Opinion
1:23-cv-00371-CL
02-22-2024
GARY HARGROVE, Plaintiff, v. LCK, INC., AAA PROPERTY MANAGEMENT, INC., Defendants.
FINDINGS AND RECOMMENDATION
CLARKE, MAGISTRATE JUDGE
Plaintiff Gary Hargrove brings this action against Defendants AAA Property Management, Inc. (“AAA”) and LCK, Inc. for claims arising out of a rental agreement. Before the Court is Defendants' Motion to Dismiss. Defs. Mot, ECF No. 33. Oral argument was held on January 3, 2024. For the reasons below, the Court recommends the Motion to Dismiss be DENIED. .
BACKGROUND
Defendant AAA managed a residential property located in Klamath Falls, Oregon (“the Property”). Hudson Decl., ECF No. 35 at ¶ 4; Rockett Decl., ECF No 34-2. AAA leased the Property to Plaintiff Mr, Hargrove and his wife through a fixed term lease agreement (“the Lease”). ECF No. 34-3. Plaintiff and Mrs. Hargrove rented the Property for $550.00 per month, subject to a $50.00 late fee. Id. The Lease ran from September 9, 2015, to February 28, 2016. Id.
Brenda Hargrove has appeared by three different names: Brenda Hargrove, Brenda James, and Brenda Estep. Plaintiff contends they are a married couple. For the purposes of this Findings and Recommendation, Brenda Hargrove will be referred to as Mrs. Hargrove.
On March 9,2016, AAA served Plaintiff with a 72-hour notice to pay or vacate for nonpayment of rent. ECF No. 34-4 at 2. The notice demanded $550 plus a $50 late fee for a total of $600. Id. AAA filed a corresponding residential eviction complaint in Klamath County Circuit . Court on March 14, 2016. Id. at 3. The court dismissed the case without prejudice. Id. at 4. AAA served a second 72-hour notice on March 31, 2016, this time demanding $550. Id. at 5. AAA also refiled the eviction complaint. Id. at 7.
It appears Plaintiff and AAA entered into negotiations regarding the manner of Plaintiff s moveout. The details of their arrangement, however, are disputed.
AAA claims that Plaintiff was to move out by end of day April 17, 2016, per the court's stipulation order. Id. at 9. When Plaintiff failed to remit the keys by the end of April 17, AAA filed an affidavit of noncompliance with the court, see id. at 8, and the court issued a general judgment of restitution for noncompliance of stipulated order, see id. at 10.
Plaintiff disagrees. He alleges he was to move out by April 19, 2016, per their settlement. He claims he timely moved out, remitted his keys, and received a satisfactory inspection report from the Veteran's Affairs Housing Agent, in compliance with the Parties' agreement. First Am. Compl., ECF No. 30 at ¶ 10 (“FAC”). Plaintiff alleges that the affidavit of noncompliance filed by AAA was therefore fraud on the court. Id. at ¶ 11. Plaintiff also claims that, based on his compliance, he understood no money was owed on the terminated Lease at that time. Pl. Resp., ECF No. 40 at 3. .
AAA submits Plaintiff did owe money on the Lease for unpaid rent and other outstanding fees (“the Debt”). ECF No. 35 at ¶ 6. “At some point between July 1, 2016, and December 31, 2016, LCK Inc. dba AAA Property Management hired Carter Jones (Carter-Jones Collection Services, Inc., “CJC”) to collect the unpaid rents and outstanding fees from Plaintiff.” ECF No. 33 at 7. Defendants maintain that the specifics of this arrangement were never documented in a written agreement; The only information relayed to CJC from Defendants, according to them, is found in Exhibit 1, ECF No. 30-1, and merely reflects a response to an outstanding balance . inquiry sent “for debt collection purposes only.” ECF No. 33 at 7. It contains the following charges related to the Property:
Defendant AAA was dissolved into Defendant LCK on June 21, 2016. ECF No. 34-1. Unless referring to one Defendant specifically, the two will be referred to jointly as “Defendants.”
