Court Opinion

ID: 804547
Source: CourtListenerOpinion
Date Created: 2012-07-17 18:46:12+00
Date Added: 2024-06-11T18:00:12.678348
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                            No. 11-1544

JAMES L. MCLEAN; EDITH L. MCLEAN,

                Plaintiffs – Appellants,

           v.

RONALD A. RAY, Esquire; ECONOMOU, FORRESTER & RAY,

                Defendants – Appellees.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.   Liam O’Grady, District
Judge. (1:10-cv-00456-LO-TCB)

Argued:   May 16, 2012                         Decided:   July 17, 2012

Before AGEE and    DIAZ,   Circuit   Judges,    and   HAMILTON,   Senior
Circuit Judge.

Affirmed by unpublished opinion. Judge Diaz wrote the opinion,
in which Judge Agee and Senior Judge Hamilton joined.

ARGUED:     Allen   Huberth  Sachsel,   Fairfax,  Virginia, for
Appellants.    David John Gogal, BLANKINGSHIP & KEITH, PC,
Fairfax, Virginia, for Appellees. ON BRIEF: Michael L. Chang,
BLANKINGSHIP & KEITH, PC, Fairfax, Virginia, for Appellees.

Unpublished opinions are not binding precedent in this circuit.
DIAZ, Circuit Judge:

        Edith and James McLean sued Ronald Ray, an attorney, and

his    law   firm,     Economou,     Forrester      &    Ray,     alleging      that     Ray

violated the Fair Debt Collections Practices Act in the course

of seeking to collect a debt the McLeans owed to his client.

Finding      the     McLeans’      claims    meritless,         the    district       court

granted      Ray’s    motion       for   summary     judgment         and    denied    the

McLeans’ cross motion for summary judgment.                       The McLeans timely

appealed.      We affirm.

                                            I.

                                            A.

       Edith McLean is a ninety-six-year-old widow.                         Edith’s son,

James McLean, manages her affairs and finances under general and

medical      powers    of    attorney.           Currently      at    a     medical    care

facility      in   Maryland,       Edith    twice       resided       at    ManorCare,    a

nursing home facility in Arlington, Virginia.                          Edith was first

admitted to ManorCare on July 30, 2006 and was discharged on

September 7, 2006.           Upon Edith’s first admission to ManorCare,

James signed a contract with the facility providing that the

McLeans would be liable for all costs (to include attorney’s

fees)     incurred     by    ManorCare      in     collecting         payment    on    the

account.       The contract also provided that it would terminate

upon     Edith’s      date    of     discharge;      however,          if    Edith     were

                                            2
readmitted within fifteen days of discharge, the contract would

continue in effect as of the date of readmission.

      In   November       2007,    Ray   sued     Edith     in   Arlington      County

General District Court on behalf of ManorCare, to collect a debt

allegedly owed to ManorCare for services it rendered to Edith

during her first stay.              The parties resolved the matter and

ManorCare nonsuited the case.

      Approximately twenty months after her first stay, Edith was

readmitted to ManorCare without signing a new contract.                        Payment

disputes     again   arose    between     the     McLeans    and    ManorCare,      and

ManorCare again engaged Ray to attempt to collect the amounts it

claimed it was owed.         On March 25, 2009, while Edith was still a

resident at ManorCare, Ray mailed Edith a letter claiming that

she   owed     ManorCare         $15,814.44,      plus    interest,        reasonable

attorney’s fees, and costs.              Two days later, Ray sued Edith in

the Arlington County Circuit Court (the “Arlington Complaint”)

alleging that she failed to pay ManorCare for services rendered.

      In   preparing       the    Arlington       Complaint,       Ray   reviewed    a

standard     collection      referral     form,    Edith’s       earlier      residence

agreement,     and   an     itemized     statement       pertaining      to    Edith’s

account, all of which he had received from ManorCare consistent

                                          3
with his normal practice before filing debt collection actions. 1

The    referral    sheet    stated   that   Edith    had   been   admitted   to

ManorCare on July 30, 2006 and remained in the facility.                     Ray

noticed that the amount sought on the referral sheet did not

match the figures ManorCare provided on the itemized statement.

