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Arminda O. Alaan v. Asset Acceptance LLC

August 8, 2011

ARMINDA O. ALAAN,
PLAINTIFF,
v.
ASSET ACCEPTANCE LLC, DEFENDANT.



The opinion of the court was delivered by: Hayes, Judge:

ORDER

The matter before the Court is the Motion for Summary Judgment filed by Defendant Asset Acceptance LLC ("Asset"). (ECF No. 30).

I. Background

On December 13, 2010, Plaintiff Arminda O. Alaan filed the Second Amended Complaint, which is the operative pleading in this action. (ECF No. 26). The Second Amended Complaint alleges: "This is an action for actual damages, statutory damages, attorney fees and costs brought by an individual consumer for Defendant's violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. (hereinafter 'FDCPA') and the Rosenthal Fair Debt Collection Practices Act, California Civil Code § 1788 et seq. (hereinafter 'RFDCPA') which prohibit debt collectors from engaging in abusive, deceptive and unfair practices." Id. ¶ 1. Plaintiff alleges that, in November 1999, Plaintiff incurred a financial obligation to Citibank, and thereafter Plaintiff was unable to make payments on the debt and defaulted on February 18, 2005. The Second Amended Complaint alleges that Asset violated the FDCPA and the RFDCPA in connection with a lawsuit Asset filed against Plaintiff in state court on February 19, 2009 seeking attorney's fees and $3,991.42 plus pre-judgment interest at a fixed rate of 24% per year from March 8, 2005.

On May 9, 2011, Asset filed the Motion for Summary Judgment accompanied by evidence in support of the motion. (ECF No. 30).

On June 14, 2011, Plaintiff filed an opposition to the Motion for Summary Judgment accompanied by evidence and objections to the evidence submitted by Asset. (ECF No. 32).

On July 1, 2011, Asset filed a reply brief and a response to Plaintiff's evidentiary objections. (ECF No. 33).

On July 27, 2011, Asset filed a Notice of Recently Decided Supplemental Authority in Support of the Motion for Summary Judgment. (ECF No. 34).

On July 28, 2011, Plaintiff filed a response to Asset's Notice of Recently Decided Supplemental Authority. (ECF No. 35).

On July 29, 2011, the Court heard oral argument on the Motion for Summary Judgment. (ECF No. 36).

II. Facts

Asset submits a declaration from Ken Proctor, Asset's "Litigation Coordinator." (Proctor Decl. ¶ 1, ECF No. 30-2). Proctor states that, "[o]n May 25, 2007, Asset acquired all rights to a portfolio of charged-off credit card accounts from Citibank," including a credit card account in Plaintiff's name. Id. ¶ 2. Proctor states that "[t]he data provided by Citibank reflected that when the account was charged off [on October 20, 2005], the balance due on the account was $3,991.42," and Citibank "provided Asset with copies of the account statements for Alaan's account at the time her last payment was credited to the account ('the March 22, 2005 statement') and at the time of charge-off ('the October 20, 2005 statement')." Id. ¶¶ 3-4. The March 22, 2005 statement reflects that the effective annual interest rate on the account was 29.49%, while the October 20, 2005 statement reflects an interest rate of 30.74%. Id., Exs. B, C, ECF No. 30-2 at 11, 13. Proctor states: "Although it could have applied a higher rate of interest, Asset assessed interest at an annualized rate of 24% from the date of charge-off, pursuant to company policy." Id. ¶ 4. Proctor states:

The Collection Complaint filed on behalf of Asset against Ms. Alaan [in state court] on February 19, 2009, contains an apparent typographical error in the prayer for relief. Instead of praying for an award of prejudgment interest on the charge-off balance and seeking interest from the date of charge-off (October 20, 2005), the prayer sought interest (at an annualized rate of 24%) on the charge-off balance from an earlier date-the date of last payment (March 8, 2005). In other words, the complaint inadvertently sought interest from the wrong date.

Despite this inadvertent typographical error, the Collection Complaint nonetheless sought to recover substantially less from Alaan than the full amount that Asset was entitled to collect. This is true regardless whether interest is calculated at an annualized rate of 24% (the rate actually assessed) over an incorrect period of time; at an annualized rate [of] 30.74% (the rate in effect on the date of charge-off) over the correct period of time; or at the variable 'Default Rate' (the rate that Alaan may contend applies after charge off) over the correct period of time....

Although the Collection Complaint sought interest for approximately an extra seven and a half months (by starting the 'interest clock' on March 8, 2005 instead of October 20, 2005), because it applied an interest rate of 24%, it sought only $3,789.77 in interest during this period.

Had Asset assessed interest at a fixed rate of 30.74% between October 20, 2005 and February 19, 2009, it would have been entitled to collect $4,094.36 in interest from Alaan....

Had Asset assessed interest at a variable Default Rate between October 20, 2005 and February 19, 2009, defined in the Card Agreement governing Alaan's Citibank account as the sum of the U.S. Prime Rate in effect each month during that period-which began at 6.75%, rose to 8.25% and dropped to its current rate of 3.25%-plus 23.99%, it would have been entitled to collect $4,116.62 in interest from Alaan.

Id. ¶¶ 5-6, 8-10.

In a declaration, Plaintiff states:

I received account statements from Citibank regarding the above Account.

Prior to my account going into default, the interest rate on my credit card with Citibank was a very low variable rate of under 24%.

At no time after my account with Citibank went into default was there ever a fixed interest rate....

I never, at that time, agreed a final balance with Citibank or Asset, nor did I ever make any agreement, in writing, verbally, or implicitly, to pay a fixed interest rate or any balance of any kind to Citibank or Asset.

Neither Asset nor Citibank ever approached me and requested that we agree to an account stated, and neither Asset nor Citibank ever communicated a final balance struck with me.

The interest rate charged on my Account with Citibank was always variable interest rate, and not the fixed rate Asset contends in its state complaint.

In 2009, I received a copy of the complaint ... that Asset Acceptance [filed] against me in the Superior Court of California.... In this complaint, Asset demanded interest at a rate of 24% from the default-date through the date-of-judgment.

When I was served with this lawsuit, I noted that the interest rate claimed owed by me was incorrect, the interest was being charged twice over a period of time, and the interest rate was not provided for ...


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