Tejero v. Portfolio Recovery Associates, LLC et al

Filing 36

ORDER GRANTING IN PART AND DENYING IN PART 28 Motion for Summary Judgment; DENYING 31 Motion for Leave to File; DENYING 32 Motion for Reconsideration Signed by Judge Sam Sparks. (td)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION

17 JUL

27 PH

t:

37

CLERK.

LUIS TEJERO,

Plaintiff,
Case No. A-16-CA-767-SS

-vs-

PORTFOLIO RECOVERY ASSOCIATES, LLC
and WESTERN SURETY COMPANY,
Defendants.

ORDER
BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and

specifically Defendants Portfolio Recovery Associates, LLC (PRA) and Western Surety Company
(Western) (collectively, Defendants)' Motion for Summary Judgment [#28], Plaintiff Luis Tejero

(Plaintiff)'s Response [#29] in opposition, and Defendants' Reply [#30] in support; Plaintiff's
Motion for Leave to File Supplemental Authority [#31] and Defendants' Response [#33] in
opposition; and Plaintiff's Motion to Reconsider the Ruling Denying Summary Judgment [#32] and

Defendants' Response [#34] in opposition. Having reviewed the documents, the relevant law, and
the file as a whole, the Court now enters the following opinion and orders.

Background
I.

Factual History
This lawsuit concerns PRA's efforts to collect Plaintiff's outstanding credit card debt (the

Debt) after Plaintiff defaulted. Compl. [#1] ¶J 13-22.

On January 29, 2016, PRA received a faxed letter listing Plaintiff as the sender and stating

the following:
I

am writing to you regarding the account referenced above. I refuse to pay this debt.

/

My monthly expenses exceed my monthly income; as such there is no reason for you
to continue contacting me, and the amount you are reporting is not accurate either.
If my circumstances should change I will be in touch.'
Compi. [#1-1] Ex. B (Debt Letter). Sometime during March 2016, PRA informed a consumer

reporting agency of the Debt. PRA reported a balance of $2,211.00 on the Debt and did not indicate
the Debt was disputed.

II.

Procedural History
On June 24, 2016, Plaintiff filed a complaint in this Court alleging violations of the Fair Debt

Collection Practices Act (FDCPA), 15 U.S.C.
(TDCA), TEx.

FmT. CODE §

§

l692l692p, and the Texas Debt Collection Act

392.001-404, against PRA and Western. Compi. [#1]. In particular,

Plaintiff claims PRA violated the FDCPA and TDCA by failing to report the Debt was disputed.
Compl. [#1]

¶IJ

12-38. Western is the surety company for the bond PRA has on file with the Texas

Secretary of State. Id. ¶ 11.
On March 17, 2017, Plaintiff filed a motion for summary judgment. Pl.'s Mot. Summ. J.
[#18]. Following Defendants' response, the Court entered an order denying Plaintiff's motion. Order

of Apr. 6,2017 [#27] at 1-2. In particular, the Court denied summary judgment for the same reasons
the Court specified in its order "in Cause No. 1 6-CV-628, styled Nicholas Palomo v. Portfolio

Recovery Associates, LLC and Western Surety Company, issued on April 3, 2017.2 Id
Subsequently, Defendants filed a motion for summary judgment on May 24,2017, Defs. 'Mot.
Summ. J. [#28], which was fully briefed.

See

Pl.'s

Resp. [#29]; Defs.' Reply [#30]. Plaintiff then

'This letter is identical to letters allegedly submitted by other debtors in several other cases before this Court.
2

In Palomo, the Court denied the plaintiffs motion for summary judgment because "the alleged letter relied
on by the plaintiff Palomo in this case and its further consequences establishes a factual issue that should be determined
by the fact finder." Order, Palomo v. Portfolio Recovery Associates, LLC, No. 1:1 6-cv-00628 (W.D. Tex. Apr. 3, 2017),
ECF No. 26 (Palomo Order). The Court also observed the Palomo case was "a minor case featuring only the aspiration
of attorney's fees. . . filed by counsel who has multiple similar cases for a party that has no damages. . . ." Id.

