J. RONNIE GREER, District Judge.
This Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., case is before the Court on Defendant Hosto & Buchan, PLLC's ("Hosto" or "defendant") Motion For Summary Judgment, [Doc. 149]. In its motion, and pursuant to Federal Rule of Civil Procedure 56 and 10(c), Hosto adopts by reference the same arguments advanced in Defendants LVNV Funding, LLC ("LVNV") and Steve Hawkins's ("Hawkins") Motion for Summary Judgment [Doc. 99]. The plaintiff responded, [Doc. 153], and the defendant replied, [Doc. 155]. For the reasons stated below, the defendant's motion is GRANTED.
Many of these facts are also set forth in the Court's March 31, 2014 Memorandum Opinion and Order, [Doc. 154]. It is undisputed that the plaintiff applied for a credit card with Credit One Bank, [Doc. 106, pg. 4 and Doc. 120-1, pg. 6]. At her deposition, she identified her signature on the application. [Doc. 106, pg. 4, 120-1, pg. 6].
Hosto sent the plaintiff a letter on January 18, 2011, and it stated that the current balance was $2,723.87. [Doc. 153-1, pg. 1]. At some point, the plaintiff retained an attorney after the civil suit was filed in General Sessions Court. [Doc. 106, pg. 8].
The plaintiff alleges that the defendants violated several provisions of the FDCPA by:
Plaintiff also asserts that LVNV is liable for the acts and omissions of Hosto and Hawkins under the theory of respondeat superior.
On August 20, 2013, Defendants LVNV and Hawkins filed a Motion for Summary Judgment, [Doc. 99]. The motion sought summary judgment as to all the FDCPA subsections listed above and requested "that this Court grant their Motion for Summary Judgment and dismiss Plaintiff's claims against [them], in their entirety and with prejudice," [Doc. 99, pg. 2]. They argued in their Memorandum in Support, [Doc. 100], regarding the collection amounts allegations as follows:
[Doc. 100, pgs. 8-11] (footnotes omitted).
On August 22, 2014, the plaintiff filed a Motion for Partial Summary Judgment, [Doc. 108], solely related to the alleged violation of section 1692e(5) by LVNV for filing a collection lawsuit without being licensed as a collection service in Tennessee. There was no mention of the collection amounts issue in this filing.
On September 13, 2013, the plaintiff filed a Response, [Doc. 120], to Defendants LVNV and Hawkins's Motion for Summary Judgment. The Response states:
[Doc. 120, pgs. 3-5] (footnote omitted). The next several pages of the Response discuss the alleged violations for filing suit in state court without the intention to prove the suit if challenged and the lack of personal knowledge by Hawkins, considering the suit is based on his sworn account. See [Doc. 120, pgs. 5-10]. Thus, the plaintiff mainly focuses on these two issues.
The Response does, however, address the collection amounts issues in a limited way. It states:
[Doc. 120, pgs. 10-12].
On September 20, 2013, Defendants LVNV and Hawkins filed a Reply, [Doc. 122]. It stated:
[Doc. 122, pg. 6-7]. On October 10, 2013, LVNV and Hawkins's counsel entered an appearance on behalf of Hosto, [Doc. 128]. Then LVNV and Hawkins filed a Supplemental Brief, [Doc. 129], on January 16, 2014, asking the Court to consider the ruling in White v. Sherman Financial Group, LLC, No. 3:12-CV-404, 2013 WL 5936679 (E.D. Tenn. Nov. 4, 2013) (Varlan, J.). The defendants stated:
[Doc. 129, pgs. 2-3] (footnote omitted).
Then, on March 10, 2014, Hosto filed a Motion for Leave to File a Motion for Summary Judgment, [Doc. 146]. The Motion for Summary Judgment incorporated and adopted all arguments made by LVNV and Hawkins. It did not raise new issues, but moved for summary judgment as to all claims. The Court granted the motion for leave to file a motion for summary judgment on March 11, 2014, [Doc. 148]. The plaintiff filed a Response on March 26, 2014, [Doc. 153].
