Opinion
H042010
06-29-2017
CITIBANK, N.A., Plaintiff, Cross-defendant and Appellant, v. KAROL U. MACDONALD, Defendant, Cross-complainant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Santa Cruz County Super. Ct. No. CV176963)
Citibank, N.A. (Citibank) filed a collection action against Karol U. MacDonald. She responded with a cross-complaint alleging violations of the Fair Debt Collection Practices Act (15 U.S.C. § 1692 et seq.; FDCPA) and the Rosenthal Fair Debt Collection Practices Act (Civ. Code, § 1788 et seq.; Rosenthal Act). Citibank moved to strike the cross-complaint pursuant to California's anti-SLAPP statute (Code Civ. Proc., § 425.16). The trial court denied the motion. On appeal, Citibank first argues that the trial court correctly concluded that the cross-complaint arose from protected activity and that MacDonald failed to show a probability of prevailing on her claim that Citibank pursued its collection efforts under a name other than its true name. Second, Citibank claims the trial court erred in concluding that MacDonald showed a probability of prevailing on her claim that Citibank levied on her bank accounts without informing her of the lawsuit or the judgment. Third, Citibank contends that the trial court should have stricken MacDonald's "meritless 'wrong name' cause of action." We agree with the first and third contentions. Accordingly, we reverse.
Unspecified section references are to the Civil Code.
The parties label MacDonald's claims the wrong name claim and the nonservice claim. We do the same.
I. Background
MacDonald defaulted on a credit card issued by Citibank (South Dakota) N.A. (Citibank South Dakota). In December 2009, the law firm of Hunt & Henriques (H&H) wrote to her at 310 Boulder Brook Drive, Boulder Creek to inform her that Citibank South Dakota had retained the firm to demand payment on the account, which was in default and had been closed. The letter advised MacDonald to pay the outstanding balance within 30 days if she wanted to resolve the matter without litigation.
Citibank South Dakota filed a collection action in March 2010. The proof of service stated that MacDonald was personally served at 310 Boulder Brook Drive, Boulder Creek on March 17, 2010.
On August 3, 2010, Citibank South Dakota filed a form request for entry of MacDonald's default. The H&H lawyer who signed the form declared under penalty of perjury that a copy of the request was mailed to MacDonald at 310 Boulder Brook Drive, Boulder Creek. On August 18, 2010, the trial court entered a default judgment for $27,671.40 against MacDonald.
On July 1, 2011, Citibank South Dakota merged with Citibank. Citibank was the surviving entity. In February 2013, Citibank (using the name Citibank South Dakota) filed a memorandum of costs after judgment. In March 2013, Citibank (using the name Citibank South Dakota) obtained a writ of execution and levied on MacDonald's bank accounts.
MacDonald moved to vacate the default judgment, set aside the default, and quash service of the summons. She asserted that "[t]his case involves a default judgment obtained by a creditor after it failed to serve the debtor, and the debtor had no notice of the action until the creditor levied on the debtor's bank account." By declaration, MacDonald said she did not reside at 310 Boulder Brook Drive on March 17, 2010, when service was allegedly made. "That property has two homes on it. One has the house number 310 and the other has the number 300. At all times in 2010, I resided at 300 Boulder Brook Drive . . . ." MacDonald "specifically" remembered being at work on March 17, 2010, because it was St. Patrick's Day. It was "not possible" that the process server could have mistaken someone else for her because her residence is on the top of a hill and "somewhat remote" with "no close-by neighbors." MacDonald denied ever being served with the summons. She also declared that she never received the request for entry of her default that was mailed to her at 310 Boulder Brook Drive. "[B]ecause I live in a rural location, the post office does not deliver mail to my street address; I am required to have a post office mail box . . . ." She did not learn about the collection action or the default judgment until March 20, 2013, "when my checks started to bounce and I called my bank to determine what was happening." Citibank (using the name Citibank South Dakota) and MacDonald subsequently stipulated that the default judgment "shall be set aside and vacated as void" and that "[s]ervice of the summons . . . shall be quashed." The trial court approved the stipulation on May 14, 2013.
Citibank asks us to take judicial notice of the motion papers filed in the collection action. By separate order, we grant the unopposed request. (Evid. Code, §§ 452, subd. (d)(1), 459, subd. (a)(1); Hotels Nevada, LLC v. L.A. Pacific Center, Inc. (2012) 203 Cal.App.4th 336, 346, fn. 4.)
One week later, Citibank filed a new action to recover the debt. MacDonald cross-complained for $6,000 in attorney's fees incurred to quash the summons and to void the default judgment in the original collection action. Her cross-complaint contained a single cause of action that included two theories of recovery. The first claim was that Citibank "became the debt collector of this account" after the merger "but failed to use its identity in its collection efforts and failed to communicate with MacDonald in its name," in violation of section 1788.13, subdivision (a) of the Rosenthal Act and the FDCPA as incorporated into the Rosenthal Act (§ 1788.17; 15 U.S.C. § 1692e). The second claim was that "[h]aving failed to notify MacDonald of the existence of the lawsuit and judgment, Citibank caused a levy to occur on MacDonald's bank accounts," in violation of the FDCPA as incorporated into the Rosenthal Act (§ 1788.17; 15 U.S.C. § 1692e).
Citibank filed a special motion to strike the cross-complaint. (Code Civ. Proc., § 425.16). It argued that the cross-complaint arose from Citibank's protected speech and petitioning activity, that MacDonald had not pleaded facts sufficient to constitute any valid cause of action, and that she could not demonstrate a probability of succeeding on the merits of either claim. MacDonald opposed the motion and Citibank filed a reply.
The trial court denied the motion. Citibank filed a timely notice of appeal from the court's written order.
