BOWLER, United States Magistrate Judge.
After a six day non-jury trial, this court issued findings and conclusions under Rule 52(a), Fed.R.Civ.P., (Docket Entry #63) and a final judgment (Docket Entry #64). Both parties filed timely motions to alter or amend the judgment under Rule 59(e), Fed.R.Civ.P. ("Rule 59(e)"). (Docket Entry ##66 & 68). After conducting a hearing, this court took the motions under advisement.
The two count complaint sets out violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 ("section
In seeking Rule 59(e) relief, defendant Marcus, Errico, Emmer & Brooks, P.C. ("MEEB") requests reconsideration of the chapter 93A "trade or commerce" determination. It also argues that the untimely conduct under the FDCPA's one year limitations period cannot serve as a predicate for a per se violation of chapter 93A. MEEB further seeks reconsideration of the determination that per se chapter 93A violations are not protected by the litigation privilege. MEEB maintains that the litigation privilege is absolute and bars any liability under chapter 93A. As to the FDCPA, MEEB challenges the determinations that it violated section 1692i by filing suit in the wrong venue and section 1692c(b) by sending letters (Ex. 38, 42, 45, 47, 55, 59, 60 & 68) to plaintiff as opposed to his attorney. (Docket Entry #74).
Plaintiff urges reconsideration of the finding that MEEB did not violate section 6(c) of Massachusetts General Laws chapter 183A ("chapter 183A"), the state condominium statute, when it failed to send notice of its intent to file suit at least 30 days in advance of filing suit to plaintiff's mortgagees. (Docket Entry #67). Plaintiff asserts that this court erroneously determined that MEEB's failure to provide the mortgagees with a letter 30 days before filing suit did not violate either section 1692f or section 1692d. Finally, plaintiff argues that he suffered actual damages in the form of increased attorneys' fees and costs as a result of MEEB's failure to notify the mortgagees 30 days in advance of filing suit.
Plaintiff, a resident of the Pondview condominiums in Lynn, Massachusetts, filed this action alleging improper debt collection activities on two residential condominium units at the 19 unit complex against MEEB, a professional corporation of attorneys located in Braintree, Massachusetts. Plaintiff, plaintiff's brother and/or plaintiff's parents owned the units at various times and, except for a one year period, plaintiff resided in one of the units.
Created under a September 1986 Declaration of Trust (Ex. B), Pondview is the governing body of the Pondview condominiums and consists of a group of volunteer trustees. The Declaration of Trust states that the trustees must be unit owners. (Ex. B).
(Ex. B, Art. V, § 5.3(C)).
In addition, the Master Deed submitted Pondview to the "provisions of Chapter 183A." (Ex. C, p. 1); see Mass. Gen. L. ch. 183A, § 1 (defining "Master deed" as "the instrument by which the condominium is submitted to the provisions of this chapter"). The Declaration of Trust similarly grants the trustees the power "to exercise all of the powers of the `organization of unit owners' pursuant to Massachusetts General Laws, Chapter 183A." (Ex. B, Art. III, § 3.6). Under section six of chapter 183A, "The organization of unit owners may ... assess any fees, attorneys' fees [and] late charges ... against the unit owner." Mass. Gen. L. ch. 183A, § 6(a)(ii). In short, under chapter 183A, the Declaration of Trust and the Master Deed, Pondview had the ability and the authority to assess condominium fees, attorneys' fees, late charges and costs of collection against a unit owner such as plaintiff. See Mass. Gen. L. ch. 183A, § 6(a)(ii) & 6(b); (Ex. B, Art. V, § 5.3(C)).
