Michaels v. Nco Financial Systems Inc

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
SHARON MICHAELS,
Plaintiff,
v. Civil Action No. 16-01339 (TFH)
NCO FINANCIAL SYSTEMS, INC., et al.,
Defendants.
MEMORANDUM OPINION
Plaintiff Sharon Michaels filed her Complaint in this action on June 27, 2016 against
NCO Financial Systems, Inc. (“NCO”), Transworld Systems, Inc. (“TSI”), Mitchell Rubenstein
& Associates (“MRA”), and Dominion Law Associates, PLLC (“Dominion”) alleging that each
defendant violated the Fair Debt Collection Practices Act, the District of Columbia Debt
Collection Law, and the District of Columbia Consumer Protection Procedures Act through their
involvement in a student loan debt collection lawsuit filed against Michaels in the Superior Court
for the District of Columbia. See Complaint [ECF No. 1]. Michaels also alleges that NCO, TSI,
and MRA committed common law abuse of process and malicious prosecution. Id.
Following a lengthy and contentious discovery period, the parties filed the following
cross-motions for summary judgment: (1) Defendants NCO Financial Systems, Inc.’s and
Transworld Systems, Inc.’s Motion for Summary Judgment [ECF No. 47]; (2) Defendant
Mitchell Rubenstein & Associates, P.C.’s Motion for Summary Judgment [ECF No. 48];
(3) Plaintiff’s Motion for Partial Summary Judgment for Liability Against Transworld Systems,
Inc. and NCO Financial Systems, Inc. [ECF No. 52]; and (4) Plaintiff’s Motion for Partial
Summary Judgment for Liability Against Mitchell Rubenstein & Associates, P.C. [ECF No.
53]. 1
Upon consideration of the briefing, the relevant legal authorities, and the entire record
herein, and for the reasons stated below, the Court grants Defendants NCO Financial Systems,
Inc.’s and Transworld Systems, Inc.’s Motion for Summary Judgment [ECF No. 47] and
Defendant Mitchell Rubenstein & Associates, P.C.’s Motion for Summary Judgment [ECF No.
48], and denies Plaintiff’s Motion for Partial Summary Judgment for Liability Against
Transworld Systems, Inc. and NCO Financial Systems, Inc. [ECF No. 52] and Plaintiff’s Motion
for Partial Summary Judgment for Liability Against Mitchell Rubenstein & Associates, P.C.
[ECF No. 53].
I. BACKGROUND
In August 2007, Michaels took out a private undergraduate student loan from JPMorgan
Chase Bank, N.A. (“Chase”) in the amount of $16,000 to attend Southern Adventist University.
MRA’s Stmt. ¶ 1 [ECF No. 48-1]; see also Loan Agreement and Promissory Note [ECF No. 46-
2 at 296-300]. On September 20, 2007, the loan was assigned, transferred, and sold from Chase
to The National Collegiate Funding, LLC, and then to the National Collegiate Student Loan
Trust 2007-4 (“NCSLT 2007-4”). NCO/TSI’s Stmt. ¶¶ 5-6 [ECF No. 47-3]; see Luke Aff. ¶¶ 8-
9 [ECF No. 46-2 at 292-295]; Ex. A to Luke Aff. (Pool Supplement) [ECF No. 46-2 at 301-306];
Ex. B to Luke Aff. (Deposit and Sale Agreement) [ECF No. 46-2 at 307-316]. In 2012, U.S.
Bank National Association (“U.S. Bank”) became the Successor Special Servicer for NCSLT
1
Michaels did not file a motion for summary judgment with respect to her claims against
Dominion. Accordingly, although Dominion is still a defendant in this case, the Court’s
collective references to “the defendants” herein refer only to NCO, TSI, and MRA.
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2007-4 and appointed NCO as one if its subservicers to perform collection and enforcement
services. NCO/TSI’s Stmt. ¶¶ 7-8; see Third Am. to Default Prevention and Collection Services
Agmt. [ECF No. 46-2 at 161-190]; Sept. 7, 2012 Letter [ECF No. 46-2 at 330-335]. One of
NCO’s duties as a subservicer was to place defaulted loan accounts with law firms for collection.
NCO/TSI’s Stmt. ¶ 9; Third Am. to Default Prevention and Collection Services § 2.7(h) [ECF
No. 46-2 at 167] (“NCO shall administer, manage and oversee collection litigation consistent
with the terms of this Agreement . . .”). NCO also served as the Custodian of Records for
NCSLT 2007-4. NCO/TSI’s Stmt. ¶ 9; Third Am. to Default Prevention and Collection Services
§ 2.7(i) [ECF No. 46-2 at 167] (“The Special Servicer shall execute and deliver to NCO one or
more powers of attorney appointing NCO as the . . . custodian of records for the Special
Servicer. . . .”).
In June 2013, NCO placed Michaels’s defaulted student loan account with MRA for
collection and evaluation for litigation. MRA’s Stmt. ¶ 2 [ECF No. 48-1]. On March 7, 2014,
MRA, on behalf of NCSLT 2007-4, filed suit against Michaels in the Superior Court for the
District of Columbia (the “Superior Court litigation”). Id.; NCO/TSI’s Stmt. ¶ 15; Michaels’s
Stmt. ¶ 1 [ECF No. 53-1]; see also Debt Collection Compl. [ECF No. 48-4]; Collection Action
Docket [ECF No. 48-10]. The Complaint sought judgment for $22,602.95, the principal sum due
on the loan, plus accrued interest, post-judgment interest, costs, and attorneys’ fees. MRA’s
Stmt. ¶ 6; Debt Collection Compl. [ECF No. 48-4]. On May 20, 2014, MRA filed an amended
complaint on behalf of NCSLT 2007-4 to waive its previously asserted entitlement to post-
judgment interest. Id. ¶ 8; see Collection Action Docket [ECF No. 48-10]; Am. Debt Collection
Compl. [ECF No. 48-9]. Michaels was served with the Amended Complaint on June 15, 2014.