II. Discussion
A. The Anti-SLAPP Statute
California's anti-SLAPP statute provides that "[a] cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the [cross-complainant] has established that there is a probability that the [cross-complainant] will prevail on the claim." (Code Civ. Proc., § 425.16, subd. (b)(1).) "In making its determination, the court shall consider the pleadings, and supporting and opposing affidavits stating the facts on which the liability or the defense is based." (Code Civ. Proc., § 425.16, subd. (b)(2).) The statute "shall be construed broadly." (Code Civ. Proc., § 425.16, subd. (a).)
"Section 425.16 posits . . . a two-part process . . . . First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. . . . If the court finds that such a showing has been made, it must then determine whether the plaintiff has demonstrated a probability of prevailing on the claim." (Navellier v. Sletten (2002) 29 Cal.4th 82, 88 (Navellier).) A defendant satisfies the "arising from" requirement " 'by demonstrating that the act underlying the plaintiff's cause [of action] fits one of the categories [of protected activity] spelled out in section 425.16, subdivision (e)' . . . ." (Code Civ. Proc., § 425.16, subd. (b)(1); Navellier, at p. 88.) Those categories include "(1) any written or oral statement or writing made before a . . . judicial proceeding . . . [or] . . . (2) . . . in connection with an issue under consideration or review by a . . . judicial body . . . ." (Code Civ. Proc., § 425.16, subd. (e)(1) & (2).) "In the anti-SLAPP context, the critical point is whether the plaintiff's cause of action itself was based on an act in furtherance of the defendant's right of petition or free speech. [Citations.]" (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78.)
"To establish a probability of prevailing, the plaintiff 'must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited.' [Citations.]" (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 291 (Soukup).) "Section 425.16 therefore establishes a procedure where the trial court evaluates the merits of the lawsuit using a summary-judgment-like procedure at an early stage of the litigation." (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 192.) " '[T]hough the court does not weigh the credibility or comparative probative strength of competing evidence, it should grant the motion if, as a matter of law, the defendant's evidence supporting the motion defeats the plaintiff's attempt to establish evidentiary support for the claim.' [Citation.] In making this assessment it is 'the court's responsibility . . . to accept as true the evidence favorable to the plaintiff . . . .' [Citation.] The plaintiff need only establish that his or her claim has 'minimal merit'. . . ." (Soukup, at p. 291.) "Only a cause of action that satisfies both prongs of the anti-SLAPP statute—i.e., that arises from protected speech or petitioning and lacks even minimal merit—is a SLAPP, subject to being stricken under the statute." (Navellier, supra, 29 Cal.4th at p. 89.) " 'Review of an order granting or denying a motion to strike under section 425.16 is de novo.' [Citation.]" (Flatley v. Mauro (2006) 39 Cal.4th 299, 325-326 (Flatley).)
B. Threshold Showing
Citibank contends that the trial court correctly ruled that it carried its threshold burden to show that McDonald's claims arose from activity protected by the anti-SLAPP statute. We agree.
The defendant in Navellier was "sued because of the affirmative counterclaims he filed in [an earlier] federal court [action]." (Navellier, supra, 29 Cal.4th at p. 90.) "In alleging breach of contract, [the] plaintiffs complain[ed] about Sletten's having filed counterclaims in the federal action." (Ibid.) The plaintiffs' fraud cause of action was grounded "in Sletten's alleged misrepresentations and omissions 'in connection with the [R]elease' and on [his] 'actions in signing the [R]elease.' " (Id. at p. 89.) "Sletten's negotiation and execution of the Release, therefore, involved 'statement[s] or writing[s] made in connection with an issue under consideration or review by a . . . judicial body' ([Code Civ. Proc.,] § 425.16, subd. (e)(2)) . . . and his arguments respecting the Release's validity were 'statement[s] or writing[s] made before a . . . judicial proceeding' (id., subd. (e)(1)) . . . ." (Navallier, at p. 90.) Thus, the action fell "squarely within the ambit of the anti-SLAPP statute's 'arising from' prong. [Citation.]" (Ibid.)
Navellier is on point and controlling here. MacDonald's wrong name claim was based on Citibank's use of the name Citibank South Dakota in its "collection efforts . . . ." Her cross-complaint alleged that Citibank South Dakota "caused to be filed a lawsuit . . . which was a collection action . . . ." The cross-complaint further alleged that Citibank South Dakota "filed a request for entry of default," "applied for and received a Writ of Execution," "negotiated a settlement of [MacDonald's] motion [to quash the summons and void the judgment]," "filed a stipulated order," and "used the entity name Citibank (South Dakota) to dismiss the First Lawsuit without prejudice . . . ." Here as in Navellier, each filing was "indisputably is a 'statement or writing made before a . . . judicial proceeding,' " and the negotiation of the stipulated order involved a "statement or writing made in connection with an issue under consideration or review by a . . . judicial body." (Navellier, supra, 29 Cal.4th at p. 90; Code Civ. Proc., § 425.16, subd. (e)(1) & (2).) Thus, MacDonald's wrong name claim fell "squarely within the ambit of the anti-SLAPP statute's 'arising from' prong. [Citation.]" (Navellier, at p. 90.)
MacDonald's nonservice claim also fell squarely within the ambit of the anti-SLAPP statute. Her cross-complaint alleged that "[h]aving failed to notify MacDonald of the existence of the lawsuit and judgment, Citibank caused a levy to occur on MacDonald's bank accounts . . . ." The gravamen of this claim was Citibank's maintenance of the lawsuit and execution on the default judgment without having properly served MacDonald with the summons and complaint and without keeping her apprised of the progress of the litigation. Thus, this claim also arose from acts in furtherance of Citibank's protected petitioning activity. (Code Civ. Proc., § 425.16, subd. (e)(1) & (2); see Yu v. Signet Bank/Virginia (2002) 103 Cal.App.4th 298, 305, 316 [lawsuit challenging "the practice of collecting consumer obligations by suing debtors in distant locations to deprive them of the opportunity to defend themselves" was based on activity protected by the anti-SLAPP statute].) The trial court properly concluded that Citibank satisfied its threshold burden under the anti-SLAPP statute.
