District Court (Cal.) Says Car Rental for Business Trip Had Enough “Personal” Components to It To Defeat Debt Collector’s MSJ; Debt was in Default at the Time of Assignment

In Denicolo v. Hertz Corp., No. 19-cv-00210-YGR, 2020 U.S. Dist. LEXIS 181248 (N.D. Cal. Sep. 30, 2020), Judge Rogers denied a debt collector’s MSJ arising out of a rental car contract  arising from a debtor’s business trip.

In Chyba, defendant claimed that plaintiff had incurred damage to a rental vehicle and that summary judgment on the FDCPA claim should be granted because plaintiff failed to establish the debt was incurred for personal, family, or household purposes. Chyba v. First Fin. Asset Mgmt., Inc., No. 12-CV-1721-BEN WVG, 2013 U.S. Dist. LEXIS 165276, 2014 WL 1744136 (S.D. Cal. Apr. 30, 2014), aff’d, 671 F. App’x 989 (9th Cir. 2016). Citing Slenk and Hansen, the court denied summary judgment as follows: this Court finds that Defendant has not met its burden of showing that no reasonable factfinder could conclude that the alleged debt is a consumer debt within the meaning of FDCPA. Plaintiff allegedly rented a vehicle in her personal capacity. Her name appears on the paperwork, and no party has drawn this Court’s attention to any reference to a business on the rental documents. The fact that certain statements in Plaintiff’s deposition suggest that she sometimes rents cars for business purposes is far from sufficient to allow Defendant to meet its burden, given the other evidence in the record. 2013 U.S. Dist. LEXIS 165276, [WL] at *7.3 Here, on the one hand, Viking submits evidence that DeNicolo flew from Chicago to San Francisco on the morning of Thursday, February 8, 2018 to meet with a client. He stayed overnight and returned the car the next morning.4 When DeNicolo was asked at his deposition whether there was any “personal aspect” of the trip, he said “no.” (Exh F. [DeNicolo Depo.] at 32-33.) On the other hand: (1) DeNicolo did not use a company credit card to pay for the rental. (id. at 36); (2) he booked his own travel, including airfare and car rental (id.); and (3) Viking’s efforts to collect the debt for the vehicle damage were directed to DeNicolo individually, not to his company. Indeed, Viking treats debts assigned by Hertz in a uniform manner, regardless of whether the underlying rental was made for “business” or “personal” reasons and does not make it a practice to determine from Hertz or the renter the purpose for which the rental was made. (Belew Decl., Exh. 2 [Bacon Depo.] at 115:2-116:20.) As in Slenk, there is evidence in the record weighing both for and against a finding that the alleged debt here was a “debt of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes.” 15 U.S.C. § 1692a(5). To find otherwise would require the Court to weigh the scant evidence offered by Viking against the evidence indicating the debt was personal. As instructed by the Ninth Circuit in Slenk, when the objective facts, though undisputed, fall on both sides of a disputed issue, the court may not “weigh conflicting evidence for purposes of summary judgment,” and the motion must be denied. Slenk, 236 F.3d at 1076.

Judge Rogers also said that the account was in “default” at the time of assignment, sufficient to trigger the FDCPA.

