James v. Machol & Johannes LLC et al

FILED
U.S. DISTRICT COURT
IN THE UNITED STATES DISTRICT COOR3i RICl OF WYOHil^Q
FOR THE DISTRICT OF WYOMING
Z0nFE8 28 	AM 9: 12
STErHA^^iiAR^iS.CLERK
CASPER
GEORGE JAMES,
Plaintiff,
vs.
MACHOL & JOHANNES, LLC, and
JANAE RUPPERT, individually,
Defendants.
Case No. 2:16-CV-0144-SWS
ORDER GRANTING MOTION FOR SUMMARY JUDGMENT
This 	matter comes before 	the Court on 	Defendants' 	Motion for 	Summary
Judgment 	(ECF 	No. 	15). 	The 	Court, having 	considered the briefs 	and materials
submitted in supportof the motion and Plaintiffs opposition thereto, and being otherwise
fully advised, FINDS and ORDERS as follows:
Undisputed Facts
1. 	Defendant Machol & Johannes, LLC ("Machol") is a collection law firm
based out of Colorado with additional offices located in Washington State, Oregon, New
Mexico, Wyoming, Utah and Oklahoma. 	Machol represents clients in the fields of
collection, bankruptcy, and creditor rights. (Ruppert Aff. ^3.)
2. 	Defendant Machol is a 	debt collector as defined under the Fair Debt
Collection Practices Act ("FDCPA").
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3. 	Defendant Janae E. Ruppert is a licensed attorney in the State of Wyoming
and the State of Colorado employed by Machol. 	Ms. Ruppert is a debt collector as
defined under the FDCPA. Id. ^ 2.
4. 	Machol frequently represents its client, 	Capital One Bank (USA), 	N.A.
("Capital One") in the legal collection of outstanding credit card debts in Wyoming. Id. ^
4.
5. 	Plaintiff, proceeding pro se, is a consumer as defined under the FDCPA.
There have been three civil legal actions brought against Plaintiff by Defendants' client
Capital One. Id. ^ 19.
6. 	On or about February 15, 2016, Capital One placed an account in Plaintiff's
name 	with Machol for legal collections. 	Based on Plaintiff's residence in Laramie
County, Wyoming, the account was assigned to the Wyoming satellite office. Id.\5.
7. 	As required by the FDCPA, on February 16, 2016, Machol sent Plaintiff the
required notice of the debt pursuant to 15 U.S.C. § 1692g, which is commonly referred to
in the collection industry as the initial demand letter. Id. 	6.
8. 	In a letter dated March 7, 2016, Plaintiff responded to Machol requesting
validation of the debt and further stating, "I refuse to pay this debt because of reasons."
Id. ^ 7; ECF No. 16 at 19. Once verification was completed and provided as required by
federal law, collection efforts resumed with no further attempts to communicate with
Plaintiff. Id.n^-9.
9. 	After reviewing Plaintiffs file and documentation provided by Capital One,
Defendant Ruppert submitted a Complaintfor Damages on behalf of Capital One against
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the Plaintiff which was filed in Laramie County Circuit Court, Docket No. CV-2016-
00931 on April 25, 2016. Id. 110.
10. 	Defendants Machol and Ruppert, as litigants filing a civil court proceeding,
are subject to the Servicemembers Civil Relief Act ("SCRA"), 50 U.S.C. App. § 512(b).
The SCRA provides for 	the temporary suspension of judicial proceedings that may
adversely affect the civil rights of personnel on active military duty and reservists who
have received call-up orders (but not yet reported for duty). See id. § 502.
11. 	Capital One 	has 	specific policies which it requires of its 	attorneys in
litigation with regard to the SCRA. As part of its requirements. Capital One prohibits its
attorneys from filing suit against an Active Military Customer or spouse. (Ruppert Aff. f
12.) 	In accordance with Capital One's requirements regarding comphance with the
SCRA, Machol and its attorneys file a "Servicemembers Civil Relief Act Affidavit" once
the suit has been filed indicating that a military verification has been conducted and that
due diligence has been performed, evidencing that the Defendant is not covered under the
Act. Id.lU.
