Alyssa Portnoy v. Nat'l Credit Sys., Inc.

Court of Appeals for the Sixth Circuit·Decided November 23, 2020·No. 20-3271·Unpublished

Opinion

NOT RECOMMENDED FOR PUBLICATION File Name: 20a0670n.06

Case No. 20-3271

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

FILED

Nov 23, 2020

ALYSSA PORTNOY and DARLENE ) DEBORAH S. HUNT, Clerk PORTNOY, )

)

Plaintiffs-Appellants, ) ON APPEAL FROM THE ) UNITED STATES DISTRICT v.

) COURT FOR THE SOUTHERN ) DISTRICT OF OHIO NATIONAL CREDIT SYSTEMS, INC. and )

WILLIAMSBURG OF CINCINNATI, OHIO, )

Defendants-Appellees, )

) OPINION DAVID D. DONNETT, )

Third Party Defendant-Appellee. )

BEFORE: CLAY, GIBBONS, and NALBANDIAN, Circuit Judges.

CLAY, Circuit Judge. Plaintiffs Alyssa Portnoy and Darlene Portnoy appeal the district court’s grant of summary judgment to Defendants National Credit Systems, Inc. (“NCS”), Williamsburg of Cincinnati, Ohio, and David D. Donnett on their claims under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692e, 1692f; Ohio Consumer Sales Practices Act (“OCSPA”), Ohio Rev. Code §§ 1345.02 and .03; Ohio Rev. Code § 5321.16; Racketeer Influenced and Corrupt Organizations (“RICO”) Act, 18 U.S.C. §§ 1961–68; and Ohio Corrupt Practices Act (“OCPA”), Ohio Rev. Code §§ 2923.32(A)(1), 2923.31(C), (E), and I(2). On appeal,

Plaintiffs contend that the district court misinterpreted the lease. For the reasons set forth below, we AFFIRM IN PART and REVERSE IN PART the judgment of the district court.

BACKGROUND

On August 10, 2016, Plaintiffs Alyssa Portnoy and Darlene Portnoy entered into a one-

year residential lease with Williamsburg for an apartment, in which Alyssa Portnoy resided and for which Darlene Portnoy acted as co-signor. The initial term of the lease was from August 20, 2016, to August 19, 2017, but the lease was set to “automatically renew month-to-month unless either party g[ave] at least 60 days written notice of termination or intent to move-out.” (R. 30-1, Apartment Lease Contract § 3 at PageID # 223.) Rent was $615.00 per month, payable on or before the first of each month. Any rent increase or lease contract change was required to be provided by Williamsburg at least 30 days before the 60-day notice date. A move out notice would not release Plaintiffs “from liability for the full term of the Lease Contract or renewal term.” (Id. § 37 at PageID # 227.)

Upon move-out, Plaintiffs were liable for a number of charges, including “unpaid rent;

unpaid utilities; unreimbursed service charges; [and] repairs or damages,” which Williamsburg could deduct from the security deposit. (Id. § 41 at PageID # 228.) Plaintiffs also signed a “Utility and Services Addendum” to the lease, providing that they would “be charged for the full period of time that [they] were living in, occupying or responsible for payment of rent or utility charges on the dwelling.” (R. 1-2, Utility and Services Addendum at PageID # 29.) And in the event of breach, they would “be responsible for utility charges for the time period [they] were obligated to pay the charges under the Lease, subject to our mitigation or damages.” (Id.)

On May 22, 2017, Williamsburg provided Plaintiffs notice that the month-to-month rent for the unit would be $898.00 per month. On July 27, 2017, Plaintiffs provided Williamsburg with

notice of intent to move out, listing “Attending NKU [Northern Kentucky University]” under “Reasons for Moving.” (R. 2-3, Resident’s Notice of Intent to Move Out at PageID # 100.) Plaintiffs agree that they did not provide 60 days’ notice of intent to move out, and, in fact, they provided just 23 days’ notice.