MacDonald disagrees. Relying on Komarova v. National Credit Acceptance, Inc. (2009) 175 Cal.App.4th 324 (Komarova), she argues that Code of Civil Procedure section 425.16, subdivision (e)(1) and (2) of the anti-SLAPP statute are coextensive with the litigation privilege (§ 47, subd. (b)), that the privilege does not shield violations of the Rosenthal Act or the federal FDCPA, and that, "[s]uch conduct cannot therefore be deemed an 'act in furtherance of the constitutional right of petition or free speech' within the meaning of the anti-SLAPP statute." Komarova does not support this argument.
Komarova was not an anti-SLAPP case. Nor is its holding as broad as MacDonald suggests. Komarova stands for the proposition that the litigation privilege cannot be used as a defense to an action alleging violations of the Rosenthal Act where its application would "inevitably conflict with" and "negate" those claims, thus rendering the Act "significantly inoperable if it did not prevail over the privilege where . . . the two conflict." (Komarova, supra, 175 Cal.App.4th at pp. 337-340.) Thus, to the extent Komarova is relevant in this case, it is relevant to the second or "probability of prevailing" prong of the anti-SLAPP analysis, that is, to the determination whether MacDonald has "stated and substantiated a legally sufficient claim." (Navallier, supra, 29 Cal.4th at p. 88; Code Civ. Proc., § 425.16; see, e.g., G.R. v. Intelligator (2010) 185 Cal.App.4th 606, 618-619 [distinguishing Komarova and holding that the defendant's anti-SLAPP motion was properly granted where the plaintiff could not demonstrate a probability of success on the merits where the litigation privilege barred his claims].)
C. Probability of Prevailing on the Merits -- Wrong Name Claim
Citibank contends that the trial court correctly concluded that MacDonald failed to satisfy her burden to show a probability of prevailing on her wrong name claim. We agree.
1. Section 1788.17
MacDonald's wrong name claim was based in part on section 1788.17. That section provides in pertinent part that "every debt collector collecting or attempting to collect a consumer debt shall comply with the provisions of [15 U.S.C. s]ections 1692b to 1692j, inclusive . . . and shall be subject to the remedies in [15 U.S.C. s]ection 1692k . . . ." (§ 1788.17.) Section 1788.17 "incorporates by reference the FDCPA's requirements . . . and makes available the FDCPA's remedies for violations." (Riggs v. Prober & Raphael (9th Cir. 2012) 681 F.3d 1097, 1100.) A section 1788.17 claim premised on a violation of the FDCPA, however, "remains a state claim." (Alkan v. Citimortgage, Inc. (N.D.Cal. 2004) 336 F.Supp.2d 1061, 1065.) Thus, whether the trial court properly rejected MacDonald's section 1788.17 claim depends on whether the cross-complaint stated and substantiated a legally sufficient claim for violation of the FDCPA provision on which her wrong name claim was premised. (Soukup, supra, 39 Cal.4th at p. 291.)
The FDCPA broadly prohibits "debt collectors" from using "any false, deceptive, or misleading representation or means in connection with the collection of any debt." (15 U.S.C. § 1692e; see Clomon v. Jackson (2d Cir. 1993) 988 F.2d 1314, 1318 (Clomon).) Its nonexhaustive list of specifically prohibited acts includes "[t]he use of any business, company, or organization name other than the true name of the debt collector's business, company, or organization." (15 U.S.C. § 1692e(14).) " '[A] debt collector's liability under § 1692e of the FDCPA is an issue of law.' [Citation.]" (Tourgeman v. Collins Fin. Services (9th Cir. 2014) 755 F.3d 1109, 1119 (Tourgeman).)
Whether debt collection efforts are false, deceptive, or misleading for purposes of the FDCPA requires an objective analysis that " 'takes into account whether the "least sophisticated debtor would likely be misled by a communication." ' [Citation.]" (Tourgeman, supra, 755 F.3d 1109 at p. 1119.) " 'The "least sophisticated debtor" standard is "lower than simply examining whether particular language would deceive or mislead a reasonable debtor." ' [Citation.] 'Most courts agree that although the least sophisticated debtor may be uninformed, naive, and gullible, nonetheless her interpretation of a collection notice cannot be bizarre or unreasonable.' [Citation.]" (Ibid.) "The standard is 'designed to protect consumers of below average sophistication or intelligence,' or those who are 'uninformed or naive,' particularly when those individuals are targeted by debt collectors." (Gonzales v. Arrow Fin. Services (9th Cir. 2011) 660 F.3d 1055, 1062 (Gonzales).) "At the same time, the standard 'preserv[es] a quotient of reasonableness and presum[es] a basic level of understanding and willingness to read with care.' [Citation.] The FDCPA does not subject debt collectors to liability for 'bizarre,' 'idiosyncratic,' or 'peculiar' misinterpretations." (Gonzales, at p. 1062.) It is " 'not concerned with mere technical falsehoods that mislead no one, but instead with genuinely misleading statements that may frustrate a consumer's ability to intelligently choose his or her response.' [Citation.] In other words, a debt collector's false or misleading representation must be 'material' . . . to be actionable under the FDCPA." (Tourgeman, at p. 1119.) " '[F]alse but non-material representations are not likely to mislead the least sophisticated consumer and therefore are not actionable under [section] 1692e.' " (Ibid.)
A majority of the federal circuit courts applies the " 'least sophisticated debtor' " or " 'least sophisticated consumer' " standard. (Gonzales, supra, 660 F.3d at p. 1061, fn. 2; Avila v. Riexinger & Associates, LLC (2d Cir. 2016) 817 F.3d 72, 75.) The Seventh Circuit applies an " 'unsophisticated debtor' " standard, but as the Ninth Circuit observed in 2011, that standard "appears to differ from the majority test only in semantics." (Gonzales, at p. 1061, fn. 2.).)
