Opinion
Civ. No. 02-396 (JNE/JGL)
May 19, 2003.
Peter F. Barry, Esq., The Barry Law Office, Ltd., appeared for Plaintiff Kay R. Phernetton.
Jill N. Brown, Esq., Morrison Fenske Sund, P.A., appeared for Defendant First Revenue Assurance.
ORDER
This case arises from First Revenue Assurance's (FRA) efforts to collect a debt owed by Kay Phernetton. Phernetton claims that FRA violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692-1692o (2000) (FDCPA), when it directed him to send payment to a post-office box that had not been licensed by the Minnesota Department of Commerce (MDOC). The case is before the Court on FRA's motion for summary judgment and for reasonable attorneys' fees and costs pursuant to 15 U.S.C. § 1692k(a)(3). For the reasons given below, the Court grants the motion for summary judgment and denies the motion for attorneys' fees and costs.
I. BACKGROUND
FRA is a collection agency whose main office is in Denver, Colorado. FRA also holds a post-office box in Seattle, Washington. In May 2001, the MDOC issued a collection-agency license allowing FRA to collect debts in Minnesota from its office in Denver. FRA did not obtain a license for its post-office box in Seattle.
In July 2001, a creditor assigned Phernetton's account to FRA for collection. That month, Phernetton received a letter from FRA demanding payment of the debt. The letter lists a post-office box in Denver as the return address, and instructs Phernetton to send any correspondence to that address. The letter also states in bold type that payments, and only payments, should be sent to FRA's post-office box in Seattle. Phernetton received a second letter containing the same information in August 2001, and a third in September 2001.
Phernetton brought this case against FRA in February 2002 pursuant to 15 U.S.C. § 1692k. Phernetton alleges that FRA carried on the business of collecting debts in Minnesota from its unlicensed post-office box in Seattle, in violation of a state statute requiring collection agencies to "procure a license for each place where the business is to be conducted." See Minn. Stat. § 332.33, subd. 3 (2002). He alleges further that, by directing him to send payments to the unlicensed post-office box, FRA violated the FDCPA. See 15 U.S.C. § 1692e (prohibiting debt collectors from using "any false, deceptive, or misleading representation or means in connection with the collection of any debt"), 1692f (prohibiting debt collectors from using "any unfair or unconscionable means to collect or attempt to collect any debt").
II. DISCUSSION
A. FRA's Motion for Summary Judgment
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party "bears the initial responsibility of informing the district court of the basis for its motion," and must identify "those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party satisfies its burden, Rule 56(e) requires the nonmoving party to respond by submitting evidentiary materials that designate "specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). In determining whether summary judgment is appropriate, a court must look at the record and any inferences to be drawn from it in the light most favorable to the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
FRA's first argument in support of its motion is that it did not carry on the business of collecting debts from Seattle. Consequently, the argument continues, FRA did not violate Minn. Stat. § 332.33, and its letters directing Phernetton to send payments to its unlicensed post-office box in Seattle did not violate the FDCPA. In the alternative, FRA argues that, even if it did violate section 332.33, it did not violate the FDCPA.
Section 332.33 requires any person who "conduct[s] . . . a collection agency" in Minnesota or "engage[s] . . . in the business of collecting claims for others" in Minnesota to obtain a collection-agency license from the MDOC. Id., subd. 1. The term "collection agency" generally refers to "any person engaged in the business of collection for others any account, bill or other indebtedness." Minn. Stat. § 332.31, subd. 3 (2002). "A licensee who desires to carry on business in more than one place [must] procure a license for each place where the business is to be conducted." Minn. Stat. § 332.33, subd. 3.
FRA had a collection-agency license for its office in Denver, but did not have a license for its post-office box in Seattle. It is undisputed that FRA did not maintain an office in Seattle and did not engage in any activity in Seattle. The question presented, then, is whether a licensee who merely holds a post-office box carries on the business of collecting debts from the post-office box for purposes of section 332.33.
Mail delivered to the post-office box was picked up and processed by U.S. Bank, N.A. U.S. Bank deposited payments retrieved from the post-office box into FRA's trust account and sent data regarding the payments to FRA electronically at the end of each business day. U.S. Bank sent items other than payments to FRA by overnight package.
A recent case from this district held that section 332.33 did not apply to FRA's post-office box in Seattle because "FRA does not actually do anything at all at the Seattle address." Carlson v. First Revenue Assurance, Civ. No. 02-209, 2002 WL 31866305, at *2 (D.Minn. Dec. 19, 2002) (Frank, J.). The Court agrees with Carlson on this point. Although Minnesota law does not define what it means to carry on the business of collecting debts, two statutory provisions related to licensing lead to the conclusion that merely holding a post-office box does not suffice. The first provides that applicants for collection-agency licenses must furnish the MDOC with "a street address where the [applicant's] business is physically located." Minn. Stat. § 45.0112 (2002). A post-office box "is not sufficient to satisfy this requirement." Id. Given that the MDOC will not issue a collection-agency license for a post-office box, it would be illogical to conclude that FRA violated section 332.33 by holding an unlicensed post-office box. The second provision requires collection agencies to post their collection-agency licenses "in a conspicuous place in the office where the business is transacted." Minn. Stat. § 332.33, subd. 3. A post-office box is not an "office where . . . business is transacted." Furthermore, it would be extremely difficult, if not impossible, to conspicuously place a collection-agency license in a post-office box.
Based on these considerations, the Court concludes that a licensee who merely holds a post-office box does not carry on the business of collecting debts from the post-office box for purposes of section 332.33. Accordingly, Phernetton cannot establish that FRA violated section 332.33, and his claim that FRA violated the FDCPA by directing him to send payments to the unlicensed post-office box fails as a matter of law. In light of this conclusion, the Court need not consider whether a violation of section 332.33 necessarily constitutes a violation of the FDCPA.
In his memorandum, Phernetton requested leave to amend his Complaint to allege that, if FRA did not carry on the business of collecting debts from Seattle, then it violated the FDCPA by "falsely representing [in its collection letters to Phernetton] that it was doing business there." Phernetton's request does not satisfy the procedural requirements for a motion to amend pleadings. See D. Minn. R. 15.1. In addition, the Scheduling Order in this case provides that "all motions which seek to amend the pleadings . . . must be served by June 3, 2002."
B. FRA's Motion for Reasonable Attorneys' Fees and Costs
FRA seeks an award of reasonable attorneys' fees and costs pursuant to 15 U.S.C. § 1692k(a)(3). The Court finds that Phernetton did not bring this case "in bad faith and for the purpose of harassment," and it therefore denies FRA's motion. See id.; Crawford v. Credit Collection Servs., 898 F. Supp. 699, 703 (D.S.D. 1995).
III. CONCLUSION
Based on the files, records, and proceedings herein, and for the reasons stated above, IT IS ORDERED THAT:
1. Defendant FRA's motion for summary judgment [Docket No. 19] is GRANTED.
2. Defendant FRA's motion for reasonable attorneys' fees and costs pursuant to 15 U.S.C. § 1692k(a)(3) [Docket No. 19] is DENIED.
LET JUDGMENT BE ENTERED ACCORDINGLY.