Fish v. Stone, Higgs & Drexler, P.C., No. 2:2017cv02093 - Document 27 (W.D. Tenn. 2017)
Court Description: ORDER granting 17 Defendant's Motion for Summary Judgment; denying 18 Defendant's Rule 11 Motion; denying 20 Plaintiff's Motion for Partial Summary Judgment. Signed by Judge Samuel H. Mays, Jr on 12-29-2017. (Mays, Samuel)
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IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TENNESSEE WESTERN DIVISION BENJAMIN FISH, ) ) ) ) ) ) ) ) ) Plaintiff, v. STONE, HIGGS & DREXLER, P.C., Defendant. No. 2:17-cv-02093-SHM-EGB ORDER Plaintiff Benjamin Fish brings this action against Defendant Stone, Higgs & Drexler, P.C., alleging violation of Section 1692(i) (“FDCPA”). First Judgment. of the Fair Debt Collection Practices Before the Court are three motions. is Defendant’s July 12, 2017 Motion (ECF No. 17; see also ECF No. 17-1.) responded on August 9, 2017. on August 23, 2017. Second is (ECF No. 23.) for Summary Plaintiff Defendant replied (ECF No. 25.) Defendant’s July 12, 2017 Motion for Rule 11 Sanctions Against Plaintiff’s Counsel (“Rule 11 Motion”). No. 18; see ECF No. 18-1.) 2017. Act (ECF Plaintiff responded on July 26, (ECF No. 22.) Third is Plaintiff’s Summary Judgment. July (ECF No. 20.) 26, 2017 Motion for Partial Defendant responded on August 23, 2017. 2017. (ECF No. 24.) Plaintiff replied on September 6, (ECF No. 26.) For the following reasons, Defendant’s Motion for Summary Judgment is GRANTED. Plaintiff’s Motion for Partial Summary Judgment and Defendant’s Rule 11 Motion are DENIED. I. Background At all relevant Mississippi. times, Plaintiff (ECF No. 24-1 at 285.)1 resided in Horn Lake, Plaintiff received a loan from Pioneer Credit Company (“Pioneer”).2 (ECF No. 21-1 at 183.) The loan was issued in the form of a check, which was mailed to Plaintiff’s home. (Id. at 183-84.) Plaintiff a went to check, and cashed it. On November Plaintiff in the 13, bank branch After receiving the check, in Horn was 2014, DeSoto given action, but did not. 2014, Pioneer the Pioneer County filed Justice an a the in against Southaven, (ECF No. 21-2 at 189-90.) opportunity judgment action Court to defend (ECF No. 23-1 at 250.) obtained amount of $1,513.00. endorsed (Id. at 185-86.) Mississippi, to collect on the loan. Plaintiff Lake, against against the On December 19, Plaintiff in the (ECF No. 24-1 at 191.) On June 4, 2015, Defendant filed a Notice of Filing of Foreign Judgment in the Circuit 1 Court of Tennessee for the Unless otherwise noted, all pin cites for record citations are to the “PageID” page number. 2 The record does not reveal when Plaintiff received the loan. 2 Thirtieth Judicial District at Memphis on behalf of Pioneer. (ECF No. 17-4 at 83.) The Notice sought February 11, 2016, the Circuit Court enforce the (Id. at 83-84.) Mississippi judgment against Plaintiff. On of to Tennessee issued a summons requiring Plaintiff to answer or object to the judgment against him within thirty days. (ECF No. 21-3 at 203.) Should Plaintiff fail, “the Clerk may issue execution on the foreign judgment against [Plaintiff].” (Id.) the summons on March 7, 2016. 6 at 95.) On Plaintiff was served with (ECF No. 23-1 at 252; ECF No. 17- Plaintiff did not answer or object. May 16, 2016, the Circuit Court entered Authenticating and Enrolling Foreign Judgement. an Order (ECF No. 17-7.) The Order authenticated the Mississippi judgment “[in] the sum of $1,676.50, including interest at 5.25 percent per annum through the date of the entry of this order, and 10 percent interest post-judgment.” (Id.) On August 22, 2016, Defendant asked the Circuit Court to issue a writ of fieri facias -- a document allowing the county sheriff to seize Plaintiff’s assets in the amount of the judgment -- and asked the Court to “[l]evy execution on the wages of [Plaintiff].” 101.) (ECF No. 21-3 at 208-10; ECF No. 17-9 at On September 20, 2016, a Notice of Garnishment was served on Plaintiff’s then-current employer, Radial. 3 (ECF No. 23-1 at 252; ECF No. 17-9 at 101.) On October 20, 2016, Radial filed its Answer of Garnishee for Wages and Salary. 