Heidi Anglin v. Merchants Credit Corp. ( 2019 )


Menu:
  •                            NOT FOR PUBLICATION                           FILED
    UNITED STATES COURT OF APPEALS                       NOV 20 2019
    MOLLY C. DWYER, CLERK
    U.S. COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    HEIDI ANGLIN; ERNEST ANGLIN,                    No.    18-35906
    husband and wife separately and the marital
    community composed thereof,                     D.C. No. 2:18-cv-00507-JCC
    Plaintiffs-Appellants,
    MEMORANDUM*
    v.
    MERCHANTS CREDIT CORPORATION,
    a Washington state corporation; JASON
    WOEHLER, on belief, a single man,
    Defendants-Appellees.
    Appeal from the United States District Court
    for the Western District of Washington
    John C. Coughenour, District Judge, Presiding
    Submitted November 6, 2019**
    Seattle, Washington
    Before: GOULD and NGUYEN, Circuit Judges, and PRESNELL,*** District
    Judge.
    *
    This disposition is not appropriate for publication and is not precedent
    except as provided by Ninth Circuit Rule 36-3.
    **
    The panel unanimously concludes this case is suitable for decision
    without oral argument. See Fed. R. App. P. 34(a)(2).
    ***
    The Honorable Gregory A. Presnell, United States District Judge for
    the Middle District of Florida, sitting by designation.
    The Anglins appeal the judgment of the district court dismissing some of
    their claims on the basis of res judicata and one of their claims on the merits. We
    have jurisdiction pursuant to 28 U.S.C. § 1291. We affirm in part and reverse in
    part.
    The district court erred in dismissing the Fair Debt Collection Practices Act
    (“FDCPA”), Consumer Protection Act (“CPA”), and negligence claims on the
    basis of res judicata. Under Washington law, the doctrine of res judicata applies
    where a prior judgment “concurs in identity” with a subsequent action with respect
    to: “(1) subject matter; (2) cause of action; (3) persons and parties; and (4) the
    quality of the persons for or against whom the claim is made.” Feminist Women’s
    Health Ctr. v. Codispoti, 
    63 F.3d 863
    , 867 (9th Cir. 1995) (quoting Rains v. State,
    
    674 P.2d 165
    , 168 (Wash. 1983) (en banc)). Res judicata applies to matters
    actually litigated as well as those that could and should have been litigated. See 
    id. The FDCPA
    claim and the derivative claims (“the federal court claims”)
    brought by the Anglins in federal court had a different factual basis than the state
    court claims. The events underlying the federal court claims occurred during the
    state court litigation. The federal court claims could have merit even though the
    state court claims did not. See 15 U.S.C. § 1692f(1).
    The district court noted that the Anglins could have amended their claim in
    state court in order to include the claim that arose during the state court litigation.
    2
    However, “a judgment upon one cause of action does not bar suit upon another
    cause which is independent of the cause which was adjudicated.” Seattle-First
    Nat’l Bank v. Kawachi, 
    588 P.2d 725
    , 728 (Wash. 1978). In this case, the federal
    court claims arose out of an entirely separate transaction that, while related in
    subject matter, was otherwise independent of the claims adjudicated in state court.
    See 
    id. at 728.
    The Anglins had no obligation to seek an amendment to their
    complaint alleging these new claims, and those claims are not barred on the basis
    of res judicata.
    The district court did not err in dismissing the Equal Credit Opportunity Act
    (“ECOA”) claim. The district court dismissed the ECOA claim on the merits. We
    affirm its decision. While the district court rightly decided that the ECOA claim
    was meritless, it erred in finding that the ECOA claim was not barred on the basis
    of res judicata.
    Had the Anglins not voluntarily dismissed their ECOA claim in state court,
    they could have (and should have) adjudicated it there. It involved the same facts
    as their state court FDCPA claim. At issue in the ECOA claim was whether the
    collection action improperly attempted to hold each spouse liable for the other’s
    debt. That issue was closely related to issues actually decided by the state court. It
    was not independent of the state law claim. See 
    Kawachi, 588 P.2d at 728
    .
    3
    As for the merits of the ECOA claim, the Anglins failed to allege that the
    Defendants were creditors under the ECOA. Even if the Defendants were creditors
    for purposes of the ECOA, collection activities related to defaulted debt are
    exempted from the ECOA. 15 U.S.C. § 1691(d)(6). Accordingly, the ECOA claim
    lacks merit.
    AFFIRMED IN PART, REVERSED IN PART, AND REMANDED
    FOR FURTHER PROCEEDINGS CONSISTENT HEREWITH.
    4