12. 	Accordingly, 	a SCRA 	Affidavit 	was signed on May 5, 	2016 by Ms.
Ruppert and subsequently filed on May 10, 2016 in Laramie County Circuit Court (Case
No. CV-2016-00931), verifying that the Plaintiff is not an active duty servicemember (or
covered by the SCRA), 	Id. ^ 14; ECF No. 16 at 21. 	A copy of the SCRA Affidavit was
served on Plaintiff as the defendant in that action.
13. 	Defendants and their clients have adopted 	policies 	that go beyond the
general requirements of the SCRA. Defendants conduct SCRA checks at multiple stages
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of account placement and as litigation progresses. 	For example, Defendants conduct
SCRA checks when an account is placed for collections with the firm, prior to drafting
the initial complaint, once the legal proceeding has been commenced and a complaint has
been filed, when default judgments are requested by the Court, when other judgments are
requested by the Court (i.e. Judgment on the Pleadings, Summary Judgment, etc.) and
when collection activities continue after judgment. (Ruppert Aff. ^ 18.)
Standard of Review
Summary judgment is appropriate where a movant 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(a) (2010) (emphasis added). 	"A dispute is genuine if there is sufficient
evidence so that a rational trier of fact could resolve the issue either way. 	A fact is
material if under the substantive law it is essential to the proper disposition of the claim."
Crowe V. ADTSec. Servs., Inc., 649 F.3d 1189, 1194 (10th Cir. 2011) (internal quotations
and citations omitted).
In reviewing a motion for summary judgment, the Court is to determine whether
there is evidence to support a party's factual claim, Jarvis v. Potter, 500 F.3d 1113, 1120
(10th 	Cir. 	2007), 	and, 	in 	doing 	so, must 	view 	the 	evidence 	and 	draw 	reasonable
inferences therefrom in a light most favorable to the nonmoving party, E.E.O.C. v. C.R.
England, Inc., 644 F.3d 1028, 1037 (10th Cir. 2011). 	"However, unsupported conclusory
allegations do not create a genuine issue of fact." 	Id. (internal quotations and citations
omitted). 	"[M]ere speculation unsupported by evidence is insufficient to resist summary
judgment." Martinez v. C02 Serv., Inc., 12 F. App'x 689, 695 (10th Cir. 2001) (citations
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omitted). 	"Once the moving 	party has properly supported its motion for summary
judgment, the burden shifts to the nonmoving party to go beyond the pleadings and set
forth specific facts showing that there is a genuine issue for trial." 	Sally Beauty Co. v.
Beautyco, Inc., 304 F.3d 964,971 (10th Cir. 2002).
Discussion
Plaintiffs 	Complaint alleges 	two 	causes 	of action 	against 	Defendants: 	(1)
violation of the FDCPA, specifically 15 U.S.C. § 1692c(c); and (2) violation of "the
Regulations." (Compl. 	31, 36.)
A. 	§ 1692c
The FDCPA provision under which Plaintiff brings his claim provides:
(c) Ceasing communication
If a consumer notifies a debt collector in writing that the consumer refuses
to pay a debt or that the consumer wishes the debt collector to cease further
communication 	with 	the 	consumer, 	the 	debt 	collector 	shall 	not
communicate further with the consumer with respect to such debt, except—
(1) to advise the consumer that the debt collector's further efforts are
being terminated;
(2) to notify the consumer that the debt collector or creditor may
invoke 	specified remedies 	which 	are 	ordinarily invoked by 	such 	debt
collector or creditor; or
(3) where applicable, to notify the consumer that the debt collector
or creditor intends to invoke a specified remedy.
15 U.S.C. 	§ 	1692c (Communication in 	connection with debt collection). 	Plaintiff
contends Ms. Ruppert's May 5, 2016 SCRA Affidavit filed in the state court action
against 	him, 	which 	he 	erroneously 	characterizes 	as 	a 	"letter," 	constitutes 	a
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communication in 	violation of this 	provision because it 	was 	sent after he 	notified
Defendants of his refusal to pay the debt.