Deposit-$825.00
$917.00 - Unpaid Rent
$100.00-2 Late Fees
$240.00 - Court Costs Deficit - $432.00ECF No. 30-1. Defendants otherwise disclaim being involved or privy to CJC's collection attempts towards Plaintiff. “Defendants vehemently deny they ever reported Plaintiff to a credit reporting agency, ever received a credit report for Plaintiff, ever received a credit dispute from a credit reporting agency pertaining to Plaintiff, ever communicated with Plaintiff regarding collection of any debt, or ever provided any information to any credit reporting agency . pertaining to Plaintiff.” ECF No. 33 at 8; see also ECF No. 35 at ¶¶ 11-14.
Plaintiff disputes this characterization. Plaintiff alleges Defendants employed CJC and authorized it to undertake credit reporting activities on Defendants behalf regarding the Debt. ECF No. 30 at ¶¶ 4-6. Plaintiff alleges he received communications from CJC and Defendants indicating that both were debt collectors attempting to collect the Debt, but that the communications falsely asserted conflicting amounts due on the same date and failed to inform Plaintiff whether the Debt was time barred. Id. at ¶ 13. Plaintiff claims he contacted Defendants and CJC several times where CJC indicated Plaintiff still owed money on the Debt but was not informed of any applicable statute of repose for rental contracts. Id. at ¶ 14. Plaintiff also filed credit reporting disputes with credit reporting agencies in May, June, and July of 2022 and included documentation regarding the satisfaction of the Debt in AAA's file. Id. at ¶¶ 16-21. CJC followed-up with Plaintiff regarding the May 2022 dispute, conveying its own awareness of Plaintiffs complaint as well as AAA's awareness:
In response to your communication regarding this debt, please be advised that we have contacted our client AAA PROPERTY . MANAGEMENT, who has confirmed that the account is listed. under your name and address, and the amount below remains . outstanding. Also enclosed is documentation provided by our, client that confirms the amount outstanding.
Please be advised we may have reported this debt to consumer reporting agencies, but in acknowledgement of your dispute, we ‘ have requested that the credit reporting agencies list the account as disputed.ECF No. 30-1 at 2. The letter stated Plaintiff owed $2,574.07 plus $1,409.61 in interest and fees, for a total amount due of $3,983.68. Id. Three days later, CJC sent Plaintiff another letter responding to the May 2022 dispute. Id. at 3. It contained nearly identical language but requested an amount of $3,985.57. Id.
Based on these notices, Plaintiff concluded that Defendants had been notified of the disputes and were aware of Plaintiff s concerns regarding the Debt. Because CJC continued attempting to collect, Plaintiff determined that Defendants failed to perform a reasonable review . of the furnished credit reporting information upon receipt of the first, second, or third dispute and instead, confirmed that the reporting was accurate and that the Debt was open, delinquent, and ; not resolved. ECF No. 30 at ¶¶ 16-21.
It's unclear exactly how the money got to CJC. Plaintiff alleges he paid CJC $3,200.00 on or around July 2022. Id. at ¶ 22. Defendants submit that “Mary Herman for Brenda James” paid the $3,200.00 to CJC on July 26, 2022. Defs. Reply, ECF No. 42-10. CJC sent Plaintiff a notice of satisfaction of the Debt on July 27,2022. ECF No. 30-2.
Mrs. Hargrove and CJC were previously parties to this litigation. Plaintiff and Mrs. Hargrove accepted CJC's Offer of Judgment on July 28, 2023, to be entered in their favor, jointly and severally, for $5,000.00. ECF No. 22. The following September, Mrs. Hargrove was removed as a plaintiff in the FAC, ECF No. 30, and CJC was dismissed from the action with prejudice, ECF No. 31.
Plaintiff alleges that Defendants' prolonged collections pursuit, disregard for the Parties' settlement, and choice to communicate incorrect and confusing statements regarding the Debt caused Plaintiff to suffer excessive stress, nausea, anxiety, and strain. ECF No. 30 at ¶ 25.
Plaintiff claims he also incurred economic damages in the form of legal fees, milage costs, and financial repercussions resulting from his decreased credit rating. Id. at ¶ 26. Plaintiff filed this lawsuit on March 14, 2023, alleging that Defendants' collections practices constituted (1) negligent noncompliance with the Fair Credit Reporting Act (“FCRA”), (2) willful noncompliance with the FCRA, and (3) elder financial abuse under ORS 124.110.
