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Cross-Defendants, VELOCITY INVESTMENTS, LLC’s (“VELOCITY”) and its alter ego
Cross-Defendant, VELOCITY PORTFOLIO GROUP, INC.’s (“VPGI”) unequivocally violated the
California Fair Debt Buying Practices Act, Civil Code §§ 1788.50-1788.64 (“CFDBPA”), which sets
forth specific documentation that debt buyers must maintain and produce in a legal action to collect a
charged-off consumer debt. Because Cross-Defendants’ violation is apparent on the face of the lawsuit
documents, Cross-Defendants oppose summary judgment via various specious arguments. The first is
that Cross-Complainant, MARIA ANTONIA CANUL, lacks standing to prosecute her Cross-
Complaint, despite the fact that Cross-Defendants haled CANUL into court by filing and serving the
subject unlawful Complaint against her. Cross-Defendants here are hoping that the Court simply
against Cross-Defendants. The second argument is a flat denial of their violation, seemingly based on
requesting that the Court apply a “substantial compliance” standard. Next, Cross-Defendants press the
concept of “materiality” – urging that even if they violated the CFDBPA, their violation is immaterial
and therefore not actionable. Lastly, Cross-Defendants claim that there is a triable question of fact
regarding their “bona fide error” affirmative defense. None of these arguments raises any triable issues
Cross-Defendants argue that does not have standing to bring this CFDBPA action,
referring the Court to Cross-Defendants’ arguments in their own summary judgment Motion. The
arguments therein are based on an expansive reading of the Fifth Appellate District’s opinion regarding
the federal Fair Credit Reporting Act in Limon v. Circle K Stores Inc. (2022) 84 Cal.App.5th 671, and
the misleading assertion that CANUL “repeatedly acknowledged that she has no actual damages.”
Inasmuch as the Court opts to consider the argument set forth in Cross-Defendants’ Motion in
determining CANUL’s Motion herein, CANUL hereby incorporates, and requests that the Court
consider, her arguments in her Opposition to Cross-Defendants’ Motion as part of this Reply. As such,
CANUL will not repeat her arguments distinguishing Limon on the facts, criticizing Limon’s
The only “argument” made about standing in Cross-Defendants’ Opposition is the assertion that
“this Court has addressed that argument in favor of Cross-Defendants Velocity Investments, LLC in
Chai v. Velocity Investments, LLC, et al., Case No. 20CV373916.” The Court should admonish Cross-
Defendants for citing Superior Court orders in unrelated cases. Any first-year associate knows that a
Superior Court order on a motion has no precedential value in another Superior Court matter, yet Cross-
Defendants cite the Chai case, which not only is of no precedential value, but which is also pending on
appeal before the Sixth Appellate District. “A written trial court ruling in another case has no
precedential value in this court.” Budrow v. Dave Buster’s (2009) 171 Cal.App.4th 875, 885 (declining
to “take judicial notice of a number of rulings by state and federal trial courts”); Bolanos v. Superior
(2008) 169 Cal.App.4th 744, 761 (“a written trial court ruling has no precedential value”);
Section 1788.58(b) of the CFDBPA provides that, “A copy of the contract or other document
described in subdivision (b) of Section 1788.52 shall be attached to the complaint.” In turn, Section
(b) A debt buyer shall not make any written statement to a debtor in an attempt to collect
a consumer debt unless the debt buyer has access to a copy of a contract or other
which no signed contract or agreement exists, the debt buyer shall have access to a copy
of a document provided to the debtor while the account was active, demonstrating that
the debt was incurred by the debtor. For a revolving credit account, the most recent
monthly statement recording a purchase transaction, last payment, or balance transfer
did not comply with the requirements of Section 1788.58(b) because they did
not attach copies of the relevant contract to their complaint, instead attaching a “Truth in Lending
Disclosure Statement”, which is inadequate to comply with the statute. Cross-Defendants’ assertion
that, “Canul cites to no authority for her assertions that there is a hierarchy to the documentation
described in Cal. Civ. Code § 1788.52(b) such that the contract must be attached if available and
another document evidencing the agreement to the debt cannot fully satisfy the requirements of Cal.
Civ. Code § 1788.58(b)” either ignores or misrepresents CANUL’s detailed parsing of the text of the
When there is no signed contract, the necessary document in accordance with Civil Code
1788.52(b) must “evidenc[e] the debtor’s agreement to the debt.” The Truth in Lending Disclosure
Statement provided to CANUL the loan transaction does not meet that requirement, as it was
provided to any debt agreement. The federal Truth in Lending Act (“TILA”) requires the Truth in
Disclosure Statement be provided to the consumer prior to the extension of credit. “TILA
mandates that creditors make specific disclosures before extending credit to consumers. 15 U.S.C. §
1638(a), (b).” Tripp v. Charlie Falk’s Auto Wholesale, Inc. (4th Cir. 2008) 290 Fed.Appx. 622, 626.
