Morrow v. Smith Rouchon and Associates Inc.

          MEMORANDUM OPINION

          ABDUL K. KALLON UNITED STATES DISTRICT JUDGE.

         Sara Morrow brings claims under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., against Smith Rouchon and Associates, Inc. (SRA), contending that SRA improperly attempted to collect a debt she discharged in bankruptcy. See doc. 1. Briefly, Morrow filed for bankruptcy under Chapter 13 and later Chapter 7, discharging her debts-including the debt she allegedly owed to the Franklin County Solid Waste for garbage collection services. Id. at 2. Morrow claims SRA violated the FDCPA when, despite having received notice of her bankruptcy filing, SRA sent Morrow a collection letter demanding payment of fees to Franklin County Solid Waste. Id. at 3. Specifically, Morrow alleges SRA violated (1) § 1692e by demanding payment of a debt that is not owed (Count I), (2) § 1692c(c) by continuing to seek collection from Morrow after receiving direction to cease communications, and (3) § 1692c(a)(2) by communicating with a consumer SRA knew to be represented (Count III). Id. at 3-5. Before the court is SRA's motion for judgment on the pleadings.^[1] Doc. 11. The motion is fully briefed, doc. 12; 19; 20, and ripe for review. Because the charges Morrow owes to Franklin County Solid Waste are not consumer debts within the meaning of the FDCPA, Morrow fails to state a claim and SRA's motion for judgment on the pleadings is due to be granted.

         I. STANDARD OF REVIEW

         “Judgment on the pleadings is appropriate where there are no material facts in dispute and the moving party is entitled to judgment as a matter of law.” Cannon v. City of W. Palm Beach, 250 F.3d 1299, 1301 (11th Cir. 2001). In ruling on the motion, the court “must accept the facts alleged in the complaint as true and view them in the light most favorable to the nonmoving party.” Id. A Rule 12(c) motion for judgment on the pleadings requires the same standard of analysis as that of a Rule 12(b)(6) motion to dismiss. Griffin v. SunTrust Bank, Inc., 157 F.Supp.3d 1294, 1295 (N.D.Ga. 2015). As such, to survive a motion for judgment on the pleadings, “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation and internal quotation marks omitted); see also Losey v. Warden, 521 Fed.Appx. 717, 719 (11th Cir. 2013) (applying the Iqbal standard to an appeal concerning a Rule 12(c) judgment on the pleadings). In other words, the plaintiff must “plead[] 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 (citation omitted). The complaint must establish “more than a sheer possibility that a defendant has acted unlawfully.” Id. Ultimately, this inquiry is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679.

         II. RELEVANT FACTUAL AND PROCEDURAL BACKGROUND^[2]

         SRA is a debt collector. Docs. 1 at 1-2; 1-6. In February 2016, Morrow filed for Chapter 13 bankruptcy, discharging a debt she allegedly owed to Franklin County Solid Waste. Id. at 2. Her petition listed SRA as a creditor, acknowledging a debt of $200.00, see doc. 1-1, and the bankruptcy court sent SRA a Notice of Chapter 13 Bankruptcy Case in late February, doc. 1-2 at 1. SRA subsequently filed a claim for payment in Morrow's bankruptcy. Doc. 1-3. Morrow converted her bankruptcy to Chapter 7 in April 2019, doc. 1 at 2, again listing her alleged $200.00 debt to Franklin County Solid Waste and SRA, doc. 1-4, prompting the bankruptcy court to send SRA a Notice of Chapter 7 Bankruptcy Case, doc. 1-5. Despite these notices, SRA sent Morrow a collection letter in June 2019 demanding payment of an alleged $136.00 debt to Franklin County Solid Waste. Docs. 1 at 3; 1-6.

         III. ANALYSIS

         SRA argues principally (1) that Morrow is judicially estopped or lacks standing under FDCPA because her claim against SRA arose before the discharge of her Chapter 7 bankruptcy case, ^[3] docs. 11 at 7-14; (2) that Morrow's claims are core bankruptcy proceedings over which this court lacks jurisdiction, ^[4] doc. 20 at 2- 5, and (3) that the charge at issue in Morrow's complaint is a tax, not a consumer debt, and therefore does not fall under the purview of FDCPA, ^[5] docs. 11 at 14-16; 20 at 5-9. The court agrees with the last contention.

