Ozmun v. Portfolio Recovery Associates LLC et al

Filing 79

ORDER DENYING 69 Motion to Strike/More Definite Statement ; DENYING 64 Motion for Summary Judgment; GRANTING IN PART AND DENYING IN PART 36 Motion for Summary Judgment; GRANTING IN PART AND DENYING IN PART 62 Motion for Summary Judgment; DISMISSING 57 Motion for Extension of Time to File Response/Reply ; DISMISSING 58 Motion to Strike ; DISMISSING 59 Motion for Extension of Time to File; DISMISSING 65 Motion to Strike/More Definite Statement; DISMISSING 66 Motion to Withdraw ; DISMISSING 75 Motion for Leave to File. Signed by Judge Sam Sparks. (ml)

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

17

J

2L

pj

'

8

t1 THT COURT

HOT OF TEXAS

JOSEPH OZMUN,
Plaintiff,
Case No. A-16-CA-940-SS

-vs-

PORTFOLIO RECOVERY ASSOCIATES, LLC;
RAUSCH, STRUM, ISRAEL, ENERSON &

HORNIK LLC;

WESTERN

SURETY

COMPANY; and TRAVELERS CASUALTY
AND SURETY COMPANY OF AMERICA,
Defendants.

ORDER
BE IT REMEMBERED on the 6th day of June 2017, the Court held a hearing in the abovestyled cause and the parties appeared through counsel. Before the Court are Defendants Travelers

Casualty and Surety Company ofAmerica (Travelers) and Rausch, Sturm, Israel, Emerson, & Homik
LLC (RSIEH)'s Motion for Summary Judgment [#36], Plaintiff Joseph Ozmun (Plaintiff)'s

Response [#47] in opposition, and Travelers and RSIEH's Reply [#5 1] in support; Portfolio
Recovery Associates, LLC (PRA) and Western Surety Company (Western)'s Motion for Summary
Judgment [#62], Plaintiffs Response and Cross-Motion for Summary Judgment [#64], and PRA and

Western's Reply [#70]; and PRA and Western's Second Motion to Strike Response [#69], Plaintiffs
Response [#71] in opposition, and PRA and Western's Reply [#73] in support.' Having reviewed the

The parties also filed Plaintiff's Motion for Extension of Time to Respond to Defendants' Motion for
Summary Judgment [#57], Plaintiffs Motion to Strike Motion for Extension of Time [#58]; Plaintiffs Motion to
Postpone Ruling on Motion for Judgment [#59] and Defendants Travelers, RSIEH, PRA, and Western (collectively,
Defendants)' Response [#60] in opposition; PRA and Western's Motion to Strike Response [#65] and PRA and
Western's Motion to Withdraw Motion to Strike Response [#66]; as well as Plaintiffs Motion for Leave to File
Supplemental Authority [#75] and PRA and Western's Response [#76] in opposition. In light of the Court's rulings
below, the Court dismisses these motions.

documents, the arguments of counsel made at the hearing, 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 Plaintiffs outstanding credit card debt of

$2,065.21 (the Debt) after Plaintiff defaulted.

On March 20, 2015, PRA, represented by RSIEH, filed a petition against Plaintiff in Texas
state court to recover the Debt (Underlying Lawsuit). Compi. [#1-1] Ex. C (Pet.) at 1. The petition

listed the Debt balance as $2,065.21 and requested "[a]ctual damages in the amount of $2,065 .21."
Id. at 1, 3. Plaintiff was served with the petition in the Underlying Lawsuit. Sometime after being

served in the Underlying Lawsuit, Plaintiff paid $57.00 of his debt. PRA Mot. Summ. J. [#62] at 2;

Pl.'s Second Resp. [#64] at 3.
Subsequently, because Plaintiff failed to timely answer the Underlying Lawsuit and a majority
of the Debt was still outstanding, RSIEH filed a motion for default judgment on PRA's behalf on

November 5, 2015. The version of the motion for default judgment docketed with the state court
includes the motion for default judgment pleading as well as supporting documents. See P1.' s Second
Resp. [#64-6] Ex. E (Docketed Mot.). One such document is the affidavit of Meryl Dreano, the

custodian of records for PRA, indicating the Debt totaled $2,065.21 as of the date of the affidavit.
Id. (Dreano Aff.) at 10. The affidavit was signed January 14,2015. Id. No proposed default judgment

was included with motion for default judgment docketed in the state court. See id. Nevertheless, the

motion for default judgment pleading expressly asked the state court to "grant [PRA]'s Motion for