After consulting with ManorCare, Ray revised the draft complaint

to    state   a   reduced   amount   owed.     The    Arlington     Complaint,

however, also asserted--incorrectly it turns out--that Edith had

resided continuously at ManorCare since her initial admission in

July 2006, and therefore alleged a breach of the contract James

signed in connection with that admission.

       Before Ray filed suit, his secretary called his attention

to the 2007 lawsuit that the parties had resolved.                Ray admitted

that he reviewed the file pertaining to the earlier matter in a

cursory fashion, concluding that the dated information was not

       1
        Ray admitted that he also customarily received a sworn
affidavit from his clients attesting to the amount sought, but
that he did not receive one from ManorCare in this instance.
Ray explained that he typically requests an affidavit to
facilitate the entry of a default judgment pursuant to Virginia
state court procedures. In this case, Ray explained that--given
the adversarial nature of the proceedings from an early stage--
he had no reason to expect that the McLeans would default and
thus no practical need for the affidavit.         Moreover, the
district court found it undisputed that Ray “decided not to use
a supporting affidavit in the McLean matter because Ms. McLean
continued to reside at the facility, and Mr. Ray assumed that he
would need to amend the complaint prior to the entry of a final
judgment order to include claims for additional services.” J.A.
994-95.

                                       4
useful and that he had no reason to otherwise question the facts

provided by ManorCare with respect to the 2009 claim.

       Edith    left    ManorCare       on    May      8,    2009.      In    the     months

following her departure, Ray exchanged several emails and phone

calls with the McLeans’ attorneys.                     It was not until the end of

September, however, that the McLeans first asserted that the

2006 contract was no longer valid because of the twenty-month

lapse     between       Edith’s     discharge           in     September       2006      and

readmission in April 2008.                Ray responded that he would look

into the matter and “clean up” the lawsuit if he confirmed that

the 2006 contract no longer applied.                        J.A. 561.        To that end,

Ray     requested      Edith’s    file       from      his    client,    but     it     took

ManorCare some time to retrieve it.                     In the interim, Ray filed

an    amended    complaint       (the    “Arlington          Amended    Complaint”)       on

October 29, 2009 without striking the claim for attorney’s fees.

       The Arlington Amended Complaint increased the ad damnum to

$70,147.67      to   encompass     services         rendered     to    Edith    from     the

filing of the initial Arlington Complaint until her discharge.

The Arlington Amended Complaint further alleged that Edith, by

accepting the benefit of the services ManorCare rendered to her,

implicitly obligated herself to pay ManorCare in quantum meruit

for their reasonable value.                  The Arlington Amended Complaint

also continued to seek interest, and attorney’s fees and costs

based    on    the   2006   contract.            The   next    day,    Edith’s      counsel

                                             5
served    and       filed    an     Answer     and    Counterclaim,            pleading       as    a

defense that there was no written contract between the parties

and    providing            specific      dates       of     Edith’s           discharge       and

readmission to ManorCare.

      By November 2009, Ray was able to confirm that Edith had

not   continuously           resided     at    ManorCare,       and      conceded       that       no

written contract existed to support a claim for attorney’s fees.

In    January        2010,     the       parties      presented          an     agreed       order

dismissing      the     written       contract       claim    and     granting         leave       to

amend the suit to include an oral contract claim.                                   Ray filed a

Second Amended Complaint, asserting claims for breach of an oral

contract     and      an     implied       contract,       dropping           the    claim     for

attorney’s          fees,     and     seeking        judgment       in        the    amount        of

$65,809.50.

                                               B.

      In the course of litigating the debt collection proceeding,

the   McLeans        sought        discovery.        Among    other         documents,        they

requested       a    list     of     ManorCare       employees        and      their     contact

information.           ManorCare         prepared      a   list       responsive         to    the

request,    listing          the    national    headquarters          address        and      phone

number as the contact information for several employees, and

submitted it to Ray.                  Ray noticed that the list was missing

contact     information            for   two    ManorCare       employees,            which        he

                                                6
inserted       before      forwarding     the    discovery        response            to   the

McLeans.