Viking has not provided evidence of the contract creating the alleged indebtedness. Instead, Viking proffers as evidence its contract with Hertz, arguing that the terms of that agreement demonstrate that neither Viking nor Hertz considered the debt to be in default when it was placed with Viking. (Motion at 16:27-17:11.; see also Motion at 18:16-19 [“neither Viking nor Hertz treated the account as being in default. To the contrary, their contract expressly identifies the account as being “non-delinquent” and “not in default” at the time of assignment.”].) Viking argues that it is “contracted with Hertz to providing billing services for non-delinquent damage claims” such that, when it obtains a Hertz account for billing services, including DeNicolo’s account, the subject debt is not in default. (Motion at 16:27-28.) Viking’s argument fails for several reasons. First, Viking’s argument elides the full terms of its agreement with Hertz, under which it performs both billing (pre-default) and collection (post-default) services. Viking calls the document the “Billing Services Agreement” between Viking and Hertz. (Motion at 7:1-9.) In reality, the document is entitled “Collection Services Agreement.” (Motion, Exh. B.) Further, the main agreement concerns collections, not simply billing as Viking represents in its brief. Paragraph 8 of the agreement states that “All files placed with [Viking] are initially placed as a collection agency and collection efforts, i.e., letters, phone calls, etc. must commence within 24 hours of receipt by [Viking].” (Id. at ECF 4, emphasis supplied.) The billing services amendment was added several years later and notes that “[e]xcept as expressly modified by this Amendment No. 1 the terms and conditions of the Collection Services Agreement shall remain in full force and effect.” (Id. at ECF [*21]  10.) Thus, the terms of that contract do not establish that the debt was not in default at the time it was placed with Viking, nor do they preclude Viking acting as a “debt collector” in the circumstances here. Second, the agreement between the DeNicolo and Hertz indicates that “Charges not known to [Hertz] at the completion of the rental are payable by You, or by the person, corporation or other entity to whom such Charges are to be billed, immediately upon receipt of an invoice therefore or by billing to the credit, charge or debit/check card presented at the time of rental. . . .” (Belew Decl., Exh. 15 [Rental Jacket] at 3, emphasis supplied.) The record indicates an invoice for repairs to the vehicle was generated on February 12, 2018. (Id. at Exh. 11.) Even if no clear contractual provision establishes when the debt was “in default,” courts generally apply a “case-by-case approach” considering the surrounding circumstances to determine whether defendant acted as a “debt collector.” See Mavris v. RSI Enters., 86 F. Supp. 3d 1079, 1084 (D. Ariz. 2015) (citing Natividad v. Wells Fargo Bank, N.A., No. 3:12-CV-03646 JSC, 2013 U.S. Dist. LEXIS 74067, 2013 WL 2299601, at *4 (N.D. Cal. May 24, 2013); and De Dios, 641 F.3d at 1075 n.3). The district court in Mavris discussed matters to be taken into consideration in the analysis as follows: the guiding principle of the analysis would be the status of the debt, viewed objectively in light of all the circumstances. That is, at the time a third party obtains a debt for collection, would a reasonable person in the debtor’s position believe that the creditor viewed the debt as being in default? Like the Slenk approach, this framework would balance a variety of different factors, none of which would necessarily be dispositive in a given case. The relevant factors might include the number of times a creditor has requested payment, the time that has elapsed since the first request, the urgency of the language used in those requests, the debtor’s knowledge that she has been referred to a third party, the creditor’s internal policies, any representations made by or on behalf of the creditor—either publicly or to a specific debtor—about how it collects debts, and apparent attempts by the creditor or third party to circumvent the FDCPA’s consumer protections. This list is not exhaustive; it necessarily captures only a subset of the factors that could impact objective perceptions of default in any given case. Mavris, 86 F.Supp.3d at 1086 (D. Ariz. 2015). Relying on Slenk and other authorities, the court found that “[o]bjective indicia of a creditor’s treatment of a debt are entitled to greater weight” or else “FDCPA protections would be subject to the whim of creditors” who could unilaterally determine whether the debt was considered “in default” and keep “debtors completely in the dark about when, if ever, those protections commence.” Id.; see also Echlin v. Dynamic Collectors, Inc., 102 F.Supp.3d 1179, 1185 (W.D. Wash. 2015) (denying summary judgment on whether debt “in default” where “[creditor’s] belief that Echlin’s account was not in default is not dispositive of whether default had in fact occurred” and the record’s “[o]bjective indicators of the debt’s status [were] limited”). Viking’s reliance on Diaz v. Viking Client Services, Inc. is misplaced. 2016 U.S. Dist. LEXIS 137697, 2016 WL 5796835 (D. Minn. Oct. 3, 2016). There, plaintiff alleged that Viking first notified him of the alleged damage to the car less than 30 days after the letter stated the alleged incident occurred. 2016 U.S. Dist. LEXIS 137697, [WL] at *1 (providing agreement terms and stating that December 29 letter alleged damage occurred December 8). Plaintiff called and explained to Viking that he did not return a car on that date but had returned one more than two weeks prior, which caused Viking to close the claim. Id. The terms of the rental agreement with Avis stated that amounts due under the agreement must be paid “upon demand” or else be subject to a “past due balance” charge. Id. Based on these allegations, the court found that he could not have been “in default” on a debt simultaneous with this first demand. 2016 U.S. Dist. LEXIS 137697, [WL] at *4. While the court acknowledged that, even if the debt was not in default yet, Viking could be considered a “debt collector” if it had treated it as such—for example by repeatedly contacting plaintiff, using urgent language in its requests, or any apparent attempts to bypass the FDCPA’s consumer protections—plaintiff there had not so alleged. 2016 U.S. Dist. LEXIS 137697, [WL] at *3-4 (citing Mavris, 86 F.Supp.3d at 1086). On summary judgment here, plaintiff submits undisputed evidence that Viking never provided DeNicolo with notice of any amount due until 109 days after Hertz placed the account with it. The first and only letter mailed to DeNicolo was dated May 29, 2018, and stated: Dear Ronaldgjlr [sic] Denicolo, Viking Billing Service has been assigned a claim by Dollar Thrifty Corp for damages incurred to a vehicle you rented. As authorized agents, we would like to extend an offer to you to resolve your claim balance for 80% of the current amount due. To take advantage of this offer your payment must be received in our office within 30 days from the date of this letter. Upon completion of an agreed settlement, your account will be considered settled with Viking Billing Service, and we will notify our client Dollar Thrifty Corp. We are not obligated to renew this offer. If you have any questions regarding the terms of this settlement arrangement or if you need additional time to respond to this offer, please contact us at 800-490-9786 to discuss. Should your settlement payment(s) be returned for any reason by your banking institution, this settlement offer will be considered null and void. (Belew Decl., Exh. 4, emphasis supplied.) While Viking previously called the cell phone on DeNicolo’s account, it never stated why it was contacting him or left a message. Ryan Bacon, Assistant Vice President of Operations and Director of Strategy and Analytics for Viking, testified that all claims Hertz places with Viking for “billing” services automatically “roll-over” to “collection” services between 91 to 105 days after placement unless the claim is subject to some exclusion. (Belew Decl. Exh 2 [Bacon Depo.] at 9-10; 143:3-9, 210:10-211:18.) Viking’s first time connecting with DeNicolo after Hertz placed the debt with Viking was within the period when the debt would have “rolled over” into collections, i.e., when Viking act as a “collection agency” for claims placed by Hertz. The letter gives rise to a reasonable inference that, even if the debt were not considered “in default” under the terms of the rental agreement, Viking was treating it as such by informing DeNicolo he had a “current balance due” on an established debt and must respond quickly to accept a settlement offer. (Belew Decl. Exh. 4.) From this evidence, the court finds that there are triable issues of fact as to whether a reasonable person in the DeNicolo’s position would believe that the Viking considered the debt to be in default or acted as if it were in default when it was assigned. For the foregoing reasons, the motion for summary judgment on DeNicolo’s claims is Denied.

