Weinstein & Riley, P.S. v. Larry Blankenship

REVERSE and REMAND; and Opinion Filed July 21, 2015.
S
Court of Appeals
In The
Fifth District of Texas at Dallas
No. 05-14-00902-CV
WEINSTEIN & RILEY, P.S., Appellant
V.
LARRY BLANKENSHIP, JACKIE ABBOTT, MICHAEL JANSKY,
AND CARL D. TILLERY, INDIVIDUALLY AND ON BEHALF OF
A CLASS OF SIMILARLY SITUATED PERSONS, Appellees
On Appeal from the County Court at Law No. 1
Dallas County, Texas
Trial Court Cause No. CC-10-05153A
MEMORANDUM OPINION
Before Justices Lang-Miers, Brown, and Schenck
Opinion by Justice Lang-Miers
In this interlocutory appeal appellant Weinstein & Riley, P.S. (W&R) appeals an order
granting class certification. 1 In three issues on appeal W&R argues that (1) the trial court lacked
subject matter jurisdiction over appellees’ claim, (2) appellees did not establish essential
elements of a class action under Texas Rule of Civil Procedure 42, and (3) the certification order
does not comply with rule 42(c)(1)(D). We resolve W&R’s first issue in its favor and do not
reach its remaining issues. We reverse the class certification order and remand this case to the
trial court with instructions to dismiss appellees’ claim for injunctive relief for lack of subject
matter jurisdiction.
1
See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(3) (West 2015).
BACKGROUND
Appellees Larry Blankenship, Jackie Abbott, and Micheal Jansky allege that they
received “demand letters” from W&R, a law firm based in Washington engaged in third-party
debt collection in Texas. Appellees filed suit against W&R and several individuals asserting
claims for violation of the federal Fair Debt Collection Practices Act, violation of the Texas Debt
Collection Act (chapter 392 of the Texas Finance Code), and for the unauthorized practice of
law. Appellees settled their federal and state law claims against the individuals and apparently
abandoned their claim against W&R for the unauthorized practice of law. At the time of the
hearing on appellees’ motion for class certification, the only claim at issue was their claim
against W&R seeking injunctive relief relating to an alleged violation of the TDCA that predated
the lawsuit, as described more fully below.
The trial court signed a class certification order naming appellees Blankenship, Abbott,
and Jansky as class representatives, appointing appellee Carl D. Tillery as class counsel, 2 and
certifying a class of “[a]ll persons who were subjected to debt collection from Weinstein & Riley
P.S. during the period of July 30, 2006 to November 17, 2009.” In its findings of fact and
conclusions of law the trial court explained that the reason for that particular date range is
because “[d]uring the period of July 30, 2006 to November 17, 2009 Weinstein & Riley P.S. did
not have a copy of a surety bond in the name of Weinstein & Riley P.S. on file with the Texas
Secretary of State.” The trial court also stated that a common question of law or fact in this case
is “[w]hether each Class member is entitled to injunctive relief to prevent [W&R] from debt
collecting in Texas without obtaining a surety bond in its true business or professional name or
2
Carl D. Tillery is named as an appellee in this case because he was named as a plaintiff and putative class representative in connection
with the claim for the unauthorized practice of law that was apparently abandoned before the class was certified.
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personal or legal name and filing a copy of such bond with the secretary of state.” W&R appeals
from that order.
ANALYSIS
In its first issue on appeal W&R argues that the trial court lacked subject matter
jurisdiction over appellees’ claim for injunctive relief. Subject matter jurisdiction is essential to
a court’s authority to decide a case. Stauffer v. Nicholson, 438 S.W.3d 205, 213 (Tex. App.—
Dallas 2014, no pet.). “Subject matter jurisdiction requires that the party bringing the suit have
standing, that there be a live controversy between the parties, and that the case be justiciable.”
State Bar of Tex. v. Gomez, 891 S.W.2d 243, 245 (Tex. 1994). W&R argues, among other
things, that there is no live controversy. We agree with W&R.
