Mccollough v. Johnson, Rodenburg & Lauinger, LLC

Facts

P opened a credit card account with Chemical Bank around 1990. Chemical Bank merged with the Chase Manhattan Bank in 1996 and continued business under the Chase Manhattan name. P continued to make purchases on the account. P and his wife fell behind on their credit card bills after he allegedly suffered a brain injury at work and she underwent surgery. P made his last payment on the Chase Manhattan account in 1999, and an unpaid balance of approximately $3,000 remained. In 2000, Chase Manhattan 'charged off' the account on its books. Collect America, Ltd. (CAL) through its subsidiary, CACV of Colorado, Ltd. (CACV), is a purchaser of bad debt portfolios. In 2006, CAL retained D, a law firm specializing in debt collection, to pursue collection of P's outstanding debt. Some of D's lawyers are admitted to practice in Montana. During the period from January 2007 through July 2008, D filed 2,700 collection lawsuits in Montana. On an average day, D filed five lawsuits in the state; on one day, JRL filed 40 lawsuits. D attorney Lisa Lauinger testified that approximately 90% of the collection lawsuits resulted in a default judgment. The contract between D and CAL contained the following disclaimer: 'Collect America makes no warranty as to the accuracy or validity of data provided.' In addition, the contract expressly made D 'responsible to determine [its] legal and ethical ability to collect these accounts.' D's screening procedures flagged a statute of limitations problem with P's debt. D asked CACV with an instrument in writing to extend the Statute of Limitations on the account. CACV responded that P had made a $75 partial payment on June 30, 2004, and inquired: 'Do you need any info from me on this one?' This meant the five-year statute of limitations on the claim against P would not have expired until 2009. The information provided by CACV was incorrect. P had not made a partial payment on June 30, 2004. The 'payment' was the return of court costs to CACV for a collection complaint and summons that CACV had prepared in 2003. On April 17, 2007, D filed a collection complaint in Montana state court. The complaint sought judgment for an account balance of $3,816.80, interest of $5,536.81, attorney's fees of $481.68, and court costs of $120.00. D admitted that it had made no inquiry into whether a partial payment occurred on June 30, 2004, and had simply relied upon the information provided by the client. P filed a pro se answer asserting a statute of limitations defense. P telephoned D and left a message indicating that he would be seeking summary judgment on the basis of the statute of limitations. On August 6, 2007, CACV informed D that P had not made a partial payment on June 30, 2004, as previously stated; rather, the entry on that date 'was actually unused costs by another office, not payment.' In October 2007, D served on P a list of twenty-two requests for admission that did not include an explanation that, under Montana Rule of Civil Procedure 36(a), the requests would be deemed admitted if P did not respond within thirty days. P retained counsel and timely denied all of the requests. D issued a subpoena to Chase in November 2007 seeking production of the operative records from P's account. Chase responded a month later that it had no records of the account. D started to panic and got to the truth. That afternoon, CACV instructed D to dismiss the suit 'asap.' D moved for dismissal with prejudice and the state court dismissed the action. P sued D in federal district court alleging violations of the FDCPA and the MCPA, along with state law claims for malicious prosecution and abuse of process. The district court found that D filed a time-barred lawsuit against P and that D had information from its client demonstrating that the lawsuit was time-barred. D prosecuted the time-barred lawsuit for a number of months afterward. The district court granted P partial summary judgment on his FDCPA claims. The jury found in favor of P on all remaining claims and awarded him the $1,000 statutory maximum for violations of the FDCPA; $250,000 for emotional distress; and $60,000 in punitive damages. D appealed. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

© 2007-2024 ABN Study Partner.