James McLean v. Ronald Ray

UNPUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 11-1544

JAMES L. MCLEAN; EDITH L. MCLEAN,

Plaintiffs – Appellants,

v.

RONALD A. RAY, Esquire; ECONOMOU, FORRESTER & RAY,

Defendants – Appellees.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Liam O’Grady, District
Judge. (1:10-cv-00456-LO-TCB)

Argued: May 16, 2012 Decided: July 17, 2012

Before AGEE and DIAZ, Circuit Judges, and HAMILTON, Senior
Circuit Judge.

Affirmed by unpublished opinion. Judge Diaz wrote the opinion,
in which Judge Agee and Senior Judge Hamilton joined.

ARGUED: Allen Huberth Sachsel, Fairfax, Virginia, for
Appellants. David John Gogal, BLANKINGSHIP & KEITH, PC,
Fairfax, Virginia, for Appellees. ON BRIEF: Michael L. Chang,
BLANKINGSHIP & KEITH, PC, Fairfax, Virginia, for Appellees.

Unpublished opinions are not binding precedent in this circuit.
DIAZ, Circuit Judge:

Edith and James McLean sued Ronald Ray, an attorney, and

his law firm, Economou, Forrester & Ray, alleging that Ray

violated the Fair Debt Collections Practices Act in the course

of seeking to collect a debt the McLeans owed to his client.

Finding the McLeans’ claims meritless, the district court

granted Ray’s motion for summary judgment and denied the

McLeans’ cross motion for summary judgment. The McLeans timely

appealed. We affirm.

I.

A.

Edith McLean is a ninety-six-year-old widow. Edith’s son,

James McLean, manages her affairs and finances under general and

medical powers of attorney. Currently at a medical care

facility in Maryland, Edith twice resided at ManorCare, a

nursing home facility in Arlington, Virginia. Edith was first

admitted to ManorCare on July 30, 2006 and was discharged on

September 7, 2006. Upon Edith’s first admission to ManorCare,

James signed a contract with the facility providing that the

McLeans would be liable for all costs (to include attorney’s

fees) incurred by ManorCare in collecting payment on the

account. The contract also provided that it would terminate

upon Edith’s date of discharge; however, if Edith were

2
readmitted within fifteen days of discharge, the contract would

continue in effect as of the date of readmission.

In November 2007, Ray sued Edith in Arlington County

General District Court on behalf of ManorCare, to collect a debt

allegedly owed to ManorCare for services it rendered to Edith

during her first stay. The parties resolved the matter and

ManorCare nonsuited the case.

Approximately twenty months after her first stay, Edith was

readmitted to ManorCare without signing a new contract. Payment

disputes again arose between the McLeans and ManorCare, and

ManorCare again engaged Ray to attempt to collect the amounts it

claimed it was owed. On March 25, 2009, while Edith was still a

resident at ManorCare, Ray mailed Edith a letter claiming that

she owed ManorCare $15,814.44, plus interest, reasonable

attorney’s fees, and costs. Two days later, Ray sued Edith in

the Arlington County Circuit Court (the “Arlington Complaint”)

alleging that she failed to pay ManorCare for services rendered.

In preparing the Arlington Complaint, Ray reviewed a

standard collection referral form, Edith’s earlier residence

agreement, and an itemized statement pertaining to Edith’s

account, all of which he had received from ManorCare consistent

3
with his normal practice before filing debt collection actions. 1

The referral sheet stated that Edith had been admitted to

ManorCare on July 30, 2006 and remained in the facility. Ray

noticed that the amount sought on the referral sheet did not

match the figures ManorCare provided on the itemized statement.

After consulting with ManorCare, Ray revised the draft complaint

to state a reduced amount owed. The Arlington Complaint,

however, also asserted--incorrectly it turns out--that Edith had

resided continuously at ManorCare since her initial admission in

July 2006, and therefore alleged a breach of the contract James

signed in connection with that admission.