See Collection Action Docket (entry dated 06/19/2014 referencing Proof of Service). Michaels
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responded to the Amended Complaint on July 7, 2014, filing a Motion for More Definite
Statement and Motion to Dismiss. See ECF No. 48-11. The Superior Court denied Michaels’s
Motion for More Definite Statement and denied her Motion to Dismiss without prejudice on
October 24, 2014. Id.
In 2014, TSI replaced NCO as U.S. Bank’s subservicer and records custodian for NCSLT
2007-4. NCO/TSI Stmt. ¶ 29; Nov. 3, 2014 Ltr. [ECF No. 46-2 at 5]; see also Fifth Am. to
Default Prevention and Collection Services (“Successor Special Servicer consented to the
assignment of NCO’s rights, obligations and duties under the Agreement to TSI . . .”) [ECF No.
46-2 at 41]. On December 29, 2014, NCSLT 2007-4 filed a Motion for Summary Judgment, and
Michaels filed a Renewed Motion to Dismiss, or in the Alternative, Motion for Summary
Judgment and Rule 37(b) Sanctions for Attorney Fees and Costs. See Collection Action Docket;
see also ECF Nos. 48-17 & 48-12. 2 The Superior Court denied both parties’ cross-motions from
the bench at a hearing on May 14, 2015. Id.
On April 6, 2015, Attorney Duane Demers filed a Motion to Withdraw as Counsel for
NCSLT 2007-4. See Collection Action Docket [ECF No. 48-10]. MRA, through Attorney
Duane Demers, made its last appearance on behalf of NCSLT 2007-4 in the Superior Court
litigation on May 14, 2015. Id. Darragh L. Inman filed a Praecipe to Substitute Appearance as
counsel for NCSLT 2007-4 on May 19, 2015, and the Superior Court formally granted Mr.
Demers’s Motion to Withdraw as Counsel at the next status hearing on July 9, 2015. 3 Id.
2
On March 16, 2015, NCSLT 2007-4 supplemented its Motion for Summary Judgment by
filing an Affidavit and Verification of Account of Bradley Luke on behalf of TSI. See Ex. O to
Pl.’s Mot. for Partial Summ. J. [ECF No. 53-2 at 395-432].
3
Mr. Demers was not present at the July 9, 2015 status hearing. Only Mr. Inman appeared
on that date on behalf of NCSLT 2007-4. See Collection Action Docket.
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Following an unsuccessful mediation on October 20, 2015, the Superior Court reopened
discovery for 60 days upon Michaels’s request. See Collection Action Docket. Soon thereafter,
on November 27, 2015, Michaels and NCSLT 2007-4 jointly filed a Stipulated Dismissal with
Prejudice pursuant to D.C. Superior Court Rule of Civil Procedure 41(a)(1)(A)(ii). See
Collection Action Docket (noting on November 30, 2015 that the case was “Dismissed by
Consent”). This lawsuit followed seven months later. 4
II. SUMMARY JUDGMENT STANDARD
Federal Rule of Civil Procedure 56 mandates that “[t]he court shall grant summary
judgment if the movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A fact is material if it
“might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). A dispute over a material fact is genuine “if the evidence is such that
a reasonable jury could return a verdict for the nonmoving party.” Id. At the summary judgment
stage, however, “the judge’s function is not himself to weigh the evidence and determine the
truth of the matter but to determine whether there is a genuine issue for trial.” Id. at 249.
“[T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving party for
a jury to return a verdict for that party.” Id. With respect to cross-motions for summary
4
The background is summarized here to provide context for the underlying Superior Court
litigation that forms the basis for Michaels’s claims in this lawsuit. Although Michaels disputes
or denies nearly every fact asserted by MRA and NCO/TSI as they relate to the assignment and
servicing of the loan she received from Chase, she does not properly support her denials with
specific facts or citations to the record establishing that she is entitled to judgment, or that there
is a genuine issue for trial. See, e.g., Plaintiff Sharon Michaels’ Statement of Genuine Issues for
Trial [ECF No. 61-1 at 38-56]; Plaintiff Sharon Michaels’ Statement of Genuine Issues for Trial
[ECF No. 60-1 at 31-56]. Importantly, however, the Court’s decisions in this Memorandum
Opinion do not hinge on any of the background facts related to the assignment and servicing of
Michaels’s loan.
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judgment, “neither party waives the right to a full trial on the merits by filing its own motion;
each side concedes that no material facts are at issue only for the purposes of its own
motion.” Vaughan v. Amtrak, 892 F. Supp. 2d 84, 91 (D.D.C. 2012) (quoting Sherwood v.
Washington Post, 871 F.2d 1144, 1148 n.4 (D.C. Cir. 1989)).
Although “[t]he evidence is to be viewed in the light most favorable to the nonmoving
party and the court must draw all reasonable inferences in favor of the nonmoving party,”
Talavera v. Shah, 638 F.3d 303, 308 (D.C. Cir. 2011), “[i]f the evidence is merely colorable, or
is not significantly probative, summary judgment may be granted,” Anderson, 477 U.S. at 249(internal citations omitted). “The mere existence of a scintilla of evidence in support of the
plaintiff’s position will be insufficient; there must be evidence on which the jury could
reasonably find for the plaintiff.” Id. at 252. The ultimate inquiry is “whether the evidence
presents a sufficient disagreement to require submission to a jury or whether it is so one-sided
that one party must prevail as a matter of law.” Id. The non-movant “must do more than simply
show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus.
Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Accordingly, “[c]onclusory
assertions offered without any factual basis in the record cannot create a genuine dispute
sufficient to survive summary judgment.” Boone v. MountainMade Found., 64 F. Supp. 3d 216,
224 (D.D.C. 2014) (citing Ass’n of Flight Attendants–CWA, AFL–CIO v. U.S. Dep’t of
Transp., 564 F.3d 462, 465–66 (D.C. Cir. 2009)).
The evidence the Court may consider when ruling on a summary judgment motion
consists of “materials specified in Federal Rule of Civil Procedure 56(c) as well as any material
that would be admissible or usable at trial.” Estate of Parsons v. Palestinian Auth., 651 F.3d
118, 145 (D.C. Cir. 2011) (internal quotation marks omitted). Pursuant to Rule 56(c), the Court
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is not limited to the evidence cited by the parties but also “may consider other materials in the
record.” Fed. R. Civ. P. 56(c)(3). In addition, the Rules of the United States District Court for
the District of Columbia state that “[i]n determining a motion for summary judgment, the Court
may assume that facts identified by the moving party in its statement of material facts are
admitted, unless such a fact is controverted in the statement of genuine issues filed in opposition
to the motion.” LCvR 7(h)(1).
III. ANALYSIS
A. Fair Debt Collection Practices Act
Congress enacted the Fair Debt Collection Practices Act (“FDCPA”) in 1977 “to
eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors
who refrain from using abusive debt collection practices are not competitively disadvantaged,
and to promote consistent State action to protect consumers against debt collection abuses.” 15
U.S.C. § 1692(e). The FDCPA prohibits debt collectors from using, inter alia, “any false,
deceptive, or misleading representation or means in connection with the collection of any debt,”
15 U.S.C. § 1692e, or any “unfair or unconscionable means to collect or attempt to collect any
debt,” 15 U.S.C. § 1692f. Debt collectors that engage in these prohibited practices are subject to
civil liability for actual damages, statutory damages, and reasonable attorney’s fees and costs. 15
U.S.C. § 1692k(a).
To prevail on a claim under the FDCPA, a plaintiff must establish that: “(1) the defendant
is a debt collector; (2) who took action ‘in connection with the collection of any debt’; and
(3) the action violated the substantive proscriptions in the Act.” Lipscomb v. The Raddatz Law
Firm, P.L.L.C., 109 F. Supp. 3d 251, 256 (D.D.C. 2015) (citing Gburek v. Litton Loan Servicing
LP, 614 F.3d 380, 384 (7th Cir. 2010); Muldrow v. EMC Mortg. Corp., 657 F. Supp. 2d 171,
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174–75 (D.D.C. 2009)). The statute of limitations for FDCPA claims is one year. 15 U.S.C.
§ 1692k(d) (“An action to enforce any liability created by this subchapter may be brought in any
appropriate United States district court . . . within one year from the date on which the violation
occurs.”).
Here, Michaels argues that “MRA violated the FDCPA . . . by filing a debt collection
lawsuit against [her] that was barred by the statute of limitations” and by making “multiple false
representations” in the Superior Court litigation. Pl.’s Mot. for Partial Summ. J. as to MRA at
12, 13 [ECF No. 53]. The basis of Michaels’s FDCPA claims against NCO and TSI are
somewhat more opaque, but it appears that she alleges NCO and TSI “falsely implie[d] legal
recourse to collect the alleged debt by filing an action that [wa]s time barred and in the name of a
false plaintiff,” Pl.’s Mot. for Partial Summ. J. as to NCO/TSI at 14 [ECF No. 52], and that TSI,
through Dominion Law Associates, illegally communicated directly with her during the Superior
Court litigation, id. All of Michaels’s FDCPA allegations appear to rest on her general claims
that (1) the Superior Court litigation was barred by the statute of limitations, (2) NCSLT 2007-4
was not the real party in interest; and (3) NCO and TSI did not have the authority to hire MRA
(and later, Dominion) to file and maintain the lawsuit on behalf of NCSLT 2007-4.
The Court must first determine whether Michaels’s FDCPA claims are time barred. “In
cases . . . where the FDCPA claim is premised on the wrongful filing of a debt collection action,
federal appellate courts generally have held that the claim accrues when the debtor is served with
the complaint, as that is the date when the debtor receives notice of the action.” Quick v.
EduCap, Inc., 318 F. Supp. 3d 121, 143 (D.D.C. 2018) (citing Lyons v. Michael & Assocs., 824
F.3d 1169, 1171-72 (9th Cir. 2016); Serna v. Law Office of Joseph Onwuteaka, P.C., 732 F.3d
440, 446-48 (5th Cir. 2013)). Michaels was served with the Amended Debt Collection
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Complaint on June 15, 2014. See Collection Action Docket (entry dated 06/19/2014 referencing
Proof of Service); see also id. (entry dated 10/24/2014 noting that “[Michael]’s counsel states
that her client was not served with the original complaint, only the amended complaint.”). There
is no dispute that Michaels did not file this action within one year of service of the Amended
Debt Collection Complaint, so unless Michaels can establish that her claims accrued at a later
date or that there is a basis for tolling the statute of limitations, her FDCPA claims are time
barred.
