Young et al v. Kelly & Bramwell Attorneys At Law et al
Filing
46
MEMORANDUM DECISION AND ORDER ON PENDING MOTIONS-denying as moot 43 Motion to Expedite; granting in part 27 Motion for Summary Judgment ; denying 28 Motion for Partial Summary Judgment; Motions terminated: 27 MOTION for Summary Judgment and Memorandum in Support filed by Jared Bramwell, Kelly & Bramwell Attorneys At Law, 28 Plaintiff's MOTION for Partial Summary Judgment and Memorandum in Support filed by Robert Young, Judy Young, 43 Plaintiff's MOTION to Expedite Motion to Vacate Scheduling Order and Memorandum in Support filed by Robert Young, Judy Young. See Order for details. Signed by Judge Ted Stewart on 6/18/19. (jmr)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
JUDY YOUNG and ROBERT YOUNG,
MEMORANDUM DECISION AND
ORDER ON PENDING MOTIONS
Plaintiffs,
v.
KELLY & BRAMWELL, P.C., JARED
BRAMWELL, and NATIONAL WOOD
PRODUCTS, INC.,
Case No. 1:17-CV-144 TS
District Judge Ted Stewart
Defendants.
This matter is before the Court on a Motion for Partial Summary Judgment filed by
Plaintiffs Judy and Robert Young, a Motion for Summary Judgment filed by Defendants Kelly &
Bramwell, P.C. and Jared Bramwell (collectively, “Defendants”), 1 and a Motion to Vacate
Deadlines and Vacate Scheduling Order. For the reasons discussed below, the Court will grant
Defendants’ Motion as to Plaintiffs’ claims under the Fair Debt Collection Practices Act
(“FDCPA”), decline to exercise jurisdiction over Plaintiffs’ state-law claims, and dismiss those
claims without prejudice.
I. BACKGROUND
Plaintiffs bring this action against Defendants as a result of Defendants’ effort to collect a
debt on behalf of National Wood Products, Inc. Plaintiffs assert claims under the FDCPA and
the Utah Consumer Sales Practices Act.
1
Defendant National Wood Products, Inc. was previously dismissed. See Docket No. 18.
1
II. SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate “if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” 2 In
considering whether a genuine dispute of material fact exists, the Court determines whether a
reasonable jury could return a verdict for the nonmoving party in the face of all the evidence
presented. 3 The Court is required to construe all facts and reasonable inferences in the light most
favorable to the nonmoving party. 4
III. DISCUSSION
A.
FDCPA
The FDCPA prohibits certain practices by debt collectors. The Act defines debt
collectors, in pertinent part, as “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.” 5 The term “debt” is defined as “any obligation or alleged obligation of a
consumer to pay money arising out of a transaction in which the money, property, insurance, or
services which are the subject of the transaction are primarily for personal, family, or household
purposes, whether or not such obligation has been reduced to judgment.” 6 The Act, by its plain
2
Fed. R. Civ. P. 56(a).
3
See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986); Clifton v. Craig, 924
F.2d 182, 183 (10th Cir. 1991).
4
See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986);
Wright v. Sw. Bell Tel. Co., 925 F.2d 1288, 1292 (10th Cir. 1991).
5
15 U.S.C. § 1692a(6).
6
Id. § 1692a(5).
2
language, distinguishes between consumer debts—debts that are primarily for personal, family,
or household purposes—and commercial or business debts. 7
“The FDCPA establishes two alternative predicates for ‘debt collector status’: 1)
engaging in debt collection as the ‘principal purpose’ of the entity’s business; or 2) engaging in
debt collection ‘regularly.’” 8 Plaintiffs bear the burden of proving Defendants’ debt collector
status. 9
There is no evidence that the principal purpose of Defendants’ business is debt collection.
Rather, the principal purpose of Defendants’ business is the practice of law, including
representing clients in various civil matters. 10 Thus, the Court must consider whether
Defendants regularly engage in debt collection.
The Tenth Circuit has identified a non-exhaustive list of factors a court “must consider in
determining whether an attorney or law firm ‘regularly’ engages in debt collection such as to
qualify as a ‘debt collector’ within the meaning of the FDCPA.” 11 These include:
(1) the absolute number of debt collection communications issued, and/or
collection-related litigation matters pursued, over the relevant period(s), (2) the
frequency of such communications and/or litigation activity, including whether
any patterns of such activity are discernible, (3) whether the entity has personnel
7
See First Gibraltar Bank, FSB v. Smith, 62 F.3d 133, 135–36 (5th Cir. 1995) (district
court properly dismissed guarantor’s FDCPA claims because guaranty was of debts arising out
of a commercial transaction); see also Goldman v. Cohen, 445 F.3d 152, 154 n.1 (2d Cir. 2006)
(“[A]ctions arising out of commercial debts are not covered by the protective provisions of the
FDCPA.”).
