Opinion
Civil No. 03-340-JE.
January 23, 2004
Danny H. Gerlt, Portland, OR, Attorneys for Plaintiff.
William R. Goode, Portland, OR, Attorneys for Defendants Brumley and Capital Credit Collection Services, Inc.
Frank H. Lagesen, Brooke M. Burns, Cosgrave Vergeer Kester LLP, Portland, OR, Attorneys for Defendant Jeffrey I Hansen.
OPINION AND ORDER
Plaintiffs Linda Clark and Jerry Clark bring this action alleging that defendants Capital Credit Collection Services, Inc. (Capital), Janine Brumley, and Jeffrey Hasson violated state and federal laws in the manner in which they attempted to collect a debt. Plaintiffs have filed two motions for partial summary judgment. All defendants move for summary judgment, and the Capital defendants move for the imposition of sanctions against plaintiffs' counsel. For the reasons set out below, I deny plaintiffs' motions for summary judgment, grant defendant Hasson's motion for summary judgment, grant in part and deny in part Capital and Brumley's (the Capital defendants) motion for summary judgment, and deny the Capital defendants' motion for sanctions.
BACKGROUND
Plaintiffs, a married couple, are "consumers" within the meaning of the relevant law applying to debt collection.
Beginning in 1995, J. Michael Sullivan, Ph.D., a licensed psychologist, treated plaintiff Linda Clark for mental health issues. Treatment was rendered at a business called "The Evans Sullivan Clinic."
From October 1994 through June 2001, plaintiff Jerry Clark maintained health insurance coverage for himself and Linda Clark under a group health insurance policy obtained through his employer. The policy paid for some, but not all, of the costs of Linda Clark's treatment.
Dr. Sullivan retired at the end of June, 2001. Dr. Katie Evans, who was affiliated with Dr. Sullivan, claimed an interest in accounts receivable, including Linda Clark's account, after she purchased Dr. Sullivan's interest in the business. After Sullivan's retirement, Linda Clark began receiving mental health care treatment at a different location from Cathy Asher, MS, LPC, LPN.
In a letter to the attention of the bookkeeper at "Dr. Evans and Associates" dated November 14, 2001, Linda Clark stated that she wanted to pay her outstanding bill in installments. Linda Clark wrote that she needed to "reconcile the account. . . ." She added that the account had "never been correct and mistakes were made in billing my insurance company and the wrong company was billed years after my insurance had changed."
On March 19, 2002, Dr. Evans asked defendant Capital to collect money Linda Clark allegedly owed for psychological therapy. Dr. Evans assigned the debt to Capital on April 10, 2002. The assignment stated that Dr. Evans assigned her "right, title and interest in and to my . . . claim and demand against CLARK, LINDA L . . . according to the terms and conditions of the assignment agreement between [Dr. Evans] and Capital Credit and Collection."
Defendant Janine Brumley, an employee of Capital, worked on the Linda Clark account. According to her affidavit, Brumley followed Capital's usual procedures in attempting to collect the debt.
On March 29, 2002, Capital sent a collection letter to Linda Clark. The letter indicated that the underlying account was from "Evans Sullivan Clinic," and that Capital sought payment of $2,523.26 in principal and $117.26 in interest.
Ms. Clark disputed the debt in telephone calls to Capital on April 3 and April 10, 2002. She also disputed the debt in a letter to Capital dated April 10, 2002, and in a telephone conversation with Brumley the same day. In the letter, Ms. Clark did not dispute that she owed some amount, but indicated that the amount sought was incorrect. She stated that she had "been trying to have the bill reconciled for years," and that she was not trying to avoid paying the bill, but just wanted "to know that the amount is correct."
On April 10, 2002, Brumley added Jerry Clark to the Linda Clark account. She sent a letter addressed to Linda L. Clark and Jerry Clark, stating that Capital would assume that their debt to "Dr. Katie Evans" was valid unless they notified the office in writing within 30 days from receipt of the notice that they disputed "the validity of this debt or any portion thereof. . . ." Brumley enclosed an eight-page itemization of Ms. Clark's account.
Brumley placed a telephone call to Ms. Clark on April 17, 2002, and left her name and number. Ms. Clark returned the call, disputed the amount of the debt, and hung up on Brumley. Brumley's notes of the conversation indicate that Ms. Clark stated that she and her husband would "just pay $50.00/month," and that Brumley had responded that "we don't want $50.00 per month, we want the balance."
Brumley sent a collection letter to plaintiffs on April 18, 2002, stating that Capital had been assigned their account from Dr. Katie Evans, who was seeking payment in the amount of $2,652.97. The letter stated that, if a collection action was filed, attorney fees and court costs would be sought in addition to that amount.
