2007 Ohio 898 | Ohio Ct. App. | 2007
{¶ 2} On February 19, 1994, Armstrong entered into an Installment Sales Contract with City Auto Repo Sales, for the purchase of a used Chevrolet Camaro. *2 At the time of contracting, Armstrong was a resident of Fort Lauderdale, Florida, and the contract was executed in Florida. As part of the sales agreement, City Auto assigned its rights under the contract to Keller Financial Services.
{¶ 3} Armstrong defaulted on the payments and, in August 1994, the vehicle was repossessed and sold at private auction. The vehicle sold for $6,349.38, leaving a deficiency balance on the loan of $4,190.16.
{¶ 4} In late 1994 or early 1995, Armstrong moved from Florida to Ohio, without informing Keller Financial Services of his whereabouts.
{¶ 5} In November 1998, Keller Financial Services assigned the contract to Beal Bank, S.S.B. In February 1999, Beal Bank assigned the contract to The Cadle Company. In July 2000, The Cadle Company subsequently assigned the contract to its "general partner," D.A.N., of Newton Falls, Ohio. The Cadle Company and D.A.N. occupy the same office space and employees of D.A.N. work on accounts owned by The Cadle Company as well as those owned by D.A.N. D.A.N. employees are paid through payroll checks issued by The Cadle Company.
{¶ 6} In March 1999, The Cadle Company attempted to contact Armstong by mail in Ohio regarding the debt.
{¶ 7} In 2003, Clare Mines and Gregory Cadle, account officers for D.A.N., contacted Armstrong by telephone in an attempt to collect the money owed. After some negotiations to settle the account, Armstrong informed the account officers of his belief that any legal action on the account was time barred.
{¶ 8} In September 2004, Tonya Guiliano, another D.A.N. account officer, contacted Armstrong regarding the money owed. Thereafter, D.A.N. filed a suit *3 against Armstrong in Broward County, Florida. This action was voluntarily dismissed in February 2005, after Armstrong had raised the defense of the Florida statute of limitations. Armstrong responded by filing suit against The Cadle Company in Florida District Court, alleging improper collection practices. In the course of this litigation, The Cadle Company admitted its status as a "debt collector" under the Fair Debt Collection Practices Act.
{¶ 9} In January 2005, Guiliano contacted Armstrong's former employer, the Steris Corporation, requesting employment information.
{¶ 10} On March 2, 2005, Terry J. Walrath, counsel for The Cadle Company, sent a "30-day" letter to Armstrong demanding payment or disavowal of the debt.
{¶ 11} On March 21, 2005, D.A.N. filed suit against Armstrong in Painesville Municipal Court, believing that Ohio's fifteen-year statute of limitations for contract actions applied. D.A.N. sought damages in the amount of $7,363.29, representing a principal amount of $3,356.83, plus accrued interest and late fees in the amount of $4,006.46. Armstrong answered and counter-claimed alleging violations of the Uniform Commercial Code, the Florida Consumer Finance Act, the Florida Lending Practices Act, the Florida Motor Vehicle Retail Sales Finance Act, the Fair Debt Collection Practices Act, and the Ohio Consumer Sales Practice Act. The basis for Armstrong's answer and counter-claims was that D.A.N.'s complaint is barred by the statute of limitations.
{¶ 12} Both parties moved for summary judgment.
{¶ 13} On March 2, 2006, a magistrate for the municipal court issued a decision on the parties' motions. The magistrate decided that, since "all pertinent *4
events surrounding this retail installment sales contract occurred in Florida," the Florida five-year statute of limitations for contract actions applied, barring D.A.N.'s claim. Fla. Stat.
{¶ 14} The magistrate also granted summary judgment in D.A.N.'s favor as to Armstrong's claims based on Florida law on the grounds that Armstrong should have raised these claims in his lawsuit filed in Florida District Court. As to Armstrong's claims for violations of the Fair Debt Collection Practices Act and the Ohio Consumer Sales Practice Act, the magistrate found that triable issues of material fact remained and denied D.A.N.'s motion as to these claims. The municipal court adopted the magistrate's decision the same day it was issued.
{¶ 15} On March 8, 2006, a trial was held before the magistrate on Armstrong's counterclaims under the Fair Debt Collection Practices Act and the Ohio Consumer Sales Practice Act. Counsel for D.A.N. moved for a directed verdict on the issue of whether D.A.N. is a "debt collector" for the purposes of the Fair Debt Collection Practices Act and the Ohio Consumer Sales Practices Act.
{¶ 16} On March 21, 2006, the magistrate issued his decision along with findings of fact and conclusions of law. The magistrate found in favor of Armstrong and awarded damages in the amount of $2,600 plus interest.1 The magistrate denied D.A.N.'s motion for a directed verdict, construing it as a motion to dismiss pursuant to *5 Ohio Civil Rule 41(B)(2). The municipal court adopted the magistrate's decision on March 23, 2006.
{¶ 17} On April 17, 2006, D.A.N. filed objections to the March 21, 2006 magistrate's decision with findings of fact and conclusions of law. The municipal court overruled D.A.N.'s objections on the same day. This appeal timely follows.