The purpose of TILA is to “assure a meaningful disclosure of credit terms so that the consumer will be
able to compare more readily the various credit terms available to him and avoid the uninformed use of
credit.” 15 U.S.C. § 1601(a). To that end, the creditor must make the specified disclosures “clearly and
conspicuously in writing, in a form that the consumer may keep” “ consummation of the
transaction.” 12 C.F.R. § 1026.17(b) and 12 C.F.R. § 226.17(a), (b) (emphasis added). In accordance
with federal law, the Truth in Lending Disclosure Statement was provided by WebBank to CANUL so
she could take the document, with its disclosed credit terms, and comparison shop for other credit terms
available to her. Although CANUL was thereafter free to consummate a loan transaction with
WebBank, she was not to do so, which is stated clearly on the face of the document. Simply
stated, a federally required TILA disclosure statement, provided eight days before the loan transaction
Additionally, the “other document evidencing the debtor’s agreement to the debt” must have
been “provided to the debtor while the account was active, demonstrating that the debt was incurred by
the debtor.” Documents produced by LendingClub show that the Truth in Lending Disclosure
Statement was provided to CANUL on May 29, 2012, eight days before the Promissory Notes were
signed by CANUL’s authorized Attorney-in-Fact on June 6, 2012, consummating the loan transaction
and thereby “demonstrating that the debt was incurred by” CANUL. Therefore, the Truth in Lending
Cross-Defendants assert that any violations of the CFDBPA were “immaterial.” However, the
concept of materiality simply does not apply here. No case has ever held that materiality is an element
of the CFDBPA. Moreover, materiality applies in deciding whether unenumerated misrepresentations
and misleading statements are actionable. Materiality cannot be implicated by a failure to attach a
specific document. Cross-Defendants conflate federal Fair Debt Collection Practices Act (“FDCPA”)
cases like Afewerki v. Anaya Law Grp. (9th Cir. 2017) 868 F.3d 771, which hold that whether a
communication is misleading under section 1692e of that Act is determined from the perspective of the
“least sophisticated consumer” with FDCPA cases which hold that whether a 1692e misrepresentation
is material is a corollary to the least sophisticated consumer inquiry, and the recent California case of
Aguilar v. Mandarich Law Grp., LLP, 87 Cal.App.5th 607, which discussed whether a violation of the
See Declaration of Fred W. Schwinn in Support of Cross-Complainant’s Motion for Summary
Judgment, or in the Alternative, Motion for Summary Adjudication, (“Schwinn Decl.”) Exhibit “K” at
CFDBPA was necessarily a violation of the section of California’s Rosenthal Fair Debt Collection
Practices Act (“RFDCPA”) which is derivative of section 1692e of the FDCPA. Combining these
disparate threads, Cross-Defendants then baldly assert, “[t]hus, per California’s own statutes and prior
case law, claims brought under the CFDBPA, like Canul’s are also subject to the materiality
requirement.” There is simply no authority whatsoever for this statement. There is no mention of
“materiality,” or even the word “material” anywhere in the text of the CFDBPA, even though the
concept of materiality emerged in 2010, four years before enactment of the CFDBPA, and the
he materiality affirmative defense under the FDCPA was first established by Donohue v.
Quick Collect, Inc. (9th Cir. 2010) 592 F.3d 1027. stated: “immaterial statements, by
definition, do not affect a consumer’s ability to make intelligent decisions.” at 1034. Continuing, the
court held “that the materiality requirement functions as a corollary inquiry into whether a
statement is likely to mislead an unsophisticated consumer. The materiality inquiry focuses our analysis
on the same ends that concerned us in Clark--protecting consumers from misleading debt-collection
practices.” In , the debt collector accurately stated the correct amount owed by the
Turning to the merits, we conclude that the Complaint did not violate §§ 1692e or 1692f.
The Complaint correctly calculated the total debt Donohue owed, accurately stated the
principal owed, and accurately listed the total non-principal amount owed inclusive of
interest and finance charges. The Complaint sought recovery of sums to which Quick
Collect was clearly and lawfully entitled, including $ 270.99 in principal, $ 24.07 in late
fees assessed pursuant to Children's Choice’s Office Financial Policy signed by
Donohue, and $ 8.82 in interest assessed at a lawful rate. The Complaint did not contain
a false, deceptive, or misleading representation for purposes of liability under §§ 1692e
or 1692f just because $ 32.89, labeled as 12% interest on principal, was actually
comprised of finance charges of $ 24.07 and post-assignment interest of $ 8.82, but not
Thus, in there was literally no misrepresentation in the amount being collected by the
debt collector. While the complaint’s characterization of the amount was technically false, the Ninth
Circuit determined that it did not matter. The total amount due was correct, and the mistake, it was
There was no California appellate authority regarding the materiality affirmative defense until
the January 2023 decision in Aguilar v. Mandarich Law Group, LLP (2023) 87 Cal.App.5th 607. In
, the defendant debt collector filed a successful anti-SLAPP Motion in response to a consumer
protection action. On review, the Sixth District held that misrepresentation of the name of the charge-
off creditor is not “a material under the standard applicable to alleged federal
does not stand for the proposition that all violations of state consumer protection
statutes like the CFDBPA are immaterial (or even that materiality applies to the CFDBPA). The
opinion seemed to turn on the specific facts of that case, as the Sixth District stated: “The
misidentification of the charge-off creditor in this instance (OneMain Financial instead of OneMain
Financial Issuance Trust) falls squarely within the category of “mere technical falsehoods that mislead
no one.” , 87 Cal.App.5th at 627 (emphasis added). Whether a California Civil Code §
violation where the names of the actual charge-off creditor and the inaccurately disclosed
entity were not so similar would be held to be a material FDCPA/RFDCPA violation is left unsaid.
