Opinion
NO. 3:99CV00005
October 11, 2000
Robert Ralph Hagy, II, Jenkins Hagy, PLC, Charlottesville, VA, for Plaintiff.
Holly Jeanne Foster, Scottsville, VA, [Pro Se].
Cheryl V. Higgins, St. John, Bowling Lawrence, Charlottesville, VA, for Defendant.
FINAL ORDER
Before the court is the defendant's Motion for Summary Judgment in the above captioned case. The case was referred to presiding United States Magistrate Judge B. Waugh Crigler, pursuant to 28 U.S.C. § 636(b)(1)(B), to handle certain pre-trial matters, including submission of a report and recommendation with proposed findings of fact and law on the defendant's dispositive motion. Magistrate Judge Crigler returned the report and recommendation on October 15, 1999 and the plaintiff timely filed two sets of objections thereto. Accordingly, the court has performed a de novo review. See 28 U.S.C. § 636 (b)(1)(C). Having considered the Magistrate Judge's report and recommendation, all memoranda of the parties, the applicable law, and for the reasons stated in the accompanying Memorandum Opinion, it is accordingly this day
ADJUDGED ORDERED AND DECREED
as follows:
(1) Magistrate Judge Crigler's report and recommendation, filed October 15, 1999, shall be, and hereby is, ACCEPTED as to its ultimate conclusions, but with different reasoning as to Count Two, as explained in the accompanying Memorandum Opinion.
(2) The defendant's Motion for Summary Judgment, dated September 10, 1999, shall be, and hereby is GRANTED.
(3) The above-captioned civil case shall be stricken from the docket of the court.
The Clerk of Court hereby is directed to send a certified copy of this Order and the accompanying Memorandum Opinion to all counsel of record, the pro se defendant, and Magistrate Judge Crigler.
MEMORANDUM OPINION
This matter comes before the court on the defendant's motion for summary judgment. The case was referred to the presiding United States Magistrate Judge to issue a report and recommendation on dispositive motions, pursuant to 28 U.S.C. § 636(b)(1)(B). The report and recommendation was returned on October 15, 1999 and the plaintiff filed two sets of objections thereto. Accordingly, the court has made a de novo review of the matter, see 28 U.S.C. § 636(b)(1)(C), concluding that the ultimate recommendations of the Magistrate shall be accepted.
The first set of objections, dated October 25, 1999, was submitted by the plaintiff's then-counsel. On November 29, 1999, plaintiff was reinstated as a pro se complainant and was permitted to enter pro se objections to the report and recommendation, which were timely filed on December 13, 1999. Both sets of objections were considered by the court in arriving at its decision.
I.
The essential facts of this matter are uncontested by the parties.
During the months of June and July, 1996, the plaintiff, Holly Jeanne Foster, wrote three checks to the IGA grocery store ("IGA") in Scottsville, Virginia, in the aggregate sum of $302.22. All three checks were returned for insufficient funds. The defendant, Accelerated Recovery is the bad check collection agency for IGA. Accordingly, IGA sent the returned checks to Accelerated Recovery for collection of the monies.
On July 1, 15 and 30, 1996, Accelerated Recovery mailed virtually identical form notices to the plaintiff that checks number 651, 665, and 673 respectively had been turned over to Accelerated Recovery for collection and that the check and returned check fee needed to be paid within ten days of the date of each letter. A $26.00 returned check fee was added to the original amount of each check, totaling $78.00 in fees. No payment was made to either Accelerated Recovery or IGA within ten days of any of the three letters.
On August 7, 1996, Foster paid cash in the amount of $302.22 to Rose Jordan at IGA to satisfy Foster's three bad checks. There is a receipt from IGA showing the amount of payment, with a remaining balance of $78.00, representing the processing fees for the three checks. According to Foster, Jordan informed her that, as far as IGA was concerned, Foster's debt had been satisfied.
On September 6, 1996, almost one full month after Foster had repaid IGA the full amount of the three checks, Wheelock, allegedly acting on behalf of IGA, swore out three criminal bad check warrants for Foster's arrest, pursuant to Virginia Code § 18.2-183. The warrants stated that the plaintiff owed a total of $302.22 and did not allege any debt for the $78.00 in service fees. Prior to swearing out the warrants, Foster alleges that Wheelock was admittedly aware that the Foster had already repaid the check money to Jordan at IGA. The plaintiff was arrested on the warrants on September 13, 1996. All three warrants were either nolle prossed or dismissed in September, 1996.
