United States District Court, D. Nebraska
KELLY M. BASSETT, individually and as heir and Personal Representative of the Estate of James M. Bassett, on behalf of herself and all other similarly situated; Plaintiff,
CREDIT MANAGEMENT SERVICES, INC., and JASON MORLEDGE, Defendants.
MEMORANDUM AND ORDER
F. Bataillon Senior United States District Judge.
matter is before the court on the plaintiff's motion for
partial summary judgment on liability, Filing No. 71 and on
the defendants' motion for summary judgment, Filing No.
This is a putative class action for violations of the Fair
Debt Collection Practices Act, (hereinafter referred to as
the “FDCPA”) 15 U.S.C. § 1692 et
seq., and the Nebraska Consumer Protection Act, Neb.
Rev. Stat. § 59-1601 et seq. (hereinafter
referred to as the “NCPA”).
plaintiff challenges defendant CMS's routine practice of
filing collection complaints in Nebraska County Courts that
seek prejudgment interest and attorney fees under Neb. Rev.
Stat. § 25-1801, et seq. Bassett contends that
CMS misrepresents the nature of the debt as one for
“goods or services” rendered, within the purview
of Neb. Rev. Stat. § 25-1801, rather than as an action
on an “account, ” and also improperly seeks
attorney fees for in-house counsel, and then retains the fees
and interest as an undisclosed collection fee. She asserts
that defendant CMS's standard collection complaint
falsely states the requirements of Nebraska County Court,
misleads an unsophisticated consumer in violation of 15
U.S.C. § 1692e and is unconscionable in violation of 15
U.S.C. § 1692f.
facts are set out in this court's order on the
defendants' motion to certify questions to the Nebraska
Supreme Court and for partial judgment on the pleadings and
need not be repeated here. Briefly, the plaintiff alleges
that the defendants' violated the FDCPA and NCPA in their
standard complaints by characterizing their cause of action
as one for providing goods and/or services in order to claim
prejudgment interest and attorney fees under Neb. Rev. Stat.
§ 25-1801, rather than as a cause of action on an
account, which does not allow for the collection of
prejudgment interest or attorney fees. She contends the
defendants choose to ignore the fact that when these
“accounts” are assigned to a collection agency,
the claim is no longer based on goods or services provided,
but is an ordinary account in default.
plaintiff seeks summary judgment on the issue of
liability-she seeks a determination that the defendants'
collection complaints are false and misleading as a matter of
The dispositive question is whether the standard form
complaint at issue contains false or misleading
representations and whether collection of additional sums for
prejudgment interest and attorney fees in a state court
action is permitted by law. She relies on this court's
decision in Powers v. Credit Mgmt. Servs.,
Inc., No. 8:11-CV-436, 2016 WL 612251 (D. Neb. Feb.
2, 2012), an action against defendant CMS, for the
proposition that misrepresenting the nature of a debtor's
account as a debt for materials or services rendered, rather
than an action on an account, in order to deceive state
courts and debtors and collect impermissible fees and
prejudgment interest is a violation of the FDCPA.
Id., 2016 WL 612251, at *10 (citing Jenkins v.
Gen. Collection Co., 538 F.Supp.2d 1165, 1174 (D. Neb.
2008)). The defendant CMS was party to the Powers
litigation and did not appeal the court's
Powers, the court examined a collection complaint
identical in most respects to the collection complaint at
issue in this action and found
The collection complaint indicates only that the defendant
“is indebted to Plaintiff [CMS] for the following
assigned account(s), ” followed by the name of a
doctor, that “a demand for payment was made” on a
certain date, and that “[m]ore than 90 days have
elapsed since the presentation of this claim.” . . . .
The court finds the least sophisticated consumer would be
reasonably confused by the interchangeable use of the terms
“demand for payment” and “claim” in
connection with the “presentment, ” as well as by
the cursory reference to “assigned account(s), ”
without any mention of the nature of the goods or services
provided or the dates on which they were provided. Without
any special knowledge of the law, a layperson could not
figure out, on the face of the collection complaint, what the
claim was for or to whom he or she was indebted, much less
comprehend his or her alleged liability for prejudgment
interest, costs, or attorney's fees.
Powers, 2016 WL 612251 at *14. (Emphasis added).
Further, this court stated in Powers that
“[m]isrepresenting the nature of a debtor's debts
as debts for materials or services rendered, rather than
actions on accounts, in order to deceive state courts and
debtors and collect impermissible fees and prejudgment
interest is a violation of the FDCPA.” Id.
