United States District Court, D. Arizona
Martha A. McNair, Plaintiff,
Maxwell & Morgan PC, et al., Defendants
[Copyrighted Material Omitted]
Martha A McNair, an individual, Plaintiff: Douglas Clark
Wigley, Jonathan Adam Dessaules, Rachel W Maron, LEAD
ATTORNEY, Dessaules Law Group, Phoenix, AZ.
Maxwell & Morgan PC, an Arizona professional corporation,
Defendant: Brian W Morgan, LEAD ATTORNEY, Maxwell & Morgan
PC, Mesa, AZ; Paul Rey Neil, LEAD ATTORNEY, Law Offices of
Maxwell & Morgan PC, Mesa, AZ; Tomio B Narita, LEAD ATTORNEY,
Simmonds & Narita LLP, San Francisco, CA.
Charles E Maxwell, husband, W William Nikolaus, husband, Lisa
Maxwell, wife, Leslie Nikolaus, wife, Defendants: Brian W
Morgan, LEAD ATTORNEY, Maxwell & Morgan PC, Mesa, AZ; Tomio B
Narita, LEAD ATTORNEY, Simmonds & Narita LLP, San Francisco,
G. Campbell, United States District Judge.
case involves Defendants' efforts to collect debts owed
by Plaintiff Martha McNair. She claims that Defendants'
actions violated numerous provisions of the Fair Debt
Collection Practices Act (" FDCPA" ). The parties
have filed cross motions for summary judgment (Docs. 80, 100)
and the Court heard oral arguments on September 18, 2015
(Doc. 123). The Court will deny Plaintiff's motion and
grant Defendants' motion in part.
August 2004, Plaintiff acquired a home in Gilbert, Arizona.
Doc. 81-1 at 2. The home was part of the Neely Commons
Association (" Association" ) and was subject to a
declaration of covenants, conditions, and restrictions.
Id. at 8-42. Under this declaration, owners are
required to pay an annual assessment to the Association.
Id. at 16. The Association can require an owner to
pay the assessment in monthly installments. Id. at
16-20. If the owner fails to pay an installment, the
Association can impose a late charge of fifteen dollars and
make a written demand for payment of the debt and additional
costs. Id. at 20. If the owner fails to pay the
amount within ten days, the Association can record a notice
of lien on the owner's property. Id. at 21. The
Association has the right to collect the debt, along with
late charges, costs, and attorneys' fees, by suing the
owner or bringing an action to foreclose the lien.
became delinquent in paying her annual assessment. On
November 4, 2009, Charles Maxwell of the firm Maxwell &
Morgan P.C. sent a letter to Plaintiff notifying her of the
debt and stating that he may take legal action if she failed
to pay. Id. at 61. On December 21, 2009, Maxwell
filed suit against Plaintiff in the Highland Justice Court,
alleging that she owed $697. Id. at 64-65. In
Plaintiff and Maxwell entered into a payment agreement, under
which Plaintiff was to pay $500 immediately and $100 a month
until her debt was paid off. Id. at 75. Plaintiff
paid the $500 and three of the monthly $100 payments before
defaulting. Doc. 81, ¶ 22. In June and September of
2010, Plaintiff made additional payments totaling $500. Doc.
81-1 at 88, 104. On July 19, 2010, Maxwell revived the
justice court lawsuit and sought a default judgment.
Id. at 92-93. The court entered judgment on November
22, 2010, for $1,466.80. Id. at 96-97. Maxwell
subsequently sent Plaintiff a letter demanding payment of the
judgment. Id. at 114.
record is silent as to what occurred in 2011. On April 30,
2012, Maxwell filed a new lawsuit in Maricopa County Superior
Court. Id. at 121. He alleged that Plaintiff's
debt had grown to $4,027.24. Id. at 122. William
Nikolaus, who also worked at Maxwell & Morgan, notified
Plaintiff of the lawsuit and stated that the total amount due
was $6,307.24, which included $2,280 in attorneys' fees
and costs. Id. at 128. Plaintiff offered to enter a
payment plan, which Nikolaus accepted on the condition that
Plaintiff sign a stipulated judgment. Doc. 101-1 at 36. On
June 29, 2012, Plaintiff and Maxwell signed a stipulated
judgment that recognized the Association's right to
collect the debt by selling Plaintiff's home. Doc. 81-1
at 130-33. In the stipulated judgment, the Association agreed
not to execute on the judgment if Plaintiff made an initial
payment of $2,500 and additional payments of $250 a month
until the debt was satisfied. Id. at 132.
paid the initial $2,500 and ten monthly payments of $250
through May of 2013. Doc. 81, ¶ 57. On May 5, 2013, she
sent a letter to Nikolaus asking how much she still owed.
Doc. 81-2 at 27. On August 21, 2013, Nikolaus notified
Plaintiff that she had failed to make the required payments,
including payments for her 2013 annual assessment.
Id. at 31. Nikolaus told her to review the
stipulated judgment and warned that the Association might
take legal action. Id. On September 23, 2013,
Plaintiff paid $275.74 and asked Nikolaus to inform her if
she owed anything else. Id. at 45.