252; ECF No. 17-10 at 104.) On March (ECF No. 23-1 at 7, 2017, Defendant informed the Circuit Court that the judgment against Plaintiff had been satisfied on February 17, 2017. On February 10, 2017, (ECF No. 23-1 at 215.) Plaintiff filed this Complaint against Defendant alleging violation of Section § 1692i of the FDCPA. II. (ECF No. 1 at 1.) Jurisdiction The Court has federal-question jurisdiction. Under 28 U.S.C. § 1331, U.S. district courts have original jurisdiction “of all civil actions arising under the Constitution, laws, or treaties of the United States.” The Complaint asserts that Defendant “violated 15 U.S.C. § 1692i(a)(2) by bringing a legal action on a debt against Plaintiff . . . where the action was not brought in the judicial district . . . where resides or signed the contract creating the Debt.” at 6.) Plaintiff (ECF No. 1 That claim arises under the laws of the United States.3 III. Standard of Review A. Summary Judgment Under Federal Rule of Civil Procedure 56, a court shall grant a party’s motion for summary judgment “if the movant shows 3 Because the Court has jurisdiction over Plaintiff’s federal-law claims under 28 U.S.C. § 1331, it need not address Plaintiff’s claim that the Court also has jurisdiction under 15 U.S.C. § 1692k(d). 4 that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Civ. P. 56(a). The moving party can meet this Fed. R. burden by pointing out to the court that the nonmoving party, having had sufficient opportunity for discovery, has no evidence to support an essential element of his case. Asbury v. Teodosio, 412 F. See Fed. R. Civ. P. 56(c)(1); App’x 786, 791 (6th Cir. 2011) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)). When confronted with a properly-supported motion for summary judgment, the nonmoving party must set forth specific facts showing that there is a genuine dispute for trial. Fed. R. Civ. P. 56(c). plaintiff presents See “A genuine dispute exists when the significant probative evidence reasonable jury could return a verdict for her.” on which a EEOC v. Ford Motor Co., 782 F.3d 753, 760 (6th Cir. 2015) (quotation marks omitted). that there facts.’” 61 The nonmoving party must do more than simply “‘show (6th is some metaphysical doubt as to the material Adcor Indus., Inc. v. Bevcorp, LLC, 252 F. App’x 55, Cir. 2007) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). A party may not oppose a properly supported judgment motion by mere reliance on the pleadings. summary See Beckett v. Ford, 384 F. App’x 435, 443 (6th Cir. 2010) (citing Celotex 5 Corp., 477 U.S. at 324). adduce concrete Instead, the nonmoving party must evidence on which return a verdict in his favor. a reasonable juror could Stalbosky v. Belew, 205 F.3d 890, 895 (6th Cir. 2000); see Fed. R. Civ. P. 56(c)(1). The court does not have the duty to search the record for such evidence. See Fed. R. Civ. P. 56(c)(3); InterRoyal Corp. v. Sponseller, 889 F.2d 108, 111 (6th Cir. 1989). Although summary judgment must be used carefully, it “is an integral part designed to determination of the secure of 294 (6th the every procedural shortcut.” 289, Federal Cir. Rules just, action[,] as a whole, speedy, rather and than which are inexpensive a disfavored FDIC v. Jeff Miller Stables, 573 F.3d 2009) (quotation marks and citations omitted). The standard remains the same when both parties move for summary judgment. Taft Broad. Co. v. United States, 929 F.2d 240, 248 (6th Cir. 1991). “When reviewing cross-motions for summary judgment, the court must evaluate each motion on its own merits and view all facts and inferences favorable to the nonmoving party.” the light most Wiley v. United States (In re Wiley), 20 F.3d 222, 224 (6th Cir. 1994). 6 in B. Rule 11 Federal Rule of Civil Procedure 11(b) provides that, when an attorney signs a written motion or pleading, the attorney certifies that the claims made therein are warranted by existing law or are nonfrivolous arguments to extend, modify, or reverse existing law. See Fed. R. Civ. P. 11(b). 11 is to deter baseless filings. The purpose of Rule Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990). “[T]he test whether the for the imposition of Rule 11 sanctions is individual's circumstances.” conduct prefiling reasonable inquiry into both the facts and Upjohn, 788 F.2d 1217, 1221 (6th Cir. 1986). if the Rule 11 “stresses the need for satisfy the affirmative duty imposed by the rule.” sanctions under Tropf v. Fidelity Nat'l Title Ins. Co., 289 F.3d 929, 939 (6th Cir. 2002). some was “a reasonable inquiry the law to Albright v. Rule 11 permits discloses the pleading, motion, or paper is (1) not well grounded in fact, (2) not warranted by existing law extension, modification interposed for delay.” any Merritt v. or or good reversal improper Int'l a of purpose Ass'n faith of argument existing such as for law, the or (3) harassment Machinists & or Aerospace Workers, 613 F.3d 609, 626 (6th Cir. 2010) (internal quotations marks and citation omitted). 