Young v. Midland Funding, LLC

Filed 10/7/22

CERTIFIED FOR PARTIAL PUBLICATION*

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FOUR

KACIE LYNN YOUNG,

Plaintiff and Appellant, A161843, A162784

v. (San Mateo County Super. Ct.

MIDLAND FUNDING, LLC, et al., No. 19-CIV-07622)

Defendants and Respondents.

Kacie Lynn Young filed a complaint alleging that Midland Funding,

LLC (Midland Funding) and Midland Credit Management, Inc. (MCM)

(collectively the Midland parties) improperly pursued a debt collection

lawsuit and obtained a default judgment against her for a delinquent credit

account of $8,529.93. Included in her complaint were equitable causes of

action for vacatur of the default judgment and a cause of action for damages

under the Rosenthal Fair Debt Collection Practices Act (Rosenthal Act)

(Civ. Code,1 § 1788 et seq.). Factually, the gist of all of her claims was that

the Midland parties falsely and deceptively represented in the debt collection

lawsuit that they effected substituted service of process on her, and then

relied on this false representation to obtain the default judgment and attempt

to collect on it.

Pursuant to California Rules of Court, rules 8.1100 and 8.1110, this

*

opinion is certified for publication with the exception of parts II.A., II.B.2.,

and II.C. of the Discussion.

1 Further undesignated statutory references are to the Civil Code.

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Midland Funding and MCM each responded with a motion to strike all

of Young’s causes of action under Code of Civil Procedure section 425.16,

commonly known as the anti-SLAPP statute. Through these motions, the

Midland parties sought to strike all of Young’s causes of action before

discovery could be had, arguing variously that Young’s equitable causes of

action were moot; that MCM has no liability because it did not take any

action against her in the previous lawsuit; that Young cannot prevail on her

Rosenthal Act cause of action because substituted service was effected; that

even if it turns out substituted service was not effected, neither of the

Midland parties had any knowledge of the service defect, thereby defeating

the Rosenthal Act cause of action because knowledge is a required element

under section 1788.15, subdivision (a); and, finally, that Young’s Rosenthal

Act cause of action was time-barred.

The trial court granted the Midland parties’ anti-SLAPP motions on

the ground Young did not show she would probably prevail on the merits of

her claims, entered judgment in their favor and awarded them attorney fees

and costs in an amount to be later determined. Young appeals from the

judgment and from the trial court’s later order staying a motion by the

Midland parties for $78,635.14 in attorney fees and costs pending the

outcome of our review. We have consolidated these two appeals.

In the published portion of this opinion, we conclude Young showed she

would probably prevail on the merits of her Rosenthal Act cause of action.

Contrary to the Midland parties’ contentions, she produced prima facie

evidence that they falsely represented substituted service on her was effected

in the debt collection lawsuit. Further, she was not required under section

1788.17 of the Rosenthal Act to show that the Midland parties knowingly

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made this false representation, and that provision controls over section

1788.15, subdivision (a) to the extent the two are inconsistent.

In the unpublished portions of the opinion, we conclude Young’s

equitable causes of action are moot and her Rosenthal Act cause of action was

not time-barred. In line with our determination that Young made a showing

of minimal merit on her Rosenthal Act cause of action, we also conclude the

order staying decision on the Midland parties’ fee motion must be vacated,

and, as a result, we need not address the various attorney fees issues the

parties have briefed in connection with that stay order.

I. BACKGROUND

Young contended below her employer told her in November 2019 that it

had received an earnings withholding order to garnish her wages (wage

garnishment order). Upon learning this, Young claimed, she investigated

and only then discovered the existence of a 2010 default judgment against

her and in favor of Midland Funding for a purported account debt of

$8,529.93 plus interest (2010 default judgment). Young further contended

that she had never been served with process in the underlying lawsuit

Midland Funding brought against her and had no knowledge of the lawsuit or

the judgment before 2019.

In December 2019, Young, through her attorney, asked Midland

Funding to stipulate to vacatur of the 2010 default judgment because she had

never been served with process. Later that month, having received no

response within the time she requested for a response, Young sued Midland

Funding and MCM in San Mateo County Superior Court.

Young brought three equitable causes of action to set aside the 2010

default judgment and have it declared void based on extrinsic mistake or

extrinsic fraud. She also brought a cause of action for actual and statutory

damages, penalties, and reasonable attorney fees and costs under the

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Rosenthal Act. In support of alleged violations of several provisions of the

Rosenthal Act, Young averred that the Midland parties were debt collectors

of a consumer debt they claimed she owed, and that they engaged in various

forms of false and deceptive conduct in attempting to collect that debt.2 Her

allegations centered on her contention that she was never served with

process in the lawsuit Midland Funding brought against her.

In their joint answer, Midland Funding and MCM denied Young’s

allegations and asserted numerous affirmative defenses. Soon after, each

filed an anti-SLAPP motion to strike all of Young’s causes of action brought

against it. Their motions were based on overlapping but not identical

grounds. Each also sought attorney fees and costs under the anti-SLAPP

statute.3

In their anti-SLAPP motions, the Midland parties contended, among

other things, that Young’s Rosenthal Act cause of action was time-barred;

that there was no evidence that MCM had any role in bringing or pursuing

2 More specifically, Young alleged the Midland parties (1) “made and

used false, deceptive, and misleading representations in an attempt to collect

the debt,” in violation of section 1788.17; (2) “misrepresented the character,

amount, or legal status of the debt,” in violation of sections 1788.13,

subdivision (e) and 1788.17; (3) “attempted to collect the debt . . . without

notice required by” the state and federal Constitutions, in violation of

sections 1788.13, subdivision (e) and 1788.17; (4) “attempted to collect a

consumer debt from [Young] by means of judicial proceedings after [the

Midland parties] knew that service of process on [Young] had not been legally

effected,” in violation of sections 1788.15, subdivision (a) and 1788.17; and

(5) “attempted to collect interest, fees, or other charges from [Young] that are

not expressly authorized by the agreement creating the debt or otherwise

permitted by law,” in violation of sections 1788.13, subdivision (e), 1788.14,

subdivision (b), and 1788.17.

3 Code of Civil Procedure section 425.16, subdivision (c)(1) states in

relevant part, “[A] prevailing defendant on a special motion to strike shall be

entitled to recover that defendant’s attorney’s fees and costs.”

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the lawsuit against Young; and that Young failed to show that she or the

Midland parties came within the respective definitions of a “debtor” of

“consumer” debt or of a “debt collector.”

To meet the requisite two-step test under the anti-SLAPP statute, the

Midland parties contended, first, that Young’s lawsuit was directed at

constitutionally protected public activity, i.e., activities before a judicial

proceeding. Second, they argued, Young could not meet her burden of

showing she would probably prevail on the merits of any of her causes of

action because Midland Funding had effected substituted service of process

on her in its lawsuit against her and, even if service had not been legally

effected, they never knew service had not been effected.

At the second step of the analysis, the Midland parties relied on proof

of substituted service of process documents Midland Funding filed with the

superior court in 2009. These documents indicate that in January 2009, a

registered process server, after making reasonably diligent but unsuccessful

efforts to personally serve Young at a particular address in Burlingame,

California (Burlingame address), served the summons and complaint at that

address on a man, described as “John Doe, A white male approx. 30–35 years

of age 5’6”–5’8” in height weighing 140–160 lbs with black hair,” who was “a

competent member of the household . . . at the dwelling house or usual place

of abode of [Young].” The documents also indicate the process server later

mailed the summons and complaint to the Burlingame address.

The Midland parties further contended that Midland Funding

purchased Young’s account from a third party lender’s managing company in

2008, and that the account had an outstanding balance of $8,269.93. As part

of this transaction, MCM received records from the managing company,

including a loan repayment and security agreement that Young executed in

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2005 (2005 loan agreement), which listed her address as the Burlingame

address. Drawing from electronic records obtained from the managing

company, MCM created a “seller data sheet” for Young’s account. This data

sheet listed the Burlingame address as Young’s address. According to a

declaration of an MCM senior project manager that the Midland parties filed

in support of their anti-SLAPP motions and which we will discuss further

post, “Midland relied on information for [Young] as reflected in the

documents and information provided by [the lender’s managing company],

including the Loan Agreement and the Seller Data Sheet.”

Young filed an opposition to the Midland parties’ anti-SLAPP motions.

She did not contest that the Midland parties had satisfied their burden under

the first step of anti-SLAPP test. Tracking the approach taken by the

Midland parties, she focused her arguments on whether she showed she had

a probability of prevailing on the merits of her causes of action. In a

declaration, Young asserted she knew nothing of Midland Funding’s lawsuit

against her until 2019, had not resided at the Burlingame address since

2001, and had never received the summons and complaint that were

allegedly served or delivered there. According to Young’s mother, stepfather

and brother, who also filed declarations, while they resided at the

Burlingame address in 2009, Young did not live there and no documents

relating to the lawsuit had been served or received at the residence.

