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Swann v. Dynamic Recovery Solutions, LLC

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

November 28, 2018

SUSAN SWANN, individually and on behalf of all others similarly situated, Plaintiff,
v.
DYNAMIC RECOVERY SOLUTIONS, LLC, et al, Defendants.

          VIRGINIA EMERSON HOPKINS SENIOR UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         The Plaintiff, Susan Swann, on behalf of herself and a purported class of similarly situated individuals, claims that Defendants Dynamic Recovery Services, LLC (“DRS”) and Jefferson Capital Systems, LLC (“JCS”) violated the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692p (the “FDCPA”), when DRS sent her a letter attempting to collect on a debt owed to JCS. (Doc. 1). The case comes before the Court on the Motion to Dismiss, filed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, by DRS and JCS, for failure to state a claim upon which relief may be granted. (Doc. 16). For the reasons stated herein, the motion will be GRANTED and this case will be DISMISSED with prejudice.

         II. STANDARD

         A Rule 12(b)(6) motion attacks the legal sufficiency of the complaint. See Fed. R. Civ. P. 12(b)(6) (“[A] party may assert the following defenses by motion: (6) failure to state a claim upon which relief can be granted[.]”). The Federal Rules of Civil Procedure require only that the complaint provide “‘a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103, 2 L.Ed.2d 80 (1957) (footnote omitted) (quoting Fed.R.Civ.P. 8(a)(2)), abrogated by Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007); see also Fed. R. Civ. P. 8(a) (setting forth general pleading requirements for a complaint including providing “a short and plain statement of the claim showing that the pleader is entitled to relief”).

         While a plaintiff must provide the grounds of his entitlement to relief, Rule 8 does not mandate the inclusion of “detailed factual allegations” within a complaint. Twombly, 550 U.S. at 555, 127 S.Ct. at 1964 (quoting Conley, 355 U.S. at 47, 78 S.Ct. at 103). However, at the same time, “it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). “[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint.” Twombly, 550 U.S. at 563, 127 S.Ct. at 1969.

         “[A] court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.” Iqbal, 556 U.S. at 679, 129 S.Ct. at 1950. “While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Id. “When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id. (emphasis added). “Under Twombly's construction of Rule 8 . . . [a plaintiff's] complaint [must] ‘nudge[] [any] claims' . . . ‘across the line from conceivable to plausible.' Ibid.” Iqbal, 556 U.S. at 680, 129 S.Ct. at 1950-51.

         A claim is plausible on its face “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949. “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556, 127 S.Ct. at 1965).

         III. ALLEGATIONS IN THE COMPLAINT

         Accordingly to Swann's Complaint, “[m]ore than 6 years ago, [] Swann fell behind on paying her bills, including a debt she allegedly owed for a Verizon Wireless account.” (Doc. 1 at 3, ¶8). At some later time, JCS purchased the debt. Then, on September 5, 2017, DRS, in an attempt to collect the debt on behalf of JCS, sent a letter to Swann which read, in pertinent part:

We have been asked to contact you by our client, Jefferson Capital Systems, LLC, regarding your past due account with them. Our Client has not received payment as of the date of this letter. Therefore, the account has been placed with our office for collection.
[1.] You may resolve your account for $132.89 if payment is received before October 20, 2017. We are not obligated to renew this offer. Upon receipt and clearance of your payment, this account will be considered satisfied and closed, and a satisfaction letter will be issued or;
[2.] You may resolve your account for $147.65 in 2 payments starting on October 20, 2017. To comply with this offer, payments should be no more than 30 days apart. We are not obligated to renew this offer. Upon receipt and clearance of these two payments of $73.83, this account will be considered satisfied and closed, and a satisfaction letter will be issued or;
[3.] You may resolve your account for $162.42 in 4 payments starting on October 20, 2017. To comply with this offer, payments should be no more than 30 days apart. We are not obligated to renew this offer. Upon receipt and clearance of these four payments of $40.60, this account will be considered satisfied and closed, and a satisfaction letter will be issued or;
[4.] If you are unable to accept the above offer(s), please contact our office. We take pride in working with all consumers, regardless of your current financial position.