In July and August of 2004, plaintiff fell behind in paying his assessments, late fees and loan payback charges for both units. Pondview did not hire or engage MEEB as its attorney, however, until March 2005. MEEB's efforts to collect the debts plaintiff owed to Pondview continued through the fall of 2008. Plaintiff's failure to pay legitimately imposed charges led MEEB, on behalf of its client Pondview, to file two collection suits against plaintiff, as a unit owner, on April 28, 2005, in the Massachusetts District Court Department (Lynn Division) ("Lynn District Court"). MEEB filed these and an additional seven collection suits in Lynn District Court except for the last collection suit filed in September 2008 ("September 2008 unit 104 suit") in the Massachusetts Superior Court Department (Essex County) ("Essex Superior Court").
Beginning in May 2005, MEEB also communicated with plaintiff's mortgagees without obtaining plaintiff's consent. Section six of chapter 183A imposes a requirement on a condominium association, such as Pondview, to send a letter to the owner of a unit when any portion of a unit owner's
Plaintiff filed this suit on February 3, 2009. The FDCPA has a one year statute of limitations. 15 U.S.C. § 1692k(d). The delay in filing suit sharply curtailed the timely FDCPA violations committed by MEEB. In addition to a May 13, 2008 letter that violated section 1692c(b), this court found the following FDCPA timely violations: (1) MEEB violated section 1692c(a)(2) by sending plaintiff, as opposed to his attorney, a 60 day letter dated June 30, 2008 (Ex. 50);
This court also found that MEEB committed a number of FDCPA violations outside the one year limitations period. These untimely FDCPA violations served as a basis for per se liability under chapter 93A. Examining MEEB's conduct independent of per se liability, this court additionally determined that such conduct was neither unfair nor deceptive under chapter 93A.
Both parties seek relief under Rule 59(e). "[T]o prevail on a Rule 59(e) motion, the moving party `must either clearly establish a manifest error of law or must present newly discovered evidence.'" Markel American Ins. Co. v. Diaz-Santiago, 674 F.3d 21, 32 (1st Cir.2012); see Prescott v. Higgins, 538 F.3d 32, 45 (1st Cir.2008) (same); Kansky v. Coca-Cola Bottling Co. of New England, 492 F.3d 54, 60 (1st Cir.2007) (same). "[A]n `intervening change' in the controlling law" also provides a basis for Rule 59(e) relief. Soto-Padro v. Public Bldgs. Authority, 675 F.3d 1, 9 (1st Cir.2012); Moran Vega v. Cruz Burgos, 537 F.3d 14, 18 (1st Cir. 2008). When successful, Rule 59(e) allows a court to reverse as well as to amend a prior judgment. See National Metal Finishing Co., Inc. v. BarclaysAmerican/Commercial, Inc., 899 F.2d 119, 123-124 (1st Cir.1990).
Rule 59(e) does not allow a party to raise an argument that could and should have been raised before a judgment issued. Markel American Ins. Co. v. Diaz-Santiago, 674 F.3d at 32 (Rule 59(e) does not permit litigant to present new arguments that "`could, and should, have been made before judgment issued'"); Fernandez-Vargas ex rel. C.J.P.F. v. Pfizer, 522 F.3d 55, 67 n. 5 (1st Cir.2008) (same); ACA Financial Guaranty Corp. v. Advest, Inc., 512 F.3d 46, 55 (1st Cir.2008) (same); cf. Venegas-Hernandez v. Sonolux Records, 370 F.3d 183, 191 (1st Cir.2004) (noting
MEEB seeks reconsideration of the entire chapter 93A award because MEEB's relationship to plaintiff, as a litigation opponent of MEEB's client, does not constitute "trade or commerce" under section 2(a) of chapter 93A. (Docket Entry #69). This court rejected the trade or commerce argument as well as the litigation privilege argument. 911 F.Supp.2d at 88-92.
Section 2(a) prohibits "unfair or deceptive acts or practices in the conduct of trade or commerce." Mass. Gen. L. ch. 93A, § 2(a). Section 2(c) provides that, "The attorney general may make rules and regulations interpreting the provisions of subsection 2(a) of this chapter" and that, "Such rules and regulations shall not be inconsistent with the rules, regulations and decisions of the Federal Trade Commission... as from time to time amended." Mass. Gen. L. ch. 93A, § 2(c).