Moreover, discusses by contrast how failure to properly identify the original creditor (versus
the charge-off creditor) be material. In sum, the Sixth District held that a violation of
Civil Code § 1788.58(a)(6) was not a material violation of section 1692e of the FDCPA
as incorporated by Civil Code 1788.17 of the RFDCPA. does not hold that omissions of
Cross-Defendants also misconstrue , . In , the Ninth Circuit reversed a
granting of summary judgment to a debt collector who obtained a default judgment in an amount higher
than the debtor owed. Afewerki does not stand for the proposition that debt buyers may omit the
Because the materiality inquiry focuses on the objective question of how the least
himself would actually have done differently had Anaya Law Group not misstated the
amount of his debt is irrelevant in determining materiality. As we have explained: [A]
consumer possesses a right of action even where the defendant’s conduct has not caused
him or her to suffer any pecuniary or emotional harm. An FDCPA plaintiff need not
even have actually been misled or deceived by the debt collector's representation;
instead, liability depends on whether the hypothetical “least sophisticated debtor” likely
The district court’s determination that Afewerki would not have proceeded differently
absent the error might mean that he did not suffer actual damages and might disqualify
him from obtaining such damages, but that determination does not mean that [the debt
While it is easy for an attorney to posit to a judge that it is obvious what was really meant by a
pleading, the understanding of a trained legal professional is is not the standard for evaluating debt
collector communications, but instead that of the “least sophisticated consumer.” “We are not, however,
to read the language from the perspective of a savvy consumer, and consumers are under no obligation
to seek explanation of confusing or misleading language in debt collection [communications].”
3. Even if the Court Finds That Materiality is an Element of a CFDBPA Claim, Cross-
CANUL does not concede that materiality is an element of the CFDBPA. However, assuming,
, Cross-Defendants’ violation needs to be material to be actionable, CANUL can show that
Cross-Defendants’ violation is indeed material. Specifically, the violation that is the subject of this
Motion must be material because the Legislature intended it to be so. The Legislature was clear that its
intention in enacting the CFDBPA was to create documentation standards “that all interested parties
can easily understand.” The Legislature specifically declared the CFDBPA “will protect consumers,
provide needed clarity to courts, and establish clearer criteria for debt buyers and the collection
California Appellate Courts routinely remind us that “California’s consumer protection laws
must be liberally, not narrowly, applied” in order to effectuate their purpose to protect consumers.
Only if “no signed contract or agreement exists” may the debt buyer possess and use another
“document evidencing the debtor’s agreement to the debt,” as long as it was “provided to the debtor
while the account was active,” and “demonstrating that the debt was by the debtor.” “In
construing statutes, the use of verb tense by the Legislature is considered significant.” Hughes v. Board
of Architectural Examiners (1998) 17 Cal.4th 763, 776. Therefore, even if, , there was no
signed contract in this case, the Truth in Lending Disclosure Statement that Cross-Defendants attached
to the collection Complaint is neither a document that was “provided to the debtor while the account
The argument that this clear violation is immaterial is an attempt to shift the burden to CANUL
to prove that Cross-Defendants’ violation impacted her decision making or prevented her from making
an informed, intelligent decision as to how to proceed in the collection lawsuit. As noted above,
materiality is a corollary to the “least sophisticated debtor” standard in an FDCPA case. The “least
sophisticated debtor” standard is objective, not subjective. Terran v. Kaplan (9th Cir.1997) 109 F.3d
1428, 1432. It is “lower than simply examining whether particular language would deceive or mislead a
reasonable debtor,” , and “is designed to protect consumers of below average sophistication or
intelligence, or those who are uninformed or naïve.” , 660 F.3d at 1061. A debtor is not
required to present evidence that the least sophisticated debtor would be misled. Gonzales v. Arrow
Financial Servs., LLC (S.D.Cal. 2007) 489 F.Supp.2d 1140, 1149, aff’d, 660 F.3d 1055 (9th Cir. 2011)
(“The cases that have addressed whether a collection letter’s language violates Section 1692e’s
provisions have done so without looking at extrinsic evidence defendant’s argument that the lack of
Thus, whether CANUL herself even realized (before retaining counsel) that Cross-Defendants’
collection Complaint violated the CFDBPA is not the test. Nor does the fact that a consumer obtained a
lawyer after being subject to collection abuse render the violation immaterial. The CFDBPA’s purpose
is to protect consumers by regulating debt buyers’ collection conduct, especially in the context of
litigation. Simply put, Cross-Defendants cannot evade their statutory liability just because they may
have communicated a misrepresentation to a consumer who may not have been misled. The fact that the
