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Durham v. Continental Central Credit

October 19, 2009

SALLIE A. DURHAM, AN INDIVIDUAL ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
CONTINENTAL CENTRAL CREDIT, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT; DENYING WITHOUT PREJUDICE PLAINTIFF'S MOTION FOR CLASS CERTIFICATION

Defendants Continental Central Credit, Inc. ("CCC") and San Clemente Cove Vacation Owners Association ("Association") (collectively "Defendants") have filed a motion for summary judgment. Plaintiff has filed a motion for class certification. For the reasons discussed below, Defendants' motion for summary judgment is GRANTED IN PART and DENIED IN PART. Plaintiff's motion for class certification is DENIED WITHOUT PREJUDICE.

I. BACKGROUND

In 2003, Plaintiff, her daughter, and son-in-law became the owners of a timeshare interest in real property located at San Clemente Cove. (Partnership Grant Deed, Pl.'s Ex. A.) Plaintiff claims that she signed a contract but has been unable to find the contract.

(Durham Decl., ¶ 4.)

According to Plaintiff, about two months after purchasing the timeshare interest, her son-in-law lost his job, and they were no longer able to afford the payments. (Durham Decl., ¶ 6.) Plaintiff claims that Grand Pacific Resorts, the managing agent for the Association, told her that if she could not make the payments, the bill would go into default and the timeshare interest would revert back to the owner. (Id.) Plaintiff claims that she was not told that she would still be responsible for the Home Owner's Association dues. (Id.) Sometime thereafter, certain amounts were assessed against Plaintiff by the Association for Maintenance Fees under the authority of the written rules and by-laws of the Association. (Pl.'s Undisputed Fact 5.)

Pursuant to an agreement dated October 9, 2000, the Association may assign delinquent accounts to CCC for collection. (Ex. 2 to Hubbard Decl. (Defs.' Ex. 3).) The Agreement provides, "The contingency fee shall be 40% on all debtor accounts, payable to Continental Central Credit, Inc., only after monies have been recovered."

In September 2006, Plaintiff received a collection notice from CCC. The notice was dated September 11, 2006, and indicated that Plaintiff owed a total balance of $1,890.27, consisting of a principal balance of $1,339.45, interest in the amount of $15.04, and a collection fee of $535.78. (Ex. A to FAC.) The notice stated, "Your account has been assigned to us for immediate collection. Please remit the balance in full or present your defense against this claim. This is an attempt to collect a debt. Any information obtained will be used for that purpose." The reverse side of the notice included a disclosure of rights under California's Rosenthal Fair Debt Collection Practices Act and the Federal Fair Debt Collection Practices Act. (Defs.' Ex. 5.)

Subsequently, Plaintiff received a second letter from CCC dated October 9, 2006.

This letter stated:

The above-referenced claim has been assigned to our firm. Because you have failed to comply with our request for payment, we may refer this account to our attorney for legal action, should he deem it appropriate. To prevent further collection efforts, payment in full is required immediately.

If you choose to ignore this notice then:

In the event judgment is rendered against you, sheriff fees for service of summons and complaint, legally allowed by the court, can be included in said judgment. Also, attorney fees will be charged if provided by contract. Interest will accrue at statute rates. (Ex. B to FAC.)

In a letter dated October 17, 2006, Plaintiff disputed the debt in writing and demanded verification. (Ex. C to FAC.) Plaintiff's letter was received by certified mail at CCC's office on October 23, 2006. (Defs.' Undisputed Fact 45.) According to CCC, after receiving Plaintiff's letter, CCC stopped collection proceedings and requested information regarding the claim from the Association. (Defs.' Undisputed Fact 46.) CCC claims that it sent Plaintiff the information that was available in its own office along with a "settlement-in-full" letter and later sent Plaintiff additional information it received from the Association. (Spielman Dep. (Defs.' Ex. 4) at 59:18-21, 62:5-22, Exs. 3, 4 & 9.) Plaintiff denies that she received any more information from CCC or the Association after she sent her letter requesting verification. (Durham Decl. ¶ 11.) Plaintiff has not paid any of the Association fees that are allegedly owed. (Defs.' Undisputed Fact 8.) According to CCC, the account was canceled as uncollectible on March 20, 2007. (Spielman Dep. at 21:13-25.)

In the FAC, Plaintiff alleges that Defendant CCC violated the Fair Debt Collection Practices Act ("FDCPA"), specifically 15 U.S.C. §§ 1692e(1), 1692e(2)(A), 1692e(2)(B), 1692f(1), and 1692g. Plaintiff also alleges that Defendants violated California's Robbins-Rosenthal Fair Debt Collect Practices Act ("Rosenthal Act"), Cal. Civil Code §§ 1788.17, 1788.13(e).

II. DISCUSSION

A. Summary Judgment Motion 1. 15 U.S.C. § 1692f(1)

Plaintiff alleges that CCC violated 15 U.S.C. § 1692f(1), which prohibits: "The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law." Specifically, Plaintiff claims that the 40% collection fee CCC added to the HOA fees owed to the Association is unreasonable and unlawful because it is arbitrary and bears no relationship to the actual cost of collection. CCC counters that the collection fee is actually permitted by California law and that, therefore, it has not violated § 1692f(1). It is Plaintiff's burden to demonstrate that ...


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