        While the debt collection action was pending, Ray filed a

separate       action      for   the     appointment        of        a    guardian        and

conservator for Edith.               Ray contended that this proceeding was

warranted      by    James’s     history    of    neglect        of       Edith’s      needs,

including      his     purported      failure     to     pay     for      her    care      and

residence at another nursing home, which ultimately resulted in

the termination of Edith’s residence agreement at that facility.

Ray admitted that recovering the debt owed to ManorCare was one

purpose for filing the guardianship proceeding, but that his

legitimate      concerns       for    Edith’s    welfare       also        motivated       his

actions.       Ray prosecuted the guardianship proceeding against the

McLeans for nearly three months after Edith left ManorCare, but

then nonsuited the action.

                                           C.

     The McLeans sued Ray and his law firm in federal district

court for violations of the Fair Debt Collections Practices Act

(“FDCPA”).          They    twice     amended    their    complaint;            the    second

amended complaint, the operative complaint before the district

court, initially contained twenty-four counts, twelve counts for

James and twelve for Edith, alleging the same violations of the

FDCPA    for    each    plaintiff.        However,       the   McLeans          voluntarily

dismissed      several      counts,     including      twelve         claims      that     the

                                           7
district court indicated were likely time-barred by the FDCPA’s

statute of limitations. 2      The McLeans also voluntarily dismissed

two   other   counts    alleging     that   Ray   violated    the    FDCPA    by

“instituting and/or continuing and prosecuting” the guardianship

proceeding, id. 27, which they argued Ray initiated “to bring

pressure on James, using the proceeding as a ‘club’ to induce or

threaten James to pay a claimed, but disputed, debt,” id. 23-24.

      The district court thus had before it ten remaining counts

alleging that Ray violated the FDCPA by (1) seeking incorrect

amounts, seeking attorney’s fees, and failing to determine the

accuracy of ManorCare’s claim prior to signing and filing the

Arlington Amended Complaint, (2) falsely making a quantum meruit

claim “with no basis in fact,” (3) falsely representing that he

would not assert the 2006 contract as a basis for recovery when

amending    the   complaint,   and    (4)   providing   a    false   discovery

response.

      The   parties    cross-moved    for   summary   judgment,      which    the

district court granted in favor of Ray.                 The McLeans timely

appealed,     challenging   the    award    of    summary    judgment   and    a

discovery ruling by the magistrate judge.

      2
       On appeal, Ray argues that all of the claims are barred by
the FDCPA’s statute of limitations.     Because we conclude that
the McLeans’ claims fail on the merits, we need not address this
separate argument.

                                       8
                                            II.

       We review de novo a grant or denial of summary judgment,

applying       the    same   standard       applied        by    the    district   court.

Overstreet v. Ky. Cent. Life Ins. Co., 950 F.2d 931, 938 (4th

Cir.       1991).     Summary         judgment   is      appropriate     only   when    the

record shows “there is no genuine dispute as to any material

fact and the movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(c).                  A district court considering a motion

for summary judgment “must view the evidence in the light most

favorable to the nonmoving party,” Unus v. Kane, 565 F.3d 103,

115 (4th Cir. 2009), and draw all inferences in favor of the

nonmovant,      Williams         v.   Griffin,     952    F.2d    820,   823    (4th   Cir.

1991).

                                            III.