ISSUE
Defendants AAA and LCK move pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss all three counts in Plaintiff's FAC with prejudice. In the alternative, Defendants move pursuant to Federal Rule of Civil Procedure 56(c) requesting the Court grant summary judgment in Defendants' favor as to all claims brought against them.
Defendants have also moved the Court to grant any such relief deemed appropriate, including awarding costs and . attorneys' fees. ECF No. 33 at 2. The Court does not find that any such grant is appropriate at this time.
DISCUSSION
First, the Court recommends denying Defendants' Motion to Dismiss, finding all three claims sufficiently pled. Second, the Court recommends denying Defendants' Motion for Summary Judgment with leave to refile, finding it premature and recognizing that too many questions of fact exist to properly cut off Plaintiff's claims before discovery.
I. Motion to Dismiss
' A Rule 12(b)(6) motion to dismiss will be granted where a plaintiff fails to state a claim upon which relief may be granted. Fed.R.Civ.P. 12(b)(6). To state a claim for relief, a pleading must contain “a short and plain statement of the claim showing that the pleader is entitled to relief,” so as to provide the defendant with fair notice of what the claim is and the grounds upon which it rests. Fed.R.Civ.P. 8(a)(2). While “detailed factual allegations” are not required, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). Facial plausibility exists where the factual allegations allow the court to infer a defendant's liability based on the alleged conduct. Iqbal, 556 U.S. at 678. In evaluating a motion to dismiss, the court must accept all allegations of material fact as true and construe those allegations in the light most favorable to the non-moving party. Odom v. Microsoft Corp., 486 F.3d 541, 545 (9th Cir. 2007) (internal citations omitted). The court is “not bound to accept as true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555.
i. Plaintiffs First and Second Claims for noncompliance with the FCRA are sufficiently pled.
The Fair Credit Reporting Act was enacted “to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy.” Safeco Ins. Co. of Am. v. Burr, 127 S.Ct. 2201, 2205 (2007). To ensure accurate credit reporting, the FCRA imposes certain duties on “furnishers,” the sources that provide credit information to credit reporting agencies (“CRA”). Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009).
A furnisher notified of a dispute from a CRA has the following duties: to conduct an investigation regarding the disputed information; to review all relevant information provided by the CRA; to report the results of its investigation to the CRA; and if the investigation finds the information is incomplete or inaccurate, to report those results to all CRAs in receipt of the information, but if after reinvestigating, an item of information is found to be inaccurate, incomplete, or unverifiable, to modify, delete, or permanently block the reporting of that item. Id. at 1154; Nelson v. Chase Manhattan Mortg. Corp., 282 F.3d 1057, 1059 (9th Cir. 2002); see . 15U.S.C. 1681s-2(b).
. Plaintiff here alleges he filed three separate credit reporting disputes in May, June, and July 2022. Plaintiff alleges that for each dispute, he included information regarding the satisfaction of Debt in Defendants' file, and that Defendants received a copy of each dispute from the CRA. Plaintiff alleges Defendants failed to perform a reasonable review of each dispute and instead, confirmed the reporting was accurate and that the Debt was open, delinquent, and not resolved, allowing CJC to continue pursuing collections on the Debt. Plaintiff claims that
Defendants failure to perform an investigation in response to the disputes constitutes negligent and willful noncompliance with the requirements of the FCRA. Plaintiff asserts these claims against Defendants relying on a theory of agency liability. Plaintiff argues that by hiring a furnisher, CJC, to collect the Debt on their behalf, Defendants formed an agency relationship with CJC, extending liability to Defendants and exposing them to the purview of the FCRA. Plaintiff supports this theory by alleging that but for Defendants, CJC would lack any motive, . recourse, or information to continue seeking collections from Plaintiff regarding the Debt. Construing all material facts in the manner most favorable to Plaintiff, the Court finds that . Plaintiff has adequately pled his FCRA claims such that Defendants are on notice of the claims brought against them. .
ii Plaintiffs Third Claim for elder financial abuse under ORS 124.110 is . sufficiently pled.
