Diaz v. Kubler Corp.

A debt collector is not prohibited from seeking an amount expressly authorized by the agreement creating the debt or permitted by law.

In the spring of 2011, Tamara Diaz incurred a debt for dental services. Kubler Corporation (“Kubler”), a debt collection agency, took over the debt from the dental group. In May 2012, Diaz received a letter from Kubler demanding payment of $3,144 in principal, and $289.03 in interest charges. Two months later, Diaz filed suit against Kubler in federal district court alleging that the demand for interest payments violated the federal Fair Debt Collection Practices Act (“FDCPA”), and the state of California’s Fair Debt Collection Practices Act (“Rosenthal Act”). Diaz successfully moved for summary judgment and was awarded statutory damages. Kubler appealed. The Ninth Circuit held that a debt collector is not prohibited from seeking an amount “expressly authorized by the agreement creating the debt or permitted by law.” The panel held that prejudgment interest is allowable as long as the amount is certain or capable of being made certain. Here, the principal demanded was verified by Diaz’s insurer and a settlement agreement with the dental group. Diaz and Kubler also both agreed that the ten percent requested for interest was not prohibited by federal or state law. REVERSED and REMANDED.