Ordinario v. LVNV Funding, LLC et al, No. 3:2013cv02804 - Document 42 (S.D. Cal. 2016)
Court Description: ORDER denying plaintiff's 13 Motion for Partial Summary Judgment, granting defendant LVNV Funding's 25 Motion for Summary Judgment. This action is dismissed with prejudice. Signed by Judge Larry Alan Burns on 3/4/16. (kas)
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Ordinario v. LVNV Funding, LLC et al Doc. 42 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 ROSANTO ORDINARIO, Plaintiff, 12 13 CASE NO. 13cv2804-LAB (NLS) ORDER DENYING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT; vs. 14 15 16 ORDER GRANTING DEFENDANT LVNV FUNDING’S MOTION FOR SUMMARY JUDGMENT; AND LVNV FUNDING, LLC, et al., Defendants. ORDER OF DISMISSAL 17 18 Plaintiff Rosanto Ordinario brings claims for violations of the federal Fair Debt 19 Collection Practices Act (FDCPA) and supplemental claims California’s Fair Debt Collection 20 Practices Act, also known as the Rosenthal Act (RFDCPA). 21 complaint once, then filed a motion for partial summary judgment. Defendant LVNV 22 Funding, LLC filed a motion for summary judgment as well. The motions are supported by 23 extensive documentation. Defendant Brachfeld Law Group, PC has not answered or 24 appeared, no proof of service on Brachfeld has been filed, and it appears Ordinario has 25 abandoned his claims against this Defendant. Ordinario amended his 26 The First Amended Complaint’s (FAC) factual allegations begin with the collection 27 efforts that give rose to Ordinario’s claims. According to the FAC, Brachfeld, on behalf of 28 LVNV, filed a state-court action to collect on a debt. Ordinario’s answer consisted of a -1- 13cv2804 Dockets.Justia.com 1 general denial. Eventually, LVNV voluntarily dismissed the action. According to the FAC, 2 the debt time-barred and the state court action also sought compound interest and 3 contractual fees to which LVNV was not entitled. The FAC alleges no facts about the nature 4 of the debt, other than to describe it as a consumer debt within the meaning of the FDCPA. 5 (FAC, ¶ 16.) 6 Legal Standards 7 Summary judgment is appropriate where “there is no genuine issue as to any material 8 fact and ... the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). 9 It is the moving party’s burden to show there is no factual issue for trial. Celotex Corp. v. 10 Catrett, 477 U.S. 317, 323 (1986). If the moving party meets this requirement, the burden 11 shifts to the non-moving party to show there is a genuine factual issue for trial. Id. at 324. 12 The non-moving party must produce admissible evidence, and cannot rely on mere 13 allegations. Estate of Tucker ex rel. Tucker v. Interscope Records, Inc., 515 F.3d 1019, 14 1033 n.14 (9th Cir. 2008). 15 With respect to each motion, the Court considers the record as a whole and draws 16 all reasonable inferences in the light most favorable to the non-moving party. Fairbank v. 17 Wunderman Cato Johnson, 212 F.3d 528, 531 (9th Cir. 2000). The Court does not make 18 credibility determinations or weigh conflicting evidence. Anderson v. Liberty Lobby, Inc., 477 19 U.S. 242, 255 (1986). Rather, the Court determines whether the record “presents a 20 sufficient disagreement to require submission to a jury or whether it is so one-sided that one 21 party must prevail as a matter of law.” Id. at 251–52. 22 Not all alleged factual disputes will serve to forestall summary judgment; they must 23 be both material and genuine. Id. at 247–49. Factual disputes whose resolution would not 24 affect the outcome of the suit are irrelevant to the consideration of a motion for summary 25 judgment. Anderson, 477 U.S. at 248. 26 /// 27 /// 28 /// -2- 13cv2804 1 Discussion 2 Consumer or Business Debt 3 The FDCPA and RFDCPA apply only to consumer debt, not business loans. See 4 Bloom v. I.C. Sys., Inc., 972 F.2d 1067, 1068 (9th Cir. 1992); 15 U.S.C. § 1692a(5); Cal. Civ. 5 code § 1788.2(e). The proper classification of the credit card debt is therefore a central 6 question in this case. LVNV points out that the credit card account at issue here was a 7 business account. LVNV therefore argues Ordinario cannot bring a claim under either 8 statute. 9 Ordinario in reply argues that he used the credit card for personal purposes, and that 10 it is the actual use of the credit card that counts. As Bloom explains, “[n]either the lender's 11 motives nor the fashion in which the loan is memorialized are dispositive of” whether the 12 debt is a business or consumer debt. 972 F.2d at 1068. Ordinario contends that, although 13 his account was characterized as being for business purposes, he actually never had a 14 business and instead used it exclusively for personal or household purposes, bringing it 15 within the scope of the two statutes. 