       The    FDCPA    is    a    strict    liability       statute      that   prohibits

false or deceptive representations in collecting a debt, as well

as certain abusive debt collection practices. 3                        Attorneys seeking

       3
       The prohibited practices include “any false deceptive, or
misleading representation or means in connection with the
collection   of   any  debt”;   15   U.S.C.   §  1692e,   “false
representation of the character, amount, or legal status of any
debt;” id. § 1692e(2)(A); “use of any false representation or
deceptive means to collect or attempt to collect any debt or to
obtain information concerning a consumer;” id. § 1692e(10); “use
[of] unfair or unconscionable means to collect or attempt to
collect any debt;” id. § 1692f, and “collection of any amount
(including any interest, fee, charge, or expense incidental to
the principal obligation) unless such amount is expressly
(Continued)
                                             9
the   repayment     of    a    debt   on    behalf       of    a     client   are     debt

collectors within the ambit of the FDCPA.                          Heintz v. Jenkins,

514 U.S. 291, 292 (1995).             False statements in the course of

litigation     constitute      violations       of     the    act.     See    Sayyed    v.

Wolpoff & Abramson, 485 F.3d 226, 229 (4th Cir. 2007) (rejecting

the argument that an attorney debt collector was entitled to

immunity for his litigating activities).                       The FDCPA, however,

contains   a    “bona    fide    error”     defense          that    absolves    a    debt

collector from liability for a violation if he can show by a

preponderance      of    the    evidence        that    “the    violation       was    not

intentional and resulted from a bona fide error notwithstanding

the maintenance of procedures reasonably adapted to avoid any

such error.”      15 U.S.C. § 1692k(c).

                                           A.

      The McLeans assert that Ray’s claims as to the amounts due

to ManorCare violated the FDCPA in several respects.                                First,

they contend that Ray misrepresented the debt owed by improperly

requesting attorney’s fees despite the fact that the break in

Edith’s    stay    at    ManorCare     rendered          the    contract      entitling

ManorCare to such fees inapplicable.                   On this point, the McLeans

argue first that Ray’s review of his own files--specifically,

authorized by the agreement creating the debt or permitted by
law;” id. § 1692f(1).

                                           10
the file pertaining to the 2007 lawsuit--should have alerted him

to the break in stay, and further that he was alerted to it by

the McLeans’ counsel.            Next, they contend that Ray violated the

FDCPA    by   seeking   the     payment     of   prejudgment     interest   in   the

complaint.

        The McLeans further argue that the bona fide error defense

does not shield Ray because he knew the amounts claimed were

erroneous and did not maintain adequate procedural safeguards to

avoid such errors.         On the latter point, the McLeans argue that

Ray’s     dereliction      of     his     own    protocol--of     requesting     and

receiving a sworn affidavit from his clients attesting to the

amount of the claimed debt--establishes his failure to comply

with procedures for avoiding error.

       In granting summary judgment in favor of Ray, the district

court--relying on our decision in Amond v. Brincefield, Hartnett

& Assocs., P.C., 175 F.3d 1013, 1999 WL 152555 (4th Cir. Mar.

22, 1999) (unpublished table decision)--determined that the bona

fide     error   defense        applied    to    absolve   Ray     of   liability.

Although by unpublished decision, this court in Amond affirmed

the district court’s finding that debt collector lawyers had no

reason to question the amount of debt they were attempting to

collect for their clients, stating that lawyers “cannot be held

liable for what appears to be an honest dispute regarding the

amount of the debt, so long as there exists a colorable factual

                                           11
basis for the higher amount claimed by their client.”                        Id. at *2

(quoting        the   district    court).        This    court    also    rejected    the

Amond plaintiff’s argument that the FDCPA created a heightened

duty       of   investigation     for    lawyers        engaged   in     ordinary    debt

collection activity.            Id. at *3.

       Noting that ManorCare had provided Ray a referral form, a

residence agreement, and an itemized bill for services, which

Ray    reviewed       (and   challenged),        the    district    court    correctly

concluded        that   there    was    a   colorable      basis    for    ManorCare’s

claim.          Addressing the McLeans’ argument that Ray would have

been alerted to the fact that Edith did not reside continuously

at ManorCare had he more carefully reviewed his own files, the

district court also correctly concluded that Amond permitted Ray

to rely on his client’s word. 4

       As for the McLeans’ separate argument that Ray deliberately

asserted a false claim for attorney’s fees despite having been

put on notice by the McLeans’ attorneys that there was a break

in Edith’s stay at ManorCare, the district court found (and we

agree) that Ray was diligent in investigating the matter.                            From

       4
       Like the district court, we credit Ray’s explanation for
why he did not insist on receiving a sworn affidavit from
ManorCare for the amount owed.    At bottom, our inquiry focuses
on whether the procedures Ray employed were reasonably adapted
to avoid error.   We are satisfied that they were, and that Ray
is thus entitled to the benefit of the bona fide error defense.