Young argued the Midland parties had violated section 1788.17 by

falsely representing that this substituted service had been effected. Because

of this lack of service, she argued, the 2010 default judgment was void

ab initio, not merely voidable, and the Midland parties had violated the

Rosenthal Act by continuing to attempt to collect on that judgment despite

actual knowledge that the judgment was void for lack of jurisdiction, an

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apparent reference to the notice her attorney gave to Midland Funding’s

counsel in December 2019 of Young’s contention that substituted service on

her had never been effected.

In July 2020, during the pendency of the action below, Midland

Funding did not apply to renew the 10-year time period provided by statute

for it to enforce the 2010 default judgment. As a result, its right to enforce

that judgment expired.

After much debate and consideration, including the parties’ submission

of written answers to the trial court’s questions on a number of issues, the

court issued a written order in which it granted the Midland parties’

anti-SLAPP motions and ordered Young’s complaint stricken on the ground

Young had not established a probability of prevailing on the merits. The

court ruled in relevant part, “The default judgment . . . is valid until it is

declared void or overturned by a court, and thus, [Young] failed to meet her

burden of stating and substantiating a legally sufficient claim. Additionally,

the Court finds that there is no evidence that [the Midland parties] made any

attempt to collect the debt after receiving the December, 2019 letter by

[Young’s] counsel.” The court did not address whether Young’s equitable

claims were moot. It also awarded the Midland parties their “reasonable

attorneys’ fees and costs incurred in bringing each of their respective

[anti-SLAPP motions], in an amount to be determined by the Court on a

noticed motion.” Soon thereafter, the court entered judgment in favor of the

Midland parties, from which Young filed a timely notice of appeal.

Subsequently, the Midland parties moved under the anti-SLAPP

statute for an award of $78,635.14 in attorney fees and costs. Young opposed

the motion, arguing among other things that the Rosenthal Act attorney fee

provision (§ 1788.30, subd. (c)), which requires a showing that the debtor did

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not act in good faith, governed whether the Midland parties should be

awarded attorney fees, not the anti-SLAPP statute attorney fee provision

(Code Civ. Proc., § 425.16, subd. (c)(1)), which does not require such a

showing. The trial court ordered the attorney fee motion stayed pending the

outcome of Young’s appeal from the judgment without addressing any of the

issues raised by the parties. Young filed a timely notice of appeal from this

order, and we consolidated the two appeals.

II. DISCUSSION

The parties devote most of their attention to whether the 2010 default

judgment was, as Young asserts, void ab initio or, as the Midland parties

assert, merely voidable upon an order of the court. Logically, that issue

drives whether the Midland parties’ settlement demands for payment and

refusal to withdraw the wage garnishment order after being told by Young’s

attorney of the lack of service violated the Rosenthal Act. But we view the

parties’ arguments around voidness versus voidability as tangential. All that

need be addressed to resolve the appeals before us are three issues:

(1) whether Young’s equitable claims are moot, (2) whether there is prima

facie evidence indicating that Young will probably prevail on the merits of

some part of her Rosenthal Act cause of action, and (3) whether that cause of

action is time-barred. We turn now to these three issues. And we publish

our analysis of the second of these issues, since its proper resolution on this

record requires us to address statutory interpretation issues that have not

yet been addressed in the California courts.

A. Young’s Equitable Causes of Action Are Moot

As they did below, Young and the Midland parties both assert that

Young’s equitable causes of action are moot because of the expiration of the

2010 default judgment in July 2020, when Midland Funding did not seek to

renew its time to enforce the judgment. The Midland parties argue mootness

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is a separate and independent ground for us to reject Young’s appeal

regarding her equitable causes of action.

We agree that the equitable claims are moot. “A claim is moot when

the grounds for the claim no longer exist.” (People v. Peoples (2016)

62 Cal.4th 718, 773.) The general rule is that “ ‘ “the duty of . . . every . . .

judicial tribunal[] is to decide actual controversies by a judgment which can

be carried into effect, and not to give opinions on moot questions or abstract

propositions, or to declare principles or rules of law which cannot affect the

matter in issue in the case before it.” ’ ” (Eye Dog Foundation v. State Board

of Guide Dogs for the Blind (1967) 67 Cal.2d 536, 541.) As this court has

previously noted, “ ‘[t]he critical factor in considering whether [an] . . . appeal

is moot is whether the appellate court can provide any effective relief if it

finds reversible error.’ ” (In re David B. (2017) 12 Cal.App.5th 633, 644.)

“ ‘When no effective relief can be granted, an appeal is moot and will be

dismissed.’ ” (MHC Operating Limited Partnership v. City of San Jose (2003)

106 Cal.App.4th 204, 214; accord, Eye Dog Foundation v. State Board of

Guide Dogs for the Blind, at p. 541.)

In July 2020, when Young’s action was still pending below, Midland

Funding allowed the 10-year time period it had to enforce the 2010 default

judgment to expire under Code of Civil Procedure section 683.0204 without

4 Code of Civil Procedure section 683.020 states: “Except as otherwise

provided by statute, upon the expiration of 10 years after the date of entry of

a money judgment or a judgment for possession or sale of property:

“(a) The judgment may not be enforced.

“(b) All enforcement procedures pursuant to the judgment or to a writ

or order issued pursuant to the judgment shall cease.

“(c) Any lien created by an enforcement procedure pursuant to the

judgment is extinguished.”

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applying for its renewal.5 Subsequently, both Young and the Midland parties

took the position regarding the anti-SLAPP motions that Young’s three

equitable causes of action—for setting aside the default judgment based on

extrinsic mistake, setting aside the judgment based on extrinsic fraud, and a

declaration that the 2010 default judgment was void—were moot because of

the expiration of the 2010 default judgment.

At the hearing on the anti-SLAPP motions, the court indicated it was

amenable to dismissing the entire case as moot because of the expiration of

the time period to enforce the 2010 default judgment. The court asked

counsel for the Midland parties if she would “do a walk-away with a

dismissal” without the court ruling on the anti-SLAPP motions. Counsel

responded that she would not because, while the equitable causes of action

were moot, the Rosenthal Act cause of action was not in light of Young’s

allegations that the Midland parties should be held liable for violations of the

Act that they had already committed. As we have discussed, the trial court

ruled in favor of the Midland parties on their anti-SLAPP motions on the

ground that Young had not shown a probability of prevailing on the merits

without addressing whether the equitable causes of action were moot.

Based on the record before us, we conclude that Young’s equitable

claims are moot—and were moot when the trial court ruled on the

anti-SLAPP motions—because Midland Funding’s time to enforce the 2010

default judgment expired under Code of Civil Procedure section 683.020 in

5 Midland Funding could have applied to renew the 2010 default

judgment before its expiration under Code of Civil Procedure section 683.130,

subdivision (a), which states in relevant part, “In the case of a lump-sum

money judgment . . . , the application for renewal of the judgment may be

filed at any time before the expiration of the 10-year period of enforceability

provided by Section 683.020 . . . .”

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July 2020. We agree with the parties that, in light of this expiration, we

cannot “ ‘provide any effective relief if [we] find[] reversible error’ ” (In re

David B., supra, 12 Cal.App.5th at p. 644) because there is not an actual

controversy left to resolve.6 So we will reverse the trial court’s ruling on the

anti-SLAPP motions to the extent it deals with Young’s equitable causes of

action, and direct the trial court to dismiss those causes of action as moot on

remand. (Cf. Paul v. Milk Depots, Inc. (1964) 62 Cal.2d 129, 134 [proper

disposition of appeal that became moot due to events that occurred during

pendency of appeal was to reverse and remand with directions to dismiss for

mootness, since simply dismissing the appeal would have implicitly affirmed

the judgment].)7

6 We note that the expiration of this 10-year enforcement time period

does not in all instances necessarily moot separate creditor actions on

judgments that are brought within the applicable statute of limitations. (See,

e.g., Pratali v. Gates (1992) 4 Cal.App.4th 632, 636–639 [action proper where

statute of limitations was tolled while party was out of state regardless of the

expiration of the enforcement period]; Code Civ. Proc., §§ 683.050, 337.5.)

Here, there is nothing in the record suggesting that a separate action on the

2010 default judgment could be timely brought.

7 The parties have not addressed the proper disposition of this appeal

with respect to the equitable causes of action following a determination of

mootness, and we have found no authority directly on point. But to avoid

leaving the same misimpression the Paul court sought to avoid—that it was

implicitly affirming the judgment there under review—we think the

dispositional approach taken in that case is appropriate here. In directing

that the equitable causes of action be dismissed as moot, we intimate no view

of the merits of those causes of action should the court find it necessary to

revisit the various issues that may arise (see, e.g., Stiles v. Wallis (1983)

147 Cal.App.3d 1143, 1147 [“ ‘Extrinsic mistake is found when . . . a mistaken

belief of one party prevented proper notice of the action . . . .’ ”]) in connection

with a renewed motion by the Midland parties for attorney fees under Code of

Civil Procedure section 425.16, subdivision (c)(1) on remand.

