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Austin v. Frederick J. Hanna & Assocs., P.C.

United States District Court, N.D. Georgia, Atlanta Division

December 23, 2014

EDUARDO G. AUSTIN, individually and as a Class Representative for all other similarly situated, Plaintiff,
v.
FREDERICK J. HANNA & ASSOCIATES, P.C., Defendant

For Eduardo G. Austin, individually and as Class Representative for all others similarly situated, Plaintiff: James W. Hurt, Jr., LEAD ATTORNEY, Hurt, Stolz, LLC - Ath. Ga, Athens, GA; Steven Howard Koval, LEAD ATTORNEY, The Koval Firm, LLC, Atlanta, GA.

For Frederick J. Hanna & Associates, P.C., Defendant: Philip Wade Savrin, LEAD ATTORNEY, Freeman Mathis & Gary, LLP, Atlanta, GA; William H. Buechner, Jr., Freeman Mathis & Gary, Atlanta, GA.

ORDER

HONORABLE STEVE C. JONES, UNITED STATES DISTRICT JUDGE.

This matter appears before the Court for consideration of the magistrate judge's July 10, 2014 Non-Final Report and Recommendation (" R& R") (Doc. No. [18]), in which the Honorable Janet F. King, United States Magistrate Judge, recommended that Defendant Frederick J. Hanna & Associates, P.C.'s Rule 12(b)(6) motion to dismiss (Doc. No. [9]) be granted in part as to Plaintiff's claim pursuant to 15 U.S.C. § 1692f and be denied in part as to all other claims asserted in the Complaint.

The facts and procedural history are stated in the R& R and incorporated by reference. In summary, Plaintiff has filed a complaint alleging violations of the Fair Debt Collection Practices Act (" FDCPA"), specifically, 15 U.S.C. § § 1692d, 1692e, 1692e(2), 1692e(10), 1692f, and 1692f(1). Doc. Nos. [1]; [6]. Plaintiff contends that (1) Defendant's conduct harassed, oppressed and abused consumers violating § 1692d [Id. ¶ 76]; Defendant misrepresented the legal status of the alleged debts by filing garnishment actions for interest on the amounts previously paid into the registry of the courts and by misrepresenting the amounts of the alleged debts violating § § 1692e and 1692e(2) [Id. ¶ ¶ 77-79]; (3) the same actions violated § 1692e(10) [Id. ¶ ¶ 80-81]; (4) Defendant's filing of garnishment actions for interest on the amount paid into court registries, misstating the amount of the debts and attempting to collect debts not owed violated § 1692f [Id. ¶ ¶ 82-83]; and (5) Defendant's attempt to collect interest that was not expressly authorized by agreement or permitted by law violated § 1692f(1) [Id. ¶ ¶ 84-85].

On July 24, 2014, Defendant filed timely objections to the R& R. Said objections are as follows:

1. The R& R's conclusion that post-judgment interest stopped accruing three years before the Court disbursed the garnished funds to Hanna is contrary to controlling Georgia law.
2. The R& R improperly refused to dismiss Plaintiff's FDCPA claims on the ground of First Amendment Immunity to litigate disputed question of law.

3. The R& R improperly failed to dismiss Plaintiff's claims under 15 U.S.C. § 1692d.

When such objections are filed, the Court must " make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made." 28 U.S.C. § 636(b)(1). After conducting this review, the Court " may accept, reject, or modify in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C. § 636(b)(1). Additionally, the Court may " receive further evidence or recommit the matter to the magistrate judge with instructions." Id.

The Court will address Defendant's objections in turn.

I. Objection # 1

As noted in the R& R, Defendant contends that Plaintiff's amended complaint (seeking relief pursuant to the FDCPA) should be dismissed because, as a matter of law, Plaintiff cannot state a cause of action based on filing of a second garnishment action that sought post-judgment interest on an unpaid debt. Defendant argues that the post-judgment interest was authorized by Georgia law, O.C.G.A. § 7-4-12. Doc. No. [18], p. 8.

As stated in the R& R, pursuant to O.C.G.A. § 7-4-12, " '[a]ll judgments in [Georgia] shall bear annual interest upon the principal amount recovered' and . . . '[t]his post-judgment interest is due from the date the judgment is entered until the date the judgment is paid.'" Doc. No. [18], p. 10.

The issue here is, when was the judgment paid, i.e., on October 11, 2010 when Plaintiff's employer paid into the Fulton County court's registry the last of his garnished wages, totaling the amount owed of $3, 312.02 or on October 3, 2013, when Fulton County disbursed $3, 312.01[1] to Defendant Hanna.

The magistrate stated that " the judgment was satisfied on October 11, 2010." Doc. No. [18], p. 9.

A. Whether the R& R correctly considered Great Southern

In its first objection, Defendant asserts that the R& R's conclusion that post-judgment interest stopped accruing October 11, 2010, three years before the Fulton County court actually disbursed the garnished funds to Hanna is contrary to controlling Georgia law, specifically Great Southern Midway, Inc. v. Hughes, 223 Ga.App. 643, 478 S.E.2d 400 (1996). Defendant further asserts that " post-judgment interest continues to accrue on judgments until garnished funds deposited into the court's registry are disbursed to the judgment creditor under clearly established Georgia law." Doc. No. [22], p. 13. Accordingly, post-judgment accrued until October 3, 2013.

