EDWARD F. SHEA, Senior District Judge.
Before the Court, without oral argument, are the Suttell Defendants'
In August 2001, Plaintiff Kelli Gray applied for and was issued a credit card. Ms. Gray received the credit card in the mail, as well as an Account Agreement and periodic statements. Ms. Gray used the credit card to purchase clothing and apparel from Spiegel Brands, Inc. (Spiegel) stores. She received an account statement dated June 3, 2003, and made the $40 payment reflected therein in May 2003. Ms. Gray made her last payment on the credit card on May 13, 2004.
The June 3, 2003 statement that Ms. Gray received contains "Spiegel Charge" in large bold letters at the top. It then contains a block of text reading,
Next the statement contains an "Account Summary," reflecting a "Total New Balance" of $1,394.76. A section entitled "Account Activity" follows, showing that a $40 payment was made on May 5, 2003. The bottom of the statement is a detachable payment slip with the word "Spiegel," addressed to:
First Consumers National Bank (FCNB) was a Federal Deposit Insurance Corporation insured, national bank regulated by the Office of the Comptroller of the Currency.
On October 27, 2008, the Suttell Law Firm filed an action on behalf of Midland Funding in Spokane County Superior Court against Ms. Gray to collect on the credit card account. The lawsuit was dismissed with prejudice on March 15, 2011; the dismissal was not based on a statute-of-limitations defense.
Summary judgment is appropriate if the record establishes "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(a). The party opposing summary judgment must point to specific facts establishing a genuine dispute of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A statement or dispute of fact must be supported by materials in the record. Fed.R.Civ.P. 56(c)(1)(a) & 2010 advisory committee's note. If the non-moving party fails to make such a showing for any of the elements essential to its case for which it bears the burden of proof, the trial court should grant the summary-judgment motion. Celotex Corp., 477 U.S. at 322, 106 S.Ct. 2548.
"[W]hen parties submit cross-motions for summary judgment, each motion must be considered on its own merits." Fair Housing Council of Riverside Cnty., Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir.2001) (internal quotations, modifications, and citations omitted). However, the Court must review evidence submitted in support of any of the cross-motions to determine whether it presents a dispute of material fact that precludes summary judgment for the opposing party. Id. at 1135; Las Vegas Sands, LLC v. Nehme, 632 F.3d 526, 532 (9th Cir.2011). In ruling on a motion for summary judgment, the Court must consider only evidence that could be presented in an admissible form at trial. Fed.R.Civ.P. 56(c)(2); see Ed Brunet, John Parry & Martin Redish, Summary Judgment: Federal Law and Practice § 8.6 (2014).
The FDCPA prohibits debt collectors from engaging in various abusive and unfair practices. Heintz v. Jenkins, 514 U.S. 291, 292-93, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995). A debt collector is prohibited from using "unfair or unconscionable means to collect or attempt to collect debt." 15 U.S.C. § 1692f. "The collection of any amount ... unless such amount is expressly authorized by the agreement creating the debt or permitted by law" is a violation of the FDCPA. 15 U.S.C. § 1692f(1). Filing a debt-collection lawsuit outside the statute of limitations, without having determined that the limitations period has been or should be tolled, violates the FDCPA. Id.; Kimber v. Fed. Fin. Corp., 668 F.Supp. 1480, 1487 (M.D.Ala.1987).
"The bona fide error defense is an affirmative defense that insulates debt collectors from liability even when they have violated the FDCPA." Johnson v. Riddle, 443 F.3d 723, 727 (10th Cir.2006). A defendant may escape liability using the
Although the Supreme Court has held that the bona fide error defense in section 1692k(c) does not apply when a debt collector mistakenly interprets the legal requirements of the FDCPA, it explicitly declined to reach the question of whether a bona fide error defense is available when a violation results from a misinterpretation of the legal requirements of a state or federal law, other than the FDCPA. Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573, 580 n. 4, 130 S.Ct. 1605, 176 L.Ed.2d 519 (2010). The Courts of Appeals and District Courts have reached different conclusions on this question. See Janet Flaccus, Fair Debt Collection Practices Act: Lawyers and the Bona Fide Error Defense, 2001 Ark. L. Notes 95, 96 (2001) ("On first examination, the cases discussing the bona fide error rule seem in disarray. It is submitted, however, that most can be explained by one simple observation. If the lawyer's actions are taken when the law is reasonably clear that what they are doing they can not do, the bona fide error defense will not apply. If, on the other hand, the law that the attorney is allegedly breaking is not at all clear, the bona fide error defense is applied."); Johnson v. Riddle, 305 F.3d 1107, 1120 n. 14 (10th Cir.2002) (collecting cases).
