Filed: Jul. 17, 2012
Latest Update: Feb. 12, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 11-1544 JAMES L. MCLEAN; EDITH L. MCLEAN, Plaintiffs – Appellants, v. RONALD A. RAY, Esquire; ECONOMOU, FORRESTER & RAY, Defendants – Appellees. Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. Liam O’Grady, District Judge. (1:10-cv-00456-LO-TCB) Argued: May 16, 2012 Decided: July 17, 2012 Before AGEE and DIAZ, Circuit Judges, and HAMILTON, Senior Circuit Judge. Affirmed by unpu
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 11-1544 JAMES L. MCLEAN; EDITH L. MCLEAN, Plaintiffs – Appellants, v. RONALD A. RAY, Esquire; ECONOMOU, FORRESTER & RAY, Defendants – Appellees. Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. Liam O’Grady, District Judge. (1:10-cv-00456-LO-TCB) Argued: May 16, 2012 Decided: July 17, 2012 Before AGEE and DIAZ, Circuit Judges, and HAMILTON, Senior Circuit Judge. Affirmed by unpub..
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 11-1544
JAMES L. MCLEAN; EDITH L. MCLEAN,
Plaintiffs – Appellants,
v.
RONALD A. RAY, Esquire; ECONOMOU, FORRESTER & RAY,
Defendants – Appellees.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Liam O’Grady, District
Judge. (1:10-cv-00456-LO-TCB)
Argued: May 16, 2012 Decided: July 17, 2012
Before AGEE and DIAZ, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Affirmed by unpublished opinion. Judge Diaz wrote the opinion,
in which Judge Agee and Senior Judge Hamilton joined.
ARGUED: Allen Huberth Sachsel, Fairfax, Virginia, for
Appellants. David John Gogal, BLANKINGSHIP & KEITH, PC,
Fairfax, Virginia, for Appellees. ON BRIEF: Michael L. Chang,
BLANKINGSHIP & KEITH, PC, Fairfax, Virginia, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
DIAZ, Circuit Judge:
Edith and James McLean sued Ronald Ray, an attorney, and
his law firm, Economou, Forrester & Ray, alleging that Ray
violated the Fair Debt Collections Practices Act in the course
of seeking to collect a debt the McLeans owed to his client.
Finding the McLeans’ claims meritless, the district court
granted Ray’s motion for summary judgment and denied the
McLeans’ cross motion for summary judgment. The McLeans timely
appealed. We affirm.
I.
A.
Edith McLean is a ninety-six-year-old widow. Edith’s son,
James McLean, manages her affairs and finances under general and
medical powers of attorney. Currently at a medical care
facility in Maryland, Edith twice resided at ManorCare, a
nursing home facility in Arlington, Virginia. Edith was first
admitted to ManorCare on July 30, 2006 and was discharged on
September 7, 2006. Upon Edith’s first admission to ManorCare,
James signed a contract with the facility providing that the
McLeans would be liable for all costs (to include attorney’s
fees) incurred by ManorCare in collecting payment on the
account. The contract also provided that it would terminate
upon Edith’s date of discharge; however, if Edith were
2
readmitted within fifteen days of discharge, the contract would
continue in effect as of the date of readmission.
In November 2007, Ray sued Edith in Arlington County
General District Court on behalf of ManorCare, to collect a debt
allegedly owed to ManorCare for services it rendered to Edith
during her first stay. The parties resolved the matter and
ManorCare nonsuited the case.
Approximately twenty months after her first stay, Edith was
readmitted to ManorCare without signing a new contract. Payment
disputes again arose between the McLeans and ManorCare, and
ManorCare again engaged Ray to attempt to collect the amounts it
claimed it was owed. On March 25, 2009, while Edith was still a
resident at ManorCare, Ray mailed Edith a letter claiming that
she owed ManorCare $15,814.44, plus interest, reasonable
attorney’s fees, and costs. Two days later, Ray sued Edith in
the Arlington County Circuit Court (the “Arlington Complaint”)
alleging that she failed to pay ManorCare for services rendered.
In preparing the Arlington Complaint, Ray reviewed a
standard collection referral form, Edith’s earlier residence
agreement, and an itemized statement pertaining to Edith’s
account, all of which he had received from ManorCare consistent
3
with his normal practice before filing debt collection actions. 1
The referral sheet stated that Edith had been admitted to
ManorCare on July 30, 2006 and remained in the facility. Ray
noticed that the amount sought on the referral sheet did not
match the figures ManorCare provided on the itemized statement.
