Aaron FOX; Toni Fox, husband and wife, Plaintiffs-Appellants, v. CITICORP CREDIT SERVICES, INC., a South Dakota corporation; Jerold Kaplan; Jane Doe Kaplan, husband and wife, Defendants-Appellees.
No. 91-16476
United States Court of Appeals, Ninth Circuit
Argued and Submitted Feb. 4, 1993. Feb. 1, 1994.
15 F.3d 1507
Iolab‘s claim with regard to the relationship between its advertising activities and the Jensen loss does not establish the causal nexus required by Bank of the West. First, under Bank of the West, Iolab would have to show its advertising caused the patent infringement, not the liability. Second, Iolab fails to show that the Jensen loss was caused by its advertising rather than its infringement of Dr. Jensen‘s patent. The fact that Dr. Jensen produced evidence of Iolab‘s extensive advertising activities in response to Iolab‘s attempt to raise a
Accordingly, the Jensen loss was not covered under the policies in question and the grant of the motions to dismiss and summary judgment was appropriate.
CONCLUSION
With respect to the excess insurers, we affirm the district court on the ground that under California law, primary coverage must be exhausted before liability attaches to the excess insurers. Iolab did not exhaust its primary coverage and did not establish that the Jensen loss would ever trigger excess coverage and thus the district court properly dismissed Iolab‘s claim against the excess insurers. With respect to the primary insurers, we affirm the district court on the ground that Iolab‘s infringing activities did not constitute “piracy arising out of advertising activities” and, thus, as a matter of law, Iolab cannot show that the Jensen loss was covered by the insurance policies. Consequently, the district court properly dismissed the claims against or granted summary judgment in favor of each of the primary and excess insurers.
AFFIRMED.
John M. Iurino and Janet Napolitano, Lewis & Roca, Tucson, Arizona, for the defendants-appellees.
Before: FLETCHER, REINHARDT, and NOONAN, Circuit Judges.
REINHARDT, Circuit Judge:
Aaron and Toni Fox appeal the entry of summary judgment in favor of defendants on four claims of violation of the Fair Debt Collection Practices Act (FDCPA),
I. Background
In 1986, the Foxes defaulted on their credit card debt with an unpaid balance of $2300.31. Citibank referred the matter for collection to Citicorp Credit Services (“Citicorp“), which in turn retained attorney Jerold Kaplan. Kaplan, on behalf of Citicorp, filed an action against the Foxes in Maricopa County, Arizona. The Foxes, who reside in Pima County, Arizona, successfully moved to transfer the action. The action was dismissed without prejudice when Citicorp failed to pay a transmittal fee. Citicorp filed another suit in Maricopa County; like the preceding suit, it was transferred to Pima County. Eventually, in June 1989, the parties reached a stipulated judgment under which the Foxes were to pay $100 per month to pay off their debt.
The Foxes missed the initial payments. Ray Jacques, a Citicorp representative, contacted Toni Fox at her place of employment, and requested $400 to bring the payments current. A $400 check sent by the Foxes bounced, and Citicorp again contacted Toni Fox. In November 1989, Jacques informed her that the full balance was due and that Citicorp would proceed with garnishing her wages. Jacques then instructed Kaplan to proceed with garnishment. Kaplan apparently did not immediately do so.
In December 1989, another Citicorp representative, Arlene Marshall, newly assigned to the Fox account, contacted Toni Fox. Marshall indicated that Fox would have to express mail a $100 check within a week, and warned her that future failure to comply with payment arrangements would result in the full balance being due or payments being increased from $100 to $200 per month. The Foxes remitted $100.
The Foxes also sent $100 in January. Nonetheless, Marshall called Toni Fox after the payment was received, and told her that an additional $200 was needed or Citicorp would refer the account for garnishment. The Foxes contend that Toni Fox and Marshall agreed upon a new permanent payment schedule of $200 per month. Marshall then sent a request to Kaplan to proceed with garnishment if Citicorp did not instruct him otherwise by January 30, 1990.1 The Foxes sent the $200. Toni Fox testified at her
Although the Foxes again sent $200 in February—and were thus current in their payments—Kaplan was never contacted by Citicorp. He therefore proceeded with garnishment in February 1990. He sent a letter to Toni Fox indicating his intention to garnish her wages. The Foxes’ attorney, Terry Aron, contacted Kaplan‘s office by telephone. By subsequent letter, Aron confirmed his understanding that no further action would be taken without first contacting him. Kaplan faxed a copy of the letter back to Aron with a handwritten note asking him to fax information about the Foxes’ past payments to Kaplan‘s office. The note also stated that Kaplan would be out of the office until March 5, 1990.
