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Casas v. Midland Credit Management

January 29, 2009


The opinion of the court was delivered by: Honorable Larry Alanburns United States District Judge


Plaintiff Patricia I. Casas has commenced this action against Defendants Midland Credit Management, Inc. and Does 1 through 10, alleging violations of the Fair Debt Collection Practices Act (the "FDCPA"), 15 U.S.C. § 1692 et seq., and the California Rosenthal Act, CAL. CIV. CODE § 1788 et seq. Casas now moves for partial summary judgment on her liability claims. (Dkt. No. 17 (June 19, 2008).) For the reasons set forth below, her motion is granted in part and denied in part.


This action arises from Midland's efforts to collect from Casas approximately $1,100.00 she allegedly incurred on an Aspire Visa account. Between May and October 2006, Midland and Casas exchanged eight letters -- five from Midland and three from Casas. Casas claims that Midland sent her dunning letters in violation of the FDCPA and the Rosenthal Act. But Midland argues that its letters constitute legitimate efforts to seek repayment from Casas and to respond to her requests for information. To analyze these competing arguments, a discussion of the eight letters is in order.

I. The Letters Between Midland and Casas

Midland mailed its first letter to Casas on May 5, 2006. (Declaration of Patricia I. Casas ("Casas Decl.") Ex. A.) In that letter, Midland informed Casas that it purchased her Aspire Visa account and offered to settle for a payment of 90% of the $1,037.18 balance. (Id.) Casas responded in writing on May 18, 2006, denying that she had an Aspire Visa account. (Casas Decl., Ex. B.) She requested that Midland confirm in writing that it made no negative credit reporting about her. (Id.)

In a May 26, 2006 letter responding to Casas' request, Midland stated that it notified credit reporting agencies that she had denied owing the underlying debt. (Casas Decl., Ex. C.) Midland also asked Casas to provide further information to support her denial. (Id.) On June 6, 2006, Casas provided Midland with her previous addresses and maiden name, and requested "a copy of the application to [Aspire Visa] showing [her] signature." (Casas Decl., Ex. D.)

Midland, however, did not meet Casas' request in its next letter, dated June 23, 2006. Instead, Midland attached an account statement to that letter. (Casas Decl., Ex. E.) Midland also warned that it was "considering forwarding [the] account to an attorney . . . to initiate legal action to satisfy the debt." Id. On July 10, 2006, Casas responded with her own warning that she would sue Midland if it damaged her credit rating. (Casas Decl., Ex. F.)

In an attempt to satisfy Casas' request, Midland sent Casas a three-page statement on July 15, 2006 identifying all the transactions of the purported Aspire Visa account. (Casas Decl., Ex. G.) Midland again demanded payment of the balance. (Id.) After receiving no response from Casas for nearly three months, Midland sent its fifth letter to Casas on October 5, 2006. (Casas Decl., Ex. H.) In that letter, Midland offered to settle the dispute for Casas' payment of 75% of the balance.(Id.) Midland again stated that it was "considering forwarding the . . . account to an attorney," but assured that it had made "no decision to forward [the] account . . . at this time." (Id.)

In addition to sending the five letters, Midland reported Casas' account to a credit reporting agency with the remark "[a]ccount information disputed by consumer." (Casas Decl., Ex. I.) Making good on her warning, Casas commenced this action.

II. Casas' Partial Summary Judgment Motion

Casas claims that Midland's last four letters violated the FDCPA and in turn, the Rosenthal Act, which incorporates the FDCPA. Dkt. No. 17-2 (June 19, 2008); see also CAL CIV. CODE § 1788.17 . In her view, Midland should have stopped its collection efforts because she disputed the underlying debt in writing. (Dkt. No. 17-2 at 6.) Moving for partial summary judgment, Casas argues that Midland failed to properly investigated her dispute and as a result, violated five FDCPA provisions, including § 1692c's prohibition against communication with disputing debtors and § 1692g's requirement to verify debts. (Id. at 6--8.) She also argues that Midland cannot assert a bona fide error defense provided in 15 U.S.C. § 1692k(c). (Id. at 9--10.)

At the November 5, 2008 hearing on the motion, Midland admitted that it would not rely on the bona fide error defense. Both at the hearing and in its opposition papers, Midland argued that the evidence demonstrated that its investigation was proper. To support its argument, Midland submitted a declaration from its employee, Melissa Allen. Allen states that when a customer disputes a debt, Midland seeks information from the seller of the disputed account. (Declaration of Melissa Allen ("Allen Decl.") ¶ 3.) She admits that Midland "rarely, if ever, contacts the original creditor." (Id.) She does not provide any information regarding Midland's investigation on Casas' account.

Nor do the deposition transcripts shed any light on Midland's investigation. On this motion, both Midland and Casas rely on the deposition testimony of Angelique Purvis, whom Midland designated to testify on its behalf under Federal Rule of Civil Procedure 30(b)(6). Purvis testified that she did not know whether Midland verified the information on Casas' account. (Dkt. No. 19-4 at 2--4, 6.) She also testified that in response to Casas' dispute, Midland sent the May 26, 2006 request for information and reviewed "the consumer ...

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