Plaintiff was allegedly informed by an Assistant Commonwealth's Attorney for the City of Charlottesville that, even though the warrants had been nolle prossed or dismissed, the record of Foster's arrest would still appear on her criminal history. Pursuant to that conversation, on September 26, 1996, Foster wrote Wheelock a letter demanding that the Wheelock retain legal counsel in order to have Foster's criminal arrest record expunged. The letter further stated that if such action was not taken within ten days of the date of the letter, Foster would seek legal action against the defendant. Even though Wheelock did not retain legal services as demanded in the letter, Foster took no further action.
In October, 1997, plaintiff was considered by State Farm Insurance Company for a position at their Charlottesville headquarters. In January, 1998 the plaintiff received a letter from State Farm dated January 26, 1998, indicating that they were unable to consider her for employment with their organization and that this action was influenced by information contained in the consumer report. Approximately two weeks later, the plaintiff received copies of State Farm's background checks. One report showed that Foster was arrested for two counts of "defraud by uttering a bad check." It further showed that one of the charges was dismissed. The other pages of this report are missing.
The plaintiff filed this complaint against the defendant on January 22, 1999.
II.
As a result of the fact situation recounted above, Foster filed a two count law suit against the defendant, Wheelock, doing business as Accelerated Recovery. Count I is a claim under the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et. seq., for allegedly intentionally and willfully providing inaccurate information as to an amount and legal status of an alleged debt. Count II is a claim under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, et seq., for improper use of the criminal process and allegedly making deceptive and misleading representations about the character, amount and legal status of an alleged debt.
A.
Count One alleges that the defendant violated the FCRA. See 15 U.S.C. § 1681 et. seq. In order to be subject to the requirements of the FCRA, the defendant must be a consumer reporting agency. See 15 U.S.C. § 1681(b). A consumer reporting agency is defined by the FCRA as "any person which for monetary fees. . .regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties. . . ." 15 U.S.C. § 1681a(f).
The parties vigorously dispute whether the defendant is a consumer reporting agency and, thereby, subject to the FCRA requirements. The plaintiff claims that, because the defendant collected credit information about the plaintiff for the purpose of furnishing said information to a third party — the Magistrate who issued the warrants for the plaintiff's arrest — the defendant is a consumer reporting agency. The defendant, on the other hand, contends that although it is a debt collection agency (in the business of collecting general bad debts for clients) the defendant should not be considered a consumer reporting agency because none of the information it collects is assembled or furnished with the purpose of providing consumer reports to third parties.
Whether the defendant is subject to the FCRA for providing consumer reports to third parties hinges on the definition of a consumer report. See 15 U.S.C. § 1681a(d). The plaintiff contends that a credit communication regarding a bad check is a consumer report. However, in addition to being a communication bearing on the consumer's credit, such communication must be used or expected to be used for specific purposes, such as establishing the consumer's eligibility for insurance or employment, in order to be deemed a consumer report. See id. None of the eligibility purposes or additional authorized purposes outlined by Congress as being factors in determining whether a credit communication is a consumer report apply to the defendant's actions in this case. See 15 U.S.C. § 1681a(d), 1681b, 1681o.
By stating that the plaintiff owed money on bad checks even after said money had been repaid, the defendant provided false information in sworn testimony to a magistrate in order to have warrants issued for the plaintiff's arrest, presumably for the sole purpose of recovering $78.00 in service fees to which the defendant may or may not have even been entitled. Whether the court interprets this as the defendant merely trying to recover a debt in good faith, or as a wilful act of dishonesty, there is no possible interpretation of the defendant's actions as consistent with any of the definitions for "consumer report." In order to be a consumer reporting agency under the FCRA, the defendant must assemble information for the purposes of furnishing consumer reports to third parties. Because the defendant's credit communications alleged in this case do not fall under the statutory definition of consumer report, the defendant is not subject to the Fair Credit Reporting Act. Accordingly, the recommendation of the Magistrate is accepted and the defendant motion for summary judgment on Count One must be granted.
The charging of processing fees on unsatisfied checks must either be agreed to by the parties or expressly permitted by state law. See § 15 U.S.C. § 1692f(1). Virginia law does not permit such processing fees. See West v. Costen, 558 F. Supp. 564, 582 (W.D.Va. 1983). Whether the parties agreed to the fee in this case is disputed, but need not be decided herein.
B.
Count Two of the complaint alleges that the defendant violated the Fair Debt Collection Practices Act ("FDCPA"). See 15 U.S.C. § 1692 et seq. The defendant moved for summary judgment on this count and, in her opposition memorandum, the plaintiff did not object. Accordingly, the Magistrate recommended granting summary judgment in favor of the defendant on this count, as such motion was apparently uncontested. However, the plaintiff, now acting pro se, argues that she was unaware that her attorney failed to contest the defendant's motion for summary judgment on Count Two. The plaintiff objected to the Magistrate's recommendation, incorporating her arguments in favor of summary judgment for the plaintiff on Count Two from her March 4, 1999 memorandum in support of summary judgment (deemed a motion for default judgment by the court and denied without prejudice). The court considers the defendant's motion for summary judgment as contested and addresses the arguments on their merits.
