Prolific FDCPA Violator taken to task: Infante v. Law Office of Joseph Onwuteaka, P.C. (5th Cir. May 31, 2018)

Fifth Circuit chides serial FDCPA violator Joseph Onwuteaka for shoddy appellate briefing, rules against him once more in a private suit over his abusive collection practices involving hundreds of lawsuits filed against debtors in a county where the defendant did not live and had not signed the contract. (Violation of FDCPA's venue provision for consumer collection suits). 

Onwuteaka, his law firm, and his debt buying company SAMARA PORTFOLIO LLC were also sued by the Consumer Protection Division of the Texas Attorney General's Office under state law for the same unfair collection practices, and for failure to redact sensitive personal information from court-filed papers. The State's enforcement case carried on over several years and eventually resulted in a multi-million dollar judgment against the defendants. See older post on -- > State of Texas (Attorney General) vs Joseph Onwuteaka et al 

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 17-41071

Summary Calendar

SHIRLEY INFANTE,

 v.

LAW OFFICE OF JOSEPH ONWUTEAKA, P.C.; JOSEPH ONWUTEAKA,

individually,

Defendants - Appellants

Appeal from the United States District Court

for the Eastern District of Texas

USDC No. 1:14-CV-324

Before KING, ELROD, and HIGGINSON, Circuit Judges.

PER CURIAM:*

Joseph Onwuteaka is a lawyer and the sole owner of the Law Office of Joseph Onwuteaka, P.C. He and his wife are the owners and managing members of Samara Portfolio Management, L.L.C.1 Until 2014, Samara was in the business of buying debts and referring them to Onwuteaka for collection. Between 2008 and 2012, Onwuteaka filed nearly 2,000 cases on Samara’s behalf—many against borrowers who lived far from the courthouse in Houston where he filed the lawsuits. So fecund a filer was he that the court even assigned Onwuteaka a “frequent filer” number. Eventually, some of the defendants fought back, filing counterclaims alleging violations of state and federal consumer protection laws. In response, Onwuteaka would routinely dismiss Samara’s claims.

Many of the defendants in the collection cases would likewise drop their claims. But some persisted. Indeed, this is not our first encounter with Onwuteaka. In another case, we affirmed a judgment against him for violations of federal consumer protection laws, including an award of $1,000 in statutory damages and over $72,000 in fees and costs. Serna v. Law Office of Joseph Onwuteaka, P.C., 614 F. App’x 146, 147-48, 150, 159 (5th Cir. 2015) (per curiam).

In time, Onwuteaka caught the attention of the State of Texas. Texas ultimately secured a $25,000,000 judgment against him in state court, along with over $500,000 in attorneys’ fees. See Texas v. Samara Portfolio Mgmt., LLC, No. 2013-35721 (80th Dist. Ct., Harris County, Tex. July 14, 2017).

[State of Texas v. Samara Portfolio LLC, et al is on appeal in the Fourteenth Court of Appeals in Houston, but is stayed pending performance of a settlement agreement] 

In June 2013, two weeks after Texas filed its lawsuit against Onwuteaka, Onwuteaka filed a lawsuit against Shirley Infante. Infante is a 64-year-old resident of Beaumont, Texas. Incensed that Onwuteaka would try to hale her into court in Houston, Infante enlisted the services of a legal aid organization. Roughly six months after Infante filed an answer in the state-court litigation, Onwuteaka nonsuited. Infante then sued Onwuteaka, Onwuteaka, P.C., and Samara in federal court, alleging violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692-1692p.

The defendants moved to dismiss, and both parties moved for summary judgment. The district court denied the defendants’ motions and granted summary judgment in Infante’s favor. The
court thereafter held a trial on damages and awarded the maximum of $1,000 in statutory damages.2 See 15 U.S.C. § 1692k(2)(A). Onwuteaka appeals.

Text of opinion cut and pasted below. For clean copy in pdf click

Infante v. Law Office of Joseph Onwuteaka, P.C. (5th Cir. May 31, 2018) 

http://www.ca5.uscourts.gov/opinions/unpub/17/17-41071.0.pdf

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 17-41071

Summary Calendar

SHIRLEY INFANTE,

Plaintiff - Appellee

v.