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filed a motion for leave to file supplemental authority as well as a motion for reconsideration of the

Court's denial of his motion for summary judgment. Pl.'s Mot. Leave [#3 1]; Pl.'s Mot. Recons.
[#32]. The pending motions are now ripe for the Court's consideration.

Analysis
I.

Legal Standards

A.

Summary Judgment
Summary judgment shall be rendered when the pleadings, the discovery and disclosure

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

that the moving party is entitled to judgment as a matter of law.
v.

FED. R. Civ. P.

56(a); Celotex Corp.

Catrett, 477 U.S. 317, 323-25 (1986); Washburn v. Harvey, 504 F.3d 505, 508 (5th Cir. 2007).

A dispute regarding a material fact is "genuine" if the evidence is such that a reasonable jury could

return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,248
(1986). When ruling on a motion for summary judgment, the court is required to view all inferences

drawn from the factual record in the light most favorable to the nonmoving party. Matsushita Elec.
Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986); Washburn, 504 F.3d at 508. Further, a court

"may not make credibility determinations or weigh the evidence" in ruling on a motion for summary
judgment. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150(2000); Anderson, 477 U.S.
at 254-5 5.
Once the moving party makes an initial showing that there is no evidence to support the

nonmoving party's case, the party opposing the motion must come forward with competent summary
judgment evidence of the existence of a genuine fact issue. Matsushita, 475 U.S. at 586. Mere
conclusory allegations are not competent summary judgment evidence, and thus are insufficient to

defeat a motion for summary judgment. Turner

v.

Baylor Richardson Med. Ctr., 476 F.3d 337, 343

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(5th Cir. 2007). Unsubstantiated assertions, improbable inferences, and unsupported speculation are

not competent summary judgment evidence. Id. The party opposing summary judgment is required
to identify specific evidence in the record and to articulate the precise manner in which that evidence

supports his claim. Adams v. Travelers Indem. Co. ofConn., 465 F.3d 156, 164 (5th Cir. 2006). Rule
56 does not impose a duty on the court to "sift through the record in search of evidence" to support

the nonmovant's opposition to the motion for summary judgment. Id

"Only disputes over facts that might affect the outcome of the suit under the governing laws
will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248. Disputed fact

issues that are "irrelevant and unnecessary" will not be considered by a court in ruling on a summary

judgment motion. Id If the nonmoving party fails to make a showing sufficient to establish the
existence of an element essential to its case and on which it will bear the burden of proof at trial,
summary judgment must be granted. Celotex, 477 U.S. at 322-23.
B.

Reconsideration
The Court construes Plaintiffs motion for reconsideration as a Rule 54(b) motion because

it asks the Court to reconsider its denial ofPlaintiff's motion for summary judgment. See FED. R. Civ.
P. 54(b) (giving a district court discretion to "revise{J at any time before the entry of a judgment"

"any order or other decision, however designated, that adjudicates fewer than all the claims or the
rights and liabilities of fewer than all the parties"). Although a district court's discretion to reconsider
its orders is broad, "it is exercised rarely to avoid the perpetual reexamination of orders and the

resulting burdens and delays." Iturralde v. Shaw Grp., Inc., No. CIV.A. 05-330, 2012 WL 1565356,
at *3 (M.D. La. May 1, 2012) (citations omitted), aff'd, 512 F. App'x 430 (5th Cir. 2013).

"Although the precise standard for evaluating a motion to reconsider under Rule 54(b) is
unclear, whether to grant such a motion rests within the discretion of the court.. . [a]nd the standard

would appear to be less exacting than that imposed by Rules 59 and 60." Cantwell Family Tr. (1998)
& Cantwell Holdings, Ltd. v. Hyten, No.

A-i 5-CA-4 1 4-SS, 2016 WL 1610610 at *2 (W.D. Tex. Apr.

20, 2016) (citing Dos Santos v. Bell Helicopter Textron, Inc. Dist., 651 F. Supp. 2d 550, 553 (N.D.
Tex. 2009)). In examining a Rule 54(b) motion to reconsider, however, "considerations similar to

those under Rules 59 and 60 inform the Court's analysis." Id. In particular, a Court considers
"whether the movant is attempting to rehash its previously made arguments or is attempting to raise
an argument for the first time without justification

. . .