Exercising the power conferred in section 2(c), the Attorney General of the Commonwealth enacted 940 C.M.R. § 3.16 ("regulation 3.16"). The regulation broadly declares that:
940 C.M.R. 3.16 (emphasis added).
Because of the breadth and reach of the language in regulation 3.16, this court rejected MEEB's argument that it was not engaged in trade or commerce. 911 F.Supp.2d at 88-91. This court reasoned that if an act violates regulation 3.16(4) by violating the FDCPA, see In re Pharmaceutical Industry Average Wholesale Price Litigation, 491 F.Supp.2d 20, 84 (D.Mass. 2007) ("[t]he types of federal statutes that courts have found to be consumer protection statutes under section 3.16(4) include" the FDCPA), the act automatically constitutes "unfair or deceptive acts or practices in the conduct of trade or commerce." Mass. Gen. L. ch. 93A, § 2(a). Thus, because the regulation did not require a "trade or commerce" showing and it globally declared that the act was a violation of section two, a showing of "trade or commerce" was not required.
After the Memorandum and Order issued and after the parties filed the Rule 59(e) motions, the Massachusetts Supreme Judicial Court issued an opinion rejecting this view. Klairmont v. Gainsboro Restaurant, Inc., 465 Mass. 165, 987 N.E.2d 1247, 1255 (2013). The May 16, 2013 decision held that regulation 3.16(3), which has
Id. (emphasis added).
It is therefore necessary to examine whether the conduct by MEEB that led to the untimely FDCPA violations and per se chapter 93A liability took place in "trade or commerce."
Section one of chapter 93A defines "trade" and "commerce" to "include the advertising, the offering for sale, rent or lease, the sale, rent, lease or distribution of any services and any property, tangible or
Interpreting section two and whether a party is engaging in trade or commerce by acting in a business context "depends on a number of factors including: `the nature of the transaction, the character of the parties involved, and [their] activities... and whether the transaction [was] motivated by business or personal reasons.'" Peabody N.E., Inc. v. Town of Marshfield, 426 Mass. 436, 689 N.E.2d 774, 778 & n. 6 (1998) (interpreting section 2(a)). The inquiry also entails factual determinations on the part of this court as the finder of fact. See Feeney v. Dell Inc., 454 Mass. 192, 908 N.E.2d 753, 770 (2009) ("`[t]rade or commerce' refers to transactions in a `business context,' which, in turn, is `determined by the facts of each case'").
The underlying dispute in the case at bar is a private dispute between volunteer members of a condominium association and a condominium owner who failed to pay assessments and related charges. See Berish v. Bornstein, 437 Mass. 252, 770 N.E.2d 961, 979 (2002) (statute "is inapplicable to a private dispute between a condominium unit owners' association and a member of that association for failure to pay condominium fees"); Office One, Inc. v. Lopez, 437 Mass. 113, 769 N.E.2d 749, 759 (2002).
Although the scale of MEEB's representation of condominium associations is large, it did not inject itself into the external marketplace in the course of its efforts to collect monies owed to its client, Pondview. See First Enterprises, Ltd. v. Cooper, 680 N.E.2d at 1165. Throughout, MEEB's statements to plaintiff and others were made to serve the interests of its client, Pondview.
Here, MEEB filed the lawsuits to collect monies owed to and incurred by Pondview as a result of plaintiff's delinquencies. MEEB's motives were not unduly influenced by the desire to increase its profits. Contrary to plaintiff's view of the facts, this court finds that MEEB was not being deceitful, purposefully concealing its legal fees or its interactions with plaintiff's mortgagees or unduly or improperly focusing on the collection of its attorneys' fees to the exclusion of the interests of its client. MEEB's motives were based on a desire to represent its client to the fullest extent possible in a vigorous and aggressive manner. See also St. Paul Fire and Marine Insurance Co. v. Ellis & Ellis, 262 F.3d 53, 67 (1st Cir.2001) (distinguishing between "vigorous advocacy in pursuit of" the client's legal claim and the use of litigation to add a veneer of legitimacy to a fraudulent scheme that affects trade or commerce).
