Court Opinion

ID: 4366782
Source: CourtListenerOpinion
Date Created: 2019-02-11 19:00:19.49764+00
Date Added: 2024-06-11T09:24:36.696714
License: Public Domain

Case: 18-30696      Document: 00514829795         Page: 1    Date Filed: 02/11/2019

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT

                                      No. 18-30696                   United States Court of Appeals
                                                                              Fifth Circuit

                                                                            FILED
                                                                     February 11, 2019
JONATHAN RABURN,
                                                                       Lyle W. Cayce
              Plaintiff–Appellant,                                          Clerk

v.

COMMUNITY MANAGEMENT, L.L.C.,

              Defendant–Appellee.

                   Appeal from the United States District Court
                       for the Middle District of Louisiana
                             USDC No. 3:17-CV-155

Before CLEMENT, OWEN, and HO, Circuit Judges.
PER CURIAM:*
       Jonathan Raburn appeals the district court’s grant of summary
judgment in favor of Community Management, L.L.C (Community).                                    The
district court held that Raburn’s claims fail because Community is not a debt
collector. We affirm.

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
    Case: 18-30696      Document: 00514829795      Page: 2    Date Filed: 02/11/2019

                                   No. 18-30696
                                          I
      Community is a property management company that manages
homeowner’s associations.       In March 2016, Community entered into an
Association    Management       Agreement      (Agreement)      with   the    Colony
Homeowner’s Association, Inc. (the Colony). The Agreement provides that
Community is authorized to act on behalf of the Colony in all matters affecting
the management of its homeowner’s association. The Agreement sets forth
sixteen different management, community, and enforcement services that
Community provides the Colony, including “Collection Services.”
      Jonathan Raburn is a member of the Colony.              As a member, he is
required to pay monthly assessments. Raburn refused to pay some of the
assessments. He claims that he stopped paying the assessments because the
service for which he was billed—lawn maintenance—was not being performed.
In March 2017, Community sent Raburn a letter advising him of the debt he
allegedly owed. The letter provided that the Colony, through its agent, might
place a lien on his property due to his non-payment. In May and June 2017,
Community sent substantially similar letters to Raburn.
      In response, Raburn sued Community alleging various violations of the
Fair Debt Collection Practices Act (FDCPA). Community moved for summary
judgment, arguing that the FDCPA is not applicable because Community is
not a debt collector. The district court agreed and granted summary judgment
in Community’s favor. 1 Raburn appeals.
                                         II
      “The FDCPA makes it unlawful for debt collectors to use abusive tactics
while collecting debts for others.” 2 A “debt collector” is “any person who uses

      1  Raburn v. Wiener, Weiss & Madison, No. 17-155-JWD-RLB, 2018 WL 2107188, at *6
(M.D. La. May 7, 2018).
       2 Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985).

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any instrumentality of interstate commerce or the mails in any business the
principal purpose of which is the collection of any debts, or who regularly
collects or attempts to collect, directly or indirectly, debts owed or due or
asserted to be owed or due another.” 3        Section 1692a(6)(F) excludes the
following from debt collector status:
      any person collecting or attempting to collect any debt owed or due
      or asserted to be owed or due another to the extent such activity
      (i) is incidental to a bona fide fiduciary obligation or a bona fide
      escrow arrangement; (ii) concerns a debt which was originated by
      such person; (iii) concerns a debt which was not in default at the
      time it was obtained by such person; or (iv) concerns a debt
      obtained by such person as a secured party in a commercial credit
      transaction involving the creditor. 4
      The district court granted summary judgment, holding that Community
is not a debt collector because it falls under § 1692a(6)(F)’s exclusion for a
person collecting a debt incidental to a bona fide fiduciary obligation. 5 “We
review a grant of summary judgment de novo, applying the same standard as
the district court.” 6 Summary judgment is appropriate only “if the movant
shows that there is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.” 7
                                         A
      Under § 1692a(6)(F)(i), the exclusion at issue in this case, a person is not
a debt collector if (1) the person has a bona fide fiduciary obligation, and (2) its
debt collection is incidental to that fiduciary obligation. 8 Raburn attempts to
add a third requirement—that the debt must not be in default when the

      3 15 U.S.C. § 1692a(6).
      4 Id. § 1692a(6)(F).
      5 Raburn, 2018 WL 2107188, at *6.
      6 Haverda v. Hays County, 723 F.3d 586, 591 (5th Cir. 2013) (citing Vaughn v.