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B. The Court Erred in Striking Young’s Rosenthal Act Cause of

Action Regarding Midland Funding and MCM

Young alleged in her Rosenthal Act cause of action and argued in her

opposition to the anti-SLAPP motions that the Midland parties engaged in

acts that violated several provisions of the Rosenthal Act. We focus on the

parties’ contentions regarding sections 1788.17 and 1788.15, subdivision (a),

the two provisions of the Rosenthal Act that are most central to the opposing

arguments on this issue.

1. Young Showed She Would Probably Prevail on Her

Rosenthal Act Claim That the Midland Parties Violated

Civil Code Section 1788.17

a. Legal Standards

“The Rosenthal Act was enacted ‘to prohibit debt collectors from

engaging in unfair or deceptive acts or practices in the collection of consumer

debts.’ (§ 1788.1, subd. (b).) The Rosenthal Act is ‘ “a remedial statute [that]

should be interpreted broadly in order to effectuate its purpose.” ’ [Citation.]

It was enacted in 1977, the same year that its federal counterpart, the [Fair

Debt Collection Practices Act (15 U.S.C. § 1692 et seq.) (FDCPA)], was

enacted. [Citation.] In addition to its other requirements and prohibitions,

the Rosenthal Act generally requires debt collectors to comply with the

provisions of the FDCPA. (§ 1788.17.)” (Davidson v. Seterus (2018)

21 Cal.App.5th 283, 295, italics and fn. omitted.)

“A SLAPP suit—a strategic lawsuit against public participation—seeks

to chill rights to free speech or petition by dragging the speaker or petitioner

through the litigation process, without genuine expectation of success in the

suit. The Legislature enacted [Code of Civil Procedure] section 425.16 to

provide a summary disposition procedure for SLAPP claims. Toward this

end, [Code of Civil Procedure] section 425.16 authorizes courts, upon motion

by anyone who claims to be the target of a SLAPP suit, to probe the basis for

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any cause of action allegedly arising from protected communicative activities,

and to strike it if the claimant cannot show minimal merit.” (Area 51

Productions, Inc. v. City of Alameda (2018) 20 Cal.App.5th 581, 591–592

(Area 51).)

The heart of the anti-SLAPP statute is Code of Civil Procedure section

425.16, subdivision (b)(1), which provides: “A cause of action against a

person arising from any act of that person in furtherance of the person’s right

of petition or free speech under the United States Constitution or the

California Constitution in connection with a public issue shall be subject to a

special motion to strike, unless the court determines that the plaintiff has

established that there is a probability that the plaintiff will prevail on the

claim.” Code of Civil Procedure section 425.16, subdivision (b)(1) does not

provide a form of immunity, “insulat[ing] defendants from any liability for

claims arising from the protected rights of petition or speech.” (Baral v.

Schnitt (2016) 1 Cal.5th 376, 384 (Baral).) Rather, the statute “only provides

a procedure for weeding out, at an early stage, meritless claims arising from

protected activity.” (Ibid.)

“Courts analyze anti-SLAPP motions using a familiar two-step

analysis.” (Area 51, supra, 20 Cal.App.5th at p. 592.) “First, the court

decides whether the defendant has made a threshold showing that the

challenged cause of action is one arising from protected activity. . . . If the

court finds such a showing has been made, it then determines whether the

plaintiff has demonstrated a probability of prevailing on the claim.” (Equilon

Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) “ ‘Only a cause

of action that satisfies both prongs of the anti-SLAPP statute—i.e., that

arises from protected speech or petitioning and lacks even minimal merit—is

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a SLAPP, subject to being stricken under the statute.’ ” (Oasis West Realty,

LLC v. Goldman (2011) 51 Cal.4th 811, 820 (Oasis West Realty).)

The second stage of the anti-SLAPP test has been described “as a

‘summary-judgment-like procedure.’ ” (Baral, supra, 1 Cal.5th at p. 384.) A

plaintiff, to show it will probably prevail on a claim, must “state[] and

substantiate[] a legally sufficient claim” (Equilon Enterprises v. Consumer

Cause, Inc., supra, 29 Cal.4th at p. 63) through “competent and admissible

evidence.” (Tuchscher Development Enterprises, Inc. v. San Diego Unified

Port Dist. (2003) 106 Cal.App.4th 1219, 1236.) “ ‘Put another way, the

plaintiff “must demonstrate that the complaint is both legally sufficient and

supported by a sufficient prima facie showing of facts to sustain a favorable

judgment if the evidence submitted by the plaintiff is credited.” ’ ” (Taus v.

Loftus (2007) 40 Cal.4th 683, 713–714.)

At this second stage, “a plaintiff seeking to demonstrate the merit of

the claim ‘may not rely solely on its complaint, even if verified; instead, its

proof must be made upon competent admissible evidence.’ ” (Sweetwater

Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931, 940.)

We may consider inferences as well as direct evidence to determine

whether there is prima facie evidence in support of a plaintiff’s claim. “[T]he

proper inquiry in the context of an anti-SLAPP motion ‘is whether the

plaintiff proffers sufficient evidence for such an inference.’ ” (Oasis West

Realty, supra, 51 Cal.4th at p. 822; followed in Jenni Rivera Enterprises, LLC

v. Latin World Entertainment Holdings, Inc. (2019) 36 Cal.App.5th 766, 781.)

“ ‘[C]laims with the requisite minimal merit may proceed.’ ” (Baral, supra,

1 Cal.5th at p. 385.) In conducting an assessment of the evidence proffered at

this second stage of the analysis, the court, as it would in summary

procedure, “ ‘does not weigh the credibility or comparative probative strength

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of competing evidence.’ [Citation.] It ‘accepts the plaintiff’s evidence as true,

and evaluates the defendant’s showing only to determine if it defeats the

plaintiff’s claim as a matter of law’ ” (Monster Energy Co. v. Schechter (2019)

7 Cal.5th 781, 795), such as by “establishing a defense or the absence of a

necessary element” of the plaintiff’s cause of action. (1-800 Contacts, Inc. v.

Steinberg (2003) 107 Cal.App.4th 568, 585.) “ ‘[W]e resolve conflicts and

inferences in the record in favor of plaintiff.’ ” (Monster Energy Co. v.

Shechter, at p. 795.)

On appeal, we examine without deference an order granting an

anti-SLAPP motion to strike. (Flatley v. Mauro (2006) 39 Cal.4th 299, 325.)

In doing so, we conduct “an independent review of the entire record.” (Roche

v. Hyde (2020) 51 Cal.App.5th 757, 787.) We exercise our discretion to

examine all of the evidence the parties presented to determine if prima facie

evidence supports Young’s contentions. (Code Civ. Proc., § 425.16,

subd. (b)(2) [“In making its determination, the court shall consider the

pleadings, and supporting and opposing affidavits stating the facts upon

which the liability or defense is based”]; see Sweetwater Union High School

Dist. v. Gilbane Building Co., supra, 6 Cal.5th at p. 949 [“at the second stage

of an anti-SLAPP hearing, the court may consider affidavits, declarations,

and their equivalents if it is reasonably possible the proffered evidence set

out in those statements will be admissible at trial”].)

Our review will include facts of which the trial court properly took

judicial notice. (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260,

291 [in determining whether anti-SLAPP plaintiff established a probability of

prevailing, “ ‘the trial court considers the pleadings and evidentiary

submissions of both the plaintiff and the defendant (§ 425.16, subd. (b)(2))’ ”];

Newport Harbor Offices & Marina, LLC v. Morris Cerullo World Evangelism

15

(2018) 23 Cal.App.5th 28, 50 [court documents, including pleadings, and prior

appellate opinion were “proper subjects of a request for judicial notice” below

and considered by appellate court in determining anti-SLAPP plaintiff’s

probability of prevailing on claims]; Golden Eagle Land Investment, L.P. v.

Rancho Santa Fe Assn. (2018) 19 Cal.App.5th 399, 411–412, 422–423

[appellate court considered materials judicially noticed below in determining

anti-SLAPP plaintiff’s probability of prevailing on claim].)

“If the trial court’s decision is correct on any theory applicable to the

case, we affirm the order regardless of the correctness of the grounds on

which the lower court reached its conclusion.” (Robles v. Chalilpoyil (2010)

181 Cal.App.4th 566, 573.) The reverse is true as well. If we conclude the

plaintiff has cleared the modest hurdle of showing a stricken claim has

“minimal merit” based on our independent review of the whole record—which

includes reasonable inferences drawn from evidence, as well as facts of which

the trial court properly took judicial notice—we will reverse and direct that

the claim may proceed.

We need not spend time addressing the first prong of the anti-SLAPP

test, since all parties agreed below and continue to agree on appeal that

Young’s Rosenthal Act cause of action arose from protected activity. We

focus, then, on the second step of the anti-SLAPP test—the requirement that

Young show her Rosenthal Act cause of action is legally sufficient and that

she will probably prevail on it.

b. There Is Prima Facie Evidence That Young Was a “Debtor”

Who Allegedly Owed “Consumer Debt”

The Midland parties argue as a separate and independent ground for

rejecting Young’s appeal that she did not proffer any evidence below to show

she was a “debtor” under the Rosenthal Act or that any debt qualified as a

“consumer credit transaction.” Although Young did not proffer evidence on

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these specific issues, we conclude that the record regarding the anti-SLAPP

motions contains prima facie evidence to support her contention that she met

these statutory definitions.