(Doc. 1-2 at 1). The letter also contained at “disclaimer” which stated:

The law limits how long you can be sued on a debt. Because of the age of your debt Jefferson Capital Systems, LLC will not sue you for it. If you do not pay the debt, Jefferson Capital Systems, LLC may report or continue to report it to the credit reporting agencies as unpaid. If you make a partial payment on this account it may restart the statute of limitations on this account.

(Doc. 1-2 at 1).[1]

         At the time this letter was sent to Swann, the statute of limitations for any civil action to collect the debt had passed.

         IV. ANALYSIS

         A. An Overview of the Fair Debt Collection Practices Act

         In 1977, Congress found that there was “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors” and that the “[e]xisting laws . . . [were] inadequate to protect consumers.” 15 U.S.C. § 1692(a), (b); see also 104 Am. Jur. Proof of Facts 3d Proof Under the Fair Debt Collection Practices Act §1. To respond, Congress passed the Fair Debt Collection Practices Act “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.” 15 U.S.C. §1692(e).

         “To assert a claim under the FDCPA, a plaintiff must establish the following elements: ‘(1) the plaintiff has been the object of collection activity arising from consumer debt, (2) the defendant is a debt collector as defined by the FDCPA, and (3) the defendant has engaged in an act or omission prohibited by the FDCPA.'” Buckentin v. Sun Trust Mortg. Corp., 928 F.Supp.2d 1273, 1294 (N.D. Ala. 2013) (Proctor, J.) (citing sources).

         The FDCPA prohibits certain conduct. “Section 1692e of the FDCPA provides that ‘[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.'” Crawford v. LVNV Funding, LLC, 758 F.3d 1254, 1258 (11th Cir. 2014) (quoting 15 U.S.C. § 1692e). The statute goes on to give examples of specific conduct that violates the act. See 15 U.S.C. § 1692e (1)-(16). “Section 1692f states that ‘[a] debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt.'” Crawford, 758 F.3d at 1258 (quoting 15 U.S.C. § 1692f). Similarly, this section also gives specific examples of conduct violating the law. See 15 U.S.C. § 1692f(1)-(8).[2] “To enforce the FDCPA's prohibitions, Congress equipped consumer debtors with a private right of action, rendering ‘debt collectors who violate the Act liable for actual damages, statutory damages up to $1, 000, and reasonable attorney's fees and costs.'” Crawford, 758 F.3d at 1258 (citing sources).

         To understand actions under the FDCPA requires knowing the “least sophisticated consumer.” See LeBlanc v. Unifund CCR Partners, 601 F.3d 1185, 1193 (11th Cir. 2010). This is because “[t]he inquiry is not whether the particular plaintiff-consumer was deceived or misled; instead, the question is ‘whether the ‘least sophisticated consumer' would have been deceived' by the debt collector's conduct.” Crawford, 758 F.3d at 1258. “The ‘least-sophisticated consumer' standard is consistent with basic consumer-protection principles.” LeBlanc, 601 F.3d at 1194 (citing sources). “‘The least sophisticated consumer' can be presumed to possess a rudimentary amount of information about the world and a willingness to read a collection notice with some care.” Id. (quoting another source) (internal quotation marks omitted). “However, the test has an objective component in that ‘[w]hile protecting naive consumers, the standard also prevents liability for bizarre or idiosyncratic interpretations of collection notices by preserving a quotient of reasonableness.'” Id. (quoting another source).

