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Sparks v. EquityExperts.Org, LLC

United States District Court, E.D. Michigan, Southern Division

July 12, 2018




         Plaintiffs Melvin and Angela Sparks claim that Defendant EquityExperts.Org, LLC, violated the Fair Debt Collection Practices Act (“FDCPA”) and the Michigan Occupational Code (“MOC”) while trying to collect on Plaintiffs' overdue homeowner's association account. Before the court are the parties' stipulated factual record, their cross motions for judgment, and their court-ordered additional briefing. (Dkt. ##22, 24, 25, 27, 33, 34.) For the following reasons, Plaintiffs' motion for judgment is denied, and Defendant's motion for judgment is granted in part and denied in part.

         I. BACKGROUND

         Plaintiffs own real property in Virginia. When they accepted title to the property, they agreed-under the Association's governing documents-to pay certain fees to their homeowner's association, Four Mile Run Homeowner's Association, Inc. (the “Association”). Those governing documents also dictated what would happen in the event that Plaintiffs failed to pay those fees:

The annual and special assessments, together with interest, costs and reasonable attorney's fees, shall be a charge on the land and shall be a continuing lien upon the property against which each such assessment is made.

(Dkt. #22-12 Pg. ID 154 (emphasis added).)

         Plaintiffs fell behind on their payments. On December 12, 2016, they owed $220.00 in past due fees and assessments. The Association assigned Plaintiffs' account to Defendant for collection. Defendant promptly sent Plaintiffs a letter, dated December 13, 2016, to collect the debt. The letter in part informed Plaintiffs that “[t]he Association reports that you have not paid your share of the Association's assessments and your total unpaid balance is $490.00.” (Dkt. #22-4 Pg. ID 133.) The letter warned that the stated balance “may also include special assessments, interest, fees, and/or fines charged by the Association, and any attorney's fees and collection costs incurred by the Association to collect the debt.” (Id.) The record reveals that the $270.00 difference between Plaintiffs' overdue balance and the stated debt amounted to the alleged “costs” for completion of Defendant's “FDCPA Compliance Assurance Package/Pre-Lien Review” Process (Dkt. #25 Pg. ID 239)-and the heart of the parties' dispute.

         A little over three weeks after Defendant sent its first letter, Plaintiff Angela Sparks called Defendant three times; no one answered the phone, and she left a voicemail to conclude each call. (Dkt. #22-3 Pg. ID 130.) The voicemails went unreturned.

         Defendant sent another letter in February 2017, this time informing Plaintiffs that Defendant had “proceeded with the next step in [its] collection process and an additional $350.00 collection cost has been charged to the [A]ssociation to be added to your balance.” (Dkt. #22-5 Pg. ID 134.) The $350.00 apparently represented Defendant's additional collection costs for what it terms “Escalated Outreach.” (Dkt. #22-6 Pg. ID 135; Dkt. #25 Pg. ID 239.)[1]

         Plaintiffs received a “Statement” from Defendant dated March 3, 2017. The Statement reflects a $70.00 payment from Plaintiffs and a remaining balance due of $1, 075.00. (Dkt. #22-6 Pg. ID 135.) A few days later, Plaintiff Angela Sparks spoke on the phone with one of Defendant's representatives. (See Dkt. #22-3 Pg. ID 131.) Despite the parties' averment to the court that they agreed to all the material facts in this case (see Dkt. #19), there is a dispute about what happened during that call: Plaintiffs say that the parties agreed to settle the debt for $330.00, an amount Plaintiffs paid in early March 2017 (see Dkt. #22 Pg. ID 116-17); Defendant says that the settlement was predicated on payment of $225.00 to the Association, which was never completed (see Dkt. #24 Pg. ID 225-26); Plaintiff replies that the $225.00 payment was made in two separate installments (see Dkt. #27 Pg. ID 258).[2]

         Defendant continued its collection efforts, sending another letter in March, two in April, and one in May. (See Dkt. #22-2 Pg. ID 128-29.) The last letter including a dollar amount owed was dated March 24, 2017-it represented that the “balance due” for Plaintiffs' file was $800.00. (Dkt. #7.) As of May 16, 2017, Plaintiffs' account history with the Association provided for an overdue balance of only $172.77. (Dkt. #22-11 Pg. ID 141.)


         As the court has already observed, the FDCPA was enacted in response to “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.” 15 U.S.C. § 1692(a). Both sides are in agreement that the FDCPA applies to the parties' transactions in this case. They agree that, as defined by the FDCPA, Plaintiffs are “consumers, ” Defendant is a “debt collector, ” and the debt at issue is a “debt.” See § 1692a(3), (5), (6); Dkt. #22-2 Pg. ID 127. The parties dispute, however, whether Defendant violated a substantive provision of the FDCPA.

         On first review of this case, the court explained that it was uncertain whether Defendant could recover its own costs of collection; from the evidence and arguments presented, it could not tell whether Defendant's costs of collection would ...

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