In plaintiff's Response, she stated that the motion "fail[s] to address additional claims made in Plaintiff's Complaint," [Doc. 153, pg. 2], specifically regarding collection amounts. The plaintiff spends much time discussing Robinson v. Sherman Financial Group, LLC, No. 2:12-CV-30, 2013 WL 3968446 (E.D. Tenn. July 31, 2013) (Collier, J.). The plaintiff again stresses that the different amounts between the warrant and affidavit show that one was misleading, deceptive or false; that attorney's fees and contract interest may not be recovered without a produced contract allowing such collection; and that LVNV is vicariously liable to the plaintiff for Hosto's actions. [Doc. 153, generally]. The plaintiff fails to clearly argue that the specific interest rates listed in the warrant and affidavit were misleading, deceptive or false. To be sure, however, the plaintiff does rely on cases which addressed differing interest rates, and she points out in the "Facts" section of the brief that interest rates on several documents in the record vary. In addition, plaintiff fails to argue that the interest rates listed are not allowed by Tennessee law despite those specific contentions in her Complaint, [Doc. 1, ¶ 47 (civil warrant) and ¶¶ 75, 77 (affidavit as to "unwritten contracts")]. Instead, the plaintiff again focuses mainly on the fact that the amounts vary between the warrant and affidavit and that the defendants have not produced the actual contract that states interest and attorney's fees are allowed to be collected per the agreement.
Prior to the Reply being filed by Hosto, the Court issued its Memorandum Opinion and Order on LVNV and Hawkins's joint motion for summary judgment. Regarding the arguments that either the collection amount in the warrant or affidavit was misleading, deceptive or false because they are inconsistent and that the defendants could not collect attorney's fees or interest without producing the contract, this Court relied on White, 2013 WL 5936679 at *6. The Court stated, "Also similar to White, this Court concludes that there is no genuine issue of material fact as to the plaintiff's arguments regarding collection amounts in violation of sections 1692e or 1692f." [Doc. 154, pg. 7].
Hosto filed a Reply on April 9, 2014, [Doc. 155]. The defendant states essentially that the Court properly relied upon the reasoning in White. [Doc. 155, generally]. The defendant argues that the amounts listed in the warrant and affidavit are not misleading, deceptive or false and gives several reasons why the additional letters mentioned by the plaintiff do not support her contention. Hosto also argues that they have produced the actual agreement which specifically authorizes the collection of attorney's fees and interest. Hosto does not thoroughly address the argument regarding different interest rates listed. Similar to the plaintiff's Response, the Reply just alludes to it slightly. Finally, there is no discussion on whether the specific interest rates listed in the warrant are allowed by Tennessee law or whether the language regarding interest rates in the affidavit are allowed by Tennessee law regarding "unwritten" contracts.
This Court admits that it has been difficult to discern the actual claims and arguments put forth by the plaintiff. Perhaps due to the difficulty in understanding the Complaint and plaintiff's filings, defendants' filings have likewise not been a model of clarity. Considering the entire record and the specifics listed above, this Court will address the following issues:
1. Whether all defendants violated various sections of the FDCPA due to the warrant and affidavit listing "inconsistent" amounts (addressed briefly in prior opinion)?;
2. Whether all defendants violated various sections of the FDCPA because the warrant and affidavit requested interest and attorney's fees and the defendants have allegedly failed to produce a contract allowing for such collection (addressed briefly in prior opinion)?;
3. Whether all defendants violated various sections of the FDCPA because the specific interest rates stated in the warrant, affidavit, and other filings in the case were different (not specifically raised by plaintiff in prior summary judgment motion filings)?;
4. Whether all defendants violated various sections of the FDCPA because the interest rates listed in the warrant and affidavit were for rates not allowed by Tennessee law (not specifically raised by plaintiff in prior summary judgment motion filings)?; and
5. Whether there is an issue of fact regarding vicarious liability (not specifically raised by plaintiff in prior summary judgment motion filings)?
The summary judgment standard is well settled. Summary judgment is proper where Athe pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law.@ Fed. R. Civ. P. 56(c). In ruling on a motion for summary judgment, the Court must view the facts contained in the record and all inferences that can be drawn from those facts in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Nat'l Satellite Sports, Inc. v. Eliadis, Inc., 253 F.3d 900, 907 (6th Cir. 2001). The Court cannot weigh the evidence, judge the credibility of witnesses, or determine the truth of any matter in dispute. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).
The moving party bears the initial burden of demonstrating that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). To refute such a showing, the non-moving party must present some significant, probative evidence indicating the necessity of a trial for resolving a material factual dispute. Id. at 322. A mere scintilla of evidence is not enough. Anderson, 477 U.S. at 252; McClain v. Ontario, Ltd., 244 F.3d 797, 800 (6
The party opposing a Rule 56 motion may not simply rest on the mere allegations or denials contained in the party's pleadings. Anderson, 477 U.S. at 256. Instead, an opposing party must affirmatively present competent evidence sufficient to establish a genuine issue of material fact necessitating the trial of that issue. Id. Merely alleging that a factual dispute exists cannot defeat a properly supported motion for summary judgment. Id. A genuine issue for trial is not established by evidence that is Amerely colorable,@ or by factual disputes that are irrelevant or unnecessary. Id. at 248-52.