The Court fmds the SCRA Affidavit that was filed in the Laramie County Circuit
Court by Defendants was not a communication governed by the FDCPA. 	See McKnight
V. Benitez, 176 F. Supp. 2d 1301, 1308 (M.D. Fla. 2001) ("the term ^communication' as
used in the [FDCPA] does not include a 'legal action' or pleadings or orders connected
therewith"). 	Rather, it was a representation to the court, served upon the opposing party
as required by law,' that the defendant was "not in the Military Service of the United
States 	and 	is 	not 	entitled 	to 	the 	protection 	of the 	Civil 	Relief Act 	of 	1940 	and
Amendments thereto." 	(ECF No. 16 at 21.) 	While the FDCPA applies to litigating
activities of attorneys regularly engaged in consumer-debt collection activity (which may
include service of a pleading), James v. Wadas, 724 F.3d 1312, 1316 (10th Cir. 2013), §
1692c(c) excepts from its application an ordinary court-related filing which invokes a
specific remedy. As the Supreme Court has explained:
We 	agree 	with 	[petitioner 	lawyer] 	that 	it 	would 	be 	odd 	if the 	Act
empowered a debt-owing consumer to stop the "communications" inherent
in an ordinary lawsuit and thereby cause an ordinary debt-collecting lawsuit
to grind to a halt. 	But, it is not necessary to read § 1692c(c) in that way-if
only because that provision has exceptions that permit communications "to
notify the consumer that the debt collector or creditor may invoke" or
"intends to invoke" a "specified remedy" (of a kind "ordinarily invoked by
[the] debt collector or creditor"). §§ 1692c(c)(2), (3). Courts can read these
exceptions, plausibly, to imply that they authorize the actual invocation of
the remedy that the collector "intends to invoke." The language permits
such 	a 	reading, 	for 	an 	ordinary court-related document does, 	in 	fact,
"notify" its recipient that the creditor may "invoke" a judicial remedy.
' Plaintiff asserts the Wyoming Rules of Civil Procedure do not require service on a party in default. See W.R.C.P.
5(a). However, there is nothing in the record to show Plaintiff was in default at the time the SRCA Affidavit was
filed, which was only 15 days after filing of the Complaint for Damages. {See Ruppert Aff. ^ 	10, 14.)
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Moreover, 	the 	interpretation 	is 	consistent 	with 	the 	statute's 	apparent
objective 	of 	preserving 	creditors' 	judicial 	remedies. 	We 	need 	not
authoritatively 	interpret 	the 	Act's 	conduct-regulating 	provisions 	now,
however. Rather, we rest our 	conclusions upon the fact that it is easier to
read § 1692c(c) as containing some such additional, implicit, exception
than to believe that Congress intended, silently and implicitly, to create a
far broader exception, for all litigating attorneys, from the Act itself.
Heintz v. Jenkins, 514 U.S. 291, 296-97 (1995).
Plaintiff references Ms. Ruppert's inclusion in the SCRA Affidavit that Capital
One was seeking "to induce the Court to enter a Default Judgment against [Mr. James],"
insisting 	this 	was 	a 	"tactic 	being 	used 	to 	try 	and 	solicit 	payment" 	and 	thus 	a
communication in violation of the FDCPA. 	(Compl. 	31.) 	The Affidavit was a court
filing in a pending action establishing that Plaintiff is not subject to the protections of the
SCRA. 	Accordingly, this filing was not a "communication with the consumer" (see §
1692c(c)), but rather a representation to the court. 	Even so, the Affidavit can be fairly
characterized as notice to Plaintiff that Capital One intended to "invoke a specified
remedy" - default judgment. See § 1692c(c)(3). In that regard, the filing of the Affidavit
was consistent with, and required by, federal law and Capital One's policies. 	See 50
U.S.C. § 521(b) ("In any action or proceeding [in which the defendant does not make an
appearance], 	the 	court, before entering judgment for 	the plaintiff, shall require the
plaintiff to file with the court an affidavit . . . stating whether or not the defendant is in
military service and showing necessary facts to support the affidavit.") 	Further, Plaintiff
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has not shown that the contents of the Affidavit are in any way misleading or unfair and
unconscionable.^
B. 	Wyoming Collection Agency Act
Plaintiff alleges 	a 	"per se 	violation" 	of "the Regulations." 	(Compl. ^ 	36.)
