-PAL Seeley v. Nevada Association Services, Inc., No. 2:2011cv00062 - Document 18 (D. Nev. 2011)
Court Description: ORDER Granting 9 Motion for Partial Summary Judgment and Denying 11 Motion for Summary Judgment. Signed by Judge Gloria M. Navarro on 9/26/11. (Copies have been distributed pursuant to the NEF - ASB)
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-PAL Seeley v. Nevada Association Services, Inc. Doc. 18 1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 4 5 JACOB SEELEY, individually and on behalf of all persons similarly situated, 6 Plaintiff, vs. 7 8 9 NEVADA ASSOCIATION SERVICES, INC., Defendant. 10 ) ) ) ) ) ) ) ) ) ) ) Case No.: 2:11-cv-00062-GMN-PAL ORDER 11 Before the Court is Plaintiff Jacob Seeley s Motion for Partial Summary Judgment (ECF 12 13 No. 9) and Defendant Nevada Association Services, Inc. s (“NAS”) Countermotion for Summary 14 Judgment (ECF No. 11.) The Court GRANTS the Motion for Partial Summary Judgment and 15 DENIES the Countermotion for Summary Judgment. 16 I. 17 BACKGROUND Plaintiff owed his Homeowner s Association (“HOA”) $80.00 when the HOA referred 18 collection to NAS. (See Ex. 5 to Pl. s Mot. for Partial Summ. J., ECF No. 9.) NAS sent a letter to 19 Plaintiff notifying him of the collection referral and the balance due, which had increased to 20 $380.00 after costs and fees. (See “Letter” Ex. E to Def. s Mot. for Summ. J., ECF No. 11.) 21 The letter stated: 22 Nevada Association Services (NAS) has been retained by Madera Homeowners Association (also called the Association) to collect from you the overdue homeowner s assessments you owe to the Association. As of today s date, records show a balance due on your account of $380.00. Any statements or invoices you receive from your association or its managing agent will not reflect the total amount due. 23 24 25 Page 1 of 9 Dockets.Justia.com 1 If you want to resolve this matter before a Notice of Delinquent Assessment Lien is recorded and sent to you pursuant to Nevada Revised Statutes, you must, within 10 days from the date of this letter, pay the balance due. Your payment must be in the form of cashier's check or money order, payable to Nevada Association Services, and mailed to the address indicated above. Should you decide not to pay within the 10 day period, this office will be entitled to proceed with the preparation and recordation of the Notice of Delinquent Assessment Lien. Should the Notice of Delinquent Assessment Lien be prepared and recorded, the additional cost to you will be $325.00 plus recording and mailing costs, there will also be a $30.00 charge to your account to release the Notice of Delinquent Assessment Lien, plus recording costs. These charges may not be all inclusive. 2 3 4 5 6 7 8 9 10 (“Letter” Ex. E to Def. s Mot. for Summ. J, ECF No. 11.) The second part of the letter explained Plaintiff s rights under Federal law to dispute the validity of the debt: 11 Federal Law gives you 30 Days from the date you receive this letter (the 30 Day Period) to dispute the validity of the debt or any part thereof. If you do not dispute the validity of the debt or any portion thereof as outlined above, NAS will assume the debt is valid. If you do contest the validity of this debt or any portion thereof, by notifying NAS in writing to that effect, NAS will, as required by law, obtain and mail to you verification of the debt. And, within the 30 Pay Period you request in writing the name and address of your original creditor, if the original creditor is different from the current creditor, the Association, NAS will also furnish you with that information. Federal Law does not require NAS to wait until the end of the 30 Day Period to record the Notice of Delinquent Assessment Lien. If, however, you notify NAS, in writing, within the 30 Day Period, that begins with the receipt of this letter, that you dispute the debt or any portion thereof; or that you request the name and address of the original creditor, if the original creditor is different from the current creditor, the Association, NAS will, as required by law, cease collection of the debt or any disputed portion thereof until NAS obtains verification of the debt or the name and address of the original creditor and a copy of such verification or name of the original creditor is mailed to you by NAS. 12 13 14 15 16 17 18 19 20 21 22 23 24 (Id.) The letter was one page in length and the text of the letter was uniform in size and font. (See 25 id.) Page 2 of 9 1 II. 2 SUMMARY JUDGMENT STANDARD The Federal Rules of Civil Procedure provide for summary adjudication when the 3 pleadings, depositions, answers to interrogatories, and admissions on file, together with the 4 affidavits, if any, show that “there is no genuine issue as to any material fact and that the movant 5 is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c)(2).1 Material facts are those 6 that may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 7 (1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable 8 jury to return a verdict for the nonmoving party. See id. “Summary judgment is inappropriate if 9 reasonable jurors, drawing all inferences in favor of the nonmoving party, could return a verdict 10 in the nonmoving party s favor.” Diaz v. Eagle Produce Ltd. P’ship, 521 F.3d 1201, 1207 (9th 11 Cir. 2008) (citing United States v. Shumway, 199 F.3d 1093, 1103–04 (9th Cir. 1999)). A 12 principal purpose of summary judgment is “to isolate and dispose of factually unsupported 13 claims.” Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986). In determining summary judgment, a court applies a burden-shifting analysis. “When the 14 15 party moving for summary judgment would bear the burden of proof at trial, it must come 16 forward with evidence which would entitle it to a directed verdict if the evidence went 17 uncontroverted at trial. In such a case, the moving party has the initial burden of establishing the 18 absence of a genuine issue of fact on each issue material to its case.” C.A.R. Transp. Brokerage 19 Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted). In contrast, 20 when the nonmoving party bears the burden of proving the claim or defense, the moving party 21 can meet its burden in two ways: (1) by presenting evidence to negate an essential element of the 22 23 24 25 1 Federal Rule of Civil Procedure 56 was recently amended, effective December 1, 2010. See Fed. R. Civ. P. 56 Advisory Committee Notes, 2010 Amendments. The standard for granting summary judgment remains the same. Id. Amendments to the Federal Rules of Civil Procedure govern proceedings that are pending at the time the amendments become effective, as long as the Supreme Court does not specify otherwise and the application would not be infeasible or work an injustice. Fed. R. Civ. P. 86(a)(2). Here, to prevent against any injustice to the parties, the Court will apply the language of Rule 56 that was in use prior to the new December 1, 2010 amendments. This earlier language was the language that was applicable when the Motion for Summary Judgment was filed and when the Response and Reply was submitted and, therefore, would be the most apt language to apply. Page 3 of 9 1 nonmoving party s case; or (2) by demonstrating that the nonmoving party failed to make a 2 showing sufficient to establish an element essential to that party s case on which that party will 3 bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323–24. If the moving party fails 4 to meet its initial burden, summary judgment must be denied and the court need not consider the 5 nonmoving party s evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 159–60 (1970). 6 If the moving party satisfies its initial burden, the burden then shifts to the opposing party 7 to establish that a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith 8 Radio Corp., 475 U.S. 574, 586 (1986). To establish the existence of a factual dispute, the 9 opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient 10 that “the claimed factual dispute be shown to require a jury or judge to resolve the parties 11 differing versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 12 F.2d 626, 631 (9th Cir. 1987). In other words, the nonmoving party cannot avoid summary 13 judgment by relying solely on conclusory allegations that are unsupported by factual data. See 14 Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposition must go beyond the 15 assertions and allegations of the pleadings and set forth specific facts by producing competent 16 evidence that shows a genuine issue for trial. See Celotex Corp., 477 U.S. at 324. 17 At summary judgment, a court s function is not to weigh the evidence and determine the 18 truth but to determine whether there is a genuine issue for trial. See Anderson, 477 U.S. at 249. 19 The evidence of the nonmovant is “to be believed, and all justifiable inferences are to be drawn 20 in his favor.” Id. at 255. But if the evidence of the nonmoving party is merely colorable or is not 21 significantly probative, summary judgment may be granted. See id. at 249–50. 22 III. 23 ANALYSIS A. Plaintiff’s Right to Dispute the Debt was Overshadowed and Contradicted. 24 The Federal Debt Collection Procedures Act (“FDCPA”) requires that, when first communicating 25 with a consumer in connection with the collection of a debt or within five days afterwards, debt Page 4 of 9 1 2 3 4 5 6 7 8 9 10 collectors shall send the consumer a written notice containing: (1) the amount of the debt; (2) the name of the creditor to whom the debt is owed; (3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector; (4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and (5) a statement that, upon the consumer s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor. 11 12 15 U.S.C. § 1692g(a). The FDCPA also prohibits debt collectors from using “any false, 13 deceptive, or misleading representation or means in connection with the collection of any debt.” 14 15 U.S.C. § 1692e (emphasis added). 