Here, it is undisputed that Citibank South Dakota dealt with MacDonald under the same name from the beginning of its credit relationship with her. Citibank South Dakota issued the credit card that she used for more than 20 years. She received monthly billing statements and correspondence about her account from Citibank South Dakota. Citibank South Dakota filed the collection action against her and took her default. The hypothetical least sophisticated debtor would not be confused on these facts about what debt was at issue, nor would she be misled into thinking that an unknown third party had applied for the writ of execution and levied on her account.
MacDonald offered no evidence to support a contrary conclusion. On appeal, she does not address or even mention the least sophisticated debtor standard. She does not respond to Citibank's argument that it is not misleading for a creditor who has communicated with a debtor for 20 years to continue to communicate with that debtor in the same name even though its legal name has changed. Instead, MacDonald addresses arguments that Citibank raised below but has not asserted on appeal. The anti-SLAPP statute puts the burden on MacDonald to establish a probability of prevailing on the merits of her wrong name claim. (Soukup, supra, 39 Cal.4th 260, 291.) She did not carry that burden here.
2. Section 1788.13
MacDonald's wrong name claim was also based on section 1788.13, subdivision (a). That section provides that "[n]o debt collector shall collect or attempt to collect a consumer debt by means of the following practices: [¶] (a) Any communication with the debtor other than in the name either of the debt collector or the person on whose behalf the debt collector is acting." (§ 1788.13, subd. (a).) MacDonald does not advance a separate argument that Citibank's continued use of the name Citibank South Dakota after the merger violated section 1788.13. She simply quotes that section in her argument with respect to section 1788.17 and then summarily asserts that "[b]ecause the statutes must be liberally construed in MacDonald's favor, this collection activity [obtaining a writ of execution and levying on her bank account post-merger] performed under a fictitious name constituted a violation."
An appellate brief must "[s]tate each point under a separate heading or subheading summarizing the point, and support each point by argument and, if possible, by citation of authority." (Cal. Rules of Court, rule 8.204(1)(B).) " 'Appellate briefs must provide argument and legal authority for the positions taken. "When an appellant fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived." ' [Citation.]" (Cahill v. San Diego Gas & Elec. Co. (2011) 194 Cal.App.4th 939, 956 (Cahill).) "Mere suggestions of error without supporting argument or authority other than general abstract principles do not properly present grounds for appellate review." (Department of Alcoholic Beverage Control v. Alcoholic Beverage Control Appeals Bd. (2002) 100 Cal.App.4th 1066, 1078.) " 'We are not bound to develop appellants' argument for them.' " (Cahill, at p. 956.)
Here, we understand MacDonald to advance the same argument with respect to her section 1788.13 claim that she advances with respect to her section 1788.17 claim premised on Citibank's alleged violation of the FDCPA. We have rejected that argument. The trial court did not err when it concluded that MacDonald failed to show a probability of prevailing on the merits of her wrong name claim.
D. Probability of Prevailing on the Merits -- Nonservice Claim
1. Alleged Pleading Defects
Citibank argues that MacDonald "did not adequately fact-plead [her nonservice] claim" and therefore failed to show that it was " 'legally sufficient.' " (Soukup, supra, 39 Cal.4th at p. 291.) We disagree.
A complaint or cross-complaint must contain "[a] statement of the facts constituting the cause of action, in ordinary and concise language." (Code Civ. Proc. § 425.10, subd. (a)(1).) "[T]he complaint ordinarily is sufficient if it alleges ultimate rather than evidentiary facts." (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) "The distinction between conclusions of law and ultimate facts is not at all clear and involves at most a matter of degree . . . . [T]he particularity of pleading required depends upon the extent to which the defendant in fairness needs detailed information that can be conveniently provided by the plaintiff, and . . . less particularity is required where the defendant may be assumed to possess knowledge of the facts at least equal, if not superior, to that possessed by the plaintiff. [Citations.]" (Burks v. Poppy Construction Co. (1962) 57 Cal.2d 463, 473-474 (Burks).) In accordance with these principles, the Burks court held in an action challenging discrimination by an owner of public housing that "it may be alleged generally, in the terms of the statute, that housing accommodations are 'publicly assisted.' " (Id. at p. 474.)
Citibank argues that MacDonald did not adequately plead that the debt was a "consumer debt." (§§ 1788.17, 1788.13.) Based on Burks, we reject the contention. MacDonald alleged that Citibank was "collecting or attempting to collect a 'consumer debt' as that term is defined in the referenced statute." The allegation satisfies the standard articulated in Burks.
The cases on which Citibank relies do not change our conclusion. Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979 (Robinson) stands for the proposition that fraud must be pleaded with particularity. As this is not a fraud case, Robinson is inapposite here. Lopez v. Southern Cal. Rapid Transit Dist. (1985) 40 Cal.3d 780 (Lopez) was a suit against a public common carrier by passengers injured in a fight on a bus. It stands for the proposition that " 'to state a cause of action against a public entity, every fact material to the existence of its statutory liability must be pleaded with particularity.' " (Id. at p. 795.) This is not an action against a public entity, so Lopez too is inapposite here. Bockrath v. Aldrich Chemical Co. (1999) 21 Cal.4th 71 (Bockrath) was a toxic tort case in which the plaintiff alleged generally that 55 defendant manufacturers of products including WD-40 and rubber cement exposed him over a 21-year period to chemicals that caused his cancer. (Id. at p. 77.) Bockrath states the rule that when the pleaded facts of negligence and injury do not naturally give rise to an inference of causation, the plaintiff must plead specific facts affording such an inference. (Id. at pp. 78-79.) Bockrath has no application to MacDonald's Rosenthal Act cross-complaint against a single defendant.