Default Judgment and award [PRA] the relief requested in [PRA] 's petition by signing and entering

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the attached proposed Default Judgment." Id. at 4. No specific amount was requested nor was the
balance of the Debt listed in PRA's pleading. See id. at 2-4. It is disputed whether PRA's motion for

default judgment was served on Plaintiff, but a default judgment was never entered in the Underlying
Lawsuit.
Following PRA's motion for default judgment, PRA received a letter listing Plaintiff as the
sender and dated May 31, 2016, 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.
Am. Compl. [#53-1] Ex. F (Debt Letter). On July 8, 2016, PRA informed a consumer reporting

agency of the Debt. PRA reported a balance of $2,008.21 on the Debt and did not indicate the Debt
was disputed.

Some months later, PRA moved for summary judgment in the Underlying Lawsuit. On March
29, 2017, the state court granted PRA's motion for summary judgment, issuing a judgment in "the

amount of $2008.21, which includes credit for payments already made totaling $57.00 as actual

damages.

II.

. .

." PRA Mot. Summ. J. [#62-1] App.(State Court Order) at

1.2

Procedural History
On August 3,2016, Plaintiff filed a complaint in this Court alleging violations of the Fair Debt

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

§

l692l692p, and the Texas I)ebt Collection Act

(TDCA), TEX. FIN. CODE § 392.001-404, against PRA, Western, RSIEH, and Travelers. Compl. [#1].

2Rather than separating documents into individual exhibits, PRA and Western simply grouped their supporting
documents into one cumbersome appendix. Thus, in referencing the Appendix, the Court includes an explanatory
parenthetical to indicate which documents it is discussing.

-3-

In particular, Plaintiff claims PRA and RSIEH (1) violated the FDCPA and TDCA by misrepresenting

the Debt balance and attempting to collect an extra $57.00 from Plaintiff in the Underlying Lawsuit

and (2) PRA violated the FDCPA and TDCA by failing to report the Debt was disputed. Am. Compl.
[#53] ¶1164-71. Western is the surety company for the bond PRA has on file with the Texas Secretary

of State; Travelers is the surety company for RSIEH's bond. Id.

¶IJ

9, 13.

On February 21, 2017, Travelers and RSIEH filed a joint motion for summary judgment.
RSIEH Mot. Summ. J. [#36]. Following two extensions, Plaintiff responded. Pl.'s First Resp. [#47].

Plaintiff also filed an amended complaint with the Court's permission.

See

Am. Compl. [#53].

Travelers and RSIEH submitted a reply in support of their motion for summary judgment, and shortly
thereafter the Court entered an order postponing ruling on the pending motion for summary judgment
to enable the parties to confer. Order of Apr. 12, 2017 [#56]. Giving the parties thirty days from the

entry of the order to parley, the Court noted it "expect[ed] a dismissal in this lawsuit

. . .

." Id.

Nevertheless, the parties were unable reach an agreement.
Following the expiration of the thirty-day period, PRA and Western filed a motion for
summary judgment on May 25, 2017. PRA Mot. Summ. J. [#62]. On June 6, 2017, the Court held a

hearing to gain perspective on the status of the issues. Subsequently, on June 8, 2017, Plaintiff filed
his response to the second motion for summary judgment in combination with a cross-motion for

summary judgment. Pl.'s Second Resp. [#64]. PRA and Western filed a motion to strike Plaintiff's

response, and in the alternative, motion for a more definite statement, as well as a reply in support of

their motion for summary judgment. Second Mot. Strike [#69]; PRA Reply [#70]. The pending
motions are now ripe for the Court's consideration.

Analysis
I.

Legal

StandardSummary 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

(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

-5-

supports his claim. Adams v. Travelers Indem. Co. of Conn., 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.

II.

