MEMORANDUM OF DECISION AND ORDER

STEPHEN McNAMEE, Chief Judge, District

Pending before the Court is Plaintiff's Motion for Partial Summary Judgment and Defendants' Cross Motion for Partial Summary Judgment. After considering the arguments raised by parties in their briefing and during oral argument, the Court now issues the following rulings.

BACKGROUND

The following facts are not in dispute. Plaintiff entered into a written residential lease agreement with Woodbridge Apartments (hereafter Woodbridge) on February 1, 2002. (See Pl.[`s] Ex. A). The lease contains a provision which says that "to enforce this Agreement, the prevailing party may recover reasonable attorney's fees and other normal and customary costs of collection including but not limited to collection agency fees and court costs." Id. at 4. Plaintiff also signed an early lease termination agreement on February 1, 2002, along with the written lease agreement, that contains a similar provision as to charges for debt collection, and limits those charges to "up to 50%" in a parenthetical. Id. at 5. Plaintiff defaulted on the rent obligation, and Woodbridge obtained a judgment against Plaintiff in the amount of $747.09 on April 25, 2002. (See Defs.['] Ex. 1). Woodbridge Apartments assigned the Plaintiff's delinquent account to Diem Corporation, "Diem" an Arizona Corporation engaged in the business of collecting debts in Arizona. Debra Dencek "Ms. Dencek" is an officer and an employee of Diem, and has participated in the attempts to collect Plaintiff's outstanding debt. Ms. Dencek's participation includes communicating with Plaintiff through the mails, and verifying Plaintiffs debt. Defendants' Response to Plaintiff's Motion for Partial Summary Judgment refers to both Diem and Dencek collectively as "Defendants."

On February 7, 2003, Plaintiff attempted to make a purchase and was denied credit due to a notation made on her consumer report by Diem, representing a debt in the amount of $2,619.00. (See Pl.['s] Ex. C). Plaintiff mailed a written notice of dispute to Diem dated February 11, 2003. (See Pl. ['s] Ex. D). However, Plaintiff's consumer report was not amended to indicate the disputed status of the debt. Plaintiff subsequently mailed a letter asking for verification of the debt from Diem. Ms. Dencek, using the name "Debra James," mailed a reply letter dated March 18, 2003 to the Plaintiff on behalf of Diem. The letter stated that "all of the information that Diem is required by law to send you is contained in our first notice which was sent to you on June 25, 2002." (See Pl. ['s] Ex. E). No verification of Plaintiff's debt was attached to the March 18, 2003 letter.

On April 7, 2003, Plaintiff mailed another letter demanding verification of the debt and informing Diem of Plaintiff's representation by counsel. Ms. Dencek mailed a reply letter on behalf of Diem dated April 17, 2003, and attached a copy of the eviction judgment awarded to Woodbridge Apartments, and a copy of Diem's Statement of Deposit Account. (See Pl. ['s] Ex. G).

After listing a credit to Plaintiff's account for a Security Deposit of $125.00, the Statement of Deposit Account itemized Plaintiff's debt as follows:

Rent owed $587.79;

Late Charges $122.16;

Lease Break Fee/Buy Out $1,000;

Attorney Fees/Court Costs $183.00;

Cleaning/Damages $61.00;

Rental Concession (Keys) $25.00;

Administrative fee $30.00;

Collection Fee (35%) $672.04.

The statement reflected that the total balance due was $2,592.16. Id. The judgment awarded to Woodbridge by the Justice of the Peace was $747.09.

STANDARD OF REVIEW

A court must grant summary judgment if the pleadings and supporting documents, viewed in the light most favorable to the nonmoving party, "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Jesinger v. Nevada Federal Credit Union, 24 F.3d 1127, 1130 (9th Cir. 1994). Substantive law determines which facts are material. See Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986); see also Jesinger, 24 F.3d at 1130. "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248. The dispute must also be genuine, that is, the evidence must be "such that a reasonable jury could return a verdict for the nonmoving party." Id.; see Jesinger, 24 F.3d at 1130.