More than thirty years ago, the Ninth Circuit stated broadly, "[r]eliance on advice of counsel or a mistake about the law is insufficient by itself to raise the bona fide error defense." Baker v. G.C. Servs. Corp., 677 F.2d 775, 779 (9th Cir.1982). However, the issue in Baker was whether a debt collector could rely on its attorney's mistaken interpretation of the FDCPA's requirements. Id. at 777. Some courts in this circuit have applied Baker broadly and refused to apply the bona fide error defense when the defendant was ignorant or mistaken about the applicable state law. Van Westrienen v. Americontinental Collection Corp., 94 F.Supp.2d 1087, 1101 (D.Or.2000) (holding bona fide error defense was inapplicable where defendant was ignorant or mistaken about the law in Oregon that required a five-day waiting period before collecting a judgment).
Other courts in this circuit and elsewhere have taken a limited view of Baker's expansive language. Watkins v. Peterson Enter., Inc., 57 F.Supp.2d 1102, 1107-08 (E.D.Wash.1999) (holding that a mistaken view of the law that had been approved by state district courts was a bona fide error); Frye v. Bowman, Heintz, Boscia and Vician, P.C., 193 F.Supp.2d 1070, 1085-86 (S.D.Ind.2002) (holding that use of an incorrect summons form that was identical to those issued by a number of state courts was a bona fide error); West v. Check Alert Sys., No. 1:00-CV-860, 2001 WL 1699196, at *7 (W.D.Mich. Sept. 7, 2001) (holding the bona fide error defense was available because the defendant complied with state law); see also Rosado v. Taylor, 324 F.Supp.2d 917, 932 (N.D.Ind.2004) (exploring the reasoning behind Baker and of the courts that decline to follow it).
In a case presenting an issue similar to that presently before this Court, the Middle District of Florida held that the bona fide error defense was available and appropriate where the defendants filed a collection action outside the applicable statute of limitations (Delaware's) but had
The trend in the case law appears to be toward allowing the bona fide error defense where the law is not clear, as stated by Ms. Flaccus and recognized and adopted by the Seventh and Tenth Circuits and the district courts cited above. Flaccus, supra at 96; Johnson, 305 F.3d at 1120 n. 14; Jenkins v. Heintz, 124 F.3d 824, 832 & n. 7 (7th Cir.1997); McCorriston, 536 F.Supp.2d at 1275; Almand, 485 F.Supp.2d at 1365-67; Simmons, 970 F.Supp. at 664. Although the Ninth Circuit has not adopted this approach and has not retreated from its broad statements in Baker, 677 F.2d at 779, Baker addressed a mistake as to the requirements of the FDCPA, not lack of clarity as to the applicable statute of limitations under state law. The Supreme Court explicitly declined to reach this issue in Jerman, 559 U.S. at 580 n. 4, 130 S.Ct. 1605. This Court finds that the bona fide error defense may be available in a case alleging defendants filed suit outside the applicable statute of limitations where the applicable limitations period has not been provided by the state legislature or resolved by the state courts.
Article 2 of the Uniform Commercial Code (UCC) governs transactions in goods and provides a four-year statute of limitations for breach of any contract for sale.
Where a sales contract creates a secured loan agreement between the seller of a
On the other hand, if the sale of goods is financed according to a separate agreement between the buyer and a bank or even a separate agreement between the buyer and seller, Article 2's statute of limitations does not apply. When an individual buys a vehicle using a loan from a bank that is secured by the vehicle, the transaction between the bank and the buyer is not a sale of goods governed by Article 2 and the bank's suit to recover the balance due is not subject to a four-year statute of limitations. BancOhio Nat'l Bank v. Freeland, 13 Ohio App.3d 245, 247, 468 N.E.2d 941 (Ohio Ct.App.1984). Similarly, a promissory note containing a security agreement that references an underlying sales contract creates a separate, distinct cause of action, because the promissory note contains an unconditional promise to pay and is thus a negotiable instrument subject to UCC Article 3, not Article 2. Alpacas of Am., LLC v. Groome, 179 Wn.App. 391, 393, 317 P.3d 1103 (Wash. Ct.App.2014); accord O'Neill v. Steppat, 270 N.W.2d 375, 376-77 (S.D.1978).