After consulting with ManorCare, Ray revised the draft complaint
to state a reduced amount owed. The Arlington Complaint,
however, also asserted--incorrectly it turns out--that Edith had
resided continuously at ManorCare since her initial admission in
July 2006, and therefore alleged a breach of the contract James
signed in connection with that admission.
Before Ray filed suit, his secretary called his attention
to the 2007 lawsuit that the parties had resolved. Ray admitted
that he reviewed the file pertaining to the earlier matter in a
cursory fashion, concluding that the dated information was not
1
Ray admitted that he also customarily received a sworn
affidavit from his clients attesting to the amount sought, but
that he did not receive one from ManorCare in this instance.
Ray explained that he typically requests an affidavit to
facilitate the entry of a default judgment pursuant to Virginia
state court procedures. In this case, Ray explained that--given
the adversarial nature of the proceedings from an early stage--
he had no reason to expect that the McLeans would default and
thus no practical need for the affidavit. Moreover, the
district court found it undisputed that Ray “decided not to use
a supporting affidavit in the McLean matter because Ms. McLean
continued to reside at the facility, and Mr. Ray assumed that he
would need to amend the complaint prior to the entry of a final
judgment order to include claims for additional services.” J.A.
994-95.
4
useful and that he had no reason to otherwise question the facts
provided by ManorCare with respect to the 2009 claim.
Edith left ManorCare on May 8, 2009. In the months
following her departure, Ray exchanged several emails and phone
calls with the McLeans’ attorneys. It was not until the end of
September, however, that the McLeans first asserted that the
2006 contract was no longer valid because of the twenty-month
lapse between Edith’s discharge in September 2006 and
readmission in April 2008. Ray responded that he would look
into the matter and “clean up” the lawsuit if he confirmed that
the 2006 contract no longer applied. J.A. 561. To that end,
Ray requested Edith’s file from his client, but it took
ManorCare some time to retrieve it. In the interim, Ray filed
an amended complaint (the “Arlington Amended Complaint”) on
October 29, 2009 without striking the claim for attorney’s fees.
The Arlington Amended Complaint increased the ad damnum to
$70,147.67 to encompass services rendered to Edith from the
filing of the initial Arlington Complaint until her discharge.
The Arlington Amended Complaint further alleged that Edith, by
accepting the benefit of the services ManorCare rendered to her,
implicitly obligated herself to pay ManorCare in quantum meruit
for their reasonable value. The Arlington Amended Complaint
also continued to seek interest, and attorney’s fees and costs
based on the 2006 contract. The next day, Edith’s counsel
5
served and filed an Answer and Counterclaim, pleading as a
defense that there was no written contract between the parties
and providing specific dates of Edith’s discharge and
readmission to ManorCare.
By November 2009, Ray was able to confirm that Edith had
not continuously resided at ManorCare, and conceded that no
written contract existed to support a claim for attorney’s fees.
In January 2010, the parties presented an agreed order
dismissing the written contract claim and granting leave to
amend the suit to include an oral contract claim. Ray filed a
Second Amended Complaint, asserting claims for breach of an oral
contract and an implied contract, dropping the claim for
attorney’s fees, and seeking judgment in the amount of
$65,809.50.
B.
In the course of litigating the debt collection proceeding,
the McLeans sought discovery. Among other documents, they
requested a list of ManorCare employees and their contact
information. ManorCare prepared a list responsive to the
request, listing the national headquarters address and phone
number as the contact information for several employees, and
submitted it to Ray. Ray noticed that the list was missing
contact information for two ManorCare employees, which he
6
inserted before forwarding the discovery response to the
McLeans.
While the debt collection action was pending, Ray filed a
separate action for the appointment of a guardian and
conservator for Edith. Ray contended that this proceeding was
warranted by James’s history of neglect of Edith’s needs,
including his purported failure to pay for her care and
residence at another nursing home, which ultimately resulted in
the termination of Edith’s residence agreement at that facility.
Ray admitted that recovering the debt owed to ManorCare was one
purpose for filing the guardianship proceeding, but that his
legitimate concerns for Edith’s welfare also motivated his
actions. Ray prosecuted the guardianship proceeding against the
McLeans for nearly three months after Edith left ManorCare, but
then nonsuited the action.
C.
