United States District Court, D. Arizona
Martha A. McNair, Plaintiff,
Maxwell & Morgan PC, et al., Defendants.
David G. Campbell United States District Judge
This 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). Upon the parties’ separate requests for reconsideration,  the Court will deny Plaintiff’s motion and grant Defendants’ motion.
In 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. Id.
Plaintiff 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 January 2010, 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.
The 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.
Plaintiff 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.
In 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.
Plaintiff 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.
Summary 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. Catrett, 477 U.S. 317, 322 (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 (1986).
The 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 (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 (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).
The 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. Reg’l Credit Ass’n, 87 F.3d 1098, 1099-1100 (9th Cir. 1996)). The “least sophisticated debtor” standard protects the “naïve 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).
In their cross motion for summary judgment, Defendants 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. In response to Plaintiff’s motion, Defendants argue that their 2013 communications with Plaintiff were neither false nor misleading, and did not constitute unfair or unconscionable means of collecting a debt. The Court finds Defendants’ arguments dispositive.
A. Statute of Limitations.
Under 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.
The 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., Nat’l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 109-10 (2002); Havens Realty Corp. v. Coleman, 455 U.S. 363, 380 (1982).
The 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.
The 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 (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.
The Supreme Court has adopted a different approach, however, for hostile work environment claims under Title VII. It ...