(also stating that “[t]he plaintiffs have shown they
are entitled to judgment as a matter of law on the issue of
liability for FDCPA and NCPA violations in connection with
allegations of entitlement to attorney's fees and
prejudgment interest in CMS's standard-form
oppose the plaintiff's motion and move for summary
judgment in their favor. They contend the Nebraska
Legislature enacted a clarifying amendment to Neb. Rev. Stat.
§ 25-1801 in February of 2018 that undermines the
plaintiff's theories in this action. They argue the
amended statute is retroactive, is applicable to this case
and dispositive of the issues. They question the
plaintiff's reliance on “the prior nonbinding (and
distinguishable decision in Powers.” Based on
recent Eighth Circuit and District Court
caselaw and the amendments to Neb. Rev. Stat.
§ 25-1801, they argue that the plaintiff's
FDCPA/NCPA claims fail as a matter of law and seek a summary
judgment of dismissal of this action.
record shows Mrs. Bassett is a “consumer” as that
term is contemplated in § 1692a(3) of the FDCPA. Credit
Management Services, Inc., (hereafter “CMS”) is a
collection agency located in Grand Island, Nebraska. CMS is a
“debt collector” within the meaning of 15 U.S.C.
§ 1692a(6). Defendant Jason Morledge is president of
CMS. Defendant Jason Morledge operates and manages the
day-to-day business of CMS.
about April 8, 2016, CMS sued James M. Bassett (now deceased)
and plaintiff Kelly M. Bassett in the County Court of Dodge
County, Nebraska for alleged medical debts. See Credit
Management Services, Inc. v. James Bassett & Kelly
Bassett, No. CI 16-534. At the time CMS sued the
Bassetts, its policy and practice was to file collection
lawsuits in Nebraska County Courts and to serve alleged
debtors with county court collection complaints in the form
of Exhibit A attached to the plaintiff's complaint.
See Filing No. 1-1, Ex. A, Complaint at 1-2. Exhibit
A is a standard template with only the consumer specific
information on names and amounts changed in each case.
Defendant CMS used this standard form template complaint when
suing Nebraska residents in Nebraska County Courts from March
of 2016 through June/July of 2016.
Bassett's alleged debts were incurred for personal,
family, or household purposes, i.e., medical bills. In Dodge
County Court, CMS sought and obtained an award of attorney
fees and prejudgment interest under Neb. Rev. Stat. §
25-1801. CMS was represented by in-house counsel in the
action. The Bassetts were not represented by counsel. County
Court collection pleadings are attached as Exhibit A to
Plaintiff's Complaint herein.
the period of time at issue in this action, CMS's
standard form county court complaints stated the alleged debt
arose from goods, services and/or labor provided. The CMS
collection complaint sets forth a monetary amount as the
“the reasonable value or agreed amount of [the]
services.” Filing No. 1-1, Ex. A, Complaint at 1. The
defendants use Neb. Rev. Stat. § 25-1801 to demand
payment of attorney fees and prejudgment interest in
collecting these county court cases. Defendant CMS's
routine practice was not to include any account number for
the alleged services in the complaints. Also, it was
CMS's routine practice not to identify the person who
received the services or the date the alleged services were
provided. Further, the subject complaints do not state a
specific date when the demand required under the statute was
sent to consumers, but states only “on or before”
a date ninety days prior to the filing of the complaint in
used this standard form complaint in 3, 800 Nebraska law
suits against between 4, 000 and 6, 000 Nebraska residents
because during the time frame at issue. In each of those
cases, the defendants' cause of action or theory of
recovery was quantum meruit. CMS no longer uses the
complaint in the form of Exhibit A to file lawsuits in
debts on which CMS collects are assigned to it. Only claims
on the alleged past due accounts are assigned. CMS is the
named plaintiff in the Dodge County Court collection case
filed against the plaintiff and her decedent. The record
contains assignments from both creditor healthcare providers
for the Bassetts' debts to CMS. See Filing Nos.
54-4, and 54-6. On January 5, 2016, Fremont Area Medical
Center executed an assignment as follows:
ASSIGNMENT OF CLAIM
The undersigned executes this assignment on behalf of FREMONT
AREA MEDICAL CENTER, (hereinafter "Creditor").
The undersigned hereby states that she/he is authorized to
execute this Assignment on behalf of the creditor and does
hereby, on behalf of such Creditor, for valuable
consideration, assign all of the Creditor's right, title,
and interest in and to the following claim, to Credit
Management Services, Inc., (Assignee) and vests in the
Assignee the entire legal title of said claim.
1. The goods and/or services which are the basis of the
assigned claim were delivered at the request of the following
person(s) or business(es), (hereinafter whether joint or