Case Name: Lorie Ann Guzman v. Mandarich Law Group, LLP, et al.
Case No.: 18-CV-322871
This is a class action under the Rosenthal Fair Debt Collection Practices Act (“RFDCPA” or “Rosenthal Act”). Before the Court is defendant Mandarich Law Group, LLP’s motion for an order granting its “subsequent application for summary judgment on the issue of [its] cure pursuant to Cal. Code of Civ. Proc. § 1008 (b),” and dismissing plaintiff’s individual and class claims. Plaintiff opposes Mandarich’s motion.
I. Factual and Procedural Background
Plaintiff incurred a consumer debt in the form of a credit account issued by WebBank. (Complaint, ¶ 15.) She was unable to pay the debt and defaulted on her payments to WebBank. (Id. at ¶ 16.) The debt was subsequently assigned or otherwise transferred to defendant for collection, and it sent an initial collection letter to plaintiff dated February 9, 2017. (Id. at ¶¶ 17-21.) The letter notified plaintiff of her specific debt in 12-point type, but, in violation of Civil Code section 1812.701, subdivision (b), provided the notice required by Civil Code section 1812.700, subdivision (a) in 10-point type. (Id. at ¶¶ 22-24.)
Plaintiff alleges that sending initial collection letters with this formatting is defendant’s standard practice, and brings a putative class action on behalf of other WebBank debtors who received such a letter. (Complaint, ¶¶ 25-40.) Her complaint asserts a single cause of action under Civil Code sections 1812.700-1812.702 (the “Consumer Collection Notice” statute). Plaintiff’s claim is styled a Rosenthal Act claim because under Civil Code section 1812.702, a violation of the Consumer Collection Notice requirements is considered a violation of the Rosenthal Act.
Plaintiff filed her complaint on February 2, 2018. Defendant answered and filed a motion for summary judgment, or, alternatively, summary adjudication of the class claim. Among the grounds raised in support of its motion, Mandarich urged that it had cured any violation of the Consumer Collection Notice statute by sending a corrected letter to Guzman upon discovering the violation when it received notice of this lawsuit. (See Civ. Code § 1788.30, subd. (d) [“A debt collector shall have no civil liability under this title if, within 15 days either after discovering a violation which is able to be cured, or after the receipt of a written notice of such violation, the debt collector notifies the debtor of the violation, and makes whatever adjustments or corrections are necessary to cure the violation with respect to the debtor.”].) In an order filed on April 18, 2019, the Court denied Mandarich’s motion. It rejected the cure argument, stating that the violation likely was not one that was “able to be cured” under the Rosenthal Act and, even if it were, there was a triable issue of fact regarding whether the violation had been cured “where the ‘curative’ letter was not sent for more than a year after the initial notice, months after the debt at issue had already been settled.”
Following the Court’s ruling, the Court of Appeal for the First District issued a published opinion addressing the cure defense in another Consumer Collection Notice action, Timlick v. National Enterprise Systems, Inc. (2019) 35 Cal.App.5th 674. Timlick held that the type-size violation at issue here is subject to the cure defense and that such a violation is “able to be cured” under the Rosenthal Act. It left undisturbed the trial court’s ruling on summary judgment that the defendant had timely cured the violation as to the named plaintiff by issuing a revised collection letter in response to her complaint, a year after it sent the initial demand letter. However, it reversed the judgment for the defendant, holding that the “pick off” doctrine applied in these circumstances. That doctrine establishes an exception to the general rule that the named plaintiff in a class action must be a member of the class where the defendant unilaterally gives relief to the plaintiff for the purpose of avoiding the class action.
On July 16, 2019, plaintiff moved to certify the class. Mandarich opposed certification, relying primarily on its argument that Timlick requires the Court to reconsider its ruling regarding the cure defense and enter summary judgment defendant’s favor. In an order filed on August 16, the Court granted class certification, reasoning that “following Timlick, the Court must evaluate whether Guzman can fairly represent the class under the ‘pick off’ doctrine.” The Court found that she could:
Guzman received the same initial collection letter as the rest of the class and did not receive the curative letter until over a year later. Her experience was the same as that of other class members until after this action was filed and Mandarich attempted to pick her off from the class. While she may no longer be able to recover penalties on her own behalf, the relevant statutes provide that in a class action under the Rosenthal Act, the penalties recoverable by the named plaintiffs are assessed separately from those recoverable by the rest of the class in any event. [Fn. omitted.] The penalties that may be awarded to the named plaintiffs and to the class are very limited, and do not provide a large financial incentive to the named plaintiffs in any case under the Act. Moreover, Guzman has already been deposed in connection with this action and submits a declaration establishing that she understands her duties as a class representative and will continue to actively participate in the litigation. For these reasons, the Court finds that Guzman is an adequate class representative. To the extent her claims are no longer typical of the class, the “pick off” doctrine applies. Plaintiff’s experience and claims were entirely typical of the class until she received a curative letter over a year after this action was filed. The impact of that letter can be determined in the context of a class action in which Guzman serves as the class representative.
Finally, the Court notes that Timlick found that the trial court had erred “in dismissing the entire putative class action without first affording Timlick the opportunity to amend her complaint, redefine the putative class, or locate a suitable class representative, and without giving notice to the putative class,” without specifically mentioning the possibility that Timlick could continue to serve as the class representative. (Timlick v. National Enterprise Systems, Inc., supra, 35 Cal.App.5th at pp. 690.) The Court interprets the more general direction that Timlick could “amend her complaint” to allow for this possibility; in any event, Timlick’s earlier discussion of the “pick off” doctrine clearly contemplates that a trial court could conclude that “the named plaintiff can continue to fairly represent the class in light of the individual relief offered by the defendant….” (Timlick v. National Enterprise Systems, Inc., supra, 35 Cal.App.5th at p. 689, internal citations and quotations omitted.) Again, the Court finds that conclusion is supported here.
The Court continued Mandarich’s related motion for reconsideration of its April 18th order denying summary judgment, which was scheduled to be heard on the same day as plaintiff’s motion for class certification but which had been filed fewer than 16 court days before the hearing. Plaintiff has now had the opportunity to file a substantive opposition to the motion for reconsideration, which has again come on for hearing by the Court.
II. Analysis
As an initial matter, a motion for reconsideration must be filed within 10 days of notice of entry of the challenged order. (Code Civ. Proc., § 1008, subd. (a).) Mandarich’s motion is therefore untimely. Still, the statute governing reconsideration permits courts to act sua sponte to enter a different order “at any time” when there has been a change in the law. (Code Civ. Proc., § 1008, subd. (c).) Moreover, even in the absence of a change in the law, a court has inherent power to reconsider its own interim orders at any time on its own motion. (Le Francois v. Goel (2005) 35 Cal.4th 1094, 1107; Nieto v. Blue Shield of Calif. Life & Health Ins. Co. (2010) 181 Cal.App.4th 60, 73.) It is appropriate for the Court to reconsider its April 18th order in light of Timlick.
However, as already discussed in its order granting class certification, the Court does not find that Timlick compels it to dismiss this action or to enter summary judgment in favor of Mandarich with regard to plaintiff’s class claim. While the status of plaintiff’s individual claim remains uncertain in light of Timlick, Mandarich has never sought summary adjudication of plaintiff’s individual claim: its prior motion was for summary judgment or summary adjudication of the class claim. For the reasons already discussed in its August 16th order, the Court finds that under the “pick off” doctrine, the class claim may proceed and plaintiff may continue to serve as the class representative.
III. Conclusion and Order
Defendant’s motion for reconsideration is DENIED.
The Court will prepare the order.