Under the facts, MEEB's acts and practices in violation of the FDCPA were not made "in the conduct of any trade or commerce" under section 2(a). The 1986 amendment to the FDCPA repealing the exemption for attorneys from the definition of a "debt collector" does not alter this factual finding. In reaching the above conclusion, this court is not applying the litigation privilege.
MEEB's challenges to the FDCPA violations found by this court are twofold. First, on the basis of two arguments, it seeks reconsideration of the finding that MEEB violated section 1692i by filing the September 2008 unit 104 suit in Essex Superior Court. (Docket Entry #69, § IV). Second, MEEB maintains that it did not unlawfully disclose the debt to third parties, i.e., plaintiff's mortgagees, in violation of section 1692c(b) because the
As noted, MEEB moves for reconsideration of the determination that it violated section 1692i by filing the September 2008 unit 104 suit in Essex Superior Court as opposed to Lynn District Court. This court determined that MEEB violated section 1692i by not filing suit in Lynn District Court because Essex Superior Court was not located in the correct "judicial district or similar legal entity" within the meaning of section 1692i. 911 F.Supp.2d at 86-88.
MEEB proffers two arguments in the Rule 59(e) motion. First, it contends that plaintiff waived the issue of its liability under section 1692i. Second, MEEB asserts this court erred by finding it liable. Plaintiff does not address the waiver argument.
Turning to the waiver argument, the "usual rule" is "that parties cannot use Rule 59(e) motions to raise new arguments that could have been made before judgment issued or to undo their own procedural failures." Venegas-Hernandez v. Sonolux Records, 370 F.3d at 190; accord ACA Financial Guaranty Corp. v. Advest, Inc., 512 F.3d at 55; Fernandez-Vargas ex rel. C.J.P.F. v. Pfizer, 522 F.3d at 67 n. 5. MEEB did not raise the waiver argument in its post trial brief (Docket Entry #61). The issue therefore arises whether to consider the argument at this point in a Rule 59(e) motion. A number of reasons favor such consideration.
As explained by the First Circuit in Venegas-Hernandez, in considering a Rule 59(e) motion, it is appropriate to balance the need for the "finality of judgments with the need to render a just decision." Venegas-Hernandez v. Sonolux Records, 370 F.3d at 190. The court in Venegas-Hernandez allowed a Rule 59(e) challenge to a default judgment by the defaulted party partly because otherwise "a party in default would never be able, by motion in the district court, to bring to that court's attention an error of law in the default judgment." Venegas-Hernandez v. Sonolux Records, 370 F.3d at 189. Here too, MEEB had no reason to raise the waiver argument in the post trial brief. Plaintiff only briefly mentioned the section 1692i liability in a sentence in paragraph 35 of the 80 paragraph complaint.
Second, addressing the waiver error at this point is more efficient than having MEEB appeal. See id. Thus, where, as here, the trial court is readily available to correct its own error, "no good purpose is served by requiring" MEEB to appeal to a higher court to be heard on the issue of plaintiff's waiver. See id. (quoting Schildhaus v. Moe, 335 F.2d 529, 531 (2nd Cir.1964), in parenthetical that, "`[T]here is indeed good sense in permitting the trial court to correct its own error and, if it refuses, in allowing a timely appeal from the refusal; no good purpose is served by requiring the parties to appeal to a higher court'"). The First Circuit in Venegas-Hernandez relied in part on this reasoning to conclude that Rule 59(e) was available to challenge a default judgment based on a new argument not previously made. The reasoning applies to the case at bar.