8
James v. Wadas, 724 F.3d 1312, 1316 (10th Cir. 2013) (quoting Goldstein v. Hutton,
Ingram, Yuzek, Gainen, Carroll & Bertolotti, 374 F.3d 56, 61 (2d Cir. 2004); 15 U.S.C. §
1692a(6)).
9
Goldstein, 374 F.3d at 60.
10
Docket No. 27-2 ¶ 5; see also Docket No. 32 Ex. P-18, at 12:11–23.
11
James, 724 F.3d at 1318.
3
specifically assigned to work on debt collection activity, (4) whether the entity
has systems or contractors in place to facilitate such activity, and (5) whether the
activity is undertaken in connection with ongoing client relationships with entities
that have retained the lawyer or firm to assist in the collection of outstanding
consumer debt obligations.
Facts relating to the role debt collection work plays in the practice as a whole
should also be considered to the extent they bear on the question of regularity of
debt collection activity (debt collection constituting 1% of the overall work or
revenues of a very large entity may, for instance, suggest regularity, whereas such
work constituting 1% of an individual lawyer’s practice might not). Whether the
law practice seeks debt collection business by marketing itself as having debt
collection expertise may also be an indicator of the regularity of collection as a
part of the practice. 12
Considering these factors, the Court concludes that Defendants are not debt collectors
under the FDCPA.
Defendants have identified a total of five debt collection cases during a five-year period
from February 2013 to February 2018. 13 This represents 0.56% of the total number of cases
Defendants handled during those years 14 and the amount earned from those cases equaled 0.22%
of Defendants’ total gross revenue for this time period. 15
Defendants also state that they have no personnel specifically assigned to work on debt
collection activity and have no systems or contractors in place to facilitate such activity. 16
Further, Defendants state that they do not have clients whose principal purpose involves debt
collection activities that are governed by the FDCPA and do not have any clients who regularly
12
Id. at 1317–18 (quoting Goldstein, 374 F.3d at 62–63).
13
Docket No. 27-2 ¶ 28; Docket No. 27-15 ¶ 28.
14
Docket No. 27-2 ¶ 28; Docket No. 27-15 ¶ 28.
15
Docket No. 27-2 ¶ 37; Docket No. 27-15 ¶ 37.
16
Docket No. 27-2 ¶¶ 7, 10; Docket No. 27-15 ¶¶ 7,10.
4
engage in collection activities governed by the FDCPA. 17 Further, the action taken here was the
first and, to date, only matter Defendants handled for National Wood Products, Inc. 18
This evidence fails to demonstrate that Defendants engage in debt collection with any
regularity. Rather, Defendants have handled a handful of debt collection cases over the past five
years, which made up half of one percent of the total cases and less than a quarter of one percent
of gross revenue during this time. 19 “Such debt collection activity is minimal.” 20 Further,
Defendants do “not have any system or personnel to assist with debt collection activity” 21 and do
not have clients who engage in collection activities governed by the FDCPA.
Plaintiffs argue that the Court cannot rely on the affidavits submitted by Defendants
because they are conclusory and lack evidentiary support. However, Rule 56(c) clearly allows
Defendants to submit and the Court to consider the affidavits. To the extent Plaintiffs argue that
it is impermissible to rely on these affidavits, they are incorrect. 22 Further, Defendants are “not
required to further substantiate [their] affidavit[s]—evidence the district court [is] entitled to
consider—with other evidence.” 23 As the moving party, it was Defendants’ burden to come
17
Docket No. 27-2 ¶¶ 8, 9; Docket No. 27-15 ¶¶ 8, 9.
18
Docket No. 27-2 ¶ 3; Docket No. 27-15 ¶ 3.
19
Even taking the higher number of cases identified in responding to Plaintiffs’
Interrogatory No. 2, the Court’s conclusion would remain the same.
20
James, 724 F.3d at 1319 (finding debt collection activity minimal where it made up
less than one percent of attorney’s total practice over the previous ten years).
21
Id. at 1319.
22
Id. (“To the extent James claims that it was impermissible for the district court to rely
on Wadas’s affidavit or her response to interrogatories, James is mistaken.”).
23
Id.
5
forward with evidence showing they did not regularly engage in debt collection. 24 As set forth
above, they did so.
