Opinion
1:21-cv-01662-CL
10-02-2022
CHRISTOPHER WATSON, Plaintiff, v. HORNECKER COWLING, LLP, an Oregon Limited Liability Partnership, Defendant,
FINDINGS AND RECOMMENDATION
Mark D. Clarke, United States Magistrate Judge
Plaintiff alleges claims against the defendant, Hornecker Cowling, LLP, a law firm and limited liability partnership, under the Oregon Unfair Debt Collection Practices Act (OUDCPA) and the federal Fair Debt Collection Practices Act (FDCPA). The defendant moves to strike the OUDCPA claim based on Oregon's anti-SLAPP statute, ORS 30.150, Plaintiff has also filed a motion to strike the defendant's Reply brief for raising new arguments. For the reasons below, both motions (#13, #33) should be DENIED. A limited judgment should be entered denying the anti-SLAPP motion.
BACKGROUND
This cause of action arises out of the attempt to collect a debt. The underlying transaction was the purchase of a vehicle; Watson bought the car from Uwe Schroeder, doing business as Schroeder Wholesale on October 31, 2014. The two parties signed a Bill of Sale and Purchase Order itemizing the purchase price, down payment, and 24 monthly payments of $157.87, which included payment of a finance charge. Watson claims that the vehicle had been purchased based upon assurances that the engine had been recently rebuilt. However, after driving approximately 180 miles, the vehicle had engine problems. Watson returned the vehicle to Schroeder, who told him to take it to the mechanic who had rebuilt the engine. Watson claims he continued to make payments until Schroeder told him to "hold off' because the repairs were taking such a long time. After two years, the mechanic said he would not be doing any further work on the vehicle, but he provided Watson with a different engine that he could use as a replacement and install himself. The vehicle was inoperable when Watson retrieved it from the mechanic in November 2016. Watson alleges that he and Schroeder discussed whether a balance was still owed on the purchase of the vehicle, but he claims that Schroeder never gave him a specific amount that was needed to resolve the account.
In November of 2020, Watson received a collection letter ("the Debt Collection Letter") from Horneck Cowling, LLP, stating that it was seeking to collect $5,387.80, plus interest and late fees, for the purchase of the vehicle. Watson alleges that he then called Schroeder directly to discuss the situation. He claims Schroeder told him he was on vacation in Mexico and would call him back, but he never did. On July 17, 2021, Hornecker Cowling filed a lawsuit on behalf of Schroeder in Josephine County Circuit Court, Case No. 21CV27462, seeking to collect the same debt for the purchase of the vehicle. Watson now brings claims under the FDCPA and the OUDCPA, alleging that the Debt Collection Letter and the filing of the lawsuit violated those statutes by attempting to collect un-owed debts and unlawful fees, charges, interest, and attorney fees. Watson alleges that at least 6 of the monthly payments itemized by the defendant were barred by the applicable statute of limitations. The Debt Collection Letter and the Josephine County Complaint, along with the Bill of Sale and Purchase Order, are attached as exhibits to the Complaint (#1) in this case.
LEGAL STANDARD
"A SLAPP suit is one in which the plaintiffs alleged injury results from petitioning or free speech activities by a defendant that are protected by the federal or state constitutions." Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1109 (9th Cir. 2003). The purpose of Oregon's anti-SLAPP statute, ORS 31.150, is to '"permit a defendant who is sued over certain actions taken in the public arena to have a questionable case dismissed at an early stage.'" Mullen v. Meredith Corp., 271 Or.App. 698, 700, 353 P.3d 598 (2015) (quoting Staten v. Steel, 222 Or.App. 17, 27, 191 P.3d 778 (2008), rev. den., 345 Or. 618, 201 P.3d 909 (2009)). That statute provides, in material part:
SLAPP stands for Strategic Lawsuit Against Public Participation.
1) A defendant may make a special motion to strike against a claim in a civil action described in subsection (2) of this section. The court shall grant the motion unless the plaintiff establishes in the manner provided by subsection (3) of this section that there is a probability that the plaintiff will prevail on the claim. If the court denies a special motion to strike, the court shall enter a limited judgment denying the motion.
