Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_15-cv-02310/USCOURTS-casd-3_15-cv-02310-1/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 15:1692 Fair Debt Collection Act

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

ZIBA YOUSSOFI,

Plaintiff,

CASE NO. 15cv2310 JM(WVG)

ORDER GRANTING IN PART AND

DENYING IN PART MOTION FOR

SUMMARY JUDGMENT;

SCHEDULING ORDER

v.

CMRE FINANCIAL SERVICES,

INC.,

Defendant.

Plaintiff Ziba Youssofi (“Plaintiff”) moves for summary judgment or,

alternatively, for partialsummary judgment on the remaining claims alleged in this Fair

Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §1692 etseq., action. Defendant

CMRE Financial Services, Inc. (“CMRE”) opposes the motion. Pursuant to L.R.

7.1(d)(1), the court finds the matters presented appropriate for decision without oral

argument. For the reasons set forth below, the court grants in part and denies in part

the motion for summary judgment. The court also instructs the parties to contact the

chambers of Magistrate Judge William V. Gallo to schedule a case management

conference. 

BACKGROUND

The FAC, filed on November 2, 2015, alleges eight counts for violation of the

FDCPA and a single state law claim for violation of the Rosenthal Fair Debt

Collections Practices Act (“Rosenthal Act”), Cal. Civil Code §1788.17. Plaintiff’s

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claims arise from two different collection letters or notices she received from CMRE,

a debt collector, regarding a consumer debt.

On or about October 29, 2014, Plaintiff received the first collection notice from

CMRE seeking to collect an alleged debt of $716.30 plus $1.18 in interest (the

“Validation Notice”). (FAC Exh. 1). The Validation Notice consisted of a single page

and allegedly did not identify the name of the creditor nor provide any information to

identify the nature of the debt. On November 17, 2014, Plaintiff retained counsel and

counsel sent a letter to CMRE disputing the debt.

The second collection notice, dated December 9, 2014, clearly and

unambiguously identified the creditor as Emergency Services Medical Corporation. 

The debt arises from the provision of emergencymedicalservicesto Plaintiff. Plaintiff

never paid the debt. The second notice identified the same debt of $716.30, in addition

to interest charges of $9.62. (FAC Exh. 2). 

On October 14, 2015, Plaintiff commenced the present action. On March 15,

2016, the court granted CMRE’s motion to dismiss Counts 1, 2, 4, 6-9 with prejudice

and denied the motion to dismiss Counts 3, 5, and the Rosenthal Act claim. Pursuant

to Fed.R.Civ.P. 12(d), the court also converted the motion to one for summary

judgment on the remaining claims. The two remaining issuesin this case are essentially

(1) whether Plaintiff was provided with page two of the Validation Notice and (2)

whether the interest calculation set forth in the December 9, 2014 collection notice

overstated the amount of interest by $0.39. The court concluded that these were

discrete, narrowly focused factual issues subject to discovery and, presumably,

resolution by summary judgment. The parties have completed discovery and Plaintiff

now moves for summary judgment on the remaining claims.

DISCUSSION

Legal Standards

A motion for summary judgment shall be granted where “there is no genuine

issue asto any material fact and . . . the moving party is entitled to judgment as a matter

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of law.” FED. R. CIV. P. 56(c); Prison Legal News v. Lehman, 397 F.3d 692, 698 (9th

Cir. 2005). The moving party bears the initial burden of informing the court of the

basis for its motion and identifying those portions of the file which it believes

demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett,

477 U.S. 317, 323 (1986). There is “no express or implied requirement in Rule 56 that

the moving party support its motion with affidavits or other similar materials negating

the opponent’s claim.” Id. (emphasis in original). The opposing party cannot rest on

the mere allegations or denials of a pleading, but must “go beyond the pleadings and

by [the party’s] own affidavits, or by the ‘depositions, answers to interrogatories, and

admissions on file’ designate ‘specific facts showing that there is a genuine issue for

trial.’” Id. at 324 (citation omitted). The opposing party also may not rely solely on

conclusory allegations unsupported by factual data. Taylor v. List, 880 F.2d 1040,

1045 (9th Cir. 1989). 

