Echlin v. Dynamic Collectors, Inc.

Citations: 102 F. Supp. 3d 1179; 2015 U.S. Dist. LEXIS 56341; 2015 WL 1954540Docket: Case No. C14-5718 BHS

Court: District Court, W.D. Washington; April 29, 2015; Federal District Court

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The court issued an order detailing the outcomes of multiple motions filed by both parties in the case involving Plaintiff Zachary Echlin and Defendant Dynamic Collectors, Inc. The order denied Echlin's motion for a continuance and denied Dynamic's motion for summary judgment. It granted Dynamic's motion to strike Echlin’s surreply and denied as moot Dynamic's motion for a protective order. Additionally, the court granted in part and denied in part Echlin's motion for an extension of time regarding class certification.

The procedural history outlines that Echlin filed a class action complaint on September 10, 2014, alleging violations of the Fair Debt Collection Practices Act (FDCPA) by Dynamic. Subsequent motions included Dynamic's motion for summary judgment and various responses and replies from both parties, culminating in a series of filings between January and March 2015.

Factual background indicates that Echlin incurred a balance with PeaceHealth Medical Group following medical treatment. PeaceHealth's policies stipulate that accounts are due in full at billing, and accounts not settled within 30 days may be considered past due, potentially leading to collection agency involvement after 90 days of non-payment. Payments were made on Echlin’s account in late 2013, but subsequent communications from PeaceHealth regarding the outstanding balance did not result in further payments. Dynamic is contracted with PeaceHealth to act as its collection agency, which includes a 30-day pre-collection period for delinquent accounts.

After April 14, 2014, Echlin received a letter from PeaceHealth indicating that his account was delinquent and under review for collections. The letter encouraged him to resolve the issue to avoid full collection status, which could lead to negative credit reporting. It provided contact details for payment and stated that if no response was received within thirty days, the account would be transferred to Dynamic Collectors, Inc.

Subsequently, after May 20, 2014, Echlin received a letter from Dynamic stating that his account was now with them for collection. This letter outlined his rights regarding disputing the debt and included their contact information for payment. Both letters were sent to Echlin by Dynamic, and all of Echlin’s claims under the Fair Debt Collection Practices Act (FDCPA) are based on the April 2014 letter.

In response to Dynamic's motion for summary judgment, Echlin requested a continuance until the close of discovery on November 18, 2015. Under Federal Rule of Civil Procedure 56(d), a party can seek a continuance if they can show that they need additional discovery to adequately defend against a summary judgment motion. Echlin failed to provide an affidavit detailing the specific facts he aimed to discover and their relevance to opposing the motion. He also did not indicate any deficiencies in Dynamic's discovery responses despite having additional time to conduct discovery after Dynamic filed their motion. As a result, the Court denied Echlin's motion for a continuance and will proceed with addressing the merits of Dynamic’s summary judgment motion.

Dynamic seeks summary judgment on two primary grounds: (1) it is not classified as a debt collector under the Fair Debt Collection Practices Act (FDCPA) because Echlin's account was not in default when the April 2014 letter was sent; and (2) it acted solely as a mailing service for PeaceHealth, thus exempting it from FDCPA regulations. 

Summary judgment is appropriate if there are no genuine disputes regarding material facts and the moving party is entitled to judgment as a matter of law, as outlined in Federal Rule of Civil Procedure 56(c). The moving party can obtain judgment if the opposing party fails to provide adequate evidence on an essential element of their claim. A genuine dispute exists if sufficient evidence supports differing factual claims, necessitating resolution by a judge or jury. The court must favor the nonmoving party in factual disputes, provided their evidence directly contradicts that of the moving party. However, mere assertions without specific evidence or conclusions lacking detail are insufficient to oppose a summary judgment motion.

Dynamic contends that since Echlin's debt was not in default at the time of the April 2014 communication, it does not meet the FDCPA's definition of a "debt collector." The FDCPA applies only to those who collect debts that are in default when acquired. The statute does not provide a definition for "in default," requiring judicial interpretation.

Courts in the Ninth Circuit assess whether a debt is in default based on the terms of the underlying contract and applicable state law. In this case, no specific contract between Echlin and PeaceHealth defining the conditions of default was presented, nor was any pertinent Washington law identified. Consequently, a case-by-case analysis is necessary to determine the default status of Echlin’s debt at the time Dynamic acquired it. Case law suggests that a debt is considered "in default" when it is at least delinquent, with distinctions made between merely outstanding debts and those that have gone into default after a period of time.

Dynamic argues that Echlin’s account was merely "delinquent" when a letter was sent in April 2014, but this belief does not determine the actual status of the debt. Objective indicators of the debt's status are crucial; however, evidence is sparse. Echlin last made a payment on December 19, 2013, and received several account balance letters from PeaceHealth in early 2014, to which no payments were made. PeaceHealth’s policy states that accounts may be forwarded to collections after 90 days of non-payment. The April 14, 2014, letter from Dynamic does not provide enough evidence to conclude that the debt was not in default at that time. As a result, the Court denies Dynamic’s motion regarding Echlin’s debt status.

Dynamic asserts it acted solely as a mailing service for PeaceHealth in sending the April 2014 letter, thus claiming it is not classified as a debt collector under the Fair Debt Collection Practices Act (FDCPA). To substantiate this, Dynamic cites Powell v. Computer Credit, Inc., where the court ruled that a company was merely a mailing service based on factors such as the letter’s return address indicating it was from the medical center, the debtor being directed to contact the medical center, and the medical center having final approval over the letter's content. Other cases have similarly found a company to be a mailing service when it lacks input on the letter's content and receives a flat rate for mailing.

In this case, the court found that while the April 2014 letter includes PeaceHealth’s contact information and is printed on its letterhead, there is no evidence that PeaceHealth participated in the content or approval of the letter. Consequently, there is insufficient evidence to support Dynamic's claim of being a mailing service rather than a collection service, leading to the denial of Dynamic's motion for summary judgment.

Dynamic also requested the court to bifurcate the case into a liability phase and a class allegation phase, along with a protective order regarding class discovery. However, since the summary judgment motion was denied, this request was deemed moot. Separately, Echlin sought an extension for the class certification deadline from March 9, 2015, to October 16, 2015. Dynamic opposed this, suggesting a shorter extension based on the timing of its discovery responses. The court noted the requirement for early class certification rulings and the potential for deadline extensions upon good cause. Echlin's motion for class certification was originally due on March 9, 2015.

Echlin served class discovery requests to Dynamic on January 26, 2015, with responses due by February 26, 2015. Echlin had twelve days between the response deadline and the deadline to file for class certification. Dynamic did not respond to the discovery requests due to a pending motion for a protective order, which the Court subsequently denied as moot. Although Echlin sought an extension for class certification, the Court found he did not demonstrate good cause for an extension to October 16, 2015. Instead, the Court granted Echlin twelve days from receiving Dynamic's responses to file for class certification.

The Court issued several orders: Echlin's motion for a continuance was denied, Dynamic's motion to strike Echlin’s surreply was granted, Dynamic's motion for summary judgment was denied, and Dynamic's motion for a protective order was denied as moot. Echlin’s surreply, which included additional evidence regarding Dynamic's summary judgment motion, was deemed improper under Local Rule 7(g) and therefore struck. The Court accepted the representations of both parties regarding the content of certain policies and letters, as neither party provided copies. Additionally, Dynamic argued it did not violate 15 U.S.C. § 1692j(a) concerning the April 2014 letter, but since Echlin did not allege such a violation in his complaint or responses, the Court did not address this argument.