Harvey v. Great Seneca Financial Corp.
| Decision Date | 06 July 2006 |
| Docket Number | No. 05-3970.,05-3970. |
| Citation | 453 F.3d 324 |
| Parties | Wendelyn HARVEY, Plaintiff-Appellant, v. GREAT SENECA FINANCIAL CORPORATION et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Stephen R. Felson, Cincinnati, Ohio, for Appellant. Michael D. Slodov, Javitch, Block, & Rathbone, Cleveland, Ohio, for Appellees.
ON BRIEF:
Stephen R. Felson, Cincinnati, Ohio, Steven C. Shane, Bellevue, Kentucky, for Appellant. Michael D. Slodov, Javitch, Block, & Rathbone, Cleveland, Ohio, for Appellees.
Before: GILMAN and GRIFFIN, Circuit Judges; DUGGAN, District Judge.*
This is a lawsuit brought under the Fair Debt Collection Practices Act (FDCPA) against a debt collector, Great Seneca Financial Corporation (Seneca), and its law firm, Javitch, Block & Rathbone, L.L.P. (Javitch). Wendelyn Harvey claimed that Seneca and Javitch violated both the FDCPA and the Ohio Consumer Sales Practices Act (OCSPA) by filing "a lawsuit to collect a purported debt without the means of proving the existence of the debt, the amount of the debt, or that Seneca owned the debt." Seneca and Javitch raised a number of defenses to Harvey's suit, including the failure to state a claim, the protection provided by the First Amendment, and the Noerr-Pennington doctrine. The district court held that Harvey's allegations failed to state a claim under the FDCPA. It then declined to exercise supplemental jurisdiction over Harvey's OCSPA claim once her federal claim had been dismissed. For the reasons set forth below, we AFFIRM the judgment of the district court.
In January of 2004, Javitch filed a "Complaint for Money" to collect a debt that Harvey allegedly owed Seneca. The complaint alleged that Harvey owed Seneca a total of $12,765.72 on two separate accounts. Seneca claimed that "[a]lthough due demand has been made, [Harvey] has failed to liquidate the balance due and owing." Attached to the complaint were two exhibits that listed the account number, the balance, and the statement closing date for each account.
Based on Seneca's Complaint for Money, Harvey filed suit in January of 2005, alleging violations of both the FDCPA and the OCSPA. Harvey's factual allegations were sparse. She alleged that after being served with the Complaint for Money, she She therefore claimed that Seneca and Javitch filed "a lawsuit to collect a purported debt without the means of proving the existence of the debt, the amount of the debt, or that Seneca owned the debt."
Harvey contended in her complaint that Seneca's filing of a state-court collection action knowing that it "had no documentation" to prove the debt constituted a deceptive, unfair, and unconscionable debt-collection practice. She specifically cited violations of 15 U.S.C. § 1692d, which prohibits conduct that has the consequence of harassing, oppressing, and abusing a debtor, and 15 U.S.C. § 1692e(10), which forbids using deceptive means to collect a debt.
Seneca and Javitch responded to Harvey's complaint by filing a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. They argued that (1) a lack of available documentation at the time the Complaint for Money was filed is not actionable under the FDCPA, (2) the filing of the Complaint for Money is protected by the common law doctrine of immunity during judicial proceedings, the First Amendment, and the Noerr-Pennington doctrine (which protects litigants who seek redress of wrongs through judicial proceedings), and (3) the district court should decline to exercise jurisdiction over Harvey's OCSPA claims. Seneca and Javitch attached to their motion to dismiss the record of their debt-collection action, which included the docket sheet, the Complaint for Money, Harvey's answer to the complaint, Harvey's request for the production of documents, Seneca's motion for an extension of time to respond to the production of documents, Harvey's motion to compel production, and Seneca's dismissal of the case.
