Opinion
Case No. EDCV 19-2378-KK
2021-05-19
David WARNER, Plaintiff, v. MIDLAND CREDIT MANAGEMENT, INC., et al., Defendant(s).
Amir J. Goldstein, Law Offices Amir J Goldstein Esq., Los Angeles, CA, Justin M. Baxter, Pro Hac Vice, Baxter and Baxter LLP, Portland, OR, for Plaintiff. Zachary C. Frampton, Holland and Knight LLP, Sevana Zadourian, Diamond McCarthy LLP, Los Angeles, CA, Megan E. Farrell, Reed Smith LLP, Pittsburg, PA, for Defendants Midland Credit Management, Inc., Midland Funding, LLC, Encore Capital Group, Inc. Zachary C. Frampton, Holland and Knight LLP, Los Angeles, CA, for Defendant Does.
Amir J. Goldstein, Law Offices Amir J Goldstein Esq., Los Angeles, CA, Justin M. Baxter, Pro Hac Vice, Baxter and Baxter LLP, Portland, OR, for Plaintiff.
Zachary C. Frampton, Holland and Knight LLP, Sevana Zadourian, Diamond McCarthy LLP, Los Angeles, CA, Megan E. Farrell, Reed Smith LLP, Pittsburg, PA, for Defendants Midland Credit Management, Inc., Midland Funding, LLC, Encore Capital Group, Inc.
Zachary C. Frampton, Holland and Knight LLP, Los Angeles, CA, for Defendant Does.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT
KENLY KIYA KATO, United States Magistrate Judge
I.
INTRODUCTION
Defendants Midland Credit Management, Inc. ("MCM"), Midland Funding, LLC ("Midland Funding"), and Encore Capital Group, Inc. ("Encore") (collectively, "Defendants")’s have filed a Motion for Summary Judgment, or in the Alternative, Partial Summary Judgment ("Motion"). The parties have consented to the jurisdiction of the undersigned United States Magistrate Judge pursuant to 28 U.S.C. § 636(c). For the reasons set forth below, Defendants’ Motion is GRANTED IN PART and DENIED IN PART.
II.
PROCEDURAL HISTORY
On December 11, 2019, Plaintiff David Warner ("Plaintiff") filed a Complaint asserting claims against Defendants arising from a credit card debt and Defendants’ alleged unlawful debt collection efforts against Plaintiff. ECF Docket No. ("Dkt.") 1. Specifically, Plaintiff asserts four causes of action: (1) violation of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 - 1692p ("FDCPA"); (2) violation of California's Rosenthal Fair Debt Collection Practices Act, Cal. Civ. Code §§ 1788 - 1788.33 ("Rosenthal Act"); (3) violation of the Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code §§ 17200 - 17210 ; and (4) intrusion upon seclusion. ECF Docket No. ("Dkt.") 1.
On February 18, 2020, Defendants filed an Answer, including an affirmative defense of bona fide error, claiming "[a]ny alleged acts or omissions of Defendants giving rise to the claims of Plaintiff, if any, are the result of innocent mistake and/or bona fide error despite reasonable procedures implemented by Defendants." Dkt. 8.
On January 14, 2021, Defendants filed the instant Motion seeking summary judgment on all of Plaintiff's claims arguing (a) Defendants did not violate the FDCPA; (b) Plaintiff's Rosenthal Act claims fail because Defendants did not violate the FDCPA; (c) even if Defendants’ conduct constituted a violation of the FDCPA or Rosenthal Act, Defendants would not be liable pursuant to the bona fide error defense; (d) Plaintiff's intrusion upon seclusion claim fails because Defendants did not intentionally invade Plaintiff's privacy or act in a highly offensive manner; and (e) Plaintiff's UCL claim fails because it is predicated on Plaintiff's other deficient claims. Dkts. 40, 40-1. Defendants filed the following documents in support of the Motion:
• Memorandum of Points and Authorities ("MSJ"), dkt. 40-1
• Statement of Uncontroverted Facts and Conclusions of Law, dkt. 40-2
• Declaration of Kimberly Larsen, defendant MCM's Process Excellence Manager ("Larsen Decl."), with Exhibits 1 to 15, dkts. 40-3, 42
• Declaration of Zachary C. Frampton, Defendants’ counsel ("Frampton Decl."), with Exhibits 1 to 2, dkts. 40-4, 41
On February 25, 2021, Plaintiff filed an Opposition. Dkt. 49, Opp. Plaintiff filed the following in support of his Opposition:
• Statement of Genuine Disputes, dkt. 49-1
• Declaration of Plaintiff ("Plaintiff Decl.") with Exhibits A to J, dkt. 49-2
• Declaration of Laurie Warner, Plaintiff's spouse ("Warner Decl."), dkt. 49-3
• Declaration of Amir J. Goldstein, Plaintiff's counsel ("Goldstein Decl."), with Exhibits K to N, dkt. 49-4
On March 8, 2021, Defendants filed a Reply. Dkt. 50, Reply. Defendants filed the following in support of their Reply:
• Reply in Support of Statement of Uncontroverted Facts and Opposition to Plaintiff's Additional Material Facts, including evidentiary objections, dkt. 50-1
• Supplemental Declaration of Zachary C. Frampton ("Frampton Suppl. Decl.") with Exhibits 1 to 3, dkt. 50-2
The Motion thus stands submitted.
III.
LEGAL STANDARD
Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure if the moving party demonstrates the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; see also FED. R. CIV. P. 56. A genuine issue of material fact will exist "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
When ruling on a summary judgment motion, the court must view all inferences drawn from the underlying facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citation omitted). Summary judgment is therefore not appropriate "where contradictory inferences may reasonably be drawn from undisputed evidentiary facts[.]" Hollingsworth Solderless Terminal Co. v. Turley, 622 F.2d 1324, 1335 (9th Cir. 1980). Furthermore, the Court must not make credibility determinations with respect to the evidence offered. See T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630-31 (9th Cir. 1987) (citing Matsushita, 475 U.S. at 587, 106 S.Ct. 1348 ).
An affidavit or declaration may be used to support or oppose a motion for summary judgment, provided it is "made on personal knowledge, set[s] out facts that would be admissible in evidence, and show[s] that the affiant or declarant is competent to testify on the matters stated." FED. R. CIV. P. 56(c)(4). In addition, pursuant to Local Civil Rule 56-3, the Court assumes the material facts as claimed and adequately supported by the moving party are admitted to exist without controversy except to the extent that such material facts are (a) included in the "Statement of Genuine Disputes" and (b) controverted by declaration or other written evidence filed in opposition to the motion. L.R. 56-3.
IV.
To the extent certain facts, or conclusions, are not mentioned, the Court has not relied on them in reaching its decision. In addition to considering the Defendants’ evidentiary objections, the Court has independently considered the admissibility of the evidence underlying both parties’ papers and has not considered facts that are irrelevant or based upon inadmissible evidence. Further, "objections to evidence on the ground that it is irrelevant, speculative, and/or argumentative, or that it constitutes an improper legal conclusion are all duplicative of the summary judgment standard itself" and are thus "redundant" and unnecessary to consider here. Burch v. Regents of Univ. of Cal., 433 F. Supp. 2d 1110, 1119 (E.D. Cal. 2006) ; see also Anderson, 477 U.S. at 248, 106 S.Ct. 2505 ("Factual disputes that are irrelevant or unnecessary will not be counted."). Therefore, all objections not specifically addressed herein are OVERRULED AS MOOT.
The Court finds the following material facts are undisputed and are admitted to exist without controversy for the purposes of this Order, except as otherwise noted. See FED. R. CIV. P. 56(e)(2) (stating where a party fails to address another party's assertion of fact properly, the court may "consider the fact undisputed for purposes of the motion"); L.R. 56-3 (stating facts not "controverted by declaration or other written evidence" are assumed to exist without controversy).
A. DEFENDANT MIDLAND FUNDING ACQUIRES THE ROJO ACCOUNT
In November 2001, a credit card account in the name of "David Rojo" was opened with HSBC Bank ("the Rojo account"). Larsen Decl., ¶ 7. "David Rojo" used Plaintiff's social security number to open the Rojo account. Id. Defendants were not involved in the opening of the Rojo account. Id., ¶ 8.
According to the Rojo account's May 11, 2007 billing statement, a debt of $5,863.11 was charged on the account. Id., Ex. 2. The billing statement listed an Irvine, California address for "David Rojo." Id.
