Bazan v. Hammerman & Hultgren PC

1 WO [5] 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA [8] 9 Jeanette Bazan, No. CV-20-01138-PHX-DLR 10 Plaintiff, ORDER 11 v. 12 Hammerman & Hultgren PC, 13 Defendant. [15] 16 Before the Court is Jeanette Bazan’s motion for partial judgment on the pleadings, 17 which is fully briefed. (Docs. 12, 13, 15.) For the following reasons, the Court will grant 18 Ms. Bazan’s motion. 19 Hammerman & Hultgren (“H&H”) is a collection services law firm representing 20 Reliable Credit Association, a creditor with whom Ms. Bazan held a past due account. On 21 January 8, 2020, H&H sent Ms. Bazan an initial communication (“the Letter”) listing her 22 outstanding debt as “the sum of $6,162.30, plus accrued interest in the sum of $691.90, 23 plus accruing interest at the contract rate of 24.99% per annum from after April 16, 2019.” 24 (Doc. 1-2 at 2.) On June 9, 2020, Ms. Bazan filed a complaint bringing claims pursuant to 25 the Fair Debt Collection Practices Act (“FDCPA”) alleging, inter alia, that H&H violated 26 15 U.S.C. §§ 1692e(2)(A) and 1692g(a)(1) by sending the Letter, which she argues failed 27 to meaningfully convey the amount of her debt and constituted an unlawfully deceptive 28 communication. (Doc. 1.) Ms. Bazan seeks judgment on the pleadings only as to her §§ 1 1692e(2)(A) and 1692g(a)(1) claims. (Doc. 12.) 2 “To prevail on a FDCPA claim, a plaintiff must sufficiently [establish] that (1) [s]he 3 was the object of collection activity arising from a consumer debt as defined by the 4 FDCPA; (2) the defendant is a debt collector as defined by the FDCPA; and (3) the 5 defendant engaged in an act or omission prohibited by the FDCPA.” Hamilton v. Tiffany 6 & Bosco PA, No. CV-14-00708-PHX-GMS, 2015 WL 11120694 , at * 2 (D. Ariz. Feb. 10, 7 2015) (citing 15 U.S.C. § 1692 ; Mansour v. Cal-Western Reconveyance Corp., 618 F. 8 Supp. 2d 1178, 1182 (D. Ariz. 2009)). H&H has admitted the first two prongs. Therefore, 9 the Court must determine only whether H&H engaged in an act or omission prohibited by 10 the FDCPA as a matter of law. Plaintiff asserts that the facts establish that H&H violated 11 both 15 U.S.C. §§ 1692e(2)(A) and 1692g(a)(1). The Court will address each section, in 12 turn. 13 Under § 1692e, “[a] debt collector may not use any false, deceptive, or misleading 14 representation or means in connection with the collection of a debt” and, specifically under 15 subsection 2(A), with regard to “the character, amount, or legal status of any debt.” Here, 16 Ms. Bazan asserts that the undisputed facts demonstrate that H&H’s characterization of the 17 debt owed in the Letter was deceptive as a matter of law. A debt collection letter is 18 deceptive when the least sophisticated debtor would likely be misled and the letter “can be 19 reasonably read to have two or more different meanings, one of which is 20 inaccurate.” Gonzales v. Arrow Fin. Servs., LLC, 660 F.3d 1055, 1061 (9th Cir. 2011) 21 (internal quotations omitted). Ms. Bazan contends that the least sophisticated consumer, 22 looking to the Letter’s language, would be unsure of the debt amount and might reasonably 23 reach at least three different balance figures, two of which are inaccurate. The Court 24 agrees. 25 The Letter states that the debt equaled “the sum of $6,162.30, plus accrued interest 26 in the sum of $691.90, plus accruing interest at the contract rate of 24.99% per annum from 27 after April 16, 2019. First, the least sophisticated consumer could reasonably believe that 28 the $691.90 figure represented the accrued interest between April 16, 2019—the date the 1 Letter represents interest accrues from—and January 8, 2020—the date of the Letter. 2 Adding $691.90 to $6,162.30, the least sophisticated debtor could reasonably conclude the 3 balance as of January 8, 2020 was $6,854.20. Second, the least sophisticated debtor could 4 reasonably believe that the Letter conveyed a balance of $7,980.69—$6,161.30 + $691.90 5 (identified interest) + $1,126.49 (additional interest assessed on $6,161.30). Third, the 6 least sophisticated debtor could also reasonably assume that the interest accrued on all 7 amounts identified in the Letter, leading to a balance of $8,107.17—$6,161.30 + $691.90 8 (identified interest) + $1,252.97 (additional interest accrued on $6,161.30 and $691.90). 9 Although a generally astute or savvy individual might push back against one or more of 10 these interpretations as less likely though not wholly impossible, the least sophisticated 11 debtor standard ‘ensure[s] that the FDCP protects all consumers, the gullible as well as the 12 shrewd . . . the ignorant, the unthinking and the credulous.” Clark v. Capital Credit & 13 Collection Serv., Inc., 460 F.3d 1162 , 1171 (9th Cir. 2006) (citation and internal quotation 14 omitted). 