Third, like the plaintiff in Venegas-Hernandez, plaintiff waived the issue of the availability of Rule 59(e) as a means for MEEB to raise plaintiff's waiver of section 1692i liability for the first time. See id. (proceeding to address Rule 59(e) error in part because the "plaintiffs have waived the issue of the availability of the Rule 59(e) motion to defendant"). Plaintiff did not address the waiver argument in opposing MEEB's Rule 59(e) motion.
Finally, the need for finality in judgments is not well served by avoiding and bypassing the issue of plaintiff's waiver. Instead, addressing the waiver issue serves to render a just decision by allowing MEEB the opportunity to be heard in light of the sua sponte and unforeseen consideration of section 1692i liability by this court. See id. at 190 (noting trial court's discretion in deciding Rule 59(e) motions requires balancing "need for finality of judgments with the need to render a just decision"). Accordingly, this court turns to the existence of Rule 59(e) relief based on plaintiff's waiver of section 1692i liability and this court's error in considering such liability sua sponte without addressing or finding the section 1692i liability issue waived.
It is well settled that, "Simply mentioning a possible defense in an initial pleading, without further development in subsequent stages of the proceedings, does not preserve it for post-trial review." Bennett v. City of Holyoke, 362 F.3d 1, 6 (1st Cir.2004); see Violette v. Smith & Nephew Dyonics, Inc., 62 F.3d 8, 11 (1st Cir.1995) ("[m]erely mentioning an issue in a pleading is insufficient to carry a party's burden actually to present a claim or defense to the district court before arguing the matter on appeal"). As explained in Bennett in deeming a notice defense waived:
Bennett v. City of Holyoke, 362 F.3d at 6 (flatly rejecting argument that reference to the notice defense in answer was sufficient) (citations omitted and emphasis supplied); see also Rodriguez-Garcia v. Miranda-Marin, 610 F.3d 756, 775 (1st Cir. 2010) (affirming trial court's finding waiver of claim due to failure to assert it in pretrial order notwithstanding a liability finding and damages award on the claim initially).
Here, plaintiff mentioned section 1962i liability in a single, short sentence in the complaint.
MEEB next seeks reconsideration of the finding that it violated section 1692c(b) and therefore chapter 93A by disclosing the debt to third parties by sending plaintiff, as opposed to his attorney, letters to plaintiff's mortgagees (Ex. 38, 42, 45, 47, 55, 59, 60, 68 & 69). (Docket Entry #74). Plaintiff originally cited 17 exhibits (Ex. 17, 38, 41, 42, 45, 46, 47, 48, 53, 54, 55, 59, 60, 68, 69, 71 & 77) to support MEEB's liability under section 1692c(b). (Docket Entry #60, § 1(b)).
The Memorandum and Order addresses these alleged section 1692c(b) violations on 911 F.Supp.2d at pages 68 through 73. This court found one timely section 1692c(b) violation in the form of a May 13, 2008 letter (Ex. 69) from MEEB to Neil Heiger, Esq. ("Heiger"), an attorney representing a mortgagee of an April 2005 mortgage for unit 104. The letter represented a lien amount against the unit as $31,309.09. The remaining letters were untimely under the FDCPA, 15 U.S.C. § 1692k(d), and therefore did not provide a basis for liability under the FDCPA. This court found that the untimely letters, however, could provide a basis for per se chapter 93A liability. MEEB seeks reconsideration of the FDCPA ruling and the chapter 93A ruling with respect to all of the letters (Ex. 38, 42, 45, 47, 55, 59, 60, 68 & 69). (Docket Entry #69, p. 16).