On June 29, 2007, HSBC Bank sold certain credit card accounts, including the Rojo account, to Atlantic Credit & Finance Special Finance Unit, LLC ("ACF"). Id., ¶¶ 6, 7, Ex. 1.
On June 24, 2009, pursuant to an Account Purchasing Agreement, defendant Midland Funding purchased the Rojo account from ACF. Id., ¶¶ 8, 9, Exs. 3, 15. Defendant Midland Funding, along with corporate affiliate and defendant MCM, is a wholly owned subsidiary of defendant Encore. Id., ¶ 5. In the Account Purchasing Agreement, ACF made representations and warranties to defendant Midland Funding that "[a]ll due diligence information and information related to the Accounts in [ACF's] possession and given to [defendant Midland Funding] is materially true and accurate to the best of [ACF's] knowledge." Id., ¶ 9, Ex. 15. ACF further made representations and warranties that the "[c]urrent [b]alance on each [a]ccount is the legal, valid and binding obligation of each [c]ustomer except as enforcement may be limited by bankruptcy, insolvency, receivership and other similar laws relating to or affecting creditors’ rights generally." Id. Additionally, to assist in detecting fraudulent accounts and ensure no required information was missing erroneous, or incomplete, defendant MCM ran multiple "scrubs," including but not limited to, bankruptcy and Servicemembers Civil Relief Act checks, on the Rojo account. Id.
B. DEFENDANTS’ COLLECTION ACTIVITIES AGAINST "DAVID ROJO"
On or about August 2, 2009, defendant MCM, which was servicing the Rojo account on behalf of defendant Midland Funding, sent "David Rojo" a debt validation letter to the address of record on the Rojo account, informing "David Rojo" of his right to contest the debt. Id., ¶ 11.
It is unclear what the address of record on the Rojo account was at this time. The HSBC Bank May 11, 2007 billing statement was addressed to "David Rojo" in Irvine, California, Larsen Decl., ¶ 8, Ex. 2, but on May 9, 2018, defendant Midland Funding sent documents to where Plaintiff resided in Chino Hills, California, id., ¶ 14, Ex. 6. It is, therefore, unclear when the address of record changed on the Rojo account.
On July 21, 2010, defendant Midland Funding filed a collection lawsuit against "David Rojo" in case no. 30-2010-00391607 in Orange County Superior Court to collect the balanced owed on the Rojo account. Id., ¶ 12, Ex. 4. On November 23, 2010, the lawsuit resulted in a default judgment against "David Rojo." Id., ¶ 13, Ex. 5.
On or about May 9, 2018, defendant Midland Funding mailed the "Memorandum of Costs after Judgment, Acknowledgment of Credit and Declaration of Accrued Interest" to "David Rojo" at the address in Chino Hills, California where Plaintiff resided at the time. Id., ¶ 14, Ex. 6. The memorandum indicated a judgment principal amount of $8,714.32 and an accrued interest of $3,416.47 remained due on the Rojo account. Id.
Pursuant to a Writ of Execution (Money Judgment) dated July 15, 2019, defendant MCM directed the Sacramento Sheriff's Department to levy "[a]ll accounts in which [‘David Rojo’] and/or individual with [Plaintiff's] social security number [ ] has any interest in the control of US BANK NA[.]" Id., ¶ 15, Ex. 7. Because Plaintiff's social security number had been used to open the Rojo account, the sheriff levied Plaintiff's U.S. Bank account in the amount of $329.64 and caused an additional $100 bank fee to be deducted from Plaintiff's account. Id.; Plaintiff Decl., ¶ 10.
C. PLAINTIFF DISPUTES THE ROJO ACCOUNT
On July 18, 2019, Plaintiff informed defendant MCM over the phone that Plaintiff was not "David Rojo" and Plaintiff's bank account had been improperly levied. Larsen Decl., ¶ 16. A representative from defendant MCM informed Plaintiff that defendant MCM would open a dispute and send him paperwork to substantiate the dispute. Id.
Five days later, on July 23, 2019, defendant MCM sent a letter to Plaintiff's address, stating defendant MCM had opened an investigation concerning Plaintiff's dispute. Id., ¶ 17, Ex. 9; Plaintiff Decl., ¶ 12, Ex. A. The letter also included (1) statements that Plaintiff has "the right to request substantiation of the debt" and defendant MCM was "treating [Plaintiff's] dispute as a request for substantiation"; (2) information regarding the Rojo account, including copies of billing statements and the current balance; and (3) the name and address of the original creditor, HSBC Bank, in the billing statements. Id. The letter further recommended Plaintiff submit: (a) a copy of a police report, (b) a fully completed and executed Federal Trade Commission Fraud Affidavit, or (c) a notarized fraud affidavit. Id. On August 27, 2019, having received no response from Plaintiff, defendant MCM sent another letter to Plaintiff's address, stating that although defendant MCM had determined defendant MCM's records were accurate, Plaintiff could provide a written explanation and documentation to dispute defendant MCM's determination. Larsen Decl., ¶ 18, Ex. 10; Plaintiff Decl., ¶ 13, Ex. B.
On August 29, 2019, Plaintiff sent defendant MCM a letter disputing defendant MCM's determination and claiming defendant MCM was attempting to collect the amount owed on the Rojo account from the wrong individual. Plaintiff Decl., ¶ 15, Ex. C. The letter further indicated Plaintiff had "filed an identity theft case with the City of Chino Hill" and directed defendant MCM to credit Plaintiff with "a full return of $329.64 in addition to the $100.00 legal processing fee that was debited from [Plaintiff's] US Bank account." Id.
On August 30, 2019, Plaintiff sent defendant MCM another letter providing (a) a copy of a police report and (b) a copy of Plaintiff's Identity Theft Victim's Complaint and Affidavit. Larsen Decl., ¶ 19, Ex. 11; Plaintiff Decl., ¶ 16, Ex. D.
On September 3, 2019, defendant MCM sent Plaintiff a letter stating defendant MCM had opened an investigation into Plaintiff's dispute of the Rojo account and was "ceasing all collection efforts until [the] conclusion of the investigation of [Plaintiff's] dispute." Larsen Decl., ¶ 20, Ex. 12; Plaintiff Decl., ¶ 17, Ex. E. Defendant MCM attached a copy of a HSBC Bank credit card statement addressed to "David Rojo" to the letter. Plaintiff Decl., ¶ 18, Ex. F.
On September 17, 2019, Plaintiff sent defendant MCM another letter again providing (a) a copy of a police report and (b) a copy of Plaintiff's Identity Theft Victim's Complaint and Affidavit. Id., ¶ 22, Ex. G.
On September 25, 2019, defendant MCM sent Plaintiff a letter with an "Acknowledgement of Satisfaction of Judgment" dated September 26, 2019 that purported to deem the judgment fully satisfied. Id., ¶ 23, Ex. H.
D. DEFENDANT MCM'S REMEDIAL STEPS
Based on the police report and affidavit submitted by Plaintiff, defendant MCM conducted a subsequent investigation and determined Plaintiff's allegations of fraud were substantiated. Larsen Decl., ¶ 21.
On October 7, 2019, defendant MCM notified Plaintiff through a letter that defendant MCM decided to close the Rojo account and would "take the appropriate steps to dismiss the lawsuit and/or vacate or release the judgment." Id., Ex. 13; Plaintiff Decl., ¶ 24, Ex. I. The letter further stated that if data related to the Rojo account was still being furnished to the consumer reporting agencies, defendant MCM would request credit reporting agencies to "delete the Midland Funding, LLC trade line related to" the Rojo account. Id.
On or about October 8, 2019, defendant MCM sent Plaintiff a check, which was made payable to "David Rojo," in the amount of $317.64. Larsen Decl., ¶ 22, Ex. 14; Plaintiff Decl., ¶ 25, Ex. J.
It is unclear why the check was made for $12 less than the amount levied from Plaintiff's account, and neither party provides admissible evidence on this issue. See Larsen Decl. ¶ 22; Goldstein Decl., ¶ 16.
On November 4, 2020, defendant MCM sent a check via United Parcel Service overnight to Defendants’ counsel. Frampton Suppl. Decl., ¶ 4, Exs. 1, 2. The check was dated October 29, 2020 and made payable to Plaintiff for $488 to reimburse Plaintiff for the $329.64 levied from his account, the $100 fee Plaintiff's bank charged and kept for processing the levy, and the interest on these amounts. Id. Defendants’ counsel did not send the check to Plaintiff's counsel for another three months. Id., ¶ 5.