A principal purpose of summary judgment is "to isolate and dispose of factually unsupported claims." Celotex, 477 U.S. at 323-24. Summary judgment is appropriate against a party who "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322; see Citadel Holding Corp. v. Roven, 26 F.3d 960, 964 (9th Cir. 1994). The moving party need not disprove matters on which the opponent has the burden of proof at trial. See Celotex, 477 U.S. at 317. The party opposing summary judgment "may not rest upon the mere allegations or denials of [the party's] pleadings, but . . . must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e); see Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 585-88 (1986); Brinson v. Linda Rose Joint Venture, 53 F.3d 1044, 1049 (9th Cir. 1995).

DISCUSSION

I. Plaintiff's Motion for Partial Summary Judgment

Plaintiff filed a motion for partial summary judgment on her claims arising under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 (hereafter "FDCPA") in regards to Defendants' attempts to collect a disputed debt from Plaintiff. Right and jurisdiction to bring this action in this Court arises under 15 U.S.C. § 1692k(a) (allowing an individual to sue for damages), and § 1692k(d) (granting jurisdiction to the district courts on claims arising under this section).

a. Failure to Communicate "Disputed" Status of Plaintiff's debt

Plaintiff first alleges that although she had notified Diem that she disputes the amount of the debt as listed on Plaintiff's consumer report, Diem has not amended the report so as to show the disputed status thereof. Defendants argue that their conduct in regards to Plaintiff's debt was within industry standards at all times.

Section 1692e of the FDCPA states that debt collectors "may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C.A. § 1692e (2004). Subsection 1692e(8) goes on to list "[c]ommunicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed," as an example of conduct in violation of this section. 15 U.S.C.A. § 1692e(8) (2004).

The FDCPA specifically addresses the claims alleged by Plaintiff. Defendants' actions, alleged and not disputed, are violations of the FDCPA. This is true regardless of whether or not they fall within industry standards and practice. The FDCPA sets the minimum standards that are to be observed by the debt collection industry in regards to its conduct toward the consumer. Thus, practicing within industry standards is not a defense to the FDCPA. Because Defendants have not disputed the allegation that they had failed to communicate the disputed status of Plaintiff's debt to the consumer reporting agency, the court will find that no genuine issue of material fact exists with regards to this claim and will grant summary judgment for Plaintiff.

b. Failure to Provide a copy of debt Verification upon Plaintiff's Demand

Plaintiff also alleges that Defendants did not comply with the FDCPA by failing to provide a copy of the verification of the debt upon request. Plaintiff has argued that the March 18, 2003 letter was a refusal on the part of Defendants to provide verification of the debt. To the contrary, Defendants argue that a "common sense reading of the collection letter dated March 18, 2003" will show that no such refusal was made. (Defs.' Mem. Supp. Resp. and Summ. J. at 10).

Whether Defendants' letter of March 18, 2003 amounts to a refusal to provide the verification is not pertinent to determining a violation of Section 1692g(b). This section states in part that once the debtor notifies the collector in writing within thirty days after receiving notice of the collection, "the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment . . . and a copy of such verification or judgment . . . is mailed to the consumer by the debt collector." 15 U.S.C.A. § 1692g(b) (2004).

Defendants' violation of this section occurred once Plaintiff notified Defendants that she disputed the debt and requested verification of the debt, and Defendants continued their collection tactics. For example, after notification, Defendants left the note on Plaintiff's credit report, and sent her a request for payment in full. (See Pl. ['s] Ex. E). Additionally, the March 18, 2003 letter contained language stating: "[t]his is an attempt to collect a debt . . ." Id; cf. Renick v. Dun and Bradstreet Receivable Management Services, 290 F.3d 1055 (9th Cir. 2002) (holding that where a second notice can be construed as a request to pay rather than a demand, and the thirty-day notice language is contained therein and is not overshadowed by the request for payment, the notice does not violate the FDCPA).

Defendants neither present an argument, nor offer evidence to show that they were within their rights in maintaining their collection activities against the Plaintiff once she had notified them that the debt was disputed. The only indication that the thirty-day period for disputing the debt had possibly expired prior to Plaintiff's notice to Defendants, is found in the March 18, 2003 letter sent by Defendants to the Plaintiff stating that there was an initial notice to Plaintiff which was sent June 25, 2002. (See Pl. ['s] Ex. E). This letter is only referenced in Plaintiff's exhibits and Defendants have not asserted such a defense. Furthermore, the thirty-day period begins to run once the debtor receives the notice, not once it is mailed. See 15 U.S.C. § 1692g(A)(3) (notice to consumer must contain language that the consumer has 30 days from receipt of the notice to dispute the debt). Defendants have not offered to show that Plaintiff ever received the June 25, 2002 notice, or that the notice even exists. Because no material fact surrounding this claim has been brought into question by Defendants, Plaintiff is entitled to summary judgment.