The material facts are undisputed. In 2003, W&R, which at the time was known as
Weinstein, Treiger & Riley, P.S., obtained a third-party debt collector surety bond as required
under section 392.101 of the Texas Finance Code, 3 and filed a copy of the bond with the
secretary of state. In 2005, W&R executed a rider with the bond company reflecting its name
change from Weinstein, Treiger & Riley, P.S. to Weinstein & Riley, P.S. W&R filed the name-
change rider with the secretary of state on November 17, 2009.
3
Section 392.101, titled “Bond Requirement” states:
(a) A third-party debt collector or credit bureau may not engage in debt collection unless the third-party debt collector or
credit bureau has obtained a surety bond issued by a surety company authorized to do business in this state as prescribed by
this section. A copy of the bond must be filed with the secretary of state.
(b) The bond must be in favor of:
(1) any person who is damaged by a violation of this chapter; and
(2) this state for the benefit of any person who is damaged by a violation of this chapter.
(c) The bond must be in the amount of $10,000.
TEX. FIN. CODE ANN. § 392.101 (West 2006).
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Appellees filed their petition in July 2010. In their petition appellees did not allege or
seek any actual damages in connection with the delayed filing of the name-change rider,
including statutory damages under section 392.403(e). Instead, they generally sought to “prevent
and restrain” W&R “from engaging in debt collection in Texas in violation of the Texas Finance
Code, Chapter 392.”
Appellees argue that the TDCA entitles them to injunctive relief under these
circumstances. Appellees rely on four sections of the TDCA. First, they rely on section
392.101(a), which requires third-party debt collectors to obtain a surety bond and file a copy of
that bond with the secretary of state. TEX. FIN. CODE ANN. § 392.101(a) (West 2006). Second,
they rely on section 392.304(a)(1)(A), which prohibits debt collectors from using a name other
than the “true business or professional name or the true personal or legal name of the debt
collector while engaged in debt collection.” Id. § 392.304(a)(1)(A). Third, they rely on section
392.403(a)(1), which states that a person may sue for “injunctive relief to prevent or restrain a
violation of this chapter.” Id. § 392.403(a)(1). Finally, they rely on section 392.403(e), which
states that “[a] person who successfully maintains an action under this section for violation of
section 392.101 . . . is entitled to not less than $100.00 for each violation of this chapter.” Id. §
392.403(e). Reading these sections together, appellees argue that they are entitled to injunctive
relief because they “established that [W&R] violated section 392.101.” We disagree. As the
Supreme Court has explained, “[p]ast exposure to illegal conduct does not itself show a present
case or controversy regarding injunctive relief [ ] if unaccompanied by any continuing, present
adverse effects.” O’Shea v. Littleton, 414 U.S. 488, 495–96 (1974).
To support their argument appellees rely on Marauder Corp. v. Beall, 301 S.W.3d 817
(Tex. App.—Dallas 2009, no pet.). In Marauder the plaintiff established a violation of the
TDCA’s bond requirement and obtained an injunction under section 392.403 enjoining the
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defendant from collecting debts without having an appropriate bond. Id. at 821. Marauder is
distinguishable, however, because in that case it does not appear that whatever violation of the
bond requirement occurred was remedied before the lawsuit was filed.
A case closer to this one is Elston v. Resolution Services, Inc., 950 S.W.2d 180 (Tex.
App.—Austin 1997, no writ). In Elston a plaintiff sued a debt collector that did not have a bond
on file with the secretary of state. The plaintiff sought injunctive relief requiring the debt
collector to comply with the bond requirement in the future. After the lawsuit was filed the debt
collector filed the bond and the trial court denied the injunction. On appeal, albeit in dictum, the
appellate court stated that it would have upheld the trial court’s decision to deny injunctive relief
because the claim was rendered moot when the debt collector filed the bond. Id. at 184.