7 IV. Analysis Section 1692i(a)(2) of the FDCPA provides that “[a]ny debt collector who brings any legal action on a debt against any consumer shall . . . bring such action only in the judicial district or similar legal entity: (A) in which such consumer signed the contract sued upon; or (B) in which such consumer resides at the commencement of the action.” 15 U.S.C. § 1692i(a)(2). A. Statute of Limitations The parties dispute whether Plaintiff’s action is timely. An action under the FDCPA must be brought “within one year from the date on which the violation occurs.” 15 U.S.C. § 1692k(d). Defendant argues that “the one (1) year statute of limitations began on June 4, 2015” because the Sixth Circuit “relies on the date of the filing of the allegedly improper ‘legal action’ in order to begin the running of the statute of limitations.” No. 17-1 at 68.) (ECF Plaintiff contends that the “Sixth Circuit has not decided when the statute of limitations begins to run on § 1692i claims.” (ECF No. 23 at 243.) Plaintiff urges the Court to rule that the statute of limitations begins to run when a plaintiff is served with the action that allegedly violates the FDCPA. (Id.) 8 Defendant’s approach to the statute of limitations has been followed by some courts. In Naas v. Stolman, for example, the Ninth Circuit held that the statute of limitations begins to run on the date the initial suit is filed. Cir. 1997). 130 F.3d 892, 893 (9th The court reasoned that the filing date was most sensible because “[f]iling a complaint is the debt collector's last opportunity to comply with the Act, and the filing date is easily ascertainable.” Courts have Id. largely abandoned the Naas approach. More recent decisions have adopted two views about when the statute of limitations begins to run in cases where the act allegedly violating the FDCPA is a debt collection or foreclosure lawsuit. Some courts, such as the Tenth Circuit, hold that the limitations period begins to run when “the plaintiff has been served.” 2002). Johnson v. Riddle, 305 F.3d 1107, 1113 (10th Cir. In Riddle, the Tenth Circuit reasoned that, “[i]f the debt collector files suit . . . but then elects to call off the process server and abandon the collection suit before the plaintiff has been served, it cannot be said that the abandoned lawsuit constitutes an ‘attempt to collect’ on the debt within the meaning of the FDCPA.” Id. at 1113-14. Other courts hold that the statute of limitations begins to run “when the plaintiff knows or has reason to know of the 9 injury which is the basis of the action.” Lyons v. Michael & Associates, 824 F.3d 1169, 1171 (9th Cir. 2016). but need not, arise from service. the “discovery rule.” Id. Notice may, Courts refer to this rule as Courts applying the discovery rule have reasoned that, if the FDCPA’s statute of limitations begins to run when suit is filed, it “would threaten to capriciously limit the broad, remedial scope of FDCPA.” Id. at 1172; see Lembach v. Bierman, 528 Fed. Appx. 297, 302 (4th Cir. 2013) (“The only circuit to address whether to apply the discovery rule to an FDCPA action has concluded that it should apply. . . .We see no reason not to apply the discovery rule.”); Serna v. Law Office of Joseph Onwuteaka, P.C., 732 F.3d 440, 443 (5th Cir. 2013) (holding that “a violation of § 1692i(a)(2) does not occur until a debtor is provided notice of the debt-collection suit”); Wagner v. BellSouth Telecom., Inc., 520 Fed. Appx. 295, 298 (5th Cir. 2013) (holding that the statute of limitations period began to run when plaintiff “had constructive knowledge that [defendant] was in violation of the FDCPA”). The Sixth Circuit has not taken a position. See Lloyd v. Midland Funding, LLC, 639 Fed. Appx. 301, 306 (6th Cir. 2016) (“We have never decided whether [the FDCPA] statute of limitations includes a discovery rule, and we need not resolve that point today.”). However, the Sixth Circuit has opined on a 10 similar issue. In Tyler v. DH Capital Mgmt., Inc., 736 F.3d 455 (6th Cir. 2013), the court addressed when an FDCPA claim accrues for purposes of inclusion in a bankruptcy estate. The court held that the claim accrues when the complaint is filed, rather than when the debtor learns of the complaint. Although Tyler was a bankruptcy case, Id. at 464. some courts have found its reasoning applicable to the statute of limitations in non-bankruptcy contexts. See, e.g., Toops v. Citizens Bank of Logan, No. 2:14-cv-2086, 2015 WL 1526411, at *2-3 (S.D. Ohio, April 2, 2015) (noting that, “although Tyler was indeed a bankruptcy