Serrania v. LPH, Inc.
2015 MT 113
| Mont. | 2015Background
- Serrania received dental treatment in 2009, signed a form agreeing to pay treatment, collection, and legal fees for delinquent balances; DDG referred her $1,112.13 account to collector LPH in 2011.
- LPH sent the statutorily required 30‑day validation notice; Serrania did not dispute the debt within 30 days.
- LPH filed and later pursued collection; Serrania sued LPH and DDG in 2012 alleging FDCPA violations, credit defamation, and MCPA violations; defendants counterclaimed for breach of contract and unjust enrichment.
- The District Court granted summary judgment to LPH on Serrania’s FDCPA claim and to defendants on the contract counterclaim, imposed multiple sanctions against Serrania and her attorney Wallace, and awarded monetary sanctions to LPH and DDG.
- Serrania later obtained a bankruptcy discharge that eliminated collection of the judgments; the FDCPA claim was apparently abandoned by the trustee back to Serrania; Wallace appealed sanctions against him.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Justiciability of appeals | Serrania contends appeals should proceed despite bankruptcy discharge | LPH/ DDG: discharge moots money judgments; only live FDCPA claim remains; Wallace as sanctioned attorney may appeal | Appeal of money judgments is moot due to bankruptcy; FDCPA claim live; Wallace may appeal sanctions against him |
| Whether §1692g dispute requirement bars §1692e suit | Serrania: failure to dispute is not a prerequisite to suing under §1692e | LPH: because Serrania failed to invoke 30‑day validation, she cannot base FDCPA suit on the debt’s alleged invalidity | Court rejects requiring pre‑suit validation as prerequisite to §1692e suit; reversed District Court’s reasoning on that ground |
| Whether LPH misrepresented amount of debt (FDCPA) | Serrania: LPH misrepresented charge types (spouse/child services, interest, NSF fee, collection/attorney fees) | LPH: charges were authorized by contract or Montana law | Court finds disputed items either authorized by Serrania’s contract (collection/legal fees) or permitted by Montana statutes (charges for spouse/child medical necessity, interest, NSF fee); affirms summary judgment for LPH on alternate grounds |
| Whether sanctions against Wallace were an abuse of discretion | Wallace: procedural defects and lack of substantial prejudice; some sanctions unjustified | LPH: Wallace’s conduct warranted sanctions for missed conference, discovery failures, and disrespect/abuse of process | Court affirms most sanctions (missed scheduling conference, discovery sanctions, $10,000 for lack of candor/disrespect); vacates and remands the joint monetary sanctions (approx. $24,797 and $41,113) imposed on Serrania and Wallace because the suit was not entirely frivolous |
Key Cases Cited
- McLaughlin v. Phelan Hallinan & Schmieg, LLP, 756 F.3d 240 (3d Cir. 2014) (a debtor need not invoke §1692g validation before bringing §1692e claims)
- Russell v. Absolute Collection Servs., Inc., 763 F.3d 385 (4th Cir. 2014) (rejecting a pre‑suit validation requirement as inconsistent with FDCPA)
- In re Estate of Bayers, 304 Mont. 296 (Mont. 2001) (attorney may appeal sanctions imposed against him)
- Missoula YMCA v. Bard, 295 Mont. 260 (Mont. 1999) (spouse can be liable for medical expenses of spouse and minor children under Montana law)