Courts have long held that a suit to recover money due on a credit card account is not subject to Article 2's four-year statute of limitations because the cardholder agreement is a written contract, not a contract for the sale of goods. See, e.g., Harris Trust and Savings Bank v. McCray, 21 Ill.App.3d 605, 610, 316 N.E.2d 209 (1974). In Harris, one of the first and most oft-cited cases to address the statute of limitations applicable to credit card agreements, the credit card was issued to the defendant by a bank and used to purchase goods from a third-party merchant. Id. at 606, 316 N.E.2d 209. The Illinois Court of Appeals rejected the defendant's argument that she had entered into and breached a contract for the sale of goods when she used her credit card to purchase goods and failed to pay the credit card. Id. at 606-07, 316 N.E.2d 209. The court explained that "[t]he bank credit card system involves a tripartite relationship between the issuer bank, the cardholder, and merchants," and clarified that the debtor-creditor relationship between the bank and the cardholder is separate from the agreement between the bank and the merchant and the agreement between the merchant and the cardholder. Id. at 607-08, 610, 316 N.E.2d 209. "It is only when the purchase money is advanced by a third party that an action to recover a balance due is removed from Article 2 of the U.C.C." May Co. v. Trusnik, 54 Ohio App.2d 71, 75, 375 N.E.2d 72 (Ohio Ct.App. 1977) (citing Harris).
However, the tripartite relationship described in Harris may become blurred when the credit card is obtained from or named for the merchant seller. In that
One court has reached the opposite conclusion from Asset Acceptance and Fulk. In an unpublished decision, citing Associates Discount Corporation v. Palmer, the New Jersey Superior Court found that a contract for sale of goods was created and that Article 2's four-year statute of limitations applied to a credit card account where the plaintiff "signed up" for a Levitz store credit card at the Levitz store and the card could only be used and was only used to buy furniture from the Levitz store. New Century Fin. Serv., Inc. v. McNamara, No. DC-016572-12, 2014 WL 1057076, at *1 & *4 (N.J.Sup.Ct. Mar. 20, 2014). However, it is not clear from the opinion in that case whether the buyer entered a credit card agreement with the Levitz store or with a third party bank. Id.
In sum, Article 2's four-year statute of limitations applies to a transaction between a buyer and a seller for the sale of goods. A separate, distinct agreement between buyer and seller to finance the sale or a separate agreement between buyer and a bank leading to a tripartite relationship will not be governed by Article 2. In limited circumstances where a credit card is obtained from a seller or an entity closely related to the seller, rather than a separate third-party bank, and where the credit card can only be used to buy goods from that seller, the transaction may be deemed a sale of goods such that Article 2 applies.
Ms. Gray obtained the credit card at issue in this case by filling out a form online. Dep. of Kelli Gray Harrington
Mr. Hammer of the Suttell law firm declares that the firm had data indicating Ms. Gray made a payment as late as 2004 and that they concluded a suit filed in 2008 was timely. Hammer Decl. ¶ 6, ECF No. 482. The account information provided by Ms. Gray confirms that the last payment was made on May 13, 2004. Ex. A, ECF No. 485-1. Ms. Gray's credit card account was in default on or before July 2004. Id. Mr. Hammer states that the firm had a formal screening process to determine whether a claim might be subject to a statute-of-limitations defense and that they maintained a matrix identifying six years as the applicable limitations period in Washington and Oregon. Hammer Decl. ¶ 6, ECF No. 482. He states, "it was and is widely accepted that credit card accounts governed by Oregon and Washington law are subject to six year statutes of limitation." Id. ¶ 4. Mr Hammer declares, "[w]e do not, and did not, file cases on claims that we believe to be untimely." Hammer Decl. ¶ 7, ECF No. 482.