Application
As an initial matter, the Court first considers PRA and Western's second motion to strike and,

in the alternative, motion for a more definite statement. See Second Mot. Strike [#69]. PRA and
Western argue the Court should strike Plaintiff's combined response and cross-motion for summary

judgment because the motion exceeded the page limit and Plaihtiff failed to file his dispositive motion
by May 25,

2017the deadline listed in the scheduling order. Id. Alternatively, PRA and Western

ask the Court to strike the portion of Plaintiff's response requesting summary judgment or require

Plaintiff to provide a more definite statement by filing separate motions. Id.
Plaintiff's response does not appear to exceed the page limit when taking into account items
such as the caption and signature block. See Local Rule CV-7(e)(3) ("These page limits are exclusive

of the caption, signature block, any certificate, and accompanying documents."). Additionally, while
Plaintiff's cross-motion for summary judgment was filed

shownthe

latefor which no good cause has been

Court nevertheless considers Plaintiff's summary judgment motion for its own

convenience. Granting Defendants' request to strike Plaintiffs motion for summary judgment at this

point would only delay the Court's summary judgment decision and prolong this lawsuit. Therefore,
the Court DEMES PRA and Western's second motion to strike and, in the alternative, motion for a
more definite statement.
The Court now turns to the merits of the cross-motions for summary judgment. As stated

above, Plaintiff alleges violations of the FDCPA and the TDCA. Travelers and RSIEH ask the Court
to grant summary judgment in their favor, arguing there was no misrepresentation as to the amount

of the Debt in the motion for default judgment and Plaintiff presented no basis for the joinder of
Travelers. Travelers and RSIEH also request their fees and costs based on Plaintiffs alleged bad faith

in bringing this suit. Additionally, PRA and Western request summaryjudgment, arguing PRA sought
the correct Debt amount in the motion for default judgment, Plaintiff does not have standing, Plaintiff

did not actually dispute his debt, and PRA is entitled to the bonajIde error defense. Finally, Plaintiff
claims he is entitled to summary judgment because his alleged violations of the FDCPA are

undisputed and no defense applies.
Because standing is a "core component" of the case-or-controversy requirement of Article III
and therefore essential to federal jurisdiction, the Court first examines Defendants' arguments Plaintiff
does not have standing to assert his federal or state law claims. See Lujan

v.

Defs.

of Wild! fe, 504

U.s. 555, 560 (1992).
A.

Standing for Federal Claims
Defendants argue Plaintiff cannot establish a concrete injury-in-fact sufficient to confer

standing. PRA Mot. Summ. J. [#62] at 7. 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).

-7-

"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) she 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.

Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81(2000); Consol. Cos., Inc.
R. R. Co., 499

F.3d 382, 385 (5th Cir. 2007); Fla. Dep 't of Ins.

v.

v.

v.

Union PacJlc

Chase Bank ofTex. Nat'! Ass 'n, 274

F.3d 924, 929 (5th Cir. 2001) (citing Lujan, 504 U.S. at 560-61). "The party invoking federal

jurisdiction bears the burden of establishing these elements." Lujan, 504 U.S. at 561.
The United States Supreme Court recently addressed standing in the context of an alleged

violation of a statutory right. Spokeo, Inc.

v.

Robins, 136 S. Ct. 1540, 1545-50 (2016). With regard

to concreteness, the Court reiterated that both tangible and intangible injuries can suffice. See id. at
1549. "In determining whether an intangible harm constitutes injury in fact, both history and the

judgment of Congress play important roles." Id. First, courts should consider "whether an alleged
intangible harm has a close relationship to a harm that has traditionally been regarded as providing
a basis for a lawsuit in English or American courts." Id. Second, Congress "may 'elevat[e] to the
status of legally cognizable injuries concrete, de facto injuries that were previously inadequate in

law. ." and "has the power to define injuries.
.

. .

that will give rise to a case or controversy where

none existed before." Id. (quoting Lujan, 504 U.S. at 578).

At the same time, the Court stated, "Article III standing requires a concrete injury even in the
context of a statutory violation," emphasizing "a bare procedural violation, divorced from any

-8-

concrete harm" would not satisfy the injury in fact requirement. Id. at 1543, 1549. The Court
emphasized that "[a] 'concrete' injury must be 'defacto'; that is, it must actually exist." Id. at 1548.
Sometimes, however, "the violation of a procedural right granted by statute can be sufficient.

constitute injury in fact.

. .

. .

to

." Id. at 1544. The Court offered two examples:

(1) "[A] group of voters' 'inability to obtain information' that Congress had decided to make
public is a sufficient injury. . ."; and
(2) "[T]wo advocacy organizations' failure to obtain information subject to disclosure under
the Federal Advisory Committee Act 'constitutes a sufficiently distinct injury' . . .
Id. at 1549-50 (internal citations omitted).