LAW OFFICE OF JOSEPH ONWUTEAKA, P.C.; JOSEPH ONWUTEAKA,

individually,

Defendants - Appellants

Appeal from the United States District Court

for the Eastern District of Texas

USDC No. 1:14-CV-324

Before KING, ELROD, and HIGGINSON, Circuit Judges.

PER CURIAM:*

Joseph Onwuteaka is a lawyer and the sole owner of the Law Office of
Joseph Onwuteaka, P.C. He and his wife are the owners and managing
members of Samara Portfolio Management, L.L.C.1 Until 2014, Samara was in

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
1 For the sake of simplicity, we refer to Onwuteaka and his firm collectively as
“Onwuteaka.” We refer to the law firm separately as “Onwuteaka, P.C.” We refer to Samara
Portfolio Management, L.L.C., as “Samara.”
United States Court of Appeals
Fifth Circuit
FILED
May 30, 2018
Lyle W. Cayce
Clerk
 Case: 17-41071 Document: 00514492888 Page: 1 Date Filed: 05/30/2018
No. 17-41071
2
the business of buying debts and referring them to Onwuteaka for collection.
Between 2008 and 2012, Onwuteaka filed nearly 2,000 cases on Samara’s
behalf—many against borrowers who lived far from the courthouse in Houston
where he filed the lawsuits. So fecund a filer was he that the court even
assigned Onwuteaka a “frequent filer” number.
Eventually, some of the defendants fought back, filing counterclaims
alleging violations of state and federal consumer protection laws. In response,
Onwuteaka would routinely dismiss Samara’s claims. Many of the defendants
in the collection cases would likewise drop their claims. But some persisted.
Indeed, this is not our first encounter with Onwuteaka. In another case, we
affirmed a judgment against him for violations of federal consumer protection
laws, including an award of $1,000 in statutory damages and over $72,000 in
fees and costs. Serna v. Law Office of Joseph Onwuteaka, P.C., 614 F. App’x
146, 147-48, 150, 159 (5th Cir. 2015) (per curiam). In time, Onwuteaka caught
the attention of the State of Texas. Texas ultimately secured a $25,000,000
judgment against him in state court, along with over $500,000 in attorneys’
fees. See Texas v. Samara Portfolio Mgmt., LLC, No. 2013-35721 (80th Dist.
Ct., Harris County, Tex. July 14, 2017).
I.
With this background, we turn to the matter at hand. In June 2013, two
weeks after Texas filed its lawsuit against Onwuteaka, Onwuteaka filed a
lawsuit against Shirley Infante. Infante is a 64-year-old resident of Beaumont,
Texas. Incensed that Onwuteaka would try to hale her into court in Houston,
Infante enlisted the services of a legal aid organization. Roughly six months
after Infante filed an answer in the state-court litigation, Onwuteaka
nonsuited. Infante then sued Onwuteaka, Onwuteaka, P.C., and Samara in
federal court, alleging violations of the Fair Debt Collection Practices Act
(“FDCPA”), 15 U.S.C. §§ 1692-1692p. The defendants moved to dismiss, and
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No. 17-41071
3
both parties moved for summary judgment. The district court denied the
defendants’ motions and granted summary judgment in Infante’s favor. The
court thereafter held a trial on damages and awarded the maximum of $1,000
in statutory damages.2 See 15 U.S.C. § 1692k(2)(A). Onwuteaka appeals.3
II.
“We review a grant of summary judgment de novo, applying the same
standard as the district court.” Vela v. City of Houston, 276 F.3d 659, 666 (5th
Cir. 2001). Summary judgment is appropriate if “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(a).
Onwuteaka raises four arguments on appeal. First, he argues that
neither he nor his firm qualifies as a “debt collector” under the FDCPA. Second
and third, he argues that two statutory exceptions to the “debt collector”
definition apply. Fourth, he argues that there is insufficient evidence of a
covered “debt.” His arguments concerning the statutory exceptions have been
forfeited on appeal. The rest lack merit. We consider each in turn.
A.
Under the FDCPA, a “debt collector” is one whose “principal purpose . . .
is the collection of any debts” or “who regularly collects or attempts to collect
. . . debts owed or due or asserted to be owed or due another.” 15 U.S.C.
§ 1692a(6). This definition describes two types of debt collectors: those whose
“principal purpose” is debt collection and those who “regularly collect” others’