Regarding the FDCPA, it was passed to eliminate "abusive, deceptive, and unfair debt collection practices." Barany-Snyder v. Weiner, 539 F.3d 327, 332 (6th Cir. 2008) (quoting 15 U.S.C. § 1692(a)). The Sixth Circuit has noted that the act is "extraordinarily broad" and must be enforced as written, even when eminently sensible exceptions are proposed in the face of an innocent and/or de minimis violation. See Frey v. Gangwish, 970 F.2d 1516, 1521 (6th Cir. 1992). While § 1692e lists a number of examples of false or misleading representations, the text of the statute itself indicates that the examples are not meant to limit its prohibition on the use of false, deceptive or misleading representations in connection with the collection of a debt. 15 U.S.C. § 1692e. Likewise, § 1692f contains the same language, making clear that the examples set forth therein do not "limit[ ] the general application" of its prohibition on the use of unfair or unconscionable means to collect or attempt to collect any debt. 15 U.S.C. § 1692f. The Seventh Circuit recently observed that the phrase "unfair or unconscionable" used in § 1692f "is as vague as they come." Beler v. Blatt, Hasenmiller, Leibsker & Moore, 480 F.3d 470, 474 (7th Cir. 2007).
In assessing whether particular conduct violates the FDCPA, courts apply "the least sophisticated consumer" test to objectively determine whether that consumer would be misled. Harvey v. Great Seneca Fin. Corp., 453 F.3d 324, 329 (6th Cir. 2006); Smith v. Transworld Systems, Inc., 953 F.2d 1025, 1029 (6th Cir. 1992). The least sophisticated consumer test is designed "to ensure that the FDCPA protects all consumers, the gullible as well as the shrewd." Kistner v. Law Offices of Michael P. Margelefsky, LLC, 518 F.3d 433, 438 (6th Cir. 2008) (quotations and citation omitted). In addition, "false but non-material representations are not likely to mislead the least sophisticated consumer and therefore are not actionable under §§ 1692e or 1692f." Clark v. Lender Processing Svs., ___ Fed. App. ___, 2014 WL 1408891, at *6 (6th Cir. Ap. 14, 2014) (citing Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1033 (9th Cir. 2010)).
The issues below are addressed applying this standard. This is an objective test that asks whether there is a reasonable likelihood that an unsophisticated consumer who is willing to consider carefully the contents of a communication might yet be misled by them. Grden v. Leikin Ingber & Winters PC, 643 F.3d 169, 172 (6th Cir. 2011). The least sophisticated consumer "can be presumed to possess a rudimentary amount of information about the world and a willingness to read a collection notice with some care." Colomon v. Jackson, 988 F.2d 1314, 1319 (2d Cir. 1993).
The plaintiff first argues that Hosto's motion is deficient as a matter of law because it improperly adopts and incorporates LVNV and Hawkins's arguments in a way not "contemplate[d]" by Rule 10(c), [Doc. 153, pg. 1]. This Court finds this argument is without merit. This Court recognizes that there are times arguments can be improperly incorporated by reference. However, in this Court's discretion and because of the similar procedural posture of related cases of which both sides' counsel are well aware due to their involvement, it finds that this is not one of them.
Over the last several years, hundreds of these FDCPA cases have been filed in this district, mostly by the same lawyers who represent plaintiff. As a result, the issues raised in this case have been addressed by several other judges in this district. A brief review of some of these cases sheds some light on, and is helpful in the resolution of, some of these issues.
In Stonecypher v. Finkelstein Kern Steinberg & Cunningham, No. 2:11-CV-13, 2011 WL 3489685, at *1 (E.D. Tenn. Aug. 9, 2011) (Mattice, J.), Judge Mattice decided a motion to dismiss pursuant to Rule 12(b)(6). The defendant sent plaintiff the first collection letter which stated that he owed $1,622.42. Id. A second letter stated he owed $1,622.42. Attached to this letter were two monthly statements with a balance of $1,707.18 and $1,749.77 and an interest rate of 29.99 percent. Id. The defendant then filed a Civil Warrant in state court, and it stated that the amount due was $1,622.42 plus interest at the contract rate of 10 percent, attorney's fees and court costs. Id. Plaintiff asserted a violation of section 1692g(a) because the defendant failed to indicate interest was accruing and failed to clarify the amount of the debt within five days of the initial communication. Id. at *5. Plaintiff also claimed a violation of section 1692e(2)(A) as to the warrant for making false representations as to the amount of the debt. Id.