Citibank next argues that the nonservice claim was insufficiently pleaded because MacDonald failed to allege "that Citibank knew that it had not effected service" or that "Citibank attempted to collect a debt by means of judicial proceedings when it knew that service of process had not been effected." This argument lacks merit.
The knowledge allegations that Citibank claims are missing are those required to state a cause of action under section 1788.15. That section provides that "[n]o debt collector shall collect or attempt to collect a consumer debt by means of judicial proceedings when the debt collector knows that service of process, where essential to jurisdiction over the debtor or his property, has not been legally effected." (§ 1788.15, subd. (a).) As Citibank acknowledged below, MacDonald did not purport to allege a cause of action under section 1788.15. Instead, she alleged a violation of section 1788.17 premised on the FDCPA, which does not include a knowledge requirement. (15 U.S.C. § 1692e.) Thus, her failure to allege that Citibank knew MacDonald had not been properly served is irrelevant.
Our conclusion means that we need not address Citibank's arguments that MacDonald "did not have evidence to support an allegation that Citibank knew that service had not been effected" and that its "unrefuted evidence that it believed that service had been effective defeats MacDonald's claims as a matter of law."
Citibank next argues that the nonservice claim was not properly pleaded because "neither the FDCPA nor [the Rosenthal Act] purport to make service of process or execution on a judgment a tort" and therefore, it "is little wonder that . . . [MacDonald's trial counsel] was unable to find any statute that purported to impose tort liability for serving a debtor at home if she gets her mail at a Post Office box." We reject the argument.
The stated purposes of the FDCPA are "to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." (15 U.S.C. § 1692(e).) The FDCPA is to be " 'construed liberally in favor of the consumer.' " (Tourgeman, supra, 755 F.3d at p. 1118.) Similarly, the purpose of the Rosenthal Act is "to prohibit debt collectors from engaging in unfair or deceptive acts or practices in the collection of consumer debts . . . ." (§ 1788.1, subd. (b).) Like the FDCPA, the Rosenthal Act is " 'a remedial statute [that] should be interpreted broadly in order to effectuate its purpose.' " (Komarova, supra, 175 Cal.App.4th at p. 340.) That neither statute explicitly proscribes the complained-of conduct is not dispositive. The FDCPA broadly prohibits the use of "any false, deceptive, or misleading representation or means in connection with the collection of any debt." (15 U.S.C. § 1692e.) Importantly, the statute's list of practices that violate the proscription against such representations or means is "non-exhaustive." (Tourgeman, at p. 1119; 15 U.S.C. § 1692e ["Without limiting the general application of the foregoing, the following conduct is a violation of this section."].) "Because the list . . . is non-exhaustive, a debt collection practice can be a 'false, deceptive, or misleading' practice in violation of § 1692e even if it does not fit within any of the subsections of § 1692e." (Clomon, supra, 988 F.2d at p. 1318.)
In Freeman v. ABC Legal Services, Inc. (N.D.Cal. 2011) 827 F.Supp.2d 1065, 1075 (Freeman), the plaintiff alleged that the defendants violated various provisions of the FDCPA by preparing and filing a false proof of service of summons to obtain a default judgment in a collection action against her. (Freeman, at pp. 1069, 1075; 15 U.S.C. §§ 1692d, 1692e, 1692f.) The district court denied the defendants' motion to dismiss, concluding that the plaintiff adequately alleged violations of the FDCPA. (Freeman, at p. 1076.)
Here, MacDonald alleged that she was "never served" with the original lawsuit, "did not receive notice of the request for entry of default," and was unaware of the default judgment and the levy until her checks started bouncing. She averred that Citibank violated the FDCPA and therefore the Rosenthal Act by maintaining its collection lawsuit and enforcing the default judgment without properly effecting service and without keeping her apprised of the progress of the litigation. It can reasonably be inferred from the allegations of the cross-complaint that (as MacDonald expressly declared in opposition to Citibank's anti-SLAPP motion) the statement in the proof of service that she had been personally served was "completely and totally false." Given that the FDCPA's list of prohibited practices is non-exhaustive and in light of Freeman, we conclude that MacDonald adequately alleged a violation of the FDCPA as incorporated into the Rosenthal Act.
Citibank next argues that MacDonald insufficiently pleaded the nonservice claim because the cross-complaint "did not allege any basis for vicarious liability." (Italics omitted.) We understand Citibank to argue that it is a " 'creditor' " rather than a " 'debt collector' " under the FDCPA and as such, cannot be held liable under that statute. (15 U.S.C. § 1692a(4) & (6).) We understand Citibank to argue further that H&H is a "debt collector" under the FDCPA, that MacDonald could have sued H&H instead of attempting to hold Citibank vicariously liable for H&H's failure to properly effect service, and that MacDonald did not in any event properly allege vicarious liability. The argument fails because its first premise is incorrect.
The Rosenthal Act does not exactly mirror the FDCPA. It contains its own definition of " 'debt collector.' " (§ 1788.2, subd. (c).) Under the Rosenthal Act, a " 'debt collector' " is "any person who, in the ordinary course of business, regularly, on behalf of himself or others, engages in debt collection." (§ 1788.2, subd. (c), italics added.) The FDCPA, by contrast, ordinarily does not apply to creditors who collect their own debts. (15 U.S.C. § 1692a(6).) Thus, "[t]he definition of 'debt collector' under the Rosenthal Act is . . . broader and more inclusive than under the FDCPA because it allows for those collecting debts on their own behalf to be considered 'debt collectors.' [Citation.]" (Masuda v. Citibank, N.A. (N.D.Cal. 2014) 38 F.Supp.3d 1130, 1134 (Masuda); see Alborzian v. JPMorgan Chase Bank, N.A. (2015) 235 Cal.App.4th 29, 36, fn. 7 ["The Rosenthal Act does not incorporate the FDCPA's applicability only to 'debt collectors' [as defined in 15 U.S.C. § 1692a(6)], so the Rosenthal Act applies to Chase whether or not it qualifies as a 'debt collector' under the FDCPA.")