Michaels first argues that her FDCPA claims are timely by operation of either the
discovery rule or equitable tolling. Pl.’s Corrected Resp. 4 [ECF No. 103] (“[U]nder the tolling
doctrines the [statute of limitations] does not begin to run until Plaintiff could have reasonably
discovered the event giving rise to the claim.”). Earlier this year, the Supreme Court held that
the FDCPA’s statute of limitations is not subject to the discovery rule. Rotkiskie v. Klemm, 140
S.Ct. 355, 357 (2020) (“We hold that, absent the application of an equitable doctrine, the statute
of limitations in § 1692k(d) begins to run on the date on which the alleged FDCPA violation
occurs, not the date on which the violation is discovered.”). The general discovery rule,
however, is distinct from equitable tolling: fraudulent concealment is an “equitable doctrine
[that] is read into every federal statute of limitations,” operating to equitably toll the statute of
limitations. Holmberg v. Armbrecht, 327 U.S. 392, 391 (1946). Michaels argues that “NCO,
TSI and MRA acting in concert fraudulently and intentionally concealed their roles in the
NCSLT suit and NCO’s and TSI’s lack of capacity to initiate and manage the NCSLT suit. . . ,”
Pl.’s Opp’n to NCO/TSI’s Mot. for Summ. J. 9 [ECF No. 60-1]), and contends that the statute of
limitations on her FDCPA claims began to run only when the Superior Court litigation was
dismissed with prejudice, id. at 8, 9.
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To establish fraudulent concealment and toll the statute of limitations, “a plaintiff must
show that the defendant engaged in conduct designed to conceal evidence of their wrongdoing,
and that the plaintiff lacked actual or constructive notice of that evidence, despite exercising
diligence.” Quick, 318 F. Supp. 3d at 143 (citing Firestone v. Firestone, 76 F.3d 1205, 1209
(D.C. Cir. 1996)). “Generally, fraudulent concealment requires that the defendant make an
affirmative misrepresentation tending to prevent discovery of the wrongdoing.” Id. Aside from
a litany of conclusory statements not supported by citations to the record, Michaels has failed to
identify any affirmative misrepresentation made by MRA, NCO, or TSI that prevented her from
discovering the FDCPA violations she alleges. In fact, Michaels argued that the Superior Court
litigation was time-barred, and challenged the roles of NCO, TSI, and MRA on multiple
occasions during the pendency of that litigation, see Mot. for More Definite Statement and Mot.
to Dismiss [ECF No. 48-11]; Renewed Mot. to Dismiss [ECF No. 48-12], so it strains credulity
to argue that she was somehow prevented from discovering such conduct until the lawsuit was
dismissed. 5 Equitable tolling simply does not apply here.
5
Michaels also misconstrues the operation and effect of a stipulated voluntary dismissal
with prejudice under D.C. Superior Court Rule of Civil Procedure 41(a)(1)(A)(ii). See Pl.’s
Corrected Resp. 3-4 [ECF No. 103]. In essence, Michaels argues that all of the arguments she
raised in the Superior Court litigation were resolved in her favor when the case was voluntarily
dismissed with prejudice, and that res judicata bars the defendants in this litigation from
“relitigating” the merits of those arguments. See id. at 3 (“the time-barred and real party in
interest/standing questions were raised and litigated by TSI through MRA in the NCSLT suit and
Ms. Michaels is the prevailing party.”). Not so. The voluntary dismissal of the Superior Court
litigation operates as res judicata only insofar as it relates to the claim asserted against Michaels
in that case for recovery of the balance on her student loan account. The parties’ stipulated
dismissal in the Superior Court litigation plainly does not operate as an admission of liability by
the defendants as to the claims asserted by Michaels in this litigation. The merits of the claims in
this case – which was not even filed until seven months after the Superior Court litigation was
dismissed – were in no way adjudicated by the Superior Court, and the parties’ stipulated
dismissal does not have the preclusive effect asserted by Michaels.
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Michaels also argues that the “continuing violation” doctrine applies to her FDCPA
claims such that her claims did not accrue until the Superior Court litigation was dismissed with
prejudice. Pl.’s Opp’n to NCO/TSI’s Mot. for Summ. J. at 10. Although the D.C. Circuit has
not decided the issue, “[n]o court of appeals has held that debt-collection litigation (or a
misleading statement made in connection with that litigation) is a continuing violation of the
FDCPA.” Slorp v. Lerner, Sampson & Rothfuss, 587 F. App’x 249, 257–58 (6th Cir. 2014)
(citing Schaffhauser v. Citibank (S.D.) N.A., 340 F. App’x 128, 131 (3d Cir. 2009) (per
curiam) (holding that ongoing debt-collection litigation does not constitute a continuing violation
of the FDCPA); Naas v. Stolman, 130 F.3d 892, 893 (9th Cir. 1997) (stating that the FDCPA’s
statute of limitations begins to run when the debt-collection suit is filed rather than when the trial
court issues its judgment)). See also Leonardo v. MSW Capital, LLC, No. 16-cv-3845, 2017 WL
2062852, at *2 (D. Minn. May 12, 2017) (“When an FDCPA claim involves misrepresentations
in a debt-collection lawsuit, a new violation is not committed merely because pleadings and
memoranda are the continuing effects of the initial violation. . . . The plaintiff is not deceived or
abused anew each time the defendants reaffirm their deceptive statements throughout the
litigation.”). All of Michaels’s FDCPA claims stem from the Superior Court litigation, and the
statute of limitations accrued in June 2014 when she was served with the Amended Debt
Collection Complaint.
Although courts have recognized that it is possible that “collection activity within or
related to pending litigation may lead to new, and separately prosecutable, violations of the
FDCPA,” the continuing violation doctrine does not operate to resurrect prior untimely claims.
