Le Baron v. Dr. & Merch. Credit, Inc.

547 P.3d 855

2024 UT App 42

Heather LE BARON, Appellant,

v.DOCTORS AND MERCHANTS CREDIT, INC., Appellee.

No. 20210518-CA

Court of Appeals of Utah.

Filed March 28, 2024

Fifth District Court, Cedar City Department, The Honorable Matthew L. Bell, No. 200500113

Daniel M. Baczynski, Draper, Attorney for Appellant

Gregory M. Constantino, West Jordan, Attorney for Appellee

Judge Gregory K. Orme authored this Opinion, in which Senior Judge Russell W. Bench concurred.¹

Justice Jill M. Pohlman concurred in part and dissented in part, with opinion.²

Opinion

ORME, Judge:

¶1 Heather LeBaron challenges the district court’s grant of summary judgment in favor of Doctors and Merchants Credit, Inc. (Doctors), resulting in dismissal of her complaint with prejudice. LeBaron’s complaint alleged that Doctors brought a prior collection action while it was unregistered under the Utah Collection Agency Act (UCAA), see generally Utah Code Ann. §§ 12-1-1 to -11 (LexisNexis 2022), and that its doing so constituted "unfair and deceptive acts and practices" in violation of the federal Fair Debt Collection Practices Act (FDCPA), see 15 U.S.C. §§ 1692–1692p, and the Utah Consumer Sales Practices Act (UCSPA), see Utah Code Ann. §§ 13-11-4 to -23 (LexisNexis 2022).³ The complaint also included multiple state law claims and a request for declaratory judgment and injunctive relief.

¶2 Because our recent decisions in Fell v. Alco Capital Group LLC, 2023 UT App 127, 538 P.3d 1249, cert. denied, No. 20231126, 2024 WL 966976 (Utah Feb. 23, 2024), and Meneses v. Salander Enterprises LLC, 2023 UT App 117, 537 P.3d 643, cert. denied, No. 20231068, 2024 WL 966975 (Utah Jan. 2, 2024), conclusively resolve LeBaron’s UCSPA and other state law claims, we affirm the district court’s decision pertaining to those claims. But FDCPA claims were not presented in Fell or Meneses and so require our consideration in the posture of this appeal. Ultimately, we affirm the court’s decision on this issue as well.

BACKGROUND⁴

Doctors' Collection Case

¶3 LeBaron executed a contract to pay for medical services she received. The debt went unpaid, and the right to payment was assigned to Doctors in 2019. In pursuit of collection, Doctors retained legal counsel, who informed LeBaron via letter that he had been retained to collect the balance owed. The letter further indicated that the "law firm collects debt" and that the letter "is from a debt collector," who could sue to collect the outstanding balance if it remained unpaid. Doctors later acknowledged that during this time and due to its own inadvertence, its UCAA registration had lapsed and it was not then registered with the State of Utah as a debt collection agency under the UCAA.⁵

¶4 Some four months later, in 2020, Doctors served LeBaron with its collection complaint, which it concurrently filed with the district court.⁶ In due course, Doctors moved for the entry of a default judgment, which LeBaron did not resist. Thus, considering the complaint and LeBaron’s choice not to contest it, the district court granted Doctors’ motion and entered a default judgment against LeBaron on April 6, 2020.

LeBaron's Complaint

¶5 A mere three months after entry of the default judgment, and having made no effort to set the default judgment aside, LeBaron filed a complaint against Doctors commencing the current action. The complaint asserted that Doctors pursued its prior collection action "without the legal right or collection agency license to do so" and sought civil remedies based on the FDCPA, the UCSPA, and other state law theories.⁷ Doctors moved for summary judgment, and the district court held a hearing on the motion.

¶6 Both at the hearing and in its motion for summary judgment, Doctors argued, first, that LeBaron’s contention that Doctors had not complied with the UCAA did not establish a private right of action under the UCSPA or support her other state law claims; second, that LeBaron’s FDCPA claim was barred because Doctors’ UCAA violation was innocuous under FDCPA jurisprudence; and finally, that all of LeBaron’s claims should be dismissed under the doctrine of res judicata—specifically the theory of claim preclusion—because LeBaron "could and should have" raised all of her claims as defenses in Doctors’ recently concluded collection case but she chose not to do so.

¶7 The court ruled from the bench, later memorializing its ruling in a written decision and an accompanying order. The court first addressed the UCSPA claim and determined that there were insufficient facts to show that Doctors knowingly or intentionally misled LeBaron regarding its registration status as a collection agency. In its written ruling, the court concluded that a violation of the UCAA, "with nothing more," did not provide a private right of action under the UCSPA or give rise to LeBaron’s other state law claims. Thus, the court dismissed the UCSPA claim and the other state law claims with prejudice.

