part 2
DISCUSSION
I. Plaintiff's Motion for Partial Summary Judgment
Plaintiff filed a motion for partial summary judgment on her claims arising under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 (hereafter "FDCPA") in regards to Defendants' attempts to collect a disputed debt from Plaintiff. Right and jurisdiction to bring this action in this Court arises under 15 U.S.C. § 1692k(a) (allowing an individual to sue for damages), and § 1692k(d) (granting jurisdiction to the district courts on claims arising under this section).
a. Failure to Communicate "Disputed" Status of Plaintiff's debt
Plaintiff first alleges that although she had notified Diem that she disputes the amount of the debt as listed on Plaintiff's consumer report, Diem has not amended the report [*7] so as to show the disputed status thereof. Defendants argue that their conduct in regards to Plaintiff's debt was within industry standards at all times. Section 1692e of the FDCPA states that debt collectors "may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C.A. § 1692e (2004). Subsection 1692e(8) goes on to list "communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed," as an example of conduct in violation of this section. 15 U.S.C.A. § 1692e(8) (2004).
The FDCPA specifically addresses the claims alleged by Plaintiff. Defendants' actions, alleged and not disputed, are violations of the FDCPA. This is true regardless of whether or not they fall within industry standards and practice. The FDCPA sets the minimum standards that are to be observed by the debt collection industry in regards to its conduct toward the consumer. Thus, practicing within industry standards is not a defense to the FDCPA. Because Defendants [*8] have not disputed the allegation that they had failed to communicate the disputed status of Plaintiff's debt to the consumer reporting agency, the court will find that no genuine issue of material fact exists with regards to this claim and will grant summary judgment for Plaintiff.
b. Failure to Provide a copy of debt Verification upon Plaintiff's Demand
Plaintiff also alleges that Defendants did not comply with the FDCPA by failing to provide a copy of the verification of the debt upon request. Plaintiff has argued that the March 18, 2003 letter was a refusal on the part of Defendants to provide verification of the debt. To the contrary, Defendants argue that a "common sense reading of the collection letter dated March 18, 2003" will show that no such refusal was made. (Defs.' Mem. Supp. Resp. and Summ. J. at 10). Whether Defendants' letter of March 18, 2003 amounts to a refusal to provide the verification is not pertinent to determining a violation of Section 1692g(b). This section states in part that once the debtor notifies the collector in writing within thirty days after receiving notice of the collection, "the debt collector shall cease collection of the debt, or any [*9] disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment . . . and a copy of such verification or judgment . . . is mailed to the consumer by the debt collector." 15 U.S.C.A. § 1692g(b) (2004).
Defendants' violation of this section occurred once Plaintiff notified Defendants that she disputed the debt and requested verification of the debt, and Defendants continued their collection tactics. For example, after notification, Defendants left the note on Plaintiff's credit report, and sent her a request for payment in full. (See Pl. ['s] Ex. E). Additionally, the March 18, 2003 letter contained language stating: "this is an attempt to collect a debt . . ." Id; cf. Renick v. Dun and Bradstreet Receivable Management Services, 290 F.3d 1055 (9th Cir. 2002) (holding that where a second notice can be construed as a request to pay rather than a demand, and the thirty-day notice language is contained therein and is not overshadowed by the request for payment, the notice does not violate the FDCPA). Defendants neither present an argument, nor offer evidence to show that they were within their rights [*10] in maintaining their collection activities against the Plaintiff once she had notified them that the debt was disputed. The only indication that the thirty-day period for disputing the debt had possibly expired prior to Plaintiff's notice to Defendants, is found in the March 18, 2003 letter sent by Defendants to the Plaintiff stating that there was an initial notice to Plaintiff which was sent June 25, 2002. (See Pl. ['s] Ex. E). This letter is only referenced in Plaintiff's exhibits and Defendants have not asserted such a defense. Furthermore, the thirty-day period begins to run once the debtor receives the notice, not once it is mailed. See 15 U.S.C. 1692g(a)(3) (notice to consumer must contain language that the consumer has 30 days from receipt of the notice to dispute the debt). Defendants have not offered to show that Plaintiff ever received the June 25, 2002 notice, or that the notice even exists. Because no material fact surrounding this claim has been brought into question by Defendants, Plaintiff is entitled to summary judgment.
c. Attorney's fees of $ 183.00 not Agreed to by Plaintiff
Plaintiff has also alleged that the collection [*11] of attorney's fees and costs in the amount of $ 183.00 was a violation of section 1692f(1) of the FDCPA because the only amount of such fees awarded by the Justice Court in the special detainer judgment was approximately $ 86.00. Defendants do not offer an argument that the amount of attorney's fees they are collecting is a reasonable amount or authorized by law.
Section 1692f provides that a debt collector cannot use unfair means to collect a debt, and that such means include (1) "the collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by agreement creating the debt or permitted by law." 15 U.S.C.A. 1692f(1) (2004). Therefore, the FDCPA allows the collection of attorney's fees in this case so long as those fees were agreed to by Plaintiff when she entered into her lease. The agreement allowing such attorney's fees is the lease agreement. The "Agreement and Acceptance" paragraph of the lease agreement, for enforcement of the Agreement, reads in relevant part;
"the prevailing party may recover reasonable attorney's fees and any other normal and customary [*12] costs of collection including but not limited to collection agency fees and court costs."