Recently, the Fifth Circuit applied Spokeo in a case where the plaintiff alleged the consumer-

debt collection agency failed to mark debts as "disputed" in violation of the FDCPA. See Sayles

v.

Advanced Recovery Sys., Inc., No. 16-60640, 2017 WL 2872343, at *1, 3 (5th Cir. July 6, 2017).
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 Recovery Assocs., LLC, 218 F. Supp. 3d 745, 749 (N.D. Ill.

2016) (quoting Spokeo, 136 S.Ct. at 1549)) (internal quotation marks omitted). 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 plaintiff's injury was concrete. Id.
Thus, the inquiry for this Court is whether the plaintiff suffered an actual harm from the

defendant's alleged wrongful conduct or there is "risk of real harm" sufficient to meet the
concreteness requirement. See Id. Defendants argue Plaintiff does not have standing for his FDCPA

claims because he cannot show a concrete injury in fact, conceding Plaintiff can meet the other

standing requirements. In conducting the standing inquiry here, the Court examines whether Plaintiff
established a concrete injury in fact for each of the federal claims he asserts irrespective of whether
he can succeed on the merits. See DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 352 (2006) (citing
Allen

v.

Wright, 468 U.S. 737, 752 (1984)) ("[O]ur standing cases confirm that a plaintiff must

demonstrate standing for each claim he seeks to press.").
i.

Alleged Misrepresentation in Motion for Default Judgment

The Court turns to Plaintiff's allegation PRA and RSIEH misrepresented the Debt balance and

attempted to collect an additional $57.00 in the state motion for default judgment. Plaintiff identifies
no actual harm suffered as a result of the alleged misrepresentation.3 Therefore, the inquiry becomes

whether the alleged statutory violation in this instance "creates the risk of real harm." See Sayles,
2017 WL 2872343, at *3

Here, Plaintiff alleges a violation of 15 U.S.C.

§

1692e, which provides:

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:

of

(2) The false representation
(A) the character, amount, or legal status of any debt;....

Although Plaintiff in this case fails to discuss how the violation of § 1 692e(2) creates a risk of real
harm, the Court nevertheless finds the alleged statutory violation exposes consumers to a real risk of

Particularly troublesome, Plaintiff neglects to even directly reference the alleged misrepresentation in
responding to Defendants' lack-of-standing argument. See Pl.'s Second Resp. [464] at 9 (only discussing standing for
the claim PRA failed to report the Debt as disputed).

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financial and legal harm.4 An inaccurate representation of the character, amount, or legal status of a
debt could have disastrous financial, legal, and reputational consequences for a consumer. Therefore,
the Court finds Plaintiff has a concrete injury and establishes standing for his allegation PRA and
RSIEH violated the FDCPA by misrepresenting the Debt amount.
ii.

Alleged Failure to Mark the Debt as Disputed

Defendants also contend Plaintiff does not have standing for his claim PRA failed to mark the
Debt as disputed in its communication with a consumer debt reporting agency. The Fifth Circuit's

recent holding in Sayles is instructive. Just as the failure to mark the debt as disputed exposed the

plaintiff in Sayles 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
Sayles, 2017 WL 2872343, at * 3. Therefore, Plaintiffs injury is concrete and he has standing to assert

this claim.
B.

Standing for State Claims
Defendants also argue Plaintiff lacks standing to assert claims under the TDCA. PRA Mot.

Summ [#62] at 9-10. Specifically, Defendants argue Plaintiff cannot prove he suffered any damages

for PRA's alleged failure to mark the Debt as dispute or failure to cease collection activity following
notice of the dispute. 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 ofthis chapter." TEx. FIN. CODE § 392.403(a). The
FDCPA was enacted in part to "eliminate abusive debt collection practices by debt collectors." 15 U.s.c.
1692(e). In this case, Plaintiff alleges only the motion for default judgment included a misrepresentation of the Debt
§
via a reference to the state court petition and via the attached affidavit, both of which listed the original Debt balance.
See Am. Compi. [#53] ¶f 29-3 2. A misrepresentation caused by indirect references to a debt balancewhere the direct
reference was inadvertently omitteddoes not seem to rise to the level of abusive debt practices. Although it is tempting
to find no standing for this claim because of Plaintiffs misuse of the protections granted by Coness, to do so would
prohibit other consumersthose justly entitled to validate rights granted by § 1692e(2)from establishing standing.