specific consumer may not understand the violation enough to be misled by it, does not make the
violation immaterial. Ultimately, Cross-Defendants are attempting to snow the Court by focusing their
argument mostly on the effect on CANUL, and not on their own conduct, since it is impossible to deny
Additionally, Cross-Defendants’ contention that it is “unreasonable” for them to comply with
the CFDBPA by attaching 144 promissory notes is highly disingenuous, because it is a “problem” of
Cross-Defendants’ own making. In fact, it is Cross-Defendants’ expectation that the Court’s
interpretation of the law bow to the convenience of their business model that is unreasonable. Neither
the Court nor CANUL forced Cross-Defendants to purchase a charged off consumer debt originated
under a dubious rent-a-bank and investor securitization model and then use the California Courts to
attempt to collect those debts. There is an old aphorism that the classic example of chutzpah was the
boy who killed his parents, then threw himself on the mercy of the courts, asking for leniency because
he was an orphan. In CANUL’s counsel’s experience, and likely the Court’s as well, most consumer
accounts are evidenced by short contracts of no more than a dozen pages. Cross-Defendants’ argument
makes even less sense because there is no page limit on a collection complaint, and electronic filing has
dispensed with the need for paper. Cross-Defendants did not comply with the CFDBPA simply because
D. Cross-Defendants Have Not Established a Triable Issue of Material Fact Regarding
As noted in CANUL’s moving papers, the language of Civil Code 1788.62 mirrors that of the
FDCPA’s “bona fide error” affirmative defense. “A debt collector asserting the bona fide error defense
must show by a preponderance of the evidence that its violation of the Act: (1) was not intentional; (2)
was a bona fide error; and (3) occurred despite the maintenance of procedures reasonably adapted to
avoid any such error The failure to meet any one of those three requirements is fatal to the defense.”
Edwards v. Niagara Credit Solutions, Inc. (11th Cir. 2009) 584 F.3d 1350, 1352-1353, citing
v. Riddle (10th Cir. 2006) 443 F.3d 723, 727-28. Thus, the plain text of the statute confirms that there
Cross-Defendants’ arguments, when not trying to shift possible blame to their attorneys, boil
down to citing the existence of written procedures regarding general day-to-day operations, and
asserting that the violation was unintentional. However, as detailed in CANUL’s moving papers, none
of the documents produced by VELOCITY in response to discovery requests regarding the “bona fide
error” affirmative defense contains any evidence that Cross-Defendants maintain any procedures
reasonably adapted to avoid the violation alleged in this case, specifically, failing to attach a copy of
the actual signed contract to the collection Complaint in actions where Cross-Defendants are attempting
to collect a consumer debt for which there is a signed contract. Cross-Defendants assert that, “Velocity
has multiple procedures in place to ensure that it does not file a lawsuit without evidence of agreement
to the debt as required by Cal. Civ. Code § 1788.52(b).” (emphasis added). Except in this case, Civil
Code 1788.58(b) does not require the debt buyer to provide “evidence of agreement to the debt,” but
rather mandates that, “A copy of the contract or other document described in subdivision (b) of Section
Beyond this failing, Cross-Defendants have not at all demonstrated that the violation was
. Black’s Law Dictionary defines “bona fide” as “In or with good faith; honestly, openly, and
sincerely[.]” The Court may conclude, on the evidence presented, that Cross-Defendants’ violation was
unintentional not in good faith. Lack of reasonable care can be construed as not acting in good
faith, even if the outcome itself was not intended by Cross-Defendants. See e.g., Graziano v. Harrison
he Eleventh Circuit has opined regarding the FDCPA: “To be considered a bona fide error, the
debt collector’s mistake must be objectively reasonable.” , 584 F.3d at 1353. The evidence
shows that Cross-Defendants’ purported error was not objectively reasonable, in part because Cross-
Defendants have repeatedly argued that they did not believe they were doing anything wrong in
attaching only the TILA Disclosure Statement. “[T]he bona fide error defense in § 1692k(c) does not
apply to a violation of the FDCPA resulting from a debt collector’s incorrect interpretation of the
requirements of that statute.” Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, L.P.A. (2010) 559
U.S. 573, 604-05; “Reliance on advice of counsel or a mistake about the law is insufficient by itself to
For all the foregoing reasons, CANUL is entitled to summary judgment on her CFDBPA cause
of action set forth in the First Amended Class Action Cross-Complaint for Declaratory Relief and
. Alternatively, if the Court does not grant summary judgment as to the entire action
