Case Name: Credit Consulting Services, Inc. v. Paredes

Case No.: 18CV328603

Plaintiff/cross-defendant Credit Consulting Services, Inc. (“CCS”) moves to strike the cross-complaint (“Cross-Complaint”) filed by defendant/cross-complainant Maritza Paredes (“Paredes”) pursuant to Code of Civil Procedure section 425.16.

I. Background
II.

This a collection action arising out of a debt incurred from the rendering of dental services. On May 18, 2018, CCS, who was assigned Paredes’ debt for collection from its creditor-client, Mai Dental Specialists, filed the instant complaint (“Complaint”) asserting various common counts. On October 21, 2019, Paredes filed the Cross-Complaint, alleging that CCS violated the federal Fair Debt Collection Practices Act (“FDCPA”) and the Rosenthal Debt Collection Practices Act (the “Rosenthal Act” or the “Act”) by engaging in abusive, deceptive and unfair debt collection practices, particularly by making false statements or representations in the Complaint.

On November 25, 2019, CCS filed the instant special motion to strike the Cross-Complaint in its entirety. Paredes opposes the motion.

III. Requests for Judicial Notice
IV.

A. Paredes’ Request
B.

In support of her opposition to CCS’s special motion to strike, Paredes requests that the Court take judicial notice of the following: (1) CCS’s complaint (Exhibit C); (2) the Amended Proof of Service filed in this action (Exhibit D); and (3) the Cross-Complaint (Exhibit E). As these items are all court records, they are proper subjects of judicial notice pursuant to Evidence Code section 452, subdivision (d). Accordingly, Paredes’ request for judicial notice is GRANTED.

C. CCS’s Request
D.

In connection with its reply, CCS requests that the Court take judicial notice of the following items: (1) Paredes’ original declaration, executed February 4, 2019 and filed the following day (attached to Supplemental Declaration of Lawrence Iglesias (“Iglesias Supp. Decl.”), Exhibit 5): (2) Paredes’ Amended Opposition to CCS’s special motion to strike (Iglesias Supp. Decl., Exhibit 7); (3) Paredes’ amended declaration, executed February 7, 2020 (Iglesias Supp. Decl., Exhibit 8); (4) Paredes’ original opposition to CCS’s special motion to strike (Iglesias Supp. Decl., Exhibit 9); (5) declaration of service of Paredes’ Amended Opposition And Amended Declaration (Iglesias Supp. Decl., Exhibit 10); and (6) the fact that February 12th and 17th are court holidays. Like the materials included in Paredes’ request, the foregoing items are all court records and therefore proper subjects of judicial notice pursuant to Evidence Code section 452, subdivisions (d) and (g). Consequently, CCS’s request for judicial notice is GRANTED.

V. CCS’s Special Motion to Strike
VI.

CCS moves to strike the Cross-Complaint in its entirety on the grounds that all of the claims asserted therein arise from its protected activity and Paredes cannot establish a probability that she will prevail on the merits.

A. Legal Standard
B.

Code of Civil Procedure section 425.16 provides a summary procedure by which defendants may dispose of “strategic lawsuits against public participation” or “SLAPP” lawsuits, i.e., lawsuits brought “primarily to chill the valid exercise of constitutional rights of freedom of speech and petition for redress of grievances.” (See Code Civ. Proc., § 425.16, subd. (a).) Courts are to broadly construe the anti-SLAPP statute to further the legislative intent of “encouraging continued participation in matters of public significance by preventing the chilling of such participation through abuse of the judicial process.” (See Kimbler v. Northern Inyo County Local Hospital Dist. (2006) 39 Cal. 4th 192, 199, internal citations omitted.) The court’s approach to ruling on a special motion to strike has been summarized thusly:

Section 425.16, subdivision (b)(1) requires the court to engage in a two-step process. First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from the protected activity. The moving defendant’s burden is to demonstrate that the act or acts of which Plaintiff complains were taken “in furtherance of the [defendant]’s right of petition or free speech under the United States or California Constitution in connection with a public issue” as defined in the statute. (§ 425.16, subd. (b)(1.) If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim. Under section 425.16, subdivision (b)(2), the trial court in making these determinations considers “the pleadings, and supporting and opposing affidavits stating facts upon which the liability or the defense is based.

(See Equilon Enterprises, LLC v. Consumer Cause, Inc. (2002) 29 Cal. 4th 53, 67.)