Here, where MacDonald alleged that Citibank was attempting to collect its own debt, Citibank fits the Rosenthal Act's definition of " 'debt collector.' " (§ 1788.2, subd. (c).) Thus, she adequately pleaded a claim for violation of the Rosenfeld Act. (Masuda, supra, 38 F.Supp.3d at p. 1134.) She had no need to rely on a theory of vicarious liability, so it is irrelevant that she did not allege facts to support that theory.
2. Expressio Unio Est Exclusio Alterius
For the first time in its reply brief on appeal, Citibank argues that the trial court was compelled to conclude "that no other section in the [Rosenthal Act apart from section 1788.15] imposes liability for executing on a judgment when a proof of service . . . might later be proven . . . inaccurate." Citibank contends that when the Legislature enacted section 1788.15 to prohibit continued judicial proceedings where a debt collector knowingly fails to effect service, it necessarily excluded any prohibition on executing on a judgment where a debt collector unknowingly fails to effect service. We deem this issue waived.
Appellate courts ordinarily do not consider new issues raised for the first time in an appellant's reply brief because to do so " 'would deprive the respondent of an opportunity to counter the argument.' [Citation.] 'Obvious reasons of fairness militate against consideration of an issue raised initially in the reply brief of an appellant.' [Citation.]" (Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 764.) " ' "Hence the rule is that points raised in the reply brief for the first time will not be considered, unless good reason is shown for failure to present them before." ' [Citation.] [¶] . . . '[T]he court may properly consider them as waived . . . .' " (Id. at pp. 764-765.) Citibank offers no excuse for its tardy presentation of this issue. We decline to consider it. (Id. at p. 765.)
3. Affirmative Defenses
Citibank asserts that the trial court erred in denying its anti-SLAPP motion because "the First Amendment and related doctrines," specifically, the litigation privilege and the Noerr-Pennington doctrine, provide complete defenses to MacDonald's claims. We disagree.
A defendant can overcome a special motion to strike by presenting evidence that defeats the plaintiff's claim as a matter of law. (Soukup, supra, 39 Cal.4th at p. 291.) "Generally, a defendant may defeat a cause of action by showing . . . there is a complete defense to the cause of action . . . . [¶] However, the defendant also generally bears the burden of proving its affirmative defenses. [Citations.] Thus, although section 425.16 places on the plaintiff the burden of substantiating its claims, a defendant that advances an affirmative defense to such claims properly bears the burden of proof on the defense. [Citation.]" (Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133 Cal.App.4th 658, 676.) If the defendant does so, the plaintiff must then overcome the defense. (Bentley Reserve LP v. Papaliolios (2013) 218 Cal.App.4th 418, 434; see Flatley, supra, 39 Cal.4th at p. 323.)
a. Litigation Privilege
"The litigation privilege, codified at Civil Code section 47, subdivision (b), provides that a 'publication or broadcast' made as part of a 'judicial proceeding' is privileged. This privilege is absolute in nature, applying 'to all publications, irrespective of their maliciousness.' [Citation.] 'The usual formulation is that the privilege applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that [has] some connection or logical relation to the action.' [Citation.]" (Action Apartment Assn., Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232, 1241 (Action Apartment).) It "is not limited to statements made during a trial or other proceedings, but may extend to steps taken prior thereto, or afterwards." (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1057 (Rusheen).) " 'The principal purpose of [the litigation privilege] is to afford litigants and witnesses [citation] the utmost freedom of access to the courts without fear of being harassed subsequently by derivative tort actions. [Citations.]' " (Action Apartment, at p. 1241.) "[T]he privilege has been broadly applied" to further this purpose and has been held applicable to constitutional and statutory causes of action. (Jacob B. v. County of Shasta (2007) 40 Cal.4th 948, 955 [litigation privilege applies to asserted violation of constitutional right to privacy]; Ribas v. Clark (1985) 38 Cal.3d 355, 364-365 [litigation privilege applies to alleged violation of the state's criminal eavesdropping laws].)
But "[t]he litigation privilege . . . is not without limit." (Action Apartment, supra, 41 Cal.4th at p. 1242.) Courts have recognized exceptions "based on irreconcilable conflicts between the privilege and other coequal state laws." (Id. at p. 1247.) In Komarova, a collection agency attempted to collect a debt from the wrong person. (Komarova, supra, 175 Cal.App.4th at pp. 330-331.) It persisted even after it was made aware of its mistake, and it ultimately obtained an arbitration award against Komarova without having served her. (Id. at pp. 331-333.) She sued the agency for violations of the Rosenthal Act and intentional infliction of emotional distress. (Komarova, at p. 335.)
On appeal from a judgment in Komarova's favor, the collection agency argued that the litigation privilege shielded its conduct. (Komarova, supra, 175 Cal.App.4th at p. 337.) The court rejected the contention. In a case of apparent first impression in the California state courts, the Komarova court agreed with the majority of federal district courts that have addressed the issue and concluded that the privilege "cannot be used to shield violations of the [Rosenthal] Act." (Id. at p. 337.) The court observed that "[e]xceptions to the litigation privilege have been recognized under statutes that (1) are 'more specific' than the privilege, and (2) would be 'significantly or wholly inoperable' if the privilege applied." (Komarova, at p. 339.) It determined that the Rosenthal Act is more specific than the litigation privilege because the privilege is implicated in all judicial and quasi-judicial proceedings, whereas the Rosenthal Act "is implicated in only the small subset of those proceedings that involve collection of consumer debts." (Komarova, at p. 339.)