Judge Rogers also found that the claim involved a delinquent debt under the Rosenthal Act, which uses a different term than the FDCPA.

In its motion, Viking contends that (1) “pursuant to their contract, Hertz places non-delinquent, non-defaulted damage claims with Viking for billing services” (Motion at 22:16-19) and (2) that “the rationale set forth in Diaz (discussed above) for why Viking’s billing statement is not in “default” under the FDCPA applies equally for why the billing statement is not “due and owing” under the Rosenthal Act (id. at 22:5-7). First, for the same reasons as set forth above with respect to DeNicolo’s claims, Viking’s suggestion that its contract with Hertz establishes that the claims placed with it (and particularly here, Hertz’s damage claim against Fox) are not in default finds no support in the contract itself, which authorizes both billing services and collection services. The contract establishes nothing whatsoever about whether all claims, or this particular claim, were considered in default or delinquent at the time they were placed with Viking. Second, even assuming the contract and the other evidence submitted by Viking were admissible, none of the evidence establishes when the claim was forwarded to Viking or, indeed, when the incident leading to the damage was alleged to have occurred. The incident report with Fox’s name on it does not include any information in the “date and time of incident” section of the form. (Motion, Exh. P.) And as Viking eventually conceded, the incident report was incorrect, as shown by evidence Fox provided to Viking. (Def. Fact 34.) As with the discussion of the “in default” issue above, Viking offers no evidence to establish when the claim would be considered due and owing either in the contract between Hertz and Fox or directly from Hertz. Thus, contrary to Viking’s assertion, the evidence it offers does not establish that Viking received the claim 20 days after Hertz identified damage, nor that Hertz had not determined the amount was due or owing prior to forwarding the claim. Fox does not dispute that the notice Viking sent him on April 23, 2019, was the first time he learned of the damage claim, nor that the letter prompted him to contact Viking and inform its representative that Hertz was mistaken. However, these facts do not foreclose Fox’s claim that Viking was a debt collector under the Rosenthal Act and that its contacts with him violated sections 1692e and 1692f, 1692g of the FDCPA.9 Consequently, the motion for summary judgment must be denied as to Fox’s claim as well.