Hammerman v. GB Collects, LLC, No. 8:2013cv01606 - Document 16 (D. Md. 2013)
Court Description: MEMORANDUM OPINION (c/m to Plaintiff 10/28/13 sat). Signed by Chief Judge Deborah K. Chasanow on 10/28/13. (sat, Chambers)
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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND : EVAN HAMMERMAN : v. : Civil Action No. DKC 13-1606 : GB COLLECTS, LLC : MEMORANDUM OPINION Presently pending and ready for review in this action alleging violations of the Fair Debt Collection Practices Act ( FDCPA ), 15 U.S.C. § 1692 et seq., are a motion for summary judgment (ECF No. 13) and a motion for sanctions (ECF No. 14) filed by Defendant Defendant ). GB Collects, LLC ( GB the or The issues have been fully briefed, and the court now rules, no hearing being deemed necessary. For Collects following reasons, Defendant s Local Rule 105.6. motion for summary judgment will be granted and the motion for sanctions will be denied. I. Background A. Factual Background The underlying facts of this case are undisputed. Evan Hammerman ( Plaintiff ), proceeding pro se, has sued GB Collects for damages resulting from Defendant s deceptive, misleading, and/or unfair debt collection practices. 2 ¶ 27). false, (ECF No. On July 25, 2006, Hammerman Legal Consultants, PLLC, a company for which Plaintiff is an owner and managing partner, filed an application with Aetna Life Insurance Company ( Aetna ) seeking group insurance coverage for three of its employees. (ECF No. 13-2).1 The application identifies Hammerman Legal Consultants, PLLC, a law office, as the applicant for insurance coverage and lists Plaintiff Evan C. Hammerman as an attorney and company contact person. On February 15, 2011, Plaintiff sent a letter to Aetna informing the company that Hammerman Legal Consultants, PLLC was expanding its practice from New York to Maryland and Washington, D.C. (ECF February failed No. 11, to 13-3).2 2013, make Approximately after monthly Hammerman premium two Legal payments years later, Consultants, on the group on PLLC life insurance policy, Aetna placed the account with Defendant for collection. (ECF No. 2 ¶¶ 14-15 & ECF No. 13-5 ¶ 2). Defendant then sent three debt collection letters, addressed to Hammerman Legal Consultants, PLLC and to Plaintiff, as the company contact identified on the application, seeking to collect on the 1 The application was signed on July 18, 2006, but Aetna received it on July 25, 2006. 2 Plaintiff stated in the letter that he was the managing partner and owner of Hammerman Legal Consultants, PLLC. We currently have a group policy with Aetna Health Insurance. (ECF No. 13-3). 2 $1,295.00 delinquent debt on behalf of Aetna. (See ECF No. 2- 1).3 B. Procedural Background On April 1, 2013, Plaintiff commenced this action in the District Court of Maryland for Montgomery County. (ECF No. 2). In the complaint, Plaintiff contends that he is a consumer within the meaning of the FDCPA and that Defendant attempted to collect an alleged debt . . . from Plaintiff that arose out of a transaction in which money, services, or property which was the subject of the transaction was primarily personal, and/or household purposes. used for (Id. ¶¶ 5, 8). family, Plaintiff asserts two causes of action for violations of 15 U.S.C. §§ 1692e and 1692g. Specifically, Plaintiff alleges that Defendant violated the FDCPA by failing to include a thirty-day validation notice of Plaintiff s rights in the three collection letters and overshadow[ing] Plaintiff s dispute rights by including the following language in each letter to Plaintiff: make [the] check payable to AETNA in the amount of $1,295.00 and send it to me immediately. (Id. at 3-5). Plaintiff seeks statutory and actual damages, as well as all costs and reasonable attorney s fees for the alleged violations. 3 The letters are dated February 11 & 12, 2013, and March 25, 2013. 3 Defendant removed the action to this court on June 4, 2013, citing federal question basis. (ECF No. 1). jurisdiction as the jurisdictional Defendant answered the complaint on June 11, 2013 (ECF No. 10). Defendant then filed two motions on July 26, 2013: (1) motion for summary judgment (ECF No. 13); and (2) motion for sanctions against Plaintiff pursuant to Rule 11 of the Federal Rules of Civil Procedure and 28 U.S.C. § 1927 (ECF No. 14). Plaintiff was provided with a Roseboro notice, which advised him of the pendency of the motions and his entitlement to respond letter. within seventeen (17) days from the date of the Roseboro v. Garrison, 528 F.2d 309, 310 (4th Cir. 1975) (holding pro se plaintiffs should be advised of their right to file responsive material to a motion for summary judgment).4 Plaintiff judgment.5 did not Given oppose that the Defendant s time for motion for Plaintiff to summary oppose Defendant s summary judgment motion has elapsed, this matter is now ripe for resolution. 4 The record reflects that a Roseboro notice was sent to Plaintiff on July 26, 2013. (ECF No. 15). 5 Consistent with Local Rule 105.8, Plaintiff was not required to respond to the Rule 11 and Section 1927 motion unless directed to do so by the court. The court may not grant sanctions without requesting a response. 