In a letter to Brumley at Capital Credit dated April 24, 2002, Jerry Clark disputed the amount of the debt. Mr. Clark stated that plaintiffs had requested "proper verification of this account balance" and had received only a partial summary of the account that lacked detail and was missing accounting information for several years. Mr. Clark stated that Linda Clark had sought "verification" on many occasions over the past few years, and requested copies of "EOBs from the three insurance companies that have always provided coverage" for services provided by Dr. Sullivan, as well as a complete listing of accounting entries from 1996 through 1999, which Mr. Clark asserted was missing from Capital Credit's "last accounting." In addition, Mr. Clark stated that he was enclosing "Evan's own acknowledgment of past accounting problems at her office which she reports contributed to her leaving practice." He added that all future communications from Capital should be directed to him in writing, and that no telephone calls should be made "to Linda at her employment" or to plaintiffs' home.
On April 24, 2002, defendant Jeffrey Hasson, an attorney, sent a letter to plaintiffs. The letter stated that Hasson represented Capital, which was attempting to collect Dr. Katie Evans' account in the amount of $2,652.34. The letter stated that Hasson's office would assume that the debt was valid unless it was disputed within 30 days, and that the office would obtain verification of the debt if the debt or any portion of it was disputed in writing.
Plaintiff Jerry Clark responded to Hasson's letter in a letter dated April 25, 2002. In that letter, Mr. Clark disputed the amount sought and the billing on which it was based. Mr. Clark asked for a written response, and stated that his letter "precludes any phone calls" to plaintiffs' home or employers.
On May 6, 2002, defendant Hasson sent plaintiffs a letter responding to Jerry Clark's letter of April 25, 2002. Hasson's letter stated that Capital intended "to pursue its claim" based upon documents that were enclosed to substantiate the claim. Along with the letter, Hasson sent a copy of the eight-page itemization of Ms. Clark's account that had been included in Brumley's letter of April 10, 2002. Plaintiffs were subsequently served with a summons and complaint on May 11, 2002, asserting that defendants were indebted to Dr. Katie Evans, Capital's assignor. The complaint alleged that the account was for "expenses of the family," and sought payment of $2,523.26, plus interest from September 25, 2001, until paid. The complaint also sought recovery of reasonable attorney fees pursuant to O.R.S. § 20.082, as well as Capital's costs.
After filing the collection action in the Washington County Circuit Court, Hasson ceased all attempts to collect on the debt outside of the litigation process.
On May 29, 2002, plaintiffs filed and served an answer to the complaint.
On July 30, 2002, Linda Clark called Hasson's office with a request for some information concerning insurance payments. According to her affidavit, Ms. Clark called "to confirm receipt of payments from the insurance company from our efforts."
Brumley called Linda Clark later that day. Ms. Clark states that she asked Brumley why she was calling plaintiff's home "when she had been told in writing not to contact us by telephone." Ms. Clark states that Brumley replied that Hasson's secretary had asked her to call in response to plaintiff's inquiry concerning insurance payments. She adds that Brumley engaged her "in extended conversation and was rude, condescending and argumentative." Ms. Clark states that this caused her to become "emotionally distraught" and to require "telephone therapy" from her social worker.
Defendants assert that Brumley had merely made "a return call with information requested by Mrs. Clark." In her answer to an interrogatory regarding her conversation with Ms. Clark, Brumley states that Hasson's secretary called Capital and reported that Ms. Clark wanted "to know who her insurance company needed to make the check payable." Brumley states that Ms. Clark "was adamant about a call being returned," and "was requesting a call back immediately."
On August 28, 2002, Plaintiffs attended an arbitration hearing concerning Capital's collection action against them. Dr. Evans appeared as a witness for Capital. On September 5, 2002, the arbitrator issued an opinion awarding Capital principal in the amount of $1,785 and costs in the amount of $612.
In a letter to Hasson dated September 11, 2002, Danny Gerlt, plaintiffs' attorney, stated that plaintiffs disputed the debt. Gerlt asked Hasson to provide validation of the debt, as well as "the collectors' notes for each defendant and/or account and all documents reflecting communications between plaintiff and defendants." Gerlt stated that, upon receipt of proof, the Clarks would "pay any undisputed amount." Gerlt filed an appeal of the arbitration award on the same day, and a trial was set for January 23, 2003.
On January 31, 2003, a stipulated judgment was entered dismissing Capital's action against plaintiffs with prejudice and without costs or attorney fees to any party.
In his affidavit, plaintiff Jerry Clark states that a copy of his credit report obtained in February 2003 reported that Capital had sought to collect from him in May, June, September, and October of 2002, indicating that Dr. Evans' claim had not been deleted following dismissal of the state court collection action against plaintiffs. Mr. Clark has also submitted a credit report dated July 14, 2003, indicating TransUnion was reporting that a debt to Dr. Katie Evans in the amount of $2,685 had been "placed for collection."
According to the affidavit of plaintiff Linda Clark, an adverse credit entry reflecting the collection action remained on her credit report through May 2003. Defendants Brumley and Capital have submitted a copy of an Experian credit report for Mr. Clark dated March 12, 2003, which indicates that a "credit item" with Capital had been deleted.