c. Attorney's fees of $183.00 not Agreed to by Plaintiff

Plaintiff has also alleged that the collection of attorney's fees and costs in the amount of $183.00 was a violation of section 1692f(1) of the FDCPA because the only amount of such fees awarded by the Justice Court in the special detainer judgment was approximately $86.00. Defendants do not offer an argument that the amount of attorney's fees they are collecting is a reasonable amount or authorized by law.

Section 1692f provides that a debt collector cannot use unfair means to collect a debt, and that such means include (1) "[t]he collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by agreement creating the debt or permitted by law." 15 U.S.C.A. 1692f(1) (2004). Therefore, the FDCPA allows the collection of attorney's fees in this case so long as those fees were agreed to by Plaintiff when she entered into her lease. The agreement allowing such attorney's fees is the lease agreement. The "Agreement and Acceptance" paragraph of the lease agreement, for enforcement of the Agreement, reads in relevant part;

"the prevailing party may recover reasonable attorney's fees and any other normal and customary costs of collection including but not limited to collection agency fees and court costs."

(See Pl.['s] Ex. A at 4). The prevailing party is the "party in whose favor a judgment is rendered. . . ." BLACK'S LAW DICTIONARY 1145 (7th ed. 1999); see also Buckhannon Bd. and Care Home v. Dep't of Health and Human Res., 532 U.S. 598, 121 S.Ct. 1835, 149 L.Ed.2d 855 (May 29, 2001) (Holding that the "prevailing party" for purposes of fee shifting statutes requires an alteration in the legal relationship of the parties); see also Bennett v. Yoshina, 259 F.3d 1097 (9th Cir. 2001) (Citing Buckhannon).

The fact that court costs are included in the agreement provision with attorney's fees indicates that the "prevailing party" would be determined through some judicial proceeding. "Respect for ordinary language requires that a plaintiff receive at least some relief on the merits of his claim before he can be said to prevail." Hewitt v. Helms, 482 U.S. 755, 760, 107 S.Ct. 2672, 96 L.Ed.2d 654 (1987). Other circuits have come to the same conclusion when encountering similar agreement provisions referring to a "prevailing party." See Utility Automation 200, Inc. v. Choctawhatchee Elec. Co-op., Inc., 298 F.3d 1238 (11th Cir. 2002) (where an acceptance of an offer of judgment satisfied the judicial proceeding requirement for determination of the "prevailing party"); see also Villescas v. Abraham, 311 F.3d 1253 (10th Cir. 2002) ("prevailing party" must benefit from a judicial alteration of parties' relationship).

Because attorney's fees of $86.00 were specifically determined through a judicial proceeding, Woodbridge Apartments had prevailed to that amount only. Therefore, the amount of attorney's fees agreed to by the Plaintiff in the original lease agreement was the amount awarded in the judgment, or $86.00. Defendants' attempt to collect an additional $97.00 results in a violation of the FDCPA, as they are attempting to collect an amount of fees and costs not expressly found in the agreement or in the judgment. Additionally, Defendants have not offered any evidence to show that an amount above $86.00 was agreed to in some way by Plaintiff, or even that it is a reasonable amount. Therefore, the Court will grant summary judgment in favor of Plaintiff on this claim.

d. Collection fee of $672.04 not Agreed to by Plaintiff

Finally, Plaintiff alleges that Defendants violated FDCPA sections 1692e and 1692f by attempting to collect an amount for collection fees above that which was agreed to in the lease agreement. Defendants are attempting to collect $672.04 in collection fees from Plaintiff. (See Defs.['] Ex. 2). Plaintiff alleges that it was a violation to use a percentage in determining the amount to be collected in collection fees and that such a percentage could only be applied toward the amount that was awarded in the detainer judgment. Defendants argue that Plaintiff agreed to pay a collection fee of up to 50% when she signed her lease agreement and lease buyout.