." Dos Santos

,

651 F. Supp. 2d at 553

(citations omitted).

II.

Application
As an initial matter, the Court first considers Plaintiff's motion for leave to file supplemental

authority. See P1.'s Mot. Leave [#3 1]. Plaintiff seeks leave to draw the Court's attention to Sayles
v.

Advanced Recovery Sys., Inc., No. 16-60640, 2017 WL 2872343 (5th Cir. July 6,2017). See id.

However, the Court is very familiar with Sayles and has even cited it in one of the many cases filed
by Plaintiff's attorneys. See Ozmun v. Portfolio Recovery Associates, No. A-16-CA-940-SS (W.D.
Tex. July 24, 2017) [#79] (quoting Sayles, 2017 WL 2872343, *3). The Court therefore DENIES

Plaintiff's motion for leave to file supplemental authority. The Court now turns to the merits of
Defendants' motion for summary judgment followed by Plaintiff's motion for reconsideration.

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Defendants' Motion for Summary Judgment

A.

As stated above, Plaintiff alleges violation of the FDCPA and the TDCA. Defendants ask the

Court to grant summary judgment in their favor, arguing Plaintiff has no standing for claims under
either statute.
i.

Standing for FDCPA claim

Defendants argue Plaintiff cannot establish a concrete injury-in-fact sufficient to confer
federal standing. Defs.' Mot. Summ. J. [#28] at 3-6. Article III of the Constitution limits the

jurisdiction of federal courts to cases and controversies. US. Parole Comm 'n v. Geraghty, 445 U.s.
388, 395 (1980). "One element of the case-or-controversy requirement is that [plaintiffs], based on

their complaint, must establish that they have standing to sue." Raines

v.

Byrd, 521 U.S. 811, 818

(1997). To meet the standing requirement a plaintiff must show (1) he has suffered an "injury in fact"

that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2)
the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed

to merely speculative, that the injury will be redressed by a favorable decision. Friends of the Earth,
Inc.

v.

Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-8 1 (2000); Consol. Cos., Inc.

Pacflc R.R. Co., 499 F.3d 382, 385 (5th Cir. 2007); Fla. Dep't of Ins.
Ass 'ii, 274 F.3d 924, 929 (5th Cir. 2001) (citing Lujan v. Defs.

v.

v.

Union

Chase Bank of Tex. Nat'l

of Wildlife, 504 U.S. 555, 560-61

(1992)). "The party invoking federal jurisdiction bears the burden of establishing these elements."

Lujan, 504 U.S. at 561.
As alluded to above, the Fifth Circuit recently examined standing in a case where the plaintiff
alleged the debt collector failed to mark debts as "disputed" in violation of the FDCPA. See Sayles,
2017 WL 2872343, at * 1,

3

(citing Spokeo, Inc.

v.

Robins, 136 5. Ct. 1540, 1545SO (2016)). There,

the Fifth Circuit affirmed the district court's holding that the plaintiff satisfied all elements of
standing. Id. at *3 In particular, the Fifth Circuit noted the violation of a procedural right granted

by statute can be sufficient to constitute injury in fact "where a statutory violation creates the risk of
real harm." Id. (quoting Bowse v. Portfolio RecoveryAssocs., LLC, 218 F. Supp. 3d 745, 749 (N.D.
Iii. 2016) (quoting Spokeo, 136 S.Ct. at 1549)) (internal quotation marks omitted). The Fifth Circuit

concluded the failure to mark a debt as disputed "exposed [plaintiff] to a real risk of financial harm
caused by an inaccurate credit rating." Id. (citations omitted). Therefore, the Fifth Circuit held the
district court did not err in finding the plaintiffs injury was concrete. Id.
The Fifth Circuit's recent holding in Sayles is instructive in this case. Just as the failure to

mark the debt as disputed exposed the plaintiff in Say/es to a real risk of financial harm caused by
inaccurate credit rating, here too the alleged failure to mark the Debt as disputed exposed Plaintiff
to a real risk of financial harm. See Say/es, 2017 WL 2872343, at *3 Therefore, Plaintiffs injury is

concrete and he has standing to assert his claim under the FDCPA.
ii.