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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 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 '1 Ass 'n, 489

S.W.3d 485, 512 (Tex. App.Houston [1st Dist.] 2015, pet. denied) (citing ArthurAndersen & 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 argue he sustained any actual damages. See Pl.'s Second Resp. [#64] at
16-17. Plaintiff does not even claim he experienced mental anguish. Id. Instead, Plaintiff argues a
party can seek "injunctive relief against the [TDCA] violations

.

. .

." Id. at 17. Yet Plaintiff's

amended complaint does not request any such injunctive relief.5 See Am. Compi. [#53]. Thus, because

Plaintiff fails to show he suffered any actual damages and is not seeking injunctive relief, he has no
standing to assert claims under the TDCA. Therefore, the Court enters a take nothing judgment on

Plaintiff's TDCPA claims.
As Plaintiff's claims against Travelers and Western only stem from the bonds the insurance

companies issued on behalf ofRSIEH and PRA for liability under Texas law, a take nothing judgment
on Plaintiff's TDCA claims warrants a take nothing judgment against Travelers and Western. See TEx.

Plaintiff argues the request for "such other or further relief as the Court deems proper" in the amended
complaint shows he is seeking injunctive relief. Pl.'s Second Resp. [#64] at 17. The Court disagrees. Plaintiff makes no
other reference to injunctive relief in his amended complaint and makes no allegation of a continuing violation of the
TDCA. See Am. Compl. [#53]. The Court declines to find any injunctive relief was requested or would be proper in this
case.

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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.")
C.

Fact Issues Preclude Summary Judgment
RSIEH and PRA both argue they are entitled to summaiy judgment Plaintiffs FDCPA claims.

In particular, they claim there was no misrepresentation as to the amount of the Debt in the state

motion for default judgment. PRA also claims it accurately reported the Debt to the consumer debt
reporting agency because Plaintiff did not actually dispute the Debt. By contrast, in his motion for
summary judgment, Plaintiff argues his alleged violations of the FDCPA are undisputed. However,
for reasons discussed in detail below, factual issues remain precluding summary judgment on both
FDCPA claims.
i.

Alleged Misrepresentation in Motion for Default Judgment

The parties dispute whether the Debt was misrepresented in the motion for default judgment.
A representation is considered false

if"it would mislead the unsophisticated or least sophisticated

consumer." Meroney v. Pharia, L.L.C, 699 F. Supp. 2d 550, 552 (N.D. Tex. 2009) (citing Goswami
v. Am.

Collections Enter. Inc., 377 F.3d 488, 495 (5th Cir. 2004)); see also In re Eastman, 419 B.R.

711, 730 (Bankr. W.D. Tex. 2009) (applying the least sophisticated consumer standard to a lawsuit

where the Defendants improperly filed a motion for a default judgment). Although an unsophisticated

consumer is neither "shrewd nor experienced in dealing with creditors," he is not "tied to the very last
run on the [intelligence or] or sophistication ladder." Id. (internal quotation marks omitted) (alteration
in original). Furthermore, a communication is to be evaluated as a whole to determine if it violates

the FDCPA. See Gonzalez

v.

Kay, 577 F.3d 600, 607 (5th Cir. 2009); Peter

v.

GC Servs. L.P., 310

F.3d 344, 349 (5th Cir. 2002). And while generally whether a consumer would perceive a

-13-

communication as deceptive is a question of fact, when "reasonable minds" cannot differ as to
whether a communication is deceptive or misleading to an unsophisticated consumer, the court may
enter a decision as a matter of law.