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Cross-Defendants, VELOCITY INVESTMENTS, LLC’s (“VELOCITY”) and its alter ego Cross-Defendant, VELOCITY PORTFOLIO GROUP, INC.’s (“VPGI”) unequivocally violated the California Fair Debt Buying Practices Act, Civil Code §§ 1788.50-1788.64 (“CFDBPA”), which sets forth specific documentation that debt buyers must maintain and produce in a legal action to collect a charged-off consumer debt. Because Cross-Defendants’ violation is apparent on the face of the lawsuit documents, Cross-Defendants oppose summary judgment via various specious arguments. The first is that Cross-Complainant, MARIA ANTONIA CANUL, lacks standing to prosecute her Cross- Complaint, despite the fact that Cross-Defendants haled CANUL into court by filing and serving the subject unlawful Complaint against her. Cross-Defendants here are hoping that the Court simply against Cross-Defendants. The second argument is a flat denial of their violation, seemingly based on requesting that the Court apply a “substantial compliance” standard. Next, Cross-Defendants press the concept of “materiality” – urging that even if they violated the CFDBPA, their violation is immaterial and therefore not actionable. Lastly, Cross-Defendants claim that there is a triable question of fact regarding their “bona fide error” affirmative defense. None of these arguments raises any triable issues Cross-Defendants argue that does not have standing to bring this CFDBPA action, referring the Court to Cross-Defendants’ arguments in their own summary judgment Motion. The arguments therein are based on an expansive reading of the Fifth Appellate District’s opinion regarding the federal Fair Credit Reporting Act in Limon v. Circle K Stores Inc. (2022) 84 Cal.App.5th 671, and the misleading assertion that CANUL “repeatedly acknowledged that she has no actual damages.” Inasmuch as the Court opts to consider the argument set forth in Cross-Defendants’ Motion in determining CANUL’s Motion herein, CANUL hereby incorporates, and requests that the Court consider, her arguments in her Opposition to Cross-Defendants’ Motion as part of this Reply. As such, CANUL will not repeat her arguments distinguishing Limon on the facts, criticizing Limon’s The only “argument” made about standing in Cross-Defendants’ Opposition is the assertion that “this Court has addressed that argument in favor of Cross-Defendants Velocity Investments, LLC in Chai v. Velocity Investments, LLC, et al., Case No. 20CV373916.” The Court should admonish Cross- Defendants for citing Superior Court orders in unrelated cases. Any first-year associate knows that a Superior Court order on a motion has no precedential value in another Superior Court matter, yet Cross- Defendants cite the Chai case, which not only is of no precedential value, but which is also pending on appeal before the Sixth Appellate District. “A written trial court ruling in another case has no precedential value in this court.” Budrow v. Dave Buster’s (2009) 171 Cal.App.4th 875, 885 (declining to “take judicial notice of a number of rulings by state and federal trial courts”); Bolanos v. Superior (2008) 169 Cal.App.4th 744, 761 (“a written trial court ruling has no precedential value”); Section 1788.58(b) of the CFDBPA provides that, “A copy of the contract or other document described in subdivision (b) of Section 1788.52 shall be attached to the complaint.” In turn, Section (b) A debt buyer shall not make any written statement to a debtor in an attempt to collect a consumer debt unless the debt buyer has access to a copy of a contract or other which no signed contract or agreement exists, the debt buyer shall have access to a copy of a document provided to the debtor while the account was active, demonstrating that the debt was incurred by the debtor. For a revolving credit account, the most recent monthly statement recording a purchase transaction, last payment, or balance transfer did not comply with the requirements of Section 1788.58(b) because they did not attach copies of the relevant contract to their complaint, instead attaching a “Truth in Lending Disclosure Statement”, which is inadequate to comply with the statute. Cross-Defendants’ assertion that, “Canul cites to no authority for her assertions that there is a hierarchy to the documentation described in Cal. Civ. Code § 1788.52(b) such that the contract must be attached if available and another document evidencing the agreement to the debt cannot fully satisfy the requirements of Cal. Civ. Code § 1788.58(b)” either ignores or misrepresents CANUL’s detailed parsing of the text of the When there is no signed contract, the necessary document in accordance with Civil Code 1788.52(b) must “evidenc[e] the debtor’s agreement to the debt.” The Truth in Lending Disclosure Statement provided to CANUL the loan transaction does not meet that requirement, as it was provided to any debt agreement. The federal Truth in Lending Act (“TILA”) requires the Truth in Disclosure Statement be provided to the consumer prior to the extension of credit. “TILA mandates that creditors make specific disclosures before extending credit to consumers. 15 U.S.C. § 1638(a), (b).” Tripp v. Charlie Falk’s Auto Wholesale, Inc. (4th Cir. 2008) 290 Fed.Appx. 622, 626. The purpose of TILA is to “assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit.” 15 U.S.C. § 1601(a). To that end, the creditor must make the specified disclosures “clearly and conspicuously in writing, in a form that the consumer may keep” “ consummation of the transaction.” 