Plaintiffs claim is apparently brought under the 	Wyoming Collection Agency Act,
Chapter 4, Section 6 of the Rules and Regulations of the Collection Agency Board, which
Plaintiff asserts creates a state cause of action and private right of action for damages for
conduct that violates the provisions of the FDCPA. 	{See Compl. at 1.) 	As discussed
above, there existing no violations of the FDCPA, Defendants are likewise entitled to
summary judgment on Plaintiffs claim under the Wyoming Act.
C. 	Attorney Fees and Costs
Defendants request attorney's fees and costs pursuant to 15 U.S.C. § 1692k(a)(3)
which provides: 	"On a finding by the court that an action under this section was brought
in bad faith and for the purpose of harassment, the court may award to the defendant
attorney's fees reasonable in relation to the work expended and costs." 	Based on the
circumstances and history of this case, the Court so finds.
The account that forms the basis for the lawsuit (and Laramie County Circuit
Court Case No. CV-2016-0931) is the third account that Plaintiff had with Capital One
that was placed for legal collections with Defendants. 	(Ruppert Aff. ^19.) 	The other
two accounts were also filed in Laramie County Circuit Court for collection towards the
^Although not specifically alleged in his Complaint, Plaintiffs opposition brief argues the Affidavit is false and
misleading in violation of 15 U.S.C. § 1692e, and unfair and unconscionable in violation of § 1692f.
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end of 2015. Id. ^ 20. Capital One filed Motions for Summary Judgment in both cases
and the hearing was scheduled and held in Laramie County Circuit Court on June 6,
2016. Id. Plaintiff (who was the defendant in the state court cases) failed to appear at the
motions hearing and judgment was entered. Id. 	On the same date, June 6, 2016, Plaintiff
filed the present action before this Court.^
During the litigation of these two matters, Plaintiff sent several inappropriate e-
mails to Defendant Ruppert. (ECF No. 16 at 23-29.) Defendant Ruppert did not respond
to any of these e-mails. 	Plaintiffs e-mail to Ms. Ruppert dated January 4, 2016 was sent
after a hearing where Plaintiffs request to compel arbitration was denied. (Ruppert Aff.
^21.) In that e-mail, Plaintiff threatens "[y]ou should get rid of me because all I'm going
to do is cause you problems and headaches." 	(ECF No. 16 at 23.) 	Plaintiff followed that
communication with a series of harassing and inappropriate e-mails regarding matters
such as Ms. Ruppert's physical appearance and repeated requests to meet socially.
The record supports a finding that this lawsuit was filed by Plaintiff in an attempt
to avoid potential liability on the underlying debts, to retaliate against the Defendants for
obtaining judgments in the two earlier cases, and to further harass Defendants. The Court
acknowledges one of the main purposes of the FDCPA is "to eliminate abusive debt
collection practices." See 15 U.S.C. § 1692(e). However, courts have also become more
cognizant of the potential misuse of the FDCPA by consumers, especially in light of the
bargaining power it can create with the consumer's potential liability.
^Curiously, two editorial errors in the Plaintiffs Complaint suggest he may have simply copied allegations from an
earlier complaint filed on behalf of a relative. See Compl. ^ 33 ("James never communicated a clear waiver of her
cease communication order.") (emphasis added); Compl. at 8 ("Plaintiff, Rachel James hereby demands a trial by
jury") (emphasis added).
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As a district court in the Second Circuit recently noted "[t]he interaction of
the least sophisticated consumer standard with the presumption that the
FDCPA imposes strict liability has 	led to a proliferation of litigation."