Under the Rosenthal Act, a “debtor” “means a natural person from

whom a debt collector seeks to collect a consumer debt that is due and owing

or alleged to be due and owing from such a person.” (§ 1788.2, subdivision (h),

italics added.) Consistent with this definition, Young stated in her complaint

that she was “alleged to have incurred a financial obligation in the form of a

consumer credit account . . . . [Young] generally denies that any debt is

owed.” As part of their anti-SLAPP motions, the Midland parties asked the

trial court to take judicial notice of Midland Funding’s 2009 complaint

against Young. In it, Midland Funding alleged that Young owed a debt to it

based on an open book account. Thus, Young qualified as a “debtor” under

the Rosenthal Act.

Under the Rosenthal Act, “consumer debt” includes “money . . . due or

owing or alleged to be due or owing from a natural person by reason of a

consumer credit transaction.” (§ 1788,2, subd. (f ).) “The term ‘consumer

credit transaction’ means a transaction between a natural person and

another person in which property, services, or money is acquired on credit by

that natural person from the other person primarily for personal, family, or

household purposes.” (Id., subd. (e).) Consistent with these definitions,

Young stated in her complaint, “The alleged debt was primarily for personal,

family, or household purposes and is therefore a ‘consumer debt’ as that term

is defined by . . . [section] 1788.2[, subdivision] (f ).”

In support of their anti-SLAPP motions, the Midland parties submitted

a document authenticated by MCM’s senior project manager that establishes

that Young’s alleged debt meets these definitions. Specifically, the 2005 loan

17

agreement between Young and the predecessor lender (which lists the

Burlingame address as Young’s) states that she is being financed $6,483.25

and requires her to pay back $12,206 in principal and interest by April 2010.

The agreement includes a checked-off box that states, “You do intend to use

the proceeds of this loan primarily for personal, family, or household

purposes.” Although Midland Funding did not sue directly on this

agreement, it did sue on Young’s account which, according to the MCM senior

project manager’s declaration, includes this agreement. Upon considering

the reasonable inferences of this loan agreement, as we are to do at the

second stage of an anti-SLAPP motion (Oasis West Realty, supra, 51 Cal.4th

at p. 822; Jenni Rivera Enterprises, LLC v. Latin World Entertainment

Holdings, Inc., supra, 36 Cal.App.5th at p. 781), we conclude Young has

established prima facie that she is a “debtor” and that her debt stems from a

“consumer credit transaction” under the Rosenthal Act.

c. There Is Prima Facie Evidence That Midland and MCM Acted

as Debt Collectors Regarding Young

The Midland parties also argue we should reject Young’s appeal

because she did not proffer any evidence below that shows either of them met

the definition of “debt collector” under the Rosenthal Act, and they further

argue that in any event we should reject Young’s appeal regarding MCM

because she proffered no evidence that it “directly engaged in the acts that

Young claims violated the Rosenthal Act.” Here too, we conclude that,

although Young did not proffer evidence on these specific issues, the record

regarding the anti-SLAPP motions contains prima facie evidence to support

her contentions that Midland Funding and MCM acted as “debt collectors”

under the Rosenthal Act regarding her account.

The Rosenthal Act defines a “debt collector” as “any person who, in the

ordinary course of business, regularly, on behalf of that person or others,

18

engages in debt collection.” (§ 1788.2, subd. (c).) Young alleged in her

complaint that Midland Funding and MCM each was a “debt collector” under

this definition.

The Midland parties submitted evidence in support of their anti-SLAPP

motions from which it can be inferred that they both met this definition

regarding Young’s account. This prima facie evidence includes the

declaration of the MCM senior project manager that the Midland parties

submitted in support of their anti-SLAPP motions, in which she stated that

she was the custodian of records responsible for maintaining MCM’s

documents relating to Young’s account. In the course of authenticating

certain documents, she also established that Midland Funding and MCM

worked hand-in-hand regarding Young’s account.

Specifically, the senior project manager stated, based on personal

knowledge, that Midland Funding purchased Young’s account from a

managing company of a previous lender in 2008 (the year before filing suit

against Young); that MCM, on behalf of Midland Funding, obtained various

business records related to Young’s account from that managing company,

including the 2005 loan agreement; and that, as we have discussed, MCM

created a seller data sheet for Young that Midland Funding relied on, and

which lists her residential address as the Burlingame address.

Further, in paragraphs three through five of her declaration, the senior

project manager stated, “3. At all times relevant, Midland [Funding] was a

passive debt buyer that purchased portfolios of charged off credit card debt.

[¶] 4. Midland [Funding] takes no action itself to collect the debt it owns. [¶]

5. Rather, Midland[ Funding]’s corporate affiliate, MCM, services the

accounts, including by receiving and maintaining account documents for the

individual accounts,” including Young’s account.

19

The MCM senior project manager also stated that Midland Funding,

through its retained outside counsel, filed suit against Young in 2009 for

$8,529.93, which Young owed on her account. She continued, “At all times

relevant, Midland [Funding] was represented by outside, independent legal

counsel in connection with the Underlying Lawsuit and all judgment

enforcement activity regarding [Young’s] [a]ccount.” This is confirmed by the

record, which includes the complaint filed against Young in 2009 and the

2010 default judgment, as well as the 2019 wage garnishment order and

Young’s employer’s return, all of which the Midland parties asked the trial

court to take judicial notice of as part of their anti-SLAPP motions. Each of

these documents contains an indication that it was prepared by attorneys for

Midland Funding.

Here again, after considering reasonable inferences drawn from this

record, as we must in evaluating the adequacy of an anti-SLAPP motion

step-two showing, we conclude there is prima facie evidence Midland

Funding was in the business of purchasing portfolios of charged-off credit

card debt. Further, although “passive” in engaging in efforts to collect this

debt, it nonetheless authorized its attorneys to file suit on its behalf against

debtors such as Young and engage in efforts to collect such as the

garnishment of a debtor’s wages.8 Thus, there is prima facie evidence that

Midland Funding acted as a debt collector under the Rosenthal Act, i.e., as a

“person who, in the ordinary course of business, regularly, on behalf of that

person or others, engages in debt collection.” (§ 1788,2, subd. (c).)

We reach this same conclusion regarding MCM based on its senior

project manager’s declaration. It establishes that Midland Funding took “no

8As we will discuss in part B.2., post, such garnishment efforts are

against consumers, contrary to the Midland parties’ contentions.

20

action itself to collect the debt it owns” but, “[r]ather, Midland[ Funding]’s

corporate affiliate, MCM, services the accounts . . . .” MCM received the

documents regarding Young’s account from the managing company of the

previous lender and MCM prepared a seller data sheet identifying Young’s

address. Moreover, the senior project manager indicated, based on personal

knowledge, that Midland Funding relied on this seller address sheet, which

lists Young as residing at the Burlingame address—a fact she could only

know if MCM worked with Midland Funding directly in pursuing collection of

Young’s purported debt. From these statements, it can be reasonably

inferred that MCM serviced Young’s account for Midland Funding as part of

its ordinary course of business and regularly engaged in debt collection,

including by engaging in the filing of the 2009 lawsuit against Young, the

service of process on her, the obtaining of the 2010 default judgment and the

effort to garnish her wages. Young has therefore established prima facie it

was a “debt collector” regarding her account.

d. There Is Prima Facie Evidence That the Midland Parties

Violated Civil Code Section 1788.17

While the parties devote some of their arguments here on appeal to the

threshold “debtor,” “consumer credit transaction,” and “debt collector” issues,

in the trial court the focal point of their anti-SLAPP step-two arguments was

on the viability of two core factual contentions—(1) the Midland parties

falsely and deceptively represented in Midland Funding’s lawsuit against

Young that substituted service of process on her was effected in 2009 when in

fact she had never been served, and (2) the Midland parties subsequently and

repeatedly relied on this misrepresentation in their efforts to obtain a default

judgment and collect on that judgment, even after Young, through her

attorney, advised counsel for Midland Funding in December 2019 that

substituted service had never been legally effected.

21

The particulars are these. The Midland parties “obtained an Entry of

Default and Judgment by default against Plaintiff by filing a Proof of Service

of Summons that was known by Defendants to be false and fraudulent.

[Young] has notified [the Midland parties] of the falsity of their Proof of

Service of Summons and the invalidity of the Judgment they obtained by

default, but [the Midland parties] have refused and continue to refuse to

stipulate to set aside the void judgment.” (Fn. omitted.) Consistent with

these allegations, Young further alleged that the Midland parties “made and

used false, deceptive, and misleading representations in an attempt to collect

the debt, in violation of . . . [section] 1788.17,” and in an accompanying

footnote she specifically cited sections 1692e and 1692e(10) of title 15 of the

United States Code, which, as we will discuss, section 1788.17 incorporates.