In February 2021, Plaintiff ultimately received the October 29, 2020 check. Id., ¶¶ 4, 6, Exs. 1, 3; Goldstein Decl., ¶ 17.
The parties dispute when Plaintiff received the check. Plaintiff's counsel states he received the check reimbursing Plaintiff on February 24, 2021. Goldstein Decl., ¶ 17. Defendants’ counsel states it was hand delivered by courier to Plaintiff's counsel's office on February 23, 2021 and attached to his declaration an email purporting to show the check was delivered to Plaintiff's counsel's office on February 23, 2021. Frampton Suppl. Decl., ¶ 6, Ex. 3. For purposes of this order, the difference in dates is not material.
V.
DISCUSSION
A. DEFENDANTS ARE ENTITLED TO SUMMARY JUDGMENT ON SOME OF PLAINTIFF'S FDCPA CLAIMS
1. Applicable Law
"[T]he FDCPA prohibits debt collectors ‘from making false or misleading representations and from engaging in various abusive and unfair practices.’ " Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1030 (9th Cir. 2010) (citing Heintz v. Jenkins, 514 U.S. 291, 292, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995) ); see also 15 U.S.C. § 1692(e). The FDCPA is a strict liability statute that "makes debt collectors liable for violations that are not knowing or intentional." Reichert v. Nat'l Credit Sys., Inc., 531 F.3d 1002, 1005 (9th Cir. 2008). "In order for a plaintiff to recover under the FDCPA, there are three threshold requirements: (1) the plaintiff must be a ‘consumer’; (2) the defendant must be a ‘debt collector’; and (3) the defendant must have committed some act or omission in violation of the FDCPA." Robinson v. Managed Accts. Receivables Corp., 654 F. Supp. 2d 1051, 1057 (C.D. Cal. 2009). "Generally, whether a defendant has violated the FDCPA is a question of fact to be resolved by the jury." Voris v. Resurgent Cap. Servs., L.P., 494 F. Supp. 2d 1156, 1163 (S.D. Cal. 2007) (citing United States v. ACB Sales & Serv., Inc., 590 F. Supp. 561, 570 (D. Ariz. 1984) ).
2. Analysis
Here, it is undisputed (1) Plaintiff is a "consumer" and (2) defendant MCM is a "debt collector" under the FDCPA. See dkts. 40-1, 49, 50. The parties, however, contest whether (1) defendants Midland Funding and Encore are debt collectors and (2) Defendants are liable under sections 1692d, 1692e, 1692f, and 1692g of the FDCPA. Id.
a. Defendant Encore is Entitled to Summary Judgment on Plaintiff's FDCPA Claims, but a Genuine Issue of Material Fact Remains as to Whether Defendant Midland Funding is a Debt Collector
i. Relevant Law
"To be held directly liable for violation of the FDCPA, a defendant must—as a threshold requirement—fall within the Act's definition of ‘debt collector.’ " Izenberg v. ETS Servs., LLC, 589 F. Supp. 2d 1193, 1198 (C.D. Cal. 2008) (citing Heintz, 514 U.S. at 294, 115 S.Ct. 1489 ). The FDCPA defines the phrase "debt collector" to include: (1) "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 (2) any person "who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6). Critical to this definition "is the notion that a debt collector is one who directly or indirectly engages in collection activity." Gold v. Midland Credit Mgmt., Inc., 82 F. Supp. 3d 1064, 1070 (N.D. Cal. 2015).
The statute excludes from its scope "any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity (i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement; (ii) concerns a debt which was originated by such person; (iii) concerns a debt which was not in default at the time it was obtained by such person; or (iv) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor." 15 U.S.C. § 1692a(6)(F). "Citing this provision, courts have concluded that mortgage lenders and servicers are not ‘debt collectors’ covered by the statute so long as they took assignment of an interest in the loan prior to default by the debtor." Babadjanian v. Deutsche Bank Nat'l Tr. Co., No. CV 10-02580-MMM, 2010 WL 11549885, at *4 (C.D. Cal. July 19, 2010).
ii. Application
Here, Defendants argue Plaintiff failed to allege defendant Midland Funding was a debt collector as defined by the FDCPA in the Complaint and there is no evidence to support a finding that defendant Midland Funding was a debt collector. Dkt. 40-1 at 21. Defendants also argue passive debt buyers or entities that have no interaction with debtors like defendants Midland Funding and Encore are not debt collectors within the meaning of the FDCPA. Id. at 22.
(a) Defendant Midland Funding
With respect to defendant Midland Funding, the Complaint contains sufficient factual allegations to establish defendant Midland Funding collects debts by, at the very least, filing debt collection actions in state court. Dkt. 1 at 3. Specifically, the Complaint alleges defendant Midland Funding filed a lawsuit against "David Rojo" in Orange County Superior Court in case no. 30-2010-00391607 to collect debt incurred on the Rojo account. Id.; see also Heintz, 514 U.S. at 297, 115 S.Ct. 1489 (holding that litigation to collect a debt is collection activity under the FDCPA). The Complaint also alleges defendant Midland Funding caused Plaintiff's bank account to be levied after the lawsuit resulted in a default judgment. Dkt. 1 at 4-5; see also Molloy v. Primus Auto. Fin. Servs., 247 B.R. 804, 821 (C.D. Cal. 2000) (holding a plaintiff sufficiently alleged the defendant was a "debt collector" subject to the provisions of the FDCPA by alleging the defendant was "in the business of ... collecting monies").
In addition, the undisputed evidence supports a finding that defendant Midland Funding directly engaged in collection activity by filing the collection lawsuit against "David Rojo" in Orange County Superior Court. Larsen Decl., ¶ 12, Ex. 4; see also Heintz, 514 U.S. at 297, 115 S.Ct. 1489. In fact, defendant Midland Funding's corporate representative testified at his deposition that defendant Midland Funding files debt collection actions and collects consumer debt:
Q. Midland Funding was the named plaintiff in the collection lawsuit, correct?
A. That's correct.
Q. And Midland Funding is the named plaintiff in other collection lawsuits. Do you agree?
MR. FRAMPTON: Objection, outside the scope, irrelevant, vague.
THE WITNESS: Yes, I -- Midland Funding is named as the plaintiff in other collection lawsuits for consumer debt, yes....
Q. Would you agree that Midland Funding was the named plaintiff in the writ of garnishment issued to U.S. Bank in the David Rojo case?
A. Yes, I believe so.
Q. Would you agree that the issuance of a writ of garnishment is an attempt to collect a debt?
MR. FRAMPTON: Objection, vague.
THE WITNESS: Yes.
Goldstein Decl., ¶ 10, Ex. N.
However, if defendant Midland Funding purchased the Rojo account and acquired an interest in the debt owed on that account prior to default by "David Rojo," defendant Midland Funding may not be a "debt collector" covered by the FDCPA. See Babadjanian, 2010 WL 11549885, at *4 (finding servicers are not "debt collectors" covered by the FDCPA if they take assignment of an interest in the loan prior to default by the debtor). On the other hand, if defendant Midland Funding acquired an interest in the debt after it was in default, defendant Midland Funding is considered a "debt collector" under the FDCPA. See id. at *5. The evidence before the Court shows "David Rojo" had a balance of $5,863.11 on his May 11, 2007 credit card statement, but this alone is insufficient to determine whether "David Rojo" was in default. Larsen Decl., ¶ 7, Ex. 2. The Court does not have the underlying contract governing the Rojo account. See De Dios v. Int'l Realty & Invs., 641 F.3d 1071, 1074 (9th Cir. 2011) ("Although the Act does not define ‘in default,’ courts interpreting § 1692a(6)(F)(iii) look to any underlying contracts and applicable law governing the debt at issue."). A genuine issue of material fact, therefore, remains as to whether defendant Midland Funding acquired an interest in the debt on the Rojo account prior to default by "David Rojo."
Thus, a genuine issue of material fact exists as to whether defendant Midland Funding is a "debt collector" under the FDCPA. The Court, therefore, DENIES Defendants’ Motion regarding the threshold issue of whether defendant Midland Funding is a "debt collector" under the FDCPA.
(b) Defendant Encore
With respect to defendant Encore, based on the undisputed evidence, a reasonable trier of fact could not find defendant Encore is a debt collector under the FDCPA. The undisputed evidence merely shows defendant Encore owns defendants Midland Funding and MCM. Larsen Decl., ¶ 5. Plaintiff has not presented any admissible evidence to show defendant Encore (1) "uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts," or (2) "regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6) ; see also LaCourte v. JP Morgan Chase & Co., No. 12 CIV. 9453 JSR, 2013 WL 4830935, at *4 (S.D.N.Y. Sept. 4, 2013) (finding "[plaintiff] is correct that corporate parents have been held to be "debt collectors" under the FDCPA but declining to find "corporate parenthood alone" is a basis to be a "debt collector" under the FDCPA).