Gajewski v. Ocwen Loan Servicing, 650 F. App’x 283, 286 (7th Cir. 2016). Therefore, even
assuming that the defendants engaged in conduct during the pendency of the Superior Court
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litigation that could have led to new, separately prosecutable violations of the FDCPA, any
claims based on conduct occurring before June 2015 – a year before Michaels filed this federal
lawsuit – would clearly be barred by the one year statute of limitations.
None of the defendants engaged in relevant conduct after May 2015. NCO took no
action with respect to Michaels’s loan account or the Superior Court litigation after 2014, when
TSI assumed NCO’s rights, obligations, and duties as subservicer and records custodian for
NCSLT 2007-4. As to TSI, its last representations regarding Michaels’s loan and its
responsibilities as records custodian and subservicer for NCSLT 2007-4 were contained in the
Affidavit of Bradley Luke, which was filed in the Superior Court litigation on March 16, 2015. 6
Finally, MRA made its last appearance on behalf of NCSLT 2007-4 in the Superior Court
litigation on May 14, 2015, and new counsel for NCSLT 2007-4 filed his Praecipe to Substitute
Appearance on May 19, 2015. Given this timeline, no FDCPA claim against the defendants
could be timely. The defendants are therefore entitled to summary judgment on Michaels’s
FDCPA claims.
6
Michaels also argues that TSI violated the FDCPA by “communicat[ing] directly with
[her] during the [Superior Court] litigation through Dominion and while she was represented by
counsel.” Pl.’s Mot. for Partial Summ. J. as to NCO/TSI at 14 [ECF No. 52]. The record reflects
that Dominion Law Associates sent a letter to Michaels dated June 29, 2015 regarding her loan
account. See ECF No. 52-2 at 193. But Michaels does not provide any support for her claim that
TSI is vicariously liable for Dominion’s actions under the FDCPA. Although the Complaint
alleges that “Dominion violated § 1692c by communicating with Ms. Michaels regarding the
alleged debt when Ms. Michaels was represented by counsel and engaged in the NCSLT
litigation,” Compl. ¶ 143, Michaels chose not to file a summary judgment motion with respect to
her claims against Dominion, and she has not pursued further prosecution of those claims in the
nearly four years that this case has been pending. She has not provided any evidence that
Dominion was acting as counsel for TSI and has not established any basis for holding TSI
vicariously liable for Dominion’s actions. The fact that Dominion sent a letter to Michaels dated
June 29, 2015 does not change the Court’s conclusion regarding the untimeliness of Michaels’s
FDCPA claims against TSI.
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B. D.C. Debt Collection Law
The D.C. Debt Collection Law (“DCDCL”) prohibits a debt collector from making “any
false representation or implication of the character, extent, or amount of a claim against a
consumer, or of its status in any legal proceeding.” D.C. Code § 28–3814(f)(5). Liability
requires “[p]roof, by substantial evidence, that a creditor or debt collector has willfully violated”
a provision of the statute. Id. § 28–3814(j)(1) (emphasis added). Michaels claims that MRA
willfully violated the DCDCL by (1) misrepresenting the name of the real party of interest in
each of its filings; (2) attempting to collect a debt in a name other than the true plaintiff; (3)
misrepresenting the name of the alleged creditor; (4) misrepresenting the character, extent,
amount, and status of the debt by filing an out-of-statute claim and swearing to the accuracy of
an interest rate that was higher than the one identified in the loan documents; (5) attempting to
collect interest not authorized by law; and (6) unlawfully requesting attorneys’ fees. Pl.’s Mot.
for Partial Summ. J. as to MRA at 20 [ECF No. 53-1]. Michaels asserts the same violations of
the DCDCL by NCO and TSI, and additionally claims that TSI willfully violated the statute by
communicating directly with her via the letter from Dominion after knowing she was represented
by counsel. Pl.’s Mot. for Partial Summ. J. as to NCO/TSI at 20 [ECF No. 52-1]. Michaels’s
DCDCL claims, however, are largely unsupported by citations to the record, and beyond broad
conclusory statements she offers no explanation of how the defendants’ conduct violated the
DCDCL. 7
7
Michaels again seeks to impose vicarious liability on TSI for the letter she received from
Dominion in June 2015, alleging that TSI committed a willful violation of § 28-3814(g)(5) of the
DCDCL by contacting her directly and not through her counsel. Pl.’s Mot. for Partial Summ. J.
as to NCO/TSI at 20. As explained above in footnote 6, the record is devoid of any evidence that
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In 2016, Judge Amy Berman Jackson decided a case in which the plaintiff alleged that
that MRA (the same defendant here) had violated the DCDCL by misrepresenting the amount of
her debt and by contacting her directly instead of through counsel as required by the statute.
Baylor v. Mitchell Rubenstein & Assocs., P.C., 174 F. Supp. 3d 146 (D.D.C. 2016), aff’d in part,
rev’d in part, and remanded on other grounds, 857 F.3d 939 (D.C. Cir. 2017). Analyzing the
willfulness requirement of the DCDCL, the court found that
[t]he D.C. Code does not define the term “willfully,” and neither the D.C. Circuit
nor the D.C. Court of Appeals appears to have interpreted the term as it is used in
the Debt Collection Law. However, the Supreme Court has provided some guidance
in the context of the Fair Credit Reporting Act (FCRA), a similar consumer
protection statute: “where willfulness is a statutory condition of civil liability, we
have generally taken it to cover not only knowing violations of a standard, but
reckless ones as well.” Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 57 (2007); see
also Feinerman v. Bernardi, 558 F. Supp. 2d 36, 47 n.12 (D.D.C. 2008) (“In
common usage the word ‘willful’ is considered synonymous with such words as
‘voluntary,’ ‘deliberate,’ and ‘intentional.’”) (quoting McLaughlin v. Richland
Shoe Co., 486 U.S. 128, 133 (1988)). The Court finds that to be the appropriate
standard here, and it concludes that the record shows that defendant’s conduct in
this case did not meet that standard.