In opposing the anti-SLAPP motions, Young drew attention to these specific

allegations, focusing in particular on the “false” proof of service of summons

filed in the lawsuit against her and the Midland parties’ continued demands

for payment after her attorney gave them notice in December 2019 that

substituted service on Young had never been legally effected.

Notably, however, other than her claim that the Midland parties

continued to demand payment from her after being notified in December

2019 that substituted service on Young had never been effected, Young does

not distinguish between representations the Midland parties knew to be false

and representations that were “false” even if the Midland parties did not

know it. This distinction matters because of two Rosenthal Act provisions

upon which Young places great reliance, sections 1788.15, subdivision (a),

and 1788.17. The Midland parties argue that Young did not make a prima

facie showing that they violated the Rosenthal Act not only because

substituted service on her was legally effected in 2009, but also because, even

22

if it was not, Young failed to show they made any representation about

service that they knew was false. They argue this lack of evidence is fatal to

Young’s Rosenthal Act cause of action because under section 1788.15,

subdivision (a), she was required to make a prima facie showing of such

knowledge and, further, that section 1788.15, subdivision (a) controls over

section 1788.17 to the extent the latter may authorize a Rosenthal Act claim

based on an unknowingly false representation.

We conclude that Young made a prima facie showing that she was not

served with process and that the Midland parties’ representation that she

was served was false. Although we agree with the Midland parties that

Young did not make any showing they knew this representation was false, we

conclude that (1) no such showing was required under section 1788.17—

which, as we shall explain, recognizes claims for liability on a strict liability

basis—and (2) section 1788.17 controls over section 1788.15, subdivision (a)

to the extent the two provisions might conflict.

i. Young Made a Prima Facie Showing That Substituted Service

on Her Was Not Legally Effected

Young supported her core factual contention about the lack of service of

process with declarations from herself, her mother, her stepfather and her

brother. Young declared that she did not discover the 2010 default judgment

or receive any of the lawsuit documents before 2019; did not reside at the

Burlingame address after 2001; and resided at a different address, which she

identified, in 2009. She further declared that the 2005 loan agreement listed

the Burlingame address as hers incorrectly, perhaps because that agreement

“shows that the overwhelming majority of the loan proceeds were kept by the

creditor for refinancing of a prior loan account. As such, it is possible that

the creditor used an old address without me noticing.”

23

Young’s mother, stepfather and brother each declared that he or she had

resided at the Burlingame address for decades, including in 2009. They each

stated that after 2001, Young did not reside at the Burlingame address or

receive any mail there and that no lawsuit documents intended for Young

had ever been served or delivered to the Burlingame address or to any of

them.

Young relied on a declaration from her attorney to contend that the

Midland parties knew as of December 2019 that she had never been served,

but nonetheless continued thereafter with improper collection efforts.

Young’s attorney declared that he faxed a letter to the counsel of record for

Midland Funding on December 19, 2019, in which he acknowledged that

Midland Funding had filed proof of service of process documents with the

superior court in 2009 showing that substituted service on Young had been

effected. Nonetheless, he asserted in his letter based on a declaration by

Young, “it appears credible that [Young] was not served with process in this

case.” He further asserted in his declaration that, despite his letter, the

Midland parties “have, through counsel, made demands for payment (i.e.,

attempted to collect the alleged debt) . . . .”

We conclude that Young, via her declaration and those of her family

members, made a prima facie showing that she was not served with process

by substituted service. In evaluating the merits of a special anti-SLAPP

motion to strike, we do not weigh the credibility or strength of an opposing

party’s evidence, but accept it as true, and resolve any conflicts and

inferences in that party’s favor. (Monster Energy Co. v. Schechter, supra,

7 Cal.5th at p. 795.) Under this standard, Young made a prima facie showing

that the Bridgewater address was not her “dwelling house [or] usual place of

abode” via the declarations by her and her family, which indicate she resided

24

elsewhere and did not receive mail at the Bridgewater address when

substituted service was attempted in 2009. Given these contentions, any

attempt at substituted service at the Bridgewater address would have been

ineffective. (See Code Civ. Proc., § 415.20, subdivision (b) [providing for

substituted service to a competent member of a household or a person

apparently in charge provided that service is effected “at the person’s

dwelling house, usual place of abode, . . . or usual mailing address”].)

The Midland parties point out that under Evidence Code section 647,

“[t]he return of a process server . . . establishes a presumption, affecting the

burden of producing evidence, of the facts stated in the return.” They argue

this presumption applies here despite Young’s evidence because substituted

service may be effected by leaving the documents with any adult “apparently

in charge” under Code of Civil Procedure section 415.20, and Young does not

present any evidence that substituted service on her was not effected via such

a person.

This argument fails for two reasons. First, the process server attested

that he served a person who was “a competent member of the household,” not

someone “apparently in charge.” The Midland parties’ contention that

substituted service was effected via someone apparently in charge of the

household at the Burlingame address therefore lacks any evidentiary

support. Second, as we have just discussed, regardless of who was served,

Young proffered competent evidence, in the form of declarations from her and

members of her family, that this was not her dwelling place, usual place of

abode, or usual mailing address, which was a requirement for any

substituted service to be effective under Code of Civil Procedure section

415.20, subdivision (b). This evidence overcomes any presumption created by

the return of substituted service of process documents. (See, e.g., Farr v.

25

County of Nevada (2010) 187 Cal.App.4th 669, 680–681 [“if a presumption

affecting the burden of producing evidence ‘applies to a proposition, the

proponent of the proposition need not prove it unless the opposing party

produces evidence undermining it, in which case the presumption is

disregarded and the trier of fact must decide the question without regard to

it’ ” (italics added)].) The Midland parties’ arguments that Young failed to

make a prima facie showing that substituted service was not legally effected

on her are without merit.

ii. Young Did Not Make a Prima Facie Showing That the Midland

Parties Knowingly Made a False Representation About Service

Emphasizing the chronology of events in November and December

2019, the Midland parties pursue an alternative argument that spotlights

another potential deficiency in Young’s merits showing, and here they are

correct: None of the evidence she submitted in her opposition to the

anti-SLAPP motions shows or implies that the Midland parties ever knew she

was not served, either before or after her attorney’s December 12, 2019 letter

to the attorney for Midland Funding. To the contrary, the 2009 proof of

substituted service of process documents arguably gave the Midland parties

good reason to think that Young was properly served with process.

Further, Young fails to explain why the Midland parties were required

by law to rely on her and her attorney’s December 2019 contentions in a

letter to counsel for Midland Funding about the lack of service. We see no

reason why the Midland parties were required to conclude these contentions

were correct any more than a court or fact finder would be required to believe

them. (See, e.g., California Chamber of Commerce v. State Air Resources Bd.

(2017) 10 Cal.App.5th 604, 643, fn. 26 [“The fact a declaration appears in the

record and was not directly contravened does not necessarily establish the

truth of its contents. A trial court is free to disbelieve evidence whether or

26

not contradicted, if there is a rational basis for doing so.”]; see also Foreman

& Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 890 [“As a general rule,

‘[provided] the trier of fact does not act arbitrarily, he may reject in toto the

testimony of a witness, even though the witness is uncontradicted.’ ”].)

Accordingly, we conclude that Young failed to make a prima facie

showing that the Midland parties knew at any time that Young was not

served by substituted service and, therefore, failed to show that they made

any knowing misrepresentations about service.

iii. Civil Code Section 1788.17 Incorporates the FDCPA’s Strict

Liability Standard

Young’s failure to make a prima facie case that the Midland parties

deliberately ignored their obligation to serve her draws into sharp relief the

parties’ competing interpretations of sections 1788.15, subdivision (a) and

1788.17. Thus, we now turn to whether Young’s prima facie showing that the

Midland parties unknowingly made false representations Young had been

served violated the Rosenthal Act. This requires us to address a question

that, so far as we are aware, is a matter of first impression in the California

courts.

Analytically, the issue arises as follows. Section 1788.15,

subdivision (a) provides, “No debt collector shall collect or attempt to collect a

consumer debt by means of judicial proceedings when the debt collector

knows that service of process, where essential to jurisdiction over the debtor

or his property, has not been legally effected.” (Italics added.) Further, as

our First District, Division One colleagues have held, under section 1788.15,

subdivision (a), “[u]se of judicial proceedings to collect a debt without service

of process [citation] will also be a continuing course of conduct insofar as the

conduct involves multiple acts, such as obtaining and collecting on a

judgment, that extend over a period of time before the proceedings are

27

concluded.” (Komarova v. National Credit Acceptance, Inc. (2009)

175 Cal.App.4th 324, 344 (Komarova).) In light of the repeated pattern of

conduct violating multiple provisions of the Rosenthal Act, the Komarova

court held, the plaintiff satisfactorily showed a violation of “section 1788.15,

subdivision (a), which prohibits an ‘attempt to collect a consumer debt by

means of judicial proceedings’ when service of process has been knowingly

neglected.” (Komarova, at p. 345, italics added.)