Plaintiff seeks to use paragraphs from defendant Encore's SEC 10-K filing as set forth in Plaintiff's counsel's declaration to support his claim that defendant Encore is a debt collector under the FDCPA. Dkt. 49 at 24, 26. However, Plaintiff's counsel does not possess personal knowledge of the SEC 10-K filing. See Hal Roach Studios Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1551 (9th Cir. 1989) ("A document which lacks a proper foundation to authenticate it cannot be used to support a motion for summary judgment."); Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 883 (9th Cir. 1982) (stating Federal Rule of Civil Procedure 56 requires that documentary materials need authentication through affidavits or declarations from individuals with personal knowledge of the documentary materials). Hence, the information from defendant Encore's SEC 10-K filing lacks proper foundation and is, therefore, not admissible.
Defendant Encore objects to this portion of Plaintiff's counsel's declaration on grounds it is not "best evidence," is an "improper opinion and legal argument," and "lacks foundation." Dkt. 50-1 at 13.
Thus, Defendants have satisfied their burden to show there is no genuine issue of material fact and defendant Encore is not a debt collector under the FDCPA. Therefore, with respect to defendant Encore, the Court GRANTS Defendants’ Motion as to Plaintiff's first cause of action.
b. Defendants Midland Funding and MCM Are Not Entitled to Summary Judgment on Plaintiff's Claim under Section 1692d of the FDCPA
i. Relevant Law
Under section 1692d of the FDCPA, a "debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt." 15 U.S.C. § 1692d. In addition to this general prohibition, the statute provides a non-exhaustive list of specific prohibited conduct. 15 U.S.C. § 1692d(1) - (6). This includes:
(1) The use or threat of use of violence or other criminal means to harm the physical person, reputation, or property of any person.
(2) The use of obscene or profane language or language the natural consequence of which is to abuse the hearer or reader.
(3) The publication of a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency or to persons meeting the requirements of section 1681a(f) or 1681b(3) of this title.
(4) The advertisement for sale of any debt to coerce payment of the debt.
(5) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.
(6) Except as provided in section 1692b of this title, the placement of telephone calls without meaningful disclosure of the caller's identity.
Id.
The principle governing the Ninth Circuit's evaluation of claims under section 1692d of the FDCPA is set forth in Swanson v. S. Or. Credit Serv., Inc., 869 F.2d 1222, 1225 (9th Cir. 1988) : "If the least sophisticated debtor would ‘likely be misled’ by a communication from a debt collector, the debt collector has violated the Act." Guerrero v. RJM Acquisitions LLC, 499 F.3d 926, 934 (9th Cir. 2007). "[T]he least sophisticated debtor is reasonable and functional, but lacks experience and education regarding financial matters." Stimpson v. Midland Credit Mgmt., Inc., 944 F.3d 1190, 1196 (9th Cir. 2019). "Ordinarily, whether conduct harasses, oppresses, or abuses will be a question for the jury." Meadows v. Franklin Collection Serv., Inc., 414 F. App'x 230, 233 (11th Cir. 2011).
This principle also governs sections 1692e, 1692f, and 1692g of the FDCPA. Guerrero, 499 F.3d at 934 ; Swanson, 860 F.2d at 1225 ; see also Donohue, 592 F.3d at 1030.
ii. Application
Defendants appear to argue Plaintiff has not alleged any facts showing defendants Midland Funding and MCM engaged in any of the conduct described in 15 U.S.C. § 1692d(1) - (6). Dkt. 40-1 at 15-16.
Prohibited conduct under section 1692d is not limited to the list in section 1692d. See 15 U.S.C. § 1692d ; Penny v. Williams & Fudge, Inc., 840 F. Supp. 2d 1314, 1320 (M.D. Fla. 2012) (finding section 1692d contains a "catch all provision" that "was purposely broadly drawn" and noting from the legislative history, "the bill prohibits in general terms any harassing, unfair, or deceptive collection practice" (quoting S.Rep. No. 95–832S.Rep. No. 95–832, 95th Cong., 1st Sess., reprinted in 1977 U.S. Code Cong. & Ad. News 1695, 1698)). Further, Plaintiff has introduced evidence upon which a factfinder could reasonably conclude that defendants Midland Funding and MCM's conduct would have objectively harassed or oppressed a consumer of below average sophistication or intelligence. For example, in a September 3, 2019 letter, defendant MCM stated it was "ceasing all collection efforts until [the] conclusion of the investigation of [Plaintiff's] dispute," Larsen Decl., ¶ 20, Ex. 12; however, later that month, defendant MCM sent Plaintiff an "Acknowledgement of Satisfaction of Judgment" without returning the funds levied from Plaintiff's bank account, suggesting Plaintiff was nonetheless responsible for the debt charged on the Rojo account and Defendants were not going to return the funds levied from his bank account, Plaintiff Decl., ¶ 23, Ex. H. Such contradictory messages may have harassed a consumer of below average sophistication or intelligence. Cf. Johnson v. Portfolio Recovery Assocs., LLC, No. CV 12-4261 PSG, 2013 WL 10156241, at *7 (C.D. Cal. June 24, 2013) ("[A] debt collector may harass a debtor by continuing to call the debtor after the debtor has requested that the debt collector cease and desist communication."). Furthermore, although Defendants explicitly acknowledged Plaintiff's dispute was meritorious on October 7, 2019, Defendants did not reimburse Plaintiff for the full amount levied from his account until more than a year later in February 2021. Larsen Decl., ¶ 21, Ex. 13; Plaintiff Decl., ¶ 24, Ex. I; Frampton Suppl. Decl., ¶ 6, Ex. 3; Goldstein Decl., ¶ 17; see also Nelson v. Equifax Info. Servs., LLC, 522 F. Supp. 2d 1222, 1232-33 (C.D. Cal. 2007) (denying defendant's motion for summary judgment as to plaintiff's section 1692d claim and finding section 1692d ’s "catch all" provision allows conduct, not specifically listed in the statute, to constitute harassing, oppressive or abusive conduct in violation of the statute).
Defendants also argue defendants Midland Funding and MCM are not liable under section 1692d because they did not intend to collect from Plaintiff, but rather from "David Rojo." Dkt. 40-1 at 16. Defendants Midland Funding and MCM, however, clearly intended to collect from the person with Plaintiff's social security number, i.e. Plaintiff. Further, regardless of defendants Midland Funding and MCM's intentions, the FDCPA is a strict liability statute that "makes debt collectors liable for violations that are not knowing or intentional." Reichert, 531 F.3d at 1005.
Thus, a genuine issue of material fact exists as to whether defendants Midland Funding and MCM engaged in "any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt." 15 U.S.C. § 1692d. Therefore, with respect to defendants Midland Funding and MCM, the Court DENIES Defendants’ Motion as to Plaintiff's first cause of action under section 1692d.
c. Defendants Midland Funding and MCM Are Not Entitled to Summary Judgment on Plaintiff's Claim under Section 1692e of the FDCPA
i. Relevant Law
Section 1692e of the FDCPA prohibits a debt collector's use of "any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692e. The section also provides "a non-exhaustive list of sixteen practices that violate this general prohibition[.]" Tourgeman v. Collins Fin. Servs., Inc., 755 F.3d 1109, 1119 (9th Cir. 2014). In the Ninth Circuit, a debt collector's liability under section 1692e is an issue of law. Gonzales v. Arrow Fin. Servs., LLC, 660 F.3d 1055, 1061 (9th Cir. 2011) (citing Terran v. Kaplan, 109 F.3d 1428, 1432 (9th Cir. 1997) ).
The following sixteen practices constitute violations of section 1962e of the FDCPA:
(1) The false representation or implication that the debt collector is vouched for, bonded by, or affiliated with the United States or any State, including the use of any badge, uniform, or facsimile thereof.
(2) The false representation of
(A) the character, amount, or legal status of any debt; or
(B) any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt.
(3) The false representation or implication that any individual is an attorney or that any communication is from an attorney.
(4) The representation or implication that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action.
(5) The threat to take any action that cannot legally be taken or that is not intended to be taken.