                                            12
the moment Ray was alerted to the contention that there was a

break     in     Edith’s        stay   that    rendered    the    attorney’s       fees

provision of the initial contract inapplicable, he diligently

investigated to confirm the truth of the assertion.                          We also

agree with the district court that Ray amended the complaint to

remove the claim for attorney’s fees as soon as he was able to

confirm that the 2006 contract no longer applied.

     The       district     court      also   correctly   rejected     the   McLeans’

allegation that Ray violated the FDCPA by seeking prejudgment

interest.        As the district court noted, Virginia law permits

plaintiffs to seek prejudgment interest, which is awarded at the

discretion of the trier of fact.                     See, e.g., Upper Occoquan

Sewage Auth. v. Blake Constr. Co., 655 S.E.2d 10, 23 (Va. 2008)

(citing Va. Code Ann. § 8.01-382).                    The McLeans nevertheless

protest        that   Ray       sought    prejudgment      interest     on   amounts

purportedly       owed     by    the    McLeans    that   were   not   yet   due   and

payable, as they had not yet been billed.                   However, the district

court determined that “the complaint is fairly read as seeking

only pre-judgment interest on the amounts past due at the time

of judgment.”         J.A. 1001.         We agree with the district court on

this score, as well.                Further, any risk that ManorCare would

have been able to recover damages to which it was not entitled--

i.e., prejudgment interest on amounts that were not yet due and

payable--is mitigated by the fact that a decision to award such

                                              13
interest in the first instance is determined at the discretion

of a presumably competent and reasonable trier of fact.

                                          B.

      The   McLeans      next   assert    that     the    quantum    meruit      claims

lacked a factual basis, and that the amount asserted therefore

violates the FDCPA.           In support, they cite Ray’s response to the

McLeans’    interrogatory        that    sought    the    basis   for      ManorCare’s

allegation that each charge represented the reasonable value of

the item or service ManorCare provided Edith.                        Ray’s response

explained    that       the   charges    were     “determined     based      upon   the

reasonable value of the time or service charged, the charges for

such items by other facilities in the market and a cost basis

evaluation as determined by ManorCare in setting prices based on

its overall operating income and expenses.”                 Id.

      The McLeans contend that the FDCPA requires--at the time a

debt collector asserts a debt--an accounting of how the amount

was calculated.         According to the McLeans, Ray’s response fails

to   constitute     a    good   faith,    pre-suit       rationale    of    a   claimed

debt, because it is merely “a list of factors that will be

considered to support a later rationalization,” Appellants’ Br.

47, which they claim does not satisfy the requirements of the

FDCPA.

      The McLeans’ position is unpersuasive, as they fail to cite

any authority for this proposition.                We agree with the district

                                          14
court      that   Ray’s    response     clearly      stated    the   basis    for    the

quantum meruit figure: “a reasonable value of the services, as

determined by the market, plus costs.”                     J.A. 1001.      Further, we

agree with the district court that the McLeans have done no more

than suggest that the numbers “smell fishy,” id. 1002, which

does not satisfy their burden in opposing summary judgment.

                                           C.

      The McLeans also allege that Ray violated the FDCPA when he

falsely represented that he would not assert the 2006 contract

(the contract signed upon Edith’s first admission to ManorCare)

as a basis for recovery and for attorney’s fees when amending

the Arlington Complaint.           This allegation stems from a statement

Ray made in a sworn affidavit he submitted to the district court

that, before amending the complaint the first time, he “would

inquire with [ManorCare] regarding the applicability of the 2006

contract and . . . would clean up the lawsuit if [he] confirmed

that there was a problem with that part of the claim.”                       Id. 561.