The court must examine the evidence in the light most favorable to the nonmoving party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962). Any doubt

asto the existence of any issue of material fact requires denial of the motion. Anderson

v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). On a motion for summary judgment,

when “‘the moving party bears the burden of proof at trial, it must come forward with

evidence which would entitle it to a directed verdict if the evidence were

uncontroverted at trial.’” Houghton v. South, 965 F.2d 1532, 1536 (9th Cir. 1992)

(emphasis in original) (quoting International Shortstop, Inc. v. Rally's, Inc., 939 F.2d

1257, 1264-65 (5th Cir. 1991), cert. denied, 502 U.S. 1059 (1992)).

The Motion

Count 3

Plaintiff comes forward with her declaration to show that the one-page

Validation Notice she received did not identify the creditor in violation of 15 U.S.C.

§§1692g(a)(2), 1692e, and 1692e(10). (Youssofi Decl. ¶5). Plaintiff declares that she

did not receive page two to the letter. She also did not submit the envelope containing

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the Validation Notice to support her motion. As this evidence demonstrates that the

Validation Notice received by Plaintiff did not identity the creditor, the burden shifts

to CMRE to show a disputed issue of material fact.

CMRE comes forward with evidence to show that Rose Moraleja, the custodian

ofrecords for EA HealthBilling, sent Plaintifffive billing statements between May and

September 2014 showing a total principal balance of $716.30 due and owing as her

personal responsibility. EA Health Billing is the billing agent for Emergency Services

Medical Corporation, the provider of medical services to Plaintiff. When Plaintiff

failed to pay for the medical services, the account balance was assigned to CMRE for

collection.

The evidence also showsthatCMRE usedBacompt, an outsourced direct mailer,

to provide notices to Plaintiff. Dwayne Hurt, Chief Operating Officer of Bacompt,

declares “without equivocation that both pages of the letter were printed, went through

automated mailing procedures that inserted both pages into an envelope, and

transmitted in a sealed envelope” to Plaintiff’s home address. (Hurt Decl. p.2:4-10). 

Mr. Hurt explains that the Validation Notice is still in its database. The barcode on the

October 29, 2014 Validation Notice “isread such that if there was some type of system

malfunction, there would be an automated response and all mailing operations would

be shut down and immediately cease.” (Id. at p.3:18-22). He further explains that

there is a small number in the right bottom corner of the pages, indicating “1687" and

“1688," on pages one and two, respectively. These numbers mean that the two pages

are the 1,687th and 1,688th pages printed on October 29, 2014. Mr. Hurt then

undertook an investigation to determine whether there was a systemmalfunction during

the week that the Validation Notice was printed. Mr. Hurt explains that any type of

interruption or problem with the system would be reflected in Bacompt’s records; and

such records do not reflect any malfunction with the system during the relevant time

period. Based upon his investigation, Mr. Hurt concludes that the only manner in

which the second page could have been excluded would require an intentional

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intervention by a Bacompt employee to remove the second page, an act which would

result in the employee’s discharge and a possible criminal prosecution.

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Even though there is very strong evidence that Plaintiff received both pages of

the Validation Notice, Plaintiff’s declaration raises a genuine issue of material fact. It

is not the role of the court on summary judgment to weigh contrary evidence or to make

credibility determinations. CMRE also attacks Plaintiff’s credibility, noting that she

has memory issues including, for example, her inability to recall having received any

of the five billing statements mailed to her between May and September 2014. Issues

of credibility are uniquely within the providence of the jury, and not this court. 

Finally, Plaintiff contends that the second page, even if received by her, failed

to adequately identify the creditor, Emergency Services MedicalCorporation. Viewed

from the perspective of the least sophisticated consumer, the Validation Notice must

effectively convey the identity of the creditor. See Swanson v. Southern Oregon Credit

Serv., Inc., 869 F.2d 1222, 1225 (9th Cir. 1988). The second page abbreviates the

creditor as “Emergency Servi.” The court concludes that whether the 15 character field

limitation (i.e. abbreviation) effectively conveyed the identity of the creditor, in light

of the evidentiary record, creates a genuine issue of material fact.

