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Lott v. Vial Fotheringham, LLP

United States District Court, D. Oregon

October 12, 2017

JANICE LOTT, on behalf of herself and all others similarly situated; KANIKA CHEA, on behalf of herself and all others similarly situated, Plaintiffs,

          Bret Knewston Bret Knewston, Esq. Mark. G. Passannante Boer & Passannante, P.S. Attorneys for Plaintiff

          Jonathan M. Radmacher McGowen Grisvold, LLP Attorney for Defendant

          OPINION & ORDER

          MARCO A. HERNÁNDEZ United States District Judge

         Plaintiffs Janice Lott and Kanika Chea (collectively “Plaintiffs”) bring claims under the Fair Debt Collection Practices Act (“FDCPA”) against Defendant Vial Fotheringham, LLP. Plaintiffs allege that Defendant engaged in abusive, deceptive, and unfair debt collection efforts when attempting to collect overdue homeowners' association (“HOA”) assessments.

         Before the Court are the parties' cross-motions for partial summary judgment regarding Defendant's right, or lack thereof, to impose or collect certain charges and interest. If the disputed charges and interest were not authorized by contract or by statute, then Defendant's collection of them qualifies as an unfair debt collection practice under the FDCPA. Plaintiffs argue that Defendant was not authorized to: (1) charge pre-suit attorneys' fees for collection work and for other management fees; and (2) impose contractual interest rates on prevailing-party attorneys' fees in excess of 9%. Defendant moves for summary judgment that both the charges and interest identified above are lawful. Defendant also generally moves for summary judgment that the following may be collected: unpaid assessments, late charges at a rate of 30% per unpaid assessment, costs, attorney fees, and interest on those items at rates set in the relevant HOA documents. Lastly, Defendant argues that summary judgment should be granted in its favor on all of Chea's claims against it because she signed a covenant to release any claims arising from the parties' disputes. The Court grants in part both parties' motions.


         A description of Lott and Chea's allegations against Defendant can be found in the Court's prior Opinion & Order regarding Defendant's motion to dismiss. See Op. & Order, Aug. 23, 2016, ECF 10. In sum, Plaintiffs fell behind on paying assessments to their HOAs for the maintenance of common areas. Plaintiffs' HOAs employed Defendant as their debt collector. Defendant initiated collection lawsuits against Plaintiffs and prevailed. Defendant charged Plaintiffs for attorneys' fees associated with its collection work conducted prior to filing suit and it collected other management fees arising from Plaintiffs' communications with Defendant regarding their delinquencies. Additionally, Defendant imposed interest on attorneys' fees it was awarded as the prevailing-party in its collection lawsuits at rates of 18% against Lott and 12% against Chea respectively, which were higher than the standard statutory 9% rate. Plaintiffs contend that the charges and interest rates described above were not authorized by Plaintiffs' agreements with their HOAs or by statute.

         For purposes of the motions currently before the Court, the relevant facts include the texts of the HOAs': declarations of covenants, conditions & restrictions; bylaws; and collection resolutions.

         I. Lott

         Lott's property is subject to the rules of the Autumn Meadows Owner's Association (“AM HOA”). Zimmerman Decl. Ex. 1, ECF 31. AM HOA's declaration (“AM Declaration”) provides that the AM HOA's Board of Directors (“AM Board”) “may adopt, modify or revoke Rules and Regulations governing the conduct of persons and the operation or use of Lots and Common Areas” and it may levy special assessments for the maintenance of common areas. Id. at §§ 4.22, 5.4, 10.5. Further, the AM Board may also levy special assessments against an owner “[t]o collect amounts due to the Association from an Owner for breach of the Owner's obligation under the Declaration, the Bylaws, or the Rules and Regulations by vote of a majority of the Board.” Id. at § 10.6. When an owner becomes delinquent on payment of its assessments, the AM HOA, through the AM Board “or any management agent, ” may file a lien on the owner's deed. Id. at § 10.8(b). “Once filed, such lien shall accumulate all future assessments or installments, interest, late fees, penalties, fines, attorneys' fees (whether or not suitor action is instituted) and other appropriate costs properly chargeable to an Owner by the Association, until such amounts are fully paid.” Id.

         Regarding interest, fines, late fees, and penalties, the AM Board has discretion to “adopt resolutions to set the rate of interest, and to impose late fees, fines and penalties on delinquent assessments or for violations of the provisions of this Declaration, the Bylaws, any Rules and Regulation . . . .” Id. at § 10.8(c). The AM HOA is required to communicate any such imposition to all owners in writing at least thirty days before the effective date and “[s]uch impositions shall be considered assessments which are lienable and collectible in the same manner as any other assessment.” Id.

         The AM HOA's bylaws (“AM Bylaws”) give the AM Board the authority to adopt “rules and regulations governing the use and maintenance” of common areas and to “establish fines and penalties for the violation thereof.” Zimmerman Decl. Ex. 2, at § 7.1. The AM Bylaws state that owners are obligated to pay 18% interest on late assessments per annum, as well as a “one-time per assessment late charge not to exceed 30% of the delinquent amount.” Id. at § 10.

         The AM Board passed a collection resolution (“AM Resolution”), stating that under the AM Declaration and AM Bylaws, owners “shall be obligated to pay reasonable fees and costs including, but not limited to, attorney fees incurred in connection with efforts to collect delinquent and unpaid assessments, regardless of whether suit or action is commences, and/or to enforce the provision of the Declaration, Bylaws, rules and regulations of the Act.” Zimmerman Decl. Ex. 3, at 1-2. The AM Resolution also provides that the “lien amount shall include all collection costs to date, including attorney's fees and the cost of preparing and/or recording the lien.” Id. at 2-3.

         II. Chea

         Chea's property is subject to the rules of the Waterford Park Homeowners' Association (“WP HOA”). The WP HOA's declaration (“WP Declaration”) states that upon a majority vote of the owners, the board of directors (“WP Board”) may levy additional special assessments. Zimmerman Decl. Ex. 4, at Art. IV(3). The WP Declaration gives the WP Board discretion to charge fees for the maintenance of common areas including “the right to levy liens on any Townhomes and charge interest for any fees not paid by the Owner(s) in accordance with the provisions hereof.” Zimmerman Decl. Ex. 4, at Art. II(B). Such liens include annual and special assessments “together with such interest thereon and costs of collection thereof.” Id. at Art. IV(B)(2). If an owner becomes delinquent on their assessments, then the assessment will bear interest at 1% per month until paid. Id. at Art. IV(B)(3)(A). Additionally, a delinquent owner must pay a late charge of 30% of the portion of the delinquent assessment. Id. If the WP HOA obtains a lien judgment or decree in its favor, the WP Declaration provides that the owner shall be liable for “the Association's court costs and disbursements and reasonable attorneys' fees to be fixed by the court, such costs, disbursements and attorneys'' fees to be further secured by such lien.” Id. at Art. IV(B)(3)(C).

         The WP HOA's bylaws (“WP Bylaws”) provides that the WP Declaration “shall establish a basis to assess and collect a prorate share of the annual budget from each Lot and Member and to enforce collection thereof, including lien rights against a Lot and Member.” Zimmerman Decl. Ex. 5, at Art. IX(B).

         The WP HOA passed a collection resolution (“WP Resolution”) stating that the “lien amount shall include all collection costs to date, including attorney's fees and the cost of preparing and/or recording the lien, any notice of lien required by law.” Zimmerman Decl. Ex. 6, at 2-3. The WP Resolution also provided “that all legal fees and costs incurred in the collection of a delinquent account shall be assessed against the ...

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