PLAINTIFFS' CLAIMS
Plaintiffs bring two claims. The first claim alleges violations of the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq. This claim alleges that defendants:
— violated 15 U.S.C. § 1692c and 1692d "by communicating with and causing Brumley to communicate with Mrs. Clark after being directed to cease communications in writing;"
— violated 15 U.S.C. § 1692d by engaging in conduct during attempts to collect a debt, the natural consequences of which was to "harass, oppress and abuse plaintiff in . . . communications with plaintiffs;"
— violated 15 U.S.C. § 1692d 1692e, and 1692f by continuing attempts to collect the debt when they knew or had reason to know that plaintiffs were not liable for the debt, adding Mr. Clark as an obligor, communicating with Clark about the debt, maintaining adverse credit entries on plaintiffs' credit reports, instituting a legal action against plaintiffs without providing verification of the debt, and failing to disclose the legal status of the debt; and
— violated 15 U.S.C. § 1692g "by failing to cease attempts to collect the debt and by continuing attempts to collect the debt without providing verification of the debt."
On this claim, plaintiffs seek recovery of general damages in the amount of $150,000, their "actual damages," and statutory damages of $1,000 from each defendant for each plaintiff.
The second claim is brought under the Oregon Unfair Debt Collection Practices Act (UDCPA), O.R.S. 646.639 et seq. This claim alleges that defendants violated O.R.S. 646.639(2) "by communicating with plaintiffs repeatedly and at times known to be inconvenient with intent to harass or annoy plaintiffs and by continuing efforts to collect the debt with knowledge or reason to know that plaintiffs were not liable for the debt."
On this claim, plaintiffs seek recovery of their actual damages, or, in the alternative, $200 from each defendant.
Plaintiffs seek recovery of attorney fees and costs under both claims.
RELEVANT STATUTES
Section 1692c provides:
(c) If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt, except —
(1) to advise the consumer that the debt collector's further efforts are being terminated;
(2) to notify the consumer that the debt collector or creditor may invoke specific remedies which are ordinarily invoked by such debt collector or creditor; or
(3) where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specific remedy.
If such notice from the consumer is made by mail, notification shall be complete upon receipt.Section 1692d provides:
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.
A non-exhaustive recitation of conduct proscribed by this section lists threat of or use of violence, use of obscene or profane language, or language that abuses the hearer, publication of a list of consumers who have refused to pay debts, engaging a person in telephone conversation "repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number," and placement of telephone calls "without meaningful disclosure of the caller's identity."
Section 1692e provides:
A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.
This section lists various proscribed forms of false representation, including, among others, false representation of "the character, amount, or legal status of any debt." It also lists providing or threatening to provide credit information that is or should be known to be false, failing to communicate that a disputed debt is disputed, and the use of any false representation or deceptive means to collect or attempt to collect any debt.
Section 1692f provides:
A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt.
This section includes a non-exhaustive list of prohibited conduct. This list includes 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." Section 1692g provides:
(a) Notice of debt; contents
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 . . . 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.
(b) If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.
O.R.S. § 646.639(2) identifies a number of debt collection practices as unlawful. These include the use of profane, obscene, or abusive language, communicating "repeatedly or continuously" with the debtor at inconvenient times in order to harass or annoy the debtor, attempting to or threatening to enforce a right or remedy that the collector knows or has reason to know does not exist, or collecting or attempting to collect any interest or other charges or fees in excess of the actual debt unless such charges are expressly authorized by the agreement creating the debt or expressly allowed by law. Only willful violations of the statutes regulating debt collection are actionable. O.R.S. § 646.641. A violation is willful "when the person committing the violation knew or should have known that the conduct of the person was a violation." O.R.S. § 646.605(10).
A debt collector who complies with the Fair Debt Collection Practices Act is considered to be in compliance with the requirements of O.R.S. § 646.639. O.R.S. § 646.643.
STANDARDS FOR EVALUATING MOTIONS FOR SUMMARY JUDGMENT
Federal Rule of Civil Procedure 56(c) authorizes summary judgment if no genuine issue exists regarding any material fact and the moving party is entitled to judgment as a matter of law. The moving party must show the absence of an issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The moving party may discharge this burden by showing that there is an absence of evidence to support the nonmoving party's case. Id. When the moving party shows the absence of an issue of material fact, the nonmoving party must go beyond the pleadings and show that there is a genuine issue for trial. Id. at 324.
The substantive law governing a claim or defense determines whether a fact is material. T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). Reasonable doubts concerning the existence of a factual issue should be resolved against the moving party. Id. at 630-31. The evidence of the nonmoving party is to be believed, and all justifiable inferences are to be drawn in the nonmoving party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1985). No genuine issue for trial exists, however, where the record as a whole could not lead the trier of fact to find for the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
DISCUSSION
I. Motion for Sanctions
In their first motion for partial summary judgment, plaintiffs seek a finding of liability against all the defendants on their federal claim. In their second motion for partial summary judgment, filed many weeks after the first motion was filed, plaintiffs simply repeat the assertions of fact set out in the concise statement of material fact submitted in support of their earlier motion for partial summary judgment, and argue that they are also entitled to a finding of liability as to their state law claim.