Having received nothing from Aron, Kaplan filed an application for a writ of garnishment in the Maricopa County court on March 5, 1990. The writ issued and was served on Toni Fox‘s employer on March 8, 1990. Aron sent Kaplan letters regarding the Foxes’ payments on March 6 and March 8. On March 8, 1990, realizing the Foxes were current in their payments, Kaplan quashed the writ of garnishment.
The Foxes brought suit against Citicorp and Kaplan under the Fair Debt Collection Practices Act (FDCPA),
II. Violation of FDCPA Venue Provision
Claim one in the Foxes’ complaint alleges that both Citicorp and Kaplan violated the FDCPA by filing the March 1990 application for a writ of garnishment in the Maricopa County Superior Court rather than in Pima County where the Foxes reside.3 The parties agree that a violation of the venue provision may support civil liability. See
... only in the judicial district or similar legal entity—
(A) in which such consumer signed the contract sued upon; or
(B) in which such consumer resides at the commencement of the action.
Nonetheless, the defendants raise several arguments in support of the entry of summary judgment on claim one. Some of these defenses are generally applicable to all FDCPA claims, while others are defenses specific to the venue claim. We address each of these contentions in turn, beginning with the theory adopted by the district court.
A. Exemption for Kaplan‘s “Purely Legal” Activity
Expressing concern that Kaplan may have violated the venue provision, the district court stated in its order that the FDCPA does not reach “a pure legal action.” Of course, as a general matter,
As originally enacted in 1977, the FDCPA specifically excluded from the definition of “debt collector” “any attorney-at-law collecting a debt as an attorney on behalf of and in the name of a client.”
Kaplan relies upon two district court decisions interpreting the legislative history of the 1986 attorney-exemption repeal. See Firemen‘s Ins. Co. v. Keating, 753 F.Supp. 1137, 1141-44 (S.D.N.Y.1990); National Union Fire Ins. Co. v. Hartel, 741 F.Supp. 1139, 1140-41 (S.D.N.Y.1990); see also Green v. Hocking, 792 F.Supp. 1064, 1065-66 (E.D.Mich.1992). These cases conclude that the Congress did not intend to expose to FDCPA liability “those attorneys acting in the role of legal counsel while representing clients.” Keating, 753 F.Supp. at 1142; see also Green, 792 F.Supp. at 1065 (concluding that literal application of “debt collector” definition is at odds with legislative intent). On the basis of this perceived congressional intent, these cases hold that attorneys “engaged in activities only of a purely legal nature” are not “debt collectors” under the FDCPA. Hartel, 741 F.Supp. at 1141.
We decline to adopt this “phantom limb” theory of statutory interpretation—allowing an excised provision to continue to determine the scope of a statute. We are unwilling to assume that the Congress acted contrary to its intentions when it repealed the attorney exemption and enacted no substitute. Like the only other circuit to consider this creative residual attorney-exception, we conclude that it simply does not exist. The plain language of the statute unambiguously precludes any continued doctrine of special treatment for attorneys under the FDCPA. See Scott v. Jones, 964 F.2d 314 (4th Cir.1992).
In short, the attorney exemption is no longer a part of the statute; the fact that it was once a part of the statute does not alter the required approach to statutory construction. Applying our general rules of statutory construction to the FDCPA freed from the repealed limitation, neither the plain language of the Act nor its structure supports any exemption for attorneys’ “purely legal” debt collection activities. See, e.g., Sacramento Regional County Sanitation Dist. v. Reilly, 905 F.2d 1262, 1268 (9th Cir.1990) (plain language is starting point of statutory construction); Seldovia Native Ass‘n v. Lujan, 904 F.2d 1335, 1341 (9th Cir.1990) (to determine plain meaning court must look to language and design of statute as whole). There is simply no mention of attorneys in the current definition of “debt collector” or its exceptions; nor is there any distinction drawn between legal and non-legal activities. Nothing currently in the text of the FDCPA hints at the conspicuous solicitude for the legal profession that Kaplan proposes.
