Court Opinion

ID: 4360000
Source: CourtListenerOpinion
Date Created: 2019-01-18 01:00:22.399175+00
Date Added: 2024-06-11T13:56:04.456953
License: Public Domain

Case: 17-30849      Document: 00514799581         Page: 1    Date Filed: 01/17/2019

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT United States Court of Appeals
                                                   Fifth Circuit

                                                                          FILED
                                                                      January 17, 2019
                                      No. 17-30849
                                                                       Lyle W. Cayce
                                                                            Clerk
NICOLE REYES, individually and as Representative of two classes, the Fair
Debt Collection Practices Act class and the Louisiana usurious class,

               Plaintiff - Appellant

v.

STEEG LAW, L.L.C.; MARGARET V. GLASS,

               Defendants - Appellees

               Appeal from the United States District Court for the
                          Eastern District of Louisiana
                            USDC No. 2:12-CV-2043

Before JONES, CLEMENT, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
       The plaintiff appeals from the district court’s grant of summary
judgment to the defendant law firm and decertifying a class of plaintiffs under
the Fair Debt Collection Practices Act. Her primary argument is that the
defendant is a “debt collector” for the purposes of the Fair Debt Collection
Practices Act. We disagree and 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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: 17-30849    Document: 00514799581     Page: 2    Date Filed: 01/17/2019

                                 No. 17-30849
                      FACTS AND PROCEDURAL HISTORY
      Nicole Reyes filed a class action lawsuit against Steeg Law and one of its
associates, Margaret Glass. She alleged repeated violations of the Fair Debt
Collection Practices Act (“FDCPA” or “the Act”). 15 U.S.C. §§ 1692-1692p.
Steeg Law is a law firm in New Orleans that has a specialty practice in real
estate and condominium law.            Steeg Law’s clients include several
condominium associations, including Julia Place Condominiums, where Reyes
owned a unit.
      The parties agree that Steeg Law is not primarily engaged in debt
collection activity. The firm stated that it provides “commercial litigation,
transactional, and real estate services to . . . condominium association clients,
who on occasion request[] assistance in recording privileges under La.
R.S. § 9:1123.115.” Privileges under Louisiana law are a form of security.
Before recording a privilege, Steeg Law’s practice is to transmit lien letters to
unit owners. These letters relate to disputes concerning “unpaid condominium
assessments, violations of the condominium owner declarations, or any other
basis permitting the association to record a privilege.”
      Reyes alleges that the letters Steeg Law sent to her and others who
belong to condominium associations represented by Steeg Law constitute facial
violations of the FDCPA. That is because Steeg Law’s standard form letter
demands payment within seven days, rather than the thirty days the Act
provides.   See 15 U.S.C. § 1692g.    Further, Reyes alleges that Steeg Law
“regularly makes demand for amounts that are not ‘expressly authorized by
the agreement creating the debt or permitted by law’. . . and for amounts that
violate state law” in violation of Section 1692f. Reyes also claims that Steeg
Law violated the Act as to her because it continued to communicate directly
with her even after learning she had legal representation with respect to this
matter. See id. § 1692c(a)(2).
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                                  No. 17-30849
      After initial discovery, the district court certified a class of condominium
owners for the purposes of claims under the FDCPA. The class was defined as
“individuals who received lien letters from Steeg Law in the year preceding the
filing of the complaint.” As the case progressed through discovery and pretrial
motions, its scope narrowed as Steeg Law successfully sought dismissal of
some members of the FDCPA class and additional defendants reached
settlement agreements with Reyes.
      The district court ordered the parties to inform the court which of the
pending motions were mooted by the settlements and “whether, in light of the
recent settlement, there [was] a proposed class that satisfie[d] Rule 23(a)-(b) of
the Federal Rules of Civil Procedure.”
      After receiving the requested briefing, the district court decertified the
FDCPA class. The next day, the court granted summary judgment to Steeg
Law, holding that it did not qualify as a debt collector for the purposes of the
Act because it was not “regularly” engaged in debt collection activity. Reyes
timely appealed.