The Capital Credit defendants move for sanctions against plaintiffs' counsel pursuant to 28 U.S.C. § 1927 "for repeatedly filing the same Concise Statements and argument as previously filed" in this action. In his declaration in support of the motion for sanctions, William Goode, counsel for the Capital Credit defendants, adds that plaintiffs' counsel has failed to timely submit a draft pretrial order and appears to be using this action to support other litigation in a manner that is "clearly vexatious."
Section 1927 provides that the court may hold an attorney who "multiplies the proceedings in any case unreasonably and vexatiously" to be personally responsible for the resulting excess costs, expenses, and attorney fees. Plaintiffs' filing of a second motion for partial summary judgment has caused the defendants to expend more resources than would have been required if plaintiffs had combined all their motions for partial summary judgment in a single proceeding. However, plaintiffs' reliance on the same concise statement of material fact has actually lessened that additional burden, because it allowed defendants to simply rely on the same responses they submitted earlier.
Though the practice of dividing dispositive motions is discouraged, I conclude that sanctions are not appropriate here. I find that the submission of two separate motions for partial summary judgment did not rise to the level of unreasonableness or vexatiousness required for the imposition of sanctions. The date for lodging a pretrial order has been extended, and now depends on the date of the court's disposition of the pending motions for summary judgment. Under these circumstances, I conclude that imposition of sanctions is not appropriate.
II. Plaintiffs' cross motions for summary judgment
Plaintiffs initially moved for partial summary judgment establishing that defendants are jointly and severally liable for the actual damages they incurred as a result of defendants' failure to comply with the FDCPA, and establishing that each defendant is liable to each plaintiff for statutory fees in the amount of $1,000 based upon that failure. They subsequently moved for summary judgment as to liability on their claim brought under the Oregon Unfair Debt Collection Practices Act as well. With the filing of that motion, cross motions as to liability on all claims are pending.
A. Defendant Hasson
1. FDCPA
a. Communication
The record establishes that defendant Hasson did not engage in unlawful "communications" with plaintiffs after Mr. Clark wrote the April 25, 2002 letter stating that "any phone calls" were "preclude[d]." After that date, Hasson sent plaintiffs a letter informing them that Capital Credit intended to pursue its claim, and enclosing the itemization of the debt in response to a request from Ms. Clark. The itemization of the claim was proper as a verification of a debt under § 1692g(b). Even if a consumer has told a debt collector "to cease further communication with the consumer," § 1692c(2) allows a debt collector to notify the consumer that the debt collector may invoke specific remedies. Filing an action to collect on the alleged debt did not constitute a communication within the meaning of the FDCPA. See Heintz v. Jenkins, 514 U.S. 291, 296 (1995). Other written communications from Hasson to plaintiffs after April 25, 2002, either responded to correspondence from plaintiffs requesting information or did not implicate the FDCPA because they were part of the collection litigation.
Defendant Brumley, an employee of Capital Credit, did contact Linda Clark on June 20, 2002, after Ms. Clark had contacted defendant Hasson's office. As noted above, Ms. Clark states that Brumley told her that she had been asked by Hasson's secretary to call in response to plaintiff's inquiry concerning insurance payments. In the discussion of the motions as to the Capital defendants below, I note my conclusion that merely returning a call to provide requested information and responding to any additional issues Ms. Clark may have raised when Brumley returned the call would not violate the Act. However, as to defendant Hasson, it is not even necessary to reach this issue, because neither Hasson nor any of his employees telephoned Ms. Clark, and there is no support for the legal conclusion that Brumley, Capital's employee, was Hasson's agent. Plaintiffs correctly note that, under certain circumstances, a collection agency may be liable for the acts of an outside attorney. See Newman v. Checkrite California, Inc., 912 F. Supp. 1354, 1369-72 (E.D. Cal. 1995) (debt collection agency may be liable for acts of outside attorney on basis of actual authority, apparent authority, or ratification). However, they have cited no authority for the proposition that Hasson, an outside attorney hired by a collection agency, could be vicariously liable for the acts of Capital or Brumley.
b. Harassment, oppression, abuse
Plaintiffs allege that Hasson violated § 1692d by communicating with them in a manner that was harassing, oppressive, and abusive.
Hasson is entitled to summary judgment on this claim because none of the correspondence from his office could reasonably be characterized as violating this section. The letters Hasson sent plaintiffs before filing the collection action were reasonable and professional, and included no language that was profane, obscene, or threatened physical harm or violence. Hasson's correspondence concerning the civil action was not subject to the FDCPA, and included no language that would have violated that Act even if it applied. Hasson is entitled to absolute immunity concerning conduct that occurred during the arbitration hearing.See Ramstead v. Morgan, 219 Or. 383, 388, 347 P.2d 594 (1959) (statements made in or incident to judicial proceedings subject to absolute immunity).