Woodforest Bank, 665 F.3d 632, 635 (5th Cir. 2011)).
      7 Id. (quoting FED. R. CIV. P. 56(a)).
      8 15 U.S.C. § 1692a(6)(F)(i).

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fiduciary obligation is created. He argues that “if the debt is in default when
the debt is assigned, the entity that receives and attempts to collect it[]
becomes a debt collector subject to liability of the FDCPA.”
      Raburn relies on Perry v. Stewart Title Co., in which we stated that “[t]he
legislative history of section 1692a(6) indicates conclusively that a debt
collector does not include the consumer’s creditors, a mortgage servicing
company, or an assignee of a debt, as long as the debt was not in default at the
time it was assigned.” 9 Perry was considering the effect of § 1692a(6)(F)(iii)’s
exclusion, 10 which states that a person collecting a debt for another is not a
debt collector if the collection activity “concerns a debt which was not in default
at the time it was obtained by such person.” 11 Here, the district court relied
on § 1692a(6)(F)(i)’s exclusion, 12 so Perry is not applicable. Community need
not meet each of § 1692a(6)(F)’s subsections to be excluded from debt collector
status. Community can be excluded because of a bona fide fiduciary obligation
“or” because the debt was not in default when Community obtained it. 13
      That Community entered into the Agreement after Raburn defaulted on
his debt is of no consequence so long as Community shows its debt collection
activity is incidental to a bona fide fiduciary obligation. We agree with the
district court that Community met its burden.
                                        1
      Community has a bona fide fiduciary obligation to collect debt. The
Agreement provides that Community will perform collection activities for past
due assessments. The Agreement also provides that Community is authorized

      9 756 F.2d 1197, 1208 (5th Cir. 1985).
      10 See id.
      11 15 U.S.C. § 1692a(6)(F)(iii).
      12 Raburn v. Wiener, Weiss & Madison, No. 17-155-JWD-RLB, 2018 WL 2107188, at

*4 (M.D. La. May 7, 2018).
      13 15 U.S.C. § 1692a(6)(F).

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to act on behalf of the Colony in all matters affecting the management of its
homeowner’s association. Under Louisiana law, which governs, the Agreement
is a mandate—“a contract by which a person, the principal, confers authority
on another person, the mandatary, to transact one or more affairs for the
principal.” 14 In a mandate, “[t]he mandatary is bound to fulfill with prudence
and diligence the mandate he has accepted.” 15 “Therefore, it follows that a
mandatary owes fiduciary duties to the principal.” 16               Community had a
fiduciary obligation to collect past due assessments.
       Raburn does not argue that Community does not have a fiduciary duty
to collect payments but instead argues that Community does not have a duty
to collect debts that were already in default when the Agreement was made.
Raburn solely relies on Sanz v. Fernandez, 17 an out-of-circuit district court
case. The district court in Sanz was ruling on a motion to dismiss and thus
accepted the plaintiff’s alleged facts as true. 18 The plaintiff did not allege that
defendants owed a fiduciary obligation to the plaintiff, so the court held that
§ 1692a(6)(F)(i)’s fiduciary duty exclusion did not apply. 19                 Here, the
Agreement establishes a fiduciary duty and provides that Community will
perform collection activities for past due assessments, regardless of when they
became delinquent.
                                            2
       Although § 1692a(6)(F)(i) does not impose a requirement that a debt be
incurred after the bona fide fiduciary obligation is created, the collection must

       14 D & J Tire, Inc. v. Hercules Tire & Rubber Co., 598 F.3d 200, 207 (5th Cir. 2010)
(quoting LA. CIV. CODE ANN. art. 2989).
       15 Id. (quoting LA. CIV. CODE ANN. art. 3001).
       16 Id. (citations omitted).
       17 633 F. Supp. 2d 1356 (S.D. Fla. 2009).
       18 Id. at 1359.
       19 Id. at 1362.

