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Masters v. Harrison & Johnston PLC

United States District Court, W.D. Virginia, Harrisonburg Division

February 20, 2018

WILLIAM MASTERS, Plaintiff,
v.
HARRISON & JOHNSTON PLC, Defendant.

          MEMORANDUM OPINION

          Hon. Michael F. Urbanski Chief United States District Judge

         This action arises under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. Plaintiff William Masters ("Masters") alleges that Defendant Harrison & Johnston PLC ("H&J") violated the FDCPA by initiating a time-barred collection action on behalf of its client, Neurologic Associates PLC ("Neurologic"). H&J does not contest the violation, but seeks shelter in the bona fide error defense under 15 U.S.C. § l692k(c). Both parties moved for summary judgment, ECF Nos. 14 & 16, and have filed responsive briefs, ECF Nos. 18 & 20-21. The court dispenses with oral argument because the facts and legal contentions are adequately presented in the materials before the court and argument would not aid the decisional process. For the following reasons, Masters' motion for summary judgment, ECF No. 14, is DENIED and H&J's cross-motion for summary judgment, ECF No. 16, is DENIED.

         I.

         Masters sought medical services from Neurologic in July 2008, for which Masters signed an agreement promising to pay any invoices. See Ex. C to PL's Mem. of Law in Supp. of Summ. J., ECF No. 15-5. No payments were made for the services after 2008. See PL's Statement of Undisputed Facts, ECF No. 15-1, at l.[1] In late 2015 or early 2016, Neurologic sought H&j's assistance in initiating collections actions for unpaid services. See Def.'s Mem. in Opp'n to PL's Mot. for Summ. J. and in Supp. of Def.'s Cross-Mot. for Summ. J., ECF No. 18, at 1 ("Def.'s Mem.").[2] Stephen L. Pettier, Jr., the managing member and an attorney at H&J, informed Dr. Mark Landrio, the manager of Neurologic, that H&J could not collect accounts that were unpaid for more than five years due to Virginia's statute of limitations. See Def.'s Mem., ECF No. 18, at 1-2. Neurologic agreed to only provide accounts with charges incurred or payments received within the last five years. See Id. at 2. Neurologic reviewed its records and the records of its medical billing company, J.D. Matthews & Associates ("J.D. Matthews") during its compilation of accounts. See Id. at 2. In July 2016, Neurologic provided information for 442 accounts, including Masters' account, to H&J for the purpose of initiating collection actions. See id.

         Prior to initiating litigation, H&J reviewed all of the accounts for "appropriate documentation and divided [the accounts] into tranches for drafting of warrants in debt and filing of the same." See Ex. E to PL's Mem. of Law in Supp. of Summ. J., ECF No. 15-7, at 3-4. H&J has no written procedures for its review of accounts received for collections and potential litigation. See PL's Statement of Undisputed Facts, ECF No. 15-1, at 2. However, "[a]ttomeys with H&J review[ed] all claims to determine that cases filed for those claims are filed within the applicable statute of limitations." See Ex. G to PL's Mem. of Law in Supp. of Summ. J., ECF No. 15-9, at 3. Although the attorneys reviewed the documents provided by Neurologic, "[n]o review of the documents from the billing company (the exhibits attached with Plaintiffs Motion for Summary Judgment) would indicate if the debtor had made payments or otherwise agreed to a payment plan or such other accommodations with Neurologic Associates, PLC." See Def.'s Mem., ECF No. 18, at 5. Specific to Masters' account, H&J reviewed his patient informational sheet, patient receipt, signed patient promise to pay, and signed insurance information sheet. See PL's Statement of Undisputed Facts, ECF No. 15-1, at 1-2. "[I]t was understood, from the information available to H&J from Neurologic Associates, PLC, that the Masters' account was currently active." See Ex. E to PL's Mem. of Law in Supp. of Summ. J., ECF No. 15-7, at 3-4.