As explained above, the untimely FDCPA violations do not provide a basis for chapter 93A liability because of the absence of acts or practices by MEEB in the conduct of trade or commerce. That
MEEB's policy argument that section 1692c(b) is designed to combat embarrassing communications to a debtor's friends, neighbors and employer or invade a debtor's privacy does not survive the statutory text. See Muzuco v. Re$ubmitIt, LLC, 2012 WL 3242013, *4 (S.D.Fla. Aug. 7, 2012) (rejecting similar policy argument as basis to avoid section 1692c(b) liability given the plain language of section 1692c(b)). Interpreting the words in section 1692c(b) guided by the statutory framework and the purpose of the statute leads to the same conclusion reached in the Memorandum and Order. See Dolan v. U.S. Postal Service, 546 U.S. 481, 486, 126 S.Ct. 1252, 163 L.Ed.2d 1079 (2006) ("[i]nterpretation of a word or phrase depends upon reading the whole statutory text, considering the purpose and context of the statute" and "precedents or authorities that inform the analysis"); Lawson v. FMR LLC, 670 F.3d 61, 68 (1st Cir.2012) (circuit "and Supreme Court precedent require" examining "broader statutory framework, including particularly the nearby language and the title and caption"). Heiger or Aegis are not among the excepted categories of individuals or entities in section 1692c(b). As explained in the Memorandum and Order, the plain language of section 1962c(b) proscribes the May 13, 2008 communication. Hence, it was not an error of law, let alone a manifest error of law. This court stands by that analysis. 911 F.Supp.2d at 69-72.
Plaintiff initially moves for reconsideration of the following two factual findings. First, based on the entire record, this court made the factual finding that, "Plaintiff's first mortgagees had not informed Pondview of their names and addresses." 911 F.Supp.2d at 32. Second, this court found that, "Under the facts, plaintiff's first mortgagees did not apprise Pondview of their names and mailing addresses." 911 F.Supp.2d at 75. The testimony of Richard E. Brooks, Esq. ("Brooks"), a principal of MEEB, provides adequate support for these findings.
This court declines to alter or amend them. Thus, although a manifest error of fact may provide a basis to allow a Rule 59(e) motion, see Markel American Insurance Co. v. Diaz-Santiago, 674 F.3d at 32 (quoting Marie v. Allied Home Mortg. Corp., 402 F.3d 1, 7 n. 2 (1st Cir.2005), in parenthetical, as "acknowledging four grounds" to grant Rule 59(e) motion including "`manifest errors of law or fact'"), Brooks' testimony and the record as a whole do not establish such an error relative to the above two findings.
Plaintiff also moves to amend the judgment regarding the failure to send the mortgagees the 30 day notice letters at least days in advance of filing suit as not violating section 1692d. (Docket Entry #66, ¶ 2). Section 1692d proscribes "conduct the natural consequence of which is to harass, oppress or abuse any person in connection with the collection of a debt." 15 U.S.C. § 1692d. In finding no section 1692d liability based on the 30 day notice
With respect to section 1692f liability, plaintiff objects to the finding that the 30 day notice letters did not violate "`section 1692f's prohibition of unfair and unconscionable collection methods.'" (Docket Entry #66) (quoting 911 F.Supp.2d at 77-78). As stated in the Memorandum and Order, "[I]t was neither unfair nor unconscionable to send the mortgagees the letters at or around the time MEEB filed suit." 911 F.Supp.2d at 78. The Memorandum and Order held that, "MEEB did not violate section 1692f by not sending or by delaying sending the mortgagees the 30 day notice 30 days before fling suit." 911 F.Supp.2d at 78. As a final matter, plaintiff seeks to amend the judgment to include a finding that he incurred actual damages in the form of liability for substantial attorneys' fees and costs as the result of MEEB's failure to comply with the 30 day notice provision of section 6(c) of chapter 183A. (Docket Entry ##66 & 67).
For present purposes, this court will assume arguendo that MEEB violated section 6(c) by not sending the letters at least 30 days in advance of filing suit. This failure to adhere to the state statutory procedure, however, is not dispositive of the section 1692d, the section 1692f or the per se or independent chapter 93A violations.
MEEB's Rule 59(e) motion (Docket Entry #68) is
(Docket Entry #1, ¶ 35).
