United States District Court, W.D. Washington, Seattle
LISA GROCHOWSKI, on behalf of herself and others similarly situated, Plaintiff,
DANIEL N. GORDON, P.C., and MIDLAND FUNDING, LLC, Defendants.
THOMAS S. ZILLY, District Judge.
THIS MATTER comes before the Court on motions for summary judgment brought by defendant Daniel N. Gordon, P.C., docket no. 60, and defendant Midland Funding, LLC, docket no. 57. Having reviewed all papers filed in support of, and in opposition to, each motion, the Court enters the following order.
On July 30, 2010, Capital One Bank (USA), N.A. ("Capital One") "charged off" debt in the amount of $5, 025.54 owed to it by plaintiff Lisa Grochowski, formerly known as Lisa Wallace. Newton Decl. at ¶¶ 5 & 9, Ex. A to Radbil Decl. (docket no. 66-1); see also Complaint at ¶¶ 21-24 (docket no. 1). According to Deborah Newton, Senior Accounting Coordinator for Capital One, a "charge off" occurs when a creditor "is faced with a delinquent loan of such severity that it must absorb the amount of the debt, at least temporarily, in order to clear the balance from its ledger." Newton Decl. at ¶ 5. On the last business day of each month, Capital One systematically "charges off" accounts that have been delinquent for 120 or more days. Id. at ¶ 6. After "charging off" plaintiff's debt, Capital One took a tax deduction for the balance of the debt, and then sold the debt to Equable Ascent Financial; Capital One recognized income from this sale on August 16, 2010. Id. at ¶¶ 14 & 15; see id. at ¶ 17; see also Complaint at ¶ 31 & Ex. A.
Equable Ascent Financial in turn sold the debt to defendant Midland Funding, LLC ("Midland") on May 14, 2012. Minford Dep. at 14:16-15:21, Ex. C to Rivera Decl. (docket no. 58-1). On June 1, 2012, Midland Credit Management, Inc. ("MCM"), which is not a party to this case, sent a notice to plaintiff indicating that Midland had acquired the Capital One debt, stating that the current balance was $5, 025.54, and announcing a payment due date of July 16, 2012. Ex. B to Complaint (docket no. 1-2). The notice advised plaintiff that "[b]ecause of interest, late charges, and other charges that may vary from day to day, the amount due on the day you pay may be greater, " and it provided a telephone number through which plaintiff could obtain an exact payoff amount or further information. Id.
The notice also included the statutorily required warning that "[u]nless you notify MCM within thirty (30) days after receiving this notice that you dispute the validity of the debt, or any portion thereof, MCM will assume this debt to be valid." Id.; see 15 U.S.C. § 1692g(a)(3). In addition, the notice contained the following language mandated by law: "If you notify MCM, in writing, within thirty (30) days after receiving this notice that the debt, or any portion thereof, is disputed, MCM will obtain verification of the debt, " and "[i]f you request, in writing, within thirty (30) days after receiving this notice, MCM will provide you with the name and address of the original creditor." Ex. B to Complaint; see 15 U.S.C. §§ 1692g(a)(4)&(5). MCM sent a reminder notice to plaintiff on July 4, 2012, reciting the same balance and the same payment due date as the initial notice. Ex. C to Complaint (docket no. 1-3). Both notices indicated that the accrued interest was $0.00 and that the interest rate was 0%. Exs. B & C to Complaint. In this lawsuit, plaintiff makes no claim that either notice issued by MCM was deficient or failed in any respect to comply with the requirements of the Fair Debt Collection Practices Act ("FDCPA").
On September 24, 2012, defendant Daniel N. Gordon, P.C. (the "Gordon Firm"), a law firm located in Eugene, Oregon, sent a letter to plaintiff, indicating that it had "been retained with the authority to file a lawsuit" against her, but that "at the time of the writing of this letter, no decision has been made whether or not we will file a lawsuit." Ex. D to Complaint (docket no. 1-4). The letter further stated:
Demand is hereby made upon you for payment in the sum of $6325.85, which sum may include principal and interest. Interest may continue to accrue at the state statutory rate until the balance is paid in full.
Id. The letter made clear that "no attorney has personally reviewed the particular circumstances of your account, " and that the communication "is from a debt collector" and constituted "an attempt to collect a debt." Id.
Plaintiff commenced this putative class action on February 22, 2013. The gravamen of her claims under federal and state law is that Midland had no right to charge interest at the state statutory rate, and that the Gordon Firm's correspondence with her therefore violated various provisions of the FDCPA and was "unfair or deceptive" within the meaning of Washington's Consumer Protection Act ("CPA"). Both defendants move for summary judgment as to the merits of plaintiff's claims concerning the accrual of interest, and Midland further argues that it is not a "debt collector" within the meaning of the FDCPA and is not vicariously liable for the actions of the Gordon Firm. The Court addresses this latter issue first, before discussing the merits of plaintiff's claims.
A. Standard for Summary Judgment
The Court shall grant summary judgment if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A fact is material if it might affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). To survive a motion for summary judgment, the adverse party must present affirmative evidence, which "is to be believed" and from which all "justifiable inferences" are to be favorably drawn. Id. at 255, 257. If ...