*1
SERVICES, INC.,
BUREAU
COLLECTION
corporation,
a Montana
Appellant,
Plaintiff and
BUCKNER,
RUTH A.
RUTH A. MORROW a/k/a
Respondent.
Defendant
No. 03-059.
September
on Briefs
2003.
Submitted
April
2004.
Decided
For Respondent: Taylor, Tonn, S. Kim City. Lucas & Miles Olson, For J. Services, Amicus: Andrea ASUM Legal Missoula. JUSTICE Opinion LEAPHART delivered the of the Court. (Collection Services, Bureau), Collection Bureau Inc. filed complaint 23,2001, February against on Court Justice Ruth Morrow (Morrow) value, charges, statutory to collect the face damages eight checks insufficient June she issued with funds in 2000. Morrow countered Collection Bureau waived its 27-1-717(3), MCA, and in seek under § pursuing damages, such had violated the Fair Debt Collection (FDCPA), Act Practices U.S.C. 1692. After Justice Morrow, judgment appealed entered in favor Collection Bureau summary judgment granted The the District Court. District Court also actual and, damages, a trial on awarded in favor of Morrow attorney fees to Morrow. statutory damages, costs suit damages, the District Court. Bureau now those two orders of appeals Collection below, affirm orders of the For the reasons stated we Court.
FACTS eight issued bad checks for total In June of Ruth Morrow checks in value from ranged $10.20 face value of $148.96. Spur, were to the Golden three to Pizza Three the checks $25.00. Hut, Holiday. engaged businesses and one each to 4B’s and Those July unpaid Bureau to collect the value of checks. letters, check one for each eight Collection Bureau sent Morrow thirty charge. Adding dollar service plus the face value demanding eight increased the thirty charge to each of checks dollar service $240.00, doubling amount more than amount Morrow owed 22, 2000, Collection Bureau from On November $148.96 $388.96. letter, entire which demanded sent Morrow another stated: balance of and also $388.96 *3 WRITING CHECKS
YOU EXPERIENCE DIFFICULTY MAY 27-1- MT. CODE ANNOTATED DUE TO THE UNPAID ITEMS. REMEDIES. CALL US TO PROVIDES SPECIFIC LEGAL RESOLVE THIS. 2000, 4, responded sending check for by
On Morrow December “I have missed a note which stated: must She also included $25.00. every two weeks until your the I will send 50.00 or more bill in mail. money Bureau a care of.” Morrow next sent Collection this is taken 4,2001. day, Bureau January That same Collection $10.00 order for on indicated the agreement order with a letter which money returned the 2001, 16, every January Morrow two weeks. On pay $50.00 was to accepted, Collection Bureau payment another which $50.00 made of leaving $313.96. new balance February and on promised payments, the next two Morrow missed Collection
23, 2001, suit in Justice Court. Bureau filed reflecting the $1,113.96, for a total of complaint prayed Bureau’s and service of the checks owing for the face amount balance $313.96 27-1-717(3),MCA, statutory damages of $100 the charges well as $800. for an additional eight for of the checks each On 27, 2001, February payment $150.00. sent On Morrow complaint. 1,2001, Bureau’s was served with Collection March Morrow next day, spoke she called Collection Bureau and with Collection Cody Kruger. they Bureau’s Morrow asked whether or not employee had received her and reason the inquired into the suit. they Kruger said filed suit failure because Morrow’s to make the agreed-on payments. felt because had money Morrow that she sent the served, being applied before it should have been to reduce the $313.96 however, Kruger, only willing apply the $163.96. $150.00 $1,113.96. prayed Kruger reduce the total for relief also indicated off’ might possible couple to “knock hundred dollars if Morrow sum, alternative, paid lump in one or in the Collection Bureau would accept payments of regular prayed $50.00 on the amount for in the complaint. Throughout only these proceedings, Morrow has contested the
statutory damages. She does not challenge validity of the face plus value the checks charges. The Justice Court ruled Morrow, that, reasoning by in favor of accepting partial payments full, instead Collection Bureau had waived its statutory damages subsequently violated FDCPA by pursuing such On damages. appeal, District Court granted Morrow’smotion partial summary Bureau, judgment, holding that Collection accepting partial payment, waived to the then violated the FDCPA pursuing damages. these After a trial damages, on Morrow’s awarded actual $40.00 $1,000 damages, statutory damages, attorney costs fees of$183.75 $17,000. in the amount of appeals, claiming Collection Bureau now 27-1-717, interpreting MCA, District Court erred in and that if it violated the FDCPA the bona error applies. fide defense 15 U.S.C. 1692k(c).