2) A special motion to strike may be made under this section against any claim in a civil action that arises out of:
a) Any oral statement made, or written statement or other document submitted, in a legislative, executive or judicial proceeding or other proceeding authorized by law;
b) Any oral statement made, or written statement or other document submitted, in connection with an issue under consideration or review by a legislative, executive or judicial body or other proceeding authorized by law;
c) Any oral statement made, or written statement or other document presented, in a place open to the public or a public forum in connection with an issue of public interest; or
d) Any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.
3) A defendant making a special motion to strike under the provisions of this section has the initial burden of making a prima facie showing that the claim against which the motion is made arises out of a statement, document or conduct described in subsection (2) of this section. If the defendant meets this burden, the burden shifts to the plaintiff in the action to establish that there is a probability that the plaintiff will prevail on the claim by presenting substantial evidence to support a prima facie case. If the plaintiff meets this burden, the court shall deny the motion.ORS 31.150.
In keeping with those provisions, a special motion to strike is resolved according to a two-step burden-shifting process:
First, the court must determine whether the defendant has met its initial burden to show that the claim against which the motion is made "arises out of one or more protected activities described in subsection (2).
Second, if the defendant meets its burden, "the burden shifts to the plaintiff in the action to establish that there is a probability that the plaintiff will prevail on the claim by presenting substantial evidence to support a prima facie case." If the plaintiff succeeds in meeting that burden, the special motion to strike must be denied.Young v. Davis, 259 Or.App. 497,501, 314 P.3d 350 (2013) (citing ORS 31.150(3)). In reviewing a motion to strike, we take the facts from the pleadings and from the supporting and opposing affidavits submitted to the trial court and state them in the light most favorable to plaintiff. ORS 31.150(4).
DISCUSSION
Plaintiff Watson alleges claims arising out of two separate actions by defendant Hornecker Cowling: (1) the sending of the Debt Collection Letter, and (2) the filing of the Complaint in Josephine County Circuit Court. Plaintiff claims that these two actions violated both the OUDCPA and the FDCPA because both the Letter and the Complaint demanded that Plaintiff pay un-owed debts and disallowed charges and fees, such as finance charges and attorney fees, and because at least 6 of the monthly payments itemized as past-due debts were beyond the statute of limitations.
Defendant Hornecker Cowling now brings a special motion to strike the OUDCPA claim, based on Oregon's anti-SLAPP statute. This motion should be denied. Oregon's anti-SLAPP statute does not apply to the claims at issue in this case. Even if the statute did apply, Plaintiff has met his burden to show that there is a probability that he will prevail on his claim.
Defendant also brought a motion for abstention to stay this case pending the resolution of the Josephine County case, but that case has been dismissed, and that motion has been withdrawn.
1. The Debt Collection Letter
The Oregon anti-SLAPP statute does not apply to the portion of the OUDCPA claim arising out of the Debt Collection Letter. Contrary to the defendant's argument, the Letter was not a document "submitted in connection with an issue under consideration or review by a judicial body" at the time it was sent to Watson. See Baldwin v. Seida, 297 Or.App. 67, 77, 441 P.3d 720 review denied, 365 Or. 769, 453 P.3d 554 (2019) (determining that writs of garnishment were not "'submitted' in connection with an issue that was 'under consideration or review by a judicial body' at the time they were issued and delivered to third party debtors.") (emphasis added). Here, the Debt Collection Letter was sent to Watson, privately, to collect a debt. The fact that it might have been later submitted as evidence in litigation does not transform it into a statement made for court purposes or for judicial review.
None of the other subsections of the anti-SLAPP statute apply to the Letter. It is true that the court is directed to "broadly construe" the anti-SLAPP statute, but that broad construction has a purpose: "to protect free speech rights." Zweizig v. Rote, No. 18-35991,2020 WL 3259293 at *4 (9th Cir. June 16, 2020). Defendant has offered no explanation for why a privately sent debt collection letter would constitute protected "free speech," and the entirety of the OUDCPA stands in direct contradiction of such an idea.
