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Cornette v. I.C. System, Inc.

United States District Court, S.D. Florida

November 30, 2017




         THIS MATTER is before me on the Defendant I.C. System, Inc.'s (“ICS”) Motion for Summary Judgment (ECF No. 87), Defendant MD Now's (“MD Now”) Motion for Summary Judgment (ECF No. 89), and Plaintiff Faustin Cornette's (“Plaintiff”) Motion for Partial Summary Judgment (ECF No. 92). All parties have filed responses and replies, as well as Statements of Undisputed Facts in support of their motions. The matter is now ripe for review.

         I. BACKGROUND

         This case arises out of a $37.79 collection charge added to Plaintiffs account as a result of unpaid medical costs.[1] MD Now contracts with ICS to collect unpaid debt from consumers in Florida on its behalf. ICS' Statement of Material Facts (“ICS' SMF”), ECF No. 88, ¶ 25. The relationship between ICS and MD Now is governed by the Premier Collect Agreement dated September 3, 2013. ICS' SMF, ¶ 26. The Premier Collect Agreement states “[MD Now's] fees include the non-refundable service fee of $0 plus $0 (applicable state tax) for a total of $0 and the highest applicable fee specified below on all amounts realized after placement.” ECF No. 49-4, p. 2. According to the Agreement, MD Now is responsible for a fee of 20% of “all amounts realized” on balances of $150.01 or more. Id. Attached to the Premier Collect Agreement is the “Patient Contract, ” which governs the relationship between MD Now and its clients. ECF No. 47-1. The Patient Contract states, “If my balance is not paid after 60 days, the information necessary for collection purposes will be forwarded to a professional collection agency, ” and “Further, in the event collection action is required to be initiated by MD Now, I hereby guarantee payment of all attorney's fees, court costs and collection charges incurred up to 40% of the outstanding principal.” ECF No. 47-1, p. 4, ¶ 5. ICS reviewed the Patient Contract to ensure it allowed for collection fees to be assessed. Morris Depo., 78:14-24. MD Now believes it incurs the 20% charge at the moment it refers an account to ICS. MD Now's Statement of Material Facts, (“MD Now's SMF”), ECF No. 90, ¶ 15.

         On March 25, 2015, Plaintiff received medical treatment at a facility owned by MD Now. MD Now's SMF, ¶ 7. Prior to receiving medical care, Plaintiff signed a “Patient Contract” with MD Now. MD Now's SMF, ¶ 8. On or about June 3, 2015, MD Now sent Plaintiff a Statement seeking payment for medical costs totaling $188.94. ECF No. 47-3. By October 2015, Plaintiff still had not paid his bill. MD Now's SMF, ¶ 9. On October 19, 2015, MD Now referred Plaintiff's account to ICS for collection. MD Now's SMF, ¶ 10. The total amount referred was $226.73, which consisted of $188.94 in “Principal” and a $37.79 “Collection Charge.” ICS' SMF, ¶ 16.

         ICS sent Plaintiff a letter dated October 22, 2015, which showed the Principal Due of $188.94 and a Collection Charge Due of $37.79. ECF No. 47-4. After receiving ICS' letter, Plaintiff paid the full amount shown on the MD Now website but did not pay the collection charge. MD Now's SMF, ¶ 19. MD Now paid ICS $37.79, the amount of the collection charge, after Plaintiff paid his medical bill to MD Now. MD Now's SMF, ¶ 22. ICS was notified on October 30, 2015 that a payment was received on Plaintiff's account and ICS stopped all collection efforts. ICS' SMF, ¶ 24. Plaintiff never disputed the debt with ICS prior to filing suit in state court on December 16, 2015. ICS' SMF, ¶ 21.

         Plaintiff filed a complaint against MD Now and ICS in the Circuit Court of Palm Beach County, Florida alleging violations of the Florida Consumer Collection Practices Act (“FCCPA”) and the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”) on the same facts described above. ICS' SMF, ¶¶ 1-2. MD Now filed a motion to dismiss the state court complaint, arguing Plaintiff could not meet the “knowledge” requirement under the FCCPA. ICS SMF, ¶ 3; ECF No. 49-2. After oral arguments, the state court granted MD Now's motion to dismiss without prejudice. ICS' SMF, ¶ 4; ECF No. 49-3. Plaintiff then filed the instant action on October 21, 2016. An ICS “Debt Detail” dated February 22, 2017 showed Plaintiff had a current balance of $37.79. ECF No. 105-11.