Judge Mattice found as to the claim that the defendant failed to clarify the amount of the debt within five days of the initial communication that plaintiff successfully stated a claim based on the documentation submitted. Id. Judge Mattice further found a stated "possible" claim for a violation of 1692e(2)(A) because of the varying amounts and interest rates on the documentation submitted. Id. He found that "the failure to reference an interest rate, attorneys fees, or costs in any prior communication is sufficient for the Court to conclude that Plaintiff has alleged a possible claim that the Defendant's use of this language [in the warrant] was false, deceptive or misleading as to the amount of the debt" "when considered in the context with Defendant's prior communications." Id. at *6. He further stated, "The fact that Defendant consistently listed the amount of the debt as $1,622.42 on these communications does not detract from the misleading nature of the communications." Id.
Chief United States District Judge Thomas J. Varlan filed a Memorandum Opinion in Smith v. Accounts Research, Inc., No. 3:10-CV-213, 2012 WL 289835, at *1 (E.D. Tenn. Jan. 31, 2012), on January 31, 2012, which granted summary judgment in favor of the defendant. At the time of the plaintiffs' default, they owed a principal balance of $71.60. Id. The contract between the parties in the case stated that the party liable for the debt agreed to pay interest, attorney's fees, and collection fees in case of delinquency. Id. Defendant sent Mr. Smith a letter stating the balance of $108.48. Id. at *2. Defendant sent a second letter stating that the balance was $116.11. Id. A third letter stated the amount due was $121.76. Id. A fourth letter stated a balance of $123.56. Id. The defendant moved for summary judgment on plaintiffs' section 1692e(10) claim, and the plaintiffs failed to address this particular argument in their response. Id. at 9. Defendant pointed out that the plaintiffs did not dispute that they owed the $71.60. Id. Instead, the plaintiffs asserted they did not understand why the amounts changed. Id. Judge Varlan noted that Mr. Smith acknowledged signing the contract where he agreed to pay interest, attorney's fees and collection costs. Id. Furthermore, Judge Varlan stated that the plaintiffs had failed to submit law stating that a debt collector was required to inform a consumer that the debt may increase due to interest or attorney's fees pursuant to the underlying contract. Id. As such, Judge Varlan found that defendant was entitled to summary judgment considering plaintiffs presented no other evidence they were misled by the defendant's letters. Id.
In Lilly v. RAB Performance Recoveries, LLC, No. 2:12-CV-364, 2013 WL 3834008, at *1 (E.D. Tenn. Jul. 23, 2013) (Varlan, C.J.), the Court granted in part and denied in part a motion to dismiss. Id. Plaintiff's defaulted debt had been sold to RAB. Buffaloe & Associates, a law firm representing RAB, undertook "to collect the balance due" on the account, sending a collection letter and ultimately filing a civil warrant and affidavit in state court on behalf of RAB. Id. In addition to the amount due listed in the letter, the letter also informed the plaintiff of the possibility of additional fees and contract interest. Id. at *2. The civil warrant stated that the amount due was for "the principal amount of $3,464.32, plus court cost in the amount of $114.50, and service of process fees in the amount of 25.00" Id. at *1. The sworn affidavit stated that plaintiff owed $3,464.32. Id. The plaintiff alleged several violations including that the collection letter was misleading, constituted an unfair means to collect a debt, and was an attempt to collect an amount not expressly authorized by agreement or law. Id. at *2. The plaintiff also alleged that Buffaloe falsely represented the character, amount and legal status of the debt. Id. In addition, the plaintiff argued that the letter failed to identify the applicable interest fees and rate, attorney's fees, and date as of which the amount was due in violation of section 1692g(a)(1)'s requirement of stating the amount of debt in the initial communication. Id.
Judge Varlan found that the plaintiff had stated a claim in regards to the collection letter. Id. at *7. The analysis mainly focused on the 1692g(a)(1) issue and relied upon Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, and Clark, LLC, 214 F.3d 872, 876 (7th Cir.2000). Because the safe harbor language here was not sufficiently similar to Miller, Judge Varlan found that the plaintiff had stated a claim regarding the collection amount in the letter. Id. at *6-7. The letter failed to notify the plaintiff of the exact amount due including interest and other charges. Id. at *6. The Court then stated in conclusory fashion that the plaintiff has stated 1692e claims as well. However, it appears this conclusion was only in regards to the letter, for it never mentions any amounts stated in the warrant or affidavit. Id. at *7. The Memorandum Opinion addressed the civil warrant and affidavit in terms of the 1692e(11) claim. Id.