On August 24, 2017, Williamsburg sent Plaintiffs a notice regarding a balance in the amount of $937.52 and sought payment of that balance. Williamsburg attached a copy of Plaintiffs’ “Final Account Statement.” (R. 2-3, Letter to Alyssa Portnoy & Darlene Portnoy at PageID # 101.) According to Williamsburg, and as shown on the “Final Account Statement,” titled “Move Out Statement,” Plaintiffs owed Williamsburg $1071.81 for “insufficient notice (37 days of 60 days noticed left. Charge remaining days at a [month-to-month] rate of $898.00).” (Id. at PageID # 102.) This amount was calculated by dividing $898.00 by 31 (the number of days in August)1 to come up with a daily rental rate, and then multiplying that daily rate by 37 days. Williamsburg added to the rent amount $63.76 in utilities and a $1.95 move out fee and then deducted Plaintiffs’ $200.00 security deposit towards the amount to come to $937.52. After Plaintiffs refused to pay the amount due, Williamsburg subsequently retained NCS to collect the debt.

On November 9, 2017, Plaintiffs filed a proposed class action complaint in Ohio state court.

They alleged that, in seeking to recover the alleged balance, Williamsburg and NCS committed the following violations of law: (1) NCS and Williamsburg attempted to collect a debt that was not expressly authorized by the agreement creating the debt and/or misrepresented the character, amount or legal status of the debt, in violation of the Fair Debt Collection Practices Act (15 U.S.C. §§ 1692e, 1692f); (2) NCS and Williamsburg committed an unconscionable act or practice in

1 Williamsburg’s brief states that the month used for the calculation was July, but this is inconsistent with the deposition testimony of the property manager, Brittany Carpenter.

connection with a consumer practice, in violation of the Ohio Consumer Sales Practices Act (Ohio Rev. Code §§ 1345.02 and .03); (3) NCS and Williamsburg engaged in a pattern of corrupt activity by using the mail to send collection letters to Plaintiffs seeking payment of what they term “notice fees,” in violation of the Racketeer Influenced and Corrupt Organizations Act (18 U.S.C. §§ 1961– 68) and the Ohio Corrupt Practices Act (Ohio Rev. Code §§ 2923.32(A)(1), 2923.31(C), (E), and I(2)); and (4) NCS and Williamsburg failed to return Plaintiffs’ security deposit, in violation of Ohio Rev. Code § 5321.16. Plaintiffs later pleaded the same claims against Donnett.2 On December 13, 2017, NCS removed the case to the United States District Court for the Southern District of Ohio on the basis of federal question jurisdiction. Williamsburg filed a counterclaim on December 28, 2017, seeking the $932.57 allegedly due to Williamsburg. Soon after, Plaintiffs’ moved for summary judgment on the basis that the lease did not allow Williamsburg to collect any money for defective notice of intent to move. The district court denied the motion. Portnoy v. Nat’l Credit Sys., Inc., No. 1:17-CV-834, 2019 WL 1440023, at *2–3 (S.D. Ohio Mar. 31, 2019) (“At this time, Plaintiffs’ conclusory arguments are not instructive, the record provides no basis from which this Court could grant Plaintiffs’ Motion, and they fail to meet their burden.”).

Defendants filed their motions for summary judgment on April 30, 2019. The district court granted Defendants’ motions for summary judgment in part, on the basis that the lease provides for collection of the balance asserted by Defendants and, accordingly, (1) Plaintiffs cannot establish that they do not owe a debt under the lease and (2) Williamsburg properly applied Plaintiffs’ security deposit to the debt owed. Portnoy v. Nat’l Credit Sys., Inc., No. 1:17-CV-834,

2 Donnett is Williamsburg’s attorney.

2020 WL 605920, at *3 (S.D. Ohio Feb. 7, 2020). The district court denied NCS’s request for attorneys’ fees and costs. Id. Plaintiffs filed a notice of appeal on March 3, 2020.

DISCUSSION

Standard of Review

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Alyssa Portnoy v. Nat'l Credit Sys., Inc., (6th Cir. 2020).

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