United States District Court, D. Nevada
ORDER Re: ECF No. 37
WILLIAM G. COBB, UNITED STATES MAGISTRATE JUDGE
the court is plaintiff Mercedes Urbina's Second Renewed
Motion to Amend Complaint and Proposed First Amended
Complaint (FAC). (ECF No. 37.) Defendant National Business
Factors, Inc. of Nevada (NBF) filed a response (ECF No. 38),
and Urbina filed a reply (ECF No. 39). For the reasons set
forth below, Urbina's motion is granted.
filed her original complaint pursuant to the Fair Debt
Collection Practices Act (FDCPA), 15 U.S.C. § 1692, et.
seq., on June 20, 2017. (ECF No. 1.) Urbina alleged that she
received medical treatment from Tahoe Fracture Clinic, and
received a bill on September 23, 2016, indicating a balance
of $614.52. On January 5, 2017, NBF, which had been assigned
collection of the debt from Tahoe Fracture Clinic, sent her a
written demand for payment for $614.52 in principal, and
$29.07 in accrued interest. The complaint alleged violations
of the FDCPA, and specifically, 15 U.S.C. § 1692e(2) and
§ 1692f(1), based on the allegation that Nevada law
prohibits a medical bill from accruing interest until thirty
days after the issuance of an explanation of benefits (EOB),
and that NBF exceeded the allowable legal interest rate.
filed its answer on July 12, 2017, and asserted, inter
alia, an affirmative defense that it calculated interest
pursuant to Nevada Revised Statute (NRS) 99.040, from the
date of Urbina's last payment on February 26, 2016,
through January 5, 2017 (the date of its initial
communication with Urbina), at the statutory legal rate of
5.5% in 2016 and 5.75% in 2017. (ECF No. 7.)
August 25, 2017, Urbina filed a motion to amend the
complaint, premised on the argument that Tahoe Fracture
Clinic was a hospital, as the term is used in NRS 449.757,
and interest may not accrue until thirty days after the
patient is sent a bill stating the amount due after a
determination concerning payment of the claim by an insurer
has been made (with interest calculated at prime plus two
percent). (ECF No. 14.) The motion to amend also argued for
class status under Federal Rule of Civil Procedure 23. At a
status conference on October 18, 2017, the motion was denied
without prejudice; however, the court allowed Urbina to take
limited discovery concerning whether Tahoe Fracture Clinic
qualified as a hospital for purposes of NRS 449.757.
(See Minutes at ECF No. 21.)
filed a second motion to amend the complaint on December 29,
2017, but it was denied without prejudice because it was not
accompanied by a proposed amended complaint. (ECF Nos. 27,
January 9, 2018, Urbina filed a renewed motion to amend the
complaint, along with a proposed amended complaint. (ECF Nos.
31, 31-1.) The proposed amended complaint was again brought
pursuant to the FDCPA, but this time was based on violation
of NRS 449.757 as well as NRS 99.040. (ECF No. 31-1.) The
proposed pleading once again asserted class status.
court held a status conference on January 17, 2018.
(See Minutes at ECF No. 36.) At that time,
Urbina's counsel represented that she was abandoning her
claim that Tahoe Fracture Clinic was a hospital, and as such,
her claims insofar as they were premised on a violation of
NRS 449.757 were being dismissed. In light of this, the court
directed Urbina to file another renewed motion to amend to
reflect the status of her claims. The court also advised
Urbina that class relief appeared to be premature, but Urbina
could seek leave to amend to assert class status at a later
date, if appropriate.
filed her Second Renewed Motion to Amend Complaint and
Proposed FAC on January 19, 2018. (ECF No. 37.) In the
proposed FAC, Urbina asserts violations of the FDCPA: 15
U.S.C. § 1692e(2) (false representation of amount of
debt), § 1692e(5)(threat to take action that cannot
legally be taken), § 1692e(10) (false representation or
deceptive means to collect debt), and § 1692f(1)
(collection of unauthorized charge). All four claims are
predicated on NBF's alleged violation of NRS 99.040.
argues that her account with Tahoe Fracture Clinic was a
“book account, ” as that term is defined in NRS
99.040, and book accounts are excluded from being authorized
to charge interest unless the account has been settled. In
the motion to amend and proposed FAC, Urbina claims she did
not “settle” the account, but failed to pay it.
Urbina asserts that under NRS 99.040, as well as case law
from the Nevada Supreme Court, interest may only be assessed
when the contract provides a definite sum of interest, states
how the value is to be calculated, or the value is reasonably
ascertainable. She further contends that the Nevada Supreme
Court has ruled that only a trial court can determine at
trial the date from which pre-judgment interest is assessed.
To support her claims against NBF, Urbina relies on Cruz
v. International Collection Corp., 673 F.3d 991 (9th
Cir. 2012), which found a collection agency contravened the
FDCPA because it violated NRS 649.375 (discussed
response, NBF argues that it was dealing with a settled book
account; therefore, it properly proceeded with attempting to
collect interest pursuant to NRS 99.040(1)(b). NBF contends
that interest on the book account could be charged from the
day on which the balance was ascertained, which it claims was
after all payments by insurance and Urbina had been deducted.
It notes that Tahoe Fracture Clinic sent a “Final
Notice” to Urbina on December 16, 2016, setting forth
the balance due. NBF also argues that the cases Urbina relies
on are inapposite because none addressed whether interest
could be assessed under NRS 99.040(1)(b).
as Urbina claims that NBF violated NRS 649.375, NBF contends
that NRS 649.375(2)(b) allows a collection agency to collect
or attempt to collect interest by adding it to the principal
of the debt when it is described as such in the first written
communication with the debtor. NBF argues that it was
authorized by NRS 99.404 to add interest, and described the
interest being charged in addition to the principal in its
first and only communication with Urbina on January 5, 2017.
its response, NBF submits the declaration of Mary Hobbs. (ECF
No. 38 at 7-8.) Ms. Hobbs states that Urbina's account
was assigned by Tahoe Fracture Clinic to NBC on January 4,
2017. The principal amount of $614.52 did not include
interest, but at that point, Tahoe Fracture Clinic had
credited all payments made by Urbina prior to the assignment.
Tahoe Fracture Clinic's billing statement of September
23, 2016, credited Urbina with four $30 payments made on
February 26, 2016, March 31, 2016, April 29, 2016, and August
12, 2016. The “Final Notice” sent to Urbina by
Tahoe Fracture on December 16, 2016, indicated a principal
balance of $614.52. (ECF No. 38 at 10.) Ms. Hobbs goes on to
state that NBF calculated interest pursuant to NRS
99.040(1)(b) because the balance on the account had been
fully ascertained after application of payments by Urbina or
her insurance carrier. She indicates ...