Plaintiff cites Kojetin v. CU Recovery, Inc., 212 F.3d 1318 (8th Cir. 2000) to support her argument that a collection fee cannot be based on a percentage. However, Plaintiff's argument fails because the Eighth Circuit in Kojetin does not prohibit the use of a percentage altogether, but rather states that "CUR's notice violated the Act by adding the collection fee based on a percentage rather than on actual costs when Kojetin's agreement with the credit union provided she was liable only for actual costs." Id. (emphasis added). As mentioned above, the FDCPA prohibits the collection of any fee, including collection costs, unless there is a law or an agreement that allows for such fees. 15 U.S.C. § 1692f(1). Kojetin is distinguishable from the present case only because the agreement called for payment of actual collection costs rather than a percentage. The lease agreement that Plaintiff signed contemplates the imposition of collection fees based on percentage. Clearly, where there is an agreement, the collection fees "expressly authorized by the agreement creating the debt" will control. 15 U.S.C.A. 1692f(1) (2004).

The lease agreement and the lease buyout agreement allow for "recover[y] [of] reasonable attorney's fees and other normal and customary costs of collection including but not limited to collection agency fees and court costs" (Pl.['s] Ex. A at 4) "up to 50%." (Pl.['s] Ex. A at 5). Thus, Defendants were within their rights when they applied a 35 or 40% collection fee to Plaintiff's debt. However, determining whether this percentage rate amounts to an unconscionable term within the agreement is not necessary because Defendants' violated the FDCPA by applying the percentage rate to an incorrect principle amount. As discussed above, the prevailing party is the party who benefits from a judicial order. In this case, Woodbridge received a judgment in the amount of $747.09. Woodbridge only prevailed as to this amount, not the nearly $2,000 to which Defendant's wish to apply such a percentage. Therefore, Defendant's could only determine the collection fee by applying the percentage rate to the amount awarded in the judgment, or $747.09. Thus, since Plaintiff never agreed to a collection fee larger than "up to 50%" of the amount awarded in the detainer judgment, the collection of such a fee is a violation of the FDCPA. Because no genuine issue of material fact exists with regard to this claim, Plaintiff is entitled to summary judgment.

II. Defendants' Motion for Partial Summary Judgment

Defendants seek partial summary judgment in their favor with regards to Plaintiff's claims that Defendants attempted to collect fees and costs not authorized under the FDCPA, and that Defendants made false representations with regard to the debt. Defendants argue that their actions while collecting the $2,619.00 debt did not offend the FDCPA because the principle amount, along with the costs and fees, were agreed to by the Plaintiff. Defendants also claim that even if their actions were offensive to the FDCPA, those actions were a result of bona fide errors.

a. Collection fee Provisions Within the Written Agreements

Defendants argue that because Plaintiff signed two documents that contained provisions allowing for fees and costs, including collection fees, up to 50% of the debt, that the amount as represented was accurate and, therefore, Plaintiffs claim must fail. Plaintiff argues that the specific amounts of fees and costs charged were not authorized by agreement and consequently were misrepresentations of the amount of the debt in violation of the FDCPA.

As explained in Part I of this Order, the written agreements signed by Plaintiff allow only for collection fees to the prevailing party in an amount up to 50% of the debt. For the same reasons as outlined above, Defendants' argument fails because they calculated fees by applying a percentage to an amount that was not awarded to Woodbridge. By listing the unauthorized collection fee in their communications with Plaintiff, Defendants falsely represented the amount of the debt, violating the FDCPA.See 15 U.S.C. § 1692e(2)(A). Because the facts and law favor Plaintiff's claims, the Court must deny Defendants' motion for summary judgment.

b. Bona Fide Error Defense

Defendants argue in the alternative that the "Bona fide error" defense allowed by section 1692k of the FDCPA exempts them from any liability for their violations. Defendants claim that a violation of the FDCPA must be knowingly committed for the Defendants to be liable. Plaintiff argues that the Ninth Circuit has treated the FDCPA as a strict liability statute, and that Defendants' actions could in no way be classified as bona fide errors under the FDCPA.