4 II. Analysis A. Defendant s Motion for Summary Judgment Summary judgment may be entered only if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Emmett v. Johnson, 532 F.3d 291, 297 (4th Cir. 2008). Summary judgment is inappropriate if any material factual issue may reasonably be resolved in favor of either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986); JKC Holding Co. LLC v. Wash. Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir. 2001). A party opposing a properly supported motion for summary judgment may not rest upon the mere allegations or denials of [her] pleadings, but rather must set forth specific showing that there is a genuine issue for trial. facts Bouchat v. Balt. Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003) (quoting former Fed.R.Civ.P. 56(e)). proof . . . will not suffice to prevent A mere scintilla of summary Peters v. Jenney, 327 F.3d 307, 314 (4th Cir. 2003). judgment. If the evidence is merely colorable, or is not significantly probative . . . summary judgment may be granted. at 249-50 (citations omitted). Liberty Lobby, 477 U.S. At the same time, the facts that are presented must be construed in the light most favorable to 5 the party opposing the motion. Scott v. Harris, 550 U.S. 372, 378 (2007); Emmett, 532 F.3d at 297. Plaintiff alleges that Defendant violated various provisions of the FDCPA, which protects consumers from abusive and deceptive Akalwadi (D.Md. v. debt Risk 2004). collection Mgmt. The practices Alts., FDCPA Inc., forbids by 336 the debt F.Supp.2d use any false, misleading collection and provides conduct. United States v. Nat l Fin. Servs., Inc., 98 F.3d a Plaintiff must prove non-exhaustive means 500 or a or of 492, deceptive, 131, 135 (4th Cir. 1996). representation collectors. list of in debt prohibited In order to prevail on a FDCPA claim, that: (1) the defendant was a debt collector, (2) the defendant s conduct in attempting to collect a debt was prohibited by the Act and (3) the debt was a consumer debt. In re Creditrust Corp., 283 B.R. 826, 830 (Bankr.D.Md. 2002). Assuming the first two prongs could be met, Plaintiff cannot establish involves a the third commercial, not because a the transaction consumer, debt. at issue The FDCPA explicitly states: (5) The term debt means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment. 6 15 U.S.C. § 1692a(5) (emphasis added). natural person debt. Id. § 1692a(3). must show obligated that or A consumer is any allegedly obligated to pay any Thus, as a threshold matter, Plaintiff Defendant s collection efforts arose from a consumer debt for FDCPA purposes, as opposed to commercial or business debt which Plaintiff plainly fails to show here. [I]n determining whether debt is consumer debt, court should examine the transaction as a whole and look to the substance of the transaction and the borrower s purpose obtaining the loan, rather than the form alone. Providence Dane LLC, 462 F.App x, 331, 335 in Boosahda v. (4th Cir. 2012) (quoting Slenk v. Transworld Sys., Inc., 236 F.3d 1072, 1075 (9th Cir. 2001)); see also Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, LLC, 214 F.3d 872, 875 (7th Cir. 2000) (observing that whether debt is consumer debt depends on the transaction out of which the obligation to repay arose, not the obligation itself ). The debt at issue here was incurred by a legal consumer. entity, explicitly Aetna not a acknowledging regarding its in change Plaintiff the of February address admits 15, that 2011 much by letter to Hammerman Consultants, PLLC has a group policy with Aetna. 3). as Legal (ECF No. 13- Specifically, [t]he obligation arose from Hammerman Legal Consultants, PLLC s failure to make payments on its employee group health insurance plan with 7 Aetna. (ECF No. 13-5, Affidavit of Gilbert Fisher). relates which to was the company s not sought household purposes. group coverage, Furthermore, the incurred debt group insurance primarily for policy with personal, Aetna, family, As stated in Plaintiff s application for Hammerman Legal Consultants, PLLC applied Aetna for insurance coverage for three of its employees. ECF No. 13-2, at 3). or to (See The fact that Hammerman Legal Consultants, PLLC is clearly identified as the applicant on the application further evidences a commercial transaction and the business as the proposed policyholder. (See ECF No. 13-5 ¶ 6, Affidavit of Gilbert Fisher ( [a]ll of Defendant s collection activities on the account at issue were directed only to the policyholder, Hammerman Legal Consultants, PLLC. )). The three collection letters Defendant sent to Plaintiff evidence Defendant s attempt to collect on a debt incurred by Plaintiff s business premium payments. as a result of its default on monthly The letters are addressed to Evan Hammerman, in addition to the legal entity, because Mr. Hammerman listed himself as the company contact on the application when he sought group coverage for the employees at his firm. (See ECF No. 13- 2, at 2; see also ECF No. 13-5 ¶ 7 ( Plaintiff was listed as the contact on Hammerman Legal Consultants, PLLC s group health insurance policy, and therefore, Defendant s collection letters were addressed to him as the representative of the company. )). 