Looking to the legislative history of the 1986 repeal, we do not find the clearly-expressed contrary intention necessary to overcome “the strong presumption that Congress expresses its intent through the language it chooses.” INS v. Cardoza-Fonseca, 480 U.S. 421, 432 n. 12, 107 S.Ct. 1207, 1214 n. 12, 94 L.Ed.2d 434 (1987). The district court decisions cited by Kaplan rely primarily upon an individual legislator‘s statements that the repeal would not interfere with the practice of law. See Keating, 753 F.Supp. at 1142-43; Hartel, 741 F.Supp. at 1141. These isolated statements, however, cannot reintroduce what the Congress has eliminated; if the
Indeed, other portions of the legislative history make it clear that Congress intended “purely legal” activities of attorneys who fall within the definition of “debt collector” to be subject to the FDCPA. Specifically, Kaplan‘s proposed exemption would effectively immunize attorneys from liability under the venue provision, which solely applies to legal actions; however, the Congress intended “that attorneys in the business of collecting debts be subject to all provisions of the Act, if they meet the definition of debt collector.” House Report 405, at 3, 1986 U.S.C.C.A.N. at 1754. Moreover, in describing the need for repeal of the attorney exemption, the House Committee excerpted, as an example of attorneys’ unfair competitive advantage over lay collectors, an advertisement by a lawyer emphasizing his ability, as a result of his exemption from the venue provision, to file suits in courts more convenient for the creditor. See House Report 405, at 5. The committee‘s interest in eliminating the type of unfair competition exemplified by this advertisement is inconsistent with the residual exemption urged by Kaplan.
Of somewhat more concern than the equivocal legislative history of the 1986 FDCPA amendment is commentary issued by the Federal Trade Commission (FTC) concluding that attorneys “that engage in traditional debt collection activities (sending dunning letters, making collection calls to consumers) are covered by the FDCPA, but those whose practice is limited to legal activities are not covered.” 53 Fed.Reg. 50,097, 50,100 (1988). Initially, we note that this commentary supports the exemption adopted by the trial court only obliquely. There is a distinction between the contention that any attorney is exempt from FDCPA liability for a “purely legal” act and the contention that an attorney is exempt from all FDCPA liability only if he never engages in any acts other than “purely legal” actions. We address the former, which is the argument made by Kaplan and accepted by the district court, while the FTC commentary seems to endorse the latter. Kaplan did not contend nor present evidence that he never engages in debt collection activities that are not “purely legal.”4 Nonetheless, even if the FTC commentary offers some support for Kaplan‘s contention, we join the Fourth Circuit in declining to adopt the position in the FTC commentary because it conflicts with the plain language of the statute. See Scott, 964 F.2d at 317.
We thus reject the district court‘s conclusion that Kaplan is not covered by the FDCPA because the filing of an application for a writ of garnishment is a “pure legal action.” Attorneys, like all other persons, are subject to the definition of “debt collector” in
The defendants argue that no FDCPA claims based on the application for a writ of garnishment can survive because their actions fall under the Act‘s “bona fide error” exception.
Citicorp argues that the application for a writ of garnishment would not even have been filed had Pat Sanchez, the Citicorp agent assigned to the Fox account after Marshall, been aware that Marshall had instructed Kaplan to proceed with garnishment if not notified otherwise by January 31, 1990. Sanchez succeeded Marshall as the agent assigned to the Foxes when Citicorp transferred all Arizona accounts from its San Mateo, California office to its Albuquerque office. Citicorp contends that Sanchez was not aware of Marshall‘s instruction to Kaplan because the computerized account notes did not indicate the instruction, and because the arrival of the hard-copy account file was delayed during the February 1990 transfer of accounts from San Mateo to Albuquerque. But for this inadvertent delay, according to Citicorp, Sanchez would have cancelled the garnishment once she determined that the Foxes were making payments.
The language of
C. In-House Collector Exemption
Citicorp argues that, as an in-house collector, it is not a “debt collector” under the FDCPA. Under
Citicorp did not raise the in-house collector exemption issue in moving for summary judgment, and the district court did not consider it. Moreover, determining whether
D. Other Defenses to Venue Provision Violation
Citicorp and Kaplan make three additional arguments in support of the entry of summary judgment on claim one. The defendants raise each of these arguments for the first time on appeal. Nonetheless, because each contention raises a pure issue of law, we consider them in deciding whether to affirm summary judgment. See Jovanovich v. United States, 813 F.2d 1035, 1037 (9th Cir.1987) (exceptions to general rule against considering issues for first time on appeal).