¶8 Next, the court addressed LeBaron’s FDCPA claim, noting that it struggled to see any "actual injury." The court stated that Doctors’ registration status was "the relevant fact that’s central to [LeBaron’s] claim" and that LeBaron’s FDCPA claim arose when Doctors filed suit in its prior collection case. Following these comments, the court indicated that it was persuaded by Federal District Judge Ted Stewart’s analysis of this issue in McMurray v. Forsythe Financial, LLC, No. 1:20-CV-8 TS, 2021 WL 83265 (D. Utah Jan. 11, 2021), aff'd, No. 21-4014, 2023 WL 5938580 (10th Cir. Sept. 12, 2023), and noted that while the duration of Doctors’ unregistered status may have been an issue of factual dispute, "whether it was six weeks or a year, if they weren’t registered, that fact existed. And that’s really the central fact." The court further noted that LeBaron’s FDCPA claim arose "[a]s soon as" Doctors filed its complaint in its collection case and, thus, LeBaron’s claims in this case should have been raised as claims or defenses in the collection case.

¶9 From the bench, the court concluded that "claim preclusion carries the day here" and dismissed the FDCPA claim along with LeBaron’s other claims. The court’s written decision held that because Doctors’ unregistered status "existed well before" it filed the collection action, "this is not a situation where a claim develops after the initial complaint is filed." Instead, "it was the filing of the complaint in" the collection case "that makes up [LeBaron’s] claims here," and they therefore "could have and should have been brought in the earlier action." The court further held that claim preclusion applied because "successful prosecution of the second action would nullify the initial judgment or would impair rights established in the initial action." Based on these conclusions, the court dismissed LeBaron’s FDCPA claim, along with the rest of her claims, with prejudice.

ISSUE AND STANDARD OF REVIEW

¶10 LeBaron appeals the district court’s summary judgment entered against her. "An appellate court reviews a trial court’s legal conclusions and ultimate grant or denial of summary judgment for correctness and views the facts and all reasonable inferences drawn therefrom in the light most favorable to the nonmoving party." Johnson v. Schnabel, 2023 UT App 102, ¶ 13, 536 P.3d 1147 (quotation simplified).

ANALYSIS

I. The UCSPA Claim

[1] ¶11 As noted, we have recently dealt with this same issue, on the same procedural footing and presented by the same attorneys. See Fell v. Alco Cap. Group LLC, 2023 UT App 127, 538 P.3d 1249, cert. denied, No. 20231126, 2024 WL 966976 (Utah Feb. 23, 2024); Meneses v. Salander Enters. LLC, 2023 UT App 117, 537 P.3d 643, cert. denied, No. 20231068, 2024 WL 966975 (Utah Jan. 2, 2024). Two different panels of this court reached the same conclusion, namely that a UCAA registration violation, without more, is not actionable under the UCSPA and does not give rise to other state law claims. We adopt our prior analysis outlined in those cases and affirm the district court’s ruling in the case at hand with respect to the UCSPA claim and the other state law claims.

II. The FDCPA Claim

[2] ¶12 Unlike the appellants in Fell and Meneses, LeBaron also included in her complaint an FDCPA claim, contending that "[b]y filing debt collection lawsuits without a license, Doctors took action it could not legally take in violation of the FDCPA."⁸ Regard- ing that claim, LeBaron does not argue for some different resolution when considering her claim through the lens of the FDCPA, as opposed to the UCSPA On the contrary, she argues that "[w]here the UCSPA prohibits the exact same conduct as the FDCPA and it is intended to marry federal and state consumer rights," "a deceptive and unconscionable act for purposes of the FDCPA should similarly create a cause of action under the UCSPA" She contends that "both statutes prohibit the same practices within the debt collection context."⁹ Thus, LeBaron’s position in this appeal—and it is the position she asserted below¹⁰—means that, for purposes of this case at least, our decisions in Fell and Meneses necessarily foreclose her FDCPA claim as well as her state claims. She has not preserved for appeal any argument that her FDCPA claim has viability distinct from her UCSPA claim. And on this basis, we affirm the dismissal of her FDCPA claim.

CONCLUSION

¶13 We affirm the district court’s grant of summary judgment in favor of Doctors and against LeBaron.

POHLMAN, Justice (concurring in part and dissenting in part):

¶14 I agree with the majority’s analysis in Part I regarding LeBaron’s state law claims, and I concur in the affirmance of their dismissal. But I respectfully disagree with the majority’s analysis in Part II regarding LeBaron’s claim under the Fair Debt Collection Practices Act (FDCPA). That claim was not dismissed by the district court on its merits; rather, it was dismissed on claim preclusion grounds. In affirming the dismissal of the claim on an alternative...