case, the analysis in that case nevertheless led to a clear holding that directs today's disposition” that the FDCPA statute of limitations begins to run when the complaint is filed); Vaughn v. National Collegiate Student Loan Trust 2006-3, No. 2:14-cv-194, 2014 WL 6686751, at *5 (E.D. Tenn., Nov. 26, 2014) (noting that, although the Sixth Circuit's decision in Tyler arose clearly in stated a . bankruptcy . . that framework, the FDCPA “[t]he statute Sixth of Circuit limitations begins to run at the time of filing, rather than service.”). Other courts have limited Tyler’s holding to bankruptcy cases. See, e.g., Mooneyham v. GLA Collection Co., Inc., No. 1:14-cv179-GNS-HBB, 2015 WL 3607647, at *4 (W.D. Ky. June 8, 2015) (holding that Tyler is “inapposite” 11 in deciding whether the discovery rule applies in non-bankruptcy cases); Turnbull v. O’Reilly Rancilio, P.C., No. 16-11971, 2017 WL 976918, at *4 n.3 (E.D. Mich. Mar. 14, 2017) (“In [Tyler], however, the Sixth Circuit expressly limited its holding to bankruptcy purposes.”). The Court is persuaded that Tyler is limited to bankruptcy cases. 306. See Tyler, 736 F.3d at 463; Lloyd, 639 Fed. Appx. at The Court is further persuaded that the Fourth, Fifth, and Ninth Circuits are correct in holding that the FDCPA statute of limitations begins to run when the plaintiff knows or has reason to know of the alleged violation. is “to eliminate collectors.” 137 S.Ct. abusive debt The purpose of Section 1692 collection practices by debt 15 U.S.C. § 1692(e); see also Henson v. Santander, 1718, 1720 (2017) (“Disruptive dinnertime calls, downright deceit, and more besides drew Congress's eye to the debt collection industry. From that scrutiny emerged the Fair Debt Collection Practices Act . . . .”). “Congress . . . clearly intended the FDCPA to have a broad remedial scope.” Hamilton v. United Healthcare of La., 310 F.3d 385, 392 (5th Cir. 2002); see Riddle, 305 F.3d at 1117 (“Because the FDCPA . . . is a remedial statute, it should be construed liberally in favor of the consumer.”). when the complaint is Commencing the statute of limitations filed does not serve Section 1692’s remedial purpose because a consumer is typically unaware of the 12 filing –- and thus unaware of the alleged FDCPA violation –when it occurs. Commencing the statute of limitations when the complaint is filed would create a perverse incentive for debt collectors to delay service or otherwise prevent consumers from receiving notice of actions against them. See Serna, 732 F.3d at 446. The initial violation Plaintiff alleges is the Notice of Filing of Foreign Judgment in the Circuit Court of Tennessee. On March 7, 2016, Plaintiff was served with a summons in that proceeding requiring him to answer or object. (ECF No. 23-1 at 252.) Nothing in the record suggests that Plaintiff had notice of the proceeding before he was served on March 7, 2016. Plaintiff filed his Complaint on February 10, 2017. No. 1 at 8.) received Less than one year had passed since Plaintiff notice Plaintiff’s (ECF of Complaint the is allegedly timely under unlawful § proceeding. 1692k(d)’s one-year statute of limitations. B. Threshold Requirements for Application of the FDCPA To establish a violation of the FDCPA, Plaintiff must prove three elements. U.S.C. § 1692a(3). First, Plaintiff must be a “consumer.” 15 Second, Plaintiff must show that the money being collected is a “debt.” 15 U.S.C. § 1692a(5). 13 Third, Plaintiff must show that Defendant is a “debt collector.” 15 U.S.C. § 1692a(6). 1. “Consumer” and “Debt” Section 1692(a)(3) defines a consumer as “any natural person obligated or allegedly obligated to pay any debt.” The meaning of consumer turns on the meaning of “debt” as used in § 1692(a)(5). A “debt” is “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.” 15 U.S.C. § 1692a(5). Defendant concedes that Plaintiff is a natural person, but contends that Plaintiff has failed to meet his burden of proving that the money collected by Defendant was a “debt.” at 271-72.) (ECF No. 24 Defendant contends that Plaintiff “offers no legal support for his conclusion [that] this use of money equates to being used for ‘personal, family, or household purposes.’” at 272.) (Id. Plaintiff argues that his deposition testimony, in which he stated “that the debt at issue arose from a loan he obtained to pay his rent,” is sufficient evidence to meet his burden. (ECF No. 26 at 309.) 