15 Even where a written notice contains all of the listed elements, this notice is not 16 effectively conveyed where it is “overshadowed or contradicted by other messages or notices.” 17 Swanson v. Southern Oregon Credit Serv., Inc., 869 F.2d 1222, 1225 (9th Cir. 1989) (per 18 curiam); see also Renick v. Dun & Bradstreet Receivable Mgmt. Servs., 290 F.3d 1055, 1057 (9th 19 Cir. 2002) (per curiam) (holding that the FDCPA was not violated where a validation notice was 20 not overshadowed or contradicted by other language in the letter); Terran v. Kaplan, 109 F.3d 21 1428, 1434 (9th Cir. 1997) (holding that the FDCPA was not violated where a validation notice 22 was not overshadowed or contradicted by other language in the letter). 23 “[T]he impact of language alleged to violate section 1692g is judged under the „least 24 sophisticated debtor standard.” Swanson, 869 F.2d at 1225. “That is, if we find that the least 25 sophisticated debtor would likely be misled by the notice…, we must hold that the [debt Page 5 of 9 1 2 collector] has violated the Act.” Id. In 2006, Congress added language to the FDCPA to capture the types of violations found 3 in case law, including the statement, “Any collection activities and communication during the 30- 4 day period may not overshadow or be inconsistent with the disclosure of the consumer s right to 5 dispute the debt or request the name and address of the original creditor.” 15 U.S.C. § 1692g(b); 6 Financial Services Regulatory Relief Act of 2006, Pub. L. No. 109-351, § 802(c), 120 Stat. 1966. 7 Here, as in Swanson, the notice “invokes a shorter response period [than the required 30 8 days], promising harm to the debtor who waits beyond 10 days” and “thus represents an attempt 9 on the part of the collection agency to evade the spirit of the notice statute and mislead the debtor 10 into disregarding the [required debt validation] notice.” 869 F.2d at 1226 (internal quotation 11 omitted). 12 Defendant argues that the approval of NAS s letters and forms by the Nevada Department 13 of Business and Industry, Division of Financial Institutions (“FID”) implies that the FDCPA was 14 not violated. Defendant also argues that the absence of complaints about the form of the letter in 15 the five years after FID approved it “strongly suggests that even the least sophisticated debtors 16 were not confused by the text.” (Def. s Mot. for Summ. J. 12:4-5, ECF No. 11.) The Court is not 17 persuaded by this reasoning, and Defendant cites no legal authority to support this proposition. 18 Defendant also points out the right of a debt collector to record a Notice of Delinquent 19 Assessment Lien even before thirty days have elapsed for the debtor to dispute the debt. 20 Defendant argues, therefore, that the language in the letter giving the debtor ten days before this 21 recording occurs is not the kind of “threatening contradiction” discussed in Swanson that 22 overshadows the debtor s right to dispute the debt. (Def. s Mot. for Summ. J. 11.) 23 24 25 However, in Swanson, the notice included the following message, in large bold face type: “IF THIS ACCOUNT IS PAID WITHIN THE NEXT 10 DAYS IT WILL NOT BE RECORDED IN OUR MASTER FILE AS AN UNPAID COLLECTION ITEM. A GOOD CREDIT RATING-IS YOUR MOST VALUABLE ASSET.” Page 6 of 9 1 869 F.2d at 1225. The debt collector in Swanson clearly had a right to record the account as an 2 unpaid collection item in its own master file, but the Court still found that “the substance of the 3 language stands in threatening contradiction to the text of the debt validation notice,” in violation 4 of the FDCPA. Id. at 1226. Here, as in Swanson, the tenor and text of Defendant s notice itself 5 was threatening, particularly when juxtaposed with a possible lien and an additional $350 cost. Finally, Defendant argues that “a FDCPA overshadowing violation does not take place 6 7 unless there is overshadowing in both form and substance.” (Def. s Mot. for Summ. J. 8:24-25 8 (emphasis omitted).) To support this argument, Defendant points to Terran, where the Court of 9 Appeals concluded “that the collection letter did not violate section 1692g,” because it was 10 “persuaded that the form and content of the additional language contained in [the debt 11 collector] s initial communication did not overshadow or contradict the validation notice.” 