To overcome the hurdle section 1788.15, subdivision (a) creates, Young

relies on section 1788.17, which states in relevant part, “Notwithstanding

any other provision of this title, every debt collector collecting or attempting

to collect a consumer debt shall comply with the provisions of Sections 1692b

to 1692j, inclusive, of, and shall be subject to the remedies in Section 1692k

of, Title 15 of the United States Code.” According to Young, “[t]he linchpin”

of the Midland parties’ efforts to wage a “shoddy” collection campaign against

her is their “false representation that they had properly served YOUNG, and

thus that the Court had jurisdiction over YOUNG to enter [the 2010 default

judgment]. This false representation in an attempt to collect a debt is a clear

violation of Civil Code [section] 1788.17, incorporating by reference 15 U.S.C.

[sections] 1692e and 1692e(10). Each subsequent representation by [the

Midland parties] in an attempt to collect the void Judgment necessarily

incorporates this false representation, repeats it, and becomes another false

representation in an attempt to collect a debt.”

We agree with Young that section 1788.17 governs. Section 1692e of

title 15 of the United States Code is a part of the FDCPA. (Meza v. Portfolio

Recovery Associates, LLC (2019) 6 Cal.5th 844, 851.) In legal effect, what we

have here is a federal liability standard embedded in state law. “The

Rosenthal Act . . . incorporates the FDCPA, so that a violation of the FDCPA

28

is per se a violation of the Rosenthal Act.” (Best v. Ocwen Loan Servicing,

LLC (2021) 64 Cal.App.5th 568, 576, citing § 1788.17.) Section 1692e

provides in relevant part that a debt collector may not use any “false . . .

representation or means in connection with the collection of any debt,”

including but not limited to regarding “the character, amount, or legal status

of any debt” (15 U.S.C. § 1692e(2)(A), italics added), “[t]he threat to take any

action that cannot legally be taken or that is not intended to be taken”

(15 U.S.C. § 1692e(5)), and “[t]he use of any false representation or deceptive

means to collect or attempt to collect any debt . . . concerning a consumer”

(15 U.S.C. § 1692e(10), italics added). As Young points out, each of these

FDCPA provisions is incorporated in section 1788.17.

To be sure, Young does not cite any California case, and we have not

found one, that establishes whether section 1788.17, by incorporating title 15

United States Code section 1692e, prohibits a debt collector from

unknowingly making or relying on a false representation about the legal

status of a debt, a threat to take legal action that legally cannot be taken, or

a false representation to collect or attempt to collect any debt of a consumer.

Numerous non-California courts have held that a debt collector is liable

under the FDCPA for unknowingly making false representations.9 (See, e.g.,

Clark v. Capital Credit & Collection Servs. (9th Cir. 2006) 460 F.3d 1162,

1174–1176 [agreeing with the Second and Seventh Circuits that “ ‘[title 15

United States Code] § 1692e applies even when a false representation was

9As the Midland parties acknowledge, because section 1788.17

incorporates provisions of the FDCPA, case law interpreting the FDCPA

applies to Rosenthal Act claims. (Kazerouni v. LVNV Funding, LLC

(C.D.Cal., Dec. 17, 2014, No. SACV 14-01282-CJC (JCCx)) 2014 U.S.Dist.

LEXIS 201219 at p. *4 [“The Rosenthal Act incorporates the FDCPA and

makes a violation of the FDCPA actionable under California law”].)

29

unintentional’ ”], citing Gearing v. Check Brokerage Corp. (7th Cir. 2000)

233 F.3d 469, 472, Turner v. J.V.D.B. & Assoc., Inc. (7th Cir. 2003) 330 F.3d

991, 995, and Russell v. Equifax A.R.S. (2d Cir. 1996) 74 F.3d 30, 36; White v.

First Step Group LLC (E.D.Cal., Sept. 19, 2017, No. 2:16-cv-02439-KJM-

GGH) 2017 U.S.Dist. LEXIS 153569 at pp. *25–*26 [debt collector’s

“argument that it was entitled to reasonably rely on the debt amount as

reported to it . . . is unavailing in the face of the FDCPA as a strict liability

statute that does not require the collector’s knowing or intentional violation”];

Gonzalez v. Cullimore (Utah 2018) 417 P.3d 129, 132, 139–140 [the

“overwhelming majority of jurisdictions . . . have almost unanimously held

that the FDCPA is a strict liability statute . . . [a]nd most . . . have explicitly

stated that [title 15 United States Code] § 1692e is a strict liability provision”

and that “ ‘a consumer need not show intentional conduct by the debt

collector to be entitled to damages’ ”].)

Further, two unpublished federal district court cases10 have recognized

that an FDCPA claim can be brought under title 15 United States Code

section 1692e(10) based on a false representation about service of process,

even if made unknowingly. In Hooper v. Midland Funding, LLC (N.D.Ala.,

July 30, 2021, No. 2:19-cv-01601-HNJ) 2021 U.S.Dist. LEXIS 142587, Hooper

sued Midland Funding for violating the FDCPA based on the contention that

Midland Funding failed to effect service of process on him in a prior state

court collection lawsuit. (Hooper, at pp. *1–*2.) He contended that Midland

Funding “filed a false proof of service in the collection action, which enabled it

to obtain a default judgment and ultimately garnish his wages.” (Id. at

10We may cite unpublished federal cases as persuasive authority

without violating the California Rules of Court. (Farm Raised Salmon Cases

(2008) 42 Cal.4th 1077, 1096, fn. 18; Nungaray v. Litton Loan Servicing, LP

(2011) 200 Cal.App.4th 1499, 1501, fn. 2.)

30

p. *2.) In considering Midland Funding’s motion for summary judgment and

Hooper’s motion for partial summary judgment (ibid.), the district court

rejected Midland Funding’s contention that Hooper’s claim failed for lack of

evidence that Midland Funding knowingly filed a falsified service return form

because, the court determined, the FDCPA “ ‘typically subjects debt collectors

to liability even when violations are not knowing or intentional.’ ” (Hooper, at

p. *18, quoting Owen v. I. C. Sys., Inc. (11th Cir. 2011) 629 F.3d 1263, 1270.)

Although the court ultimately granted Midland Funding’s motion for

summary judgment and denied Hooper’s motion for partial summary

judgment on other grounds (Hooper v. Midland Funding, LLC, supra, at

pp. *19–*36), it concluded that “Midland’s good faith bears no relevance upon

the issue whether it may incur liability for filing the allegedly falsified

service return form.” (Id. at p. *18.)

Similarly, in Mirshafiei v. Legal Recovery Law Offices, Inc. (C.D.Cal.

Oct. 5, 2016, No. SACV- 5-00873-CJC (DFMx)) 2016 U.S.Dist. LEXIS 143625,

Mirshafiei sued Legal Recovery Law Offices, Inc. (Legal Recovery) for

violating the FDCPA, including under title 15 United States Code section

1692e, for filing an invalid proof of service with the state court. (Mirshafiei,

at pp. *3–*6.) Legal Recovery or its process server filed a proof of service of

summons in a state court action filed by Legal Recovery against Mirshafiei to

recover a debt, which proof of service represented that substituted service

had been effected on Mirshafiei, although she “had not lived at the address

listed on the proof of service for two years, as the property went through

foreclosure.” (Id. at p. *4.) In granting Mirshafiei’s motion for partial

summary judgment in substantial part, the district court concluded that

there was “no genuine dispute of material fact that the proof of service was a

‘false representation’ that [Mirshafiei] had been properly served, and that

31

[Legal Recovery] specifically employed this false representation to collect a

debt against [her].” (Id. at pp. *13–*14, see p. *31.) The court rejected Legal

Recovery’s argument that “it was unaware that [Mirshafiei] did not reside at

that address at that time” because “[t]he FDCPA does not require

knowledge.” (Id. at p. *14.)

Based on this well-established body of case law, we hold that section

1788.17, by its incorporation of title 15 United States Code section 1692e,

permits a Rosenthal Act plaintiff to state a prima facie case for liability

where a defendant unknowingly made or relied on a false representation

about the legal status of a debt or employed a false representation as a means

to attempt the collection of a debt.

But we so hold with a caveat. The courts in Hooper and Mirshafiei

categorically rejected defense attempts to argue that violations of section

1692e of the FDCPA must be knowing and intentional, which is consistent

with the terminology of “strict liability” that may be found in the body of

authority of which they are part. But that only means scienter is not a claim

element that the plaintiff must prove to establish liability. The FDCPA

recognizes an “exception to the strict liability imposed upon debt collectors by

the FDCPA.” (Picht v. Jon R. Hawks, Ltd. (8th Cir. 2001) 236 F.3d 446, 451.)

A debt collector may not be held liable under the FDCPA if it shows by a

preponderance of the evidence that the alleged FDCPA 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); Fox v. Citicorp Credit Servs. (9th Cir. 1994) 15 F.3d

1507, 1514.) This exception “is an affirmative defense, for which [the debt

collector] has the burden of proof at trial.” (Fox, at p. 1514.)