Before Ray filed suit, his secretary called his attention

to the 2007 lawsuit that the parties had resolved. Ray admitted

that he reviewed the file pertaining to the earlier matter in a

cursory fashion, concluding that the dated information was not

1
Ray admitted that he also customarily received a sworn
affidavit from his clients attesting to the amount sought, but
that he did not receive one from ManorCare in this instance.
Ray explained that he typically requests an affidavit to
facilitate the entry of a default judgment pursuant to Virginia
state court procedures. In this case, Ray explained that--given
the adversarial nature of the proceedings from an early stage--
he had no reason to expect that the McLeans would default and
thus no practical need for the affidavit. Moreover, the
district court found it undisputed that Ray “decided not to use
a supporting affidavit in the McLean matter because Ms. McLean
continued to reside at the facility, and Mr. Ray assumed that he
would need to amend the complaint prior to the entry of a final
judgment order to include claims for additional services.” J.A.
994-95.

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useful and that he had no reason to otherwise question the facts

provided by ManorCare with respect to the 2009 claim.

Edith left ManorCare on May 8, 2009. In the months

following her departure, Ray exchanged several emails and phone

calls with the McLeans’ attorneys. It was not until the end of

September, however, that the McLeans first asserted that the

2006 contract was no longer valid because of the twenty-month

lapse between Edith’s discharge in September 2006 and

readmission in April 2008. Ray responded that he would look

into the matter and “clean up” the lawsuit if he confirmed that

the 2006 contract no longer applied. J.A. 561. To that end,

Ray requested Edith’s file from his client, but it took

ManorCare some time to retrieve it. In the interim, Ray filed

an amended complaint (the “Arlington Amended Complaint”) on

October 29, 2009 without striking the claim for attorney’s fees.

The Arlington Amended Complaint increased the ad damnum to

$70,147.67 to encompass services rendered to Edith from the

filing of the initial Arlington Complaint until her discharge.

The Arlington Amended Complaint further alleged that Edith, by

accepting the benefit of the services ManorCare rendered to her,

implicitly obligated herself to pay ManorCare in quantum meruit

for their reasonable value. The Arlington Amended Complaint

also continued to seek interest, and attorney’s fees and costs

based on the 2006 contract. The next day, Edith’s counsel

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served and filed an Answer and Counterclaim, pleading as a

defense that there was no written contract between the parties

and providing specific dates of Edith’s discharge and

readmission to ManorCare.

By November 2009, Ray was able to confirm that Edith had

not continuously resided at ManorCare, and conceded that no

written contract existed to support a claim for attorney’s fees.

In January 2010, the parties presented an agreed order

dismissing the written contract claim and granting leave to

amend the suit to include an oral contract claim. Ray filed a

Second Amended Complaint, asserting claims for breach of an oral

contract and an implied contract, dropping the claim for

attorney’s fees, and seeking judgment in the amount of

$65,809.50.

B.

In the course of litigating the debt collection proceeding,

the McLeans sought discovery. Among other documents, they

requested a list of ManorCare employees and their contact

information. ManorCare prepared a list responsive to the

request, listing the national headquarters address and phone

number as the contact information for several employees, and

submitted it to Ray. Ray noticed that the list was missing

contact information for two ManorCare employees, which he

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inserted before forwarding the discovery response to the

McLeans.

While the debt collection action was pending, Ray filed a

separate action for the appointment of a guardian and

conservator for Edith. Ray contended that this proceeding was

warranted by James’s history of neglect of Edith’s needs,

including his purported failure to pay for her care and

residence at another nursing home, which ultimately resulted in

the termination of Edith’s residence agreement at that facility.

Ray admitted that recovering the debt owed to ManorCare was one

purpose for filing the guardianship proceeding, but that his

legitimate concerns for Edith’s welfare also motivated his

actions. Ray prosecuted the guardianship proceeding against the

McLeans for nearly three months after Edith left ManorCare, but

then nonsuited the action.

C.

The McLeans sued Ray and his law firm in federal district

court for violations of the Fair Debt Collections Practices Act

(“FDCPA”). They twice amended their complaint; the second

amended complaint, the operative complaint before the district

court, initially contained twenty-four counts, twelve counts for

James and twelve for Edith, alleging the same violations of the

FDCPA for each plaintiff. However, the McLeans voluntarily

dismissed several counts, including twelve claims that the

7
district court indicated were likely time-barred by the FDCPA’s

statute of limitations. 2 The McLeans also voluntarily dismissed

two other counts alleging that Ray violated the FDCPA by

“instituting and/or continuing and prosecuting” the guardianship

proceeding, id. 27, which they argued Ray initiated “to bring

pressure on James, using the proceeding as a ‘club’ to induce or

threaten James to pay a claimed, but disputed, debt,” id. 23-24.

