District Court (Cal.) Finds No FDCPA/Rosenthal Act Violation Arising from Allegedly Defective Sub-Service of State Court Collection Action

In Scott v. Kelkris Associates, Inc., 2012 WL 161415 (E.D.Cal. 2012), Judge Shubb granted summary judgment to a debt collector on FDCPA and Rosenthal Act claims where the debtor claimed that the debt collector’s substitution service of process relating to a state-court collection action was invalid.  The Court found no unconscionable practices under the FDCPA, and imposed an intent element under the Rosenthal Act’s section 1788.15.

The Rosenthal Act provides that “[n]o debt collector shall collect or attempt to collect a consumer debt by means of judicial proceedings when the debt collector knows that service of process, where essential to jurisdiction over the debtor or his property, has not been legally effected.” Id. § 1788.15(a).  ¶   Defendant cannot avoid liability simply by claiming that it hired an independent process server and thus did not “know” that service of process had not been legally effected. See Bishop v. Silva, 234 Cal.App.3d 1317, 1322, 285 Cal.Rptr. 910 (6th Dist.1991) (“In this case, [defendant’s] problems were within [its] own control. [Defendant] ‘selected and employed [its] own agent to effect service of process upon [plaintiff]. [It] is necessarily charged with notice of the acts and declarations of [its] agent.’ ” (quoting Ippolito v. Municipal Court, 67 Cal.App.3d 682, 687, 136 Cal.Rptr. 795 (2d Dist.1977) (disapproved of on other grounds by Hocharian v. Superior Court, 28 Cal.3d 714, 170 Cal.Rptr. 790, 621 P.2d 829 (1981)))). It appears that few cases have applied section 1788.15(a), and in those that have there has been proof of actual notice that service was unsuccessful. See, e.g., Tourgeman v. Collins Fin. Servs., Inc., No. 08–CV–1392, 2011 WL 3176453, at *8 (S.D.Cal. July 26, 2011) (finding liability under section 1788.15(a) where debt collector was informed that service of process had not been legally effected and directed the process server to prepare a fraudulent proof of service).  ¶  As discussed above, defendant’s declarations provide evidence that defendant’s belief that plaintiff lived on Culpepper Drive was reasonable, that the process server was never informed that plaintiff did not live at the Culpepper Drive address, and that defendant was notified that substitute service was successful. Defendant has therefore provided sufficient evidence to establish that it did not know that plaintiff was never properly served when it filed for declaratory judgment.