United States District Judge Curtis L. Collier decided Robinson v. Sherman Financial Group, ___ F. Supp. 2d ___, 2013 WL 3968446, at *1 (E.D. Tenn. July 31, 2013) (Collier, J.). In this case, the Defendant Hosto & Buchan, PLLC sent a collection letter to the plaintiff and listed that the plaintiff owed the current balance of $2,725.22. Id. Defendant Hosto sent another letter which stated a balance of $2,747.00. Id. Then Defendant Hosto filed a civil warrant and affidavit in state court. Id. The warrant stated that the plaintiff owed "a money judgment of $3,201.06 plus cost from a suit filed on a sworn account with the principle [sic] sum of $2,208.59 accrued pre-judgment interest of $550.76 accruing at 6% until date of judgment, reasonable attorney's fees in the amount of $441.72, all of which shall bear post-judgment interest of 10% per annum beginning from judgment date." Id. The affidavit stated that there was a "purchased balance owing of $2,208.59 plus any additional accrued interest." Id. at *2. All defendants moved for summary judgment as to all claims asserted by the plaintiff. Id. at *5. Judge Collier noted that the plaintiff alleged in the Amended Complaint that the defendants violated the FDCPA in several ways including that defendants "used false, deceptive, and misleading representations or means in connection with the collection of the debt `by stating in the Summons for Civil Warrant that Defendant LVNV was entitled to an amount not expressly authorized by the agreement creating the debt or permitted by law, without personal knowledge of whether a contract on which the Defendants allegedly relied to file the collection lawsuits.'" Id. The plaintiff also alleged that the suit was defective because of false, deceptive and misleading information in the affidavit. Id. Judge Collier further stated that the plaintiff alleged in the Amended Compliant that the defendants sought interest and attorney's fees that could not lawfully be received. Id.
Plaintiff argued in response to the summary judgment motion that the different amounts in the summons and the affidavit create an issue of fact whether one is false, deceptive or misleading. Id. at *6. The plaintiff also argued that the defendants could not seek interest and attorney's fees without a written contract. Id.
Judge Collier concluded that there was a genuine issue of material fact as to the 1692e claims despite the fact that the warrant and the affidavit stated the same principal amount. Id. at *6. Judge Collier stated that the issue was to "the amounts Plaintiff was informed he owed to the LVNV Defendants." Id. He pointed out that the billing statements, apparently provided by the defendants with their filings, showed a balance of $2,208.59 and an interest rate of 30.49 percent. Id. Then the communications received by the plaintiff showed different amounts that progressively increased. Id. Those letters did not inform the plaintiff of the applicable interest rate or that the amount was subject to other fees. Id. The warrant states two other interest rates. Id. Thus, Judge Collier concluded that there was a genuine issue of fact as to the interest rate that applied especially considering the least sophisticated consumer test. Id. Judge Collier rejected defendants' argument that the Cardmember Agreement they provided allowed for attorney's fees and interest rates far greater than what was stated in the warrant. Id. at *7. He reasoned that the Cardmember Agreement provided was of such poor quality that defendants' contentions could not be verified, that it was a "generic form" and there were no "personal identifiers" to show the agreement was connected to the plaintiff. Id. In sum, Judge Collier concluded that there were genuine issues of fact as to what interest rate applied and whether attorney's fees and costs were properly asserted. Id. at *8.
Judge Varlan also filed a Memorandum Opinion in White v. Sherman Financial Group, LLC, ___ F. Supp. 2d ___, 2013 WL 5936679, at *1 (E.D. Tenn. Nov. 4, 2013), deciding summary judgment motions filed by the plaintiff and defendants. In White, Defendant Buffaloe & Associates, PLC, filed a civil warrant and sworn affidavit in state court. Id. The warrant stated the amount due was for "the principal amount of $5,387.93, plus pre and post judgment interest accruing at the statutory rate of 10%, and court costs of this cause of $181.50." Id. The affidavit stated the plaintiff owed "$5,387.93." Id. Then, Buffaloe sent a letter to the plaintiff informing him of his right to dispute the debt. Id. He disputed the debt, and the defendants dismissed the state court suit. Id.