Even if W&R committed a prior violation of the finance code by not filing its name-
change rider with the secretary of state until November 2009, which we need not decide today,
the name-change rider was on file months before appellees filed this lawsuit. Although section
392.403(a)(1) states that a person may sue for injunctive relief to “prevent” a violation of finance
code, we do not construe this to mean that a person is entitled to seek prospective injunctive
relief against any debt collector predicated upon a hypothetical contingency that the debt
collector might violate a provision of the finance code at some unknown point in the future. See,
e.g., Tex. Parks & Wildlife Dep’t v. Tex. Ass’n of Bass Clubs, 622 S.W.2d 594, 596 (Tex. App.—
Austin 1981, writ ref’d n.r.e.) (“Courts are not empowered to decide cases predicated upon future
contingencies.”).
Appellees also suggest that there is a live controversy in this case because section
392.403(e) provides for statutory damages when someone “successfully maintains an action
under this section for violation of section 392.101.” But in this case appellees did not seek
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statutory damages, and they cannot successfully maintain an action because there is no
continuing injury that injunctive relief could redress.
Citing Texas A&M University-Kingsville v. Yarbrough, 347 S.W.3d 289 (Tex. 2011),
appellees argue that their claim for injunctive relief in this case falls under the exception to the
mootness doctrine for cases that are “capable of repetition, yet evading review.” That rare
exception, however, requires proof that “(1) the challenged action was too short in duration to be
litigated fully before the action ceased or expired; and (2) a reasonable expectation exists that the
same complaining party will be subjected to the same action again.” Williams v. Lara, 52
S.W.3d 171, 184 (Tex. 2000). In this case the alleged violation continued for more than three
years, and appellees have not shown a reasonable expectation that they will be subject to the
same alleged violation again. As a result, the exception to the mootness doctrine does not apply.
Finally, appellees also argue that it would “destroy the very essence of the bonding
requirements of the Finance Code” if a third-party debt collector can moot a claim like theirs by
“filing a bond upon a moment’s notice.” We disagree. The essence or purpose of the bond
requirement is to protect consumers, and that purpose is met when a bond is filed in compliance
with section 392.101.
We conclude that the trial court lacks subject matter jurisdiction over appellees’ claim for
injunctive relief because there is no live controversy that injunctive relief could redress. As a
result, the class certification order is void. See generally In the Interest of S.J.G., No. 05-13-
01351-CV, 2015 WL 1611833, at *2 (Tex. App.—Dallas Apr. 9, 2015, pet. filed) (mem. op.)
(noting order is void when issuing court lacks subject matter jurisdiction).
CONCLUSION
We resolve W&R’s first issue in its favor and do not need to address W&R’s alternative
arguments that (1) appellees did not establish essential elements of Texas Rule of Civil
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Procedure 42, and (2) the certification order does not comply with rule 42(c)(1)(D). We reverse
the class certification order and remand this case to the trial court with instructions to dismiss
appellees’ claim for injunctive relief for lack of subject matter jurisdiction.
/Elizabeth Lang-Miers/
ELIZABETH LANG-MIERS
JUSTICE
140902F.P05
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
WEINSTEIN & RILEY, P.S., Appellant On Appeal from the County Court at Law
No. 1, Dallas County, Texas
No. 05-14-00902-CV V. Trial Court Cause No. CC-10-05153A.
Opinion delivered by Justice Lang-Miers.
LARRY BLANKENSHIP, JACKIE Justices Brown and Schenck participating.
ABBOTT, MICHAEL JANSKY, and CARL
D. TILLERY, INDIVIDUALLY AND ON
BEHALF OF A CLASS OF SIMILARLY
SITUATED PERSONS, Appellees
In accordance with this Court’s opinion of this date, the class certification order is
REVERSED and this cause is REMANDED to the trial court with instructions to dismiss
appellees’ claim for injunctive relief for lack of subject matter jurisdiction.
It is ORDERED that appellant Weinstein & Riley, P.S. recover its costs of this appeal
from appellees Larry Blankenship, Jackie Abbott, Michael Jansky, and Carl D. Tillery.
Judgment entered this 21st day of July, 2015.
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