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Rhineheart v. Diversified Central, Inc.

United States District Court, N.D. Alabama, Middle Division

January 11, 2018

BRITTANY CRANE RHINEHART, Plaintiff,
v.
DIVERSIFIED CENTRAL, INC., DIVERSIFIED CONSULTANTS, INC., and JEFFERSON CAPITAL SYSTEMS, INC., Defendants.

          MEMORANDUM OPINION

          VIRGINIA EMERSON HOPKINS UNITED STATES DISTRICT JUDGE.

         This civil action arises out debt collection activities by Diversified Central, Inc. (“Diversified Central”), Diversified Consultants, Inc. (“Diversified Consultants”)[1], and Jefferson Capital Systems, LLC (“Jefferson Capital”). The Plaintiff, Brittany Crane Rhinehart, alleges that through their actions, Jefferson Capital and Diversified Consultants violated the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1986 (“RICO”) (Counts One and Two). Rhinehart also alleges that Diversified Consultants violated the federal Telephone Consumer Protections Act, 47 U.S.C. § 227 (“TCPA”) (Count Three) and the federal Fair Debt Collections Practices Act, 15 U.S.C. § 1692-1692p (“FDCPA”) (Count Five). Finally, the Plaintiff alleges that all Defendants are liable for the Alabama state law claims of civil conspiracy (Count Four) and wantonness (Count Six).

         The case comes before the Court on the Defendants' Motion To Dismiss, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, for failure to state a claim upon which relief may be granted (the “Motion”). (Doc. 14). For the reasons stated herein, the Motion will be GRANTED.

         I. STANDARD

         Generally, the Federal Rules of Civil Procedure require only that the complaint provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a). However, to survive a motion to dismiss brought under Rule 12(b)(6), a complaint must “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) (“Twombly”).

         A claim has facial plausibility “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556) (“Iqbal”). That is, the complaint must include enough facts “to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555 (citation and footnote omitted). Pleadings that contain nothing more than “a formulaic recitation of the elements of a cause of action” do not meet Rule 8 standards, nor do pleadings suffice that are based merely upon “labels or conclusions” or “naked assertion[s]” without supporting factual allegations. Id. at 555, 557 (citation omitted).

         Once a claim has been stated adequately, however, “it may be supported by showing any set of facts consistent with the allegations in the complaint.” Id. at 563 (citation omitted). Further, when ruling on a motion to dismiss, a court must “take the factual allegations in the complaint as true and construe them in the light most favorable to the plaintiff.” Pielage v. McConnell, 516 F.3d 1282, 1284 (11th Cir. 2008) (citing Glover v. Liggett Group, Inc., 459 F.3d 1304, 1308 (11th Cir. 2006)).

         II. ALLEGATIONS IN THE COMPLAINT

         The First Amended Complaint alleges that Rhinehart “has received, and continues to receive letters and telephone calls from Diversified Consultants, Diversified Capital and/or Jefferson Capital regarding alleged monies owed to Jefferson Capital.” (Doc. 9 at 3, ¶5). She contends that in these letters “Jefferson Capital purposely and willfully misrepresented to Plaintiff Rhinehart that Defendant Jefferson Capital was a creditor to Plaintiff Rhinehart” when it was not. (Doc. 9 at 7, ¶32). She also contends that “Defendant Diversified Consultants [falsely] alleged in these letters that Jefferson Capital was an original creditor of Plaintiff Rhinehart.” (Doc. 9 at 8, ¶40; see also doc. 9 at 8, ¶41). Rhinehart contends that both Jefferson Capital and Diversified Consultants knew the aforementioned statements in their letters were false, and purposefully made them in order to convince the Plaintiff to pay them money, which she did. (Doc. 9 at 7, ¶¶32, 33, 35; doc. 9 at 7 ¶¶44, 45, 46, 47, 48).

         In addition, the Plaintiff alleges that, between December 27, 2016, and March 2, 2017, Diversified Consultants used an “automatic telephone-dialing machine” to call the Plaintiff's “personal telephone” 34 times in an effort to collect money from her. (Doc. 9 at 10-17, ¶¶56-95). Considering the Amended Complaint as whole, it is clear that by “personal telephone, ” the Plaintiff means “personal cell phone.” (See doc. 9 at 20, ¶109 (stating that Diversified Consultants used “an automatic telephone dialing system in placing calls to Plaintiff Rhinehart's cellular telephone.”)). The Amended Complaint also alleges that “Diversified Consultants' automatic telephone dialing machine randomly dialed Plaintiff Rhinehart's employer's telephone number on multiple occasions.” (Doc. 9 at 11, ¶59). The Plaintiff alleges that these calls continued despite her “multiple” requests to Diversified Consultants to stop. (Doc. 9 at 17, ¶¶97-98).

