Hendricks v. Hunts and Henriques, CLP ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 SYNDEE HENDRICKS, No. 2:19-cv-02334-KJM-AC 12 Plaintiff, 13 v. ORDER 14 HUNTS & HENRIQUES and SYNCHRONY BANK, 15 Defendants. 16 17 18 Defendant Hunt & Henriques (“H&H”) moves for summary judgment and 19 sanctions. Mot. Summ. J. (“MSJ”), ECF No. 13; Mot. Sanctions, ECF No. 19. Plaintiff Syndee 20 Hendricks (“Hendricks”) withdrew her opposition to the MSJ and filed a statement of non- 21 opposition. Not. Withdrawal of Opp’n, ECF No. 31. Hendricks opposes the motion for 22 sanctions, however. Opp’n to Sanctions, ECF No. 21. H&H replied to both motions. MSJ 23 Reply, ECF No. 24; Sanctions Reply, ECF No. 25. H&H filed a notice of supplemental authority 24 on its motion for sanctions. Not. Suppl. Authorities, ECF No. 33. Plaintiff’s counsel filed a 25 declaration in opposition to the motion for sanctions after the initial filing, ECF No. 34, and 26 defendant objected it was an unpermitted surreply. ECF No. 35.1 27 1 While the court did not authorize further briefing, it has considered the supplemental filings, 28 finding no material effect on the outcome and therefore no prejudice to either side. 1 The court submitted the matter on the papers after receiving plaintiff’s non- 2 opposition to the motion for summary judgment. Having reviewed the moving papers, and the 3 applicable law, the court GRANTS the motion for summary judgment and DENIES the motion 4 for sanctions. 5 I. BACKGROUND 6 This action arises under the federal Fair Debt Collection Practices Act 7 (“FDCPA”), 15 U.S.C. § 1692 et seq., and California’s Rosenthal Fair Debt Collection Practices 8 Act (“Rosenthal Act”), Cal. Civ. Code section 1788. Compl., ECF No. 1, ¶¶ 1.1–1.2. Plaintiff 9 was issued a credit card by defendant Synchrony Bank (“Synchrony”). Id. ¶ 4.1. Plaintiff 10 incurred $881.36 in debt on the card. Id. ¶ 4.7. 11 On or about June 28, 2019, plaintiff received a document in the mail purporting to 12 be a “Summons” naming her as a defendant in an action filed by Synchrony Bank in Santa Clara 13 County Superior Court. Id. ¶ 4.3. The summons does not specify a cause of action or a credit 14 card account number. Compl. Ex. A. (“Fake Summons”), ECF No. 1–1. The attorneys of record 15 for Synchrony were listed on the purported summons as Michael S. Hunt and Janalie Henriques 16 of “Hunts [sic] & Henriques.” Compl. ¶ 4.4; H&H Statement of Undisputed Facts (“SUF”) 3, 17 ECF No. 13–3. However, the case number on the summons does not correspond to any suit in 18 Santa Clara Superior Court. Sherill Decl. ¶ 4, ECF No. 13–2; Apps Decl. ¶ 9 ECF No. 22–1. 19 The parties agree the summons is fake, thus the court’s use of the moniker “Fake Summons” to 20 identify it. 21 Following her receipt of the Fake Summons, plaintiff settled her debt to Synchrony 22 on a payment plan through a debt settlement company. Compl. ¶¶ 4.7–4.8. On November 18, 23 2019, plaintiff filed this complaint alleging H&H violated the FDCPA and Rosenthal Act by 24 fraudulently representing there was an action on the debt pending in Santa Clara Superior Court 25 when there was no such case. Compl. ¶¶ 5.1–6.7. 26 On April 30, 2020, the court held a scheduling conference by video 27 teleconferencing and issued a Rule 16 scheduling order setting the close of fact discovery for 28 August 8, 2020, as the parties proposed in their joint statement. Sched. Min., ECF No. 15. As 1 noted, H&H has moved for summary judgment and sanctions. See generally MSJ; Mot. 2 Sanctions. 3 II. LEGAL STANDARD 4 A court will grant summary judgment “if . . . there is no genuine dispute as to any 5 material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). 6 The “threshold inquiry” is whether “there are any genuine factual issues that properly can be 7 resolved only by a finder of fact because they may reasonably be resolved in favor of either 8 party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). 9 The moving party bears the initial burden of showing the district court “that there 10 is an absence of evidence to support the nonmoving party’s case.” Celotex Corp. v. Catrett, 11 477 U.S. 317, 325 (1986). The burden then shifts to the nonmoving party, which “must establish 12 that there is a genuine issue of material fact . . . .” Matsushita Elec. Indus. Co. v. Zenith Radio 13 Corp., 475 U.S. 574, 585 (1986). In carrying their burdens, both parties must “cit[e] to particular 14 parts of materials in the record . . .; or show [] that the materials cited do not establish the absence 15 or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to 16 support the fact.” Fed. R. Civ. P. 56(c)(1); see also Matsushita, 475 U.S. at 586 (“[the 17 nonmoving party] must do more than simply show that there is some metaphysical doubt as to the 18 material facts”). Moreover, “the requirement is that there be no genuine issue of material fact. . . . 