The Court agrees that while not determinative, Great Southern provides guidance as to the resolution of this case. The Court further finds that Defendant has accurately set forth the inferential holding of Great Southern -- specifically, as follows: " Great Southern suggests that depositing the garnished funds into the court's registry may toll the accrual of post-judgment interest only 'if the judgment creditor is allowed to withdraw the funds and satisfy the judgment without delay and in the time prescribed by our garnishment statutes, . . . ." Doc. No. [22], p. 11 (emphasis omitted). Defendant argues that the critical inquiry is whether the judgment creditor was able to withdraw the garnished funds from the court without delay. Id. Defendant states that here, it was not allowed to withdraw the funds and satisfy the judgment without delay, " instead, the court did not disburse the garnished funds to Hanna for approximately three years." Id. (emphasis omitted). Defendant attributes the delay in disbursement to the Fulton County court. Doc. No. [22], p. 9. However, the allegations of the Amended Complaint and O.C.G.A. § 18-4-89(1) does not readily lead to such a conclusion. The allegations of the Complaint, which the Court assumes as true for purposes of the pending motion, state that " Defendant Hanna was responsible for ensuring that the Clerk's Office disbursed Plaintiff's garnished wages in the Fulton State Court Garnishment Action to Defendant Hanna . . . . [and] Defendant Hanna . . .was not diligent in retrieving the funds from the registry of the Fulton County State Court" Doc. No. [6], p. 7, ¶ ¶ 29, 31. In addition, O.C.G.A. § 18-4-89(1) provides in relevant part: " If no traverse or claim has been filed within 15 days after the garnishee's answer is filed . . . (1) [i]f money is delivered to the court by the garnishee, the clerk shall pay the money to the plaintiff or his attorney on his application." (emphasis added).[2]

Defendant also argues fault of Plaintiff Austin for the delay; however, said arguments are not determinative as to fault if it is later determined that Defendant failed to file the application for disbursement in accordance with O.C.G.A. § 18-4-89(1).

On the whole, after de novo review of the R& R, the Court is unable to uphold Defendant's arguments that Plaintiff's FDCPA claims should be dismissed, as a matter of law.

B. Whether the R& R incorrectly assumed that there was a second judgment in the garnishment action.

Also in its objection, Defendant argues that the R& R incorrectly assumed that there was a second judgment entered in the Fulton County garnishment action.

Drawing from the Court's prior Superior Court experience, the Court agrees with Defendant's statement that in a typical garnishment case, there is no judgment entered in a garnishment in the absence of a traverse or a failure to deliver the money or property to the court.[3] However, even if there is no second judgment as to the garnishment, this portion of the R& R is not conclusive. Accordingly, with the above-stated modification, the Court declines to reject the R& R on this ground, but will allow the record to be developed on this matter through the discovery process.

II. Objection # 2

In its second objection, Defendant assert that the R& R improperly refused to dismiss Plaintiff's FDCPA claims on the ground of First Amendment Immunity to litigate disputed questions of law. In its objection, Defendant recognizes that " [t]he Eleventh Circuit has not addressed whether the First Amendment litigation immunity applies to FDCPA claims . . . ." Doc. No. [22], p. 18. Instead, Defendant draws analogies from other types of cases and argues that it is entitled to First Amendment immunity under the test set forth in Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49, 60, 113 S.Ct. 1920, 123 L.Ed.2d 611 (1993). Said case was an anti-trust case in which the Supreme Court outlined a sham litigation exception as follows.

First, the lawsuit must be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits. If an objective litigant could conclude that the suit is reasonably calculated to elicit a favorable outcome, the suit is immunized . .., and an antitrust claim premised on the sham exception must fail. Only if challenged litigation is objectively meritless may a court examine the litigant's subjective motivation. Under this second part of our definition of sham, the court should focus on whether the baseless lawsuit conceals " an attempt to interfere directly with the business relationships of a competitor . . . ." [4]

Id. (citations omitted).

After de novo review and in the absence of binding authority, the Court is not convinced that the anti-trust immunity test set forth in Professional Real Estate Investors should be applied to the present FDCPA case. Further even in applying the test, it could be held that no objective litigant would have concluded that the second (Gwinnett County) garnishment was reasonably calculated to elicit a favorable outcome where O.C.G.A. § 18-4-89(1) imposes an application requirement on the part of Defendant Hanna for disbursement of the funds in the first (Fulton County) garnishment and the allegations of the Complaint in the case sub judice are that Defendant Hanna was not diligent in retrieving the funds. In the absence of satisfaction of the first prong (concerning objective meritlessness), the Court does not consider the second prong of the test.

Defendant's objection on this ground is hereby OVERRULED.

III. Objection # 3

In its third objection, Defendant asserts that the R& R improperly failed to dismiss Plaintiff's claims under 15 U.S.C. § 1692d[5] for the following additional reason: merely filing a lawsuit does not constitute conduct " the natural consequences of which is to harass, oppress, or abuse" a consumer in connection with the collection of the debt under § 1692d. Doc. No. [22], p. 23. Defendant argues that " [g]iven the R& R's conclusion that no controlling Georgia case law exists, [Defendant] Hanna could not have 'known' that the additional post-judgment interest sought in the Gwinnett County garnishment action was not owed." Id. at p. 24.

After de novo review, the Court is unable to uphold Defendant's argument, as even in the absence of a determinative Georgia case law, the Court has found guidance in Great Southern. Furthermore, Defendant could have known that additional post-judgment interest sought in the second (Gwinnett County) garnishment action was not owed through the application process of O.C.G.A. § 18-4-89(1).[6] Defendant's objection is hereby OVERRULED.

CONCLUSION

After de novo review, the Court ADOPTS the Non-Final Report and Recommendation (" R& R") (Doc. No. [18]), with the modifications stated, herein.

The Defendant's objections to the R& R are OVERRULED.

Defendant's motion to dismiss (Doc. No. [9]) is hereby GRANTED in part as to Plaintiff's claim pursuant to 15 U.S.C. § 1692f and DENIED as to all other claims asserted in the Complaint.

IT IS SO ORDERED.


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