         Attached to the Amended Complaint are two letters. The first[2], dated September 28, 2016, is from Diversified Consultants, Inc. (Doc. 9-2 at 1). It notes the “Current Creditor” as “Jefferson Capital Systems, LLC, ” notes the “Debt Description” as “Verizon Wireless, ” and states that the “Current Balance” is $1, 534.14. (Doc. 9-2 at 1). The body of that letter reads:

This Notice is to inform you that Jefferson Capital Systems, LLC is the new owner of the above-referenced account. Diversified Consultants, Inc, will service your account on the owner's behalf.
Unless you notify this office within 30 days after receiving this notice that you dispute the validity of this debt, or any portion thereof, this office will assume the debt is valid. If you notify this office in writing within 30 days from receiving this notice that you dispute the validity of this debt, or any portion thereof, this office will obtain verification of the debt or obtain a copy of a judgment and mail you a copy of such judgment or verification. If you request of this office in writing within 30 days after receiving this notice, this office will provide you with the name and address of the original creditor, if different from the current creditor.
Calls to or from this company may be monitored or recorded.
Diversified Consultants[, ] Inc. Is doing business as Diversified Central[, ] Inc. in the state of Alabama.
This is an attempt to collect a debt. Any information will be used for that purpose. This communication is from a debt collector.

(Doc. 9-2 at 1).

         The second letter is dated February 10, 2017, and is also from Diversified Consultants, Inc. (Doc. 9-1 at 1). It notes the “Current Creditor” as “Jefferson Capital Systems, LLC, ” notes the “Debt Description” as “Verizon Wireless, ” and states that the “Current Balance” is $1, 474.14. (Doc. 9-1 at 1). The body of that letter reads:

Our attempts to contact you regarding your past due account have been unsuccessful. Please contact us to discuss this account.
Calls to or from this company may be monitored or recorded.
Diversified Consultants[, ] Inc. Is doing business as Diversified Central[, ] Inc. in the state of Alabama.
This is an attempt to collect a debt. Any information will be used for that purpose. This communication is from a debt collector.

(Doc. 9-1 at 1).

         III. ANALYSIS

         A. The RICO Claims (Counts One and Two)

         The Eleventh Circuit has stated:

Under RICO, it is illegal “for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity.” 18 U.S.C. § 1962(c). Four elements must be proven in a RICO case: “(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.” Williams v. Mohawk Indus., Inc., 465 F.3d 1277, 1282 (11th Cir.2006) (per curiam) (internal quotation marks omitted). “A pattern is established by at least two acts of racketeering activity the last of which occurred within ten years ... after the commission of a prior act of racketeering activity.” McCaleb v. A.O. Smith Corp., 200 F.3d 747, 750 (11th Cir.2000) (alteration and internal quotation marks omitted). The civil RICO provision permits a private plaintiff “injured in his business or property by reason of a violation of section 1962” to recover treble damages. § 1964(c).

Lehman v. Lucom, 727 F.3d 1326, 1330 (11th Cir. 2013)[3]. The Defendants argue that the Plaintiff has failed to plausibly allege a “pattern of racketeering activity” of an “enterprise.”

         1. Pattern of Racketeering Activity

         “Racketeering activity” includes certain criminal predicate acts defined by statute, including conduct “relating to mail fraud.” 18 U.S.C. §1961(1)(B); 18 U.S.C. §1341. In this case, the Plaintiff alleges that Jefferson Capital sent letters through the U.S. mail which “purposely and willfully misrepresented to Plaintiff Rhinehart that Defendant Jefferson Capital was a creditor to Plaintiff Rhinehart" when it was not. (Doc. 9 at 7, ¶32). She also contends that “Defendant Diversified Consultants [falsely] alleged in these letters that Jefferson Capital was an original creditor of Plaintiff Rhinehart” when it was not. (Doc. 9 at 8, ¶40; see also doc. 9 at 8, ¶41) (emphasis added). According to the Plaintiff, these representations were made in a successful attempt to get the Plaintiff to pay on the alleged debt.

         The Supreme Court has stated:

Mail fraud . . . occurs whenever a person, “having devised or intending to devise any scheme or artifice to defraud, ” uses the mail “for the purpose of executing such scheme or artifice or attempting so to do.” § 1341. The gravamen of the offense is the scheme to defraud, and any “mailing that is incident to an essential part of the scheme satisfies the mailing element, ” Schmuck v. United States, 489 U.S. 705, 712, 109 S.Ct. 1443, 103 L.Ed.2d 734 (1989) (citation and internal quotation marks omitted), even if the mailing itself “contain[s] no false information, ” id., at 715, 109 S.Ct. 1443.

Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 647, 128 S.Ct. 2131, 2138, 170 L.Ed.2d 1012 (2008). In the instant case, the Plaintiff does not allege a scheme to defraud. The basis for her claim is not that money was not owed to Jefferson Capital, as an assignee of the Verizon debt, but instead that Jefferson Capital should not have been identified in the letters as a “creditor” because, under the FDCPA, “creditor” is defined as

“any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of ...

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