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be “incidental” to the fiduciary obligation. 20 Several sister courts have held
that debt collection activities are incidental only if they are not central to, or
the primary purpose of, an entity’s fiduciary obligations. 21                        Here, the
undisputed evidence shows that debt collection was one of Community’s
sixteen obligations. Community provided evidence that its “primary purpose
is not the collection of debts.” Raburn finds that “hard to believe” but failed to
produce any controverting evidence. 22 We agree with the district court that
Community’s debt collection was incidental to its bona fide fiduciary
obligations. As the district court noted, this holding aligns with one sister
court and numerous district courts that have held that property management
companies are not debt collectors because of their fiduciary obligation. 23
                                               B
       Even if one of § 1692a(6)(F)’s exclusions applies, a creditor is still
considered a debt collector if the creditor, “in the process of collecting his own
debts, uses any name other than his own which would indicate that a third
person is collecting or attempting to collect such debts.” 24 Raburn argues that
Community falls under this “false name exception” because it used deceptive
letters under a different name to collect late dues. The district court held that

       20 15 U.S.C. § 1692a(6)(F)(i).
       21 Harris v. Liberty Cmty. Mgmt., Inc., 702 F.3d 1298, 1302 (11th Cir. 2012); Rowe v.
Educ. Credit Mgmt. Corp., 559 F.3d 1028, 1034 (9th Cir. 2009); Wilson v. Draper & Goldberg,
P.L.L.C., 443 F.3d 373, 377-78 (4th Cir. 2006).
       22 Contra FED. R. CIV. P. 56(c) (“A party asserting that a fact . . . is genuinely disputed

must support the assertion by[] citing to particular parts of materials in the record.”).
       23 See Harris, 702 F.3d at 1302; Taylor v. Precision Prop. Mgmt., No. 1:14-cv-75, 2015

WL 1756981, at *10 (W.D. Mich. Apr. 17, 2015); Johnson v. Young, No. 2:06-cv-818, 2007 WL
2177956, at *3 (S.D. Ohio July 27, 2007); Reynolds v. Gables Residential Servs., Inc., 428 F.
Supp. 2d 1260, 1264 (M.D. Fla. 2006); Berndt v. Fairfield Resorts, Inc., 339 F. Supp. 2d 1064,
1068 (W.D. Wis. 2004).
       24 15 U.S.C. § 1692a(6) (emphasis added).

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                                  No. 18-30696
Raburn failed to show that Community was collecting its own debts, rather
than debts owed to the Colony. 25 We agree.
      Raburn primarily relies on Fleming v. Greystar Management Services,
L.P., 26 another out-of-circuit district court case, to argue that property
management companies that send deceptive letters fall under the false name
exception. Raburn’s reliance on Fleming is misplaced. In Fleming, it was
“undisputed that [the alleged debt collector] [was] a first-party creditor with
respect to the [plaintiff].” 27 Even if Fleming was authoritative, it would still
not apply because Community is not a first-party creditor to Raburn. When
Community sent Raburn the collection letter, it was attempting to collect the
Colony’s debt, not its own. Raburn has produced no evidence that he was
indebted to Community.
      Raburn also argues that Community is a creditor because it “stands in
the shoes” of the Colony. That language comes from Johnson v. Young. 28
Johnson held that the defendant, as a property manager, stood in the shoes of
the property owner and thus fell within § 1692(a)(6)(F)’s fiduciary obligation
exclusion. 29 Johnson did not address the false name exception. Further,
§ 1692a does not provide that a fiduciary stands in the shoes of its principal or
inherits the debts of its principal. As the district court noted, “to hold that the
false name exception applies in this case would be to hold that Community
improperly used the Colony’s name in collecting debts ultimately owed to the
Colony.” 30 We agree that Raburn’s debt is owed to the Colony, not Community.