1. First Step
2.

Turning to the substantive merits of the instant motion, in order to satisfy the first step of the anti-SLAPP analysis, CCS need only make a prima facie showing that Paredes’ claims against it “arise[] from” its exercise of free speech or petition rights as defined in Code of Civil Procedure section 425.16, subdivision (e), i.e., protected activity. (See Governor Gray Davis Committee v. American Taxpayer Alliance (2002) 102 Cal.App.4th 449, 458-459.) Code of Civil Procedure section 425.16, subdivision (e) provides that:

[An] “act in furtherance of a person’s right of petition or free speech under the United States or California Constitution in connection with a public issue” includes: (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law; (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law: (3) any written or oral statement or writing made in a place open to the public forum in connection with an issue of public interest; (4) or any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.

(Code Civ. Proc., § 425.16, subd. (e).)

In determining whether a defendant has sustained its initial burden, the court considers the pleadings, declarations and matters that may be judicially noticed. (See Brill Media Co., LLC v. TCW Group, Inc. (2005) 132 Cal.App.4th 324.) Here, CCS establishes that Paredes’ claims against it arise out of its protected conduct, particularly a “statement or writing made before a … judicial proceeding” (Code Civ. Proc., § 425.16, subd. (e)(1)), i.e., litigation-related activity, because Paredes’ Cross-Complaint is entirely predicted on her contention that CCS made false statements in the Complaint. A claim for relief filed in court is “indisputably a statement or writing made before a judicial proceeding” (Navallier v. Sletten (2002) 29 Cal.4th 82, 90), and pleadings, statements and writings “in connection” with such a claim are covered by the anti-SLAPP statute (Nevillie v. Chudacoff (2008) 160 Cal.App.4th 1255, 1266). In her opposition, Paredes does not dispute that the first step of the anti-SLAPP analysis has been met. Accordingly, Paredes must now demonstrate a probability of prevailing on the merits of the claims in her Cross-Complaint in order to defeat the anti-SLAPP motion.

3. Second Step
4.

Generally, in order to establish a “probability” of prevailing on the merits, a plaintiff/cross-complainant “must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited.” (Soukop v. Law Offices of Herbert Hafif (2006) 39 Cal. 4th 260, 291.) This “probability of prevailing” standard is tested by the same standard governing a motion for summary judgment in that it is the plaintiff’s burden to make a prima facie showing of facts that would support a judgment in the plaintiff’s favor. (See Taus v. Loftus (2007) 40 Cal. 4th 683, 714.) A plaintiff/cross-complainant must show that there is admissible evidence that, if credited, would be sufficient to sustain a favorable judgment. (See McGarry v. University of San Diego (2007) 154 Cal.App.4th 97, 108.) The court may not weigh credibility or comparative strength of the evidence; the court must consider the defendant’s evidence only to determine if it defeats the plaintiff’s showing as a matter of law. (See Soukop, supra, 39 Cal. 4th at 291.) “In making this assessment it is the court’s responsibility … to accept as true the evidence favoring the plaintiff …. The plaintiff need only establish that his or her claim has ‘minimal merit’ to avoid being stricken as a SLAPP.” (Id., internal quotations and citations omitted.)

Here, while CCS has no burden on the second step of the anti-SLAPP analysis, it nevertheless insists in its papers that Paredes cannot establish a probability of prevailing on her claims for two reasons: (1) they are both time-barred; and (2) the Rosenthal Act is inapplicable to Paredes’ debt because it only applies to “consumer debt” arising from “consumer credit transactions” and her debt does not qualify as such.

a. Timeliness of Paredes’ Claims
b.

As set forth above, in her Cross-Complaint Paredes asserts claims for violation of the FDCPA and its state counterpart, the Rosenthal Act. Both statutes impose a one-year statute of limitations (see 15 U.S.C. § 1692k, subd. (d) and Civ. Code, § 1788.30, subd. (f)), and the claims accrue, thus triggering this time period, when the purported violations have occurred (Mattson v. U.S. West Communications, Inc. (8th Cir. 1992) 967 F.2d 259, 261). Here, CCS maintains that the violations at issue, i.e., the filing of the Complaint allegedly containing misrepresentations regarding Paredes’ debt, occurred on June 6, 2018, when the summons and Complaint were transmitted for service to Paredes (representing CCS’ last opportunity to comply with the statutes), and therefore the Cross-Complaint had to be filed by June 6, 2019 in order to be timely. However, it was not filed until October 21, 2019, CCS explains, and therefore Paredes’ claims are time-barred.