(See Pl.['s] Ex. A at 4). The prevailing party is the "party in whose favor a judgment is rendered. . . ." BLACK'S LAW DICTIONARY 1145 (7th ed. 1999); see also Buckhannon Bd. and Care Home v. Dep't of Health and Human Res., 532 U.S. 598, 121 S. Ct. 1835, 149 L. Ed. 2d 855 (May 29, 2001) (Holding that the "prevailing party" for purposes of fee shifting statutes requires an alteration in the legal relationship of the parties); see also Bennett v. Yoshina, 259 F.3d 1097 (9th Cir. 2001) (Citing Buckhannon).
The fact that court costs are included in the agreement provision with attorney's fees indicates that the "prevailing party" would be determined through some judicial proceeding. "Respect for ordinary language requires that a plaintiff receive at least some relief on the merits of his claim before he can be said to prevail." Hewitt v. Helms, 482 U.S. 755, 760, 107 S. Ct. 2672, 96 L. Ed. 2d 654 (1987). Other circuits have come to the same conclusion when encountering similar agreement provisions referring to a "prevailing party. [*13] " See Utility Automation 2000, Inc. v. Choctawhatchee Elec. Co-op., Inc., 298 F.3d 1238 (11th Cir. 2002) (where an acceptance of an offer of judgment satisfied the judicial proceeding requirement for determination of the "prevailing party"); see also Villescas v. Abraham, 311 F.3d 1253 (10th Cir. 2002) ("prevailing party" must benefit from a judicial alteration of parties' relationship).
Because attorney's fees of $ 86.00 were specifically determined through a judicial proceeding, Woodbridge Apartments had prevailed to that amount only. Therefore, the amount of attorney's fees agreed to by the Plaintiff in the original lease agreement was the amount awarded in the judgment, or $ 86.00. Defendants' attempt to collect an additional $ 97.00 results in a violation of the FDCPA, as they are attempting to collect an amount of fees and costs not expressly found in the agreement or in the judgment. Additionally, Defendants have not offered any evidence to show that an amount above $ 86.00 was agreed to in some way by Plaintiff, or even that it is a reasonable amount. Therefore, the Court will grant summary judgment in favor of Plaintiff on this claim.
[*14] d. Collection fee of $ 672.04 not Agreed to by Plaintiff
Finally, Plaintiff alleges that Defendants violated FDCPA sections 1692e and 1692f by attempting to collect an amount for collection fees above that which was agreed to in the lease agreement. Defendants are attempting to collect $ 672.04 in collection fees from Plaintiff. (See Defs.['] Ex. 2). Plaintiff alleges that it was a violation to use a percentage in determining the amount to be collected in collection fees and that such a percentage could only be applied toward the amount that was awarded in the detainer judgment. Defendants argue that Plaintiff agreed to pay a collection fee of up to 50% when she signed her lease agreement and lease buyout.
Plaintiff cites Kojetin v. CU Recovery, Inc., 212 F.3d 1318 (8th Cir. 2000) to support her argument that a collection fee cannot be based on a percentage. However, Plaintiff's argument fails because the Eighth Circuit in Kojetin does not prohibit the use of a percentage altogether, but rather states that "CUR's notice violated the Act by adding the collection fee based on a percentage rather than on actual costs when Kojetin's agreement with the [*15] credit union provided she was liable only for actual costs." Id. (emphasis added). As mentioned above, the FDCPA prohibits the collection of any fee, including collection costs, unless there is a law or an agreement that allows for such fees. 15 U.S.C. § 1692f(1). Kojetin is distinguishable from the present case only because the agreement called for payment of actual collection costs rather than a percentage. The lease agreement that Plaintiff signed contemplates the imposition of collection fees based on percentage. Clearly, where there is an agreement, the collection fees "expressly authorized by the agreement creating the debt" will control. 15 U.S.C.A. 1692f(1) (2004).
The lease agreement and the lease buyout agreement allow for "recovery [of] reasonable attorney's fees and other normal and customary costs of collection including but not limited to collection agency fees and court costs" (Pl.['s] Ex. A at 4) "up to 50%." (Pl.['s] Ex. A at 5). Thus, Defendants were within their rights when they applied a 35 or 40% collection fee to Plaintiff's debt. However, determining whether this percentage rate amounts to [*16] an unconscionable term within the agreement is not necessary because Defendants' violated the FDCPA by applying the percentage rate to an incorrect principle amount. As discussed above, the prevailing party is the party who benefits from a judicial order. In this case, Woodbridge received a judgment in the amount of $ 747.09. Woodbridge only prevailed as to this amount, not the nearly $ 2,000 to which Defendant's wish to apply such a percentage. Therefore, Defendant's could only determine the collection fee by applying the percentage rate to the amount awarded in the judgment, or $ 747.09. Thus, since Plaintiff never agreed to a collection fee larger than "up to 50%" of the amount awarded in the detainer judgment, the collection of such a fee is a violation of the FDCPA. Because no genuine issue of material fact exists with regard to this claim, Plaintiff is entitled to summary judgment.
[follows to part 3]