2 To date, two other district courts in this circuit have also awarded the statutory
maximum in FDCPA cases brought against Onwuteaka. Alaniz v. Law Office of Joseph
Onwuteaka, P.C., No. 5:15-CV-00587, 2015 WL 13545188, at *3 (W.D. Tex. Dec. 4, 2015);
Serna v. Law Office of Joseph Onwuteaka, PC, No. 4:11-CV-3034, 2014 WL 109402, at *10
(S.D. Tex. Jan. 10, 2014), aff’d, 614 F. App’x 146.
3 Onwuteaka has represented himself in this litigation, just as he did in Serna. See
614 F. App’x at 147.
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No. 17-41071
4
debts. See Garrett v. Derbes, 110 F.3d 317, 318 (5th Cir. 1997). A “creditor,” by
contrast, is “any person who offers or extends credit creating a debt or to whom
a debt is owed.” 15 U.S.C. § 1692a(4).
While the dispositive motions in this case were pending, the Supreme
Court held that debt purchasers who collect for their own accounts are not
“debt collectors” under the “regularly collects” alternative. See Henson v.
Santander Consumer USA Inc., 137 S. Ct. 1718, 1721-22 (2017). Recognizing
that she had not pleaded the “principal purpose” alternative, Infante conceded
that her complaint no longer stated a claim against Samara, at least not in its
present form. Citing the potential for delay, she declined to seek leave to
amend.
On appeal, Onwuteaka claims that he deserves “creditor” status by
proxy. His argument (though only barely more elaborate than those he has
forfeited) seems to run as follows: Samara owns the debts, Onwuteaka owns
Samara, and therefore Onwuteaka owns the debts. According to this
argument, because Onwuteaka owns the debts, he was not collecting another’s
debts and is therefore not a debt collector under the “regularly collects”
alternative. Onwuteaka never clarifies why, in his view, that status should also
extend to Onwuteaka, P.C. He seems simply to assume it should based on
common ownership.
Onwuteaka’s creditor-by-proxy argument lacks support in the law and
defies logic. Under Texas law, Onwuteaka, his limited liability company, and
his professional corporation are distinct legal personalities. Spates v. Office of
Att’y Gen., Child Support Div., 485 S.W.3d 546, 550-51 (Tex. App.—Houston
[14th Dist.] 2016, no pet.) (limited liability company); Newman v. Toy, 926
S.W.2d 629, 631 (Tex. App.—Austin 1996, writ denied) (professional
corporations). Onwuteaka could have bought the debts himself. Instead, he
decided to take advantage of the benefits of limited liability. See Shook v.
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No. 17-41071
5
Walden, 368 S.W.3d 604, 613 n.10 (Tex. App.—Austin 2012, pet. denied). But
he must accept the bitter with the sweet. Samara—not Onwuteaka or
Onwuteaka, P.C.—owns the debt. Cf. Tex. Bus. Orgs. Code § 101.106 (“A
member of a limited liability company . . . does not have an interest in any
specific property of the company.”). Thus, Onwuteaka was collecting “debts . . .
asserted to be owed or due another,” not himself. 15 U.S.C. § 1692a(6).
Indeed, the pre-suit demand letters Onwuteaka sent to Infante both
represented that Samara Portfolio Management was Onwuteaka’s “client.”
“[T]he term ‘debt collector’ in the Fair Debt Collection Practices Act applies to
a lawyer who ‘regularly,’ through litigation, tries to collect consumer debts.”
Heintz v. Jenkins, 514 U.S. 291, 292 (1995) (emphasis removed) (citation
omitted). As if to underscore the point, both of the demand letters state at the
bottom (albeit in conspicuously small type): “This Is An Attempt to Collect A
Debt By A Debt Collector.” We reject Onwuteaka’s argument that he is not a
debt collector by virtue of a legally distinct entity’s ownership of the debt.
B.
After defining “debt collector,” the FDCPA lists a number of exceptions
to that definition, two of which Onwuteaka tries to invoke. See 15 U.S.C.
§ 1692a(6)(A), (B). The entirety of Onwuteaka’s argument for the exceptions
spans two short sentences—sentences in which he not only misstates the
exceptions, but also fails to explain why either applies to this case and to
provide citations to the factual record. We have already chastised Onwuteaka
for his “conclusory” and “deficient” briefing. 614 F. App’x at 151, 159. We also
admonished him that in opposing summary judgment, he “must not only
‘identify specific evidence in the record,’ but also ‘articulate the “precise
manner” in which that evidence’” supports his position. Id. at 152 (quoting
Willis v. Cleco Corp., 749 F.3d 314, 317 (5th Cir. 2014)). This is because “Rule
56 does not impose upon the district court [or the court of appeals] a duty to
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No. 17-41071
6
sift through the record in search of evidence to support a party’s opposition to
summary judgment.” Id. (alteration in original). Despite having already been
sanctioned by this court for his “persistently deficient briefing and
misrepresentation of legal authority,” id. at 159, Onwuteaka once again asks
this court to consider half-baked arguments devoid of legal citation or factual
support. We again decline to do so.4 See id. at 151-53 & n.8, 156-57, 159 n.14.
C.
Finally, Onwuteaka argues that there is insufficient evidence of a
covered “debt.” Under the FDCPA, a “debt” is “any obligation or alleged
obligation of a consumer to pay money arising out of a transaction in which the
money, property, insurance, or services which are the subject of the transaction
are primarily for personal, family, or household purposes.” 15 U.S.C.
§ 1692a(5).
Onwuteaka’s argument is difficult to follow because it merely recounts
facts that have no obvious legal significance without explaining why they
support his argument. Cf. Serna, 614 F. App’x at 152 (advising Onwuteaka
that he must “articulate the ‘precise manner’ in which [the factual record]
support[s]” his argument (quoting Willis, 749 F.3d at 317)). Onwuteaka
explains that the complaint alleges that Infante bought two televisions from a
Conn’s store on an installment plan. But, significantly in Onwuteaka’s view,
Conn’s Appliance, Inc., not Conn’s, was the original creditor. Onwuteaka then
highlights that Infante stipulated at the damages hearing that she did not
produce any contract with Conn’s Appliance, Inc., and that her testimony at
the hearing provides no evidence of a relationship with the original creditor.