The McLeans sued Ray and his law firm in federal district
court for violations of the Fair Debt Collections Practices Act
(“FDCPA”). They twice amended their complaint; the second
amended complaint, the operative complaint before the district
court, initially contained twenty-four counts, twelve counts for
James and twelve for Edith, alleging the same violations of the
FDCPA for each plaintiff. However, the McLeans voluntarily
dismissed several counts, including twelve claims that the
7
district court indicated were likely time-barred by the FDCPA’s
statute of limitations. 2 The McLeans also voluntarily dismissed
two other counts alleging that Ray violated the FDCPA by
“instituting and/or continuing and prosecuting” the guardianship
proceeding, id. 27, which they argued Ray initiated “to bring
pressure on James, using the proceeding as a ‘club’ to induce or
threaten James to pay a claimed, but disputed, debt,”
id. 23-24.
The district court thus had before it ten remaining counts
alleging that Ray violated the FDCPA by (1) seeking incorrect
amounts, seeking attorney’s fees, and failing to determine the
accuracy of ManorCare’s claim prior to signing and filing the
Arlington Amended Complaint, (2) falsely making a quantum meruit
claim “with no basis in fact,” (3) falsely representing that he
would not assert the 2006 contract as a basis for recovery when
amending the complaint, and (4) providing a false discovery
response.
The parties cross-moved for summary judgment, which the
district court granted in favor of Ray. The McLeans timely
appealed, challenging the award of summary judgment and a
discovery ruling by the magistrate judge.
2
On appeal, Ray argues that all of the claims are barred by
the FDCPA’s statute of limitations. Because we conclude that
the McLeans’ claims fail on the merits, we need not address this
separate argument.
8
II.
We review de novo a grant or denial of summary judgment,
applying the same standard applied by the district court.
Overstreet v. Ky. Cent. Life Ins. Co., 950 F.2d 931, 938 (4th
Cir. 1991). Summary judgment is appropriate only when the
record shows “there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(c). A district court considering a motion
for summary judgment “must view the evidence in the light most
favorable to the nonmoving party,” Unus v. Kane,
565 F.3d 103,
115 (4th Cir. 2009), and draw all inferences in favor of the
nonmovant, Williams v. Griffin,
952 F.2d 820, 823 (4th Cir.
1991).
III.
The FDCPA is a strict liability statute that prohibits
false or deceptive representations in collecting a debt, as well
as certain abusive debt collection practices. 3 Attorneys seeking
3
The prohibited practices include “any false deceptive, or
misleading representation or means in connection with the
collection of any debt”; 15 U.S.C. § 1692e, “false
representation of the character, amount, or legal status of any
debt;” id. § 1692e(2)(A); “use of any false representation or
deceptive means to collect or attempt to collect any debt or to
obtain information concerning a consumer;”
id. § 1692e(10); “use
[of] unfair or unconscionable means to collect or attempt to
collect any debt;”
id. § 1692f, and “collection of any amount
(including any interest, fee, charge, or expense incidental to
the principal obligation) unless such amount is expressly
(Continued)
9
the repayment of a debt on behalf of a client are debt
collectors within the ambit of the FDCPA. Heintz v. Jenkins,
514 U.S. 291, 292 (1995). False statements in the course of
litigation constitute violations of the act. See Sayyed v.
Wolpoff & Abramson,
485 F.3d 226, 229 (4th Cir. 2007) (rejecting
the argument that an attorney debt collector was entitled to
immunity for his litigating activities). The FDCPA, however,
contains a “bona fide error” defense that absolves a debt
collector from liability for a violation if he can show by a
preponderance of the evidence that “the violation was not
intentional and resulted from a bona fide error notwithstanding
the maintenance of procedures reasonably adapted to avoid any
such error.” 15 U.S.C. § 1692k(c).
A.
The McLeans assert that Ray’s claims as to the amounts due
to ManorCare violated the FDCPA in several respects. First,
they contend that Ray misrepresented the debt owed by improperly
requesting attorney’s fees despite the fact that the break in
Edith’s stay at ManorCare rendered the contract entitling
ManorCare to such fees inapplicable. On this point, the McLeans
argue first that Ray’s review of his own files--specifically,
authorized by the agreement creating the debt or permitted by
law;” id. § 1692f(1).
10
the file pertaining to the 2007 lawsuit--should have alerted him
to the break in stay, and further that he was alerted to it by
the McLeans’ counsel. Next, they contend that Ray violated the
FDCPA by seeking the payment of prejudgment interest in the
complaint.