15 Next, under § 1692g(a), a debt collector must, either in its initial communication or 16 within five days of that initial communication, send the debtor a written notice that 17 “effectively” conveys the debt amount. Terran v. Kaplan, 109 F.3d 1428, 1432 (9th Cir. 18 1997). A communication in which the amount is not clearly stated so “as to not confuse 19 the least sophisticated consumer” does not comply with this notice requirement. Pavlovich 20 v. Account Discovery Sys., LLC, No. 17-CV-0412-AJB-KSC, 2018 WL 1605174 , at *2 21 (S.D. Cal. Apr. 3, 2018). Here, the Letter did not meet the clear-notice-of-debt 22 requirement. Rather, in order to determine the balance, the least sophisticated debtor would 23 need to calculate the sum independently and, in doing so, could reach at least three different 24 reasonable answers. Therefore, as to §§ 1692e and 1692g, Ms. Bazan makes a prima facie 25 case. The Court next evaluates whether H&H has put any relevant issue in dispute so as 26 to foreclose judgment on the pleadings. 27 H&H first argues that judgment on the pleadings is inappropriate because it 28 expressly denied legal conclusions in its answer. For example, it notes that it denied that 1 the least sophisticated debtor would, looking to the Letter’s language, be unsure about the 2 amount of the debt as set forth in the Letter. Denying a legal conclusion does not create a 3 dispute to survive judgment on the pleadings. 4 Second, H&H avers that judgment on the pleadings is inappropriate because it has 5 asserted a bona fide error defense in its answer. The bona fide error defense is an 6 affirmative defense for “clerical, calculation, computer malfunction and programming, and 7 printing errors.” Semar v. Platte Valley Fed. Sav. & Loan Ass’n, 791 F.2d 699, 705 (9th 8 Cir. 1986). The defense does not apply to “a debt collector’s mistaken interpretation of the 9 legal requirements of the FDCPA.” Jerman v. Carlisle, McNelli, Rini, Kramer & Ulrich 10 LPA, 559 U.S. 573, 574 (2010). The bona fide error defense is inapplicable here because 11 the violations alleged—making a deceptive representation and failing to effectively convey 12 a debt—arise from legal judgments as to FDCPA obligations; they are not typos, faulty 13 math calculations, or misprints. 14 Third, H&H posits that judgment is inappropriate because it raised the following 15 affirmative defenses: failure to state a claim, proximate cause, estoppel, release, waiver, 16 failure to mitigate damages, statute of frauds, statute of limitations, fraud, mistake, failure 17 to join an indispensable third party, assumption of risk, intervening or superseding cause, 18 accord and satisfaction, arbitration and award, duress, failure of consideration, illegality, 19 payment, res judicata, and laches. Each of these affirmative defenses is inapplicable or 20 insufficient.1 [21] 1 First, failure to state a claim is not an affirmative defense, but rather an assertion 22 of a defect in the plaintiff’s prima facie case. Second, as to these two FDCPA claims, no reasonable inference of plausibility can be drawn from H&H’s defenses of proximate 23 cause, estoppel, statute of frauds, assumption of risk, failure to join an indispensable party, intervening or superseding cause, failure of consideration, duress, illegality and laches. See 24 Racick v. Dominion Law Associates, 270 F.R.D. 228, 236 (E.D.N.C. 2010). The release, waiver, accord and satisfaction, arbitration and award, payment, and res judicata defenses 25 are similarly implausible considering the apparent lack of settlement, agreement, arbitration, or prior judgment in this matter. Third, the only FDCPA-specific affirmative 26 defense raised—bona fide mistake—is inapplicable for the reasons described above. Fourth, Ms. Bazan does not move for judgment on the pleadings as to damages, rendering 27 the failure to mitigate damages affirmative defense irrelevant. Finally, Ms. Bazan has clearly brought these claims within the one-year statute of limitations period. 15 U.S.C. § 28 1692k. 1 Fourth, H&H argues that Ms. Bazan has failed to prove that it made a representation 2|| that was “false, deceptive or misleading” in violation of § 1692e, because Ms. Bazan has 3 || not shown that the representation was false, rather than merely deceptive. The Court rejects 4|| H&H’s counterintuitive and distorted reading of the statute, which attempts to interpret 5|| “false, deceptive, or misleading” as “false, deceptive, and misleading.” However, even if 6|| Ms. Bazan were required to show that the Letter included a false representation, she has 7|| done so. The Letter is subject to at least three balance calculations, two of which are 8 || necessarily false. 9 Fifth, H&H contends that judgment on the pleadings under § 1692e is inappropriate 10 || because Ms. Bazan has made no showing that she was, in fact, deceived. Ms. Bazan’s 11 || state of mind is irrelevant to her recovery; rather, the Court conducts an objective inquiry under the “least sophisticated debtor” standard. Afewerki v. Anaya Law Grp., 868 F.3d 13 } 771,775 (9th Cir. 2017). 14 Finally, H&H asserts that judgment on the § 1692¢ claim is inappropriate because 15 || it clearly conveyed the debt balance. Again, presenting its own legal conclusion does not 16 || create a dispute to survive judgment on the pleadings. In sum, the Court finds that, as a || matter of law, H&H violated both 15 U.S.C. 8§ 1692e(2)(A) and 1692g(a)(1). 18 IT IS ORDERED that Ms. Bazan’s motion for partial judgment on the pleadings (Doc. 12) is GRANTED. 20 Dated this 10th day of September, 2020. [22] 23 {Z, 24 _- {UO 25 Usited States Dictric Judge [28] _5-