1. Enforcement-Action Exemption from Venue Provision
First, Citicorp contends that the application for a writ of garnishment, as an action in enforcement of a previously-obtained judgment, does not fall within the venue provision. By its terms,
The plain meaning of the term “legal action” encompasses all judicial proceedings, including those in enforcement of a previously-adjudicated right. Cf. S & M Investment Co. v. Tahoe Regional Planning Authority, 911 F.2d 324, 326-27 (9th Cir.1990) (construing term “legal action” as used in interstate compact), cert. denied, 498 U.S. 1087, 111 S.Ct. 963, 112 L.Ed.2d 1050 (1991). Because “debt” includes obligations reduced to judgment, any judicial proceeding relating to such a judgment constitutes a “legal action on a debt.”
Moreover, the purpose of the venue provision supports our rejection of an enforcement-action exception. In enacting the provision, Congress was concerned about consumers having to defend against suits in “distant or inconvenient” courts. S.Rep. No. 382, 95th Cong., 1st Sess. 5 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1699. Consumers face similar burdens in defending against enforcement actions. Here, for example, had the writ not been quashed, the Foxes would have had to move for its quashing or defend against the amount of garnishment in a distant court. We find no indication that Congress intended to exclude enforcement actions, entailing the same concerns as initial adjudications, from the venue provision. Accordingly, we conclude that such actions are subject to
2. Separate Judicial Districts
Second, the defendants argue that Maricopa County and Pima County are not separate “judicial districts“; therefore, filing the application in the former rather than in the latter establishes no venue violation.
Nonetheless, as with the “pure legal action” exemption issue, we conclude that the plain language of the statute compels our decision.
Third, Citicorp contends that it may not be held vicariously liable under
Having concluded that none of the defendants’ general or specific arguments in favor of affirming summary judgment are valid, we reverse the entry of summary judgment on claim one and direct the district court to reinstate the Foxes’ claim that Citicorp and Kaplan violated the FDCPA venue provision.
III. Other FDCPA Claims
The Foxes’ complaint also alleged three other FDCPA claims under
We begin by noting that the district court‘s brief statement regarding the reasonableness of the defendant‘s actions states an incorrect standard. The FDCPA is not simply a federal codification of common-law negligence. Rather, each section specifies what kind of conduct supports FDCPA liability. We believe the Foxes met their burden of showing the existence of facts or disputed factual evidence upon which a rational jury could premise liability.
As to
Finally, a jury could rationally find the filing of an application for a writ of garnishment when the Foxes were current in payments demanded by Citicorp agents to constitute an unfair or unconscionable means of collection or attempted collection of a debt under
Our comments should not be construed as limiting any other theories that may support recovery under these FDCPA claims. We have merely identified some theories, supported either by facts conceded by the defendants or by evidence submitted by the Foxes, which could rationally sustain a verdict for the Foxes, in order to demonstrate the inappropriateness of summary judgment. We reverse summary judgment on each of the FDCPA claims.
IV. State-Law Claims
The parties agree that the Foxes’ appeal of summary judgment on claims eight and nine of the complaint, alleging state-law claims of negligence and strict liability, rests upon our resolution of the FDCPA claims. The parties have not separately addressed these claims; instead, they have asserted that as go the FDCPA claims, so go claims eight and nine. Therefore, having reversed summary judgment on all of the appealed FDCPA claims,11 we similarly reverse judgment on claims eight and nine.
The Foxes appeal the entry of summary judgment on one additional state-law claim—claim ten, alleging breach of contract. The complaint alleges that Citicorp breached its obligations under the 1986 stipulated judgment by filing for a writ of garnishment. The problem, however, as the Foxes soon realized, is that their prior breach of the agreement (by failing to make timely payments) prevents their succeeding on this claim. Thus, in opposing summary judgment, the Foxes argued that Citicorp had breached its obligations under a new arrangement, agreed to by Marshall on behalf of Citicorp, under which they would pay $200 per month rather than $100. Citicorp then argued, and the district court agreed, that no consideration supported the new contract sued upon by the Foxes. The Foxes contend that the acceleration in payment schedule constituted consideration. The dispute involves a question of Arizona law that it is not necessary for us to resolve.