Id. at 153. The defendant submitted a declaration from its president, Mitchell Rubenstein, who
explained that his violations were unintentional, and the court rejected the plaintiff’s argument
that the defendant lacked the appropriate training and procedures in place to prevent such a
mistake. Id. at 154-55. Pointing to the defendant’s policies and procedures manual, the court
found that there was no genuine dispute of material fact regarding the willfulness of MRA’s
actions and therefore granted summary judgment to MRA on both claims. Id. at 158, 159. The
Circuit affirmed the district court’s decision to grant summary judgment to the defendants on the
plaintiff’s DCDCL claims, noting that
Dominion was acting as counsel for TSI, and Michaels has not established any basis for holding
TSI vicariously liable for the letter sent by Dominion.
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neither this court nor the D.C. Court of Appeals appears to have set forth the
standard for determining what constitutes “willful” conduct. While we can find no
fault in the District Court’s decision to treat this term as embracing “not only
knowing violations of [the DCDCL], but reckless ones as well,” we refrain, out of
deference to the D.C. Court of Appeals, from specifically adopting this standard
when interpreting this statute. Instead, we note simply that no definition of
willfulness advanced by any party in this litigation suggests that Appellee’s conduct
can be viewed as a “willful” violation of this law.
Baylor, 857 F.3d at 952 (internal citations omitted).
Even viewing the evidence in the light most favorable to Michaels, there is no evidence
before the Court that would allow a reasonable jury to find that the defendants committed any
knowing and reckless violations of the DCDCL. The defendants are therefore entitled to
summary judgment on Michaels’s DCDCL claims.
C. D.C. Consumer Protection Procedures Act
The D.C. Consumer Protection Procedures Act (“CPPA”) creates an “enforceable right to
truthful information from merchants about consumer goods and services that are or would be
purchased, leased, or received in the District of Columbia.” D.C. Code § 28–3901(c).
One of the principal goals of the CPPA is to “assure that a just mechanism exists to
remedy all improper trade practices.” D.C. Code § 28–3901(b)(1). To that end, it
embraces both an expansive understanding of the conduct which constitutes a
“trade practice”—”any act which does or would create, alter, ... make available,
provide information about, or, directly or indirectly, solicit or offer for or effectuate,
a sale ... or transfer, of consumer goods or services”, which are “any and all parts
of the economic output of society, at any stage or related or necessary point in the
economic process, and includes consumer credit ... and consumer services of all
types”—and provides an extensive list of unlawful trade practices. D.C. Code §
28–3901(a)(6)–(7); see id. § 28–3904; Howard v. Riggs Nat’l Bank, 432 A.2d 701,
708 (D.C. 1981). These prohibited practices can only be committed by a merchant,
an individual who “sell[s] ... or transfer[s], either directly or indirectly, consumer
goods or services” or who, in the ordinary course of business, “suppl[ies] the goods
or services which are or would be the subject matter of a trade
practice.” D.C. Code § 28–3901(a)(3); see DeBerry v. First Gov’t Mortg. & Inv’rs
Corp., 743 A.2d 699, 701 (D.C. 1999).
Baylor, 857 F.3d at 947-48.
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In Baylor, the Circuit also considered whether the district court erred in dismissing the
plaintiff’s CPPA claims against MRA. Id. at 939. There, MRA, acting as a debt collector, sent
letters to the plaintiff that contained inconsistencies regarding the plaintiff’s loans and the
amounts she owed on them. Id. at 942. MRA also failed to direct all communications to the
plaintiff’s attorney after she had retained counsel. Id. In holding that the district court had
properly dismissed the plaintiff’s CPPA claims against MRA, the Circuit explained that the
“CPPA applies only to consumer-merchant relationships,” and “a debt collector [ ] attempting to
recoup funds on behalf of a creditor who itself did not provide [plaintiff] with any credit” does
not create such a relationship for purposes of the CPPA. Id. at 948. (“[I]t seems perverse to
suggest that the ‘consumer’ of the services it provides—debt collection—is the individual from
whom it is attempting to collect rather than the creditor who retained it.”).
Just as in Baylor, the defendants here did not provide Michaels with any goods or
services, and their actions did not occur in the context of a consumer-merchant relationship.
Chase provided Michaels with the original loan. The loan was then assigned, transferred, and
sold from Chase to The National Collegiate Funding, LLC, and then to NCSLT 2007-4.
NCO/TSI’s Stmt. ¶¶ 5-6 [ECF No. 47-3]; see Luke Aff. ¶¶ 8-9 [ECF No. 46-2 at 292-295]; Ex.
A to Luke Aff. (Pool Supplement) [ECF No. 46-2 at 301-306]; Ex. B to Luke Aff. (Deposit and
Sale Agreement) [ECF No. 46-2 at 307-316]. NCO, and then TSI, were subservicers and record
custodians for NCSLT 2007-4, and MRA served as counsel for NCSLT 2007-4. Michaels was
not the consumer of any services provided by NCO, TSI, or MRA. See also Mushala v. U.S.
Bank, Nat’l Ass’n, No. 18-1680 (JDB), 2019 WL 1429523, at *9 (D.D.C. Mar. 29, 2019) (loan
servicer and bank that did not provide borrower with original loan were not subject to liability
under the CPPA because they did not provide the borrower with any “goods or services” and
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their “actions did not take place within the context of a consumer-merchant relationship”) (citing
and quoting Baylor, 857 F.3d at 948); Winebarger v. Penn. Higher Educ. Assistance Agency, 411
F. Supp. 3d 1070, 1093-94 (C.D. Cal. 2019) (“Loan servicers . . . are not ‘merchants’ and, thus,
are not subject to liability under the CPPA.”) (citing Mushala, 2019 WL 1429523).