The defendants moved for summary judgment as to all claims. Id. at *3. Regarding the civil warrant and affidavit, Judge Varlan noted that the plaintiff characterized his argument by stating the "fundamental claim for this violation is that [d]efendants filed the collection lawsuit without possessing any competent evidence they could use to establish that [p]laintiff owed a debt to LVNV, and knowing that they did not obtain such evidence . . . ." Id. The majority of the opinion discusses this "fundamental claim." Id. at 3-5. However, it also addresses "plaintiff's arguments regarding the amounts defendants sought to collect in the state action" and whether these violated sections 1692e and 1692f. Id. at *6. Judge Varlan concluded that there were no genuine issues of fact for trial. Id. He first addresses plaintiff's claim that the amounts stated in the warrant and affidavit are inconsistent, and, thus, one is false or misleading. Id. Judge Varlan stated, "The Court finds this argument is meritless, as the affidavit clearly states the amount due, including the possibility of interest, and was used to validate the debt on which the civil warrant is seeking to collect." Id. He further stated that "[t]he failure to include the court cost amount would not be misleading, nor would it be an attempt to collect on an amount not authorized by law, given that court costs are authorized by statute." Id. Judge Varlan then addressed plaintiff's argument that defendants' failure to show evidence of an agreement permitting the 10% interest rate was a violation of the FDCPA. Id. Judge Varlan found this argument "unavailing" because a Tennessee statute provides for this rate. Id. Finally, he concluded that summary judgment on these claims was appropriate because "[t]he two statements plaintiff offers are not inconsistent with one another and would not be deceptive to the least sophisticated consumer." Id.
The Sixth Circuit recently decided Clark v. Main Street Acquisition Corp., No. 13-3763, ___ Fed. Appx. ___, 2014 WL 274469 (6
The plaintiff filed an amended complaint and alleged that Main Street had violated the FDCPA by the "intentional filing of false affidavits for the purpose of obtaining judgments against debtors in collection law suits and coercing debtors." Id. Main Street moved for summary judgment, and the district court found that the term "costs" was not "deceptive or unfair," that even if it referred to "court costs" the word choice was immaterial, and that it would not have influenced a consumer's decision to pay the debt. Id. at *2.
Addressing the alleged 1692e violation for seeking to collect "costs," the Sixth Circuit stated that the law of the state where the state court action was brought allows for the award of costs. Id. at *3. The court noted that even though the costs had not yet been awarded when demanded, neither had interest or principal amounts, and the plaintiff made no argument that these were due and owing and that such demand was false or deceptive. Id. The court further stated that it would be "reasonable for a consumer to assume that a case headed to court might involve `costs' that had to be determined." Id. As such, the court concluded that the request for costs, which were allowed by state law, does not violate 1692e. Id.
The court then addressed the plaintiff's 1692f claims and emphasized that costs were permitted by state law. The court further pointed out that "the district court determined as an `undisputed fact' that the `Cardmember Agreement provided that the account user would pay court costs . . . and other collection costs related to the default to the extent permitted by law . . ..' and that `the Plaintiff has failed to present any evidence that she did not agree to pay such costs.'" Id. at *4 (quoting the district court's order). The plaintiff argued to the Sixth Circuit that the Cardmember Agreement was "generic and had not been authenticated." Id. However, the court stated that the plaintiff failed to provide any evidence to the contrary. Id. Thus, the court concluded that the record indicated that costs were expressly authorized by the agreement, and therefore, there was no violation of section 1692f. Id.
Finally, Judge Collier filed his memorandum in Murr v. Tarpon Financial Corporation, No. 3:10-CV-372, 2014 WL 546690 (E.D. Tenn. Feb. 10, 2014) (Collier, J.). In Murr, Tarpon Financial Corporation had purchased Murr's defaulted note and security agreement along with other assets from Fairway Lending. Id. at *1-2. The agreement stated that Murr would pay court costs and atttorney's fees in the event of a default. Id. at *1. Fairway Lending sold the assets to generate proceeds to pay down indebtedness of its own. Id. at *2. Tarpon hired Attorney Kevin J. Jones to represent it in collecting Murr's debt. Id. The fee arrangement was that Jones would receive 20% of collected amounts plus expenses. Id. Jones obtained an affidavit from Tarpon that indicated Murr's total indebtedness was $6,582.95. Id. Jones then sent a letter to Murr, and the letter stated Murr owed $6,582.95 plus $1,316.59 in attorney's fees. Id. After receiving no response, Jones filed suit in General Sessions Court for Knox County, and the warrant sought $6,582.95 plus reasonable attorney's fees in the amount of $1,316.59. Id. It also sought "court costs and pre and post judgment interest at the underlying contract rate." Id.
Murr filed suit against Tarpon and Jones for violations of the FDCPA. Id. He alleged that Jones violated the FDCPA by not stating that Tarpon was seeking interest in the initial communication, i.e. the collection letter, for seeking attorney's fees not authorized by contract in the letter and the warrant, and for not including certain information in the civil warrant. Id. at *7.