Whether the Rosenthal Act would be significantly or wholly inoperable if the litigation privilege applied was "a closer question." (Komarova, supra, 175 Cal.App.4th at p. 340.) In concluding that it would be, the court was "mindful of the ease with which the Act could be circumvented if the litigation privilege applied. In that event, unfair debt collection practices could be immunized merely by filing suit on the debt." (Ibid.) In addition, "the Act's prohibitions of deliberate neglect of service of process (§ 1788.15, subd. (a)) and distant forum abuse (§ 1788.15, subd. (b)) would be nullified by the privilege. The Legislature presumably would not have included those protections in the Act if it intended for the privilege to apply." (Komarova, at p. 340.) Finally, the court noted that the Rosenthal Act was a remedial statute that should be interpreted broadly to effectuate its purpose. (Komarova, at p. 340.) The court concluded that the privilege did not entitle the collection agency to judgment on Komarova's Rosenthal Act claims. (Komarova, at p. 340.)
We agree with the Komarova court's reasoning and find it applicable here. If the litigation privilege were applicable, debt collectors could easily immunize themselves against liability for FDCPA violations by filing collection actions in California. This would effectively nullify section 1788.17, which incorporates those provisions into the California statute. (See People v. Persolve, LLC (2013) 218 Cal.App.4th 1267, 1275 (Persolve).) Accordingly, we reject Citibank's argument that the litigation privilege provides a complete defense to MacDonald's nonservice claim.
Citibank selectively quotes from Komarova to support its argument that the Rosenthal Act does not trump the litigation privilege because the two are not "wholly irreconcilable." But Komarova nowhere states that a statute must be "wholly irreconcilable" with the litigation privilege before it will be held to trump it. It states that exceptions to the privilege have been recognized under more specific statutes that "would be 'significantly or wholly inoperable' if the privilege applied." (Komarova, supra, 175 Cal.App.4th at p. 339.) Here, we have determined that application of the litigation privilege would effectively nullify section 1788.17. That section is an integral part of the Rosenthal Act because it incorporates most provisions of the FDCPA into the California statute. It follows that the Rosenthal Act would be "significantly inoperable" if enforcement of the FDCPA provisions that section 1788.17 incorporates were barred when their application conflicts with the privilege. (Komarova, at pp. 340, 338-339; see Persolve, supra, 218 Cal.App.4th at pp. 1275-1277.)
Citibank next argues that which statute is more specific "is entirely a question of perspective." It concedes that the litigation privilege is implicated in all judicial and quasi-judicial proceedings while the Rosenthal Act is implicated in only a small subset of those proceedings. It argues, however, that the litigation privilege "covers only communications made in or related to petitions to the government, and not the multitude of collection actions that the legislature expressly intended to prohibit: harassing phone calls, abusive language, misleading letters, threats of violence or criminal prosecution, public shaming, and so on." We think this argument misses the point. The point is that if the litigation privilege applied to Rosenthal Act claims, debt collectors could easily escape liability for unfair debt collection practices "merely by filing suit on the debt" and this would render the Rosenthal Act significantly inoperable. (Komarova, supra, 175 Cal.App.4th at p. 340.) We conclude that the litigation privilege does not bar MacDonald's cross-complaint.
b. First Amendment/Noerr-Pennington Doctrine
Citibank summarily asserts that the First Amendment precludes MacDonald's nonservice claim. However, it does not separately address or develop that point. Instead, it argues that the Noerr-Pennington doctrine required the court "to construe the FDCPA and the [Rosenthal Act] in a way that would avoid burdening conduct protected by the Petition Clause." Citibank contends that the trial court ran afoul of the Noerr-Pennington doctrine "[b]y ruling that MacDonald might prevail on a statutory cause of action complaining that Citibank had petitioned the government . . . ." We reject the argument.
The Noerr-Pennington doctrine "derives from the First Amendment's guarantee of 'the right of the people . . . to petition the Government for a redress of grievances.' [Citation.] Under the . . . doctrine, those who petition any department of the government for redress are generally immune from statutory liability for their petitioning conduct." (Sosa v. DIRECTV, Inc. (9th Cir. 2006) 437 F.3d 923, 929 (Sosa).) "Under the Noerr-Pennington rule of statutory construction, we must construe federal statutes so as to avoid burdening conduct that implicates the protections afforded by the Petition Clause unless the statute clearly provides otherwise." (Sosa, at p. 931.)
In Sial v. Unifund CCR Partners (S.D.Cal. Aug. 28, 2008, No. 08 CV 0905 JM (CAB)) 2008 WL 4079281) (Sial), the court considered whether the Noerr-Pennington doctrine barred the plaintiff's FDCPA claim against a debt collection company. (Id. at p. *3.) The plaintiff claimed the company submitted declarations containing false statements to obtain a default judgment and garnished the plaintiff's wages when it knew it had not served the plaintiff with the summons and complaint. (Sial, at p. *1.) The Sial court denied the collection company's motion for judgment on the pleadings, explaining that the United States Supreme Court's decision in Heintz v. Jenkins (1995) 514 U.S. 291 (Heintz) "strongly" supported a conclusion that the Noerr-Pennington doctrine did not bar the plaintiff's FDCPA claims. (Sial, at p. *3.)
In Heintz, a defaulting debtor sued the lawyer and the law firm that represented her bank in a collection action to recover the debt. (Heintz, supra, 514 U.S. at p. 293.) She alleged that the defendants violated the FDCPA by sending her a settlement letter that falsely represented the amount of her debt. (Heintz, at p. 293; 15 U.S.C. §§ 1692e, 1692f.) The district court held that the FDCPA did not apply to lawyers engaged in litigation and dismissed the action. (Heintz, at p. 294.) The Second Circuit reversed and the United States Supreme Court upheld the reversal. The high court rejected the law firm's argument that the FDCPA's definition of " 'debt collector' " did not include litigating attorneys. (Heintz, at p. 295.) The court held that the FDCPA "applies to attorneys who 'regularly" engage in consumer-debt-collection activity, even when that activity consists of litigation." (Heintz, at p. 299.) It reached that result based on the plain language of the statute and on Congress's 1986 repeal of an exemption for attorneys in an earlier version of the statute. (Id. at pp. 294-295.)