After providing plaintiffs with verification of the debt as required under § 1692g(b), Hasson could lawfully inform plaintiffs that Capital intended to pursue its claims. See § 1692c(2). Simply informing a purported debtor that a debt collector might proceed with a collection action does not amount to unlawful harassment, oppression, or abuse where, as here, an action could lawfully be brought. E.g., Pearce v. Rapid Check Collection, Inc., 738 F. Supp. 334, 338-39 (D.S.D. 1990). Plaintiffs therefore cannot prevail on their contention that Hasson violated § 1692d by informing them that Capital intended to pursue a claim.
c. Validity of underlying debt
Plaintiffs' next allegation concerns § 1692e, which prohibits the use of false, deceptive, or misleading representations or means in the collection of a debt, and § 1692f, which prohibits the use of "unfair or unconscionable means to collect or attempt to collect" a debt. Plaintiffs allege that defendant Hasson violated these sections by attempting to collect a debt that he knew or should have known plaintiffs did not owe.
Disposition of this claim under either of the cited statutes turns largely on the debt collector's responsibility for the accuracy of the debt it attempts to collect, and the efforts a debt collector must make to verify a debt that is disputed by the purported debtor. Plaintiffs contend that defendants, including Hasson, violated this section because the debt they sought to collect was "either paid by insurance, subject to preconditions for collection, unpaid as a result of billing and insurance claims practices, not supported by billing to permit plaintiffs to make claims for insurance coverage and/or could not be verified to permit voluntary payment of a verified amount."
I disagree. The record establishes that defendant Hasson satisfied the technical requirements of verification set out in the UDCPA by timely mailing plaintiffs a copy of the itemization of Ms. Clark's account that defendant Brumley had included in her earlier letter responding to plaintiffs' dispute concerning the amount of the debt. Hasson's verification was based upon the representations of Capital, which had hired him to pursue collection of a debt that it represented was valid. Hasson was entitled to rely on Capital's representations, and the fact that the validation notice was not entirely accurate cannot establish that he knew or should have known that any portion of the debt was not valid.
A purported debtor's dispute of the existence or amount of a debt does not require a debt collector to independently investigate the alleged debt, because a debt collector is entitled to rely on the creditor's representation that the debt is valid. Bleich v. The Revenue Maximization Group, Inc., 233 F. Supp.2d 496, 500 (E.D.N.Y. 2002). The process of debt verification under the Act "involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed. . . ." Chaudhry v. Gallerizzo, 174 F.3d 394, 406 (4th Cir.), cert. denied, 528 U.S. 891 (1999). See also Mahon v. Credit Bureau of Placer County, Inc., 171 F.3d 1197, 1203 (9th Cir. 1999) (debt collector satisfies verification requirement by contacting creditor to determine "nature and balance of the outstanding bill"); Smith v. Transworld Systems, Inc., 953 F.2d 1025, 1032 (6th Cir. 1992) (FDCPA does not require independent investigation of debt referred for collection); Ducrest v. Alco Collections, Inc., 931 F. Supp. 459, 462 (M.D. La. 1996) (FDCPA does not require independent investigation of information provided by clients, or require debt collector to dispute creditor's construction of a contract).
By the time defendant Hasson was hired, the debt had been assigned to Capital Credit. Capital asserted that the debt was valid, and that plaintiffs owed the amount sought. The notice Hasson sent on April 24, 2002, accurately stated that Hasson represented Capital Credit, and the listing of "Dr. Katie Evans" as the original creditor accurately reflected information Hasson received from his client. Hasson was not required to examine the underlying documents concerning Ms. Clark's insurance coverage, the assignment of her debt to Dr. Evans or Capital, Capital's addition of Jerry Clark to Linda Clark's account, or other legal issues that might affect the legal status of the debt in question, or to calculate the charges and insurance reimbursements to determine if the amount of the verified debt was correct. Plaintiffs have cited, and I have found, no authority for the proposition that a debt collector incurs liability under the UDCPA simply because the creditor was not owed the amount sought. Instead, reported decisions support only the conclusion that the existence and amount of a debt may be determined in collection proceedings, and a judicial determination that the purported debtor is not liable for the sum sought does not subject the debt collector to liability for violation of the FDCPA.
Moreover, Hasson's status as an attorney did not require him to perform independent legal analysis of the creditor's claim. See Jenkins v. Heintz, 124 F.3d 824, 833-34 (7th Cir. 1997),cert. denied, 523 U.S. 1022 (1998) (debt collector's status as an attorney does not "add a requirement of independent legal analysis for each aspect of the creditor's claim"). It was enough that he confirm that the creditor was seeking compensation for services performed, and that the creditor was seeking the amount he was attempting to collect. Though plaintiffs contend that Hasson violated the FDCPA by failing to have "meaningful involvement" in sending the validation letter, Hasson's affidavit provides unrebutted evidence that Hasson reviewed the itemization before sending plaintiffs a letter verifying the debt, and determined when to send plaintiffs letters and when to prepare the lawsuit.
Plaintiffs likewise cannot prevail on their assertion that Hasson could not lawfully attempt to collect the debt because Dr. Evans' agreement with the insurer stated that providers would not bring collection actions against their patients for amounts owed by the insurer, and would arbitrate any disputes arising out of their agreement with the insurer. These provisions did not bar Hasson from attempting to collect the debt for several reasons. Though Dr. Evans' agreement with the insurer prevented her from bringing an action against plaintiffs for amounts the insurer owed, plaintiffs never asserted that the insurer was responsible for all of the debt. Instead, they acknowledged their responsibility for some of the debt, but disputed the accuracy of Dr. Evans' records. By its own terms, the arbitration clause that plaintiffs cite applied only to the parties to the agreement — the provider and the insurer — and to disputes arising out of or related to the agreement between those parties. Plaintiffs and the debt collectors were not parties to that agreement, and the dispute concerning the debt did not arise out of or "relate to" the agreement between the insurer and the provider.