(6) The false representation or implication that a sale, referral, or other transfer of any interest in a debt shall cause the consumer to
(A) lose any claim or defense to payment of the debt; or
(B) become subject to any practice prohibited by this subchapter.
(7) The false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer.
(8) Communicating 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.
(9) The use or distribution of any written communication which simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of the United States or any State, or which creates a false impression as to its source, authorization, or approval.
(10) The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.
(11) The failure to disclose in the initial written communication with the consumer and, in addition, if the initial communication with the consumer is oral, in that initial oral communication, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose, and the failure to disclose in subsequent communications that the communication is from a debt collector, except that this paragraph shall not apply to a formal pleading made in connection with a legal action.
(12) The false representation or implication that accounts have been turned over to innocent purchasers for value.
(13) The false representation or implication that documents are legal process.
(14) The use of any business, company, or organization name other than the true name of the debt collector's business, company, or organization.
(15) The false representation or implication that documents are not legal process forms or do not require action by the consumer.
(16) The false representation or implication that a debt collector operates or is employed by a consumer reporting agency as defined by section 1681a(f) of this title.
15 U.S.C. § 1692e.
As mentioned above, the principle governing the Ninth Circuit's evaluation of section 1692e of the FCDPA is set forth in Swanson, 869 F.2d at 1225 : "If the least sophisticated debtor would ‘likely be misled’ by a communication from a debt collector, the debt collector has violated the Act." Guerrero, 499 F.3d at 934 (stating this standard applies to section 1692e of the FDCPA). "[T]he least sophisticated debtor is reasonable and functional, but lacks experience and education regarding financial matters." Stimpson, 944 F.3d at 1196.
A false or misleading statement, however, is actionable under section 1692e only if it is material. Donohue, 592 F.3d at 1033. While materiality does not appear in the text of the FDCPA, the Ninth Circuit has reasoned "that false but non-material representations are not likely to mislead the least sophisticated consumer[.]" Id. In examining materiality, a court should look for "genuinely misleading statements that may frustrate a consumer's ability to intelligently choose his or her response," rather than "mere technical falsehoods." Id. at 1034.
ii. Application
Defendants argue Plaintiff has not set forth sufficient facts to allege a section 1692e claim and Plaintiff's section 1692e claim is based on the faulty premise that attempting to collect a debt that the consumer does not owe can be false, misleading, or deceptive. Dkt. 40-1 at 17.
The undisputed evidence establishes defendant MCM sent contradictory communications regarding its collection efforts. As mentioned above, even though defendant MCM had informed Plaintiff that defendant MCM was "ceasing all collection efforts until [the] conclusion of the investigation of [Plaintiff's] dispute," Larsen Decl., ¶ 20, Ex. 12, defendant MCM later sent Plaintiff a letter with an "Acknowledgement of Satisfaction of Judgment," suggesting defendant MCM was not going to return the funds levied from Plaintiff's bank account, Plaintiff Decl., ¶ 23, Ex. H. Applying the least sophisticated debtor standard, a reasonable trier of fact could find the contradictory messages in these communications false, misleading, and even threatening to continue unlawfully withholding the levied funds. See Gonzales, 660 F.3d at 1062 (rejecting defendant's arguments that the letters do not violate the FDCPA and holding that "under the least sophisticated debtor standard, the letters are misleading and impliedly threaten to take action that cannot be legally taken").
Moreover, the undisputed evidence establishes defendants MCM and Midland Funding sent documents, including the May 9, 2018 "Memorandum of Costs after Judgment, Acknowledgment of Credit and Declaration of Accrued Interest" to "David Rojo" at the address where Plaintiff resided in Chino Hills, California, Larsen Decl., ¶ 14, Ex. 6, even before Plaintiff first called Defendants on July 18, 2019, id., ¶ 16. Applying the least sophisticated debtor standard, a reasonable trier of fact could find receiving a letter from a debt collector addressed to "David Rojo" would be misleading because it suggests Plaintiff is responsible for the debt on the Rojo account. See Tourgeman v. Collins Fin. Servs., Inc., No. 08-CV-1392 JLS NLS, 2011 WL 3176453, at *6 (S.D. Cal. July 26, 2011) ("[T]he Court can conceive of nary a situation more confusing than receiving a dunning letter identifying an original creditor to whom the consumer never was indebted.").
Thus, because a reasonable factfinder could find the correspondence from defendants Midland Funding and MCM misleading and material under the least sophisticated consumer standard, defendants Midland Funding and MCM have not satisfied their burden to show there is no genuine issue of material fact regarding the alleged violation of section 1692e. Therefore, with respect to defendants Midland Funding and MCM, the Court DENIES Defendants’ Motion as to Plaintiff's first cause of action under section 1692e. d. Defendants Midland Funding and MCM Are Entitled to Summary Judgment on Section 1692f of the FDCPA
i. Relevant Law
Section 1692f of the FDCPA maintains that "[a] debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt." 15 U.S.C. § 1692f. This section lists eight non-exhaustive examples of conduct that violates this section. Id.
The following practices constitute violations of section 1692f of the FDCPA:
(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.
(2) The acceptance by a debt collector from any person of a check or other payment instrument postdated by more than five days unless such person is notified in writing of the debt collector's intent to deposit such check or instrument not more than ten nor less than three business days prior to such deposit.
(3) The solicitation by a debt collector of any postdated check or other postdated payment instrument for the purpose of threatening or instituting criminal prosecution.
(4) Depositing or threatening to deposit any postdated check or other postdated payment instrument prior to the date on such check or instrument.
(5) Causing charges to be made to any person for communications by concealment of the true purpose of the communication. Such charges include, but are not limited to, collect telephone calls and telegram fees.
(6) Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if
(A) there is no present right to possession of the property claimed as collateral through an enforceable security interest;
(B) there is no present intention to take possession of the property; or
(C) the property is exempt by law from such dispossession or disablement.
(7) Communicating with a consumer regarding a debt by post card.
(8) Using any language or symbol, other than the debt collector's address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.
15 U.S.C. § 1692f.
"The Ninth Circuit has not articulated a standard for identifying ‘unfair or unconscionable’ conduct outside of the eight examples listed in the statute." Cunningham v. Meridian Credit Grp., LLC, No. EDCV 18-1889-JGB (SHKx), 2019 WL 643966, at *4 (C.D. Cal. Feb. 11, 2019). District courts in the Ninth Circuit, however, have held that, when the conduct alleged is not "remotely similar" to the enumerated examples, the conduct is not "unfair or unreasonable" within the meaning of section 1692f. Id. Other courts have noted the plain meaning of "unfair" is "marked by injustice, partiality, or deception" and the term "unconscionable" means "having no conscience"; "unscrupulous"; "showing no regard for conscience"; and "affronting the sense of justice, decency, or reasonableness." See LeBlanc v. Unifund CCR Partners, 601 F.3d 1185, 1200 (11th Cir. 2010).
As mentioned above, the principle governing the Ninth Circuit's evaluation of claims under section 1692f of the Act is the same standard set forth in Swanson, 869 F.2d at 1225 : "If the least sophisticated debtor would ‘likely be misled’ by a communication from a debt collector, the debt collector has violated the Act." Guerrero, 499 F.3d at 934 (stating this standard applies to section 1692f of the FDCPA). "[T]he least sophisticated debtor is reasonable and functional, but lacks experience and education regarding financial matters." Stimpson, 944 F.3d at 1196. ii. Application
Here, the conduct Plaintiff alleges is "unfair or unconscionable" does not violate section 1692f. Plaintiff claims defendants Midland Funding and MCM's conduct constitutes unfair and unconscionable means to collect debt because (1) defendants Midland Funding and MCM obtained and used a default judgment against another person with a different name and address to levy Plaintiff's bank account and (2) even though Plaintiff repeatedly disputed he was "David Rojo" and provided the requested documentation, defendants MCM and Midland Funding failed to return the money they had garnished or reimburse Plaintiff for bank charges in a timely fashion. Dkt. 49 at 19. Plaintiff, however, has not cited any valid authority—and the Court has found none—which applies section 1692f to facts like those alleged herein.