      25 Raburn v. Wiener, Weiss & Madison, No. 17-155-JWD-RLB, 2018 WL 2107188, at
*5 (M.D. La. May 7, 2018).
      26 No. 2:15-CV-00174-SMJ, 2016 WL 4491846 (E.D. Wash. Aug. 25, 2016).
      27 Id. at *1.
      28 No. 2:06-cv-818, 2007 WL 2177956, at *3 (S.D. Ohio July 27, 2007).
      29 Id.
      30 Raburn, 2018 WL 2107188, at *6.

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Thus, Community does not qualify as a creditor collecting its own debt, and
§ 1692(a)(6)(F)’s fiduciary obligation exclusion applies.
                                              III
       Raburn also argues that the district court should have delayed ruling on
summary judgment until discovery was completed. “Courts are authorized
under Rule 56(d) to defer ruling on a summary judgment motion and allow
discovery, but ‘Rule 56 does not require that any discovery take place before
summary judgment can be granted.’” 31 “[D]eferring summary judgment and
ordering discovery is appropriate only if the ‘nonmovant shows by affidavit or
declaration that, for specified reasons, it cannot present facts essential to
justify its opposition.’” 32 We review a district court’s denial of discovery for
abuse of discretion. 33
       Raburn’s response to Community’s summary judgment motion argued
that “[s]ummary [j]udgment is not appropriate when discovery is still
outstanding.” But he never sought relief under Rule 56(d). Thus, he cannot
argue that the district court abused its discretion. 34 Further, even if Raburn
complied with Rule 56(d)’s procedural requirements, he did not adequately “set
forth a plausible basis for believing that specified facts, susceptible of collection
within a reasonable time frame, probably exist and indicate how the emergent

       31   Mendez v. Poitevent, 823 F.3d 326, 336 (5th Cir. 2016) (quoting Baker v. Am.
Airlines, Inc., 430 F.3d 750, 756 (5th Cir. 2005)).
        32 Id. (quoting FED. R. CIV. P. 56(d)).
        33 Id. at 331; see also Baker, 430 F.3d at 753.
        34 See Potter v. Delta Air Lines, Inc., 98 F.3d 881, 887 (5th Cir. 1996) (“If [plaintiff]

needed more discovery in order to defeat summary judgment, it was up to her to move for a
continuance pursuant to rule 56([d]). Because she did not, she is foreclosed from arguing
that she did not have adequate time for discovery.”); Ferrant v. Lowe’s Home Ctrs., Inc., 494
F. App’x 458, 463 (5th Cir. 2012) (per curiam) (“Although [Plaintiff’s] response to . . .
summary judgment . . . stated that ‘[d]iscovery is not complete in this case,’ she never sought
relief under Rule 56(d). As [Plaintiff] did not seek such relief, she cannot argue that the
district court erred in granting summary judgment without allowing for sufficient
discovery.”).
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facts, if adduced, will influence the outcome” of the case. 35                Nor did he
demonstrate that he “diligently pursued discovery” prior to the summary
judgment motion. 36 The district court did not abuse its discretion in granting
summary judgment without allowing further discovery.
                                   *        *         *
      For the foregoing reasons, we AFFIRM the district court’s judgment.

      35 Raby v. Livingston, 600 F.3d 552, 561 (5th Cir. 2010) (citation omitted).
      36McKay v. Novartis Pharm. Corp., 751 F.3d 694, 700 (5th Cir. 2014) (quoting Beattie
v. Madison Cty. Sch. Dist., 254 F.3d 595, 606 (5th Cir. 2001)).
                                            9