Paredes maintains that CCS’s argument ignores the effect that the filing of the Complaint had on the running of the statute of limitations on her claims. Similar in effect to the “relation back doctrine,” the filing of a complaint “tolls” or “suspends” the statute of limitations as to any cross-complaint against the plaintiff arising out of the same “contract, transaction, matter, happening or accident” upon which the plaintiff’s action is brought, i.e., a compulsory cross-complaint. (Trindade v. Superior Court (1973) 29 Cal.App.3d 857, 859-860.) This is because “by the filing of the original complaint … the plaintiff has thereby waived the claim and permitted the defendant to make all proper defenses to the cause of action pleaded.” (Boyer v. Jensen (2005) 129 Cal.App.4th 62, 69-70.) The same rule applies to permissive cross-complaints. (ZF Micro Devices, Inc. v. TAT Capital Partners, Ltd. (2016) 5 Cal.App.5th 69, 92.) Thus, as long as the statute of limitations on Paredes’ claims had yet to run out when CCS filed its Complaint, her Cross-Complaint is timely because it relates back to when that pleading was filed. As that is the case here, CCS’s argument that Paredes’ claims are time-barred is without merit.

c. Applicability of the Rosenthal Act
d.

CCS also asserts that Paredes cannot demonstrate a probability of prevailing on her claim under the Rosenthal Act because the underlying debt does not fall within its scope. Paredes insists to the contrary.

The Rosenthal Act was enacted “to prohibit debt collectors from engaging in unfair or deceptive acts or practices in the collection of consumer debts.” (Civ. Code, § 1788.1, subd. (b).) A “debt collector” is “any person who, in the ordinary course of business, regularly, on behalf of himself or herself or others, engages in debt collection.” (Civ. Code, § 1788.2, subd. (c).) The Rosenthal Act defines the term “debt collection” as “any act or practice in connection with the collection of consumer debts.” (Civ. Code, § 1788.2, subd. (b).) “Consumer debt,” in turn, is defined as “money, property or their equivalent, due or owing or alleged to be due or owing from a natural person by reason of a consumer credit transaction.” (Civ. Code, § 1788.2, subd. (f).) The Rosenthal Act further defines the phrase “consumer credit transaction” as “a transaction between a natural person and another person in which property, services, or money is acquired on credit by that natural person from such other person primarily for personal, family, or household purposes.” (Civ. Code, § 1788.2, subd. (e).)

CCS does not dispute that it is a “debt collector” within the meaning of the Rosenthal Act, but insists that the underlying debt obligation (Paredes’ allegedly unpaid dental bill) did not arise from a “consumer credit transaction” as defined within the Act. The phrase “on credit” or the word “credit” are not defined by the Rosenthal Act, but the Court of Appeal has concluded that the phrase “on credit” can be stated as “obtaining something of value without immediate payment on the promise to make a payment or payments in the future,” and thus construes Civil Code section 1788.2, subdivision (e), as providing that a “consumer credit transaction” is “a transaction between a natural person and another person in which property, services, or money is acquired [without immediate payment and with the promise to pay in the future] by that natural person from such other person primarily for personal, family, or household purposes.” (Davidson v. Seterus, Inc. (2018) 21 Cal.App.5th 283, 296-297.)

CCS argues that Paredes’ debt to her dentist did not involve any promise to make a payment or payments in the future because, even by her own account, she was told by the dentist’s office that it would accept payment for services rendered to her from her insurer and would waive any co-payment not covered by it. (Cross-Complaint, ¶ 13.) This argument is wholly unpersuasive because, as Paredes points out in her opposition, CCS alleges in its own Complaint that within the last four years, Paredes became indebted to CCS’s assignor Mai Dental on an open book account for money due. Further, Paredes explains in a declaration submitted in support of her opposition that while she believed that payments would be made on her behalf by her insurer to the dentist, she did not believe that she had no future obligation to make such payments and understood, in fact, that she would have to do so if her insurer ended up denying her claims. (Declaration of Maritza Paredes in Support of Opposition to Special Motion to Strike (“Paredes Decl.”), ¶ 5.) Stated most succinctly, a “consumer credit transaction” occurs when the consumer “acquires something without paying for it.” (Gouskos v. Aptos Village Garage, Inc. (2001) 94 Cal.App.4th 754, 759.) There is no dispute that Paredes’ did not pay for the dental services she and her family acquired at the time they acquired them. Thus, CCS’s contention that Paredes’ debt did not arise from a “consumer credit transaction” is without merit.

e. Paredes’ Showing
f.