Standing for TDCA claim

Defendants also argue Plaintiff lacks standing to assert a claim under the TDCA. Defs.' Mot.
Summ. J. [#28] at 6-7. Specifically, Defendants argue Plaintiff cannot prove he suffered damages

caused by PRA's alleged failure to mark the Debt as disputed. Id.

For a cause of action under the TDCA, a party may sue for either injunctive relief or "for
actual damages sustained as a result of a violation of this chapter." TEx. FIN. CODE §

392.403(a).3

The Texas Supreme Court has not defined the scope of § 392.403(a), but "the rule suggested by
[Texas] cases and supported by a plain reading of the statutory text is that persons who have

Plaintiff makes no argument he is seeking injunctive relief so the Court does not consider this ground for
TDCA standing. See Resp. [#29].

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sustained actual damages from a TDCA violation have standing to sue." McCaig v.

Wells

Fargo

Bank (Tex.), NA., 788 F.3d 463,473 (5th Cir. 2015) (citing § 382.403(a)). Actual damages are those

damages recoverable under common law, such as direct or consequential damages. Alanis v. US Bank

Nat 'lAss 'n, 489 S.W.3d 485, 512 (Tex. App.Houston [1st Dist.] 2015, pet. denied) (citingArthur
Andersen

& Co.

v.

Perry Equip. Corp., 945 S.W.2d 812, 816 (Tex. 1997)). Under Texas law, mental

anguish is a form of actual damages. McCaig, 788 F.3d at 473 (citation omitted).

Plaintiff does not directly respond to Defendants' argument he cannot show actual damages
to support a cause of action under the TDCA.

See

P1.'s Resp. [#29]. However, in responding to

Defendants' claim Plaintiff lacked standing under the FDCPA, Plaintiff asserts "he has been upset
and worried for over a year about his credit score and the debt's impact." Id. at 9. Plaintiff relies on

his declaration, in which claims he checked his credit score in March 2016 and his anxiety stems
from "both the debt and PRA's failure to mark the debt as disputed." Id. [#29-2] (Pl.'s Deci.) ¶ 12.
By contrast, Defendants cite Plaintiff's deposition testimony to show Plaintiff suffered

general anxiety from being in debt rather than from PRA's failure to mark the Debt as disputed:
Q.
A.

And so what did PRA actually do to cause you anxiety?
The calls and the debt is getting bigger

Defs.' Mot. Summ. J. [#28] at 6-7 (quoting Pl.'s Dep. at 40:12-1 4). Moreover, Defendants quote

Plaintiff's deposition testimony where he admitted he only checked his credit score in January 2016,
before PRA allegedly failed to report the Debt as disputed to the consumer debt reporting agency.
Id. at 4 (quoting Pl.'s Dep. at 26:24-27:1, 27:6-27:8). Plaintiff does not address the contradictions

between his declaration and his deposition testimony.

See

Pl.'s

Resp. [#29].

In light of those contradictions, Defendants argue Plaintiff's declaration should be

disregarded under the "sham affidavit" doctrine. Defs.' Reply [#30] at 4-5. The Court agrees. "A
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motion for summary judgment cannot be defeated 'by submitting an affidavit which directly
contradicts, without explanation, [an affiant's] previous testimony." GBP Partners, Ltd. v. Md. Cas.
Co., 505 F. App'x 389, 391 (5th Cir. 2013) (quoting Powell v. Dallas Morning News, L.P., 776 F.

Supp. 2d 240,246-47 (N.D. Tex.20 11)). "Courts have consistently disregarded such sham affidavits
as nothing more than an attempt to manufacture a disputed material fact where none exists." Powell,

776 F. Supp. 2d at 247 (quotation marks and citation omitted). Thus, the Court sustains Defendants'

objections and disregards Plaintiffs declaration where it contradicts his previous testimony. See id.