8 In any event, even if Defendant directed its debt collection efforts at Plaintiff, this does existence of a consumer debt. not necessarily suggest the See Boosahda, 462 F.App x at 335 ( a person can be sued in his or her individual capacity even for business debts. ). Finally, as Defendant points out, [t]he only accounts Aetna places with Defendant for collection are commercial group health insurance accounts in default. (ECF No. 13-6 ¶ 4).6 Accordingly, Plaintiff fails to carry his burden of establishing an essential element of his FDCPA claims - that the debt on which Defendant sought to collect was consumer as opposed to business or commercial debt.7 B. Defendant s Motion for Sanctions On July 26, 2013, Defendant filed a motion for sanctions against Plaintiff pursuant to Rule 11 and 28 U.S.C. § 1927 6 Defendant further notes that GB Collects only uses the collection letters at issue in connection with the collection of commercial accounts. (ECF No. 13-5 ¶ 12). When collecting on consumer accounts, Defendant uses collection letters that contain the validation notice and disclosures required by Sections 1692g and 1692e(11) of the FDCPA. (Id. ¶ 13). 7 Defendant makes two additional arguments for summary judgment. First, Defendant argues that Plaintiff lacks standing to bring claims under the FDCPA for violations related to communications between Defendant and Hammerman Legal Consultants, PLLC. Defendant also argues that even if the debt at issue qualified as consumer debt, the action is not viable because any violation resulted from a bona fide error. Because the FDCPA does not apply to Plaintiff s claims, these arguments will not be addressed. 9 relating to Plaintiff s complaint alleging violations of the FDCPA.8 [T]he central purpose of Rule 11 is to deter baseless filings in District Court and thus . . . streamline administration and procedure of the federal courts. Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990). the Cooter & Under Rule 11, by presenting a pleading or written motion to the court, an attorney or unrepresented party is certifying that to the best of the person s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, the pleading or motion is, among other things, warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law and that its allegations evidentiary support. and other factual Fed.R.Civ.P. contentions have Section 1927 11(b). provides that an attorney who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys fees reasonably incurred because of such conduct. 28 U.S.C. § 1927. also requires a Section 1927 is distinct from Rule 11, but finding of counsel s precondition to the imposition of fees. bad faith as a Brubaker v. City of Richmond, 943 F.2d 1363, 1382 n.25 (4th Cir. 1991). 8 The motion recites that it was served on Plaintiff on June 18, 2013, more than twenty-one (21) days previously. (See ECF No. 14 & 14-2). 10 Here, Plaintiff, apparently an attorney who is representing himself, filed the complaint in state court, the case was removed by Defendant, and Plaintiff has not filed anything in this court or taken any action here to advocate on behalf of the complaint. Thus, it is arguable that Plaintiff has not presented to the court a pleading, written motion, or other paper under Rule 11(b). Defendant argues that because Plaintiff is an attorney who is a shareholder in Hammerman Legal Collections, PLLC, a professional limited liability company which specializes in debt collection and the practice of law, he should know that his claims do not establish a legal or factual basis for claims under the FDCPA. 5) (emphasis in Plaintiff s original). specialized Defendant knowledge (ECF No. 14, at concludes this in thus field that of law indicates that he has filed this frivolous claim for no reason other than to impede Defendant s debt collection efforts against Hammerman Legal Consultants, PLLC. difference between a losing case (Id.). and a But there is a frivolous case, and Plaintiff s refusal to withdraw the complaint, which he did not even file in sanctionable allegation this court, conduct. merely does not Moreover, must be rise to supported to avoid by the level of sanctions, an some Brubaker, 943 F.2d at 1377 (emphasis in original). fact that Plaintiff cannot successfully 11 evidence. Despite the establish FDCPA liability on any of the asserted claims, there is no indication on the record that Plaintiff acted with a dishonest purpose or with ill will, or that Plaintiff s claims were utterly without factual foundation. (4th Cir. 1991). Chaudhry v. Gallerizzo, 174 F.3d 394, 411 Given that Plaintiff has not filed anything in this court, the high standard required for the imposition of sanctions, and the fact that all claims raised in the complaint will be dismissed, the court will exercise discretion not to award sanctions at this time. III. Conclusion For the foregoing reasons, the motion for summary judgment will be granted and the motion for sanctions will be denied. separate order will follow. /s/ DEBORAH K. CHASANOW United States District Judge 12 A
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