Accordingly, the Circuit has already clearly determined that the CPPA does not apply to
the conduct at issue here by the defendants, and the defendants are entitled to summary judgment
on Michaels’s CPPA claim.
D. Abuse of Process
While Michaels asserts that “[t]he record is replete with evidence and law supporting
[her] claim” for abuse of process, Pl.’s Revised Reply at 24 [ECF No. 79-1], she fails to cite to
facts sufficient to support a finding that the defendants used the legal system to achieve an
impermissible end.
As the D.C. Circuit has explained, “[t]he essence of the tort of abuse of process is the use
of the legal system ‘to accomplish some end which is without the regular purview of the process,
or which compels the party against whom it is used to do some collateral thing which he could
not legally and regularly be required to do.’” Scott v. D.C., 101 F.3d 748, 755 (D.C. Cir. 1996)
(quoting Bown v. Hamilton, 601 A.2d 1074, 1079 (D.C. 1992)); see also Heck v. Humphrey, 512
U.S. 477, 486 n.5 (1994); Bd. of Educ. v. Farmingdale Classroom Teachers Ass’n, 343 N.E.2d
278 (N.Y. 1975). “[I]n addition to ulterior motive, one must allege and prove that there has been
a perversion of the judicial process and achievement of some end not contemplated in the regular
prosecution of the charge.” Morowitz v. Marvel, 423 A.2d 196, 198 (D.C. 1980); see also
Houlahan v. World Wide Ass’n of Specialty Programs and Schools, 677 F. Supp. 2d 195, 199
(D.D.C. 2010) (“There are two essential elements to an abuse of process claim: ‘(1) the existence
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of an ulterior motive; and (2) an act in the use of process other than such as would be proper in
the regular prosecution of the charge.’”) (quoting Hall v. Hollywood Credit Clothing Co., 147
A.2d 866, 868 (D.C. 1959)).
Michaels’s conclusory statements regarding the defendants’ alleged ulterior motives are
insufficient to create a triable issue of fact with respect to this claim. There is no evidence that
the defendants acted with an ulterior motive in filing the Superior Court litigation, and there was
no “perversion of the judicial process and achievement of some end not contemplated in the
regular prosecution of the charge.” See Morowitz, 423 A.2d at 198. Accordingly, the defendants
are entitled to summary judgment on Michaels’s claim for abuse of process.
E. Malicious Prosecution
Michaels alleges that the defendants “maliciously prosecuted the [Superior Court]
litigation without probable cause.” Pl.’s Mot. for Partial Summ. J. as to MRA at 23; Pl.’s Mot.
for Partial Summ. J. as to NCO/TSI at 23. “[T]o prevail in a claim of malicious prosecution,
[Michaels] must plead and prove four things: (1) the underlying suit terminated in [Michaels]’s
favor; (2) malice on the part of [the defendants]; (3) lack of probable cause for the underlying
suit; and (4) special injury occasioned by [Michaels] as the result of the original action.”
Morowitz v. Marvel, 423 A.2d at 198 (discussing Ammerman v. Newman, 384 A.2d 637 (D.C.
1978)).
Again, without any citations to the record before the Court, Michaels attempts to support
her claim of malicious prosecution with the same laundry list of conclusory allegations that she
relies upon throughout her summary judgment briefing: (1) NCSLT was not the “proper
plaintiff” in the Superior Court litigation; (2) the Superior Court litigation was time barred; (3)
the relationship between NCO/TSI and NCSLT was “improper”; (4) MRA acted in “reckless
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disregard” of its obligations as an attorney; and (5) MRA engaged in the unauthorized practice of
law. See Pl.’s Opp’n to MRA Mot. for Summ. J. 30-31 [ECF No. 61-1], Pl.’s Mot. for Partial
Summ. J. as to MRA at 23-26, Pl.’s Mot. for Partial Summ. J. as to NCO/TSI at 23-26, Pl.’s
Opp’n to NCO/TSI Mot. for Summ. J. 21-24 [ECF No. 60-1].
Michaels’s claims for malicious prosecution fail for three independent reasons: (1) she
has not established malice on the part of the defendants; (2) she has not established the absence
of probable cause for the underlying lawsuit; and (3) she has not established that she suffered a
special injury resulting from the underlying litigation. It is of no moment that the Superior Court
litigation was ultimately dismissed with prejudice pursuant to the parties’ stipulation. 8
First, the undisputed facts in this case do not establish that the defendants acted with
malice toward Michaels in the Superior Court litigation. Malice is defined as “the existence of
an evil purpose or motive, a wicked or mischievous intent, or a willful, wanton, reckless or
oppressive disregard to the rights of the plaintiff.” Ammerman, 384 A.2d at 640-41 (citing 52
Am. Jur. 2d Malicious Prosecution § 46 (1970)). The record establishes that Michaels obtained a
student loan from Chase that was ultimately transferred to NCSLT 2007-4, that she defaulted on
her loan, and that MRA filed the underlying lawsuit on behalf of NCSLT 2007-4 to collect the
outstanding balance on the loan. The record is devoid of any evidence on which a reasonable
jury could rely to establish that the defendants acted with “an evil purpose or motive, a wicked or
8
Michaels incorrectly asserts that the arguments she raises in support of her malicious
prosecution claim, which she also raised in the Superior Court litigation, “were conceded in [her]
favor” when that case was dismissed with prejudice. Pl.’s Opp’n to MRA’s Mot. for Summ. J. at
32 [ECF No. 61-1]. As explained above in footnote 5, the parties’ Stipulated Dismissal With
Prejudice did not operate as an admission or a concession of truth by the defendants as to the
arguments raised by Michaels during the course of the Superior Court litigation.
