Monday, June 29, 2009
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C.A.: Debt Collection Abuses Not Shielded by Litigation Privilege
By SHERRI M. OKAMOTO, Staff Writer
The First District Court of Appeal has upheld an award of nearly $200,000 in damages to a San Francisco woman subjected to debt collection abuses due to a case of mistaken identity.
In its decision Thursday, Div. One clarified that the litigation privilege did not shield conduct violating the Robbins-Rosenthal Fair Debt Collection Practices Act, but it did bar a cause of action for the intentional infliction of emotional distress and reduced Anastasiya Komarova’s award against National Credit Acceptance Inc. accordingly.
National purchased a delinquent credit card account with an unpaid balance of $7,872.98 for “Anastasia Komarova” from MBNA America Bank N.A. in December 2004.
After National obtained a credit report for Anastasiya Komarova which misspelled her name, listed addresses for her in the San Francisco Bay Area, and did not identify any accounts with MBNA, the debt collection company began calling Komarova at her work.
A receptionist at Komarova’s workplace described the calls as “quite persistent and rude.” Komarova said she repeatedly informed callers, who would not identify the company they represented, that the debt was not hers, to no avail.
Arbitration Award
In March 2005, National filed a claim on the debt with the National Arbitration Forum against “Anastasia Komarova,” who was listed at an address in Long Beach. An arbitrator later issued National an award of $11,214.33, which included amounts for accrued interest and attorney fees.
Komarova said that a caller agreed to send a “verification of debt” form in July 2005 which, for the first time, provided her with National’s name and address, and she filed a police report with authorities in San Francisco asserting possible fraud.
The spa which employed Komarova closed in November 2005, and callers to the spa’s phone number were directed by a message to alternate numbers, which were cell phone numbers belonging to the spa’s owner, Komarova’s father-in-law, and Komarova’s husband.
Both men testified that collection calls to the spa continued into December 2005 and that they received calls from National on their cell phones, which they did not answer, until January 2006.
A petition to confirm the NAF arbitration award was served on Komarova in February 2006. The petition was set for a hearing in the Los Angeles Superior Court.
Collection Efforts End
After Komarova retained an attorney to represent her on the petition, which she maintained she knew nothing about, National took the scheduled hearing off calendar. National took no further action to collect the debt from Komarova.
Komarova subsequently filed suit against National, but all her causes of action other than those for violations of the Robbins-Rosenthal Act and for intentional infliction of emotional distress were summarily adjudicated in National’s favor.
Trial proceeded with San Francisco Superior Court Judge Ernest Goldsmith presiding, and the jury returned special verdicts finding that National had violated several provisions of the act, awarding her $197,905 in damages.
In a separate special verdict the jury also found National liable for intentional infliction of emotional distress and awarded $67,905 in damages, plus $75,000 in punitive damages.
Writing for the appellate court, Presiding Justice James J. Marchiano noted that several federal district courts had addressed the applicability of the litigation privilege to the Robbins-Rosenthal Act and found that the act prevailed over the privilege.
He posited that the act would be “significantly inoperable” if the privilege did not yield when the two were in conflict as “unfair debt collection practices could be immunized merely by filing suit on the debt.”
However, Marchiano emphasized that those same federal cases finding the privilege inapplicable to Robbins-Rosenthal Act claims nevertheless held that it precluded claims for intentional infliction of emotional distress, and such authority dictated the same outcome here.
Marchiano then rejected National’s statute of limitations defense because the debt collection company’s attempts to collect from Komarova were not abandoned until she was served with the petition to confirm the arbitration award, an event that occurred within the one-year limitations period.
Additionally, he explained that the harassing phone calls, which continued into December 2005, were a continuing course of conduct that extended into the limitations period, even if Komarova and her family did not answer them, as the act does not require calls be answered for them to be actionable.
As for National’s challenge to the award of attorney fees, Marchiano said Komarova was entitled to reasonable attorney fees on appeal attributable to the defense of the judgment on her claims under the Robbins-Rosenthal Act.
Although use of a lodestar multiplier was appropriate, the trial court erred by basing its decision to grant a multiplier on the necessity of private enforcement of the Robbins-Rosenthal Act, the justice said.
Joined by Justice Sandra L. Margulies and retired Marin Superior Court Judge Stephen Graham, sitting by assignment, Marchiano reversed the attorney fee award for reconsideration and modified the judgment to eliminate the intentional infliction of emotional distress claim and punitive damages.
The case is Komarova v. National Credit Acceptance, Inc., 09 S.O.S. 3917.
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