The district court thus had before it ten remaining counts

alleging that Ray violated the FDCPA by (1) seeking incorrect

amounts, seeking attorney’s fees, and failing to determine the

accuracy of ManorCare’s claim prior to signing and filing the

Arlington Amended Complaint, (2) falsely making a quantum meruit

claim “with no basis in fact,” (3) falsely representing that he

would not assert the 2006 contract as a basis for recovery when

amending the complaint, and (4) providing a false discovery

response.

The parties cross-moved for summary judgment, which the

district court granted in favor of Ray. The McLeans timely

appealed, challenging the award of summary judgment and a

discovery ruling by the magistrate judge.

2
On appeal, Ray argues that all of the claims are barred by
the FDCPA’s statute of limitations. Because we conclude that
the McLeans’ claims fail on the merits, we need not address this
separate argument.

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 II.

We review de novo a grant or denial of summary judgment,

applying the same standard applied by the district court.

Overstreet v. Ky. Cent. Life Ins. Co., 950 F.2d 931, 938 (4th

Cir. 1991). Summary judgment is appropriate only when the

record shows “there is no genuine dispute as to any material

fact and the movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(c). A district court considering a motion

for summary judgment “must view the evidence in the light most

favorable to the nonmoving party,” Unus v. Kane, 565 F.3d 103,

115 (4th Cir. 2009), and draw all inferences in favor of the

nonmovant, Williams v. Griffin, 952 F.2d 820, 823 (4th Cir.

1991).

III.

The FDCPA is a strict liability statute that prohibits

false or deceptive representations in collecting a debt, as well

as certain abusive debt collection practices. 3 Attorneys seeking

3
The prohibited practices include “any false deceptive, or
misleading representation or means in connection with the
collection of any debt”; 15 U.S.C. § 1692e, “false
representation of the character, amount, or legal status of any
debt;” id. § 1692e(2)(A); “use of any false representation or
deceptive means to collect or attempt to collect any debt or to
obtain information concerning a consumer;” id. § 1692e(10); “use
[of] unfair or unconscionable means to collect or attempt to
collect any debt;” id. § 1692f, and “collection of any amount
(including any interest, fee, charge, or expense incidental to
the principal obligation) unless such amount is expressly
(Continued)
9
the repayment of a debt on behalf of a client are debt

collectors within the ambit of the FDCPA. Heintz v. Jenkins,

514 U.S. 291, 292 (1995). False statements in the course of

litigation constitute violations of the act. See Sayyed v.

Wolpoff & Abramson, 485 F.3d 226, 229 (4th Cir. 2007) (rejecting

the argument that an attorney debt collector was entitled to

immunity for his litigating activities). The FDCPA, however,

contains a “bona fide error” defense that absolves a debt

collector from liability for a violation if he can show by a

preponderance of the evidence that “the violation was not

intentional and resulted from a bona fide error notwithstanding

the maintenance of procedures reasonably adapted to avoid any

such error.” 15 U.S.C. § 1692k(c).

A.

The McLeans assert that Ray’s claims as to the amounts due

to ManorCare violated the FDCPA in several respects. First,

they contend that Ray misrepresented the debt owed by improperly

requesting attorney’s fees despite the fact that the break in

Edith’s stay at ManorCare rendered the contract entitling

ManorCare to such fees inapplicable. On this point, the McLeans

argue first that Ray’s review of his own files--specifically,

authorized by the agreement creating the debt or permitted by
law;” id. § 1692f(1).

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the file pertaining to the 2007 lawsuit--should have alerted him

to the break in stay, and further that he was alerted to it by

the McLeans’ counsel. Next, they contend that Ray violated the

FDCPA by seeking the payment of prejudgment interest in the

complaint.

The McLeans further argue that the bona fide error defense

does not shield Ray because he knew the amounts claimed were

erroneous and did not maintain adequate procedural safeguards to

avoid such errors. On the latter point, the McLeans argue that

Ray’s dereliction of his own protocol--of requesting and

receiving a sworn affidavit from his clients attesting to the

amount of the claimed debt--establishes his failure to comply

with procedures for avoiding error.