14 Plaintiff provides sufficient evidence that the loan was a debt. Plaintiff used the residence in Mississippi. defined as loan to “pay [his] rent” (ECF No. 21-1 at 184-87.) at his Rent is “[c]onsideration paid, usu[ally] periodically, for the use or occupancy of property.” (10th ed. 2014). Black's Law Dictionary, 1488 Money used to pay for occupancy of residential property is money used for household purposes. “consumer” under Plaintiff is a § 1692(a)(3), and the money collected is a “debt” under § 1692(a)(5). 2. A “Debt Collector” “debt collector” instrumentality of is “any interstate person commerce or who the uses mails any in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” Plaintiff 15 U.S.C. § 1692(a)(6). seeks summary judgment Defendant is a debt collector. image of Defendant’s website. a “debt collector” because on his contention that Plaintiff relies on a purported Defendant responds that it is not it “never contacted Plaintiff by phone or through the mail, never attempted to communicate with Plaintiff, and never held itself out to Plaintiff as a debt collector.” (ECF No. 24 at 274.) 15 Defendant also argues that the image Plaintiff offers to support his claim that Defendant is a debt collector is inadmissible. reply, Plaintiff attempts to (Id. at 273.) authenticate the In his image by representing that “the undersigned certifies that the printouts filed as Doc. 21-4 accurately represent the website listed at the top of each page, as it appeared on June 13, 2017.” (ECF No. 26 at 309.) For the purported image of Defendant’s admissible, it must be authenticated. website to be Federal Rule of Evidence 901(a) provides that “[t]he requirement of authentication . . . [as] a condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims.” Plaintiff has failed to authenticate the purported image of Defendant’s website. Courts confronting images that purport to represent websites have held that “[t]o authenticate printouts from a website, the party proffering the evidence must produce some statement or affidavit from someone with knowledge of the website . . . for example a web master or someone else with personal knowledge would be sufficient.” St. Luke's Cataract and Laser Institute v. Sanderson, 2006 WL 1320242, at *2 (M.D. Fla. 2006) (internal citations and quotation marks omitted); see also United States v. Bansal, 663 F.3d 634, 667-68 (Fed. Cir. 16 2011) (concluding that testimony of a witness with personal knowledge was sufficient to authenticate screenshot images of a website); Wady v. Provident Life and Accident Ins. Co. of America, 216 F. Supp. 2d 1060, 1064 (C.D. Cal. 2002) (sustaining objection to affidavit of a witness attempting to authenticate documents from a website because the affiant had no personal knowledge of who maintained the website). offered evidence “sufficient to support Plaintiff has not a finding that the [website] is what the proponent claims it is.” Rule 901(a). The image is inadmissible and cannot be considered. Plaintiff argues that “the Court should . . . take judicial notice of Defendant’s website under Fed. R. Evid. 201.” No. 26 at 309.) (ECF Judicial notice is appropriate only when a fact “can be accurately and readily determined from sources whose accuracy cannot 201(b)(2). the be questioned.” Fed. R. Evid. The image Plaintiff seeks to offer does not satisfy that standard. verify reasonably Without supporting evidence, the Court cannot information found on the conclude that the website is authentic. purported website or The Court declines to take judicial notice of the image. Plaintiff has not offered undisputed material facts to support its contention that Defendant is a debt collector as 17 defined by the FDCPA. Plaintiff’s Motion for Partial Summary Judgment is DENIED.4 C. Whether a Garnishment Action is “Against Any Consumer” Section 1692i applies to “[a]ny debt collector who brings any legal action on a debt against any consumer.” Plaintiff argues that Defendant violated Section 1692i by “fil[ing] legal actions (a domestication action, and a garnishment action) against [Plaintiff] in Tennessee to collect on a personal loan.” (ECF No. 23 at 234.) Defendant argues that it is entitled to summary judgment because “a garnishment proceeding is against the garnishee, not the judgment debtor, and therefore does not qualify as a ‘legal action on a debt against any consumer’” under § 1692i(a). The Sixth proceedings (ECF No. 17-1 at 67.) Circuit constitute under § 1692i. has legal not decided actions whether “against garnishment any consumer” See Turnbull v. O’Reilly Rancilio P.C., No. 16- cv-11971, 2017 WL 4572334 at *2 (E.D. Mich. Oct. 13, 2017). 