On February 15, 2019, Supreme Court of California held that, normally, a declarant for Portfolio Recovery Associates, LLC (or anyone else for that matter) utilizing Civil Code § 98, must be physically available for personal service at the address provided in the declaration.
The Issue in Context
Most collection cases in California are “limited jurisdiction” cases, meaning that they are for less than $25,000. These cases are subject to some special procedures specified by the California Code of Civil Procedure (CCP) at sections 90 through 100. supposedly intended to limit the cost of such cases.
At issue in this case, CCP § 98 provides a procedure whereby witness testimony can be used at trial even if it is submitted via written declaration instead of the witness testifying live at trial.
Normally, trial testimony has to be in-person, and the submission of such a written declaration would be barred by the rule against hearsay codified in the California Evidence Code at §1200.
However, even in a limited jurisdiction case, cost is not the only issue. There are limits built-in to CCP § 98, with which a witness must comply in order for the declaration to be admissible. One of those rules, is that the witness (the declarant) has to provide an address where he can be served with “process” by the party against whom the testimony is offered. Also, that address has to be within 150 miles of the court.
In recent years, institutional debt collectors have routinely formulaic CCP § 98 declarations signed by low level employees supposedly establishing the facts needed to prove the debt collector’s case. There declarations are often problematic for many reasons. The specific issue addressed in Meza v. Portfolio Recovery Associates, LLC is whether the declarant on a § 98 declaration has to be physically available at the address provided on the declaration, or whether the address can be that of a mere proxy, such as a law firm or some other agent.
Normally, in order to obligate someone to testify at trial, they have to be personally served with a subpoena. Therefore Meza argued that CCP § 98 requires providing an address where personal service can be accomplished.
Portfolio Recovery Associates, LLC and the debt collection industry generally, is interested in arguing that the “service of process” required by CCP § 98 does not necessarily mean the type of service that is used to obligate a witness to appear at trial. They state that service of process as used in CCP § 98 might also refer to looser service requirements such as those applicable to serving a lawsuit (summons) which is also called “service of process” and which can sometimes be served on a proxy.
Meza v. Portfolio Recovery Associates, LLC was placed in front of the Supreme Court of California by a circuitous route.
Initially, Portfolio Recovery Associates, LLC, then represented by the collection law firm Hunt & Henriques, sued Meza in California Superior Court for $11,000 in a run of the mill collection case. During that case, Portfolio Recovery Associates, LLC submitted a CCP § 98 declaration signed by an individual named Colby Eyre. The address for service provided in the CCP § 98 declaration, was the address of Hunt & Henriques, the law firm, even though Mr. Eyre would certainly not have physically been at that law firm to accept service personally.
Portfolio Recovery Associates, LLC dismissed the case a few days prior to trial, so there was never a determination one way or the other at trial as to whether the declaration was admissible.
However, that was not the end of the story. Meza then sued Portfolio Recovery Associates, LLC in federal court, claiming that the procedure of using CCP § 98 declarations when the declarant was not physically available for service of process at the stated address, was a violation of the Fair Debt Collection Process Act, and constituted a misrepresentation in the course of attempting to collect a debt.
Portfolio Recovery Associates, LLC brought a motion for summary judgment. The federal district court ruled against Meza on summary judgment, and said that Portfolio Recovery Associates, LLC was within its rights to use the CCP § 98 procedure the way it did, and that availability for personal service was not required by the statute.
Meza appealed the district court’s ruling to the federal Court of Appeals for the Ninth Circuit. In turn, the Ninth Circuit, using a little-used procedure, punted the current issue to the Supreme Court of California because it is an issue of California state law, and the Ninth Circuit sought guidance concerning how the Supreme Court of California would interpret the law.
Meza argued that the “service of process” required by CCP § 98 had to refer to personal service, because personal services is required in order to compel someone to show up at trial.
Portfolio Recovery Associates, LLC argued that in an earlier draft of the legislation that become CCP § 98, there used to be language requiring the declarant to be available for a “subpoena to trial” and that language did not make it into the final version of the statute, indicating the legislature decided against such a requirement.
However, the court decided in Meza’s favor noting that allowing testimony via declaration was qualified by the safeguard of ensuring that the other side had the ability to cross-examine that witness, so the type of service required would have to be the type of service of process that would in fact compel the attendance of a witness. Normally, that means personal service (although there are exceptions).
Also of potential significance, Portfolio Recovery Associates, LLC also argued that Meza had “waived” any argument about the failure to provide a proper service address, because Meza never tried to serve Eyre at the address provided. The court, by ruling against Portfolio Recovery Associates, LLC evidently rejected this position.