Plaintiffs rely on Porter v. Hill, 314 Or. 86, 92, n. 4, 838 P.2d 45 (1992), in support of their contention that Hasson may be liable for attempting to enforce a remedy or right that did not exist because the agreement between the insurer and the provider proscribed collection and required arbitration. This reliance is misplaced. In the cited footnote, the Oregon Supreme Court observed that, if "the parties' agreement required them to submit to arbitration instead of filing a civil action," it could be argued that the debt collector was trying to enforce a remedy which it knew did not exist. However, in Porter, unlike here, the attorney debt collector was the very creditor who had furnished the services and would have necessarily been a party to any agreement with the debtor. Hasson was not a party to the agreement between Dr. Evans and the insurer. Any complaint that plaintiffs had based upon that agreement is not properly addressed in a FDCPA claim against Hasson.
Finally, plaintiffs cannot prevail on their assertion that Hasson's validation notice was unlawful because it failed to list the correct creditor. Hasson's validation notice listed Dr. Evans as the creditor. That listing was both consistent with Capital's representations, on which Hasson was entitled to rely, and was correct. The record establishes that Dr. Evans purchased the clinic, including the accounts receivable, after Dr. Sullivan retired. Those accounts included unpaid charges for services provided to Ms. Clark. Under the FDCPA, a creditor is "[a]ny person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another." 15 U.S.C. § 1692a(4). Neither Hasson nor the Capital defendants meet this definition. Dr. Evans does.
Plaintiffs have not shown evidence from which a reasonable trier of fact could conclude that defendant Hasson made false, deceptive, or misleading representations, or that he used unfair or unconscionable means to attempt to collect the debt he was engaged to pursue. He complied with the verification requirements under the FDCPA, and the collection proceedings that he initiated were authorized under Oregon statues. See O.R.S. § 20.082. He is therefore entitled to summary judgment on this claim.
d. Verification
If a consumer disputes a debt within 30 days of receiving a collection letter, the debt collector must cease collection activity until verification of the debt is provided to the consumer. § 1692g. Plaintiffs allege that defendant Hasson violated this provision by failing to cease attempts to collect the debt and by continuing to attempt to collect the debt without providing the required verification.
The record establishes that Hasson's office received a letter from Mr. Clark on May 1, 2002, disputing the debt, and that Hasson's office sent plaintiffs an itemization of the debt on May 6, 2002. There is no evidence that Hasson continued to attempt to collect the debt before the itemization verifying the debt was sent. For the reasons discussed in the preceding section, the record will support only the conclusion that defendant Hasson provided plaintiffs with a verification that satisfied his obligation as a debt collector by confirming that the creditor sought the amount in question and asserted that it had not been paid, and providing plaintiffs with a copy of an itemized account of charges and services. Defendant Hasson is therefore entitled to summary judgment on this issue as well.
2. UDCPA
Plaintiffs' allegations that Hasson communicated with plaintiffs in a harassing and annoying manner, and continued to attempt to collect a debt for which he knew or should have known plaintiffs were not liable, describe conduct that violates the UDCPA. See O.R.S. § 646.639(2). Instituting legal proceedings to collect a debt does not violate the UDCPA. Porter, 314 Or. 94, 838 P.2d 45 (1992).
A debt collector who complies with the requirements of the FDCPA is "considered to be in compliance with the requirements of ORS 646.639." O.R.S. § 646.643. For the reasons discussed above, the record does not include evidence from which a reasonable trier of fact could conclude that defendant Hasson violated the FDCPA. In the absence of such evidence, Hasson is entitled to summary judgment on the claim brought under Oregon law as well.
Plaintiffs' complaint specifically alleges only that defendants violated the UDCPA by communicating with plaintiffs in a harassing and annoying manner and continued to attempt to collect the debt when they knew or should have known that plaintiffs were not liable for the debt. Plaintiffs cannot prevail on those allegations for the reasons discussed above.
Plaintiffs' memoranda assert that defendants violated the UDCPA in other ways as well. These include the assertion that Hasson violated O.R.S. § 646.639(2)(L) by having no "meaningful involvement" in the sending of a validation letter. The cited statute provides that a debt collector may not "use any form of communication which . . . gives the appearance of being authorized, issued or approved by . . . an attorney at law when it is not in fact so approved or authorized." Plaintiff cannot prevail on any claim under this provision because Hasson has provided unrebutted evidence that he decided to send the validation letter, and reviewed the information he had about the debt before the letter was mailed. There is no evidence that Hasson's employees were not authorized to draft and send the letter. Under these circumstances, plaintiffs cannot establish that the letter was not "authorized" by Hasson within the meaning of the relevant statute.