16 The law is more nuanced than Ordinario’s arguments would suggest. When 17 determining the purpose of a loan, courts typically examine “the transaction as a whole, 18 paying particular attention to the purpose for which the credit was extended.” Bloom, 972 19 F.2d at 1068. See also Slenk v. Transworld Systems, Inc., 236 F.3d 1072, 1075 (9th Cir. 20 2001) (analyzing facts of a transaction). Here, credit was explicitly extended for business 21 purposes, Ordinario on the application agreed to use the card for business purposes only, 22 and the account statements call it a business account. 23 Ordinario points to his own declaration (Docket no. 26-5) as evidence of the use he 24 made of the credit. Although much of it is purely conclusory, saying little more than that the 25 charges were for personal consumer uses and not for business purposes, it does say he 26 used the card to buy restaurant meals, gasoline, groceries, medicine, movie tickets, and 27 other consumer goods and services for his own personal use. (Ordinario Decl., ¶ 9.) He also 28 says he has never owned a business. (Id., ¶ 10.) -3- 13cv2804 1 That being said, one need not be a business owner to have business debt; individuals 2 can engage in business activities. See, e.g., Piper v. Portnoff Law Assocs., 215 F.R.D. 495, 3 502 n.10 (E.D. Pa. 2003) (noting that individuals can own real property for business 4 purposes, rendering their obligations business debts). While the kinds of purchases 5 Ordinario mentions are not typically business purchases, it is impossible to be sure. This is 6 particularly true because Ordinario does not remember the reasons for all his charges. 7 Taken together, these facts are enough to create a genuine issue as to the nature of the 8 debt, and to preclude summary judgment for either side on this issue. 9 Litigation Privilege 10 LVNV raises the litigation privilege as a defense against RFDCPA claims. Under 11 California law, when the only collection method used to collect a debt is litigation, the 12 litigation privilege bars the claim. See Boon v. Prof'l Collection Consultants, 958 F. Supp. 13 2d 1129, 1133 (S.D. Cal. 2013); Taylor v. Quall, 458 F. Supp. 2d 1065, 1067–69 (C.D. Cal. 14 2006). Ordinario has not disputed this. 15 FDCPA Claim for Lawsuit to Collect Time-Barred Debt 16 LVNV argues that an action filed in California state court to collect a time-barred debt 17 is not actionable under the FDCPA, because under California law, the statute of limitations 18 is a waiveable affirmative defense. See Koch v. 704 Group, LLC, 2014 WL 7330877 (S.D. 19 Cal., Dec. 18, 2014) (citing Abels v. JBC Legal Grp., P.C., 428 F. Supp. 2d 1023, 1027 (N.D. 20 Cal. 2005)). While the Ninth Circuit has not definitively spoken on the issue, this appears 21 to be the accepted law, at least where the defense was waived. LVNV points out that 22 Ordinario’s answer failed to raise the affirmative statute of limitations defense, thereby 23 waiving it. See Docket no. 25-4 (answer to state lawsuit) at 3 (“Affirmative Defenses” 24 section, left blank). See also Cal. Civ. Proc. Code § 431.30(b) (requiring an answer to 25 contain both a general or specific denial of factual allegations, § 431.30(b)(1), and a 26 statement of “any new matter constituting a defense,” § 431.30(b)(2));§ 431.30(g) (requiring 27 that defenses be separately stated). Ordinario concedes he did not raise the time bar 28 /// -4- 13cv2804 1 defense (Opp’n, 2:19–21), but instead argues he was preparing to seek leave to amend his 2 answer to do so when Brachfeld voluntarily dismissed the complaint. (Id., 3:3–16.) 3 Ordinario does not argue that Abels was wrongly decided or that its holding is 4 inapplicable here. Rather, he focuses in detail on a different part of LVNV’s argument, 5 namely which state’s statute of limitations applies. But the Court need not reach these 6 issues, because the defense was waived. Ordinario may have been proceeding pro se at 7 the time he filed his answer, but under California law he was bound by his own omissions 8 just as much as if his attorney had waived the defense. See Harding v. Collazo, 177 Cal. 9 App.3d 1044, 1056 (Cal. App. 2 Dist. 1986). The fact that later, after he was represented 10 by counsel, he considered amending his complaint to add this defense does not change the 11 outcome, because the state court never gave him leave to amend. The Court is not in a 12 position to, in effect, reopen the case and make its own ruling on a motion never made in the 13 state court. LVNV is therefore entitled to summary judgment on this issue. 