12 C.F.R. § 1026.17(b) and 12 C.F.R. § 226.17(a), (b) (emphasis added). In accordance with federal law, the Truth in Lending Disclosure Statement was provided by WebBank to CANUL so she could take the document, with its disclosed credit terms, and comparison shop for other credit terms available to her. Although CANUL was thereafter free to consummate a loan transaction with WebBank, she was not to do so, which is stated clearly on the face of the document. Simply stated, a federally required TILA disclosure statement, provided eight days before the loan transaction Additionally, the “other document evidencing the debtor’s agreement to the debt” must have been “provided to the debtor while the account was active, demonstrating that the debt was incurred by the debtor.” Documents produced by LendingClub show that the Truth in Lending Disclosure Statement was provided to CANUL on May 29, 2012, eight days before the Promissory Notes were signed by CANUL’s authorized Attorney-in-Fact on June 6, 2012, consummating the loan transaction and thereby “demonstrating that the debt was incurred by” CANUL. Therefore, the Truth in Lending Cross-Defendants assert that any violations of the CFDBPA were “immaterial.” However, the concept of materiality simply does not apply here. No case has ever held that materiality is an element of the CFDBPA. Moreover, materiality applies in deciding whether unenumerated misrepresentations and misleading statements are actionable. Materiality cannot be implicated by a failure to attach a specific document. Cross-Defendants conflate federal Fair Debt Collection Practices Act (“FDCPA”) cases like Afewerki v. Anaya Law Grp. (9th Cir. 2017) 868 F.3d 771, which hold that whether a communication is misleading under section 1692e of that Act is determined from the perspective of the “least sophisticated consumer” with FDCPA cases which hold that whether a 1692e misrepresentation is material is a corollary to the least sophisticated consumer inquiry, and the recent California case of Aguilar v. Mandarich Law Grp., LLP, 87 Cal.App.5th 607, which discussed whether a violation of the See Declaration of Fred W. Schwinn in Support of Cross-Complainant’s Motion for Summary Judgment, or in the Alternative, Motion for Summary Adjudication, (“Schwinn Decl.”) Exhibit “K” at CFDBPA was necessarily a violation of the section of California’s Rosenthal Fair Debt Collection Practices Act (“RFDCPA”) which is derivative of section 1692e of the FDCPA. Combining these disparate threads, Cross-Defendants then baldly assert, “[t]hus, per California’s own statutes and prior case law, claims brought under the CFDBPA, like Canul’s are also subject to the materiality requirement.” There is simply no authority whatsoever for this statement. There is no mention of “materiality,” or even the word “material” anywhere in the text of the CFDBPA, even though the concept of materiality emerged in 2010, four years before enactment of the CFDBPA, and the he materiality affirmative defense under the FDCPA was first established by Donohue v. Quick Collect, Inc. (9th Cir. 2010) 592 F.3d 1027. stated: “immaterial statements, by definition, do not affect a consumer’s ability to make intelligent decisions.” at 1034. Continuing, the court held “that the materiality requirement functions as a corollary inquiry into whether a statement is likely to mislead an unsophisticated consumer. The materiality inquiry focuses our analysis on the same ends that concerned us in Clark--protecting consumers from misleading debt-collection practices.” In , the debt collector accurately stated the correct amount owed by the Turning to the merits, we conclude that the Complaint did not violate §§ 1692e or 1692f. The Complaint correctly calculated the total debt Donohue owed, accurately stated the principal owed, and accurately listed the total non-principal amount owed inclusive of interest and finance charges. The Complaint sought recovery of sums to which Quick Collect was clearly and lawfully entitled, including $ 270.99 in principal, $ 24.07 in late fees assessed pursuant to Children's Choice’s Office Financial Policy signed by Donohue, and $ 8.82 in interest assessed at a lawful rate. The Complaint did not contain a false, deceptive, or misleading representation for purposes of liability under §§ 1692e or 1692f just because $ 32.89, labeled as 12% interest on principal, was actually comprised of finance charges of $ 24.07 and post-assignment interest of $ 8.82, but not Thus, in there was literally no misrepresentation in the amount being collected by the debt collector. While the complaint’s characterization of the amount was technically false, the Ninth Circuit determined that it did not matter. The total amount due was correct, and the mistake, it was There was no California appellate authority regarding the materiality affirmative defense until the January 2023 decision in Aguilar v. Mandarich Law Group, LLP (2023) 87 Cal.App.5th 607. In , the defendant debt collector filed a successful anti-SLAPP Motion in response to a consumer protection action. On review, the Sixth District held that misrepresentation of the name of the charge- off creditor is not “a material under the standard applicable to alleged federal does not stand for the proposition that all violations of state consumer protection statutes like the CFDBPA are immaterial (or even that materiality applies to the CFDBPA). The opinion seemed to turn on the specific facts of that case, as the Sixth District stated: “The misidentification of the charge-off creditor in this instance (OneMain Financial