As lawyers who collect debts through litigation, the Suttell Defendants are "debt collectors" under the FDCPA. See McCollough v. Johnson, Rodenburg & Lauinger, LLC, 637 F.3d 939, 951 (9th Cir.2011) (citing Heintz, 514 U.S. at 294, 115 S.Ct. 1489).
If a four-year statute of limitations under UCC Article 2 governs, there appears to be no dispute that the October 2008 debt-collection lawsuit was untimely. If, however, the action is treated as an action upon a contract or account receivable with a six-year statute of limitations, then there appears to be no dispute that the suit was timely and that the Suttell Defendants did not violate the FDCPA by filing it.
The key questions to be answered in determining the applicable statute of limitations are with whom Ms. Gray entered into a credit card agreement. This will determine whether this case presents a tripartite relationship, as described in Harris, 21 Ill.App.3d at 610, 316 N.E.2d 209. The terms of the applicable credit card agreement must be analyzed to confirm whether Ms. Gray's card could only be used to buy goods from Spiegel. If Ms. Gray entered into a credit card agreement with FCNB, then it will be necessary to determine the relationship between FCNB and Spiegel and consider whether the two companies are functionally the same entity, such that FCNB credit card accounts should be considered to be financed by Spiegel, or whether they are truly separate entities, such that the tripartite relationship is maintained, as in Fulk, 55 F.Supp.3d at 971-72, and Asset Acceptance, 2008 WL 2837304 at *2 n. 2.
Presently, it is clear that Ms. Gray opened the credit card at issue online and that the card itself and account statements prominently displayed the word "Spiegel." The account statement indicated that
Even if the Court were to consider this document and find that it is the account agreement applicable to Ms. Gray, the account agreement alone does nothing to illuminate the relationship between FCNB and Spiegel.
The Suttell Defendants argue that even if the Court determines that a four-year statute of limitations applies, Defendants should not be held liable because their understanding that a six-year statute of limitations applies to credit card debt and decision to file suit within that period was a bona fide error. Motion for Summary Judgment, ECF No. 480 at 9. Plaintiffs did not respond to this argument. See Response, ECF No. 498 (containing no response); Reply, ECF No. 520 at 8-9 (addressing bona fide error as to Midland Defendants only). Accordingly, the Court assesses whether the undisputed facts demonstrate that the Suttell Defendants are eligible for the bona fide error defense.
A defendant may escape liability using the defense if it can prove that the violation was "1) unintentional, 2) a bona fide error, and 3) made despite the maintenance of procedures reasonably adapted to avoid the error." 15 U.S.C. § 1692k(c); McCollough, 637 F.3d at 948. Courts employ a subjective approach in determining whether a FDCPA violation is unintentional, asking whether the debt collector can establish lack of specific intent to violate the FDCPA. Johnson, 443 F.3d at 728. The second and third prongs are objective inquiries. Id. at 729. A bona
Even if the Suttell Defendants filed suit outside the applicable statute of limitations, the undisputed facts show that this was an unintentional, genuine mistake, made despite the firm's procedures to prevent the filing of lawsuits with a statute-of-limitations defense. Decl. of Isaac Hammer, ECF No. 482. If it is later determined that a four-year statute of limitations applies under the facts of this case, this was not clear to the Suttell Defendants at the time they filed suit, and understandably so given that it was not clear to the Court in its initial analysis. The Suttell Defendants believed in good faith that a six-year statute of limitations applied, id., and nothing in the statutes or case law in Washington, Oregon, or even the case law in other states in 2008, should have alerted the Suttell Defendants that their understanding was incorrect.
The Court now addresses Plaintiffs' motion to strike, which pertains to exhibits submitted in support of the Midland Defendants' motion for summary judgment.
When seeking or opposing summary judgment, a party must support its factual position by "citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations ... admissions, interrogatory answers, or other materials." Fed.R.Civ.P. 56(c)(1)(A). "A party may object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence." Fed.R.Civ.P. 56(c)(1)(B), (c)(2). "The burden is on the proponent to show that the material is admissible as presented or to explain the admissible form that is anticipated." Fed.R.Civ.P. 56(c)(2) 2010 advisory committee's note.