STANDARDOF REVIEW Our on appeals summary judgment standard of review from is de Conoco,Inc., 50, 401, 10, 10, novo. Sherner v. 2000 MT 298 Mont. ¶ ¶ 990, P.2d apply We the same evaluation as the court district ¶ Robinson, 271, based on Rule M.R.Civ.P. Danelson 2003 MT ¶ 462, 11, 317 Mont. P.3d 11. We review a trial court’s ¶ ¶ *4 legal they conclusions to determine whether correct. v. are Gonzalez Walchuck, 9, 262, 240, 9, 377, MT 312 2002 Mont. P.3d 9. Our ¶ 59 ¶ ¶ plenary. Marriage standard of review for a of law is In re question of 15, Robison, 207, 246, 15, 1279, 2002 MT 311 53 P.3d 15. Mont. ¶ ¶ ¶
DISCUSSION Part I: Waiver violations, Act the Fair Debt Collection Practice addressing Before conclude, Court, did We
we first address waiver. statutory damages. to right Collection Bureau waived payee for the or the provides statutory various remedies Montana Section27-1-717, Apayee MCA. ofadishonored draft. payee’s assignee charge a in a face value the check and service may collect both the Furthermore, written not when a $30. reasonable amount to exceed made, full, in is not payment is in but full demand made for statutory may pursue damages an payee assignee then the or its charge plus greater “equal amount which is to check, draft, or order was or times the amount for which the three check, However, of the may not exceed the value damages issued. 27-1-717(3), MCA. Before draft, by more than Section $500.” or order court, statutory damages in may a check seek payee on a dishonored 27- days. full at least ten Section demand and wait must l-717(4)(a), MCA. waived its Collection Bureau had The District Court held that statutory A is intentional
right damages. to waiver seek claim or Reiter relinquishment right, privilege. of a known voluntary 194, 202, 845, (1981), P.2d Mont. County v. Yellowstone Statutorily-created may waived. rights be advantage waive the Anyone may of a of a
Waiver benefit law. But a established for solely for his benefit. law of a law intended by private agreement. be public reason cannot contravened 1-3-204, Section MCA. rights are not creating public for a benefit Although statutes Co., 50, 16, 293 waiver, 1999 MT ¶ Rothwell v.Allstate Ins.
subject statute, 512, 393, 16, 976 indemnification (employee P.2d 16¶ Mont. ¶ waiver) 39-2-701(1), MCA, and State ex rel. Neiss subject not (minimum 324, 328, 511 979, 981 wage (1973), P.2d Mont. Dist. Ct. waiver), private rights created subject is public benefit (1990), 383, 244 Mont. In Matter Gaither benefits can be waived. right surviving widow’s we held that the 797 P.2d to her personal laws compensation under the workers’ benefits case, present rights. or abandon those and thus she could waive statutory pursue check payee on a dishonored and is payee of the for the benefit solely created damages is 1-3-204, MCA. subject to waiver under thus by a course by express declarations or may proven Waiver
483 and acts conduct so as to induce the belief that the intention and (1977), 516, Kelly 520, was waive. v. Mont. purpose Lovejoy to 565 321, 324. may by P.2d We have that waiver held be established conduct forego which to manifests intention benefit: may proved by declarations, It express by be or acts and manifesting declarations an intent and claim purpose not to conduct, supposed advantage, byor a of or by course acts and so act, and to it neglecting failing as to induce the belief that was his purpose intention and to waive. (1925), 142, 149, 238 &
Northwestern F. M. Ins. Co. v.Pollard 74 Mont. 594, P. 596. Co., Co., In VanDyke 279, Const. v. Stillwater 2003 MT Mining ¶
