
Accordingly, the Becker court held that “any
violation of any one of the enumerated sections of the FDCPA is
necessarily an unfair and deceptive act or practice in violation
of 2 R.C. § 1345.02 and/or § 1345.03.”
Id.
Although the Law Firm Defendants acknowledge that “various
violations of the FDCPA will also violate the OCSPA,” they argue
that the “overlapping language and purpose in the statutes” does
not result in “a wholesale incorporation of one statute into
another by judicial fiat.”
(Doc. #87 at 2).
It is true that a
violation of the FDCPA is not necessarily a violation of the
4
The “civil Miranda” warning in §1692(g) requires that,
within five days after the initial communication, the debt
collector send written notice to the consumer containing certain
information regarding the debt, including the amount of the debt,
the name of the creditor to whom the debt is owed, and how to
dispute the validity of the debt. See 15 U.S.C. §1692(g).
17
OCSPA in all cases.
See, e.g., Foster v. D.B.S. Collection
Agency, 463 F. Supp.2d 783, 810 n. 45 (S.D. Ohio 2006) (noting
that “Ohio courts have not spoken in unison on the issue of
federal regulatory statute incorporation”).
Courts in the Sixth
Circuit, however, generally have interpreted the OCSPA and the
FDCPA as prohibiting the same conduct.
See Munger v. Deutsche
Bank, No. 1:11-CV-00585, 2011 WL 2930907, at *20 (N.D. Ohio July
18, 2011) (“Although the types of transactions that the OCSPA and
the FDCPA regulate are not always co-extensive (the OCSPA is much
broader), courts in this Circuit have generally interpreted the
Ohio statute and the FDCPA as prohibiting the same acts”).
As set forth above, Defendants violated §1692e(11) of the
FDCPA by failing to include in June 30 letter that the
communication was from a debt collector.
Consistent with the
Becker decision, the Court finds that this FDCPA violation is
also an OCSPA violation.
Further, had the June 8 letter not been
barred by the one-year statute of limitations applicable to FDCPA
claims, this Court would have found that Law Firm Defendants’
conduct surrounding the letter also would have violated the
statute.
The June 8 letter was made “in connection with the
collection of any debt” as required by §1692e because the
“animating purpose of the foreclosure action” and the settlement
discussions contained in both the June 8 and June 30 letters “was
to induce the Hagys to pay the Green Tree defendants, at least in
part, on the unpaid note” and was “part of a strategy to make
payment more likely.”
(Doc. #42 at 13-14).
The Law Firm
Defendants do not dispute that the June 8 letter fails to
disclose that they are debt collectors and fails to contain the
mini-Miranda warning.
The Law Firm Defendants likewise do not
dispute that they failed to provide the Hagys with the “civil
Miranda” warning within five days of the June 8 letter.
18
In this case, the Hagys’ claims are based on the Law Firm
Defendants’ alleged failure to comply with consumer warning
provisions identical and similar to the provision at issue in
Becker.
The Law Firm Defendants’ failure to comply with those
provisions is at least unfair under the statute, giving rise to a
violation of §1345.02(A).
Because the OCSPA is a remedial
statute and should be given liberal construction and broad
application, see Foster v. D.B.S. Collection Agency, No. 01-CV514, 2008 WL 755082, at *10 (S.D. Ohio Mar. 20, 2008), the Court
finds that the Law Firm Defendants’ use of the letter and
subsequent failure to provide the civil Miranda warning violated
the OCSPA.
The fact that the June 8 letter is time barred under
the FDCPA does not alter this outcome.
For these reasons, the
Hagys’ motion for summary judgment is granted as to this claim.
D. The Hagys’ Motions to Continue Discovery and Summary Judgment
Deadlines (Docs. #59, #70) and Green Tree’s
Motion to Quash (Doc. #60)
The Hagys have filed motions asking this Court to extend
discovery deadlines and motion for summary judgment deadlines in
this case (Doc. ##59, 70) because they needed additional time to
resolve discovery disputes.
Specifically, they sought additional
information from the Law Firm Defendants and issued a subpoena to
Green Tree.
Green Tree has filed a motion to quash that subpoena
(Doc. #60).
This Court previously resolved the discovery dispute
concerning the Law Firm Defendants.
(Doc. #71).
As to the
Hagys’ request to seek additional information from Green Tree,
that request is denied.
The Hagys argue that the Law Firm
Defendants have produced an email communication demonstrating
that Green Tree told the Law Firm Defendants that the warranty
deed in lieu of foreclosure should include specific language
about Green Tree’s promise not to collect a deficiency.
Because
this language was not present in the deed in lieu, the Hagys
19
argue that additional discovery might reveal facts that would
demonstrate the Law Firm Defendants violated either §§1692d,
1692e, or 1692f by leaving the language out.
Even if discovery indeed revealed that the Law Firm
Defendants purposefully left out that language from the deed in
lieu, the Hagys have given this Court no reason to believe such
behavior would violate the Act.
It is undisputed that the Law
Firm Defendants told the Hagys that the deficiency balance would
be waived and did not misrepresent the facts.
The Law Firm
Defendants failure to include this term did not result in any
action the natural consequence of which is to harass or oppress
the Hagys, nor was the behavior unconscionable.
The record
reflects that the Law Firm Defendants adequately informed the
Hagys of the terms of the agreement as authorized by Green Tree.
The Hagys have given this Court no reason to believe that
additional discovery from Green Tree is likely to lead to the
discovery of admissible evidence.
As such, this Court sees no
reason to extend these deadlines or require Green Tree to appear
for additional discovery.
The motion to quash (Doc. #60) is
granted and the Hagys motions for extension of time are denied
(Docs. ##59, 70).
IV. Conclusion
For the reasons stated above, the Law Firm Defendants’
motion for summary judgment is granted in part and denied in part
(Doc. #65), the Hagys’ partial motion for summary judgment is
granted (Doc. #83), the Hagys’ motions to extend discovery
deadlines and motion for summary judgment deadlines (Doc. ##59,
20
70) are denied, and Green Tree’s motion to quash (Doc. #60) is
granted.
/s/ Terence P. Kemp
United States Magistrate Judge
21
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