         To state a FDCPA claim, Morrow must allege (1) that she was subjected to a collection attempt, (2) that SRA is a debt collector, and (3) that SRA violated the FDCPA. Swann v. Dynamic Recovery Sols., LLC., No. 4:18-CV-1000-VEH, 2018 WL 6198997, at *3 (N.D. Ala. Nov. 28, 2018). The parties do not dispute that SRA is a debt collector and subjected Morrow to a collection attempt for the garbage collection debt while she was in bankruptcy proceedings. See docs. 1; 11; 12; 19; 20. At issue is the third prong. More specifically, whether SRA is correct that the FDCPA does not apply to the charges at issue because those charges are taxes, not consumer debts. Docs. 11 at 14-16; 20 at 5-9.

         To state a plausible FDCPA claim, “a plaintiff must make a threshold showing that the money being collected qualifies as a debt.” Oppenheim v. I.C. System, Inc., 627 F.3d 833, 836-37 (11th Cir. 2010). A consumer debt is “any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes.” § 1692a(5). “A transaction under the FDCPA must involve some kind of business dealing or other consensual obligation.” Hawthorne v. Mac Adjustment, Inc., 140 F.3d 1367, 1370-71 (11th Cor. 1998). Stated simply, a debt under the FDCPA is an obligation arising from a contract. Agrelo v. Affinity Mgmt. Servs., LLC, 841 F.3d 944, 950 (11th Cir. 2016).

         The issue before the court is whether Morrow's obligation to pay her county for garbage removal services is a municipal tax that falls outside the purview of the FDCPA, as SRA alleges, docs. 11 at 14-16; 20 at 5-9, or is a consumer debt, as Morrow contends, doc. 19 at 11-15. Several circuits have held that the FDCPA does not encompass taxes, and the district courts in this circuit that have addressed this issue have reached a similar conclusion.^[6] For the reasons below, because the court concludes that the garbage collection fees are mandatory, rather than contractual, and are therefore more akin to a tax, the court joins these other courts in finding that efforts to collect a “tax” are not covered by the FDCPA.

         Two elements determine whether Morrow's obligation is better defined as a tax or a consumer debt: (1) whether the obligation arose from a contract, and (2) whether the service rendered was “primarily for personal, family, or household purposes.” § 1692a(5); See St. Pierre v. Retrieval-Masters Creditors Bureau, Inc., 898 F.3d 351 (3d. Cir. 2018). Where charges arise from contractual agreements between the debtor and the service provider, they constitute consumer debts under the FDCPA.^[7] However, automatic fees that require no affirmative consent from the obligee fail the transactional criterion for FDCPA consumer debts.^[8] And, where, as here, municipal services provide for the general welfare, they do not meet the FDCPA statutory “personal use” requirement.^[9] In that respect, Morrow can only pursue her claim if her obligation to Franklin County is more appropriately deemed a debt. Morrow cannot make such a showing.

         Alabama cities and towns have the right to establish and maintain garbage disposal systems and “to fix and collect such reasonable fees as may be necessary” for that maintenance. Ala. Code 1975 § 11-47-135. Individuals who refuse to use municipal garbage services face jail for up to six months and a maximum fine of $500. Ala. Code 1975 § 11-45-1. Under the Solid Wastes and Recyclable Materials Management Act, “[e]very person . . . shall participate in and subscribe to . . . [a garbage collection] service unless granted a certificate of exception.” Ala. Code 1975 § 22-27-3(a)(2). Without this certificate of exception, garbage collection services are mandatory. Martin v. City of Trussville, 376 So.2d 1089, 1093 (Ala. Civ. App. 1979). Residents seeking a certificate of exception must file an application with their county health officer explaining how they will comply with sanitation rules and regulations set by state and county boards of health. Id. at § 22-27-3(g). The county health officer then performs an investigation of the proposed plan and either issues or denies the certificate of exception. Id.

         A review of the Alabama Code and cases show that the services Morrow received and the fees she owed Franklin County were mandatory, rather than contractual. Unlike the plaintiffs in Pollice, Piper, and St. Pierre, ^[10] Morrow did not have the option to forego the service or pay based on how much she chose to use it.^[11] Garbage collection services and the accompanying fees are automatically assessed against residents of Alabama. Thus, the fees Morrow incurred and which SRA sought to collect were not the result of a transactional, consensual dealing between Morrow and the municipal government-they were imposed upon her as a consequence of her residency in the state. Therefore, Morrow's obligation to the county did not arise from a contract. Because Morrow's obligations to Franklin ...