Moreover, the fact that defendants MCM and Midland Funding issued a writ of garnishment on Plaintiff's bank does not give rise to a section 1692f violation where the evidence does not suggest they knew or should have known at the time that Plaintiff's identity had been stolen. See Chenault v. Credit Corp Sols., Inc., No. CV 16-5864, 2017 WL 5971727, at *3 (E.D. Pa. Dec. 1, 2017) ("The FDCPA was intended to protect debtors from offensive, misleading, and aggressive tactics by debt collectors, not to hold debt collectors ... to a standard of omniscience as to whether or not a debt will eventually be found to belong rightfully to someone other than the individual first identified as the debtor." (citations and internal quotation marks omitted)). Further, although a genuine issue of material fact remains as to whether defendants Midland Funding and MCM violated section 1692d of the FDCPA, the undisputed evidence establishes defendants Midland Funding and MCM investigated Plaintiff's dispute and ultimately reimbursed him for the funds taken from his bank account. Therefore, no evidence suggests defendants Midland Funding and MCM's conduct was "unscrupulous"; "showing no regard for conscience"; or "affronting the sense of justice, decency, or reasonableness." LeBlanc, 601 F.3d at 1200. Ultimately, no reasonable factfinder could find defendants Midland Funding and MCM's conduct rose to the level of unfair or unconscionable as contemplated by section 1692f. See Johnson, 2013 WL 10156241, at *10-11 (finding "that the FDCPA provides ... examples of violations of § 1692f that are in no way similar to the conduct proscribed in §§ 1692d and 1692e" and that while a triable issue of fact remained as to the plaintiff's claims under section 1692d(5) for voluminous and harassing phone calls, the same alleged conduct did not form a basis for plaintiff's claims under 1692f).
Thus, based on the undisputed material facts, defendants Midland Funding and MCM are entitled to summary judgment on Plaintiff's claim under 1692f. Therefore, with respect to defendants Midland Funding and MCM, the Court GRANTS Defendants’ Motion as to Plaintiff's first cause of action under section 1692f.
e. Defendants Midland Funding and MCM Are Entitled to Summary Judgment on Section 1692g under the FDCPA
i. Relevant Law
Section 1692g of the FDCPA provides:
Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.
15 U.S.C. § 1692g. This written notice is referred to as a "validation notice." See Riggs v. Prober & Raphael, 681 F.3d 1097, 1099 (9th Cir. 2012). The purpose of section 1692g ’s notice requirement is "specifically to ensure that debt collectors g[i]ve consumers adequate information concerning their legal rights." Swanson, 869 F.2d at 1225.
Section 1692g(b) of the FDCPA further provides, "Any collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer's right to dispute the debt or request the name and address of the original creditor." 15 U.S.C. § 1692g(b) ; see also Terran, 109 F.3d at 1432 (" ‘[The validation notice] must not be overshadowed or contradicted by other messages or notices appearing in the initial communication from the collection agency.’ "(citation and internal quotation marks omitted)). "[W]hether language in a collection letter overshadows or contradicts the validation notice so as to confuse a least sophisticated debtor is a question of law." Terran, 109 F.3d at 1432.
Again, the principle governing the Ninth Circuit's evaluation of claims under section 1692g of the FDCPA is set forth in Swanson: "if [the court] find[s] that the least sophisticated debtor would likely be misled by the notice which [plaintiff] received from [the credit service], we must hold that the credit service has violated the Act." 869 F.2d at 1225-26 (reversing the district court's grant of a summary judgment in favor of defendant and holding that the collection letter violates section 1692g because it misleads a least sophisticated debtor in both form and content). "[T]he least sophisticated debtor is reasonable and functional, but lacks experience and education regarding financial matters." Stimpson, 944 F.3d at 1196.
ii. Application
First, the undisputed evidence shows defendants Midland Funding and MCM followed the requirements of section 1692g. Assuming the "initial communication" for purposes of section 1692g was Plaintiff's July 18, 2019 phone call to Defendants, Larsen Decl., ¶ 16, defendant MCM sent Plaintiff a timely written notice within five days through defendant MCM's July 23, 2019 letter, id., ¶ 17, Ex. 9; Plaintiff Decl., ¶ 12, Ex. A.
Contrary to Plaintiff's arguments, dkt. 19 at 14, the letter also satisfied the notice requirements pursuant to section 1692g(3)-(5). The letter included (1) statements that Plaintiff has "the right to request substantiation of the debt" and defendant MCM was "treating [Plaintiff's] dispute as a request for substantiation"; (2) information regarding the Rojo account, including copies of billing statements and the current balance; and (3) the name and address of the original creditor, HSBC Bank, in the billing statements. Larsen Decl., ¶ 17, Ex. 9; Plaintiff Decl., ¶ 12, Ex. A. Because defendant MCM's letter already acknowledged Plaintiff had exercised his right to dispute the debt, defendant MCM satisfied the requirement under section 1692g(a)(3). Further, because defendant MCM's letter already provided verification of the debt, defendant MCM satisfied the requirement under section 1692g(a)(4). Finally, because defendant MCM's letter already provided Plaintiff the name and address of the original creditor, defendant MCM satisfied the requirement under section 1692g(a)(5).
Second, to the extent Plaintiff argues defendants Midland Funding and MCM violated section 1692g(b), dkt. 49 at 20-21, their collection activities were consistent with Plaintiff's right to dispute the debt within thirty days after Plaintiff's receipt of defendant MCM's July 23, 2019 letter. In fact, the undisputed evidence establishes defendants Midland Funding and MCM did not engage in any collection efforts during this thirty-day period.
Therefore, with respect to defendants Midland Funding and MCM, the Court GRANTS Defendants’ Motion as to Plaintiff's first cause of action under section 1692g.
f. Defendants Midland Funding and MCM Have Not Met Their Burden in Showing They Are Entitled to the "Bona Fide Error" Defense
Defendants argue that even if defendants Midland Funding and MCM's conduct constituted a violation of the FDCPA, defendants Midland Funding and MCM "would still not be liable pursuant to the Bona Fide Error Defense." Dkt. 40-1 at 24-27.
i. Relevant Law
The "bona fide error" defense, codified in section 1692k(c) of the FDCPA provides:
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.
The "bona fide error" defense is an "affirmative defense" and "narrow exception to strict liability under the FDCPA," for which defendants bear the burden of proof on summary judgment. Clark v. Cap. Credit & Collection Servs., Inc., 460 F.3d 1162, 1177 (9th Cir. 2006) ; Fox v. Citicorp Credit Servs., Inc., 15 F.3d 1507, 1514 (9th Cir. 1994). Accordingly, defendants "must show that any alleged false or misleading representations were (1) unintentional; (2) the result of bona fide error; and (3) made despite the maintenance of procedures reasonably adapted to avoid any such error." Taylor v. Quall, 471 F. Supp. 2d 1053, 1057 (C.D. Cal. 2007) (citation omitted).
ii. Application
As stated above, a reasonable trier of fact could find defendants Midland Funding and MCM violated sections of the FDCPA based upon the nature of their communications with Plaintiff and the substantial delay in returning the funds levied from Plaintiff's bank account. Defendants Midland Funding and MCM, however, have failed to show there is no genuine issue of material fact that any violation was unintentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error. For example, while defendants Midland Funding and MCM have acknowledged they failed to reimburse Plaintiff for more than a year, it remains in dispute whether the delay was intentional and the result of bona fide error. Moreover, while the alleged violations appeared to have occurred in defendant Midland Funding and MCM's dispute investigation process, defendant Midland Funding and MCM have not satisfied their burden in showing they maintain dispute investigation procedures reasonably adapted to avoid such violations. Defendants Midland Funding and MCM submit defendant MCM's Dispute Investigation Policy, but much of it is redacted and thus unavailable for the Court's review. See Larsen Decl., ¶ 16, Ex. 8; Parker v. Peters & Freedman, LLP, No. 8:17-CV-00667-JLS-DFM, 2018 WL 5904169, at *5 (C.D. Cal. Apr. 9, 2018) (finding defendant has failed to raise a genuine issue that is entitled to the bona fide error defense and none of the procedures constituted a policy "designed to avoid the specific errors that led to [Defendant's] filing and maintenance of a time-barred collection suit against [Plaintiff]" (alternations in original)).
Accordingly, defendants Midland Funding and MCM have not met their burden of establishing the bona fide error defense to the FDCPA.
In summary, with respect to defendant Encore, the Court GRANTS Defendants’ Motion as to Plaintiff's first cause of action under sections 1692d, 1692e, 1692f, and 1692g of the FDCPA. With respect to defendants Midland Funding and MCM, the Court DENIES Defendants’ Motion as to Plaintiff's first cause of action under sections 1692d and 1692e of the FDCPA and GRANTS Defendants’ Motion as to Plaintiff's first cause of action under sections 1692f and 1692g of the FDCPA.