Having done so, the burden shifts to Plaintiffs to demonstrate a genuine issue for trial.
Because Plaintiffs bear the burden of demonstrating Defendants status as a debt collector,
Plaintiffs are “required, in responding to [Defendants’] motion for summary judgment, ‘to make
a showing sufficient to support a determination that [Defendants were] . . . debt collector[s] at
the time of the challenged communication.’” 25 Plaintiffs have not done so. Plaintiffs primarily
rely on a statement from Defendants’ website, which states that Defendants provide debt
collection services. However, debt collection is just one of the practice areas listed on
Defendants’ website and does not answer the question as to the frequency Defendants engaged in
debt collection under the FDCPA. Moreover, nothing in these statements demonstrate that
Defendants market themselves “as having debt collection expertise,” one of the factors identified
by the Tenth Circuit 26 Additionally, the statement on Defendants’ website indicates that it
represents both creditors and debtors, not just creditors. 27 Plaintiffs’ attempt to use this general
statement about debt collection services to support the conclusion that Defendants regularly
engaged in debt collection activities is insufficient to survive summary judgment.
Plaintiffs point to other internet statements that similarly identify Defendants as
providing debt collection services. Again, these statements merely show that Defendant
Bramwell’s practice includes debt collection, but they do not demonstrate that Defendants
24
Id.
25
Id. (quoting Goldstein, 374 F.3d at 60–61).
26
Id. at 1318.
27
Docket No. 32 Ex. P-16, at 16.
6
regularly engage in debt collection. While the Avvo and People Background Check websites list
debt collection as being 20% of Defendant Bramwell’s practice, 28 it is unclear where this
information came from and it is not supported by the record. “Accordingly, the scant evidence
[Plaintiffs] submitted in opposition to summary judgment is insufficient to create a genuine issue
of material fact.” 29
B.
STATE-LAW CLAIM
The Court’s jurisdiction in this case is based on federal question, with supplemental
jurisdiction over Plaintiffs’ claim under the Utah Consumer Sales Practices Act. As set forth
above, Plaintiffs’ federal-law claim has been resolved in Defendants’ favor, leaving only this
claim under Utah law. The Tenth Circuit has suggested “[w]hen all federal claims have been
dismissed, the court may, and usually should, decline to exercise jurisdiction over any remaining
state claims.” 30 Having considered the relevant factors, 31 the Court will decline to exercise its
discretion over Plaintiffs’ remaining state-law claim and will dismiss it without prejudice.
28
Id. at 4–5.
29
James, 724 F.3d at 1320.
30
Koch v. City of Del City, 660 F.3d 1228, 1248 (10th Cir. 2011) (quoting Smith v. City
of Enid ex rel. Enid City Comm’n, 149 F.3d 1151, 1156 (10th Cir. 1998)); see also 28 U.S.C. §
1367(c)(3) (“The district courts may decline to exercise supplemental jurisdiction over a claim
under subsection (a) if . . . the district court has dismissed all claims over which it has original
jurisdiction.”).
31
Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 (1988) (“[A] federal court should
consider and weigh in each case, and at every stage of the litigation, the values of judicial
economy, convenience, fairness, and comity in order to decide whether to exercise jurisdiction
over a case brought in that court involving pendent state-law claims.”).
7
C.
ATTORNEY’S FEES
Defendants seek attorney’s fees under the FDCPA. The FDCPA provides: “On a finding
by the court that an action under this section was brought in bad faith and for the purpose of
harassment, the court may award to the defendant attorney’s fees reasonable in relation to the
work expended and costs.” 32 Having carefully considered the record in this case, the Court
cannot conclude that Plaintiffs brought this action in bad faith and for the purpose of harassment.
Therefore, the Court declines to award Defendants their attorney’s fees under the FDCPA. 33
IV. CONCLUSION
It is therefore
ORDERED that Defendants’ Motion for Summary Judgment (Docket No. 27) is
GRANTED IN PART as set forth above. It is further
ORDERED that Plaintiffs’ Motion for Partial Summary Judgment (Docket No. 28) is
DENIED. It is further
ORDERED that Plaintiffs’ Motion to Vacate Deadlines and Vacate Scheduling Order
(Docket No. 43) is DENIED AS MOOT.
DATED this 18th day of June, 2019.
BY THE COURT:
Ted Stewart
United States District Judge
32
15 U.S.C. § 1692k(a)(3).
33
To the extent Defendants may have the ability to seek attorney’s fees in relation to
Plaintiffs’ state-law claim, this Order should not be read as expressing an opinion on that issue.
8
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