109 12 F.3d at 1434. The Court lists cases where other circuits have concluded that section 1692g was 13 violated, pointing out that “[i]n each of these cases, payment was demanded within a time period 14 less than the statutory thirty days granted to dispute the debt and this demand was communicated 15 in a format that emphasized the duty to make payment, and obscured the fact that the debtor had 16 thirty days to dispute the debt.” Id. at 1433 (emphasis in original). However, Defendant s argument overreaches, extrapolating a holding where there is 17 18 merely a description of the letter before the Court of Appeals in Terran. Likewise, Defendant 19 mischaracterizes the opinion in Muha v. Encore Receivable Management, Inc., 558 F.3d 623, 629 20 (7th Cir. 2009), as “expressly recogniz[ing] Swanson [citation omitted] as contrary authority on 21 that point of law.” (Def. s Reply to Countermotion for Summ. J. 3:24-26, ECF No. 14.)2 This 22 23 The Court of Appeals in Muha states: “Confusing language in a dunning letter can have an intimidating effect by making the recipient feel that he is in over his head and had better pay up rather than question the demand for payment. Cf. Swanson v. Southern Oregon Credit Service, Inc., 869 F.2d 1222, 1226 (9th Cir. 1988) (per curiam).” 558 F.3d at 629. A “Cf.” signal indicates that “[c]ited authority supports a proposition different from the main proposition but sufficiently analogous to lend support,” as opposed to signals that indicate contradiction such as “Contra,” “But see” and “But cf.” The Bluebook: A Uniform System of Citation R.1.2(a), (c), at 54-55 (Columbia Law Review Ass n et al. eds., 19th ed. 2010). 2 24 25 Page 7 of 9 1 2 Court declines to accept Defendant s construction of Terran. Nevertheless, here, both the form and the substance of the letter overshadowed the 3 required notice. Although the text was uniform in font style and size, the threat to file a lien on 4 the property and to impose additional costs preceded the notice of the rights to dispute the debt. 5 Also, the information that upon written dispute, “NAS will, as required by law, cease collection 6 of the debt or any disputed portion thereof “ is buried at the end of the notice, preceded by the 7 sentence: “Federal Law does not require NAS to wait until the end of the 30 Day Period to record 8 the Notice of Delinquent Assessment Lien.” (“Letter” Ex. E.) By first emphasizing the threat of a 9 lien and additional costs in the letter, as well as NAS s rights under “Federal Law,” the 10 arrangement of these sentences and paragraphs is likely to mislead a “least sophisticated debtor” 11 as to his rights under the FDCPA. 12 For the reasons described above, this Court concludes that a “least sophisticated debtor” 13 would likely be misled by Defendant s notice due to the inclusion of overshadowing and 14 contradictory language, and that the FDCPA was therefore violated. Plaintiff s Motion for 15 Partial Summary Judgment is granted. 16 17 18 B. Whether the Amount of Collection Costs and Fees Were Expressly Authorized is a Disputed Material Fact. Under the FDCPA, “[a] debt collector may not use unfair or unconscionable means to 19 collect or attempt to collect any debt.” 15 U.S.C. § 1692f. Conduct in violation of section 1692f 20 includes “[t]he collection of any amount (including any interest, fee, charge, or expense 21 incidental to the principal obligation) unless such amount is expressly authorized by the 22 agreement creating the debt or permitted by law.” 15 U.S.C. § 1692f(1) (emphasis added). 23 Nevada law authorizes a HOA to “charge a unit s owner reasonable fees to cover the costs of 24 collecting any past due obligation. NRS 116.310313(1) (emphasis added). The Madera HOA 25 “permits NAS to charge collection fees and costs as provided under applicable State and Federal Page 8 of 9 1 law, and the Association s governing documents.” (Madera HOA Covenants, Conditions, and 2 Restrictions (“CC&Rs”), Ex. C to Def. s Mot. for Summ. J.) In its summary judgment motion, Defendant argues that “NAS is Permitted to Pursue 3 4 Collection Cost by both Nevada Law and the CC&Rs.” (Def. s Mot. for Summ. J. 12:11-12.) In 5 support, Defendant refers to the CC&Rs and to Chapter 116 of the Nevada Revised Statutes. 6 (Def. s Mot. for Summ. J. 12-15.) However, Defendant offers no evidence that the amount is 7 authorized, instead citing statutes and case law that merely permit NAS to pursue collection 8 costs. Defendant makes no argument that the specific costs assessed and described in the letter to 9 Plaintiff are authorized by the CC&Rs and Nevada law. Furthermore, Defendant does not 10 address whether the Madera HOA specifically authorized as “reasonable” the amount of the costs 11 and fees collected. Because Defendant does not adequately address Plaintiff s claim that 12 Defendant violated the FDCPA under section 1692f(1), Defendant has not met its burden and is 13 not entitled to judgment as a matter of law. 14 IV. 15 16 17 18 19 CONCLUSION IT IS HEREBY ORDERED that Plaintiff s Motion for Partial Summary Judgment is GRANTED. IT IS HEREBY ORDERED that Defendant s Motion for Summary Judgment is DENIED. DATED this 26th day of September, 2011. 20 21 22 ________________________________ Gloria M. Navarro United States District Judge 23 24 25 Page 9 of 9
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