At the summary-judgment phase, the Court focuses on the admissibility of the evidence's contents, rather than on the admissibility of its form. Fraser v. Goodale, 342 F.3d 1032, 1037 (9th Cir. 2003). "If the movant's materials are capable of being put in a form which is admissible at trial, the need for summary judgment materials to be trustworthy and reliable has still been satisfied." Brunet,
Plaintiffs seek to strike Exhibits A, C, D, G, H, I, J, K, and P attached to the Declaration of John Munding, ECF No. 516, and presented in support of the Midland Defendants' motion for summary judgment because the documents are unauthenticated hearsay and Mr. Munding, the Midland Defendants' attorney, does not have personal knowledge of their contents and origin. Motion to Strike, ECF No. 523 at 2; Reply, ECF No. 530 at 2. The Midland Defendants respond that the documents are admissible and explain how each would be authenticated at trial. Response, ECF No. 529.
Exhibit A is a copy of Ms. Gray's credit report from Novastar. ECF No. 514. Ms. Gray's credit report is relevant and would be admissible at trial if authenticated by her testimony or by the testimony of a records custodian. It contains personal information indicating it belongs to Ms. Gray and its form is typical of credit reports. Id. Its heading and footer indicate its origin at Novastar. Id. Because its present form would be admissible at trial with proper authentication, the Court declines to strike Exhibit A.
Exhibit C is a copy of FCNB's credit card agreement. Decl. of John Munding, ECF No. 516; Ex. C, ECF No. 516-3. Defendants argue that this document is admissible because Plaintiffs have not produced the relevant contract and Ms. Gray's credit report and bank statements reflect that her credit card account was financed by FCNB. Response, ECF No. 529 at 9. Ms. Gray's failure to produce the relevant contract may be relevant to her motion for summary judgment, but it has no bearing on the question of whether this contract produced by Defendants is or will be admissible.
Although Exhibit C is an example of a FCNB credit card agreement, there is no indication that this is the agreement that governed Ms. Gray's credit card, as it does not contain any information, nor is there any testimony, tying it to Ms. Gray or to Spiegel. There is also no evidence in was the only credit card agreement in use by FCNB during the applicable time period and so therefore must be the agreement that applied to Ms. Gray. The Court strikes Exhibit C because it finds that Defendants have not met their burden of showing that its contents are relevant, and thus admissible at trial, nor how this document would be authenticated.
Exhibit D is a Spiegel Charge card statement for Ms. Gray for the period closing June 3, 2003. ECF No. 516-4. This document is relevant and would be admissible at trial if authenticated by Ms. Gray's testimony or by the testimony of a records custodian. It contains Ms. Gray's name and address, and the payment information within could be verified. Because its present form would be admissible at trial with proper authentication, the Court declines to strike Exhibit D.
Exhibit G is a Bill of Sale and Assignment of Accounts dated December 4, 2007,
Exhibit H is a Purchase and Sale Agreement between Spiegel and Midland, dated December 4, 2007. ECF No. 514. The document is signed and clearly identified as a bill of sale. It could be authenticated at trial by one of the signers or by a records custodian. The Court declines to strike Exhibit H at present because it could be admissible at trial after proper authentication. However, it is not immediately clear to the Court how this document is relevant to the present case, so the Court will consider what weight, if any, to give it when ruling on the Midland Defendants' summary-judgment motion.
Exhibit I is "Schedule A" of Ms. Gray's original August 24, 2001 loan. Decl. of John Munding, ECF No. 516; Ex. I, ECF No. 516-9. The document contains Ms. Gray's name and address, a portion of an account number, and other identifying characteristics that would enable it to be authenticated at trial by Ms. Gray or another appropriate witness. This same document was submitted by Plaintiffs in support of their summary-judgment motion. Ex. A, ECF No. 485-1. This document is relevant, and the Court declines to strike Exhibit I because its present form would be admissible at trial with proper authentication.
Exhibit J is the servicing agreement entered into between Midland Funding and Midland Credit Management. ECF No. 514. The document is signed by the president of each entity and could be authenticated by him at trial or by a records custodian. This document is relevant to the relationship between the Defendants and would be admissible at trial with proper authentication, so the Court declines to strike Exhibit J.
