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Tanner v. Loan Science, LLC

United States District Court, W.D. Texas, Austin Division

July 21, 2017

TIFFANY TANNER, Plaintiff,
v.
LOAN SCIENCE, LLC, Defendant/Third-Party Plaintiff,
v.
RISK MANAGEMENT RESOURCES, INC., Third-Party Defendant.

          ORDER

          ROBERT PITMAN UNITED STATES DISTRICT JUDGE

         Before the Court is Third-Party Plaintiff Loan Science, LLC's Traditional and No Evidence Motion for Summary Judgment, filed June 23, 2017. (Dkt. 41). For the reasons that follow, the Court finds that the motion should be granted in part.

         BACKGROUND

         On June 1, 2016, Plaintiff Tiffany Tanner filed this action against Defendant and Third-Party Plaintiff Loan Science, LLC (“Loan Science”). (See Compl., Dkt. 1). Loan Science owned Plaintiff's student loan debt and was engaged in efforts to collect on her debt following her default. Plaintiff alleged that Loan Science violated the federal Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227 et seq., by calling her up to 158 times after she withdrew her consent to be called on June 20, 2014.

         On August 19, 2016, Loan Science filed a third-party complaint naming Risk Management Resources, Inc. (“RMR”) as a third-party defendant. (Dkt. 14). Loan Science had contracted with RMR to conduct its collection activities. Pursuant to the contract between the two entities, Loan Science was to provide client information to RMR or its agent, and RMR or its agent would undertake collection efforts and provide account updates to Loan Science. (See Service Agreement, Dkt. 41-1, at 2). RMR eventually contracted with a third party, Mercantile Adjustment Bureau (“Mercantile”) to perform the collection services. (Mercantile Agreement, Dkt. 41-1, at 153). The contract between Loan Science and RMR additionally required RMR to manage Mercantile's performance to ensure the best results for Loan Science, implement Loan Science's collection strategy, and to engage in an ongoing process of evaluating and improving collection operations. (Service agreement, 41-1, at 2). Additionally, the contract required RMR and Mercantile to comply with all federal and state laws and regulations governing the collection of debts. (Id. at 4).

         Each party agreed to indemnify the other under the contract. RMR and Mercantile were to indemnify Loan Science for all losses that directly resulted from their “negligence, willful misconduct, or performance or failure to perform” under the contract. (Id.). This indemnification was contingent upon Loan Science's warranting that “to the best of its knowledge the information furnished by it to [Mercantile] regarding the identity of the debtor or any other such information regarding the debtor is accurate as of the date furnished.” (Id.). Loan Science agreed to indemnify RMR and Mercantile for any losses sustained as a result of its provision of inaccurate debtor information. (Id.).

         Loan Science asserts that the indemnification clause requires RMR to indemnify it for the losses it sustained as a result of Plaintiff's litigation. More specifically, Loan Science argues that RMR and Mercantile failed to perform adequately under the relevant agreements because Mercantile failed to make note of Plaintiff's “do not call” request and did not notify Loan Science of the request. This failure to convey the information resulted in Loan Science's continuing to provide Plaintiff's account information to Mercantile in the “Daily Dialer File”[1] to continue collection activities. This in turn resulted in Mercantile's continuing to call Plaintiff, as seemingly instructed by Loan Science, notwithstanding her “do not call” request, giving rise to Plaintiff's cause of action.

         LEGAL STANDARD

         Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure only “if the movant shows there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A dispute is genuine only if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254 (1986). “A fact issue is ‘material' if its resolution could affect the outcome of the action.” Poole v. City of Shreveport, 691 F.3d 624, 627 (5th Cir. 2012).

         The party moving for summary judgment bears the initial burden of “informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “[T]he moving party may [also] meet its burden by simply pointing to an absence of evidence to support the nonmoving party's case.” Boudreaux v. Swift Transp. Co., 402 F.3d 536, 544 (5th Cir. 2005). The burden then shifts to the nonmoving party to establish the existence of a genuine issue for trial. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 585-87 (1986); Wise v. E.I. Dupont de Nemours & Co., 58 F.3d 193, 195 (5th Cir. 1995). After the non-movant has been given the opportunity to raise a genuine factual issue, if no reasonable juror could find for the non-movant, summary judgment will be granted. Miss. River Basin Alliance v. Westphal, 230 F.3d 170, 175 (5th Cir. 2000). The court will view the summary judgment evidence in the light most favorable to the non-movant. Rosado v. Deters, 5 F.3d 119, 123 (5th Cir. 1993).

         DISCUSSION

         Loan Science and RMR appear to be in agreement that the indemnification clause of their contract is valid and enforceable. They disagree, however, on whether the facts of this case have triggered a duty for RMR to indemnify Loan Science for losses sustained in this litigation. The issues thus requiring resolution are: (1) whether RMR engaged in negligence, willful misconduct, or failed to perform under the contract; (2) if so, whether indemnification is excused because of Loan Science's failure to provide RMR with accurate information; and (3) whether the losses for which Loan Science seeks indemnification resulted directly from RMR's wrongdoing.

         1. RMR's Wrongdoing

         The failure of RMR and its agent, Mercantile, to perform under the contract with Loan Science is clear. As noted above, the contract imposed upon RMR and Mercantile an independent obligation to comply with federal law governing debt collection. The evidence establishes that Mercantile received Plaintiff's “do not call” request, yet immediately disregarded the request. (Mot. Summ. J. ...


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