32

So too with the Rosenthal Act. Under section 1788.30, subdivision (e),

“A debt collector shall have no civil liability to which such debt collector

might otherwise be subject for a violation of this title, if the debt collector

shows by a preponderance of evidence that the violation was not intentional

and resulted notwithstanding the maintenance of procedures reasonably

adapted to avoid any such violation.” Because, as under section 1692k(c) of

the FDCPA, the burden of proof is expressly allocated to the alleged debt

collector, section 1788.30, subdivision (e) provides an affirmative defense that

must be proved. (Sargent Fletcher, Inc. v. Able Corp. (2003) 110 Cal.App.4th

1658, 1668 [“the defendant bears the burden of proof on new matter and

affirmative defenses”].)

The Midland parties did not invoke section 1788.30, subdivision (e), in

the trial court and do not raise it on appeal. At this stage, therefore, we deal

only with whether Young mounted a prima facie case of liability under

section 1788.17. We do not address and express no view about whether, as

the case proceeds, the Midland parties may successfully pursue a defense

under section 1788.30, subdivision (e).

iv. Young Made a Sufficient Showing Because Civil Code Section

1788.17’s “Strict Liability” Standard Controls over Civil Code

Section 1788.15, Subdivision (a)’s “Knowledge” Standard

Our holding on the issue of scienter does not complete our inquiry.

According to the Midland parties, “[o]ther than Section 1788.15, no provision

of the Rosenthal Act imposes liability for continuing to prosecute a collections

action or executing a judgment when a proof of service might later be proven

inaccurate.” This is incorrect. In our view, Young can state—and has

stated—a prima facie Rosenthal Act cause of action under section 1788.17

based on the Midland parties’ purportedly false representations about service

of process on Young in 2009, even if unknowing, because of section 1788.17’s

33

incorporation of section 1692e of title 15 of the United States Code, a “strict

liability” statute. The Midland parties insist that, regardless, section

1788.15, subdivision (a) controls over section 1788.17 because otherwise

section 1788.15, subdivision (a) would be surplusage. This too is incorrect.

Section 1788.17 expressly states that “[n]otwithstanding any other provision

of this title” (italics added), debt collectors are to comply with certain

provisions of the FDCPA, including section 1692e of title 15 of the United

States Code.

Midland’s surplusage argument fails under conventional principles of

statutory construction. (See Timlick v. National Enterprise Systems, Inc.

(2019) 35 Cal.App.5th 674, 682–683 [using standard tools of statutory

interpretation to analyze whether the enactment of section 1788.17, with its

incorporation of FDCPA provisions, repealed section 1788.30, subd. (d)]

(Timlick).) “Our primary task ‘in interpreting a statute is to determine the

Legislature’s intent, giving effect to the law’s purpose. [Citation.] We

consider first the words of a statute, as the most reliable indicator of

legislative intent. [Citation.]’ [Citation.] We construe the statute’s words in

context, harmonizing statutory provisions to avoid absurd results.”

(California Building Industry Assn. v. State Water Resources Control Bd.

(2018) 4 Cal.5th 1032, 1041.) “We may not, under the guise of construction,

rewrite the law or give the words an effect different from the plain and direct

import of the terms used.” (California Fed. Savings & Loan Assn. v. City of

Los Angeles (1995) 11 Cal.4th 342, 349.) “[A]n interpretation that renders

other provisions ineffective or nugatory should be avoided,” however. (Hoitt

v. Department of Rehabilitation (2012) 207 Cal.App.4th 513, 523.)

Mindful of these principles, we reject the Midland parties’ surplusage

argument for two reasons. First, we are not persuaded that sections 1788.15,

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subdivision (a) and 1788.17 are directly in conflict in all instances. That a

debt collector cannot attempt to collect a debt via judicial proceedings when

the debt collector knows service of process has not been legally effected (as

provided for in section 1788.15, subdivision (a)) does not necessarily mean the

debtor is entitled to unintentionally make false statements about service in a

court proceeding (as prohibited by section 1788.17). The former statute

regulates a debt collector’s employment of a legal proceeding; the latter

regulates that collector’s representations in, among other things, such

proceedings. Thus, section 1788.15 prohibits a debt collector from employing

a lawsuit in which it knows service was not effected even if it does not make

any false representations regarding service; section 1788.17 does prohibit any

such activity.

In Timlick, our colleagues in Division Three faced a similar issue when

they considered whether the Legislature’s enactment of section 1788.17, with

its incorporation of certain FDCPA remedies provisions, repealed the “cure”

provision contained in subdivision (d) of section 1788.30, also a part of the

Rosenthal Act.11 The Timlick court concluded, based on the plain language of

the statute, legislative history and similar Ninth Circuit case law, that

section 1788.17 does not repeal section 1788.30 subdivision (d) because the

former incorporates FDCPA remedies while the latter provides certain

defenses. (Timlick, supra, 35 Cal.App.5th at pp. 682–685.)

11 Section 1788.30, subdivision (d) provides, “A debt collector shall have

no civil liability under this title if, within 15 days either after discovering a

violation which is able to be cured, or after the receipt of a written notice of

such violation, the debt collector notifies the debtor of the violation, and

makes whatever adjustments or corrections are necessary to cure the

violation with respect to the debtor.”

35

Here, Young’s contentions focus on the Midland parties’

representations in, not their employment of, the lawsuit Midland Funding

filed against her in 2009. Similar to those in Timlick, Young’s contentions

necessarily implicate section 1788.17’s prohibition against false

representations, but do not necessarily implicate section 1788.15,

subdivision (a)’s prohibition against a debt collector’s employment of a legal

proceeding knowing service has not been effected. That is why allowing

Young to maintain a claim against the Midland parties under section 1788.17

does not necessarily render section 1788.15, subdivision (a) surplusage as the

Midland parties contend.

Second, section 1788.17 expressly states, “Notwithstanding any other

provision of this title, every debt collector collecting or attempting to collect a

consumer debt shall comply with the provisions of Sections 1692b to 1692j,

inclusive, of . . .Title 15 of the United States Code.” (Italics added.) This

introductory phrase is determinative here. “When the Legislature intends for

a statute to prevail over all contrary law, it typically signals this intent by

using phrases like ‘notwithstanding any other law’ or ‘notwithstanding other

provisions of law.’ ” (In re Greg F. (2012) 55 Cal.4th 393, 406.) Accordingly,

courts have held regarding a variety of subjects that a provision that includes

such a phrase controls over other provisions of law regarding the same

subject.

The court in Molenda v. Department of Motor Vehicles (2009)

172 Cal.App.4th 974 summarized some of this law: “In People v. DeLaCruz

(1993) 20 Cal.App.4th 955, 963, the court explained that the language

‘notwithstanding other provisions of law’ in Penal Code section 12403.7 is a

‘term of art’ that ‘has been read as an express legislative intent to have the

specific statute control despite the existence of other law which might

36

otherwise govern.’ (Accord, People v. Franklin (1997) 57 Cal.App.4th 68,

73–74 [interpreting Pen. Code, § 667, subds. (c), (d), (f )(1)].) In California

Housing Finance Agency v. E.R. Fairway Associates I (1995) 37 Cal.App.4th

1508, 1515–1516, the court explained: ‘The introductory phrase of [Health

and Safety Code] section 51205(f ), “[n]otwithstanding any other provision of

law,” qualifies the operative language of the section entitling the prevailing

party to recover “costs and reasonable attorney’s fees.” Thus “any other

provision of law” relating to costs, to the extent contrary to or inconsistent

with [Health and Safety Code] section 51205(f ), is subordinated to the latter

provision.’ ” (Molenda, at p. 995.)

As the Timlick court mentioned, two Ninth Circuit cases have relied on

the “notwithstanding” language in section 1788.17 to conclude that section

1788.17, with its incorporation of certain FDCPA remedies provisions,

“nullified” certain limitations on remedies contained in section 1788.30.

(Timlick, supra, 35 Cal.App.5th at pp. 682–683, citing Afewerki v. Anaya Law

Group (9th Cir. 2017) 868 F.3d 771, 779 and Gonzales v. Arrow Financial

Services, LLC (9th Cir. 2011) 660 F.3d 1055, 1065.) We agree with and adopt

this interpretation of the Rosenthal Act here. Based on the plain meaning of

the introductory phrase of section 1788.17, i.e., “[n]otwithstanding any other

provision of this title, every debt collector collecting or attempting to collect a

consumer debt shall comply with the provisions of Sections 1692b to 1692j,

inclusive, of . . . Title 15 of the United States Code,” we conclude the

Legislature intended that section 1788.17 control to the extent it conflicts

with section 1788.15, subdivision (a).12

12 “The Legislature is presumed to be aware of all laws in existence

when it passes or amends a statute.” (In re Greg F., supra, 55 Cal.4th at

p. 407.) Given this presumption, section 1788.17’s enactment more than two

37

Accordingly, because Young made a prima facie showing that the

Midland parties made a false representation that substituted service was

effected on her in 2009, even if it was an unknowing false representation, the

court should have denied the Midland parties’ anti-SLAPP motions regarding

her Rosenthal Act cause of action.13

2. Young’s Rosenthal Act Cause of Action Was Not Time-barred

Finally, the Midland parties argue that Young’s Rosenthal Act cause

of action was time-barred under the Rosenthal Act’s one-year statute of

limitation.