Exhibit K is a collection agreement between Midland Credit Management and Suttell & Associates. ECF No. 514. This document is signed by both parties, and Defendants represent that it is a record of regularly conducted business activities. Exhibit K is relevant and could be authenticated at trial by testimony of the signers or a records custodian. The Court declines to strike Exhibit K because it would be admissible at trial with proper authentication.
Exhibit P contains three flow charts regarding "Estimation of SOL," "Estimate Start Date," and "Estimate Date of Occurrence." ECF No. 514. Mr. Munding declares that these flow charts were used by Midland Credit Management to estimate the applicable statute of limitations. Decl. of John Munding, ECF No. 516. Mr. Munding's explanation is in concert with their contents. Though it is not clear that Mr. Munding has personal knowledge of the purpose of these records such that he
Plaintiffs' motion to strike is granted as to Exhibit C, the FCNB Credit Card Agreement, and denied as to all other exhibits.
On December 4, 2007, Midland Funding, LLC purchased defaulted credit card accounts from Spiegel Acceptance Corporation. Bill of Sale and Assignment of Accounts, ECF No. 516-7; Purchase and Sale Agreement, ECF No. 516-8. On the same day, FCNB sold or transferred its right, title, and interest in "certain preferred charge accounts and certain MasterCard and VISA accounts" to CCA Assets LLC, Ex. H, ECF No. 514 at 25, and CCA Assets LLC transferred "certain preferred private label charge accounts ... that are associated with certain credit card receivables owned by [Spiegel Acceptance Corporation]" to Spiegel Acceptance Corporation, Ex. H, ECF No. 514 at 23. Midland Funding assigned delinquent or deficient consumer obligations to its servicer, Midland Credit Management, Inc., to pursue collection efforts. Servicing Agreement, Ex. J, ECF No. 514. Midland Credit entered into a collection agreement with Suttell & Associates. Ex. K, ECF No. 514. Suttell & Associates later assigned the Collection Agreement to Suttell & Hammer. Id.
In August 2001, Ms. Gray opened a Spiegel-branded credit card online. Midland Defendants' Statement of Facts, ECF No. 496 ¶¶ 1-2; Plaintiffs' Statement of Facts, ECF No. 527 ¶ 1. It is unclear from the record whether Ms. Gray's credit card account was the subject of any of the above-described sale and assignment transactions. On October 27, 2008, Defendant Mark Case of Suttell & Associates filed a lawsuit against Ms. Gray in Spokane County Superior Court to collect on a credit card account with an alleged unpaid balance of $2,065.22. Superior Court Complaint, Ex. L, ECF No. 516-12.
A debt collector is, "any person ... who regularly collects or attempt to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6). The Midland Defendants have not provided any argument or evidence suggesting that they are not debt collectors. Therefore, the Court finds that the FDCPA applies to the Midland Defendants. See, e.g., Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 643-44 (7th
The Midland Defendants argue that the six-year statute of limitations period applicable to written contracts or accounts receivable applies and that the 2008 debtcollection lawsuit was timely because it was filed within the six-year limitations period. Motion for Partial Summary Judgment, ECF No. 495 at 10. Plaintiffs argue that the four-year statute of limitations in Article 2 applies and that the 2008 debt-collection lawsuit was not timely.
As was the case with the Suttell Defendants' motion, there are insufficient undisputed facts in the record for the Court to determine the applicable statute of limitations. The Court struck the FCNB Credit Card Agreement, Exhibit C, from the record on this motion, but even if the agreement were considered, it does not show that Ms. Gray entered a credit card agreement with FCNB. Similarly, the Midland Defendants provided exhibits documenting various transfers of delinquent credit card accounts, but these documents do not assist the Court in determining the relationship between FCNB and Spiegel or FCNB and Ms. Gray. Furthermore, nothing in these documents shows that Ms. Gray's credit card account at issue here was among those involved in the various transfers. For these reasons, the Court cannot determine as a matter of law that the six-year statute of limitations governing written contracts applies, rather than the four-year statute of limitations governing contracts for the sale of goods.
