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Truhn v. Equityexperts.Org, LLC

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

November 20, 2019



          MARK A. GOLDSMITH United States District Judge

         Plaintiffs Chad and Caitlin Truhn fell behind on their payments to their homeowners' association, Landsdowne Community Association (the “Association”). In their agreement with the Association, the Truhns agreed to pay the costs of collecting their fees, a task the Association outsourced to Defendant, LLC (“Equity Experts”) in November 2017. Over the course of Equity Experts' involvement, the Truhns' debt grew from $577.42 in delinquent assessments in November 2017 to $2, 269.31 in March 2018, when they paid $2, 232.21 to settle their debt. 7/2/18 Statement, Ex. 7 to Mot. for Summ. J. at 19-20 (Dkt. 27-7).[1] The Truhns subsequently brought this case alleging that Equity Experts' collections practices violate the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. They now move for summary judgment (Dkt. 27). For the reasons discussed below, the motion is granted in part.

         I. BACKGROUND

         By accepting title to their Virginia property, the Truhns agreed to pay the Association regular and special assessments, “together with such interest thereon and costs of collection thereof.” Statement of Additional Material Facts ¶ 2 (“SAMF”) (Dkt. 32) (quoting Decl. of Covenants, Conditions and Restrictions at 8, Ex. 1 to Resp. (Dkt 32-2)). “Costs of collection” include “interest, costs, and reasonable attorney fees.” Id. These financial obligations became charges against the land and a continuing lien on the lot, as well as the personal obligation of the Truhns. Id. From the uncontested ledger, it appears the Truhns missed their July and October quarterly assessments; with late fees, the Truhns owed $577.42 as of October 31, 2017. See Association Ledger, Ex. 3 to Mot. (Dkt. 27-3). The Association retained Equity Experts in November 2017. SAMF ¶ 4.

         Equity Experts sent a dunning letter to the Truhns on November 21, 2017. Ex. 2 to Mot. (Dkt. 27-2) (“November 21 Letter”). This letter said the Truhns owed $847.42, and it noted that the debt “may consist of regular association assessments, special assessments, interest, fees, fines and costs, which include amounts incurred by the Association to collect the debt.” Id. The $847.42 included $577.42 for association dues and late fees and $270 for sending the November 21 Letter. Counterstatement of Material Facts ¶ 5 (“CMF”). The charges were not itemized in the November 21 Letter, and the parties dispute whether the letter's language describing what the debt “may consist of” was sufficient to inform the Truhns of the amount and character of the debt.

         On January 31, 2018, Equity Experts sent another collection letter to the Truhns. Ex. 5 to Mot. (Dkt. 27-5) (“January 31 Letter”). The letter stated the following:

In our previous letter, we advised you that if the debt was not paid within 15 days, a lien would be filed against your property and additional collection charges would be added to your debt. Unfortunately, we have not received full payment of the debt. Accordingly, this letter is your notice that a lien has been mailed for recording against your property. A $395.00 collection fee, actual attorney's fees incurred to prepare the lien and actual filing fees have been charged to your association, who will add these charges to your balance.

Id. That letter also provided a list of the charges-separated into categories such as “assessment, ” “collection costs, ” and “attorney's fees”-and provides instructions “to make a payment or obtain a release of this lien.” Id. Equity Experts never recorded a lien. CMF ¶ 16.

         Equity Experts contends that Virginia law requires an attorney to execute a property lien, so it sent the draft lien and check for actual costs to attorney Tom Hodges in Virginia. Id. Equity Experts alleges that “[b]ecause Plaintiffs paid off their account in full, the lien was not filed to honor Plaintiffs' payment to satisfy the account.” Id.; see also CMF ¶ 10. The Truhns deny this allegation and point to the fact that the lien had not been recorded by the time the Truhns paid their debt in full, one-and-a-half months after Equity Experts stated that it had mailed the lien to be recorded. Reply to Counter-Statement of Material Facts ¶ 10 (“RCMF”). The parties agree that Equity Experts never stated that a lien was recorded. SAMF ¶ 11. The Truhns contend that “the clear implication in those statements is that the lien would be recorded.” Mot. at 18.

         On February 16, 2018, Equity Experts sent another letter. Ex. 9 to Mot. (Dkt. 27-9) (“February 16 Letter”). It stated, among other things, the following:

You were advised in a previous letter that a lien has been sent for recording against the property. A lien for unpaid association assessments remains until it is removed by a court, the debt is satisfied or the debt is paid in full. The law also permits the association to enforce its lien by foreclosure, if it chooses. Please note that the association has not started foreclosure proceedings at this time. That decision belongs only to your association and they may choose not to foreclose. If the association decides to enforce its lien at a future date, you will receive the notice that the law requires before that step is taken.


         On March 14, 2018, the Truhns paid $2, 232.21 to Equity Experts to settle their debt. See 7/2/18 Statement.


         A motion for summary judgment under Federal Rule of Civil Procedure 56 shall be granted “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). A genuine dispute of material fact exists when there are “disputes over facts that might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “[F]acts must be viewed in the light most favorable to the nonmoving party only if there is a ‘genuine' dispute as to those facts.” Scott v. Harris, 550 U.S. 372, 380 (2007). “Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The moving party may discharge its burden by showing “that there is an absence of evidence to support the nonmoving party's case.” Horton v. Potter, 369 F.3d 906, 909 (6th Cir. 2004) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)).

         Under the FDCPA, courts review a debt collector's representations under the “least sophisticated consumer standard, ” an objective test meant to ensure that the FDCPA protects all consumers. Barany-Snyder v. Weiner, 539 F.3d 327, 333 (6th Cir. 2008).

         III. ANALYSIS

         To prevail on a claim under the FDCPA, a plaintiff must show that (1) she is a “natural person obligated or allegedly obligated to pay any debt, ” 15 U.S.C. § 1692a(3); (2) the “debt” arises out of a transaction entered primarily for personal, family, or household purposes, 15 U.S.C. § 1962a(5); (3) the defendant is a “debt collector, ” within the meaning of 15 U.S.C. § 1692a(6); and (4) the defendant violated a provision of the FDCPA. Dunn-Mason v. JP Morgan Chase Bank, N.A., No. 11-13419, 2013 WL 5913684, at *11 (E.D. Mich. Nov. 1, 2013).

         Although Equity Experts argues that the Truhns failed to file an affidavit supporting their position that their debt is a consumer debt and that Equity Experts is a debt collector, Resp. at 22, Equity Experts does not seriously deny that Truhn is a consumer, that the alleged debt is a “debt” as defined by the FDCPA, or that Equity Experts is a “debt collector” under the FDCPA.[2] The Truhns meet the threshold requirements of an FDCPA claim, and the only dispute for each claim under the FDCPA is whether Equity Experts violated a provision of the FDCPA.

         1. Violation of 15 ...

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