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mischievous intent, or a willful, wanton, reckless or oppressive disregard” to Michaels’s rights.
Id.
Michaels has also failed to establish the absence of probable cause for the underlying
lawsuit. The D.C. Court of Appeals has explained that
[l]ack of probable cause is an essential element of an action for malicious
prosecution, and a showing of probable cause is thus a valid defense which warrants
a directed verdict for the defendant. With reference to civil actions, probable cause
has been said to be such reason supported by facts and circumstances as will
warrant a cautious man in the belief that his action and the means taken in
prosecuting it are legally just and proper. One need not be certain of the outcome
of a proceeding to have reasonable grounds for instituting it, however. Probable
cause does not mean sufficient cause. According to the generally accepted view,
probable cause depends not on the actual state of the case in point of fact, but upon
the honest belief of the person instituting it. It may flow from a belief that turns out
to be unfounded as long as it is not unreasonable.
Ammerman, 384 A.2d at 639–40 (internal citations omitted). As detailed above, the defendants
had probable cause to file the underlying lawsuit against Michaels to recover the debt she owed.
See Davis v. World Credit Fund I, LLC, 543 F. Supp. 2d 953, 956-57 (N.D. Ill. 2008) (granting
summary judgment to defendant on claim of malicious prosecution based on finding that
defendant established probable cause to file the underlying suit where the facts “reasonably
suggest[ed] plaintiff owed the alleged debt.”).
Finally, Michaels has not presented any evidence that she suffered a “special injury”
under D.C. law. “The special injury required has been defined as arrest, seizure of property, or
‘injury which would not necessarily result from suits to recover for like causes of
action.’” Joeckel v. Disabled Am. Veterans, 793 A.2d 1279, 1282 (D.C. 2002) (citing
Mazanderan v. McGranery, 490 A.2d 180, 182 (D.C. 1984)). Under D.C. law, “[i]njuries to
reputation, emotional distress, loss of income, and substantial expense in defending” are outside
the scope of what constitutes a “special injury.” Id. Michaels argues that she meets a limited
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exception to the special injury rule known as the “one suit plus” exception. See Davis v. Boyle
Bros., 73 A.2d 517, 520 (D.C. 1950). In Davis, the court recognized that a plaintiff may satisfy
the special injury requirement if she is forced to defend against a lawsuit that “involves
something more than the usual suit brought maliciously and without probable cause. . . .” Id.There, the defendant brought a lawsuit against the plaintiff, in an alternative name that she had
never used, based on mistaken identity. Id. The defendant initially agreed to dismiss the lawsuit,
but it then proceeded to request a default judgment against the plaintiff and she was forced to
defend against the default judgment and a subsequent trial on the merits. Id. Here, there is no
evidence supporting Michaels’s claim of special damages in the form of “one suit plus.” Not
only was the Superior Court litigation not brought with malice and supported by probable cause,
but it did not in any way resemble the circumstances presented in Davis. Michaels has not
presented any evidence that she suffered a “special injury” under D.C. law.
Because Michaels has failed to present any evidence establishing malice on the part of
the defendants, lack of probable cause for the underlying lawsuit, or that she has suffered a
special injury, the Court finds that the defendants are entitled to summary judgment on
Michaels’s malicious prosecution claim.
IV. LEAVE TO AMEND
In her oppositions to the defendants’ motions for summary judgment, Michaels requests
leave to amend her complaint “if the court determines that [her] pleading is in any way deficient
in conforming to the claims discovered and named in the instant opposition or with the evidence
obtained during discovery.” Pl.’s Opp’n to MRA’s Mot. for Summ. J. at 34-35; Pl.’s Opp’n to
NCO/TSI’s Mot. for Summ. J. at 27-28. As the D.C. Circuit has made clear, “a request for leave
[to amend the complaint] must be submitted in the form of a written motion. . . .” Belizan v.
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Hershon, 434 F.3d 579, 582 (D.C. Cir. 2006). Michaels’s request is not a proper motion for
leave to amend her complaint under Rule 15(a) of the Federal Rules of Civil Procedure or Local
Civil Rule 15.1. In addition, “[i]t is well-established in this district that a plaintiff cannot amend
h[er] Complaint in an opposition to a defendant’s motion for summary judgment.” Jo v. District
of Columbia, 582 F. Supp. 2d 51, 64 (D.D.C. 2008); see also Trudel v. SunTrust Bank, 288 F.
Supp. 3d 239, 258 (D.D.C 2018). Michaels’s request for leave to amend is therefore improper
and will be denied.
V. CONCLUSION
The Court has considered the remaining arguments offered by the parties and finds them
to be superfluous or without merit in light of the Court’s reasoning above. Therefore, and for the
reasons above, the Court grants Defendants NCO Financial Systems, Inc.’s and Transworld
Systems, Inc.’s Motion for Summary Judgment [ECF No. 47] and Defendant Mitchell
Rubenstein & Associates, P.C.’s Motion for Summary Judgment [ECF No. 48], and denies
Plaintiff’s Motion for Partial Summary Judgment for Liability Against Transworld Systems, Inc.
and NCO Financial Systems, Inc. [ECF No. 52] and Plaintiff’s Motion for Partial Summary
Judgment for Liability Against Mitchell Rubenstein & Associates, P.C. [ECF No. 53]. An
appropriate Order accompanies this Opinion.
May 29, 2020 ______________________________
Thomas F. Hogan
Senior United States District Judge
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