Lynch v. Custom Welding & Repair, Inc.

142 F.Supp.3d 814

Keith Lynch, Plaintiff,

v.Custom Welding & Repair, Inc., et al., Defendants.

No. C14–4072–LTS

United States District Court, N.D. Iowa, Western Division.

Signed November 6, 2015

JD Haas, JD Haas & Associates, PLLC, Bloomington, MN, for Plaintiff.

Matthew Grant Sease, Kemp & Sease, Des Moines, IA, for Defendants.

ORDER ON CROSS–MOTIONS FOR SUMMARY JUDGMENT

LEONARD T. STRAND, UNITED STATES MAGISTRATE JUDGE

I. INTRODUCTION

This case is before me on cross-motions (Doc. Nos.13, 14) for summary judgment. Both motions are resisted (Doc. Nos.15, 16) and defendants have filed a reply (Doc. No. 17) in support of their motion. While defendants have requested oral argument, the issues have been thoroughly briefed such that I do not find oral argument to be necessary. See N.D. Ia. L.R. 7(c). Both motions are fully submitted and ready for decision.

II. PROCEDURAL HISTORY

Plaintiff Keith Lynch (Lynch) commenced this action on September 2, 2014, by filing a twenty-one complaint (Doc. No. 2) against defendants Custom Welding & Repair, Inc. (Custom), and Randal G. Sease d/b/a Sease Law Firm (Sease). Counts I through VII of the complaint assert that Sease, while attempting to collect a debt allegedly owed by Lynch to Custom, committed various violations of the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692, et seq. Counts VIII through XIV allege that Sease's conduct also violated the Iowa Debt Collection Practices Act (IDCPA), Iowa Code § 537.7101, et seq . Finally, Counts XV through XXI describe various alleged violations of the IDCPA by Custom. Defendants filed an answer (Doc. No. 4) on November 3, 2014, denying liability with regard to all counts.

This case was referred to me (Doc. No. 8) on January 12, 2015, after the parties unanimously consented to trial, disposition and judgment by a United States Magistrate Judge pursuant to 28 U.S.C. § 636(c). Discovery is closed and trial is scheduled to begin January 25, 2016. See Doc. No. 9.

III. UNDISPUTED FACTS

The following facts are undisputed for purposes of both motions:

On or about July 15, 2013, Lynch consulted Custom, a welding shop in Everly, Iowa, to repair a gearbox owned by Lynch. This was the first time Custom had performed services for Lynch. At the completion of the project on July 31, 2013, Lynch paid Custom $500. A dispute arose as to whether a balance remained. As a result of this dispute, Custom retained possession of the gearbox. After the initial payment from Lynch, Custom continued to seek additional payments and sent Lynch invoices that included finance charges. Custom sent Lynch a final invoice for $606.31 on April 30, 2014, indicating that the gearbox would be disposed of unless the balance was paid.

In addition to sending invoices, Custom contacted Sease, who had previously represented Custom with regard to corporate law matters. On April 16, 2014, Sease sent a letter to Lynch that read as follows:

Please be advised that your outstanding account with Custom Welding & Repair has been forwarded to my office for collection. In that regard, please find a current billing showing an outstanding account of $606.15.

The purpose of this letter is to make a demand on you in the amount of $606.15 plus $50.00 for attorney fees for a total of $656.15 to be paid to my office within the next 10 days. Failure to make payment within the next 10 days will result in an action filed in the Iowa District Court in and for Clay County.

PLEASE GOVERN YOURSELF ACCORDINGLY.

Doc. No. 13–3 at 34 (emphasis in original). Sease directed no other correspondence to Lynch.

Sease is a sole practitioner who has one employee, a legal secretary. In an affidavit and answers to interrogatories, Sease states that he has practiced law as a small town general trial practitioner for 30 years and has handled over 4,000 matters. He estimates that less than 10 of those matters, representing less than one percent of his business, have related to the collection of money on behalf of another party.

IV. SUMMARY JUDGMENT STANDARDS

Any party may move for summary judgment regarding all or any part of the claims asserted in a case. Fed.R.Civ.P. 56(a). Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

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, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Thus, "the substantive law will identify which facts are material." Id . Facts that are "critical" under the substantive law are material, while facts that are "irrelevant or unnecessary" are not. Id .