The district court granted Seneca and Javitch's motion to dismiss for failure to state a claim and therefore did not reach the merits of their other defenses. It held that Seneca and Javitch had not engaged in deceptive behavior, and that the filing of a complaint without the supporting documentation in hand did not constitute harassment under the FDCPA. After dismissing Harvey's FDCPA claims, the district court declined to exercise jurisdiction over Harvey's remaining state-law claim under the OCSPA.
On appeal, Harvey asserts that, if permitted, she can prove the following facts which she argues constitute a claim under the FDCPA:
1. Seneca purchases extremely old, defaulted debt in batches of as many as one million accounts at a time, for which it pays pennies on the dollar.
2. This type of debt is transferred electronically; the seller does not provide paperwork which would be considered satisfactory evidence of the debt if submitted to a court.
3. When printed out, the electronic evidence of the sale consists of one line per debtor containing the debtor's name, account number, and alleged indebtedness, without any information about the original contract, the debtor's payments, or the assignment or sale of the account.
4. Seneca never obtained from the original debtor, or from an assignee of the original debtor, any payment history or other documentary proof demonstrating the amount of the debt allegedly owed by Ms. Harvey. The same is true for documentation of the original agreement (including the interest rate) and for documentation of the chain of ownership of the alleged debt. This is common practice in the industry because of the time and cost of obtaining such documentation.
5. Seneca-Javitch routinely files state-court collection actions with no more evidence in hand of the debt in question than the single line described above.
6. The default rate on such lawsuits is at least ninety percent; once a default judgment is entered the debtor's chances of overturning it are miniscule. Thus, in the vast majority of cases, Seneca-Javitch can proceed to garnishment regardless of whether it could have proved its case in disputed litigation.
7. On the rare occasion when a debtor obtains an attorney and that attorney requests proof of the debt, the amount of the debt and/or Seneca's ownership of the debt, as happened here . . ., Seneca-Javitch routinely dismisses its collection action. This decision is based upon a cost-benefit analysis which is built into the price of purchasing these debts.
We review de novo the district court's dismissal of a complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Morrison v. Marsh & McLennan Cos., 439 F.3d 295, 299 (6th Cir.2006). Id. at 300 (citations omitted).
Before we can consider whether Harvey's complaint survives the defendants' motion to dismiss, we must first determine the extent of her allegations. Harvey's complaint alleges that Seneca and Javitch filed a Complaint for Money without the means of proving that Harvey actually owed a debt to Seneca in the specified amount. Because Harvey's complaint uses imprecise language, we must decide whether Harvey intended to allege that (1) Seneca and Javitch filed the complaint without having on hand at the time of filing the means to prove the complaint, or (2) Seneca and Javitch filed the complaint without the means of ever being able to obtain sufficient proof of the debt-collection action.
Although reasonable inferences drawn from the allegations must be accepted, Evans-Marshall v. Bd. of Educ., 428 F.3d 223, 228 (6th Cir.2005), we need not accept "unwarranted factual inferences." Perry v. Am. Tobacco Co., 324 F.3d 845, 848 (6th Cir.2003). A commonsense reading of Harvey's complaint convinces us that she alleged only that, at the time of filing, Seneca and Javitch did not have the means of proving their debt-collection claim. This reading of the complaint comports with the district court's understanding, which was not challenged by Harvey. In addition, Harvey clarified her theory of the case in her appellate brief, which states that Seneca chooses not to acquire the documentation needed to prove its debt-collection claims "because of the time and cost of obtaining such documentation," not that it is incapable of doing so. The conclusion that Seneca and Javitch had no means of ever proving their claim would therefore be both an unreasonable extension and a strained reading of Harvey's allegation that Seneca and Javitch filed "a lawsuit to collect a purported debt without the means of proving the existence of the debt, the amount of the debt, or that Seneca owned the debt."
We must next consider whether Harvey's unpled allegations, which she asserts for the first time in her brief on appeal, are properly before us. On appeal, Harvey argues that she can prove that Seneca and Javitch routinely file unsubstantiated debt-collection suits in the hope of obtaining default judgments. She also contends that, in the event that a debtor contests Seneca and Javitch's...
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