Consequently, Plaintiff identifies no competent summary evidence to support his claim he
suffered actual damages caused by PRA' s alleged failure to mark the Debt as disputed. Because

Plaintiff fails to show he suffered any actual damages, he has no standing to assert a claim under the
TDCA. Therefore, the Court grants Defendants' motion for summary judgment on Plaintiffs TDCA
claim.
As Plaintiffs claim against Western only stems from the bond the insurance company issued

on behalfofPRA for liability under Texas law, the Court also grants summary judgment in Western's
favor. See TEX.

FIN.

CODE

§

392.102 ("A person who claims against a bond for a violation of this

chapter may maintain an action against the third-party debt collector or credit bureau and against the
surety.").
B.

Plaintiff's Motion for Reconsideration
Plaintiff asks this Court to reconsider its denial of Plaintiffs motion for summary judgment

in light of the recent Sayles decision. See Pl.'s Mot. Recons. [#32]. Specifically, Plaintiff requests

reconsideration because "Sayles clearly confirms that Plaintiff has Article III standing." Id. at 5. But
the Court did not deny Plaintiffs motion for summary judgment on standing grounds. Order of Apr.

6,2017 [#27] at 1-2. Instead, the Court denied summary judgment for the same reasons it denied the
plaintiff's motion for summary judgment in Palomo, namely "the alleged letter relied on by the

plaintiff.

. .

establishes a factual issue that should be determined by the fact finder." Id.; Palomo

Order.

Nothing in Plaintiffs motion for reconsideration suggests the Court erred in denying his
summary judgment motion. In his summary judgment motion, Plaintiff argued the Debt letter

"constituted a dispute because it 'called into question' [

br 'evinced the intention to dispute' the

alleged debt. P1.' s Mot. Summ. J. [#18] at 11. On the other hand, PRA argued it accurately reported
the Debt to the consumer debt reporting agency because Plaintiff did not actually dispute the Debt.

Defs.' Resp. P1.'s Mot. Summ. J. [#20] at 13-15. PRA insinuated that Plaintiff's attorneys fabricated
the alleged dispute and provided evidence Plaintiffs attorneys submitted multiple letters to PRA with
the exact same language on behalf of several clients. Compare Debt Letter with Defs.' Resp. [#20-3,
4, 5] Ex. C, D, E (identical letters sent to PRA from other debtors such as the plaintiff in Palomo).

Consequently, there is no indication the Court erred in concluding a fact issue exists on
whether Plaintiff actually disputed the Debt when the Debt letter was sent to PRA. Evidence that

Plaintiffs' attorneys are involved in a scheme to force settlements from debt collectors by abusing
the FDCPA may well be relevant for this issue and provide support for

sanctions.4

The Court

therefore DENIES Plaintiffs motion for reconsideration.

Conclusion
As explained in this order, the Court grants Defendants' motion for summary judgment on

Plaintiffs TDCA claim for lack of standing. However, Plaintiffs FDCPA claim against PRA

Whether PRA is eligible for the bonafide error defense is an additional fact issue remaining for trial.
Defs.' Resp. Pl.'s Mot. Summ. J. [#20] at 18-19.

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See

survives. Additionally, because fact issues remain, Plaintiff's motion for reconsideration of the

Court's denial of his summary judgment motion is denied.
Following trial, sanctionsincluding attorneys fees and costswill be considered. This case
has the appearance of being a lawsuit misusing the statutes involved. The undersigned is charged
with the responsibility of judgments based on factual determinations including alleged damages,
costs, and attorneys' fees. Those decisions will be guided by the apparent lack of good faith in this
case.

Accordingly,
IT IS ORDERED that Plaintiff Luis Tejero's Motion for Leave to File Supplemental

Authority [#311 is DENIED;
IT IS FURTHER ORDERED that Defendants PRA and Western's Motion for

Summary Judgment [#281 is GRANTED IN PART and DENIED IN PART as described in

this opinion; and
IT IS FINALLY ORDERED that Plaintiff Luis Tejero's Motion to Reconsider the

Ruling Denying Summary Judgment [#321 is DENIED.
"-

SIGNED this the

2 7 day of July 2017.

SAM SPARKS
UNITED STATES DISTRICT JUDGE

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