In Roadhouse v. Patenaude & Felix, A.P.C. , 2015 WL 1691885 (D.Nev. 2015), Judge Navarro denied a debt collector’s Motion for Summary Judgment based on the bona-fide error defense because the debt collector continued to prosecute the underlying debt collection lawsuit despite knowledge provided by the debtor that the statute of limitations had run on the obligation.
Defendant asserts that summary judgment should be granted on Plaintiffs’ violation of the FDCPA claim based on the affirmative defense of bona fide error pursuant to 15 U.S.C. § 1692k(c). (Mot. for Summ. J. 5:10–9:19). The bona fide error defense is an affirmative defense, for which the debt collector has the burden of proof. Reichert v. Nat’l Credit Sys., Inc., 531 F.3d 1002, 1006 (9th Cir.2008); Fox v. Citicorp Credit Servs., Inc., 15 F.3d 1507, 1514 (9th Cir.1994). Thus, to qualify for the bona fide error defense, the defendant must prove that (1) it violated the FDCPA unintentionally; (2) the violation resulted from a bona fide error; and (3) it maintained procedures reasonably adapted to avoid the violation. McCollough v. Johnson, Rodenburg & Lauinger, LLC, 637 F.3d 939, 948 (9th Cir.2011). Procedures that support a valid bona fide error defense must be “reasonably adapted to avoid the specific error at issue.” McCollough, 637 F.3d at 948 (citing Reichert, 531 F.3d at 1006). More specifically, Defendant asserts that the alleged violation of the FDCPA was an “unintentional incident,” made by one of its attorneys, Wesley Villanueva (“Villanueva”), who “was experiencing serious personal issues and tragedies during the duration of the State Court action against Plaintiffs.” (Mot. for Summ. J. 5:18, 8:19–21). Moreover, Defendant asserts that the “error was inadvertent and occurred despite the policies and procedures that have been put into place to ensure FDCPA compliance.” (Id. 5:18, 8:13–14). Such policies and procedures include: a.) Conducting weekly meetings for attorneys, managers, and team leads to provide up to date information about the industry and any changes to current policies and procedures. b.) Conducting bi-annual FDCPA training and testing for all collection staff. The training and testing include topics such as, but not limited to, debt validation, collection call compliance, mini-miranda, statute of limitations issues, SCRA, FCRA, TCPA, and meaningful attorney involvement. c.) The firm utilizes sophisticated collections software that is integrated to communicate with client software to ensure accounts are within the statute of limitations and the integrity of the data transmitted is secure and accurate. d.)The firm maintains and internal IT team that ensures proper functioning of the software and systems. e.) Patenaude & Felix, A.P.C., Nevada Division, have two on-site full time attorneys well versed in the FDCP A who provide immediate access to any legal or collection staff who have questions regarding collection’ files so as to ensure a consistent adherence to FDCP A policies and procedures. Patenaude & Felix, A.P. C.’s FDCPA policies and procedures are designed to ensure compliance with all of the applicable FDCPA requirements. However, no system is completely foolproof and errors are always possible. (Id. 7:23–8:11). To support these assertions, Defendant attaches a self-serving affidavit executed by Villanueva. (Ex. C to Mot. for Summ. J., ECF No. 33–3). Without more, the Court finds that Defendant has not produced sufficient evidence which would support a reasonable jury finding that the bona fide error defense applied to its violations of the FDCPA. Even if Defendant had produced sufficient evidence, Plaintiffs have presented evidence that creates a genuine issue of material fact. First, Plaintiffs clarify that “the gravamen of Plaintiffs’ complaint is that Defendant not only filed the collection action in Clark County District Court, but also maintained said action for another eight months, through final judgement (in the Plaintiffs’ favor).” (Response 3:8–11, ECF No. 34). Second, Plaintiffs assert that Defendant was in possession of a letter Plaintiff Trina Roadhouse sent to Defendant more than a month before Defendant filed its complaint in state court, advising Defendant that the statute of limitations had expired on the collection of the account. (Id. 3:20–4:4). This assertion is supported by Defendant’s Response to Plaintiffs’ Requests for Admissions. (Ex. A to Response 21:9–26, ECF No. 34–1; see also Ex. 2 to Compl., ECF No. 1). Third, Plaintiffs assert that they “answered the collection action complaint and again informed P & F via their second affirmative defense that the claims in the state court action were commenced after the running of the applicable statute of limitations,” yet “[f]or the next eight-plus months, P & F continued to litigate the state court action.” (Mot. for Summ. J. 4:12–16; Ex. A to Response 24:10–3). Accordingly, the Court finds that a genuine issue of fact exists regarding whether Defendant’s alleged violations of the FDCPA were the result of a bona fide error. Therefore, the Court denies Defendant’s Motion for Summary Judgment on this basis.