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The Principle Group, LLC v. Smith

Court of Appeals of Ohio, First District, Hamilton

September 6, 2019

THE PRINCIPLE GROUP, LLC, Plaintiff-Appellant,
STEPHANIE C. SMITH, Defendant/Third-Party Plaintiff-Appellee,
SHERRY WHITLOCK, Third-Party Defendant-Appellant.

          Civil Appeal From: Hamilton County Municipal Court TRIAL NO. 16CV-21295

         Judgment Appealed From Is: Affirmed in Part, Reversed in Part, and Cause Remanded

          David. D. Donnett for Appellants

          Nicholas DiNardo for Appellee.


          WINKLER, JUDGE.

         {¶1} In this landlord-tenant dispute, a limited-liability company and its owner appeal the trial court's judgment entered in favor of a former tenant. For the reasons that follow, we determine that the trial court erred in holding the individual owner liable under the Fair Debt Collection Practices Act ("FDCPA") for filing an eviction action, and in holding the company liable for failure to return the tenant's security deposit, as well as assessing attorney's fees. We affirm the remainder of the judgment.

         Factual Background and Procedural Posture

         {¶2} Sherry Whitlock and her husband are co-owners of The Principle Group, LLC, ("The Principle Group"), an entity they formed to own residential rental properties. Stephanie C. Smith entered into a lease agreement with The Principle Group in January 2012 to rent an apartment on Vera Avenue. Smith lived at the property for four years, seemingly without issue, until January 2016, when Smith reported to the Cincinnati Metropolitan Housing Authority ("CMHA") and the Cincinnati Health Department ("CHD") that she had a leak in the bathroom of her apartment, which had caused mold to form. Whitlock repaired Smith's property in April, and the next month, Whitlock claimed that she had not received Smith's May rent. Smith reassured Whitlock that she had already mailed rent in the form of money orders, and Smith paid to have the money orders traced. A week later, Whitlock filed an action against Smith for forcible entry and detainer and money damages.

         {¶3} Smith represented herself during the eviction matter, and the magistrate ruled against her. Smith obtained counsel, who then filed objections. Fearing the uncertainty of her living situation, Smith vacated the property. On objections, Smith's counsel argued that Whitlock had falsely represented that she owned the property, when, in fact, The Principle Group had title ownership of the property. Whitlock dismissed the eviction matter without prejudice.

         {¶4} Subsequently, The Principle Group filed the instant action against Smith seeking unpaid rent and money damages. Smith filed a counterclaim, alleging that The Principle Group had wrongfully withheld her security deposit, and that The Principle Group breached the lease agreement when Whitlock prematurely filed an eviction action. Smith also filed a third-party complaint against Whitlock under the FDCPA, stemming from Whitlock's action in filing the initial eviction complaint in her own name, instead of in the name of The Principle Group. Smith also sought attorney's fees.

         {¶5} The matter proceeded to a bench trial. The trial court found that Whitlock had lied when she claimed that she did not receive Smith's May rent, thus enabling Whitlock to file an eviction action against Smith in retaliation for Smith's complaints to CMHA and CHD regarding the mold. The trial court also determined that The Principle Group's allegations that Smith had damaged the rental premises were grossly exaggerated, and that any claimed damages beyond a couple of broken toilets were the result of normal wear and tear. The trial court determined that Smith owed The Principle Group $847 for unpaid rent for May 2016, because the money orders Smith had mailed were automatically cancelled once Smith had them traced. The trial court also found Smith owed $200 for the cost to repair broken toilets. The trial court also determined that Smith could recover $1, 000 under a contract theory of recovery for The Principle Group's premature eviction action, which caused Smith and her children to be homeless.

         {¶6} The trial court determined that The Principle Group wrongfully withheld Smith's security deposit, so that Smith was entitled to damages in the amount of twice her security deposit. Finally, the trial court determined that Whitlock violated the FDCPA by falsely representing that she owned the Vera Avenue property. The trial court also awarded Smith attorney's fees. This appeal by The Principle Group and Whitlock ensued.

         FDCPA Claim Against Whitlock

         {¶7} We first address the fifth assignment of error pertaining to the trial court's decision holding Whitlock liable under the FDCPA.

         {¶8} The FDCPA is a federal statutory scheme meant to target third-party debt collectors. Taylor v. First Resolution Invest. Corp., 148 Ohio St.3d 627, 2016-Ohio-3444, 72 N.E.3d 573, ¶ 11. The FDCPA was enacted to" 'eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.'" Lewis v. ACB Business Servs., Inc., 135 F.3d 389, 398 (6th Cir.1998), quoting 15 U.S.C. 1692(e).

         {¶9} In order to establish a prima facie violation under the FDCPA, a ...

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