As to the first issue, Judge Collier relied upon Miller for this alleged 1692g(a)(1) violation and concluded that Tarpon sought interest in the civil warrant that was not listed in the initial communication. Id. at *8. Thus, the "letter's recitation of the principal amount violated § 1692g because it did not included the total amount due." Id. Regarding the attorney's fees issue, Judge Collier concluded that the underlying agreement provided for the collection of attorney's fees. Id. at *11. He did not accept the plaintiff's argument that there was a violation of the Act because the letter and warrant stated a specific sum, and this sum had yet to be determined because the fee arrangement was contingent upon sums collected. Id. Finally, as to whether the civil warrant violated 1692e(11), Judge Collier found in favor of the plaintiff.
This Court addressed this argument previously in its March 31, 2014 Memorandum Opinion and Order, [Doc. 154]. This Court concluded that the amounts were not inconsistent, and thus, there was no genuine issue of material fact as to whether the alleged inconsistencies violated 1692e, 1692f and various other subsections. See also White, 2013 WL 5936679, at *6. As stated above, the warrant states the amount due is "$3,041.18, plus the cost of this cause by reason of a suit filed on a sworn account, here to the Court in the principle [sic] amount of $
The principal amounts are the same. Thus, they are not inconsistent. The affidavit merely states the principal amount "plus any additional accrued interest is due." The warrant states specific rates for pre-and-post judgment interest. However, these rates are not inconsistent with the affidavit because it does not list specific amounts. It merely states that additional interest will accrue. As for attorney's fees and costs, it is true that the affidavit does not state those are due and owing. It does not state as such because they have not yet accrued. Thus, there is no inconsistency regarding attorney's fees and costs.
Moreover, for the reasons set out below, the agreement allows collection of attorney's fees, and state law allows collection of costs. See Tenn. Code Ann. § 20-12-101 (2010)
The Court also addressed this argument in its prior Memorandum Opinion and Order but will elaborate on its reasoning here. The Court found the reasoning in White persuasive. Id. There, Judge Varlan found "plaintiff's argument that defendant failed to show evidence of an agreement permitting the 10% interest rate unavailing in light of the statute which provides for this rate." Id. It is undisputed that Tennessee law allows for the collection of pre- and post-judgment interest. See Tenn. Code Ann. § 47-14-121, -123 (2010). Thus, the contract need not be produced stating that interest may be collected since Tennessee law specifically allows for such collection. See Clark, 2014 WL 274469, at *3-4; White, 2014 WL 5936679, at *6.
Furthermore, Tennessee adheres to the "American rule" for award of attorney fees. John Kohl & Co. v. Dearborn & Ewing, 977 S.W.2d 528, 534 (Tenn. 1998); Pullman Standard, Inc. v. Abex Corp., 693 S.W.2d 336, 338 (Tenn. 1985). This rule states that a party in a civil action may recover attorney's fees only if: (1) a contractual or statutory provision creates a right to recover attorney fees; or (2) some other recognized exception to the American rule applies, allowing for recovery of such fees in a particular case. Taylor, 158 S.W.3d at 359; John Kohl, 977 S.W.2d at 534.
Here, the defendant contends that the Cardmember Agreement produced by it specifically states that the account holder promises to pay collection costs including attorney's fees. [Doc. 155, pg. 7] (summarizing [Doc. 120-1, p. 12, ¶ 18]). Furthermore, the record contains the plaintiff's signature on an application, and at her deposition, she identified her signature, [Doc. 106, pg. 4, 120-1, pg. 6]. Also at the deposition, the following exchange took place:
[Doc. 155-1, pg. 4]. Therefore, she does not deny that she agreed to pay attorney's fees. This Court recognizes that the plaintiff argues that the Cardmember Agreement is dated November 2006, and the plaintiff's application is dated November 27, 2007, and thus, the defendants have failed to produce a contract signed by the plaintiff, [Doc. 153, pg. 7]. However, it is the plaintiff's burden to come forth with evidence to show that there is a genuine issue of material fact for trial regarding whether the contract allowed for attorney's fees.
Based on the reasons above, this Court finds that there is no genuine issue of material fact as to whether defendants violated various sections of the FDCPA because the warrant and affidavit requested interest and attorney's fees, even though the defendants have failed to produce a contract allowing for such collection. See Clark, 2014 WL 274469, at *3-4; White, 2013 WL 5936679, at *6; see also Murr, 2014 WL 546690, at *9-13.
For the first time, the plaintiff specifically argues that the warrant and affidavit violate the FDCPA because the interest rates stated in these documents differ from each other
It is true that the collection letters list increasing amounts for the "current balance."