         “Generally, ‘whether the 'least sophisticated consumer' would construe [the conduct] as deceptive is a question for the jury.'” Miljkovic v. Shafritz & Dinkin, P.A., 791 F.3d 1291, 1307 n.11 (11th Cir. 2015) (quoting Jeter v. Credit Bureau, 760 F.2d 1168, 1178 (11th Cir. 1985)); see also Buchanan v. Northland Group, Inc., 776 F.3d 393, 397 (6th Cir. 2015) (noting that in most cases “whether a letter is misleading raises a question of fact”). “Courts do not lightly reject fact-based claims at the pleading stage.” Buchanan, 776 F.3d at 397. “[This Court] may do so only after drawing all reasonable inferences from the allegations in the complaint in the plaintiff's favor and only after concluding that, even then, the complaint still fails to allege a plausible theory of relief.” Id. (citing Fed.R.Civ.P. 12(b)(6); Ashcroft v. Iqbal, 556 U.S. 662, 677-79 (2009)).

         B. The Liability of JCS

         As noted above, each of the Defendants can be liable for a violation of the FDCPA only if they are “debt collectors” as defined by the FDCPA. Buckentin, 928 F.Supp.2d at 1294. The Complaint affirmatively alleges that JCS “was acting as a debt collector.” (Doc. 1 at 1, ¶5). The statute defines the term “debt collector” as “any person . . . who regularly collects . . . debts . . . owed or due another.” 15 U.S.C.A. § 1692a(6). Fairly recently, a unanimous Supreme Court held that a purchaser of a defaulted debt, like JCS, who tries to collect it for itself, is not a debt collector under the Act. See, Henson v. Santander Consumer USA Inc., 137 S.Ct. 1718, 1721, 198 L.Ed.2d 177 (2017) (“[T]he Act defines debt collectors to include those who regularly seek to collect debts ‘owed ... another.' And by its plain terms this language seems to focus our attention on third party collection agents working for a debt owner-not on a debt owner seeking to collect debts for itself. Neither does this language appear to suggest that we should care how a debt owner came to be a debt owner-whether the owner originated the debt or came by it only through a later purchase.”). However, this issue was not raised by the parties, and the Supreme Court's opinion in Henson did not address “related” ways in which JCS might still qualify as a debt collector under the Act.[3] Accordingly, and in light of the fact that the Complaint alleges that JCS “was acting as a debt collector” (doc. 1 at 1, ¶5), the Court will not hold, at this time, that JCS is not a debt collector.

         That being said, Swann's allegations all stem from a letter sent by DRS. Other than conclusory statements regarding the “defendants” unlawful conduct, the Complaint contains no facts which plausibly establish that JCS did anything wrong. Again, however, this point was not raised by the parties. Accordingly, if the Court were to dismiss JCS on this basis, it would be doing so sua sponte. “A district court abuses its discretion when it dismisses an action sua sponte without ‘provid[ing] the plaintiff with notice of its intent to dismiss or an opportunity to respond,' unless amendment ‘would be futile' or ‘the complaint is patently frivolous.'” Brinson v. Welsh, 709 Fed.Appx. 582, 584 (11th Cir. 2017) (quoting Tazoe v. Airbus S.A.S., 631 F.3d 1321, 1335 (11th Cir. 2011) and Surtain v. Hamlin Terrace Found., 789 F.3d 1239, 1248 (11th Cir. 2015)). In light of this standard, the Court will not dismiss JCS on these grounds, at this time.

         C. The Liability for the Representations in the Letter from DRS

         In both counts of her Complaint Swann alleges that

[a]lthough Defendants attempted to provide a disclaimer that the debt was time-barred, that disclaimer was ineffective because: a) they failed to foreclose the possibility that DRS would/could not sue on the debt; b) they failed to foreclose that [JCS] could not legally sue, rather than that [JCS] had simply chosen not to do so; c) they falsely claimed that payment would result in benefits.”

(Doc. 1 at 5, ¶18; doc. 1 at 6, ¶23) (emphasis added). In the next paragraph of each count, Swann states that “[t]hese” are “materially false or misleading statements” (Count One) and “materially unfair or unconscionable means” (Count Two) which “would lead any consumer to believe that they had to pay this debt to avoid being sued, credit reported or having to pay the full amount at some point in the future[.]” (Doc. 1 at 5, ¶19; doc. 1 at 6, ¶24) (emphasis added). For these reasons, Swann contends that the ...


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