In their memoranda, plaintiffs also assert that Hasson violated O.R.S. § 646.639(2)(k), (m), and (n) by seeking to collect charges that Dr. Evans had agreed with the insurer would not be subject to collection, and by attempting to collect a debt that Dr. Evans was required to submit to arbitration. Even if these allegations were properly included in their allegations related to Oregon law, they could not prevail on them for the reasons set out in the discussion of plaintiffs' federal claim above.
B. Capital Defendants
1. FDCPA
a. Communication/harassment, oppression, abuse (subparts 1 and 2 of FCPA claim)
The record establishes that defendant Brumley, Capital's employee, contacted Ms. Clark by telephone after plaintiffs notified Capital that they disputed the debt and did not want to be contacted by telephone. Plaintiffs allege that this communication violated §§ 1692c and 1692d, which respectively proscribe all but specified communications from a debt collector after a consumer has instructed it to cease further communication, and conduct "the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt."
There is no question that Ms. Clark telephoned Hasson's office after plaintiffs had told both Hasson and Capital not to call their home. Though there are questions concerning the specifics of Ms. Clark's conversation with defendant Brumley, there is no question that she had requested information from one of the debt collectors. Under these circumstances, a reasonable finder of fact could only conclude that, at least as to one return telephone call to provide the information Ms. Clark requested, plaintiffs waived their objection to receiving a telephone communication from one of the debt collectors. Therefore, they cannot prevail on their assertion that, by simply returning Ms. Clark's telephone call, the Capital defendants violated the FDCPA.
Nevertheless, the Capital defendants are not entitled to summary judgment on the first claim. Ms. Clark's request for particular information waived any objection to a return call that sought merely to provide the information requested, and to responses to any issues that Ms. Clark specifically or impliedly raised when her call was returned. It did not waive any objection to communication that went beyond the scope of the information requested, and did not waive objection to any communication that was abusive, harassing, or offensive in the delivery of the information sought. Brumley and Ms. Clark report different recollections of the precise nature of their July 30, 2002 conversation. Ms. Clark asserts that defendant Brumley engaged her in an extended conversation, and was "rude, condescending and argumentative." Under these circumstances, neither plaintiffs nor the Capital defendants are entitled to summary judgment on the first two parts of plaintiffs' FDCPA claim, because material issues of fact remain concerning the scope and nature of Brumley's communication with Ms. Clark when Brumley returned the call.
b. Validity of underlying debt
Plaintiffs' next allegation concerns § 1692d, which prohibits harassing, oppressive, and abusive conduct, § 1692e, which prohibits the use of false, deceptive, or misleading representations or means in the collection of a debt, and § 1692f, which prohibits the use of "unfair or unconscionable means to collect or attempt to collect" a debt. Plaintiffs allege that the Capital defendants violated these sections by attempting to collect a debt that they knew or should have known plaintiffs did not owe. They contend that Capital and Brumley violated these provisions by adding Mr. Clark as a defendant, communicating with Ms. Clark about the debt, maintaining adverse credit entries on plaintiffs' credit reports, instituting legal action against plaintiffs without providing verification of the debt, and failing to disclose the legal status of the debt. Communications
For the reasons discussed above, material issues of fact exist as to Brumley's telephone conversation with Ms. Clark on July 30, 2002.
Adding Mr. Clark to the debt
The Capital defendants contend that they were entitled to add Mr. Clark as a debtor and attempt to collect the debt from him because the treatment for Ms. Clark on which the debt was based was a "healthcare expense considered a family obligation in Oregon." This assertion is supported by O.R.S. § 108.040(1), which provides that "expenses of the family . . . are chargeable upon the property of both husband and wife, or either of them, and in relation thereto they may be sued jointly or separately." Oregon courts have long interpreted the "expenses of the family" referred to in this statute as including medical expenses incurred by either of the spouses. See Hansen v. Hayes, 175 Or. 358, 365, 175 P.2d 202 (1944).
Under Oregon law, a collection agency "has a property right in any claim or account assigned to the agency in writing for collection." O.R.S. § 697.045(1) Dr. Evans assigned her claim against Ms. Clark to Capital Credit in writing. Though the assignment did not specifically name Mr. Clark under Oregon law, he was jointly responsible for charges incurred for medical services provided to Ms. Clark. Under these circumstances, any claim for medical services provided to Ms. Clark that Dr. Evans assigned necessarily included a claim against Mr. Clark that a debt collector could lawfully assert. I therefore conclude that the Capital defendants' addition of Mr. Clark as a defendant did not constitute false, deceptive, and misleading representations within the meaning of § 1692e, or unfair or unconscionable means to attempt to collect a debt within the meaning of § 1692f.
Validity and verification of debt and accuracy of amount sought
A debt collector's responsibility for verification of a debt is fully discussed in the portion of the opinion above addressing the parties' motions for summary judgment as to defendant Hasson. As noted in that discussion, a debt collector is entitled to rely on the client's representation that a debt is valid, and is not required to independently investigate the validity and amount of an alleged debt. E.g., Bleich, 233 F. Supp.2d at 500. Decisions discussing this responsibility consistently hold that, when an alleged debtor disputes a debt, the debt collector is required only to confirm that the amount it is demanding is the amount that the creditor claims is owed. E.g., Chaudhry, 174 F.3d at 1203.