First, there is no issue of fact regarding the statement in the affidavit. It states that as of the date of assignment, the plaintiff owed "$2,329.45 plus any additional accrued interest." [Doc. 18-1, pg. 2]. It does not list a specific amount of interest. Thus, the least sophisticated consumer would not be misled by a request for an unspecified amount of interest even considering the varying rates in other documents. By stating "accrued interest," the affidavit was not inconsistent with any of the other documents in the record. Therefore, it is not false or misleading and does not violate the various sections of the FDCPA.
Second, regarding the warrant, this Court agrees with Judge Collier in Robinson; there seems to be an issue of fact as to what interest rate applied. However, this Court respectfully disagrees with Judge Collier's holding in that the issue is material. A statement cannot "mislead," within the meaning of the FDCPA, unless it is material, so a false but non-material statement is not actionable. Miller v. Javitch, Block & Rathbone, 561 F.3d 588 (6th Cir. 2009). Here, the plaintiff only alleges and argues that the warrant's statement of the specific interest rates are misleading or false. The warrant lists the least amount of interest sought to be collected of all the documents. The Cardmember Agreement allows for the collection of interest, and the plaintiff admits that she agreed to pay the interest rate in the contract. The plaintiff does not argue that the interest rates listed in the warrant are higher than those allowed by the contract. Therefore, the fact that the warrant seeks to collect a lesser amount of interest is not material as to whether the least sophisticated consumer would pay the debt. As such, it is not false, deceptive or misleading. Accordingly, defendants are entitled to summary judgment on this issue as there is no violation of any of the FDCPA sections.
The plaintiff makes this allegation in her Complaint, but she never raises the issue in opposition to the defendants' summary judgment motion as to all claims. She fails to cite any law to support her conclusory allegation. She does not present any evidence that the rates requested are contrary to Tennessee law. As such, the Court need not address the argument, and summary judgment on this issue is proper.
Nevertheless, this Court will briefly address some points related to this allegation. First, in regards to the affidavit, no specific interest rate is requested. However, the Complaint alleges that the rate of interest in the affidavit was a rate greater than that "allowed under Tennessee law for
Tenn. Code Ann. § 47-14-121 (2010). Regarding prejudgment interest, section 47-14-123 states:
Id. 47-14-123. Therefore, summary judgment on this issue is appropriate. Second, the plaintiff alleged that the warrant was false or misleading because Tennessee law does not allow prejudgment interest at a rate of 10 percent. [Doc. 1, pg. 10, ¶ 47]. The same code same section as stated above applies here. The record establishes that there was a written contract. Thus, had the plaintiff addressed this issue, then she would have had to show that the rate requested was one not allowed by section 47-14-123 for written contracts. That section states again that "contracts may expressly provide for the imposition of the same or a different rate of interest to be paid after breach or default within the limits set by § 47-14-103." Id. at 47-14-123. Therefore, the plaintiff should have told the Court what the limits were pursuant to section 47-14-103.
That section states:
Id. 47-14-103. Therefore, the applicable formula rate is needed for this determination. The Tennessee Code defines the applicable formula rate as:
Id. 47-4-102(3). The "formula rate" is defined as follows:
Id. 47-4-102(7). The plaintiff did not provide the Court with the formula rate last published in the Tennessee Administrative Register and did not supply the average prime loan rate (or the average short-term business loan rate, however denominated) for the most recent week for which such an average rate had been published by the board of governors of the Federal Reserve System. Therefore, this Court cannot determine whether the prejudgment interest rate stated in the warrant is actually false. It is the plaintiff's burden to do so in order to show that there is an issue of fact for trial. Thus, for this additional reason, the defendant is entitled to summary judgment on this issue.
Even though this Court has concluded that there is no genuine issue of material fact for trial, this Court will still decide the vicarious liability issue since plaintiff addressed the issue in her Response, [Doc. 153, pgs. 13-14]. This Court finds the reasoning and the cases cited in White persuasive. 2013 WL 5936679, at *10-11. It appears to be undisputed that LVNV hired Resurgent and Hosto to carry out debt collection efforts. In addition, Hawkins was an "Authorized Representative for LVNV." [Doc. 18-1, pg. 2]. Therefore, for the reasons stated in White, this Court concludes that LVNV may be held liable for any of Hosto or Hawkins's FDCPA violations. As state above, however, there are no violations, so this issue is actually moot.
For the reasons set forth above, this Memorandum Opinion confirms and elaborates upon this Court's earlier Memorandum Opinion and Order deciding Defendant LVNV and Hawkins's Motion for Summary Judgment, [Doc. 99]. In addition, for the reasons stated above, Defendant Hosto's Motion for Summary Judgment, [Doc. 149], is GRANTED.