The Midland Defendants also argue that the 2008 debt-collection lawsuit was a suit on an account receivable and thus governed by a six-year statute of limitations under Washington law. RCW 4.16.040(2); Reply, ECF No. 534 at 3-4. An account receivable is "an amount due a business on account from a customer who has bought merchandise or received services." Tingey v. Haisch, 159 Wn.2d 652, 659, 663, 665, 152 P.3d 1020 (2007). An oral contract between a customer and a business for the purchase of merchandise or services and for which performance has been completed meets this definition. Id. at 659-60, 152 P.3d 1020. The Midland Defendants argue that even if the transaction could be characterized as either a contract for sale of goods or an account receivable, the longer limitations period applicable to accounts receivable should apply. Reply, ECF No. 534 at 2, 5; Tomlin v. Boeing Co., 650 F.2d 1065, 1072 (9th Cir.1981). Although it is possible that the relationship at issue here could be viewed as an account receivable, the Court does not presently have sufficient undisputed evidence before it in the record to make this determination. The Court cannot find as a matter of law that a six-year statute of limitations applies and denies the Midland Defendants' motion for summary judgment on this point.
The Midland Defendants argue that if the Court determines that a four-year statute of limitations applies, Defendants should not be held liable because their
As an initial matter, Jerman does not hold that the bona fide error defense does not apply to all mistakes of law, as Plaintiffs state; rather, it holds that the bona fide error defense does not apply to incorrect interpretation of the legal requirements of the FDCPA. Jerman, 559 U.S. at 576, 130 S.Ct. 1605. The Supreme Court explicitly declined to decide whether the bona fide error defense applies to a misinterpretation of the legal requirements of other federal or state laws. Id. at 580 n. 4, 130 S.Ct. 1605. As explained in detail above, this Court determined that the bona fide error defense is available under the circumstances of this case.
Here, even if the debt-collection suit was filed outside the applicable limitations period, there is no evidence suggesting that the Midland Defendants intentionally directed this to occur. Indeed, they believed the applicable statute of limitations to be six years, and there is no evidence that their interpretation of the applicable statute of limitations was a contrived, rather than a genuine, mistake. As a matter of fundamental fairness, when the Court itself undertakes an extensive survey of the statutes and case law and cannot easily determine which statute of limitations applies, it will not hold the Defendants liable for failing to determine that a four-year statute of limitations governs, if in fact that is ultimately determined to be the law.
Finally, Midland Credit had a process in place for determining the statute of limitations and ensuring that untimely debt-collection suits were not filed. Supplemental Response to Discovery, Ex. O, ECF No. 516-15. It determined the date of occurrence, the start date for the limitations period, and the applicable statute of limitations using detailed flow charts. Id.; Flow Charts, Ex. P, ECF No. 514. It updated its flow charts when it became aware of changes to the statute of limitations to be applied in a particular state. Supplemental Response to Discovery, Ex. O, ECF No. 516-15. The Court finds that, under the facts and circumstances of this case, the Midland Defendants' procedures were reasonably adapted to avoid filing suit outside the statute of limitations. Owen, 629 F.3d at 1274. Furthermore, the Court finds that additional procedures or screening would not have avoided the alleged error here because the law was unclear.
In ruling on Plaintiffs' motion, the Court considered the parties' undisputed facts because Plaintiffs did not produce additional evidence that impacts the Court's ruling on these motions when viewed in the light most favorable to Defendants. See Statement of Facts, ECF No. 484. Plaintiffs have provided no evidence that shows Ms. Gray contracted with Spiegel for the sale of goods, and there is a genuine dispute as to whether Plaintiff contracted with Spiegel or FCNB as well as a dearth of evidence as to the relationship between Spiegel and FCNB. For this reason, the Court cannot find as a matter of law that a four-year statute of limitations
The parties disagree as to the nature of Ms. Gray's debt and the applicable statute of limitations. After a thorough review of the record and the case law, the Court has determined that the statute-of-limitations issue in this case does not present a situation where "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(a). However, the Court need not determine the applicable statute of limitations to decide these motions. The Court grants Defendants' motions for summary-judgment because, even if a four-year statute of limitations applies, Defendants' good-faith and reasonable belief that a six-year statute of limitations governed was a bona fide error, insulating Defendants from liability under 15 U.S.C. § 1692k(c).
Accordingly,