4 Although Defendant argues that it is not a debt collector in its Response to Plaintiff’s Motion for Partial Summary Judgment, it does not make that argument in its own Motion for Summary Judgment. Compare ECF No. 24 at 273 (“Plaintiff’s attempt to establish as a matter of fact that Defendant meets the definition of a ‘debt collector’ based on unsupported and unauthenticated images with no context and no explanation does not carry the day. Based on these images alone, Plaintiff cannot establish the absence of a genuine dispute regarding whether or not ‘[Defendant] regularly collects debts owed to others.’”) with ECF No. 17-1 at 57 (“Defendant’s Answer neither admits nor denies it is a ‘debt collector’ within the meaning of the FDCPA, [and] Defendant would submit such a determination is neither material nor dispositive to the outcome of the present motion for summary judgment.”). That Defendant is not a debt collector for purposes of Plaintiff’s Motion for Partial Summary Judgment is not dispositive of Defendant’s Motion for Summary Judgment. 18 Plaintiff urges the Court to adopt a rule “that post-judgment legal actions, even those that are facially directed to third parties (like wage garnishments), are still taken against the consumer.” (ECF No. 23 at 237.) Defendant argues that Tennessee law “make[s] clear a garnishment proceeding is against the garnishee . . . not the judgment debtor.” 66.) (ECF No. 17-1 at Plaintiff argues that Defendant’s approach “turns a blind eye to . . . due process concerns” and would allow “collectors to forum shop for states with limited consumer protections.” (Id. at 240-41.) Plaintiff and Defendant rely on competing case law from other jurisdictions, none of which is binding on the Court. Most courts confronting the issue have concluded, based on state law, consumer.” that a garnishment action is not “against any The First Circuit, in Smith v. Solomon & Solomon, PC, 714 F.3d 73 (1st Cir. 2013), decided the question based on Massachusetts law. Massachusetts required the judgment creditor to file the collection action in the county in which the trustee or employer, rather than the consumer, was located. 76. Id. at 75- Massachusetts also required the trustee or employer, rather than the consumer, to respond to the collection action. 76. Based on those laws, the First Circuit Id. at concluded that “[f]undamentally . . . a Massachusetts trustee process action is 19 geared toward compelling the trustee to act, not the debtor.” Id. at 76. The court held that post-judgment enforcement proceedings under Massachusetts law did not qualify as legal actions “against [any] consumer” under the FDCPA. Id. at 76-77. The Eighth Circuit, in Hageman v. Barton, 817 F.3d 611 (8th Cir. 2016), and the Seventh Circuit, in Jackson v. Blitt & Gaines, P.C., 833 F.3d 860 (7th Cir. 2016), reached the same conclusion based on Illinois law. Illinois required the judgment creditor to direct its summons against the consumer’s employer, rather than the consumer, and required the employer, rather than the consumer, to respond to and comply with any garnishment order. at 864. Hageman, 817 F.3d at 618; Jackson, 833 F.3d Illinois also required “wage-garnishment actions [to] be filed in the county where the third-party employer resides, regardless of the judgment debtor's residence.” F.3d at 864. characteristics The of Jackson an court Illinois concluded Jackson, 833 that wage-garnishment “[t]hese action make clear . . . that it is a legal proceeding against an employer, not a consumer.” The Id. Eleventh garnishment proceedings against consumers. F.3d 1107 Circuit (11th under has held Georgia that law are post-judgment not actions In Ray v. McCullough Payne & Haan, LLC, 838 Cir. 2016), the 20 court considered Georgia’s garnishment law. Georgia “requires the judgment-creditor to direct its summons to the garnishee (not the consumer), and it requires the garnishee (not the consumer) to file an answer.” Id. at 1111 (internal citations omitted). “[T]he governing statute specifically provides that ‘[a] garnishment proceeding is an action between garnishee.’” Id. the plaintiff [judgment-creditor] and For those reasons, the court concluded that “the [garnishment] process is fundamentally an action against the garnishee.” Id. The Court is persuaded that a garnishment proceeding in Tennessee is not a legal action “against any consumer” under § 1692i. Tennessee garnishment law is like the state laws analyzed by the First, Seventh, Eighth, and Eleventh Circuits. In Tennessee, service of a wage garnishment directed to the