The defendant is in the business of collecting bad debts for its clients, and is a debt collector for purposes of the FDCPA. See 15 U.S.C. § 1692a(6). The plaintiff alleges various violations of the FDCPA for which the defendant is liable and the defendant argues that such claims are time-barred. Civil suits brought under the FDCPA must be brought within "one year from the date on which the violation occurs." 15 U.S.C. § 1692k(d). The defendant argues that the last act of the defendant with respect to collecting debts from the plaintiff occurred in September 1996, when Wheelock swore out the warrants for Foster's arrest. The plaintiff, however, claims that the acts continued beyond that date, and that the violation did not occur until the plaintiff discovered the acts. The discovery of the violation, according to the plaintiff, came in January 1998, when Foster first learned, in the unfortunate circumstance of losing a job opportunity, that her criminal record from the warrants had not been expunged. The plaintiff had allegedly been informed that only the defendant could have the plaintiff's record expunged, and had demanded by letter dated September 26, 1996 that the defendant do exactly that. However, after that letter, in which Foster threatened legal action if Wheelock did not act within ten days, apparently neither party did anything further with regards to the plaintiff's criminal record. The plaintiff claims that, when she learned in January, 1998 that her record had not been expunged, a violation occurred, thereby starting the one year FDCPA statute of limitations.
There are apparently multiple violations of the FDCPA committed by the defendant, such as violating the regulations for communicating with customers regarding their debts. See 15 U.S.C. § 1692c(a). The defendant is no stranger to this court, because less than three months prior to Wheelock's involvement with Foster, the court ruled against the defendant for violating the FDCPA by using the same form notices that Wheelock again used in her communications with Foster. See Shifflett v. Accelerated Recovery Systems, Inc., 939 F. Supp. 1234 (W.D.Va. 1996). Apparently, an adverse judgment for violating the FDCPA was insufficient to inspire the defendant's compliance with consumer protection laws. However, it is clear that the instant violations occurred more than one year prior to the filing of this lawsuit.
The plaintiff argues that the statute of limitations did not commence until the plaintiff was aware of the violation, which was allegedly Wheelock's failure to have Foster's criminal record expunged. Assuming, arguendo, that failure to expunge a criminal record based on one's own false testimony is actionable under § 1692d of the FDCPA, the plaintiff's claim is still time-barred. At the very latest, on the date the plaintiff sent a letter demanding that the defendant seek to expunge the plaintiff's record, the plaintiff was on notice of the defendant's behavior (and alleged violation of the FDCPA). The plaintiff alleges that she was surprised to learn in 1998 for the first time that the defendant had not kept her word and had the plaintiff's criminal record expunged, alleging that Foster had "every reason to believe that Ms. Wheelock would follow through on her promise to set the record straight. . . ." (Compl. at ¶ 19.) However, the plaintiff had every reason in the world not to trust the defendant, who, according to the facts as alleged by the plaintiff, had already proven herself to be unworthy of such a high level of the plaintiff's confidence. The plaintiff's skepticism that the defendant would "set the record straight"is exemplified by the plaintiff's threat to resort to legal action if the defendant failed to act. (Sept. 16, 1996 letter.) The fact that the plaintiff did not follow up on her own criminal record, knowing full well the circumstances under which the record was created, does not extend the statute of limitations in this case. Even if the failure of the defendant to expunge was actionable, the plaintiff was aware of the situation as early as September 1996, and her failure to keep abreast of the situation cannot extend the limited time period within which she had to act in order to seek a civil remedy against the defendant. Apparently, the plaintiff's unwarranted trust in the defendant to right a wrong prevented the plaintiff's timely filing of this lawsuit. Thus, the defendant, notwithstanding her repeated refusal to respect the consumer protection laws, has narrowly escaped a judgment against her in this court. The defendant's motion for summary judgment on Count Two must be granted.
The parties also contest whether Wheelock violated the FDCPA by allegedly advising Swiss Way, a local business, not to accept Foster's checks. Even if this did occur, which the defendant contests, the plaintiff was aware of this action no later than February, 1997, almost two years prior to filing this action, and well past the FDCPA one year statute of limitations.
III.
For the foregoing reasons, the recommendations of the Magistrate on Counts One and Two shall be accepted, but for different reasons on Count Two, as explained above. The defendant's motion for summary judgment shall be granted in its entirety and the matter shall be stricken from the docket of the court. An appropriate Order shall this day enter.