See Gonzalez,

577 F.3d at 606-07.

Here, Plaintiff alleges the motion for default judgment misrepresented the balance of the Debt
because (1) it asked for the relief requested in the petition, which listed the Debt balance as

$2,0651.21; and (2) the Dreano affidavit, which indicated the Debt balance was $2,065.21 as of
January 14, 2015, was attached. Pl.'s First Resp. [#47] 7-8; Pl.'s Second Resp. [#64] at 11-12. It is

undisputed the motion for default judgment pleading itself makes no explicit reference to the balance

ofthe Debt. Instead, the pleading only asks the court to grant "the relief requested in [PRA' s] petition
by signing and entering the attached Default Judgment." Docketed Mot. at 4. It is also undisputed the

version of the motion for default judgment docketed in the state court did not include a proposed

default judgment.
RSIEH contends the version of the motion for default judgment version docketed by the state
court is not the full version of motion for default judgment it submitted. Comp. Docketed Mot. with

Travelers' Mot. Summ. J. [#36-14] Ex. C-i (Submitted Mot.). It claims the full version ofthe motion
submitted to the state court included the motion for default judgment, a cover letter to the clerk, and
two copies of a proposed default judgmentone of which was labeled for return to

RSIEHas well

as other supporting documents. See Submitted Mot. The proposed default judgment allegedly included

with the submitted motion requested "[j]udgment in the amount of $2008.21, which includes credit
for payments already made totaling $57.00.

. .

." Id.

However, deciding whether RSIEH submitted a version of the motion for default judgment

including a proposed default judgment requires the Court to make an impermissible credibility

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determination. See

Reeves, 530

U.S. at

150.

Furthermore, RSIEH does not explain why the docketed

version of the motion for default judgment did not include the proposed judgment or why the motion
for default judgment did not expressly reference the correct Debt balance.

Viewing the docketed filing as a whole, the Court finds reasonable minds could differ as to
whether the motion for default judgment was deceptive or misleading to an unsophisticated consumer.
An unsophisticated consumer might conclude RSIEH was trying to collect

$57.00

more than the

Debt's balance because the motion for default judgment did not feature an express reference to the
current balance of the Debt and incorporated material indicating the Debt amounted to
Consequently, a fact issues regarding the alleged misrepresentation

$2,065.21.

remains.6

Additionally, a fact issue remains on what version ofthe motion for default judgment Plaintiff

received or viewed. RSIEH contends the motion for default judgment was never served on Plaintiff
but was only sent to the state court. Castro Decl. at 3. If that were the case, Plaintiff would only have

viewed the motion for default judgment as docketed. By contrast, Plaintiff contends he was served
with the motion for default judgment. Am. Compi.

[#53]

¶IJ

26,

38, 40. If this

were true, Plaintiff

might have received a version of the motion for default judgment including the proposed judgment,

which specifically recognized Plaintiffs
seeking to collect the

$57.00,

$57.00

payment. If Plaintiff knew Defendants were not

it would be appropriate to find Plaintiff brought the claim of

misrepresentation in bad faith.

Additionally, a fact issue remains on what version of the motion for default judgment Plaintiff received or
viewed. RSIEH contends the motion for default judgment was never served on Plaintiff but was only sent to the state
court. Castro Decl. at 3. If that was the case, Plaintiff would only have viewed the motion for default judgment as
docketed. By contrast, Plaintiff contends he was served with the motion for default judgment. Am. Compl. [#53] ¶j 26,
38, 40. If this were true, Plaintiff might have received a version of the motion for default judgment including the
proposed judgment, which specifically recognized Plaintiff's $57.00 payment. If Plaintiff knew Defendants were not
seeking to collect the $57.00, it would be appropriate to find Plaintiff brought the claim ofmisrepresentation in bad faith.
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ii.

Alleged Failure to Mark the Debt as Disputed

PRA argues it is entitled to summary judgment because Plaintiff did not actually dispute the

Debt and PRA accurately reported the Debt to the consumer debt reporting agency. PRA cites

Plaintiff's deposition testimony where Plaintiff recognized PRA accurately reported the Debt balance
and confirmed the Debt balance was correct. PRA Mot. Summ. J. [#62] at 6. Instead, PRA argues

Plaintiff's attorneys fabricated the alleged dispute. PRA claims its evidence shows Plaintiff's
attorneys submitted multiple letters to PRA with the exact same language on behalf of several clients.
Compare Debt Letter with PRA Mot. Summ. J. [#62-1] App. at

2-3 (identical letters sent to PRA

from other debtors).
In response, Plaintiff claims PRA misrepresents his deposition testimony and Plaintiff did

indeed dispute the Debt. Pl.'s Second Resp. [#64] at 14-15. In particular, Plaintiff claims he did not

know what the balance was when he indicated he disputed the debt.

Id.7

Consequently, 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.
D.