An action may be brought under ORS 124.110 for: “(1) a taking or appropriation (2) of money or property (3) that belongs to an elderly or incapacitated person, and (4) the taking must be wrongful.” Church v. Woods, 190 Or.App. 112,117 (2003); see ORS 124.110(1)(a). Conduct is “wrongful” if it is carried out in pursuit of an improper motive or by improper means, including deceit, misrepresentation, and disparaging falsehood. Church, 190 Or.App. at 118 (quoting Conklin v. Karban Rock, Inc., 94 Or.App. 593, 601 (1989)). The action may be brought against any person who caused the financial abuse or who permitted another to engage in the financial abuse if the permitting party knowingly acts or fails to act when a reasonable person should have known of the abuse. ORS 124.100(2), (5).
Plaintiff here is a 65-year-old man alleging that CJC took $3,200.00 of his money in satisfaction of the Debt. The first three elements of Plaintiff's claim are adequately pled. Plaintiff argues the taking was wrongful because it was carried out by improper means. He alleges that Defendants misrepresented the accuracy of the amount owed and their legal entitlement to the Debt. Plaintiff brings this action against Defendants, alleging that they permitted CJC to engage in the actual abuse by employing CJC to collect the Debt, providing all requisite information, and further failing to act after being notified of Plaintiff's concerns. Accepting these allegations as true, Plaintiff has sufficiently pled a claim under ORS 124.110.
The Court finds the FAC satisfies federal pleading standards. As this phase, Plaintiff has the low burden of alleging facts that, when assumed true, may show he is entitled to relief. The FAC provides Defendants with fair notice of what the claims are and the grounds upon which they rest. The Court therefore recommends denying Defendants' Motion to Dismiss.
II. Motion for Summary Judgment
Summary judgment shall be granted when the record shows that there is no genuine dispute as to any material of fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). The moving party has the initial burden of showing that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001) (en banc). The court cannot weigh the evidence or determine the truth but may only determine whether there is a genuine issue of fact. Playboy Enters., Inc. v. Welles, 279 F.3d 796, 800 (9th Cir. 2002). An issue of fact is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248. When a . properly supported motion for summary judgment is made, the burden shifts to the opposing party to set forth specific facts showing there is a genuine issue for trial. Id. at 250. In assessing whether a party has met its burden, the court views the evidence in the light most favorable to the non-moving party. Allen v. City of Los Angeles, 66 F.3d 1052, 1056 (9th Cir. 1995).
The Court here finds Defendants' Motion for Summary Judgment premature. Plaintiff has sufficiently stated a claim for relief and is entitled to the discovery process. At this phase, Plaintiff should not be expected to prove his claims before having the opportunity to seek the evidence necessary to do so. Defendants moreover have failed to show that no genuine issue of material fact exists in this case. The Parties disagree on whether Plaintiff complied with the terms of his moveout, whether he owed money on the Lease, and how much money was owed on the Lease. There is an issue regarding when exactly Defendants employed CJC, what the terms of their arrangement were, whether those terms created an agency relationship, and whether such a relationship could give rise to extended liability under the FCRA. There is a clear dispute involving who was contacting Plaintiff to collect the Debt and whether those communications were in fact false, misleading, or deceptive, both with respect to the amount asserted and to any applicable statutes of limitations on the Debt. Defendants claim to have had nd awareness or involvement in CJC's correspondence to Plaintiff, but CJC's letter indicates that Defendants were made aware of the disputes and Plaintiffs concerns on more than one occasion. These questions have not been adequately teased out or resolved in the manner required for the Court to properly rule on them, let alone grant summary judgment in Defendants' favor.
The Court therefore recommends denying Defendants' Motion for Summary judgment as premature with leave to refile.
RECOMMENDATION
The Court recommends denying Defendants' Motion to Dismiss, with leave to refile the motion for summary judgment. ECF No. 33. Plaintiff sufficiently pled his claims and is entitled to discovery. Entering summary judgment in Defendants' favor is premature and improper given the existence of significant questions of fact.