{¶ 18} On appeal, D.A.N. raises the following assignments of error:
{¶ 19} "[1.] The trial court erred to the prejudice of Plaintiff-Appellant in applying Florida's statute of limitations to plaintiff's claims and granting Defendant-Appellee's motion for summary judgment on that basis.
{¶ 20} "[2.] The trial court erred in denying Plaintiff-Appellant's Motion for Directed Verdict and In Awarding Damages to Appellee."
{¶ 21} The first question we must address under the first assignment of error is whether D.A.N. has properly preserved the issue of the statute of limitations for appellate review. In a matter referred to a magistrate, "[a] party may file written objections to a magistrate's decision within fourteen days of the filing of the decision." Ohio Civ.R. 53(D)(3)(b)(i). "Except for a claim of plain error, a party shall not assign as error on appeal the court's adoption of any factual finding or legal conclusion * * *, unless the party has objected to that finding or conclusion as required by Civ.R. 53(D)(3)(b)." Ohio Civ.R. 53(D)(3)(b)(iv).
{¶ 22} However, "[a] magistrate's decision shall indicate conspicuously that a party shall not assign as error on appeal the court's adoption of any factual finding or legal conclusion * * *, unless the party timely and specifically objects to that factual finding or legal conclusion as required by Civ.R. 53(D)(3)(b)." Ohio Civ.R. *6
53(D)(3)(a)(iii). Where the magistrate's decision fails to include the language required by Civ.R. 53(D)(3)(a)(iii), a party is not prevented from assigning as error on appeal the lower court's adoption of factual findings or legal conclusions. Mix v. Mix, 11th Dist. No. 2003-P-0124,
{¶ 23} In the present case, D.A.N. did not file timely objections to the magistrate's decisions of March 2, 2006 or of March 21, 2006. However, neither of the magistrate's decisions "conspicuously indicated" that the parties had fourteen days to file objections or waive their right to appeal as required by Civ.R. 53(D)(3)(a)(iii). Accordingly, we will consider D.A.N.'s assignment of error regarding the applicable statute of limitations.
{¶ 24} The second preliminary question before us concerns the proper standard of review. D.A.N. urges that our standard of review is de novo, as is appropriate in cases involving summary judgment. Grafton v. OhioEdison Co.,
{¶ 25} Although this court is technically reviewing the trial court's adoption of the magistrate's summary determination that the Florida statute of limitations applies, we will review that decision under a de novo standard of review. The abuse of discretion standard of review is not mandated by Rule 53. Armstrong has not cited any case where a court of appeals has reviewed the lower court's adoption of a magistrate's decision granting summary judgment under an abuse of discretion *7
standard. There are cases that have expressly reviewed such decisions under the de novo standard of review. See Long v. Noah's Lost Ark,Inc.,
{¶ 26} The magistrate's conclusion that the Florida statute of limitations applied in the present case was based on the fact that "all pertinent events surrounding this retail installment sales contract occurred in Florida" and the case of Payne v. Kirchwehm (1943),
{¶ 27} In Payne, the Ohio Supreme Court held: "Though * * * fifteen years is the limitation of time fixed for an action upon a contract in writing in Ohio, the five-year limitation prescribed by the law of Florida for an action upon a contract in writing is by reason of Section 11234, General Code, applicable to an action brought in Ohio upon a written contract executed and to be performed in Florida." Id. at paragraph one of the syllabus; also, Alropa Corp. v. Kirchwehm (1941),
{¶ 28} As D.A.N. correctly points out, G.C. 11234, subsequently R.C.
{¶ 29} Armstrong counters that G.C. 11234/R.C.
{¶ 30} Accordingly, D.A.N.'s claim against Armstrong is governed by the Ohio statute of limitations.
{¶ 31} The question next arises as to which Ohio statute of limitations should apply. D.A.N. would apply the fifteen-year statute of limitations generally applicable to contracts in writing. R.C.
{¶ 32} Armstrong argues the proper statute of limitations is the six-year statute of limitations applicable to actions arising under the Ohio Retail Sales Installment Act. Although the Retail Installment Sales Act does not contain a statute of limitations provision, several courts have applied to such actions the six-year statute of limitations applicable to "liability created by statute other than a forfeiture or penalty." R.C.
{¶ 33} Armstrong's argument is inapplicable. D.A.N.'s cause of action against Armstrong arises from a retail sales contract. It is not based in any way on an alleged violation of the Ohio Retail Sales Installment Act. Cf. C.B. Transp. Servs., Inc. v. Bus and Bodies, Inc. (Aug. 15, 1994), 12th Dist No. CA94-02-030, 1994 Ohio App. LEXIS 3549, at *3-*6 (applying a four-year statute of limitations to a retail installment sales contract that conformed to the requirements of the Act).
{¶ 34} The proper statute of limitations applicable to D.A.N.'s claim is the four-year statute of limitations "for [the] breach of any contract for sale" contained in Ohio's Uniform Commercial Code. R.C.
{¶ 35} Accordingly, the municipal court correctly concluded that D.A.N.'s cause of action against Armstrong, arising out of an installment sales contract are barred by the statute of limitations, although a different statute of limitations than the one relied on by the lower court applies. The first assignment of error is without merit.