Finally, even if the anti-SLAPP statute applied, Plaintiff has met his burden under the statute. The Letter included a demand for Plaintiff to pay attorney fees, as well as other charges and fees, which Plaintiff alleges are disallowed by contract and law and exceed the actual debt owed. This properly states a claim under OUDCPA. Plaintiff also attached the Purchase Order and the Bill of Sale to his Complaint, to show that there were no terms expressly allowing the fees and charges sought by the defendant. The Letter and accompanying itemize statement of fees were also attached. This is sufficient evidence for this stage of the proceedings to show a prima facie case for violation of the OUDCPA, as well as a probability of success on the merits, and the defendant has not raised an issue of fact as to these allegations.
2. The Josephine County Complaint
The anti-SLAPP statute does not apply to the portion of the OUDCPA claim arising out of the filing of the lawsuit in Josephine County Circuit Court. The defendant argues that the state court Complaint is a "...written statement or other document submitted, in a ... judicial proceeding." While technically and arguably true, the Josephine County Complaint is not the type of written statement or document intended to be protected under the statute. As discussed above, the intention of the statute is to protect free speech. Zweizig, 2016 WL 5402935, at *4. Moreover, the OUDCPA expressly provides that certain debt collection lawsuits create a cause of action:
A debt collector engages in an unlawful collection practice if the debt collector, while collecting or attempting to collect a debt, does any of the following:
Files a legal action to collect or files a legal action to attempt to collect a debt if the debt collector knows, or after exercising reasonable diligence would know, that an applicable statute of limitations bars the collection or the collection attempt.ORS 646.639(2)(r). If Oregon law expressly allows a cause of action based on the filing of a legal action to collect a debt, then Oregon anti-SLAPP law cannot cut that cause of action off at the knees by claiming the filing of a legal action to collect a debt is protected activity.
Defendant's Reply brief raises the issue of Oregon's "litigation privilege" as an alternative reason to dismiss this claim. Plaintiff moves to strike this argument for being raised for the first time in the Reply, but the Court finds that it would be inapplicable for the same reason. Oregon law expressly creates a cause of action in this instance, therefore neither the anti-SLAPP statute nor any privilege can bar the claim outright.
The operative Complaint in this case alleges that the Josephine County Complaint attempted to collect a debt that was beyond the statute of limitations. This claim is supported by the allegations and the attachments to the Complaint establishing the dates that Plaintiff purchased the subject vehicle, the terms of the Bill of Sale and Purchase Order, and the dates of payments made and then suspended. While the defendant argues the merits of the statute of limitations issue, that is a substantive question to be determined in the course of the litigation, not a threshold question to be answered at the pleading stage. Defendant argues that Plaintiff submitted "zero evidence" in response to the special motion to strike, but this argument ignores the attachments to the Complaint establishing the prima facie facts, and it overstates the burden on Plaintiff at this stage of litigation, particularly considering the federal pleading rules. Moreover, the Court is required to construe all facts in the Plaintiffs favor at this stage. The defendant has not carried its burden to show that the filing of the Josephine County Complaint is protected activity, and the Court finds that it is not. Even if it were protected activity, Plaintiff has met his burden under the anti-SLAPP statute to show a prima facie case and a probability of success on the merits. This motion should be denied.
Finally, Plaintiff has filed a motion to strike the defendant's Reply brief, on the basis that the Reply raises new arguments for the first time, thus prejudicing Plaintiff because Plaintiff is unable to respond. Because the Court is recommending that the defendant's motion be denied, this motion should also be denied as moot.
RECOMMENDATION
For the foregoing reasons, the defendant's motion to strike (#13) and Plaintiffs motion to strike (#33) should both be DENIED. The Court should enter a limited judgment denying the defendant's special motion order to strike under Oregon's anti-SLAPP statute.
This Findings and Recommendation will be referred to a district judge. Objections, if any, are due no later than fourteen (14) days after the date this recommendation is filed. If objections are filed, any response is due within fourteen (14) days after the date the objections are filed. See Fed. R. Civ. P. 72, 6. Parties are advised that the failure to file objections within the specified time may waive the right to appeal the District Court's order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).