      The McLeans interpret Ray’s statement as an unconditional

vow   to    amend    the   initial      complaint     to    remove   the    breach    of

written contract claim and the claim for attorney’s fees.                            The

district court, however, correctly interpreted Ray’s statement

with the qualifier in context:                  that Ray would “clean up the

lawsuit” if and when he confirmed the applicability of the 2006

contract,      and   not    that   he    made   an    unconditional        promise    to

                                           15
remove   the    claim    for    attorneys’       fees.          Several    obstacles--

including the fact that ManorCare had misplaced Edith’s file--

prevented Ray from confirming the facts any sooner.                           The record

shows that Ray amended the complaint to remove the claim for

attorney’s fees as soon as he was able to determine that the

2006   contract    did   not    support        it.      We   thus   agree       with    the

district court that this claim lacks merit.

                                          D.

       The   McLeans    also    allege    that       Ray   violated     the     FDCPA   by

providing a false discovery response.                   According to the McLeans,

Ray falsely provided the ManorCare national headquarters address

and    phone   number     as    the      contact       information        for     several

ManorCare employees, when he knew that those employees were not

in fact based at the company’s Ohio headquarters.

       As to this claim, the district court correctly noted that

there was neither factual nor legal support for the notion that

Ray made a “false statement” or “misrepresentation” within the

meaning of the FDCPA when he forwarded the list of employees

from   ManorCare    to    the    McLeans.            Assuming    that     Ray’s   action

constituted a “representation” or “means of collecting a debt,”

the district court nevertheless concluded that it was not false,

deceptive, or misleading, let alone “unfair or unconscionable”

as prohibited by the act.

                                          16
        Again,      the    McLeans        cite     no    authority             to    support       their

contention         on    appeal      that    the      district           court’s       reasoning      is

legally incorrect.              To the contrary, we agree with the district

court    that       there      was    nothing        wrong         or    dishonest          about    Ray

specifying         that   certain         ManorCare          employees            could    be     reached

through the company’s headquarters.

                                                 E.

     Finally,           the    McLeans       seek       to    appeal          a     discovery      order

entered       by    the       magistrate       judge         in    this        case.         In    their

complaint, the McLeans asserted two separate FDCPA violations

premised on the view that Ray abused the separate guardianship

proceeding as a coercive debt collection tool.

     In       support         of     their       claims,           the        McLeans       propounded

discovery       directing           Ray   to     admit        that       “Plaintiff          James    L.

McLean,    at      all    times       hereto      relevant,             was    properly         managing

Edith    L.     McLean’s           affairs.”          Id.         211.         In    response,       Ray

propounded         interrogatories             and      requests          for        production       of

documents seeking information relating to James’s management of

Edith’s financial affairs.                   When the McLeans refused to provide

the information, the magistrate judge granted Ray’s motion to

compel.       Rather than comply with the order, however, the McLeans

opted    to    dismiss         the    two      claims.            At     the      same     time,    they

objected to the magistrate judge’s order, contending that it was

an abuse of discretion and should be set aside.                                           The district

                                                 17
court   overruled   the    objection,       finding   that   “the    information

sought by Defendants is plainly relevant to Plaintiffs’ claims .

. . [and] Defendants are entitled to develop their response to

Plaintiffs’     allegations    through        discovery      of   all   relevant

documents.”     Id. 388.

     On appeal, the McLeans argue that the magistrate judge and

the district court erred in ordering the McLeans to disclose

Edith’s assets.        They ask us to reverse the district court’s

order and to remand the case with instructions to reinstate the

two counts alleging violations of the FDCPA pertaining to the

guardianship claims.

     We conclude, however, that this assignment of error is now

moot,   given   that   the   McLeans    elected       to   dismiss   the   claims

rather than comply with the order.             In any event, we discern no

error, as we agree with the district court that the discovery

was plainly relevant to the issues in the case.

                                   IV.

     For the foregoing reasons, the judgment of the district

court is

                                                                        AFFIRMED.

                                       18