Transworld Systems, Inc. v. Rogan

Opinion CROSBY, J. The trial court granted judgment for the defendant in this debt collection action because plaintiff failed to prove it was a licensed collection agency, We hold a denial on lack of information and belief in a verified answer is insufficient to place that issue in controversy. I Transworld Systems, Inc., as assignee of ITT Life Insurance Corporation, sued Steve John Rogan for money due on a written contract. Transworld alleged its status as a licensed collection agency in a verified complaint. Rogan’s verified answer denied that and other allegations on a lack of information and belief. No evidence as to plaintiff’s licensure was presented by either side in the court trial. During closing argument, counsel for defendant asserted, “Plaintiff. . . purports to be a licensed and bonded collection agency. And under the Business and Professions Code, they cannot collect debts unless [733] they are licensed. There has been no proof of that, [fl] Business and Professions Code section[s] 6850 and 6956 are the relevant code sections as alleged in the complaint. And there’s been no proof that they are licensed.” Counsel also argued plaintiff failed to prove it held a valid assignment to collect the sued-upon debt; but the record does not support that claim, nor does defendant urge it here. Plaintiff’s attorney moved to reopen to establish his client was a licensed collection agency or, alternatively, to have the court telephone the appropriate state agency to verify that status. Both requests were denied. The court first observed the licensing question was “placed in issue by the [defendant’s] denial [on lack of information and belief]” and then concluded, “the point raised by [defendant’s attorney] is a point that I cannot ignore and disregard, and it does affect the standing of this plaintiff to prosecute this lawsuit against this defendant. []|] And on the basis of the failure of [ ] proof as to the license status which is a prerequisite, as I understand it under the law, to the bringing of the action by this assignee, the court would have to treat the matter as dispositive of the case. []J] So on that basis then I will give judgment for the defendant.” Transworld argues that matters of official record may not be effectively denied on information and belief; consequently, the licensure question was never properly placed in issue and it had no burden to prove its status. We agree. II An unbroken chain of California decisions holds that allegations relating to the contents of official records may not be effectively placed in issue by a denial on information and belief. (See, e.g., 5 Witkin, Cal. Procedure (3d ed. 1985) Pleading, § 990, pp. 415-416 [citing numerous cases].) The rationale for the rule is obvious: Why allow defendants to inject superfluous issues into lawsuits when, by letter or telephone call to a public agency, they may easily satisfy themselves of their lack of merit? Remarkably, the dissent pointedly refuses to follow a holding of our Supreme Court, Art Metal Const. Co. v. A.F. Anderson Co. (1920) 182 Cal. 29 [186 P. 776], despite Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450 [20 Cal.Rptr. 321, 369 P.2d 937], (See also Werner v. State Bar (1954) 42 Cal.2d 187, 195 [265 P.2d 912]; Mulcahy v. Buckley (1893) 100 Cal. 484, 487-489 [35 P. 144].) It also rejects or ignores seven Court of Appeal decisions described in the Witkin passage cited in the preceding paragraph. California law is clear: A defendant’s [734] denial on information and belief does not raise a triable issue as to the license status of the plaintiff.1 The judgment is reversed and the cause remanded for a new trial. Appellant is entitled to costs. Sonenshine, Acting P. J., concurred. Footnotes [1] Our dissenting colleague’s concern that it will be burdensome for defendants to verify plaintiff’s status in the 30-day period to answer is unpersuasive for several reasons. First, plaintiff’s complaint will invariably disclose exactly what agency should have the record of its license. Defendant will know where to look and in many, if not most, cases can verify status by telephone or letter addressed to the appropriate agency or plaintiff’s counsel. Second, multiple extensions to answer are probably the rule rather than the exception. The defendant will usually have 60 to 90 days to investigate plaintiff’s status. Third, defendant need not deny status in the answer. As a matter of public policy, the fact of nonlicensure may be raised as an affirmative defense to an action by an unlicensed collection agency by motion before, during, and after trial, whether asserted in the answer or not. (See, e.g., Horn v. County of Ventura (1979) 24 Cal.3d 605, 619 [156 Cal.Rptr. 718, 596 P.2d 1134]; Parker v. Bowron (1953) 40 Cal.2d 344, 351 [254 P.2d 6]; Grossman v. Vaupel (1970) 13 Cal.App.3d 706, 710 [91 Cal.Rptr. 876]; 5 Witkin, supra, Pleading, § 1019, pp. 435-436.) These cases illustrate that a lack of status must be affirmatively raised, however. A denial on information and belief in a verified answer followed by nothing else is not enough, particularly where, as discussed above, the matter is of public record.