Here the record establishes that, after plaintiffs disputed the debt, the Capital defendants sought and received confirmation of the amount being sought from Dr. Evans, and timely provided plaintiffs the itemized records upon which Dr. Evans based her claim. In doing so, these defendants satisfied their obligation under the FDCPA. The proper forum for challenging the amount of the outstanding bill was the collection proceedings initiated, and subsequently dismissed, in state court.
The record also establishes that plaintiffs were adequately informed of the identity of the creditor. One validation notice listed the creditor as "Evans Sullivan Clinic," and another listed the creditor as "Dr. Katie Evans." There is no basis for concluding that this minor difference was legally significant, or that plaintiffs were confused in any way as to the true identity of the creditor. In their communications with the defendants while collection efforts were being made, plaintiffs never indicated any misunderstanding about who was seeking payment, or objected to paying Dr. Evans on the grounds that she had not provided the services in question or was not the proper creditor. As with defendant Hasson, there is also no basis for concluding that any agreements between Dr. Evans and plaintiffs' insurance provider concerning collection and arbitration rendered the Capital defendants' collection efforts unlawful. The Capital defendants verified the debt by confirming with Dr. Evans that she was seeking to collect a certain amount, and provided plaintiffs with the itemized records that Dr. Evans provided. In doing so, these defendants satisfied their legal obligation under the FDCPA.
The Capital defendants are entitled to summary judgment on plaintiffs' allegations that they sought to collect a debt that they knew or should have known was not owed, and that they failed to provide plaintiffs the verification of the debt that is required by the FDCPA.
c. Maintaining adverse credit entries
Plaintiffs contend that, as of July 14, 2003, Capital Credit was reporting a debt with a consumer credit reporting agency concerning Mr. Clark, and that it was making a similar report as to Ms. Clark as of August 9, 2003. Plaintiffs assert that, in maintaining adverse credit entries that do not indicate that the debt is disputed or "was resolved through a judgment of dismissal," Capital Credit violated 15 U.S.C. § 1692d,1692e, and 1692f.
The cited statutes all prohibit particular types of conduct in connection with collection of a debt. Given that there is no evidence that Capital attempted to collect any debt from plaintiffs after the stipulated judgment of dismissal was entered, plaintiffs cannot establish that the Capital defendants took any action that could have violated the cited statutes after the collection action was dismissed. These defendants are also entitled to summary judgment as to any claim based upon credit entries because the cited statutes are not directed at debt collectors' reports to credit reporting agencies. Providing payment information to credit reporting agencies is specifically excepted from the activity proscribed under § 1692d, and is far different from any of the examples of prohibited conduct described in § 1692e and § 1692f.
2. UDCPA Claim
The same material issues of fact that preclude summary judgment for plaintiffs or the Capital defendants on the portion of the FDCPA claim based upon Brumley's telephone conversations with Ms. Clark on July 30, 2002, also preclude summary judgment on the same allegations under the state law claim.
The Capital defendants are entitled to summary judgment on plaintiffs' allegations that they violated state law by continuing to attempt to collect a debt for which they knew or should have known plaintiffs were not responsible. For the reasons discussed above, these defendants' validation of the debt was sufficient, and their non judicial and judicial attempts to collect the debt were lawful. The Capital defendants are therefore entitled to summary judgment on the balance of plaintiffs' claim brought under state law.
The allegation that the Capital defendants improperly reported the debt to credit reporting agencies is not part of plaintiffs' state law claim.
As noted in the discussion above concerning defendant Hasson, in their motion for partial summary judgment on the state law claim, plaintiffs add several asserted violations that they did not formally allege in their complaint. Based upon a careful review of these assertions and the related arguments, I conclude that plaintiffs could not prevail on them if they were included as specific allegations in plaintiffs' complaint for the reasons discussed above. Plaintiffs' contention that the underlying debt could not be assigned was an issue between plaintiffs and Dr. Evans, not Capital, which was not a party to any agreement limiting assignment. Likewise, plaintiffs cannot prevail on any assertion that the defendants attempted to collect charges that were not allowable, such as attorney fees. Under O.R.S. § 20.082, recovery of attorney fees is a possibility in a breach of contract action concerning the amount at issue in the underlying action, and defendants could litigate the issue of those fees in the state court collection action that was dismissed without violating the UDCPA.
CONCLUSION
Plaintiffs' motions for partial summary judgment (#s 11 and 76) are DENIED.Defendant Hasson's motion for summary judgment (# 19) is GRANTED.
Defendants Brumley and Capital Credit's motion for summary judgment (# 27) is GRANTED in part and DENIED in part. The motion is DENIED as to plaintiffs' allegations in the state and federal claims concerning defendant Brumley's oral communications, and is GRANTED as to the balance of plaintiffs' claims.
The Capital Credit defendants' motion for sanctions (# 84) is DENIED.