14 Claim for Interest 15 The FAC alleges that LVNV improperly relied on assumpsit theories in its state court 16 complaint to claim interest on the debt and fees owed on the account. (FAC, ¶ 26.) 17 The FAC mentions in passing that this was “not authorized by law or agreement,” (id.) 18 but this is nothing more than a conclusion of law. The FAC does not cite the cardholder 19 agreement or allege that the fees or interest claimed were contrary to that agreement. 20 Rather, the FAC focuses on whether the legal theories under which LVNV sought to recover 21 them allowed for such recovery. In his briefing on the cross motions, Ordinario likewise does 22 not argue that the interest and fees were not authorized by the cardholder agreement; 23 instead, he tacitly agrees the fees and interest he was being charged were contractually 24 authorized, and alleges that they were accumulating faster than he could pay them off. 25 (Opp’n at 1:20–2:1; 2:16–17 (“The balance of $3,318.00 that LVNV claimed as restitution 26 damages under assumpsit included charges for contractual compound interest and contract 27 late fees.”); 22:10-18 (calling the compound interest and fees charged on Ordinario’s credit 28 card account “unremarkable”).) -5- 13cv2804 1 By not responding to LVNV’s contentions and by failing to raise the issue himself in 2 his own motion, Ordinario has waived any claim that the cardholder agreement did not 3 authorize the fees or interest that LVNV claimed. 4 LVNV responds that it was entitled to seek interest and account fees on this theory, 5 and saying so in its state court complaint was not a material misrepresentation. In the 6 alternative, LVNV argues that its alternative theory, for recovery of interest and account fees 7 on an “account stated” theory was valid, rendering any misstatement regarding the 8 assumpsit theory immaterial. 9 For reasons discussed above, Ordinario’s time bar argument fails. His only remaining 10 argument is that the compound interest and fees LVNV asked for in its complaint are not 11 authorized by law, even if the agreement did provide for them. 12 A similar case in this District recently addressed this question, and determined that 13 California law does not forbid aggregating both interest and fees into the principal balance 14 and seeking those under an assumpsit theory. O’Bryne v. Portfolio Recovery Associates 15 LLC, 2013 WL 1223590, at *7 (S.D. Cal., Mar. 26, 2013) (citing Kawasho Int’l, USA, Inc. v. 16 Lakewood Pipe Serv., Inc., 152 Cal. App. 3d 785, 794–95 (Cal. App. 2 Dist. 1983)). 17 Ordinario’s opposition tacitly acknowledges that O’Bryne would compel the same result in 18 this case, if the Court follows it, but argues at length that the Court should reject both 19 O’Bryne and Kawasho as wrongly decided and contrary to California Supreme Court 20 decisions. (Opp’n, 26:1–25:23.) 21 But the Ninth Circuit affirmed O’Bryne, relying on Kawasho just as the district court 22 did, and reading it in the same way. O’Bryne v. Portfolio Recovery Associates, LLC, 596 23 Fed. Appx. 565, 566 (9th Cir. 2015)1 (finding that attempt to collect interest and fees included 24 in the credit card balance under an assumpsit theory did not violate the FDCPA or 25 RFDCPA). Even though this was an unpublished decision, the Court finds no contrary 26 authority that would cause it to reject the panel’s holding. 27 1 28 The plaintiff in that case was represented both at trial and on appeal by the same attorney who now represents Ordinario. Presumably he raised, or could have raised, the same arguments about Kawasho as he raises here. -6- 13cv2804 1 Conclusion and Order 2 The only factual issue that cannot be decided as a matter of law is whether the 3 underlying debt was business or consumer debt. As to the other issues raised in the briefing 4 on the cross motions, LVNV is entitled to judgment as a matter of law. The question of the 5 nature of the debt therefore makes no difference to the outcome, and the Court need not 6 reach it. See Anderson, 477 U.S. at 248. 7 Ordinario’s motion for partial summary judgment is DENIED. LVNV’s motion for 8 summary judgment is GRANTED. This action is therefore DISMISSED WITH PREJUDICE. 9 10 11 12 IT IS SO ORDERED. DATED: March 4, 2016 13 14 15 HONORABLE LARRY ALAN BURNS United States District Judge 16 17 18 19 20 21 22 23 24 25 26 27 28 -7- 13cv2804
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