An issue of material fact is genuine if it has a real basis in the record, Hartnagel v. Norman, 953 F.2d 394, 395 (8th Cir.1992) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ), or when " ‘a reasonable jury could return a verdict for the nonmoving party’ on the question," Woods v. DaimlerChrysler Corp., 409 F.3d 984, 990 (8th Cir.2005) (quoting Anderson, 477 U.S. at 248, 106 S.Ct. 2505 ). Evidence that only provides "some metaphysical doubt as to the material facts," Matsushita, 475 U.S. at 586, 106 S.Ct. 1348, or evidence that is "merely colorable" or "not significantly probative," Anderson, 477 U.S. at 249–50, 106 S.Ct. 2505, does not make an issue of material fact genuine.

As such, a genuine issue of material fact requires "sufficient evidence supporting the claimed factual dispute" so as to "require a jury or judge to resolve the parties' differing versions of the truth at trial." Anderson, 477 U.S. at 248–49, 106 S.Ct. 2505. The party moving for entry of summary judgment bears "the initial responsibility of informing the court of the basis for its motion and identifying those portions of the record which show a lack of a genuine issue." Hartnagel, 953 F.2d at 395 (citing Celotex, 477 U.S. at 323, 106 S.Ct. 2548 ). Once the moving party has met this burden, the nonmoving party must go beyond the pleadings and by depositions, affidavits, or otherwise, designate specific facts showing that there is a genuine issue for trial. Mosley v. City of Northwoods, 415 F.3d 908, 910 (8th Cir.2005). The nonmovant must show an alleged issue of fact is genuine and material as it relates to the substantive law. If a party fails to make a sufficient showing of an essential element of a claim or defense with respect to which that party has the burden of proof, then the opposing party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 322, 106 S.Ct. 2548.

In determining if a genuine issue of material fact is present, I must view the evidence in the light most favorable to the nonmoving party. Matsushita, 475 U.S. at 587–88, 106 S.Ct. 1348. Further, I must give the nonmoving party the benefit of all reasonable inferences that can be drawn from the facts. Id. However, "because we view the facts in the light most favorable to the nonmoving party, we do not weigh the evidence or attempt to determine the credibility of the witnesses." Kammueller v. Loomis, Fargo & Co., 383 F.3d 779, 784 (8th Cir.2004). Instead, "the court's function is to determine whether a dispute about a material fact is genuine." Quick v. Donaldson Co., Inc., 90 F.3d 1372, 1376–77 (8th Cir.1996).

V. ANALYSIS

A. The Fair Debt Collection Practices Act

In Counts I through VII, Lynch alleges that Sease violated the FDCPA because he acted as a "debt collector" within the meaning of the act and, in that capacity, failed to comply with various FDCPA obligations.¹ Sease argues that he did not violate the act because he does not, as a matter of law, fall within the statutory definition of debt collector.

1. Applicable Law

The FDCPA was designed to "eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." 15 U.S.C. § 1692(e). As a threshold matter, a plaintiff seeking relief under FDCPA must prove that he or she is a "consumer" and that the defendant is a "debt collector" who violated a provision of the statute while attempting to collect a "debt." Scott v. Portfolio Recovery Assocs., LLC, 139 F.Supp.3d 956, 964, 2015 WL 6160003, at *4 (S.D.Iowa Oct. 16, 2015) (citing Mayhall v. Berman & Rabin, P.A., No. 4:13CV0175 AGF, 2014 WL 340215, at *4 (E.D. Mo. Jan. 30, 2014) ); see also Owens v. Hellmuth & Johnson, PLLC, 550 F.Supp.2d 1060, 1065 (D.Minn.2008) (plaintiff must establish defendant is a debt collector).

The FDCPA defines a debt collector 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." 15 U.S.C. § 1692a(6). Thus, the statute establishes two alternative tests for considering whether a defendant is a debt collector: (1) the "principal purpose" test, which applies if the defendant "uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts;" and (2) the "regularly collects" test, which applies if the defendant "regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." Id.

The Supreme Court has held that the "regularly collects" test will encompass an attorney if that attorney regularly engages in consumer debt collection efforts, even when those efforts involve litigation. Heintz v....