In sum, the court denies summary judgment on Count 3.2

Count 5

Plaintiff contends that (1) CMRE could not impose interest charges on the debt

and, even if it could, (2) the amount of the interest charged was overstated by $.39. 

The arguments and evidence in support of this claim are not persuasive. The court

grants summary judgment against Plaintiff, and in favor of CMRE, on Count 5. 

Mr. Hurt also declares that an inspection of the envelope could provide 1

additional information concerning the mailing of the Validation Notice. However,

Plaintiff did not retain the envelope. 

The court doesreach CMRE’s affirmative defense of a bona fide error. CMRE

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has the burden to demonstrate this affirmative defense. Not only doesCMRE not move

for summary judgment on this affirmative defense, but it also fails to establish that any

error occurred. The focus of CMRE’s argument and evidence isthat no error occurred. 

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Under the FDCPA, a debt collector may collect interest charges where the

charges are “expressly authorized by the agreement creating the debt or permitted by

law.” 15 U.S.C. §1692f(1). State law allows recovery of prejudgment interest on debts

under certain circumstances. Cal. Civil Code §3287(a). In the absence of a stated

contractual rate of interest, the “obligation shall bear interest at a rate of 10 percent per

annum after a breach.” Cal. Civil Code §3289. As explained in Diaz v. Kubler Corp.,

785 F.3d 1326 (9th Cir. 2015):

prejudgment interest under section 3287(a) becomes available as of the

day the amount at issue becomes “calculable ... mechanically, on the basis

of uncontested and conceded evidence,” and it is available “as a matter of

right,” rather than at the discretion of a court. 

Id. at 1329 (quoting Leff v. Gunter, 33 Cal.3d 508 (1983). Accordingly, CMRE is

entitled to collect interest on the debt because the amount of the debt is calculable

based upon the undisputed evidence that Plaintiff never paid for her medical treatment. 

Second, the interest charge is not overstated by CMRE. Without explaining

when the debt became calculable, Plaintiff selects October 30, 2014 as the date to

commence the interest charges. Here, there is no dispute that Plaintiff sought and

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received medical services from Emergency Services Medical and did not pay for the

services provided. The interest charges were thus “calculable . . . mechanically, on the

basis of uncontested and conceded evidence,” id., as of the date Plaintiff received any

of the billing statements dated May 16, 2014, June 19, 2014, July 24, 2014, August 22,

2014, and September 22, 2014. Indisputably, an interest charge based on any of these

dates results in a charge substantially greater than the $9.62 interest charge as of

December 9, 2014. As previously noted, the practice of a debt collector to collect less

interest than owed is not an abusive practice because the consumer actually benefits by

such practice. 

In sum, Plaintiff fails to establish a violation of the FDCPA based upon the

 Plaintiff’s evidence shows that CMRE has the policy of not charging interest

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until the debt is assigned from the creditor. Determination of the amount of interest,

however, depends on the date the interest charge becomes calculable, mechanically,

based upon undisputed evidence, and not the date of assignment from the creditor.

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interest charges. Consequently, the court grantssummary judgment in favor of CMRE

and against Plaintiff on Count 5.

Scheduling Order

The parties are instructed to contact the chambers of Magistrate Judge William

V. Gallo within seven days of entry of this order to schedule a case management

conference. As discovery is complete, the court anticipates the scheduling of a Pretrial

Conference in October 2016, with a trial in November 2016. 

In sum, the court denies summary judgment on Count 3; grants summary

judgment in favor of CMRE, and against Plaintiff, on Count 5; and denies summary

judgment on the Rosenthal Act claimassummary judgment is not appropriate onCount

3. The parties are also instructed to contact the chambers of Magistrate Judge William

V. Gallo to schedule a case management conference. 

IT IS SO ORDERED.

DATED: August 2, 2016

 

JEFFREY T. MILLER

United States District Judge

cc: All parties

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