garnishee, not to the consumer. § 26-2-203. action must be Tenn. Code Ann. “If the service of the summons is made upon an employee of the garnishee rather than the garnishee, and such employee is also the judgment debtor, such summons is voidable by the court.” Tenn. Code Ann. § 26-2-203(d). The garnishee, rather than the consumer, must respond to a writ of garnishment and disclose any assets the garnishee holds that belong to the debtor. that, Tenn. R. Civ. P. 69.05. “[u]nder the applicable Tennessee courts have decided statutes, 21 the attachment of a debtor's property by garnishment is effected when the garnishee is informed in writing that the debtor's property possession of the garnishee is being attached.” in the Dexter Ridge Shopping Center, LLC v. Little, 358 S.W.3d 597, 605 (Tenn. Ct. App. 2010). Garnishment proceedings consumer” in Tennessee. are not actions “against any To garnish wages lawfully, the judgment creditor need communicate only with the garnishee. The consumer does not participate in the garnishment proceeding and is not a party to the garnishment. Plaintiff urges the Court to reject the holdings of the First, Seventh, Eighth, and Eleventh Circuits and adopt instead the Ninth Circuit’s holding in Fox v. Citicorp Credit Services, Inc., 15 F.3d 1507 (9th Cir. 1994). Plaintiff contends that Fox, “found that post-judgment legal actions, even those that are facially directed to third parties (like wage garnishments), are still taken against the consumer.” That is not the holding in Fox. (ECF No. 23 at 237.) The Ninth Circuit held that “[t]he plain meaning of the term ‘legal action’ encompasses all judicial proceedings, including those in enforcement of a previously-adjudicated right.” not decide whether a Fox, 15 F.3d at 1515. garnishment consumer.” 22 action is Fox did “against any Public policy considerations here that garnishments Congress’s provision principal was that are not “concern a also support the debt actions underlying collector against the conclusion consumers. FDCPA would file venue in an inconvenient forum, obtain a default judgment, and thereby deny the consumer an opportunity to defend herself.” Smith, 714 F.3d at 76 (citing S. Rep. No. 95–382, at 5 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1699). Plaintiff was not denied the opportunity to defend himself. He admits that he appeared for trial Justice Court on December 19, 2014. also admits that “he was in the DeSoto County (ECF No. 23-1 at 250.) provided with the He opportunity on December 19, 2014 to defend the original action giving rise to the Underlying Judgment.” (Id.) Plaintiff “agreed to let the Underlying Judgment be entered against him.” (Id. at 251.) “The FDCPA was created to prevent abusive debt-collection practices, not to prevent law-abiding creditors from collecting on legally enforceable debts.” Jackson, 833 F.3d at 866. Defendant did not employ abusive debt-collection practices in taking its judgment against Plaintiff. After the judgment had been entered, Defendant sought to collect a legally enforceable debt by garnishing Plaintiff’s wages. The underlying purpose of the FDCPA is not implicated by Defendant’s actions. 23 Plaintiff argues that excluding garnishment actions from § 1692i would “allow[] collectors to forum shop for states with limited consumer protections, which utterly frustrates states’ efforts to protect their citizens.” argument cannot be sustained. any judgment against them (ECF No. 23 at 241.) Citizens are protected because must be obtained satisfies the requirements of § 1692i(a). not the garnishment That proceeding, is in a forum that The original action, the one in which the “consumer needs to fight to keep his lights on and his children fed.” (Id. at 240.) Once a judgment has been entered against a consumer, the consumer is liable for the debt owed. Plaintiff argues that matter of federalism. “Congress sought to excluding garnishments fails as a He contends that, by passing the FDCPA, avoid” an approach in which “whether a garnishment action violates federal law [] varies [from] state to state.” (ECF No. 23 at 241.) Although the FDCPA is a federal law, “[c]ontroversies . . . governed by federal law[] do not inevitably require resort to uniform federal rules.” United States v. Kimbell Foods, Inc., 440 U.S. 715, 727-728 (1979). “[I]f there is little need for a nationally uniform body of law, state law may be incorporated as the federal rule of decision, so long as application of state 24 law would not programs.” frustrate specific objectives of