                                 DISCUSSION
      “We review a grant of summary judgment de novo, applying the same
standard that the district court applied.” Smith v. Reg’l Transit Auth., 827
F.3d 412, 417 (5th Cir. 2016). Summary judgment is appropriate if “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(a). A material fact is one “that
might affect the outcome of the suit under the governing law.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute regarding a material
fact is genuine when “the evidence is such that a reasonable jury could return
a verdict for the nonmoving party.” Id. “The court must view the evidence
introduced and all factual inferences from the evidence in the light most
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                                  No. 17-30849
favorable to the party opposing summary judgment.” Hightower v. Tex. Hosp.
Ass’n, 65 F.3d 443, 447 (5th Cir. 1995). “A party opposing summary judgment
may not,” however, “rest on mere conclusory allegations or denials in its
pleadings” to avoid an adverse ruling. Id.
      The FDCPA imposes civil liability on “debt collectors” for certain
prohibited debt collection practices. 15 U.S.C. §§ 1692-1692p. It regulates
interactions between a debtor and a debt collector, the latter being defined as
“any person who uses 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.” Id. § 1692a(6). “Attorneys
qualify as debt collectors for purposes of the FDCPA when they regularly
engage in consumer debt collection, including but not limited to litigation on
behalf of a creditor client.” Mahmoud v. De Moss Owners Ass’n, Inc., 865 F.3d
322, 330 (5th Cir. 2017).
      As a panel of this court previously acknowledged, this circuit has not
developed a bright-line rule to determine when a law firm is a debt collector
for the purposes of the FDCPA. Hester v. Graham, Bright & Smith, P.C., 289
F. App’x 35, 41 (5th Cir. 2008). We decline to adopt such a standard today and
instead continue to consider a variety of factors. One district court listed
factors we have identified in our caselaw as including
      the number of lawsuits filed and collection letters mailed, the
      percentage of time debt collection activities consume, the share of
      total lawsuits filed that were dedicated to debt collection, the
      number of creditor clients and the length of the firm’s relationship
      with them, the frequency and nature of the non-collection work in
      which the firm engages, and the number of firm attorneys and
      other employees dedicated to debt collection activities.

Kirkpatrick v. Dover & Fox, P.C., No. 4:13-cv-00123, 2013 WL 5723077, at *5
(S.D. Tex. Oct. 21, 2013) (collecting cases).
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                                  No. 17-30849
      Reyes emphasizes that we have previously held that an attorney “who,
during a single nine-month period, attempts to collect debts owed another by
639 different individuals ‘regularly’ attempts to collect debts owed another,
and thus is a debt collector under [Section] 1692a(6),” although the debt
collection work for that client constituted 0.5% of his practice during that nine-
month period. Garrett v. Derbes, 110 F.3d 317, 318 (5th Cir. 1997).
      We resolve these issues on a case-by-case basis for a reason. In the cited
precedent, Derbes’s collection activity was “regular” although it constituted a
small percentage of his firm’s overall practice. Labeling the work as “regular”
was a reflection of the nature of Derbes’s practice. Steeg Law, though, sent
only 36 letters (related to 34 liens) in the year before Reyes filed her complaint.
That level of activity pales in comparison to the 639 letters Derbes sent in three
quarters of that time. See id. While it is certainly true that the lien letters
and the negotiations, research, and drafting work associated with each letter
made up more than 0.5% of Steeg Law’s practice during the relevant period,
this work did not represent a large part of the firm’s overall practice.
      During the three years before Reyes filed her complaint, less than 1.3%
of Steeg Law’s overall revenue was “attributable to fees accrued through the
representation of condominium associations in perfecting and enforcing liens
and recovering delinquent balances.” During that same period, all of the work
that Steeg Law attorneys undertook for its condominium association clients
constituted less than 1.5% of the firm’s total billable hours. Even adopting an
expansive definition of “debt collection activity,” that activity constituted less
than 3.5% of that 1.5%. Neither this court’s precedent nor common sense
compel a determination that these circumstances constitute regularly
engaging in debt collection activity. The district court did not err in holding
that Steeg Law is not a debt collector as defined by the Act.

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                               No. 17-30849
     This determination moots Reyes’s argument that the district court erred
in decertifying her FDCPA class.
     AFFIRMED.

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