Bona Fide Error Defense
Regardless of whether it actually violated the FDCPA, PRA claims it is entitled to the bona

JIde

error defense and summary judgment should therefore be granted in its favor. PRA Mot. Summ.

J. [#62] at 14-17.

7Additionafly, it is plausiblealthough perhaps unlikelythe Debt Letter is a form letter Plaintiff's attorneys
send to debt collectors when a client indicates a debt amount is incorrect.

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The FDCPA provides that "[a] debt collector may not be held liable.

. .

if the debt collector

shows by a preponderance ofevidence that the violation was not intentional and resulted from a bona
fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such

error." 15 U.S.C.

§

1692k(c). PRA argues it is entitled to the bonafide error defense because the

failure to mark the Debt as disputed was "an unintentional, bona fide error" and PRA maintains

policies and procedures to properly deal with disputed debts. PRA Mot. Summ. J. [#62] at 14-17.
In order for PRA to prevail on a bona JIde error defense, it must show the violation was (1)

unintentional, (2) a bona fide error, and (3) made despite reasonable precautions and practices to
avoid such errors. See

§

1

692k(c); see also Coleman

v.

Credit Mgmt., LP, No. 3:1 0-CV-23 1 2-M,

2011 WL 5248219, at *4 (N.D. Tex. Nov. 2, 2011).

PRA fails to show entitlement to the bona fide error defense. Specifically, PRA has not
shown it had reasonable precautions and practices in place to avoid errors such as misrepresenting
a debt amount and failing to mark a debt as disputed. To satisfy the third element of the bonajIde

error defense, a defendant must show it had specific procedures to avoid the type of error that
occurred. See Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573, 587 (2010).
Such procedures are "processes that have mechanical or other such 'regular orderly' steps to avoid

mistakes

. . .

." Id.

In its motion for summary judgment, PRA only offers conclusory statements it "has policies

and procedures in place to ensure that PRA properly deals with disputed debts." PRA Mot. Summ.
J. [#62] at 16. PRA explains it follows "protocol required by the FDCPA[,]" including verification

of the debt. Id. These conclusory statements provide no specific evidence of PRA's procedures.
Without more, the Court cannot conclude PRA employs regular, orderly steps to ensure disputed

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debts are so marked. Moreover, PRA fails to allege it has policies to prevent the specific mistake at
issue. PRA only asserts it has policies in place to ensure the amount it attempts "to collect from the

debtor is the correct amount." Id. [#62-1] App. at 4-6 (Affidavit from PRA's custodian of records).
PRA does not claim it has procedures to record when debts are disputed or to ensure such records
are consulted when communicating with a third party.

Because PRA has not proven by a preponderance of evidence it maintained procedures

reasonably adapted to report when debts are disputed, PRA has not established it is entitled to the
bona fide error defense as a matter of law. Whether PRA is eligible for the bonafide error defense

remains an issue for trial.

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

Plaintiff's TDCA claims for lack of standing. However, Plaintiff's FDCPA claims against PRA and
RSIEH survive Defendants' summary judgment motions. Because fact issues remain, Plaintiff's

motion for summary judgment is denied.
Following trial, sanctionsincluding attorneys fees and costswill be considered. This case
has the appearance ofbeing a lawsuit misusing the statutes involved, but this order simply recognizes

that fact issues remain under the law, as interpreted by others. The undersigned has a very heavy civil
docket of substantial cases, and there is now a time lapse between the answering of a complaint and
trial in excess of two years. The undersigned is charged with the responsibility ofjudgments 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.

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Accordingly,
IT IS ORDERED that PRA and Western's Second Motion to Strike Response [#69]
is DENTED;

IT IS FURTHER ORDERED that Plaintiff's Cross-Motion for Summary Judgment
[#64] is DENIED;

IT IS FURTHER ORDERED that Defendants Travelers and RSIEH's Motion for

Summary Judgment [#36] is GRANTED IN PART and DENTED IN PART as described in
this opinion;
IT IS FURTHER ORDERED that Defendants PRA and Western's Motion for
Summary Judgment [#62] is GRANTED IN PART and DENTED IN PART as described in

this opinion; and
IT IS FINALLY ORDERED that all other motions pending in this care are
DISMISSED.
SIGNED this the

f

day of July 2017.

SASPARK'
UNITED STATES DISTRICT JUDGE

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