16, 519, 16, 844, 16, 317 Mont. 78 P.3d VanDyke’s ¶ letters ¶ requesting arbitration were deemed a of waiver object subsequently to the contract provisions requiring arbitration. express The conduct of the in real sellers estate contract established (1985), waiver in Thiels, Thiel Johnson Mont. P.2d 829. motel, the sellers of expressly waived their right to receive certain monthly payments buyers contract on when time communicated that, low because of winter months’ revenue an in utility and increase rates, they unable make monthly were their installment payments. they Thiels said this was “fine” and that were willing to work with the buyers as long payments as the interest were underlying made on the previous “they contract with the owner and glad would extend payments their to be until made the summer season started rolling Thiel, again.” 219 Mont. at at 711 P.2d case, present already after having sent demand letters for of2000, each ofthe eight July checks in Collection Bureau a letter sent in demanding November the full amount $388.96. Instead of amount, paying the full began making payments. Morrow installment December, paid She and included a indicating $25 note she would payments. January, make installment Morrow next sent which $10 thereafter, Collection Bureau sent Shortly back. Morrow sent $50 accepted applied which Collection Bureau to the balance leaving Bureau balance Before Collection $363.96 $313.96. 27, it February received Morrow’s next on had $150 $1,113.96, already including filed suit 27-1-717(3),
under MCA. Bureau there no waiver contends that intentional that, partial payments, known it although accepted of a it agreed upon if did not repeatedly told Morrow that she make legal it under the law. It further payments, could invoke its remedies by July notice in complied giving contends that it with the statute it to nothing accomplished requiring November and that would be contrary Finally, it contends that it would be give yet another notice. attempting to settle claims public policy penalize payees payments. through acceptance the District Court’s does responds ruling Morrow disadvantage. or at a discourage put settlement debt collectors control; accept partial or not to is in can choose whether collector permanently it has not accepts partial payments, If it payments. *6 damages. right to It can reinstate that with rights statutory waived its that, after giving points notice. Morrow also out even the a new can, any partial giving the collector without accepting payments, notice, plus a claim for the amount of the debt the pursue further fee. service held: in full for the making payment written demand for
After the charges, partial accepted checks and service CBS dishonored effectively By just partial payment, one CBS payments. accepting damages in ability statutory to sue for the $800.00 waived its Having its November 2000 notice. waived pursuant to the the damages under November statutory to sue for the right Annotated demand, to with the Montana Code comply § in order 27-1-717, statutory rights by issuing CBS had to reinstate its remaining of the balance payment another written demand for ten If full partial payments waiting days. deducting after all demand, to the new written payment pursuant was not tendered damages to the statutory the in addition CBS could then demand a charges service of dishonored checks and remaining balance pursuant to CBS’s under rights §27-1-717. lawsuit filed statutory Court. The reasoning of the District agree We with the the ten-day opportunity pay to designed give to the debtor a scheme is liability civil for faced with charges being debt before here, Where, engages the collector in course statutory damages. partial full but payment accepts it demands of conduct wherein foregone its the collector has the debtor is led to believe that payment, acceptable. Contrary are payments that partial demand and no would serve that another demand Collection Bureau’s assertion (after payment) having accepted partial demand purpose, another longer payments are no partial that the debtor on notice puts demand less (prior full the new balance acceptable; payment days partial payments) paid credit for must within ten or the may statutory damages. collector invoke remedies for acceptance having We hold that payment made demand full waives the collector’s 27-1-717, MCA. order under In to reinstate its damages, to such the must make further demand collector days of the new balance and then wait ten requisite the filing before suit.