instead of OneMain Financial Issuance Trust) falls squarely within the category of “mere technical falsehoods that mislead no one.” , 87 Cal.App.5th at 627 (emphasis added). Whether a California Civil Code § violation where the names of the actual charge-off creditor and the inaccurately disclosed entity were not so similar would be held to be a material FDCPA/RFDCPA violation is left unsaid. Moreover, discusses by contrast how failure to properly identify the original creditor (versus the charge-off creditor) be material. In sum, the Sixth District held that a violation of Civil Code § 1788.58(a)(6) was not a material violation of section 1692e of the FDCPA as incorporated by Civil Code 1788.17 of the RFDCPA. does not hold that omissions of Cross-Defendants also misconstrue , . In , the Ninth Circuit reversed a granting of summary judgment to a debt collector who obtained a default judgment in an amount higher than the debtor owed. Afewerki does not stand for the proposition that debt buyers may omit the Because the materiality inquiry focuses on the objective question of how the least himself would actually have done differently had Anaya Law Group not misstated the amount of his debt is irrelevant in determining materiality. As we have explained: [A] consumer possesses a right of action even where the defendant’s conduct has not caused him or her to suffer any pecuniary or emotional harm. An FDCPA plaintiff need not even have actually been misled or deceived by the debt collector's representation; instead, liability depends on whether the hypothetical “least sophisticated debtor” likely The district court’s determination that Afewerki would not have proceeded differently absent the error might mean that he did not suffer actual damages and might disqualify him from obtaining such damages, but that determination does not mean that [the debt While it is easy for an attorney to posit to a judge that it is obvious what was really meant by a pleading, the understanding of a trained legal professional is is not the standard for evaluating debt collector communications, but instead that of the “least sophisticated consumer.” “We are not, however, to read the language from the perspective of a savvy consumer, and consumers are under no obligation to seek explanation of confusing or misleading language in debt collection [communications].” 3. Even if the Court Finds That Materiality is an Element of a CFDBPA Claim, Cross- CANUL does not concede that materiality is an element of the CFDBPA. However, assuming, , Cross-Defendants’ violation needs to be material to be actionable, CANUL can show that Cross-Defendants’ violation is indeed material. Specifically, the violation that is the subject of this Motion must be material because the Legislature intended it to be so. The Legislature was clear that its intention in enacting the CFDBPA was to create documentation standards “that all interested parties can easily understand.” The Legislature specifically declared the CFDBPA “will protect consumers, provide needed clarity to courts, and establish clearer criteria for debt buyers and the collection California Appellate Courts routinely remind us that “California’s consumer protection laws must be liberally, not narrowly, applied” in order to effectuate their purpose to protect consumers. Only if “no signed contract or agreement exists” may the debt buyer possess and use another “document evidencing the debtor’s agreement to the debt,” as long as it was “provided to the debtor while the account was active,” and “demonstrating that the debt was by the debtor.” “In construing statutes, the use of verb tense by the Legislature is considered significant.” Hughes v. Board of Architectural Examiners (1998) 17 Cal.4th 763, 776. Therefore, even if, , there was no signed contract in this case, the Truth in Lending Disclosure Statement that Cross-Defendants attached to the collection Complaint is neither a document that was “provided to the debtor while the account The argument that this clear violation is immaterial is an attempt to shift the burden to CANUL to prove that Cross-Defendants’ violation impacted her decision making or prevented her from making an informed, intelligent decision as to how to proceed in the collection lawsuit. As noted above, materiality is a corollary to the “least sophisticated debtor” standard in an FDCPA case. The “least sophisticated debtor” standard is objective, not subjective. Terran v. Kaplan (9th Cir.1997) 109 F.3d 1428, 1432. It is “lower than simply examining whether particular language would deceive or mislead a reasonable debtor,” , and “is designed to protect consumers of below average sophistication or intelligence, or those who are uninformed or naïve.” , 660 F.3d at 1061. A debtor is not required to present evidence that the least sophisticated debtor would be misled. Gonzales v. Arrow Financial Servs., LLC (S.D.Cal. 2007) 489 F.Supp.2d 1140, 1149, aff’d, 660 F.3d 1055 (9th Cir. 2011) (“The cases that have addressed whether a collection letter’s language violates Section 1692e’s provisions have done so without looking at extrinsic evidence defendant’s argument that the lack of Thus, whether CANUL herself even realized (before retaining counsel) that Cross-Defendants’ collection Complaint violated the CFDBPA is not the test. Nor does the fact that a consumer obtained a lawyer after being