         On November 8, 2016, H&J filed a lawsuit against Masters in Winchester General District Court to collect an alleged outstanding balance of $392.99 owed to Neurologic, plus interest, costs, and attorney's fees of $500. See PL's Statement of Undisputed Facts, ECF No. 15-1, at 1. Masters' counsel then notified H&J that the statute of limitations had lapsed. Upon learning of the statute of limitations defense, H&J "subsequently determined, after consultation with Neurologic Associates, PLC, that the Masters account was open, but it did not have any activity on the account within the period of the applicable statute of limitations. The account was sent to H&J for collection by mistake." Ex. G to PL's Mem. of Law in Supp. of Summ. J., ECF No. 15-9, at 2. Prior to Masters responding to the suit, H&J dismissed the suit with prejudice. See id.

         II.

         Both Masters and H&J move for summary judgment, ECF Nos. 14 & 16. In his motion for summary judgment, Masters argues that H&J's initiation of litigation meets the three requirements for an FDCPA violation: (1) Masters is a consumer as defined in § l692a(3) because he is a natural person allegedly obligated to pay a medical debt; (2) H&J, as a law firm seeking repayment of a debt on behalf of a client, is a debt collector under § l692a(6); and (3) H&J engaged in an act or omission in violation of the FDCPA by filing a lawsuit to collect a time-barred debt. Masters contends H&J possessed documents showing that the statute of limitations passed in 2013, three years prior to the initiation of the lawsuit.

         In opposition and in its cross summary judgment motion, H&J does not contest the FDCPA violation but claims the bona fide error defense under 15 U.S.C.S. § l692k(c). H&J argues that filing the time-barred collection action was unintentional and a bona fide mistake because Neurologic agreed to only forward active accounts. Further, H&J contends that its reliance on Neurologic's review of the records was a procedure reasonably adopted to avoid such an error. As different billing records were held by both Neurologic and J.D. Matthews, Neurologic agreed to collect and review the records to verify that accounts were not barred by the statute of limitations. H&J states that it had to rely on Neurologic's review of the records given the nature of Neurologic's two different account records.

         Masters opposed H&J's cross-motion for summary judgment and replied in support of its own motion, arguing that the bona fide error defense is inapplicable because H&J did not commit a bona fide error and did not have procedures reasonably adapted to avoid the error.[3] Masters does not challenge H&J's lack of intention for the error. However, Masters asserts that the error was not bona fide error because, although a debt collector can rely on its client for information, there must be a reasonable or colorable factual basis to believe that the information is accurate; H&J had no reasonable basis because the client's provided documentation showed no activity on the account after 2008. Masters further argues that H&j lacks written procedures reasonably adapted to avoid time-barred claims, and that reliance on Neurologic's representations as the client is insufficient.

         III.

         Pursuant to Federal Rule of Civil Procedure 56(a), the court must "grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett. 477 U.S. 317, 322 (1986); Glynn v. EDO Corp.. 710 F.3d 209, 213 (4th Or. 2013). When making this determination, the court should consider "the pleadings, depositions, answers to interrogatories, and admissions on file, together with . . . [any] affidavits" filed by the parties. Celotex. 477 U.S. at 322. Whether a fact is material depends on the relevant substantive law. Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 248 (1986). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Id. (citation omitted). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. See Celotex, 477 U.S. at 323. If that burden has been met, the non-moving party must then come forward and establish the specific material facts in dispute to survive summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp.. 475 U.S. 574, 586-87 (1986).

         In determining whether a genuine issue of material fact exists, the court views the facts and draws all reasonable inferences in the light most favorable to the non-moving party. Glynn. 710 F.3d at 213 (citing Bonds v. Leavitt. 629 F.3d 369, 380 (4th Or. 2011)). Indeed, "[i]t is an 'axiom that in ruling on a motion for summary judgment, the evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor.'" McAirlaids. Inc. v. Kimberly-Clark Corp.. No. 13-2044, 2014 WL 2871492, at *1 (4th Cir. June 25, 2014) (internal alteration omitted) (citing Tolan v. Cotton. 134 S.Ct. 1861, 1863 (2014) (per curiam)). Moreover, "[credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge . . . ." Anderson. 477 U.S. at 255. However, the non-moving party "must set forth specific facts that go beyond the 'mere existence of a scintilla of evidence.'" Glynn. 710 F.3d at 213 (quoting Anderson. 477 U.S. at 252). Instead, the non-moving party must show that "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Res. Bankshares Corp. v. St. Paul Mercury Ins. Co.. 407 F.3d 631, 635 (4th Cir. 2005) (quoting Anderson. 477 U.S. at ...


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