Part II: Violations of FDCPA The Fair Debt Act provides Collection Practices as follows: may
A unfair debt collector use or unconscionable means any collect or to collect attempt limiting debt. Without general application of the foregoing, following conduct is a violation this section:
(1) any interest, (including any fee, The collection amount charge, expense or incidental the principal obligation) unless such expressly agreement amount is authorized creating permitted by debt or law. 1692f(l) added). (emphasis 15 U.S.C. § that, The District Court held sought since Bureau
statutory MCA, damages 27-1-717, under given without having demand, requisite attempted it had collect an amount which was not 1692f(l). “permitted by law” and thus had violated 15 U.S.C. particular, the District Court concluded that Collection Bureau statutory violated the FDCPA when sued for damages without *7 having complied requirements first with the of notice Montana law and then, instead crediting partial against Morrow’s the $150 ($313.96), amount owed on the it against checks credited it the statutory damages ($1,113.96). prayed complaint for in the The correctly interpreted District Court the federal law. prohibits FDCPA a clearly using debt collector from unfair or attempt any unconscionable means to “collect or to collect debt.” (7th Services, 1999), Sykes Transamerica Financial Cir. 171 Inc. (§ F.3d 1692f applies 555 circumstances where debt collectors attempt by law); to collect fee not authorized Newman v. Checkrite (E.D. 1995), Calif., F.Supp. (attempt Inc. Cal. 1377 1692f(l)). not authorized It by recover amounts law is violation § provides further that it is unfair or for a debt collector unconscionable any by expressly to collect amount which is not authorized contract or case, Bureau, permitted by present which is not law. In the Collection suing statutory damages giving a renewed without $800 by law.” attempting “permitted was to collect a sum not demand Furthermore, partial payment towards applying $150 Morrow’s $1,113.96, “permitted actually it collected a sum not claimed balance of prior to statutory requirements with state by comply law.” Failure amount of the dishonored attempting to collect sums in excess of the Services, Ozkaya Act. Inc. check 1692f of the v. Telecheck violates § (D. (N.D. 1997), 578, 586;Ditty Ltd. Utah F.Supp. Ill. v. CheckRite CheckRite, 1997), 1320, 1324-25. attempted the collector F.Supp check, a plus charge a service and for the amount of to settle for a not to sue. State further as consideration covenant sum listed filed, however, a law, that, a civil action had been provided unless greater for a sum than amount of debtor could not be liable check, that charge. Accordingly, the court concluded plus prior filing suit attempt to collect excess amount CheckRite’s violated the FDCPA. accepted partial Bureau We conclude that when Collection then, 27- by new demand as
payments giving required § without MCA, 1-717, applied subsequent sued for statutory damages, attempted it towards the actually which were not permitted collect and did collect sums 1692f(l). a violation of 15 U.S.C. § law. This constitutes that, assuming that it did violate contends even Collection Bureau 27-1-717, MCA, it be held liable since violation cannot § fide on the bona error defense unintentional. Collection Bureau relies 1692k(c), provides: in 15 which U.S.C. (c) any liable in action may A collector not be held
Intent debt by a collector shows subchapter this if the debt brought under the violation was of the evidence that preponderance notwithstanding from fide error and resulted a bona intentional any reasonably adapted to avoid procedures the maintenance of such error. law that, there was no case argues prior Bureau since
interpreting 27-1- MCA, accepting partial as a renewed demand requiring Montana law forewarning violating that it was
payment, it had no
of FDCPA was
resulting
violation
it cannot
said that
thus
fide
Rather,
a bona
error.
any
contends
mistake was
“intentional.”
as
qualifies
of law
to whether a mistake
question
This
raises
1692k(c).
authority
split
There is a
under
a bona fide error defense
minority view holds
on this issue. The
among the circuit courts
*8
v. Riddle
fide errors. Johnson
can be considered bona
mistakes of law
(10th
2002),
majority
305 F.3d
1121. The
view is that the
Cir.
See,
only
e.g.,
for
defense is
available
clerical
factual errors.
Piclit
(8th
Hawks,
2001),
446, 451-52;
R.
Ltd.
F.3d
Hulshizer
v. Jon
Cir.
(no
(8th
Services,
1984),
1037, 1038
Credit
Inc.
Cir.
728 F.2d
Global
bona fide error defense where the debt collector relied on advice of a
(FTC)
attorney); Pipiles
Fair Trade
v. Credit Bureau
Commission
staff
(2nd Cir.1989),
Lockport,
27;
Inc.