the federal Id. The incorporation of state garnishment law is consistent with Congress’s “expressed intent in enacting a strong public abusive, and unfair consumer Hamilton, 310 F.3d Relying on purpose. obtain state at the 392; see garnishment dishonest, collection debt Congress disfavoring policy FDCPA. practices.” also law 15 does U.S.C. not judgment against the consumer in 1692(e). frustrate that the debtor Before any garnishment can occur, a § must a venue that is appropriate under § 1692i. Justice Brandeis once observed that “[o]ne of federalism's chief virtues . . . is that it promotes innovation by allowing for the possibility that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.” New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) as Texas, (Brandeis, J., dissenting). As Plaintiff Pennsylvania, severely Others, and limited such as points North wage out, Carolina states have garnishment.” Florida, prohibit 25 such “outright (ECF No. garnishments banned 23 in at or 241.) certain circumstances.5 ongoing.6 Debate over the proper garnishment regime is That is how our federal system is supposed to work. Wage garnishment proceedings in Tennessee actions “against any consumer” under § 1692i. not apply to Defendant’s garnishment of are not legal The FDCPA does Plaintiff’s wages. Defendant’s Motion for Summary Judgment is GRANTED. D. Rule 11 Sanctions Defendant’s Rule 11 Motion asks the Court to “enter an Order imposing sanctions to the fullest extent allowed by Fed. R. Civ. P. 11(c), up to and including dismissal of the Complaint and all expenses Defendant case.” in and reasonable connection with attorney’s this meritless fees and incurred time by barred (ECF No. 18 at 123.) Defendant’s memorandum in support of its Rule 11 Motion largely restates Judgment. the Defendant arguments in contends its that Motion its for Summary garnishment of Plaintiff’s wages did not violate the FDCPA and that Plaintiff’s claim is untimely because it was brought outside the statute of limitations. should be (Id. at 128-41.) sanctioned [Plaintiff’s] Defendant argues that Plaintiff because substantive of claims, 5 “(i) (ii) lack of expired merit to statute of Carolyn Carter & Robert J. Hobbs, No Fresh Start: How States Let Debt Collectors Push Families Into Poverty 31 (National Consumer Law Center 2013). 6 See, e.g., MICH. COMP. LAWS § 600.4012 (amending Michigan’s garnishment laws in 2015). 26 limitations, (iii) Plaintiff’s Counsel focusing exclusively on litigation under the FDCPA and other consumer protection laws, (iv) failure to research beyond a subjective interpretation of the statute, commentary.” and (v) an abundance of whether case law and (Id. at 143.) Sanctions are not appropriate. for adverse Rule 11 sanctions “In this Circuit, the test are warranted is whether the conduct for which sanctions are sought was ‘reasonable under the circumstances.’” Salkil v. Mount Sterling Tp. Police Dept., 458 F.3d 520, 528 (6th Cir. 2006) (internal quotations omitted). Plaintiff’s claim is not time barred. Plaintiff’s arguments are reasonable. Defendant cites Tyler, 736 F.3d 455, to support its claim that “the Sixth Circuit has rejected measure of the statute of limitations.” Tyler, as Defendant concedes, bankruptcy proceeding.” “arose (Id. at 68.) Plaintiff’s apparent (ECF No. 17-1 at 67.) in the context of a Several district courts have distinguished Tyler when addressing the FDCPA’s statute of limitations, and the Sixth Circuit has acknowledged that it has not decided when the FDCPA statute of limitations begins to run. See Lloyd, 639 Fed. Appx. at 306. Given this lack of binding authority, are Plaintiff’s arguments meritless. 27 not unreasonable or Defendant’s other arguments to support sanctions are not persuasive. Plaintiff did not “fail[] to research beyond a subjective interpretation of the statute.” 143.) The Sixth Circuit has not decided whether garnishments are legal actions against consumers. faith (ECF No. 18-1 at argument authority, that they Plaintiff’s are. Plaintiff has made a good- Because arguments are there is not no binding objectively unreasonable. Sanctions are not warranted. Defendant’s Rule 11 Motion is DENIED. V. Conclusion For the foregoing reasons, Defendant’s Motion for Summary Judgment is GRANTED, and Plaintiff’s Motion for Partial Summary Judgment and Defendant’s Rule 11 Motion are DENIED. So ordered this 29th day of December, 2017. /s/ Samuel H. Mays, Jr._____ SAMUEL H. MAYS, JR. UNITED STATES DISTRICT JUDGE 28
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