In McCollough v. Johnson, Rodenburg & Lauinger, LLC., No. 09-35767 (9th Cir. Mar. 4, 2011), plaintiff opened a credit card account around 1990 with Chemical Bank, which later merged with Chase. Plaintiff's account became delinquent and in 2000, Chase Manhattan charged off the $3,000 account balance and later sold the account to CACV of Colorado, Ltd. CACV filed a collection action in state court in 2005. Two weeks later, CACV dismissed the case after plaintiff pointed out that the statute of limitations had lapsed. In 2006 CACV 's parent company retained Johnson, Rodenburg & Lauinger (“JRL”), a debt collection law firm, to pursue collection of plaintiff’s debt.
JRL noticed a statute of limitations problem with plaintiff’s account and inquired to CACV, who responded that plaintiff had made a partial payment in 2004, which would extend the statute of limitations to 2009. This information was incorrect: the payment in 2004 was actually the return of court costs to CACV, and not a partial payment on the account. However, based on the incorrect information, JRL filed a collection complaint against plaintiff in state court in 2007. JRL subsequently dismissed the collection action with prejudice based on the statute of limitations.
Plaintiff then sued JRL in federal district court, alleging violations of the Fair Debt Collection Practices Act (“FDCPA”) and the Montana Unfair Trade Practices and Consumer Protection Act (“MCPA”), as well as state law claims for malicious prosecution and abuse of process. The court granted plaintiff partial summary judgment on his FDCPA claims and a jury found in favor of plaintiff on all remaining claims and awarded damages. JRL filed motions for a new trial and amendment of the judgment to reduce the emotional distress damage award. The district court denied these motions; JRL appealed. The Ninth Circuit affirmed.
The Ninth Circuit agreed with the district court that JRL’s bona fide error defense failed as a matter of law. The court found that JRL erred by relying without verification on CACV’s representation and by overlooking contrary information in its files and thus presented no evidence of procedures designed to avoid the specific errors that led to its filing and maintenance of a time-barred suit against plaintiff.
The Ninth Circuit affirmed the district court’s grant of summary judgment on plaintiff’s claim that JRL violated the FDCPA by requesting attorney’s fees in its underlying state collection complaint. The court found that JRL had produced no evidence of express authorization of its fee request and so failed to meet its burden to show a genuine issue for trial.
The Ninth Circuit affirmed the district court’s grant of summary judgment on plaintiff’s claim that JRL’s service of false requests for admission violated the FDCPA. The court first found that the FDCPA does not exclude from its coverage the service of requests for admission, but applies broadly to the litigating activities of lawyers. Applying an objective “least sophisticated debtor” standard, the court concluded that the service of requests for admission containing false information upon a pro se defendant without an explanation that the requests would be deemed admitted after thirty days constitutes “unfair or unconscionable” or “false, deceptive, or misleading” means to collect a debt.
Editor's note: This article was co-written by Priscilla Taylor, a summer law clerk in the Firm's San Francisco office.