4 Since filing this appeal, Onwuteaka has filed an appeal of the district court’s postjudgment
attorneys’ fees award. See Infante v. Law Office of Joseph Onwuteaka, P.C., No. 18-
40231 (filed Mar. 16, 2018). He should carefully consider in that case whether his briefing
adequately presents his arguments under our caselaw. See United States v. Scroggins, 599
F.3d 433, 446-47 (5th Cir. 2010).
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No. 17-41071
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According to Onwuteaka, it follows—as night the day—that Infante has failed
to prove a debt.
His argument misses the mark. The FDCPA’s definition of “debt”
includes “any . . . alleged obligation.” 15 U.S.C. § 1692a(5). It is undisputed
that Onwuteaka sent two demand letters and filed a lawsuit alleging that
Infante owed a debt to Conn’s Appliance, Inc., and demanding payment.
Moreover, Infante produced two retail installment contracts with Conn’s
Credit Corporation, Inc. To the extent Onwuteaka is playing a semantic game,
his argument is not well taken. Even assuming that Conn’s Appliance, Inc., is
not the original creditor, any error in identifying the original creditor is
entirely of Onwuteaka’s making. He failed to identify the original creditor
correctly in his demand letters and state-court petition. Because the FDCPA
covers alleged debts, see 15 U.S.C. § 1692a(5), his failure matters not a whit.
III.
In sum, all of Onwuteaka’s claims of error fail. We find no ground upon
which to reverse the district court. For the foregoing reasons, we AFFIRM.
 Case: 17-41071 Document: 00514492888 Page: 7 Date Filed: 05/30/2018

Venue violations - What remedies when consumer gets sued in the wrong county & court?

