Rose v. Asset Acceptance, LLC

FREIDA ROSE, Cross-Complainant and Appellant, v. ASSET ACCEPTANCE, LLC, Cross-Defendant and Respondent.

A129025

COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION THREE

Dated: February 24, 2012

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Alameda County Super. Ct. No. WG 07328408)

Debt collector Asset Acceptance, LLC, (Asset) sued appellant Freida Rose (Rose) for money she allegedly owed to "Pacific Bell Tel/[doing business as] SBC" (SBC) for telephone service. Rose countersued, claiming the telephone bills were not hers and that a statute of limitations had run on any amounts owed to SBC. She sought to certify a class of all California consumers that Asset had pursued to recover debts on telephone bills that were "so poorly documented that their authenticity [could not] be proven" and/or were "so old that they f[e]ll well beyond any pertinent statute of limitations under which they [could] be pursued . . . ." On appeal, Rose challenges the trial court's order denying her motion for class certification and contends the court: (1) improperly decided a merits issue on the class certification motion, specifically, which statute of limitations applies to telephone bill debts; and (2) erred in ruling that a four-year state statute of limitations applies to such debts. We reject the contentions and affirm.

FACTUAL AND PROCEDURAL BACKGROUND

On May 30, 2007, Asset filed a complaint against Rose, alleging she became indebted to SBC in the amount of $2,198.67 "within the last four years" and hadpromised to pay that amount to SBC "for goods, wares and merchandise sold and delivered to [her] and for which [she] promised to pay . . . ." Asset alleged it had purchased Rose's account from SBC and that as current owner of the account, was entitled to collect $2,198.67 plus interest from Rose.

Rose filed a second amended class action cross-complaint against Asset alleging it was engaged in a "business practice of purchasing debts referred to as 'zombie debt' and attempting to collect them" throughout California. The debts were "so old that they f[e]ll well beyond any pertinent statute of limitations under which they [could] be pursued, or [we]re so poorly documented that their authenticity [could not] be proven." She alleged Asset attempted to collect on such debts by, among other things, "filing complaints in court, but failing to document the origination of the debt and typically tak[ing] defaults against the purported debtors on these debts." Rose alleged as to her case that she did not know how the debt originated because she had not opened or become a subject of collection upon any SBC accounts in many years. She suspected it was a debt she disputed over seven years before, or was not her debt at all. Rose brought the action on her own behalf and on behalf of all persons similarly situated—"California consumers who within the last four years were subject to attempts to collect by Cross-Defendants on accounts that have been manipulated to make them appear to be collectable when they were not and whose authenticity is otherwise insufficiently supportable by evidence."

Under her first cause of action for violation of the Rosenthal Fair Debt Collection Practices Act (the Rosenthal Act), Rose alleged Asset "manipulat[ed] accounts and account numbers . . . as an artifice to collect a debt," attempted to collect debts that were past the statute of limitations, and filed complaints after the statute of limitations had passed. Under her second cause of action for breach of contract and breach of the covenant of good faith and fair dealing, Rose alleged Asset altered account numbers or failed to properly track accounts so that the ages of the accounts or the disputes relating to those accounts were inaccurate. Under her third cause of action for unfair business practices, she alleged Asset's conduct constituted unfair competition "in that [respondent] unlawfully, and in a deceptive manner, . . . violated [the Act] . . . ."

Under her fourth cause of action for violation of the California Consumer Legal Remedies Act (CLRA), Rose alleged Asset engaged in unfair, deceptive and unconscionable practices by representing that: (1) "goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities, which they do not have"; (2) "goods or services are of a particular standard, quality, or grade, if they are of another"; and (3) "a transaction confers or involves right, remedies, or obligations which it does not have or involve, or which are prohibited by law . . . when it manipulat[ed] accounts and account numbers to make them appear to be amenable to collection efforts when they [were] not." Under her fifth cause of action, abuse of process, Rose alleged Asset commenced lawsuits "fully knowing it ha[d] no right to bring such proceedings, as the time period for filing such suits ha[d] pas[sed]."

Asset filed a motion for judgment on the pleadings, which the trial court granted in part. The court ruled that Rose "may proceed with the claims under the Rosenthal Fair Debt Collection Practices Act, the contractual duty of good faith and fair dealing, and the UCL." Asset then filed a motion for summary judgment or summary adjudication. The court granted summary adjudication as to some allegations in the first cause of action relating to violations of the Rosenthal Act. It found Rose had presented no evidence in support of her claim that Asset manipulated the account dates to make its claim appear timely when in fact it was not. It found, however, that Rose was allowed to proceed on her allegation that Asset attempted to collect debts that were past the statute of limitations and filed complaints in court after the statute of limitations had passed. The court granted the motion for summary adjudication as to the entire second cause of action for breach of contract or breach of the duty of good faith and fair dealing. It found, as it did as to the first cause of action, that Rose had not presented any evidence in support of her claim that Asset or its predecessor had "manipulated the contractual accounts and account numbers or failed to track the accounts properly." The court granted the motion for summary adjudication as to the allegations in her third cause of action for unfair business practices that were based on manipulation of data and breach of contract. It denied themotion as to her allegations that were based on Asset's act of filing lawsuits that were barred by the statute of limitations.

Rose filed a motion for class certification on December 23, 2009. The trial court denied the motion, finding that because a four year statute of limitations applied to the debts that were at issue, and Rose had presented no evidence of the number of debtors Asset had sued beyond the expiration of the four-year statute, she had not established her burden of establishing numerosity. The court also ruled that a class was ascertainable if the court redefined the class; that common legal issues existed; that Rose was a typical class member; that Rose and her counsel were adequate; and that a class action was not a superior method of resolving Rose's claims. Both parties appealed.

DISCUSSION

Class certification is governed by Code of Civil Procedure section 382, which provides in part: "[W]hen the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court, one or more may sue . . . for the benefit of all." "Class certification requires proof (1) of a sufficiently numerous, ascertainable class, (2) of a well-defined community of interest, and (3) that certification will provide substantial benefits to litigants and the courts, i.e., that proceeding as a class is superior to other methods. [Citations.] In turn, the 'community of interest requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class.' [Citation.]" (Fireside Bank v. Superior Court (2007) 40 Cal.4th 1069, 1089.)

"The decision to certify a class rests squarely within the discretion of the trial court, and we afford that decision great deference on appeal, reversing only for a manifest abuse of discretion: 'Because trial courts are ideally situated to evaluate the efficiencies and practicalities of permitting group action, they are afforded great discretion in granting or denying certification.' [Citation.] A certification order generally will not be disturbed unless (1) it is unsupported by substantial evidence, (2) it rests on improper criteria, or (3) it rests on erroneous legal assumptions." (Id. at p. 1089.) " ' "Any valid pertinentreason stated will be sufficient to uphold the order." ' [Citations.]" (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326-327.)

Rose contends the order denying class certification must be reversed because the trial court improperly decided a merits issue when it determined that a four-year statute of limitations applied to telephone bill debts. She relies on Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429 (Linder), for the proposition that courts are not to decide an action on its merits when determining whether to certify a class. Linder does not support Rose's contention. There, the Supreme Court stated that "the question of certification" is "essentially a procedural one" in which courts "do[] not ask whether an action is legally or factually meritorious." (Id. at pp. 439-440.) However, it also stated, "Nothing we say today is...