November 2013, Maxwell requested, and the Superior Court
granted, a writ of special execution for foreclosure on
Plaintiff's house. Id. at 49-53. The writ stated
that Plaintiff owed $4,791.58. Id. at 53. The
sheriff held a foreclosure sale on January 9, 2014, the
property was sold for $75,000, and Defendants received
$5,559.74. Doc. 81, ¶ ¶ 75-76. On May 14, 2014, the
Superior Court awarded the Association an additional
$6,040.39 from the proceeds of the sale for attorneys'
fees and costs. Doc. 81-2 at 70-71.
filed this lawsuit on April 24, 2014, naming as Defendants
Maxwell & Morgan, Charles Maxwell, William Nikolaus, and
their spouses. Doc. 1. She claims that Defendants violated
the FDCPA by misrepresenting the amount and character of her
debt, failing to account for the payments she made,
misrepresenting the amount of her debt to the justice court,
taking actions that Arizona law prohibits, initiating
multiple lawsuits over the same debt, and refusing to explain
the amount she owed. Doc. 80.
II. Legal Standards.
judgment is appropriate if the evidence, viewed in the light
most favorable to the nonmoving party, shows " that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a). Summary judgment is also appropriate
against a party who " fails to make a showing sufficient
to establish the existence of an element essential to that
party's case, and on which that party will bear the
burden of proof at trial." Celotex Corp. v.
477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
Only disputes over facts that might affect the outcome of the
suit will preclude the entry of summary judgment, and the
disputed evidence must be " such that a reasonable jury
could return a verdict for the nonmoving party."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248,
106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
FDCPA was enacted to eliminate abusive debt collection
practices, to ensure that debt collectors who abstain from
those practices are not competitively disadvantaged, and to
promote consistent state action to protect consumers. 15
U.S.C. § 1692(e); Jerman v. Carlisle, McNellie,
Rini, Kramer & Ulrich LPA, 559 U.S. 573, 577, 130 S.Ct.
1605, 176 L.Ed.2d 519 (2010). The FDCPA regulates
interactions between consumer debtors and " debt
collector[s]," defined to include any person who "
regularly collects . . . debts owed or due or asserted to be
owed or due another." 15 U.S.C. § 1692a(6). A
lawyer regularly engaged in debt collection activity, even
litigation, is considered a debt collector. See
Heintz v. Jenkins, 514 U.S. 291, 299, 115 S.Ct.
1489, 131 L.Ed.2d 395 (1995). A debt collector " who
fails to comply with any provision of [the FDCPA] with
respect to any person is liable to such person" for
actual damages and additional damages not to exceed $1,000.
15 U.S.C. § 1692k(a).
FDCPA is a strict liability statute. Clark v. Capital
Credit & Collection Servs., Inc., 460 F.3d 1162, 1175
(9th Cir. 2006). It prohibits a wide array of abusive and
unfair practices. See Heintz, 514 U.S. at
292-93. In deciding whether a debt collector has violated the
FDCPA, courts assess the debt collector's conduct from
the perspective of a hypothetical " least sophisticated
debtor." See Guerrero v. RJM Acquisitions
LLC, 499 F.3d 926, 934 (9th Cir. 2007) (citing
Clark, 460 F.3d at 1171; Wade v. Regional Credit
Ass'n, 87 F.3d 1098, 1099-1100 (9th Cir. 1996)). The
" least sophisticated debtor" standard protects the
" naï ve and trusting" debtor while shielding
debt collectors " against liability for bizarre or
idiosyncratic interpretations of collection notices."
Isham v. Gurstel, Staloch & Chargo, P.A., 738
F.Supp.2d 986, 995 (D. Ariz. 2010) (quotation marks and
citation omitted). The FDCPA is a remedial statute and should
be interpreted liberally to protect debtors from abusive debt
collection practices. Evon v. Law Offices of Sidney
Mickell, 688 F.3d 1015, 1025 (9th Cir. 2012).
argue that (1) the FDCPA's statute of limitations bars
most of Plaintiff's claims, (2) the FDCPA does not apply
to those claims that arise out of Defendants' foreclosure
action, (3) the stipulated judgment authorized the amounts
the Defendants sought in the foreclosure action, and (4) res
judicata and collateral estoppel bar many of Plaintiff's
claims. The Court will focus on these arguments and address
Plaintiff's motion for summary judgment only to the
extent that Defendants' motion does not dispose of
Statute of Limitations.
the FDCPA, a plaintiff must bring suit " within one year
from the date on which the violation occurs." 15 U.S.C.
§ 1692k(d). Plaintiff filed her complaint on April 24,
2014, but many of the alleged FDCPA violation occurred before
April of 2013. Plaintiff urges the Court to adopt the
continuing-violation doctrine. Plaintiff also argues that her
claims are timely because the discovery of her injury -- the
foreclosure of her house -- occurred less than a year before
she filed suit.
continuing-violation doctrine has roots in the common law.