In granting summary judgment in favor of Ray, the district

court--relying on our decision in Amond v. Brincefield, Hartnett

& Assocs., P.C., 175 F.3d 1013, 1999 WL 152555 (4th Cir. Mar.

22, 1999) (unpublished table decision)--determined that the bona

fide error defense applied to absolve Ray of liability.

Although by unpublished decision, this court in Amond affirmed

the district court’s finding that debt collector lawyers had no

reason to question the amount of debt they were attempting to

collect for their clients, stating that lawyers “cannot be held

liable for what appears to be an honest dispute regarding the

amount of the debt, so long as there exists a colorable factual

11
basis for the higher amount claimed by their client.” Id. at *2

(quoting the district court). This court also rejected the

Amond plaintiff’s argument that the FDCPA created a heightened

duty of investigation for lawyers engaged in ordinary debt

collection activity. Id. at *3.

Noting that ManorCare had provided Ray a referral form, a

residence agreement, and an itemized bill for services, which

Ray reviewed (and challenged), the district court correctly

concluded that there was a colorable basis for ManorCare’s

claim. Addressing the McLeans’ argument that Ray would have

been alerted to the fact that Edith did not reside continuously

at ManorCare had he more carefully reviewed his own files, the

district court also correctly concluded that Amond permitted Ray

to rely on his client’s word. 4

As for the McLeans’ separate argument that Ray deliberately

asserted a false claim for attorney’s fees despite having been

put on notice by the McLeans’ attorneys that there was a break

in Edith’s stay at ManorCare, the district court found (and we

agree) that Ray was diligent in investigating the matter. From

4
Like the district court, we credit Ray’s explanation for
why he did not insist on receiving a sworn affidavit from
ManorCare for the amount owed. At bottom, our inquiry focuses
on whether the procedures Ray employed were reasonably adapted
to avoid error. We are satisfied that they were, and that Ray
is thus entitled to the benefit of the bona fide error defense.

12
the moment Ray was alerted to the contention that there was a

break in Edith’s stay that rendered the attorney’s fees

provision of the initial contract inapplicable, he diligently

investigated to confirm the truth of the assertion. We also

agree with the district court that Ray amended the complaint to

remove the claim for attorney’s fees as soon as he was able to

confirm that the 2006 contract no longer applied.

The district court also correctly rejected the McLeans’

allegation that Ray violated the FDCPA by seeking prejudgment

interest. As the district court noted, Virginia law permits

plaintiffs to seek prejudgment interest, which is awarded at the

discretion of the trier of fact. See, e.g., Upper Occoquan

Sewage Auth. v. Blake Constr. Co., 655 S.E.2d 10, 23 (Va. 2008)

(citing Va. Code Ann. § 8.01-382). The McLeans nevertheless

protest that Ray sought prejudgment interest on amounts

purportedly owed by the McLeans that were not yet due and

payable, as they had not yet been billed. However, the district

court determined that “the complaint is fairly read as seeking

only pre-judgment interest on the amounts past due at the time

of judgment.” J.A. 1001. We agree with the district court on

this score, as well. Further, any risk that ManorCare would

have been able to recover damages to which it was not entitled--

i.e., prejudgment interest on amounts that were not yet due and

payable--is mitigated by the fact that a decision to award such

13
interest in the first instance is determined at the discretion

of a presumably competent and reasonable trier of fact.

B.

The McLeans next assert that the quantum meruit claims

lacked a factual basis, and that the amount asserted therefore

violates the FDCPA. In support, they cite Ray’s response to the

McLeans’ interrogatory that sought the basis for ManorCare’s

allegation that each charge represented the reasonable value of

the item or service ManorCare provided Edith. Ray’s response

explained that the charges were “determined based upon the

reasonable value of the time or service charged, the charges for

such items by other facilities in the market and a cost basis

evaluation as determined by ManorCare in setting prices based on

its overall operating income and expenses.” Id.

The McLeans contend that the FDCPA requires--at the time a

debt collector asserts a debt--an accounting of how the amount

was calculated. According to the McLeans, Ray’s response fails

to constitute a good faith, pre-suit rationale of a claimed

debt, because it is merely “a list of factors that will be

considered to support a later rationalization,” Appellants’ Br.

47, which they claim does not satisfy the requirements of the

FDCPA.