The allegations underlying Paredes’ claims for violations of the FDCPA and the Rosenthal Act are essentially identical, with Paredes alleging that CCS violated these statutes by, via the filing of the Complaint: making and using false, deceptive and misleading representations in an attempt to collect the alleged debt; misrepresenting the character, amount, or legal status of the alleged debt; misrepresenting the compensation which may be lawfully received by them for collection of the alleged debt; attempting to unlawfully collect the alleged debt; and attempting to collect interest, fees or other charges from her that they are not authorized to collect. (Cross-Complaint, ¶¶ 19-23, 29, 40.) The foregoing acts are prohibited under the FDCPA and the Rosenthal Act, particularly 15 U.S.C. sections 1692e, subds. (2)(A), (2)(B), (5), (10) and (f)(1) and Civil Code sections 1788.13, subd. (e), 1788.14, subd. (b) and 1788.17.

In support of her allegations, Paredes submits her own declaration, filed February 5, 2020, wherein she states, under penalty of perjury, the following: she was promised by the dentist’s office that it would accept payment from her insurer, Delta Dental, as payment-in-full for any services provided to her and her family (Paredes Decl., ¶ 4); in reliance on the foregoing promise, Paredes and her family obtained dental services on various dates between May 16, 2015 and March 24, 2016 (id.); in June 2018, Paredes received a claim summary and check from Delta Dental in the amount of $2,195.00, which she attempted to deliver to the dentist’s office (id., ¶ 6); a different employee than the one she had previously dealt with informed Paredes that the office would not accept the check as full payment for the services rendered (id.); the first notice that Paredes had that she had been sued by CCS was when she received a Memorandum of Costs After Judgment, Acknowledgment of Credit, and Declaration of Accrued Interest in the mail on August 8, 2019 (id., ¶ 8); while the Proof of Service of Summons and the Complaint filed in this matter states that Paredes was personally served with both at Kellogg Company in San Jose on June 6, 2018, Paredes declares that she did not work at Kellogg company at that time and was at no point served with a summons or the Complaint in this matter (id., ¶¶ 9, 11-12); an Amended Proof of Service of Summons filed by CCS indicates that CCS personally served Paredes at her home address on August 28, 2019, but Paredes states that this is false; on October 17, 2019, Paredes received a call from the dentist’s office that the instant action would be dismissed if she brought in the Delta Dental Check.

In its reply, CCS explains that upon receipt of Paredes’ February 5th declaration, its attorney sent an email to opposing counsel with an attached audio recording from June 7, 2018, in which Paredes had a conversation with a CCS collector and expressly admitted that she had been served with the summons and Complaint the day prior as stated in the Proof of Service of Summons and Complaint filed with the court by CCS. (See Iglesias Supp. Decl., ¶ 3, Exhibit 6.) Instead of notifying the Court that the representations made by Paredes in her original declaration regarding service on her were false and expressly withdrawing those representations, Paredes’ counsel filed an Amended Opposition and Paredes’ Amended Declaration the following day. In her Amended Declaration, Paredes no longer represents that she was not served in this action and instead states that she did not remember any calls with CCS until she was provided with a copy of her call by her counsel, upon which she remembered that the company called her, but not when that call occurred. In the call, Paredes attempted to explain that her dentist’s office had agreed to accept payment from her insurer, but the CCS representative apparently did not care.

Paredes’ declarations represent the entirety of the materials submitted by her in support of her claims. It appears to the Court that her claims against CCS (as the question of proper service is no longer an issue) are predicated entirely on her contention that she never owed the underlying debt in the first place because her dentist had agreed to accept payment from her insurer. This is apparently what Paredes is referring to when she alleges that CCS violated the FDCPA and the Rosenthal Act by making false and misleading statements, i.e., by communicating in the Complaint that she owed any debt at all. The Court is not persuaded, however, that this conduct supports viable claims for violations of the subject statutes, because CCS was merely assigned a debt for collection by Paredes’ dentist, and Paredes offers nothing to suggest that CCS was aware that no debt was actually owed by her because of her conversations with the dentist’s office, or otherwise made known false representations concerning the nature of that debt. Paredes also suggests that CCS falsely represented in the Complaint that it was entitled to attorney fees by agreement or statute in the amount of $1,376 because, according to her, such fees may not legally be added to the existing obligation, but she fails to clarify how this is the case here, outside of her assertion that she did not owe the underlying debt to begin with. Paredes’ denial that she owes the alleged debt is properly asserted as a defense to the underlying Complaint, but the Court does not believe that the mere representation by CCS to Paredes that a debt is owed by her in that pleading supports claims for violation of the FDCPA and the Rosenthal Act. Consequently, Paredes has not met her burden to demonstrate a probability of prevailing on the merits of her claims, and therefore CCS’s special motion to strike is GRANTED.

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