The McLeans further argue that the bona fide error defense
does not shield Ray because he knew the amounts claimed were
erroneous and did not maintain adequate procedural safeguards to
avoid such errors. On the latter point, the McLeans argue that
Ray’s dereliction of his own protocol--of requesting and
receiving a sworn affidavit from his clients attesting to the
amount of the claimed debt--establishes his failure to comply
with procedures for avoiding error.
In granting summary judgment in favor of Ray, the district
court--relying on our decision in Amond v. Brincefield, Hartnett
& Assocs., P.C., 175 F.3d 1013,
1999 WL 152555 (4th Cir. Mar.
22, 1999) (unpublished table decision)--determined that the bona
fide error defense applied to absolve Ray of liability.
Although by unpublished decision, this court in Amond affirmed
the district court’s finding that debt collector lawyers had no
reason to question the amount of debt they were attempting to
collect for their clients, stating that lawyers “cannot be held
liable for what appears to be an honest dispute regarding the
amount of the debt, so long as there exists a colorable factual
11
basis for the higher amount claimed by their client.” Id. at *2
(quoting the district court). This court also rejected the
Amond plaintiff’s argument that the FDCPA created a heightened
duty of investigation for lawyers engaged in ordinary debt
collection activity.
Id. at *3.
Noting that ManorCare had provided Ray a referral form, a
residence agreement, and an itemized bill for services, which
Ray reviewed (and challenged), the district court correctly
concluded that there was a colorable basis for ManorCare’s
claim. Addressing the McLeans’ argument that Ray would have
been alerted to the fact that Edith did not reside continuously
at ManorCare had he more carefully reviewed his own files, the
district court also correctly concluded that Amond permitted Ray
to rely on his client’s word. 4
As for the McLeans’ separate argument that Ray deliberately
asserted a false claim for attorney’s fees despite having been
put on notice by the McLeans’ attorneys that there was a break
in Edith’s stay at ManorCare, the district court found (and we
agree) that Ray was diligent in investigating the matter. From
4
Like the district court, we credit Ray’s explanation for
why he did not insist on receiving a sworn affidavit from
ManorCare for the amount owed. At bottom, our inquiry focuses
on whether the procedures Ray employed were reasonably adapted
to avoid error. We are satisfied that they were, and that Ray
is thus entitled to the benefit of the bona fide error defense.
12
the moment Ray was alerted to the contention that there was a
break in Edith’s stay that rendered the attorney’s fees
provision of the initial contract inapplicable, he diligently
investigated to confirm the truth of the assertion. We also
agree with the district court that Ray amended the complaint to
remove the claim for attorney’s fees as soon as he was able to
confirm that the 2006 contract no longer applied.
The district court also correctly rejected the McLeans’
allegation that Ray violated the FDCPA by seeking prejudgment
interest. As the district court noted, Virginia law permits
plaintiffs to seek prejudgment interest, which is awarded at the
discretion of the trier of fact. See, e.g., Upper Occoquan
Sewage Auth. v. Blake Constr. Co., 655 S.E.2d 10, 23 (Va. 2008)
(citing Va. Code Ann. § 8.01-382). The McLeans nevertheless
protest that Ray sought prejudgment interest on amounts
purportedly owed by the McLeans that were not yet due and
payable, as they had not yet been billed. However, the district
court determined that “the complaint is fairly read as seeking
only pre-judgment interest on the amounts past due at the time
of judgment.” J.A. 1001. We agree with the district court on
this score, as well. Further, any risk that ManorCare would
have been able to recover damages to which it was not entitled--
i.e., prejudgment interest on amounts that were not yet due and
payable--is mitigated by the fact that a decision to award such
13
interest in the first instance is determined at the discretion
of a presumably competent and reasonable trier of fact.
B.
The McLeans next assert that the quantum meruit claims
lacked a factual basis, and that the amount asserted therefore
violates the FDCPA. In support, they cite Ray’s response to the
McLeans’ interrogatory that sought the basis for ManorCare’s
allegation that each charge represented the reasonable value of
the item or service ManorCare provided Edith. Ray’s response
explained that the charges were “determined based upon the
reasonable value of the time or service charged, the charges for
such items by other facilities in the market and a cost basis
evaluation as determined by ManorCare in setting prices based on
its overall operating income and expenses.” Id.
The McLeans contend that the FDCPA requires--at the time a
debt collector asserts a debt--an accounting of how the amount
was calculated. According to the McLeans, Ray’s response fails
to constitute a good faith, pre-suit rationale of a claimed
debt, because it is merely “a list of factors that will be
considered to support a later rationalization,” Appellants’ Br.