Jacobson, 434 F.Supp.2d at 138. The court in Jacobson continued:
Ironically, it appears 	that 	it is 	often 	the 	extremely sophisticated
consumer who takes advantage of the civil liability scheme defined
by this statute, not the individual who has been threatened or misled.
The cottage industry that has emerged does not bring suits to remedy
the "widespread and serious national problem" of abuse that the
Senate observed in 	adopting the 	legislation, 	1977 U.S.C.C.A.N.
1695, 	1696, 	nor 	to 	ferret 	out 	collection 	abuse 	in 	the 	form 	of
"obscene or profane language, threats of violence, telephone calls at
unreasonable hours, misrepresentation of a consumer's legal rights,
disclosing a consumer's personal affairs to friends, neighbors, or an
employer, obtaining information about a consumer through false
pretense, 	impersonating 	public 	officials 	and 	attorneys, 	and
simulating legal process." 	Id. Rather, the inescapable inference is
that 	the judicially developed 	standards have enabled a class of
professional plaintiffs....
It 	is 	interesting 	to 	contemplate 	the 	genesis 	of these 	suits. 	The
hypothetical Mr. Least Sophisticated Consumer ("LSC") makes a $
400 	purchase. 	His 	debt 	remains 	unpaid 	and 	undisputed. 	He
eventually receives a collection letter requesting payment of the debt
which he rightfully owes. Mr. LSC, upon receiving a debt collection
letter 	that 	contains 	some 	minute 	variation 	from 	the 	statute's
requirements, immediately exclaims "This clearly runs afoul of the
FDCPA!" and-rather than simply pay what he owes-repairs to his
lawyer's office to vindicate a perceived "wrong." "[T]here comes a
point where this Court should not be ignorant as judges of what we
know as men." Watts v. State oflnd., 338 U.S. 49, 52, 69 S.Ct. 1347,
1349, 93 L.Ed. 1801 (1949).
Id. 	at 	138-39 	(emphasis 	added). 	We 	echo 	Jacobson's 	sentiments 	and
concerns. 	Lamar fits the description of Jacobson*s hypothetical consumer
to 	a 	tee, 	and 	we 	will 	not 	"countenance 	lawsuits 	based 	on 	frivolous
misinterpretations or nonsensical assertions of being led astray."
Fed. Home Loan Mortg. Corp. v. Lamar, 503 F.3d 504, 513-14 (6th Cir. 2007).
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Defendants have provided several inappropriate and harassing e-mails from the
Plaintiff to Defendant Ruppert, the first expressing Plaintiffs intent to cause "problems
and headaches" for Defendants if they pursued the collection action. 	The evidence
further shows that on the date Defendants obtain two judgments against Plaintiff in state
court. Plaintiff, in retaliation, filed this lawsuit. 	These facts weighed together with the
lack of merit in Plaintiffs allegation of an FDCPA violation clearly shows that Plaintiff
has acted in bad faith in pursuing this matter and for the purpose of harassment.
Conclusion
For the reasons discussed above. Defendants are entitled to judgment as a matter
of law. 	Defendants 	are 	further entitled to 	an 	award of attorney's fees 	and 	costs.
THEREFORE, it is hereby
ORDERED that Defendants' Motion for Summary Judgment (ECF No. 	15) is
GRANTED; it is further
ORDERED that Defendants shall, within fourteen (14) days after entry of the
final judgment in this matter, to file a Bill of Costs and separate request for a specified
amount of attorney's fees, 	supported by detailed and contemporaneous time records,
affidavits and other evidence showing the amount of time spent on the case, the hourly
fee claimed by the attorney and the hourly fee usually charged by the attorney, if this
differs from the amount claimed in the case. Plaintiff shall file any objections to the costs
or fee request, supported by affidavits or other evidence, within fourteen (14) days after
the filing of the Bill of Costs and request for attorney's fees.
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Failure to timely file the request for or an objection to the request shall constitute a
waiver thereof unless the Court grants relief from the waiver upon good cause shown.
Dated this 	day of February, 2017.
Scott W. Skavdahl
United States District Judge
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