B. DEFENDANTS ARE ENTITLED TO SUMMARY JUDGMENT ON SOME OF PLAINTIFF'S ROSENTHAL ACT CLAIMS
1. Applicable Law
"California has adopted a state version of the FDCPA, called the Rosenthal Act." Riggs, 681 F.3d at 1100 ; see also Cal. Civ. Code §§ 1788 - 1788.33. The Rosenthal Act exists to " ‘prohibit debt collectors from engaging in unfair or deceptive’ " debt collection practices. Davidson v. Seterus, Inc., 21 Cal. App. 5th 283, 295, 230 Cal.Rptr.3d 441 (2018) (quoting Cal Civ. Code § 1788.1(b) ). " ‘The Rosenthal Act mimics or incorporates by reference the FDCPA's requirements ... and makes available the FDCPA's remedies for violations.’ " Riggs, 681 F.3d at 1100. The Rosenthal Act, thus, establishes liability under California law for violations of the FDCPA. De Amaral v. Goldsmith & Hull, No. 12-CV-03580-WHO, 2014 WL 572268, at *7 (N.D. Cal. Feb. 11, 2014) (citation omitted).
2. Analysis
a. Defendant Encore Is Entitled to Summary Judgment on Plaintiff's Claim under Section 1788.17 of the Rosenthal Act; Defendants Midland Funding and MCM Are Not Entitled to Summary Judgment on Plaintiff's Claim under Section 1788.17 of the Rosenthal Act
i. Relevant Law
Section 1788.17 of the Rosenthal Act incorporates provisions from the FDCPA and provides that "every debt collector collecting or attempting to collect a consumer debt shall comply with the provisions of Sections 1692b to 1692j" of the FDCPA. Cal. Civ. Code § 1788.17. "[W]hether the [conduct] violates the Rosenthal Act turns on whether it violates the FDCPA." Riggs, 681 F.3d at 1100 ; Mariscal v. Flagstar Bank, FSB, No. ED CV 19-2023-DMG (SHKx), 2020 WL 4804983, at *2 (C.D. Cal. Aug. 4, 2020) ("[V]iolations of the FDCPA's substantive provisions also violate section 1788.17"). ii. Application
(a) Defendant Encore
As an initial matter, a genuine issue of material fact does not exist as to whether defendant Encore is a debt collector under the Rosenthal Act.
"[T]he definition of ‘debt collector’ found in the [Rosenthal Act] is broader than that contained in the FDCPA[.]" Izenberg v. ETS Servs., LLC, 589 F. Supp. 2d 1193, 1199 (C.D. Cal. 2008). "[T]he Rosenthal Act considers anyone who regularly engages in the act or practice of collecting money, property or their equivalent that is due or owing by a natural person as a result of a transaction between that person and another person, in which the natural person acquired property, services, or money on credit, primarily for personal, family, or household purposes to be a ‘debt collector.’ " Davidson, 21 Cal. App. 5th at 303, 230 Cal.Rptr.3d 441. Under even the more expansive definition in the Rosenthal Act, defendant Encore does not meet the definition of "debt collector" under the FDCPA because the undisputed evidence does not show defendant Encore engaged in "the act or practice of collecting money, property or their equivalent" in an attempt to obtain repayment of debt on the Rojo account. See id.
Because Defendants demonstrate an absence of a genuine issue of material fact as to whether defendant Encore is a "debt collector" under the FDCPA, there is no genuine issue of material fact as to whether defendant Encore violated section 1788.17 of the Rosenthal Act. Therefore, with respect to defendant Encore, the Court GRANTS Defendants’ Motion as to Plaintiff's second cause of action under section 1178.17 of the Rosenthal Act.
(b) Defendants Midland Funding and MCM
On the other hand, as the Court finds defendants Midland Funding and MCM have not met their burden in proving they are entitled to summary judgment under sections 1692d and 1692e of the FDCPA, defendants Midland Funding and MCM have also failed to meet their burden in proving they are entitled to summary judgment under section 1788.17 of the Rosenthal Act. See Hosseinzadeh v. M.R.S. Associates, Inc., 387 F. Supp. 2d 1104, 1118 (C.D. Cal. 2005) ("Because defendant has violated the FDCPA for the reasons stated herein, the Court concludes that defendant has also violated Cal. Civ. Code § 1788.17.").
Therefore, with respect to defendants Midland Funding and MCM, the Court DENIES Defendants’ Motion as to Plaintiff's second cause of action under section 1788.17 of the Rosenthal Act.
b. Defendants Are Entitled to Summary Judgment on Plaintiff's Claims under Sections 1788.10(f), 1788.13(j), and 1788.15(a) of the Rosenthal Act
i. Relevant Law
Section 1788.10(f) of the Rosenthal Act prohibits debt collectors from collecting or attempting to collect a consumer debt by threats to take any prohibited actions. Cal. Civ. Code § 1788.10(f). Section 1788.13(j) of the Rosenthal Act prohibits debt collectors from collecting or attempting to collect a consumer debt through "false representation that a legal proceeding has been, is about to be, or will be instituted unless payment of a consumer debt is made." Cal. Civ. Code § 1788.13(j). Section 1788.15(a) of the Rosenthal Act prohibits debt collectors from collecting or attempting to collect a consumer debt "by means of judicial proceedings when the debt collector knows that the service of process, where essential to jurisdiction over the debtor or his property, has not been legally effected." Cal. Civ. Code § 1788.15(a). ii. Application
As stated above, there is no genuine issue of material fact and the undisputed evidence establishes defendant Encore is not a "debt collector" under the Rosenthal Act. Without satisfying this threshold inquiry, defendant Encore is entitled to summary judgment on Plaintiff's claims under sections 1788.10(f), 1788.13(j), and 1788.15(a) of the Rosenthal Act.
In addition, the undisputed evidence establishes defendants Midland Funding and MCM did not violate sections 1788.10(f), 1788.13(j), and 1788.15(a) of the Rosenthal Act. Plaintiff appears to claim that because defendants Midland Funding and MCM (1) obtained a default judgment against "David Rojo" and later used the default judgment to levy Plaintiff's bank account, (2) delayed in reimbursing Plaintiff, and (3) "sent correspondence to Plaintiff asserting he was responsible for the debt until and unless he proved that he was not David Rojo," defendants Midland Funding and MCM violated sections 1788.10(f), 1788.13(j), and 1788.15(a) of the Rosenthal Act. Dkt. 49 at 27. None of these actions, however, suggest defendants Midland Funding or MCM made threats to take any prohibited actions, made false representations about a legal proceeding, or did not know that service of process had not been legally effected. See Cal. Civ. Code §§ 1788.10(f), 1788.13(j), and 1788.15(a).
The Court, therefore, GRANTS Defendants’ Motion as to Plaintiff's second cause of action under sections 1788.10(f), 1788.13(j), and 1788.15(a) of the Rosenthal Act.
c. Defendants Midland Funding and MCM Have Not Met Their Burden in Showing They Are Entitled to the "Bona Fide Error" Defense
Similar to the FDCPA, the Rosenthal Act exempts debt collectors from liability if they show by a "preponderance of evidence that the violation was not intentional and resulted notwithstanding the maintenance of procedures reasonably adapted to avoid any such violation." Cal. Civ. Code § 1788.30(e).
As discussed above, defendants Midland Funding and MCM have failed to meet their burden of demonstrating entitlement to summary judgment on the alleged FDCPA claims due to the bona fide error defense. Hence, defendants fail to meet their burden of establishing entitlement to summary judgment on the alleged Rosenthal Act claims due to the bona fide error defense. See Castillo v. Nationstar Mortg. LLC, No. 15-CV-01743-BLF, 2016 WL 6873526, at *7 (N.D. Cal. Nov. 22, 2016) (finding defendant did not raise a triable issue showing it maintained procedures "reasonably adapted" to avoid errors defendant identified as having caused the wrongful collection and thus could not satisfy its burden under the bona fide error defense to liability under the Rosenthal Act).
Accordingly, defendants Midland Funding and MCM have not met their burden of establishing the bona fide error defense to the Rosenthal Act.