{¶ 36} Under the second assignment of error, D.A.N. argues that the magistrate and municipal court erred by overruling its motion for a directed verdict, properly construed by the lower court as a motion to dismiss under Civil Rule 41(B)(2). Osborne, Inc. v. H R Purchasing,Inc., 11th Dist. No. 2003-L-051,
{¶ 37} D.A.N. argues that the trial court erred in its determination that it is a "debt collector" subject to the Fair Debt Collection Practices Act. We disagree.
{¶ 38} "The Fair Debt Collection Practices Act prohibits `debt collectors]' from making false or misleading representations and from engaging in various abusive and unfair practices." Heintz v.Jenkins (1995),
{¶ 39} The provisions of the Act distinguish between "debt collectors" and "creditors." Pollice v. National Tax Funding, L.P. (C.A.3 2000),
{¶ 40} Thus, "[t]he statute does not apply to persons or businesses collecting debts on their own behalf. * * * It is directed to those persons who are engaged in business for the principal purpose of collecting debts." Staub v. Harris (C.A.3 1980),
{¶ 41} In the present case, there was abundant evidence before the lower court from which to conclude that D.A.N. is a debt collector for the purposes of the Act.
{¶ 42} Initially, there is the fact that The Cadle Company stipulated that it was a "debt collector" for the purposes of the Fair Debt Collection Practices Act in the course of Armstrong's federal litigation in Florida. D.A.N. argues that this stipulation is not binding on itself, although The Cadle Company is D.A.N.'s general partner in a limited partnership, since "the status of a general partner is not imputed to a limited partner." D.A.N. also notes that it expressly denied being a "debt collector" for purposes of the Fair Debt Collection Practices Act in the present litigation.
{¶ 43} Although The Cadle Company's stipulation is not binding on D.A.N., it is competent, credible evidence that the magistrate could properly consider in rendering his decision. The magistrate found that the business operations of The Cadle Company and D.A.N. were so intertwined that the actions of one could be imputable to the other. For example, D.A.N. and the Cadle Company share the same office space and mailing address. Employees of D.A.N. receive their payroll checks from The Cadle Company. Account officers for D.A.N. routinely worked on Cadle Company accounts. When D.A.N. account officer Guiliano decided to file suit against Armstrong in Florida, The Cadle Company's in-house counsel, Attorney Walrath, filed the suit. It was also Attorney Walrath who dismissed the Florida suit and re-filed the action in Ohio.
{¶ 44} Two of D.A.N.'s account officers further testified that they were trained to comply with the provisions of the Fair Debt Collections Practice Act and used *14 specific forms for collection, including the letters sent to Armstrong. Account officer Mines testified to receiving "daily training" on the Fair Debt Collections Practice Act and "regular team meeting discussions" about its requirements.
{¶ 45} Finally, it is undisputed that D.A.N. had notice that the Armstrong account was in default when it was assigned from The Cadle Company. See Pollice,
{¶ 46} For the foregoing reasons, the lower court did not err in its imputation of The Cadle Company's status as a "debt collector" to D.A.N.
{¶ 47} We also reject D.A.N.'s argument that it was necessary to prove that it acted intentionally. D.A.N. relies on
{¶ 48} D.A.N. further argues that Armstrong failed to establish a "separate basis" for liability under the Ohio Consumer Sales Practices Act at trial. Again, we disagree.
{¶ 49} The Ohio Consumer Sales Practices Act prohibits "suppliers" from "committing] unfair or deceptive practice[s]" or "unconscionable act[s] or practice[s] in connection with a consumer transaction." R.C.
{¶ 50} "Numerous cases have held that various violations of the [Fair Debt Collection Practices Act] constitute a violation of the [Consumer Sales Practices Act]. * * * Since the underlying purpose of the [Fair Debt Collection Practices Act] is to prohibit `abusive, deceptive and unfair debt collections practices,' the purpose of both *16
acts is to prohibit both unfair and deceptive acts and * * * any violation of any one of the enumerated sections of the [Fair Debt Collection Practices Act] is necessarily an unfair and deceptive act or practice in violation of R.C. §
{¶ 51} In the present case, the magistrate specifically identified the basis of D.A.N.'s liability under the Consumer Sales Practices Act as its violation of the Fair Debt Collection Practices Act, i.e. "falsely representing that a debt was owed when it was already time barred" and "threatening legal action when it could not legally be advanced." The magistrate also identified eight specific instances of D.A.N. committing these violations in connection with its award of damages under the Consumer Sales Practices Act.
{¶ 52} For the foregoing reasons, it was not necessary to establish a "separate basis" for violation of the Consumer Sales Practices Act.
{¶ 53} The second assignment of error is without merit.
{¶ 54} Accordingly, the judgment of the Painesville Municipal Court, granting summary judgment against D.A.N. and finding for Armstrong on his claims for violations of the Fair Debt Collection Practices Act and Consumer Sales Practices Act, is affirmed.
CYNTHIA WESTCOTT RICE, P.J. and COLLEEN MARY OTOOLE, J., concur.