The Rosenthal Act provides that, in order to recover actual and

statutory damages or attorney fees and costs, “[a]ny action under this section

may be brought in any appropriate court of competent jurisdiction in an

individual capacity only, within one year from the date of the occurrence of

the violation.” (§ 1788.30, subd. (f ); see Komarova, supra, 175 Cal.App.4th at

decades after section 1788.15 (Stats. 1999, ch. 319, § 2 [§ 1788.17]; Stats.

1977, ch. 907, § 1 [§ 1788.15]) further indicates the Legislature’s intention

that it controls to the extent it is inconsistent with section 1788.15,

subdivision (a). (See Canteen Corp. v. State Bd. of Equalization (1985)

174 Cal.App.3d 952, 960 [“when two laws upon the same subject, passed at

different times, are inconsistent with each other, the one last passed must

prevail”]; Western Mobilehome Assn. v. County of San Diego (1971)

16 Cal.App.3d 941, 948 [same].)

13 In light of this conclusion, we will not address the parties’ debates

over whether Young made a prima facie showing that the Midland parties

violated other provisions of the Rosenthal Act. “If the plaintiff ‘can show a

probability of prevailing on any part of its claim, the cause of action is not

meritless’ and will not be stricken; ‘once a plaintiff shows a probability of

prevailing on any part of its claim, the plaintiff has established that its cause

of action has some merit and the entire cause of action stands.’ ” (Oasis West

Realty, supra, 51 Cal.4th at p. 820.)

38

p. 343 [“Actions under the Rosenthal Act ‘may be brought . . . within one year

from the date of the occurrence of the violation.’ (§ 1788.30, subd. (f ).)”].)

As we have discussed, in her opposition to the anti-SLAPP motions,

Young argued that the Midland parties falsely represented to the superior

court in 2009 that substituted service had been effected on Young, which

false representation violated section 1788.17, and, further, that “[e]ach

subsequent representation by [the Midland parties] in an attempt to collect

the Judgment necessarily incorporates this false representation and becomes

another false representation in an attempt to collect a debt.” Young further

argued that her Rosenthal Act cause of action was not time-barred by the

one-year statute of limitations contained in section 1788.30, subdivision (f )

under the “continuing violation theory.” Relying on a continuing violation

theory, Young cited the holding on this point in Komarova, which we

described above. (Komarova, supra, 175 Cal.App.4th at pp. 343–344.) And

she renews the argument here on appeal.

We agree that Komarova applies. The record contains considerable

evidence of a continuing course of conduct by the Midland parties to parlay

their allegedly false representation about service to obtain and then collect on

the 2010 default judgment until within a year of Young’s filing of her lawsuit

in December 2019. The record indicates that after they obtained the default

judgment, the Midland parties continued to act to collect on the judgment on

a number of occasions. Specifically, according to a Midland Funding attorney

who submitted a declaration in support of the anti-SLAPP motions, she

began working with the law firm serving as Midland Funding’s outside

counsel on the Young case in 2013 and “assumed attorney management” of

Young’s account at that time. In 2016, she moved to another firm, which

“was tasked with handling post-judgment enforcement efforts” on Young’s

39

account. Between July 2013 and July 2019, “[she], or her firms’ support staff,

. . . served [Young] with post-judgment notices at least a half dozen times at

her [Burlingame] address . . . . These notices included settlement letters,

memorandums of costs, and a substitution of attorney.” Then, in July 2019,

her firm obtained the wage garnishment order and caused it to be served on

Young’s employer at the time.

The Midland parties, in challenging Young’s contention that their

refusal to withdraw their wage garnishment order after Young’s attorney told

them she had never been served was itself an effort to collect on the debt (an

issue which we need not resolve in light of our conclusion that the Midland

parties’ “knowledge” that service was not effected is of no consequence to

Young’s Rosenthal Act claim under section 1788.17), argue that “garnishment

proceedings are against an employer and not ‘against a consumer,’ ” citing

Muhammad v. Reese Law Grp., APC (S.D.Cal., Oct. 12, 2017, No. 16cv2513-

MMA (BGS)) 2017 U.S.Dist. LEXIS 169082 at page *21. “Therefore,” the

Midland parties continue, “at most, the garnishment constituted a collection

action against Young’s employer and not Young.”

The Midland parties’ contention that their effort to garnish Young’s

wages was as a matter of law not part of any collection actions against her is

directly contradicted by the text and legislative history of the Rosenthal Act.

Specifically, section 1788.10, a part of the Act, provides, “No debt collector

shall collect or attempt to collect a consumer debt by . . . [¶] . . . [¶] (e) [t]he

threat to any person that nonpayment of the consumer debt may result in . . .

the garnishment or attachment of wages of the debtor, unless such action is

in fact contemplated by the debt collector and permitted by the law.” (Italics

added.)

40

Further, the legislative history of section 1788.17, of which we take

judicial notice (see Voris v. Lampert (2019) 7 Cal.5th 1141, 1147, fn. 5 [court

can take judicial notice of published legislative history]), includes repeated

references to the view of supporters that the provision was needed to address

certain “growing problem[s],” including “ ‘misrepresentations, such as threats

. . . to garnish wages . . . when no such intent or rights exists.’ ” (Sen. Com.

on Judiciary, Analysis of Assem. Bill No. 969 (1999–2000 Reg. Sess.), as

amended May 18, 1999, p. 4; Sen. Rules Com., Off. of Sen. Floor Analyses, 3d

reading analysis of Assem. Bill No. 969 (1999–2000 Reg. Sess.) as amended

July 15, 1999, pp. 6–7.)

The case relied on by the Midland parties, Muhammad v. Reese Law

Grp., supra, 2017 U.S.Dist. LEXIS 169082, involved FDCPA claims, not

Rosenthal Act claims. Specifically, it involved section 1692i of title 15 of the

United States Code, a part of the FDCPA. Section 1692i requires a debt

collector who brings a legal action on a debt “against any consumer” to bring

it in a particular “judicial district,” and the debtor argued that this provision

applied to a wage garnishment order issued where the debtor neither resided

nor worked. (Muhammad, at pp. *14–*21.) The federal district court in

Muhammad, without considering the Rosenthal Act but instead looking to

our Code of Civil Procedure, held that title 15 United States Code section

1692i did not apply because wage garnishment proceedings were not against

a “consumer” under California law. (Muhammad, at pp. *19–*21.) This, of

course, does not address whether efforts to garnish a consumer debtor’s

wages are regulated by the Rosenthal Act. In any event, an unpublished

federal district court case is not persuasive in the face of binding California

authority. (Balsam v. Trancos (2012) 203 Cal.App.4th 1083, 1100.) We read

41

California law differently than did the Muhammad court and therefore find

that case unpersuasive.

In short, we conclude that Young’s Rosenthal Act cause of action was

not time-barred because there is evidence that the Midland parties engaged

in a continuing course of conduct until within one year of Young filing suit,

including their efforts to garnish Young’s wages. The court’s judgment on

this cause of action is therefore reversed. Further, we vacate that part of the

trial court’s judgment awarding the Midland parties’ attorney fees and

remand this matter to the trial court to reconsider, consistent with our

opinion, whether or not to award attorney fees.

C. Young’s Appeal from the Trial Court’s Order Staying the

Midland Parties’ Attorney Fee Motion

Young argues that the trial court erred in awarding the Midland

parties attorney fees in the absence of a showing that she did not act in good

faith in prosecuting her lawsuit under the Rosenthal Act; that the trial court

erred by awarding attorney fees to the Midland parties in any event; and that

the trial court at most should have awarded $4,023.50 in attorney fees to the

Midland parties. We need not address any of these issues in light of our

vacating of that part of the trial court’s judgment regarding its award of

attorney fees to the Midland parties.

III. DISPOSITION

To the extent the court granted the anti-SLAPP motions with respect to

Young’s equitable claims, we reverse and remand with directions to dismiss

those claims as moot. The portion of the judgment dismissing Young’s

Rosenthal Act cause of action is reversed. The portion of the judgment

42

awarding the Midland parties attorney fees is vacated. The case is remanded

to the trial court for further proceedings consistent with this opinion. Young

is awarded costs of appeal.

STREETER, J.

WE CONCUR:

POLLAK, P. J.

GOLDMAN, J.

43

Trial Court: San Mateo County Superior Court

Trial Judge: Hon. Nancy L. Fineman

Counsel: Consumer Law Center, Fred W. Schwinn, Raeon R. Roulston,

Matthew C. Salmonsen for Plaintiff and Appellant.

Solomon Ward Seidenwurm & Smith, Thomas F. Landers,

Mei-Ying Imanaka, Owen M. Praskievicz for Defendants

and Respondents.

A161843, A162784 Young v. Midland Funding, LLC, et al.