         Summary judgment “shall be granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Allen v. Tyson Foods, Inc., 121 F.3d 642 (11th Cir. 1997) (quoting Fed.R.Civ.P. 56(c)) (internal quotations omitted); Damon v. Fleming Supermarkets of Florida, Inc., 196 F.3d 1354, 1358 (11th Cir. 1999). In making this assessment, the Court “must view all the evidence and all factual inferences reasonably drawn from the evidence in the light most favorable to the nonmoving party, ” Stewart v. Happy Herman's Cheshire Bridge, Inc., 117 F.3d 1278, 1285 (11th Cir. 1997), and “must resolve all reasonable doubts about the facts in favor of the non-movant.” United of Omaha Life Ins. Co. v. Sun Life Ins. Co. of Am., 894 F.2d 1555, 1558 (11th Cir. 1990).

         “By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original). “As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.” Id. at 248. Likewise, a dispute about a material fact is a “genuine” issue “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

         “For factual issues to be considered genuine, they must have a real basis in the record...mere conclusions and unsupported factual allegations are legally insufficient to defeat a summary judgment motion.” Ellis v. England, 432 F.3d 1321, 1326 (11th Cir. 2005) (citations omitted). The moving party “always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Summary judgment is proper “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Id. at 322. In those cases, there is no genuine issue of material fact “since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.” Id. at 323.

         A. Fair Debt Collection Practices Act (“FDCPA”)

         Plaintiff brings two FDCPA claims against ICS pursuant to 15 U.S.C. §§ 1692e(2)(A) and 1692f(1). Plaintiff and ICS each maintain they are entitled to summary judgment on both FDCPA claims. After a careful review of the record and the relevant legal authorities, ICS is entitled to judgment as a matter of law.

         a. The 20% collection charge violated the FDCPA.

         Pursuant to 15 U.S.C. § 1692e(2)(A), a debt collector is prohibited from using any false, deceptive, or misleading representation in connection with the collection of a debt, specifically including the false representation of the character, amount or legal status of any debt. 15 U.S.C. § 1692f(1) prohibits a debt collector from using unfair or unconscionable means to collect a debt, including collecting any amount, interest, fee, charge, or expense incidental to the principal obligation, unless expressly authorized by the agreement creating the debt. To prevail on an FDCPA claim, a plaintiff must prove three elements. “First, the plaintiff must have been the object of a collection activity arising from consumer debt. Second, the defendant must be a debt collector as defined by the FDCPA. Third, the defendant must have engaged in an act or omission prohibited by the FDCPA.” Erickson v. Gen. Elec. Co., 854 F.Supp.2d 1178, 1182 (M.D. Fla. 2012) (internal citations omitted). There is no dispute that the first two elements have been met; I must therefore determine whether ICS engaged in an act or omission prohibited by the FDCPA.

         The Eleventh Circuit addressed an almost identical factual situation in Bradley v. Franklin Collection Serv., Inc., 739 F.3d 606 (11th Cir. 2014). In Bradley, the plaintiff received medical services for which he did not pay. Id. at 609. The medical provider referred his account to a collection agency, and in doing so added a fee of 33.33%. Id. The contract between the plaintiff and the medical provider stated the plaintiff would pay for “all costs of collection.” Id. The Eleventh Circuit interpreted the contract to obligate plaintiff only for the “actual” costs of collection. Id., at 610. Because the 33.33% fee bore no correlation to the actual costs of collection, the fee was not expressly agreed to by plaintiff and violated the FDCPA. Id. According to the court, percentage-based fees are not per se violations of the FDCPA; the agreement just needs expressly to allow for it. Id. Similarly, in a case against a mortgage loan servicer, the Eleventh Circuit held that estimated fees violated both §§ 1692(e)(2) and 1692f(1) where the contract language only allowed for “incurred” or “disbursed” fees. Prescott v. Seterus, Inc., 635 F. App'x 640, 633-44 (11th Cir. 2015) (hereinafter “Prescott I).

         The contract at issue here required Plaintiff to pay “all attorney's fees, court costs and collection charges incurred up to 40%.” ECF No. 47-1, p. 4, ¶ 5. Plaintiff argues that the 20% charge MD Now added to his outstanding balance is simply a percentage-based fee and was not expressly agreed to by Plaintiff in the agreement.[2] ICS does not contest the inappropriateness under the FDCPA of the collection charge as calculated by MD Now. MD Now, however, argues that the 20% fee is MD Now's actual cost because, based on the Premier Collect Agreement, it incurred the 20% fee at the time it sent Plaintiffs account to ICS for collection.[3] In addition, MD Now contends that ...

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