The McLeans’ position is unpersuasive, as they fail to cite

any authority for this proposition. We agree with the district

14
court that Ray’s response clearly stated the basis for the

quantum meruit figure: “a reasonable value of the services, as

determined by the market, plus costs.” J.A. 1001. Further, we

agree with the district court that the McLeans have done no more

than suggest that the numbers “smell fishy,” id. 1002, which

does not satisfy their burden in opposing summary judgment.

C.

The McLeans also allege that Ray violated the FDCPA when he

falsely represented that he would not assert the 2006 contract

(the contract signed upon Edith’s first admission to ManorCare)

as a basis for recovery and for attorney’s fees when amending

the Arlington Complaint. This allegation stems from a statement

Ray made in a sworn affidavit he submitted to the district court

that, before amending the complaint the first time, he “would

inquire with [ManorCare] regarding the applicability of the 2006

contract and . . . would clean up the lawsuit if [he] confirmed

that there was a problem with that part of the claim.” Id. 561.

The McLeans interpret Ray’s statement as an unconditional

vow to amend the initial complaint to remove the breach of

written contract claim and the claim for attorney’s fees. The

district court, however, correctly interpreted Ray’s statement

with the qualifier in context: that Ray would “clean up the

lawsuit” if and when he confirmed the applicability of the 2006

contract, and not that he made an unconditional promise to

15
remove the claim for attorneys’ fees. Several obstacles--

including the fact that ManorCare had misplaced Edith’s file--

prevented Ray from confirming the facts any sooner. The record

shows that Ray amended the complaint to remove the claim for

attorney’s fees as soon as he was able to determine that the

2006 contract did not support it. We thus agree with the

district court that this claim lacks merit.

D.

The McLeans also allege that Ray violated the FDCPA by

providing a false discovery response. According to the McLeans,

Ray falsely provided the ManorCare national headquarters address

and phone number as the contact information for several

ManorCare employees, when he knew that those employees were not

in fact based at the company’s Ohio headquarters.

As to this claim, the district court correctly noted that

there was neither factual nor legal support for the notion that

Ray made a “false statement” or “misrepresentation” within the

meaning of the FDCPA when he forwarded the list of employees

from ManorCare to the McLeans. Assuming that Ray’s action

constituted a “representation” or “means of collecting a debt,”

the district court nevertheless concluded that it was not false,

deceptive, or misleading, let alone “unfair or unconscionable”

as prohibited by the act.

16
 Again, the McLeans cite no authority to support their

contention on appeal that the district court’s reasoning is

legally incorrect. To the contrary, we agree with the district

court that there was nothing wrong or dishonest about Ray

specifying that certain ManorCare employees could be reached

through the company’s headquarters.

E.

Finally, the McLeans seek to appeal a discovery order

entered by the magistrate judge in this case. In their

complaint, the McLeans asserted two separate FDCPA violations

premised on the view that Ray abused the separate guardianship

proceeding as a coercive debt collection tool.

In support of their claims, the McLeans propounded

discovery directing Ray to admit that “Plaintiff James L.

McLean, at all times hereto relevant, was properly managing

Edith L. McLean’s affairs.” Id. 211. In response, Ray

propounded interrogatories and requests for production of

documents seeking information relating to James’s management of

Edith’s financial affairs. When the McLeans refused to provide

the information, the magistrate judge granted Ray’s motion to

compel. Rather than comply with the order, however, the McLeans

opted to dismiss the two claims. At the same time, they

objected to the magistrate judge’s order, contending that it was

an abuse of discretion and should be set aside. The district

17
court overruled the objection, finding that “the information

sought by Defendants is plainly relevant to Plaintiffs’ claims .

. . [and] Defendants are entitled to develop their response to

Plaintiffs’ allegations through discovery of all relevant

documents.” Id. 388.

On appeal, the McLeans argue that the magistrate judge and

the district court erred in ordering the McLeans to disclose

Edith’s assets. They ask us to reverse the district court’s

order and to remand the case with instructions to reinstate the

two counts alleging violations of the FDCPA pertaining to the

guardianship claims.

We conclude, however, that this assignment of error is now

moot, given that the McLeans elected to dismiss the claims

rather than comply with the order. In any event, we discern no

error, as we agree with the district court that the discovery

was plainly relevant to the issues in the case.

IV.

For the foregoing reasons, the judgment of the district

court is

AFFIRMED.

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