What if a consumer is sued on a credit card debt where he does not live? There will likely be relief available: Motion to transfer venue and/or motion to dismiss the improperly filed suit; and possibly a cause of action under fair debt collection laws. This post focuses on the latter, the FDCPA in particular.

FEDERAL & STATE VENUE RULES FOR DEBT SUITS

Mandatory venue under federal law: Cardholder must be sued in county of residence

Under the FDCPA, a consumer must be sued in the county in which he or she lives or where the loan contract was signed. In credit card cases, the consumer typically signs no contract (except perhaps if the card is issued by a credit union); therefore there will typically only be one applicable venue, which would be mandatory, i.e leaving the debt collection attorney no choice in the matter. Another exception, involving location of real estate, is not applicable either, because consumer credit card debt is not a mortgage, and typically not secured at all, at least not in Texas.

If the consumer gets sued elsewhere, he or she may have a case under the fair debt collection laws in addition to being entitled to transfer of venue under the Texas Rules of Civil Procedure.  -- > Motion to Transfer of Venue under  TRCP.

The venue restriction on debt suits imposed by the FDCPA is found at Section 1692i(a)(2) of Title 15 of the United States Code, cited as 15 U.S.C. § 1692i(a)(2).

Mandatory venue under Texas law: Credit card debt suit must be filed in county where cardholder resides
The Texas Civil Practice and Remedies specifies where civil lawsuit may or must be brought. "May be brought" is called permissive venue and "must be brought" goes under the rubric of "mandatory venue". For consumer debt, the rules mirror the federal venue rule: the lawsuit against the consumer seeking collection of debt must be filed either where the contract was signed (if there is a signed contract) or where the consumer lives.

Texas Civil Practice & Remedies Codes also has strict rule for venue 

Venue for consumer credit cases is governed by Section 15.035(b) of the Civ. Prac. & Rem Code, which mandates that venue is proper in either the county of the consumer's residence or the county in which the consumer signed the contract. The CPRC also expressly states that this provision cannot by waived by the consumer.

Enforcement of venue provision against debt collector with a record of massive violations 

The Texas Attorney General recently brought an enforcement action against an attorney for routinely suing debtors in Justice Court court in Downtown Houston (JP Court of Harris County Precinct 1 Place 2) even though they lived outside the county and had no connection to Harris County. The civil action was filed by the Consumer Protection Division in the public interest and seeks a permanent injunction and hefty monetary penalities to be paid to the State of Texas. As of November 2013, it is still pending in Harris County District Court: State of Texas vs. Samara Portfolio Management LLC; Law Office of Joseph Onwuteaka, PC, and Joseph O. Onwuteaka, individually.

Case Style on complaint filed by AG: State of Texas v. Samara Portfolio Management LCL
TDCA Enforcement Action (above) and factual allegations section (below)

VENUE VIOLATION BY DEBT COLLECTION ATTORNEYS AS AN FDCPA CLAIM 

Under the FDCPA, unless a debt collector is suing to enforce an interest in real property, it must bring any action on a debt against a consumer in the judicial district where the consumer signed the contract at issue or in the judicial district where the consumer resided when the suit was filed. 15 U.S.C. §1692i(a)(2).
Note that the federal judicial district is not coextensive with a county (a political subdivision of the state), wherefore caselaw should be researched to determine whether a venue violation can be asserted in good faith in a particular case, such as when the defendant is sued in the wrong JP court precinct within a county.
Lawsuits on behalf of corporations are mostly filed by attorneys because corporate officers who are not attorneys are not permitted to sue and sign pleadings as agents of corporate entities unless they bring the lawsuit in justice court. -- > Can a corporate entity appear in court without lawyer?

To assert a venue-violation claim against an attorney under the FDCPA, it must be shown that the attorney meets the federal definition of debt collector. The FDCPA covers attorneys, but not all attorneys under all circumstances in which a questionable or clearly prohibited act occurred (such as a violation of the federal venue rule). An attorney only faces liability under the FDCPA for such act if he or she meets the statutory definition of "debt collector". The key element of that definition is the "regularity" of the debt collection activitities. -- > When can attorneys be sued for FDCPA violations?