19 Only disputes over facts that might affect the outcome of the suit under the governing law will 20 properly preclude the entry of summary judgment.” Anderson, 477 U.S. at 247–48 (emphasis in 21 original). 22 In deciding a motion for summary judgment, the court draws all inferences and 23 views all evidence in the light most favorable to the nonmoving party. Matsushita, 475 U.S. at 24 587–88; Whitman v. Mineta, 541 F.3d 929, 931 (9th Cir. 2008). “Where the record taken as a 25 whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine 26 issue for trial.’” Matsushita, 475 U.S. at 587 (quoting First Nat’l Bank of Arizona v. Cities Serv. 27 Co., 391 U.S. 253, 289 (1968)). 28 ///// 1 A district court may not grant a motion for summary judgment solely because it is 2 unopposed. Henry v. Gill Indus., Inc., 983 F.2d 943, 950 (9th Cir. 1993). Instead, the court must 3 determine whether the movant has satisfied “its burden of showing its entitlement to judgment.” 4 Cristobal v. Siegel, 26 F.3d 1488, 1491 (9th Cir. 1994). 5 III. DISCUSSION 6 a. Summary Judgment 7 To prevail on her FDCPA claim, plaintiff must show (1) she is a consumer; (2) the 8 debt at issue arises from a transaction entered into for personal purposes; (3) defendant is a debt 9 collector within the meaning of 15 U.S.C. § 1692a(6); and (4) defendant violated one of the 10 provisions of the FDCPA, 15 U.S.C. §§ 1692a-1692o. Alonso v. Blackstone Fin. Group., LLC, 11 962 F. Supp. 2d 1188, 1193–94 (E.D. Cal. 2013) (citations omitted). Likewise, “[t]he Rosenthal 12 Act mimics or incorporates by reference the FDCPA’s requirements . . . and makes available the 13 FDCPA’s remedies for violations.” Riggs v. Prober & Raphael, 681 F. 3d 1097, 1100 (9th Cir. 14 2012). The FDCPA forbids the use of false, misleading or deceptive representations in 15 connection with the collection of a debt. 15 U.S.C. § 1692e(10). It also forbids the false 16 representation of the legal status of any debt. 15 U.S.C. § 1692e(2)(A). Moreover, the Rosenthal 17 Act prohibits any debt collector, creditor or attorney from sending a communication simulating 18 legal process that gives the impression it is authorized by a governmental agency when it is not. 19 Cal. Civ. Code § 1788.16. 20 Defendant’s motion argues there is no evidence it was responsible in any way for 21 the Fake Summons. A partner in H&H, Donald Sherrill, testified Synchrony Bank is not and has 22 never been a client of H&H. SUF at 2; Sherrill Decl. ¶ 3. Sherrill avers H&H did not create, 23 authorize the production or service of or send the summons; indeed, it did not send any 24 communication at all to plaintiff. MSJ at 4 (citing SUF at 10; Sherrill Decl. ¶ 8). Instead, 25 defendant claims “H&H’s name has been improperly used in some scam.” Id. 26 Assuming, without deciding, that the Fake Summons would be violative of the 27 FDCPA, this unopposed declaration is sufficient to negate H&H’s responsibility for such a 28 violation. Other elements aside, without responsibility for a violation, H&H cannot be held liable 1 under either the FDCPA or the Rosenthal Act. Thus, defendant is entitled to judgment and the 2 court GRANTS its motion for summary judgment. 3 b. Sanctions 4 H&H asserts plaintiff’s counsel knew the complaint here was frivolous and 5 factually unsupported when filed, warranting sanctions. Mot. for Sanctions. H&H seeks fee 6 sanctions under Rule 11 as a result. Rule 11 provides a court may impose sanctions where, after a 7 reasonable inquiry, a pleading, written motion or other paper’s factual contentions do not “have 8 evidentiary support or, if specifically so identified, will likely have evidentiary support after a 9 reasonable opportunity for further investigation or discovery.” Fed. R. Civ. P. 11(b), (c). The 10 Ninth Circuit has used the term “frivolous” in the context of sanctions as “a shorthand . . . to 11 denote a filing that is both baseless and made without a reasonable and competent inquiry.” 12 Townsend v. Holman Consulting Group, 929 F.2d 1358, 1362 (9th Cir. 1990). What constitutes a 13 “reasonable and competent inquiry” is judged using an objective standard in light of the 14 circumstances. Business Guides, Inc. v. Chromatic Comms. Enters., Inc., 498 U.S. 533, 552 15 (1991). Rule 11 does not impose a continuing duty past the time an attorney signs a filing. 