Kyle Graham, The Continuing Violations Doctrine, 43
Gonz. L.Rev. 271, 308 (2008) (discussing early versions of
the doctrine in trespass and nuisance suits from the 1500s).
Broadly speaking, the doctrine permits a plaintiff to recover
" for actions that take place outside the limitations
period if these actions are sufficiently linked to unlawful
conduct within the limitations period." Sosa v. Utah
Loan Servicing, LLC, No. 13-CV-364-W(KSC), 2014 WL
173522, at *4 (S.D. Cal., Jan. 10, 2014) (quotation marks and
citation omitted). Some courts have described this as a
tolling doctrine, but most treat it as a doctrine governing
accrual. Heard v. Sheahan, 253 F.3d 316, 319 (7th
Cir. 2001) (collecting cases); see also
Pisciotta v. Teledyne Indus., Inc., 91 F.3d 1326,
1332 (9th Cir. 1996) (" Under [the continuing-violation]
theory, the statute of limitations does not begin to run
until the last breach occurs." ). In the context of
statutorily-created causes of action, the applicability of
the doctrine is a question of statutory interpretation.
See, e.g., AMTRAK v.
Morgan, 536 U.S. 101, 109-10, 122 S.Ct. 2061, 153
L.Ed.2d 106 (2002); Havens Realty Corp. v. Coleman,
455 U.S. 363, 380, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982).
FDCPA states that " [a]n action to enforce any liability
created by this subchapter may be brought . . . within one
year from the date on which the violation occurs." 15
U.S.C. § 1692k(d). By referring to " the
violation," the statute could be read as referring to a
single act, but courts could also consider an ongoing
violation of the FDCPA to be one violation that consisted of
several parts. Some courts have adopted this view, holding
that when " the conduct complained of [under the FDCPA]
constitutes a continuing pattern and course of conduct as
opposed to unrelated discrete acts," then the entirety
of that conduct is a single violation of the FDCPA.
See Joseph v. J.J. MacIntyre Cos., LLC, 281
F.Supp.2d 1156, 1161-62 (N.D. Cal. 2003) (applying the
doctrine when the defendant had made hundreds of repeated,
automated collection calls to Plaintiff over an 18 month
period). Under this approach, a plaintiff's
claim regarding a continuing pattern of FDCPA violations
could accrue on the date of the most recent violation and a
defendant could be liable for conduct that otherwise falls
outside of the limitations period.
Supreme Court has provided guidance on the distinction
between a continuing violation and a series of individual
violations. See Ledbetter v. Goodyear Tire &
Rubber Co., 550 U.S. 618, 127 S.Ct. 2162, 167 L.Ed.2d
982 (2007); Morgan, 536 U.S. at 109-11. Title VII
requires a claimant to file a claim within 180 days "
after the alleged unlawful employment practice
occurred." 42 U.S.C. § 2000e-5(e)(1). Interpreting
this language, the Supreme Court found that " [t]here is
simply no indication that the term 'practice'
converts related discrete acts into a single unlawful
practice for the purposes of timely filing."
Morgan, 536 U.S. at 111. For that reason, "
[d]iscrete acts such as termination, failure to promote,
denial of transfer, or refusal to hire" do not call for
application of the continuing-violation doctrine, even when a
time-barred discriminatory act is related to more recent
acts. Id. at 114.
Supreme Court has adopted a different approach, however, for
hostile work environment claims under Title VII. It has
explained that such claims:
are different in kind from discrete acts. Their very nature
involves repeated conduct. The 'unlawful employment
practice' therefore cannot be said to occur on any
particular day. It occurs over a series of days or perhaps
years and, in direct contrast to discrete acts, a single act
of harassment may not be actionable on its own. . . . Such
claims are based on the cumulative effect of individual acts.
. . . A hostile work environment claim is composed of a
series of separate acts that collectively constitute one
'unlawful employment practice.' . . . [Thus,
p]rovided that an act contributing to the claim occurs within
the filing period, the entire time period of the hostile
environment may be considered by a court for the purposes of
Id. at 115-17 (quotation marks and citations
Court finds that " the violation" in the FDCPA is
similar to " the alleged unlawful employment
practice" in Title VII and that the Supreme Court's
guidance is relevant to this case. The Court finds that
Defendants' alleged FDCPA violations are more akin to
discrete acts than a continuing course of conduct. The
following alleged FDCPA violations are identified in the
o November 2009: Maxwell's letter to Plaintiff
misrepresented the amount of Plaintiff's debt.
o February 2010: Defendants drafted a payment agreement with
Plaintiff which violated the FDCPA by failing to state the
amount owed, failing to promise that Plaintiff's payments
would be applied first to the principal of the debt, and
misrepresenting the amount of the debt.
o July 2010: Defendants misrepresented to the justice court
the amount Plaintiff owed and the amount Plaintiff had paid.
They also sought recovery for fees to which they were not
o November 2010: Maxwell sent a letter to Plaintiff that
misrepresented the amount of the debt and ignored