The FDCPA has one-year statute of limitations. Therefore, a remedy may no longer be available under the FDCPA even if a violation could easily be proven and even if the attorney meets the statutory definition. In those instance where the claim of unfair debt collection is time-barred under federal law, it may be worth considering the TDCA as an alternative.

RELATED TOPICS RELATED TO FAIR DEBT COLLECTION COMPLIANCE: 

When are collection attorneys subject to liability under the FDCPA?
What is a covered debt under the FDCPA?
Texas Debt Collection and federal Fair Debt Collection Practices Act: Compare and Contrast
Texas AG civil injunction suits to enforce compliance with state fair debt collection statute

Do debt collection attorneys have to comply with the FDCPA? Are they covered?

FDCPA When do attorneys face liability under the federal Fair Debt Collection Practices Act?

Can collection attorneys be sued under the FDCPA if they engage in deceptive or otherwise prohibited conduct?  

In principle, yes, but not always. The debt at issue must be a consumer debt and the attorney must meet the definition of debt collector that is set forth in the act. A single debt collection suit would not make the filing attorney a debt collector (under the FDCPA) because the statute says that it applies only to those who engage in debt collection on a regular basis.

WHO IS A DEBT COLLECTOR UNDER THE FDCPA? and WHEN DOES THIS APPLY TO COLLECTION ATTORNEYS?  

Attorneys qualify as debt collectors for purposes of the FDCPA when they regularly engage in consumer debt collection, such as litigation on behalf of a creditor client that is a national bank or other financial institution, or an assignee of an original creditor.

Numbers matter

A person may “regularly” collect debts even if debt collection is not the principal purpose of his business. If the volume of a person’s debt collection services is great enough, it is irrelevant that these services only amount to a small fraction of his total business activity. Whether a party "regularly" attempts to collect debts is determined, of course, by the volume or frequency of its debt-collection activities.

What is 'regular'?

But there is no clear-cut rule or yardstick that can be used to determine what amounts to regular, so the status issue may have to be litigated in the particular case, unless the attorney's correspondence expressly states that the attorney is a debt collector on its paperwork (correspondence and pleadings) or concedes the issue in the course of an FDCPA action. In a complaint filed in federal court, specific allegations must be set forth in the initial pleading, including those pertinent to the essential elements of a cause of action, and the defendant must admit or deny each allegation in his answer.

Status definition not vague

At some point the definition of “debt collector” in 15 U.S.C. § 1692a(6) was challenged as unconstitutionally vague, but the Fifth Circuit Court of Appeals decided that it was not, pointing out that it was a statute that regulates economic activty and provides for civil penalties rather than jail, and that courts have managed with the statutory definition for a long time since FDCPA was enacted with no major problems in making the necessary determinations as to debt collector status under the Act on a case-by-case basis.

When the federal act is not available

Note that the FDCPA has a state law counterpart, the Texas Debt Collection Add (TDCA). The TDCA (also abbreviated DCA with the T for Texas omitted) uses a different definition of those covered by it, which includes original creditors, and differs in other significant respects. -- > Suing under the Texas Debt Collection Act.

STATUTORY DEFINITION OF DEBT COLLECTOR UNDER FDCPA

LEADING CASE FOR LAWYERS AS FDCPA DEFENDANTS

Heintz v. Jenkins, 514 U.S. 291, 292 (1995) (litigating lawyers are not exempt from the FDCPA if they otherwise qualify as debt collectors)

RELATED FAIR DEBT COLLECTION TOPICS

Consumer's counterclaim under federal and state fair debt collection laws
Federal vs state regulation of debt collectors: FDCPA and Texas Debt Collection Act
Differences between FDCPA and TDCA: Who is covered, what type of debt, and what conduct provides grounds for relief?
What is a consumer debt under federal fair debt collection practices law?
Mandatory venue violations: Consumer sued in the wrong county and wrong court