We affirm the entry of summary judgment on the alternative basis argued by Citicorp in the district court. The Foxes failed to put forward evidence of any contractual damages. All they claimed was emotional distress and mental anguish. The Foxes may well have claims for statutory12 or tortious damages, but they showed no damages of a contractual nature.
V. Conclusion
We affirm summary judgment on the Foxes’ breach-of-contract claim (claim ten), reverse summary judgment on all other appealed claims (claims one, two, three, four, eight,
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
NOONAN, Circuit Judge, concurring in part and dissenting in part:
I concur in the judgment of the court that the defendants were entitled to summary judgment on the contract claims and were not entitled to summary judgment on the Foxes’ claims for violation of the venue provision of the FDCPA and that the defendants’ affirmative defenses must be established at trial.
The Foxes may get before a jury on these two claims. But what mountains have been made of molehills! And the Foxes have sought $10 million punitive damages without in their deposition being able to identify any basis for such an extraordinary request. How this court regards inflated claims for punitives is well-established. Hudson v. Moore Business Forms, Inc., 836 F.2d 1156, 1163 (9th Cir.1988). I turn to the claims on which I disagree with the majority:
The Alleged Abusive Conduct.
(1) The use or threat of use of violence or other criminal means to harm the physical person, reputation, or property of any person.
(2) The use of obscene or profane language or language the natural consequence of which is to abuse the hearer or reader.
(3) The publication of a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency or to persons meeting the requirements of
section 1681a(f) or1681b(3) of this title.(4) The advertisement for sale of any debt to coerce payment of the debt.
(5) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.
(6) Except as provided in
section 1692b of this title, the placement of telephone calls without meaningful disclosure of the caller‘s identity.
The statute does not limit its general application to these examples. However, normal rules of statutory construction require that the harassment or abuse condemned be of the same nature as the examples the statute supplies. The Foxes provided no testimony showing that the defendants’ conduct was of this quality. At most, Toni Fox could recall a telephone call from a Citicorp agent whose voice she described as “intimidating,” “aggressive,” “threatening” or “not nice.” At the point she received this call the Foxes had failed for over three years to pay the debts due on their Citibank credit cards. Several months before the telephone call the Foxes had agreed to a stipulated judgment requiring them to pay the full unpaid balance of $2,300.31 in monthly installments of $100 apiece, with the additional stipulation that if the payments were not timely made the entire judgment, plus interest, court costs, and attorneys’ fees would be due. Months went by without the Foxes paying a penny. Under these circumstances a telephone call from a representative of Citibank would have been very intimidating, and her voice would have sounded “not nice.” It might even have been considered “aggressive.” There is nothing in the statute that restrains a creditor from attempting to collect from a delinquent debtor or makes a reminder to the debtor an act of harassment.
The Alleged Misrepresentations
The Foxes had agreed in the stipulated judgment to payment of their debt in full upon failure to pay the monthly installments of $100. Consequently, there was no misrepresentation when Toni Fox was told that the full balance of her debt was due; nor was there any misrepresentation when another agent asked the Foxes to pay $100 per month that they had promised to pay; nor
The opinion of the court notes the contention of Aron, the Foxes’ lawyer, that Kaplan would not proceed with garnishment without contacting Aron. There is no indication that Kaplan had in fact agreed. Rather, Aron‘s self-serving statement is refuted by Kaplan‘s reply to him by fax that he would first like to see the records showing the status of the Foxes’ payments. There is no genuine material fact in dispute, no evidence that Kaplan had promised not to file the garnishment.
The Alleged Unfair Practices.
The opinion of the court takes the position that the filing of an application for a writ of garnishment “when the Foxes were current in payments demanded by Citicorp agents” could be found to be an unfair or unconscionable means of collecting. According to the stipulated judgment, as of March 5, 1990, the Foxes should have paid Citicorp $1,000. In fact they had paid nothing from September through October and had given one bad check for $400. As of March, 1990, they had paid only $400 of what they had stipulated by judgment to pay. At this time, they were, of course, liable for the full $2,300 plus interest, court costs and attorneys’ fees. In these circumstances the Foxes were not protected from having their wages garnished.