16 MGIC Indem. Corp. v. Moore, 952 F.2d 1120, 1121 (9th Cir. 1991) (“[Rule 11] applies only to 17 the initial signing and imposes no continuing duty on the signer.”); see also Cunningham v. Cty. 18 of Los Angeles, 879 F.2d 481, 490 (9th Cir. 1988) (denying sanctions under Rule 11 for suit that 19 was not frivolous when filed but had no evidentiary support on later development). 20 H&H asserts, and its attorneys testify, that it repeatedly notified plaintiff’s counsel 21 it was not responsible for the fake summons at issue. Narita Decl. in Supp. Mot. Sanctions ¶ 2, 22 ECF No. 19-1; DiPiero Decl. in Supp. MSJ ¶¶ 2, 4, ECF No. 13-1. However, H&H provided 23 plaintiff’s counsel no evidence this was the case beyond bare assertions before plaintiff filed the 24 case here. Plaintiff’s counsel testified it was only upon receipt of H&H’s summary judgment 25 reply that he received copies of H&H’s letters to the state bar, Santa Clara County Superior Court 26 ///// 27 ///// 28 ///// 1 and correspondence with other recipients of Fake Summonses in H&H’s name. Not. Withdrawal 2 of Opp’n at 3 (“Suppl. Apps Decl.”).2 3 H&H has filed a notice of supplemental authority, namely an order granting a 4 motion for sanctions in a parallel case in which another Fake Summons was sent in H&H’s name 5 to a debtor represented by plaintiff’s counsel. Gallego v. Hunts & Henriques, No. 19-cv-07596- 6 VC, 2020 U.S. Dist. LEXIS 170870, at *1 (Sept. 17, 2020). In that case, the District Judge found 7 “[w]hen attorney Stanley Apps filed the complaint on [plaintiff]’s behalf in response to the fake 8 summons she received, the only plausible explanation was that some third party was circulating 9 fake summonses using H&H’s name.” Id. While the court cannot tell if there are factual 10 distinctions between this and the Gallego case, it finds the record here does not support such a 11 conclusion. 12 Assuming plaintiff actually received the Fake Summons attached to the complaint, 13 which is not contested by H&H, the existence of the Fake Summons alone could create the 14 reasonable inference that H&H was responsible. Plaintiff’s counsel knew H&H litigated 15 collections actions on behalf of similar financial entities, including entities that purchased or were 16 assigned interests in Synchrony accounts. Apps Decl. in Supp. Opp’n to Summ. J. ¶ 3, 17 ECF No. 22-1. Plaintiff had actually incurred debt with Synchrony and was induced to settle it by 18 the Fake Summons. While the record is unclear regarding whether plaintiff’s debt was acquired 19 by an H&H client, such an inference would not be unreasonable when crediting Mr. Apps’ 20 uncontroverted testimony. See MSJ Apps Decl. ¶ 3 (“I have worked on many collection cases 21 against Hunt and Henriques where they represent Portfolio Recovery Associates, LLC on files 22 that were purchased from Synchrony Bank and/or cases that were assigned to Portfolio Recovery 23 by Synchrony Bank.”). In light of this record, plaintiff’s counsel’s inference that one of H&H’s 24 clients would stand to benefit from the Fake Summons and thus H&H would have a reason to 25 have it served would have had some support at the time of filing. H&H told Mr. Apps it was not 26 ///// 27 28 2 This declaration was not filed separately and is consolidated with the notice of withdrawal. 1 responsible, but never provided any extrinsic evidence for that assertion before plaintiff filed the 2 complaint. Suppl. Apps Decl. ¶ 4. 3 Without supporting evidence H&H was not responsible, Mr. Apps had no 4 obligation to take H&H’s representations it was not responsible at face value. Furthermore, that a 5 state court clerk advised Mr. Apps the Fake Summons was part of a possible scam, i.e., not a real 6 case, is not relevant to whether H&H was responsible for it. See Mot. Sanctions at 9. On this 7 record, it does not appear the suit was objectively unreasonable at the time the complaint was 8 signed and filed. H&H filed its motion for sanctions before any further filings in the case. While 9 Mr. Apps may have failed to develop his suspicion through discovery, the court does not view 10 this as sanctionable misconduct under Rule 11 in light of his later withdrawal of opposition to the 11 motion for summary judgment. While the court has authority under 28 U.S.C. § 1927 to sanction 12 counsel for abuses later in the litigation, H&H did not argue the failure to withdraw the suit as a 13 basis for sanctions under this provision. 14 The court DENIES defendant’s motion for sanctions. 15 IV. CONCLUSION 16 For the foregoing reasons, the court GRANTS Hunt & Henriques’ motion for 17 summary judgment and DENIES Hunt & Henriques’ motion for sanctions. This order resolves 18 ECF Nos. 13 & 19. The clerk is directed to CLOSE the case. 19 IT IS SO ORDERED 20 DATED: October 5, 2020. 21 22 23 24 25 26 27 28