47, which they claim does not satisfy the requirements of the
FDCPA.
The McLeans’ position is unpersuasive, as they fail to cite
any authority for this proposition. We agree with the district
14
court that Ray’s response clearly stated the basis for the
quantum meruit figure: “a reasonable value of the services, as
determined by the market, plus costs.” J.A. 1001. Further, we
agree with the district court that the McLeans have done no more
than suggest that the numbers “smell fishy,” id. 1002, which
does not satisfy their burden in opposing summary judgment.
C.
The McLeans also allege that Ray violated the FDCPA when he
falsely represented that he would not assert the 2006 contract
(the contract signed upon Edith’s first admission to ManorCare)
as a basis for recovery and for attorney’s fees when amending
the Arlington Complaint. This allegation stems from a statement
Ray made in a sworn affidavit he submitted to the district court
that, before amending the complaint the first time, he “would
inquire with [ManorCare] regarding the applicability of the 2006
contract and . . . would clean up the lawsuit if [he] confirmed
that there was a problem with that part of the claim.” Id. 561.
The McLeans interpret Ray’s statement as an unconditional
vow to amend the initial complaint to remove the breach of
written contract claim and the claim for attorney’s fees. The
district court, however, correctly interpreted Ray’s statement
with the qualifier in context: that Ray would “clean up the
lawsuit” if and when he confirmed the applicability of the 2006
contract, and not that he made an unconditional promise to
15
remove the claim for attorneys’ fees. Several obstacles--
including the fact that ManorCare had misplaced Edith’s file--
prevented Ray from confirming the facts any sooner. The record
shows that Ray amended the complaint to remove the claim for
attorney’s fees as soon as he was able to determine that the
2006 contract did not support it. We thus agree with the
district court that this claim lacks merit.
D.
The McLeans also allege that Ray violated the FDCPA by
providing a false discovery response. According to the McLeans,
Ray falsely provided the ManorCare national headquarters address
and phone number as the contact information for several
ManorCare employees, when he knew that those employees were not
in fact based at the company’s Ohio headquarters.
As to this claim, the district court correctly noted that
there was neither factual nor legal support for the notion that
Ray made a “false statement” or “misrepresentation” within the
meaning of the FDCPA when he forwarded the list of employees
from ManorCare to the McLeans. Assuming that Ray’s action
constituted a “representation” or “means of collecting a debt,”
the district court nevertheless concluded that it was not false,
deceptive, or misleading, let alone “unfair or unconscionable”
as prohibited by the act.
16
Again, the McLeans cite no authority to support their
contention on appeal that the district court’s reasoning is
legally incorrect. To the contrary, we agree with the district
court that there was nothing wrong or dishonest about Ray
specifying that certain ManorCare employees could be reached
through the company’s headquarters.
E.
Finally, the McLeans seek to appeal a discovery order
entered by the magistrate judge in this case. In their
complaint, the McLeans asserted two separate FDCPA violations
premised on the view that Ray abused the separate guardianship
proceeding as a coercive debt collection tool.
In support of their claims, the McLeans propounded
discovery directing Ray to admit that “Plaintiff James L.
McLean, at all times hereto relevant, was properly managing
Edith L. McLean’s affairs.” Id. 211. In response, Ray
propounded interrogatories and requests for production of
documents seeking information relating to James’s management of
Edith’s financial affairs. When the McLeans refused to provide
the information, the magistrate judge granted Ray’s motion to
compel. Rather than comply with the order, however, the McLeans
opted to dismiss the two claims. At the same time, they
objected to the magistrate judge’s order, contending that it was
an abuse of discretion and should be set aside. The district
17
court overruled the objection, finding that “the information
sought by Defendants is plainly relevant to Plaintiffs’ claims .
. . [and] Defendants are entitled to develop their response to
Plaintiffs’ allegations through discovery of all relevant
documents.” Id. 388.
On appeal, the McLeans argue that the magistrate judge and
the district court erred in ordering the McLeans to disclose
Edith’s assets. They ask us to reverse the district court’s
order and to remand the case with instructions to reinstate the
two counts alleging violations of the FDCPA pertaining to the
guardianship claims.
We conclude, however, that this assignment of error is now
moot, given that the McLeans elected to dismiss the claims
rather than comply with the order. In any event, we discern no
error, as we agree with the district court that the discovery
was plainly relevant to the issues in the case.
IV.
For the foregoing reasons, the judgment of the district
court is
AFFIRMED.
18