subject to collection abuse render the violation immaterial. The CFDBPA’s purpose is to protect consumers by regulating debt buyers’ collection conduct, especially in the context of litigation. Simply put, Cross-Defendants cannot evade their statutory liability just because they may have communicated a misrepresentation to a consumer who may not have been misled. The fact that the specific consumer may not understand the violation enough to be misled by it, does not make the violation immaterial. Ultimately, Cross-Defendants are attempting to snow the Court by focusing their argument mostly on the effect on CANUL, and not on their own conduct, since it is impossible to deny Additionally, Cross-Defendants’ contention that it is “unreasonable” for them to comply with the CFDBPA by attaching 144 promissory notes is highly disingenuous, because it is a “problem” of Cross-Defendants’ own making. In fact, it is Cross-Defendants’ expectation that the Court’s interpretation of the law bow to the convenience of their business model that is unreasonable. Neither the Court nor CANUL forced Cross-Defendants to purchase a charged off consumer debt originated under a dubious rent-a-bank and investor securitization model and then use the California Courts to attempt to collect those debts. There is an old aphorism that the classic example of chutzpah was the boy who killed his parents, then threw himself on the mercy of the courts, asking for leniency because he was an orphan. In CANUL’s counsel’s experience, and likely the Court’s as well, most consumer accounts are evidenced by short contracts of no more than a dozen pages. Cross-Defendants’ argument makes even less sense because there is no page limit on a collection complaint, and electronic filing has dispensed with the need for paper. Cross-Defendants did not comply with the CFDBPA simply because D. Cross-Defendants Have Not Established a Triable Issue of Material Fact Regarding As noted in CANUL’s moving papers, the language of Civil Code 1788.62 mirrors that of the FDCPA’s “bona fide error” affirmative defense. “A debt collector asserting the bona fide error defense must show by a preponderance of the evidence that its violation of the Act: (1) was not intentional; (2) was a bona fide error; and (3) occurred despite the maintenance of procedures reasonably adapted to avoid any such error The failure to meet any one of those three requirements is fatal to the defense.” Edwards v. Niagara Credit Solutions, Inc. (11th Cir. 2009) 584 F.3d 1350, 1352-1353, citing v. Riddle (10th Cir. 2006) 443 F.3d 723, 727-28. Thus, the plain text of the statute confirms that there Cross-Defendants’ arguments, when not trying to shift possible blame to their attorneys, boil down to citing the existence of written procedures regarding general day-to-day operations, and asserting that the violation was unintentional. However, as detailed in CANUL’s moving papers, none of the documents produced by VELOCITY in response to discovery requests regarding the “bona fide error” affirmative defense contains any evidence that Cross-Defendants maintain any procedures reasonably adapted to avoid the violation alleged in this case, specifically, failing to attach a copy of the actual signed contract to the collection Complaint in actions where Cross-Defendants are attempting to collect a consumer debt for which there is a signed contract. Cross-Defendants assert that, “Velocity has multiple procedures in place to ensure that it does not file a lawsuit without evidence of agreement to the debt as required by Cal. Civ. Code § 1788.52(b).” (emphasis added). Except in this case, Civil Code 1788.58(b) does not require the debt buyer to provide “evidence of agreement to the debt,” but rather mandates that, “A copy of the contract or other document described in subdivision (b) of Section Beyond this failing, Cross-Defendants have not at all demonstrated that the violation was . Black’s Law Dictionary defines “bona fide” as “In or with good faith; honestly, openly, and sincerely[.]” The Court may conclude, on the evidence presented, that Cross-Defendants’ violation was unintentional not in good faith. Lack of reasonable care can be construed as not acting in good faith, even if the outcome itself was not intended by Cross-Defendants. See e.g., Graziano v. Harrison he Eleventh Circuit has opined regarding the FDCPA: “To be considered a bona fide error, the debt collector’s mistake must be objectively reasonable.” , 584 F.3d at 1353. The evidence shows that Cross-Defendants’ purported error was not objectively reasonable, in part because Cross- Defendants have repeatedly argued that they did not believe they were doing anything wrong in attaching only the TILA Disclosure Statement. “[T]he bona fide error defense in § 1692k(c) does not apply to a violation of the FDCPA resulting from a debt collector’s incorrect interpretation of the requirements of that statute.” Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, L.P.A. (2010) 559 U.S. 573, 604-05; “Reliance on advice of counsel or a mistake about the law is insufficient by itself to For all the foregoing reasons, CANUL is entitled to summary judgment on her CFDBPA cause of action set forth in the First Amended Class Action Cross-Complaint for Declaratory Relief and . Alternatively, if the Court does not grant summary judgment as to the entire action ✓