The applicable subsection of the FDCPA states that "[a] debt collector may not be held liable in any action brought under this subchapter if the debt collector shows by a preponderance of evidence 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.A. § 1692k(c) (2004). Intentional, for purposes of these types of cases, has been defined as "voluntary, deliberate acts and omissions," which acts constitute a violation of the law. See Haynes v. Logan Furniture Mart, Inc., 503 F.2d 1161 (7th Cir. 1974) (defining intent for purposes of the Truth In Lending Act);see also Baker v. G.C. Services Corp., 677 F.2d 775 (9th Cir. 1982) (stating that "[s]ection 1692k(c) of the Act is nearly identical to the bona fide error defense section under the Truth in Lending Act (TILA)"). Here, Defendants have not made a case that they did not intend to collect Plaintiff's debt in the manner in which they proceeded.

Even if Defendants could show that their acts were unintentional and bona fide errors, the burden still rests on the Defendants to show that they had procedures in place that were reasonably adapted to avoid the errors. "The language of section 1692k(c) indicates that the bona fide error exception is an affirmative defense, for which Citicorp [collector] has the burden of proof at trial." Fox v. Citicorp Credit Servs., 15 F.2d 1507, 1514 (9th Cir. 1994). The error must occur despite reasonably preventive procedures being in place. Defendants have not met this burden. In fact, Defendants have failed to articulate what the bona fide error(s) might be, and thus cannot effectively argue that measures were followed to avoid them. Conclusory denials will not defeat a motion for summary judgment.See Anderson, 477 U.S. at 252 (holding that the existence of a mere "scintilla" of evidence is insufficient to support opposition of motion for summary judgment).

Defendants argue that reliance upon their client's representation of the amount of the debt is sufficient to satisfy their burden. Certainly in many cases, as the Defendants have pointed out, relying upon a trusted client for accurate information proves to be reasonable. Also, no independent investigation of the debt is required. However, a collector can rely on the representation as long as their are the minimal procedural safeguards in place that are designed to prevent errors. See Smith v. Transworld Systems, Inc., 953 F.2d 1025, 1032 (6th Cir. 1992) (where a $10 misrepresentation was found to be a clerical error excused by the bona fide error provision of the FDCPA). Here, however, Defendants have attempted to collect an amount exceeding $2,500 despite their possession of the detainer judgment containing an award about one-third that size. No procedural safeguards are described by Defendants that would help eliminate this type of error.

Defendants offer two arguments; 1) that acting within industry standards, which fails for reasons described above; and 2) that being affiliated with organizations that are available to train them and inform them with regards to the law, qualify as procedures in effect that would satisfy the bona fide error provision of the FDCPA. As evidence of these procedures, Ms. Dencek has offered an affidavit stating that her office belongs to "ACA International" (See Defs. ['] Ex. 3), which provides them with opportunities to "keep abreast" of industry practices and changes in the law. Id. However, had Defendants' error been that of a mistake about the law, it would still not be excused by the bona fide error provision. "Section 1692k(c) does not immunize mistakes of law, even if properly proven." Baker, 677 F.2d at 779. Evidence of procedures reasonably adapted to avoid mistakes of law are irrelevant to a section 1692k(c) determination under the FDCPA. Therefore, Defendants have not provided sufficient evidence to support their bona fide error defense, and thus, their motion for summary judgment must be denied.

CONCLUSION AND ORDER

The Court recognizes that summary judgment "is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole. . . ."Celotex, 477 U.S. at 327. However, summary judgment motions must also be considered with "due regard" to the "rights of persons asserting claims and defenses that are adequately based in fact to have those claims and defenses tried to a jury." Id. Here, Plaintiff offered evidence of FDCPA violations, and Defendants have failed to offer evidence to refute the allegations or to support their bona fide error defense. Based on parties' admissible submissions, the Court finds that no genuine issues of material fact remain as to Plaintiff's 15 U.S.C. § 1692 claims against Diem and Ms. Dencek as set out above. For the reasons set forth,

IT IS ORDERED that Plaintiff's Motion for Partial Summary Judgment is GRANTED. IT IS FURTHER ORDERED that Defendants' Cross-Motion for Partial Summary Judgment is DENIED. IT IS FURTHER ORDERED in light of the Courts Ruling, this matter is set for a Status Hearing before the Honorable Stephen M. McNamee on Monday, May 10, 2004 at 11:30 a.m. in Courtroom 605, sixth floor, Federal Courthouse, 401 W. Washington Street, Phoenix, Arizona. The parties should be prepared to discuss the issue of damages and any remaining claims before the Court.