886 F.2d
v. G.C.
Baker
of
Services
(9th
1982),
Cir.
adapted any to avoid such generally adopted error.” “Procedures” are opposed to avoid clerical errors as mistakes of law. accord with view, majority we hold that the fact did that Collection Bureau not anticipate 27-1-717, MCA, a decision that requires new demand acceptance partial payments after not does rise to the level of a 1692k(c). “bona fide error” defense under That Collection Bureau any mistook the law does make its action less intentional.
CONCLUSION reasons, For the above-stated the orders of District Court are affirmed. provides attorney The FDCPA for reasonable fees and costs who in establishing liability suit those are successful under the 1692k(a)(3). FDCPA. prevailed, 15 U.S.C. Since Morrow she is has attorney entitled to reasonable fees and on We remand appeal. costs hearing to the District Court determine Morrow’s reasonable attorney on appeal. fees costs GRAY,
CHIEF JUSTICE WARNER and REGNIER JUSTICES concur. dissenting.
JUSTICE COTTER I respectfully dissent. The Court concludes at of a acceptance having made a demand for full waives the collector’s *9 27-1-717, problem statutory MCA. The is damages § to under suggests thing. the statute no such that written, as and that that CBS did not violate the statute Given impression, ofthe statute is a matter first interpretation this Court’s FDCPA, the of the and the application provisions I find our Act, 17,000.00 in under that attorney over fees and costs imposition of $ 1-2-101, in effectively, and violation unconscionable. We have omitted, 27-1-717, MCA, then MCA, what has been inserted into § law the first time-have construing faulted CBS for the as we-for not it is wrong, patently it. if we conclude that CBS was interpreted Even that taking entirely to for is punish excessively position unfair it so I therefore dissent. defensible under the statute written. join RICE in the dissent of JUSTICE NELSON and JUSTICE JUSTICE COTTER. dissenting.
JUSTICE RICE joinI in Justice Cotter’s dissent. 1-3-204, MCA, upon by the provision the waiver relied Section MCA, 1-3-101, Court, Section Jurisprudence.” is one of the “Maxims provides: set forth in
Purpose jurisprudence of maxims. The maxims of any to of the other chapter qualify 2 this are intended not part of just application. aid in their provisions of this code but to MCA, used 1-3-204, cannot be thereto, we held that § Pursuant have statutory provisions.” Campbell “qualify other substantive 146, 17, 45, 17, Mont. 29 P.3d Mahoney, ¶ ¶ 2001 MT ¶ only qualify Here, provision the the Court has used waiver law, it. but re-write substantive approvingly In the Court cites from ¶
decision: 27-1- the Montana Code Annotated comply order with
[I]n by issuing another statutory rights to reinstate its CBS had remaining balance of the written demand days. If full waiting ten deducting partial payments all demand, new to the written pursuant not tendered payment was to the statutory damages in addition demand the CBS could then charges checks and service remaining balance of dishonored 27-1-717. rights to CBS’s under § lawsuit filed pursuant requirement, forth a new “reinstatement” which sets language, This demand,” reflect “all must which by “another written established pure is “waiting” period, undergo another payments,” procedures say that these new entirely inaccurate legislating. It is necessary comply 27-1-717, are “to with” MCA. Collection Bureau fully statute, complied and it with is incredulous to hold that its compliance full with the statute somehow transformed into a waiver rights of its thereunder. matters, clarify order to the Court should announce that its legislative requirements
new shall henceforth be known as new (8) course, subparagraph only the statute. Of with problem attaching subparagraph number to the new requirements Court’s is (8) directly that number would conflict the subparagraph with which has placed Legislature: been the statute the real
(8) Making partial payments of amounts under owed this entering agreement section or paying into an in whole or in part amounts owed this any under section does not waive or the payee payee’s assignee may under have this required made, section. Once demand this under section is *10 required upon demand is not to be repeated partial payment of amounts owed under this section. (2003) added). 27-1-717(8),
Section MCA (emphasis stay courts should out of the legislating business. I would reverse.
JUSTICE joins NELSON in the dissent of JUSTICE RICE.