The Sial court found Heintz's "logical implication" persuasive. (Sial, supra, 2008 WL 4079281 at p. *4.) It explained that "[w]hile the [Heintz] Court did not address the Noerr-Pennington doctrine, its holding contradicts the result urged by [the defendants] in this case. Plaintiff's claims arise out of [the firm's] filing [of] the collection action, obtaining a default judgment, and garnishing Plaintiff's wages. These are litigation-related activities. Pursuant to Heintz's statutory construction, therefore, the FDCPA applies to these methods of debt collection. To hold now that the Noerr-Pennington doctrine immunizes these activities would suggest that the FDCPA claims in Heintz ran afoul of the First Amendment. The court declines to make such a suggestion." (Sial, at p. *4.) The Sial court added that Sosa also supported its conclusion that the Noerr-Pennington doctrine did not bar the plaintiff's claims. "The doctrine requires courts to 'construe federal statutes so as to avoid burdening conduct that implicates the protections afforded by the Petition Clause unless the statute clearly provides otherwise.' [Citation.] As construed by the Heintz Court, the FDCPA 'clearly provides' that the Act covers some petitioning conduct." (Sial, at p. *4.)
The Sial court's reasoning is persuasive. Heintz stands for the proposition that the FDCPA applies to those who meet the statutory definition of debt collector even when their debt collection methods involve litigation-related activities. The Rosenthal Act imposes liability on debt collectors who violate the FDCPA. (§ 1788.17.) We conclude that the Rosenthal Act applies to those who meet its definition of debt collector even when their debt collection methods involve litigation. Citibank meets that definition. (§ 1788.2, subd. (c).) The Noerr-Pennington doctrine does not bar MacDonald's claims. (Sial, supra, 2008 WL 4079281 at pp. *3-4.)
E. Striking Allegations of Protected Activity
Relying on Taus v. Loftus (2007) 40 Cal.4th 683 (Taus), Citibank argues that "[a]t a minimum, the meritless 'wrong name' cause of action should have been stricken, and not saved simply because it [was] lumped together under one 'basis of damage claim' " in MacDonald's cross-complaint. Relying on Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811 (Oasis) and Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90 (Mann), overruled in Baral v. Schnitt (2016) 1 Cal.5th 376, 396, footnote 11 (Baral), MacDonald responds that an anti-SLAPP motion cannot be used to strike only part of a cause of action. She cites Oasis for the proposition that "[i]f the plaintiff 'can show a probability of prevailing on any part of its claim, the cause of action is not meritless' and will not be stricken; 'once a plaintiff shows a probability of prevailing on any part of its claim, that plaintiff has established that its cause of action has some merit and the entire cause of action stands.' [Citation.]" (Oasis, at p. 820, quoting Mann, at p. 106.) Thus, the issue is whether an anti-SLAPP motion can be used to strike only part of a cause of action as framed in a complaint or cross-complaint.
The California Supreme Court recently resolved this question in favor of Citibank's position. In Baral, the court addressed how a special motion to strike operates against a so-called " 'mixed cause of action' " that includes multiple claims, some protected by the anti-SLAPP statute and some not. (Baral, supra, 1 Cal.5th at p. 381.) The Baral court overruled Mann and disapproved a number of other cases "in so far as they read Oasis . . . as an endorsement of the Mann rule." (Baral, at p. 396, fn. 11.) The court explained that "the application of [Code of Civil Procedure] section 425.16 cannot reasonably turn on how the challenged pleading is organized." (Baral, at p. 392.) The anti-SLAPP statute "is not concerned with how a complaint is framed, or how the primary right theory might define a cause of action." (Id. at p. 382.) "[T]he Legislature used 'cause of action' in a particular way in [Code of Civil Procedure] section 425.16 (b)(1), targeting only claims that are based on the conduct protected by the statute." (Baral, at p. 382.) Further, "the Legislature's choice of the term 'motion to strike' reflects the understanding that an anti-SLAPP motion, like a conventional motion to strike, may be used to attack parts of a count as pleaded." (Id. at p. 393.) "Thus, in cases involving allegations of both protected and unprotected activity, the plaintiff is required to establish a probability of prevailing on any claim for relief based on allegations of protected activity. Unless the plaintiff can do so, the claim and its corresponding allegations must be stricken." (Id at p. 395.)
In Baral as in this case, the issue arose at the second step of the anti-SLAPP analysis. (Baral, supra, 1 Cal.5th at p. 396.) The court summarized "the showings and findings required by section 425.16(b)" in such cases as follows: "[T]he burden shifts to the plaintiff to demonstrate that each challenged claim based on protected activity is legally sufficient and factually substantiated. The court, without resolving evidentiary conflicts, must determine whether the plaintiff's showing, if accepted by the trier of fact, would be sufficient to sustain a favorable judgment. If not, the claim is stricken. Allegations of protected activity supporting the stricken claim are eliminated from the complaint, unless they also support a distinct claim on which the plaintiff has shown a probability of prevailing." (Baral, at p. 396.)
Here, we have concluded that MacDonald failed to show that her wrong name claim was legally sufficient and factually supported. Therefore, the claim and the allegations supporting it must be stricken.
III. Disposition
The order denying Citibank's anti-SLAPP motion is reversed. On remand, the trial court shall vacate its order denying the motion in its entirety and enter a new order granting the motion in part and denying it in part. The court shall strike MacDonald's wrong name claim and the allegations supporting it from the cross-complaint. The parties shall bear their own costs on appeal.
/s/_________
Mihara, J. WE CONCUR: /s/_________
Premo, Acting P. J. /s/_________
Elia, J.