C. DEFENDANT ENCORE IS ENTITLED TO SUMMARY JUDGMENT ON PLAINTIFF'S INTRUSION UPON SECLUSION CLAIM, BUT DEFENDANTS MIDLAND FUNDING AND MCM ARE NOT ENTITLED TO SUMMARY JUDGMENT ON PLAINTIFF'S INTRUSION UPON SECLUSION CLAIM
1. Applicable Law
An action for invasion of privacy by intrusion upon seclusion has two elements: (1) an intrusion into a private place, conversation, or matter, (2) in a manner highly offensive to a reasonable person. Taus v. Loftus, 40 Cal. 4th 683, 725, 54 Cal.Rptr.3d 775, 151 P.3d 1185 (2007) ; see also Deteresa v. Am. Broad. Cos., Inc., 121 F.3d 460, 465 (9th Cir. 1997) ("One who intentionally intrudes, physically or otherwise, upon the solitude or seclusion of another or his private affairs or concerns, is subject to liability to the other for invasion of his privacy, if the intrusion would be highly offensive to a reasonable person."). The intrusion must be intentional. Taus, 40 Cal. 4th at 725, 54 Cal.Rptr.3d 775, 151 P.3d 1185. Additionally, the plaintiff must have had an objectively reasonable expectation of seclusion or solitude in the place, conversation, or data source. Shulman v. Grp. W Prods., Inc., 18 Cal. 4th 200, 232, 74 Cal.Rptr.2d 843, 955 P.2d 469 (1998). To determine whether conduct is "offensive," courts consider "all the circumstances of the intrusion, including its degree and setting and the intruders ‘motives and objectives.’ " Id. at 236, 74 Cal.Rptr.2d 843, 955 P.2d 469 (citation omitted).
2. Analysis
a. Defendant Encore
The undisputed evidence demonstrates defendant Encore merely owns defendants Midland Funding and MCM. Larsen Decl., ¶ 5. There is no evidence defendant Encore engaged in debt collection activity or had any interactions with Plaintiff. Therefore, the Court cannot find defendant Encore (1) intruded upon Plaintiff's private place, conversation, or matter (2) in a manner highly offensive to a reasonable person. See Taus, 40 Cal. 4th at 725, 54 Cal.Rptr.3d 775, 151 P.3d 1185.
Thus, there is no genuine issue of material fact and, with respect to defendant Encore, the Court GRANTS Defendants’ Motion as to Plaintiff's fourth cause of action for intrusion upon seclusion.
b. Defendants Midland Funding and MCM
With respect to defendants Midland Funding and MCM, however, a genuine issue of material fact exists as to whether they intruded upon Plaintiff's private affairs or concerns by intentionally issuing a writ of garnishment on Plaintiff's bank. Specifically, defendant MCM instructed the sheriff to levy Plaintiff's bank account by directing the sheriff to levy a bank account associated with Plaintiff's social security number, Larsen Decl., ¶ 15, Ex. 7. A reasonable factfinder could find that a writ of garnishment on Plaintiff's bank could intrude upon Plaintiff's private affairs because a bank account holder generally does not expect anyone, except those with prior authorization, to levy a bank account. See Nayab v. Cap. One Bank (USA), N.A., 942 F.3d 480, 491 (9th Cir. 2019) (noting an intrusion upon seclusion may involve some form of investigation or examination into a person's private concerns, such as examining a person's private bank account (citation and quotation marks omitted)).
Moreover, a genuine issue of material fact remains as to whether defendants Midland Funding and MCM's levy of Plaintiff's bank account would be highly offensive to a reasonable person. While defendants Midland Funding and MCM were legally entitled to issue a writ of garnishment on Plaintiff's bank account, it remains in dispute whether defendants Midland Funding and MCM should have known they were directing the sheriff to levy the incorrect bank account and whether their procedures, including "scrubs," were reasonably adapted to avoid a levy on the incorrect account. Ultimately, it remains for a trier of fact to decide based on a number of factors, including the context, the conduct and circumstances surrounding the levy, and defendants Midland Funding and MCM's motives and objectives, whether defendants Midland Funding and MCM levied Plaintiff's bank account in a manner highly offensive to a reasonable person. Shulman, 18 Cal. 4th at 236, 74 Cal.Rptr.2d 843, 955 P.2d 469 ; see also Deteresa, 121 F.3d at 465 ("[W]hat is ‘highly offensive to a reasonable person’ suggests a standard upon which a jury would properly be instructed.").
Thus, a genuine issue of material fact remains as to whether defendants Midland Funding and MCM intentionally intruded upon Plaintiff's private affairs or concerns in a manner that is highly offensive to a reasonable person. Therefore, with respect to defendants Midland Funding and MCM, the Court DENIES Defendants’ Motion with respect to Plaintiff's fourth cause of action for intrusion upon seclusion.
D. DEFENDANT ENCORE IS ENTITLED TO SUMMARY JUDGMENT ON PLAINTIFF'S UNFAIR COMPETITION CLAIM, BUT DEFENDANTS MIDLAND FUNIDNG AND MCM ARE NOT ENTITLED TO SUMMARY JUDGMENT ON PLAINTIFF'S UNFAIR COMPETITION LAW CLAIM
1. Applicable Law
Under the California Unfair Competition Law ("UCL"), unfair competition "include[s] any unlawful, unfair or fraudulent business act or practice[.]" Cal. Bus. & Prof. Code § 17200. California's UCL's "coverage is sweeping, embracing anything that can properly be called a business practice and that at the same time is forbidden by law." Cel-Tech Commc'n, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 165, 83 Cal.Rptr.2d 548, 973 P.2d 527 (1999) (internal quotation marks omitted). "By proscribing ‘any unlawful’ business practice, [California's UCL] borrows violations of other laws and treats them as unlawful practices that the [UCL] makes independently actionable." Id. "Virtually any law—federal, state or local—can serve as a predicate for" liability under California's UCL. L. Offs. of Mathew Higbee v. Expungement Assistance Servs., 214 Cal. App. 4th 544, 553, 153 Cal.Rptr.3d 865 (2013) (internal quotation marks and citation omitted); see also del Campo v. Am. Corrective Counseling Servs., Inc., 254 F.R.D. 585, 595 n. 8 (N.D. Cal. 2008) ("[A]n FDCPA violation serves as a predicate for liability under the [California's UCL].").
2. Analysis
a. Defendant Encore
Defendant Encore has met its burden in proving it is entitled to summary judgment on Plaintiff's claims pursuant to the FDCPA, Rosenthal Act, and intrusion upon seclusion claim. Because there are no facts showing, nor any allegations that, defendant Encore has violated any other laws, defendant Encore has met its burden in proving it is entitled to summary judgment on Plaintiff's claim pursuant to UCL.
Therefore, with respect to defendant Encore, the Court GRANTS Defendants’ Motion with respect to Plaintiff's third cause of action pursuant to sections 17200 to 17210 of the California Business and Professions Code.
b. Defendants Midland Funding and MCM
Because defendants Midland Funding and MCM have not met their burden in proving they are entitled to summary judgment on Plaintiff's claims pursuant to sections 1692d and 1692e of the FDCPA and 1788.17 of the Rosenthal Act as well as Plaintiff's intrusion upon seclusion claim, defendants Midland Funding and MCM have failed to meet their burden in proving they are entitled to summary judgment on Plaintiff's claim pursuant to the UCL. See Robinson, 654 F. Supp. 2d at 1064 ("Because Plaintiff has stated claims under the FDCPA and [Rosenthal Act] against all Defendants, Plaintiff also states a claim under the California UCL against all Defendants.").
Therefore, with respect to defendants Midland Funding and MCM, the Court, DENIES Defendants’ Motion with respect to Plaintiff's third cause of action pursuant to sections 17200 to 17210 of the California Business and Professions Code.
VI.
ORDER
For the foregoing reasons, the Court GRANTS IN PART AND DENIES IN PART Defendants’ Motion.
With respect to defendant Encore, the Motion is GRANTED as to all of Plaintiff's claims. Defendant Encore is, thus, DISMISSED from the instant action with prejudice.
With respect to defendants Midland Funding and MCM, the Motion is DENIED as to Plaintiff's claims in his first cause of action pursuant to sections 1692d and 1692e of the Fair Debt Collection Practices Act; claims in his second cause of action pursuant to section 1788.17 of California's Rosenthal Fair Debt Collection Practices Act; claims in his third cause of action pursuant to sections 172000 to 17210 of the California Business and Professions Code ; and claims in his fourth cause of action for intrusion upon seclusion.
However, with respect to defendants Midland Funding and MCM, the Motion is GRANTED as to Plaintiff's claims in his first cause of action pursuant to sections 1692f and 1692g of the Fair Debt Collection Practices Act and claims in his second cause of action pursuant to sections 1788.10(f), 1788.13(j), and 1788.15(a) of California's Rosenthal Fair Debt Collection Practices Act. Those causes of action are DISMISSED with prejudice and without leave to amend.