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Urbina v. National Business Factors, Inc.

United States District Court, D. Nevada

February 14, 2018

MERCEDES URBINA, Plaintiff,
v.
NATIONAL BUSINESS FACTORS, INC. OF NEVADA, Defendant.

          ORDER Re: ECF No. 37

          WILLIAM G. COBB, UNITED STATES MAGISTRATE JUDGE

         Before 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.

         I. BACKGROUND

         Urbina 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.

         NBF 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.)

         On 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.)

         Urbina 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, 28.)

         On 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.

         The 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.

         Urbina 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.

         Urbina 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 infra).

         In its 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).

         Insofar 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.

         With 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 ...


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