Townsend v. Quantum3 Grp., LLC

• Decision Date: 29 July 2015
• Docket Number: No. 3:14–cv–1301–J–39PDB.,3:14–cv–1301–J–39PDB.
• Citation: 535 B.R. 415
• Parties: Christopher J. TOWNSEND, on behalf of himself and all others similarly situated, Plaintiff, v. QUANTUM3 GROUP, LLC, Defendant.
• Court: U.S. District Court — Middle District of Florida

535 B.R. 415

Christopher J. TOWNSEND, on behalf of himself and all others similarly situated, Plaintiff

v.QUANTUM3 GROUP, LLC, Defendant.

No. 3:14–cv–1301–J–39PDB.

United States District Court, M.D. Florida, Jacksonville Division.

Signed July 29, 2015.

Bryan K. Mickler, Mickler & Mickler, Jacksonville, Max H. Story, Max Story, Esq., Jacksonville Beach, FL, for Plaintiff.

Geremy Walden Gregory, Balch & Bingham, LLP, Jacksonville, FL, for Defendant.

ORDER

BRIAN J. DAVIS, District Judge.

This is a Crawford¹ –progeny putative class action in which Plaintiff alleges that Defendant is liable under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”) for its conduct in Plaintiff's Chapter 13 bankruptcy proceeding. Through this action, Plaintiff admittedly seeks to expand the Eleventh Circuit's decision in Crawford, which held that filing a proof of claim in a bankruptcy proceeding constitutes an attempt to collect a debt for purposes of the FDCPA, to require that debt collectors comply with all aspects of the FDCPA when filing a proof of claim in a bankruptcy proceeding, under any circumstance.

The case is now before the Court on Defendant, Quantum3 Group, LLC's (“Quantum”) Motion to Dismiss Plaintiff's Class Action Complaint. See (Motion to Dismiss, Doc. 9). Plaintiff has responded in opposition, see (Response, Doc. 12), and—while the Court has denied Defendant's request to file additional memoranda, see (Endorsed Order, Doc. 19)—the Court has considered the supplemental authorities cited by Defendant, see (Motion for Leave to File Supplemental Authority, Doc. 18). As such, the matter is ripe for adjudication.

I. FACTUAL BACKGROUND²

The facts of this case are strikingly simple. On March 14, 2014, Plaintiff filed a Voluntary Petition under Chapter 13 of the Bankruptcy Code in the United States Bankruptcy Court for the Middle District of Florida, Jacksonville Division. (Class Action Complaint, Doc. 1 ¶ 4). On May 8, 2014, Defendant filed two proofs of claim on behalf of MOMA Funding, LLC. (Id. ¶¶ 5–6). Proof of claim # 4 claimed that Plaintiff owed $2,234.53 for a Paypal account. (Id. ¶ 5); (Proof of Claim # 4, Doc. 1–2). Proof of claim # 5 claimed that Plaintiff owed $985.42 for a Walmart account. (Class Action Complaint, Doc. 1 ¶ 6); (Proof of Claim # 5, Doc. 1–3). Proof of claim # 4 and proof of claim # 5 were the first attempts to collect the debts by Defendant. (Class Action Complaint, Doc. 1 ¶ 9). Both proofs of claim lacked statutory debt validation notices, required by 15 U.S.C. § 1692g, and Defendant failed to provide Plaintiff with same within five (5) days of filing the proofs of claim. (Id. ¶ 10). Additionally, the proofs of claim did not include the “mini-Miranda” warnings required by 15 U.S.C. § 1692e(11), namely that the Defendant was attempting to collect a debt and that any information obtained would be used for that purpose. (Id. ¶¶ 29(b)). The Defendant is not licensed as a Florida consumer collection agency by the Florida Department of Financial Regulation. (Id. ¶¶ 12, 29(c)).

Plaintiff commenced this putative class action on October 23, 2014, contending that Defendant's conduct violates the FDCPA in the following ways. First, Plaintiff claims that Defendant failed to send Plaintiff the required statutory debt validation notices, pursuant to 15 U.S.C. § 1692g(a). (Id. ¶ 29(a)). Second, Plaintiff claims that Defendant failed to provide him with “mini-Miranda” warnings in its initial communication, pursuant to 15 U.S.C. § 1692e(11). (Id. ¶ 29(b)). Third, Plaintiff claims that Defendant violated 15 U.S.C. § 1692f(1), which proscribes “[t]he collection of any amount ... unless such amount is expressly authorized by the agreement creating the debt or permitted by law,” by failing to register with the Florida Department of Financial Regulation as a Florida consumer collection agency. (Id. ¶ 29(c)). Fourth, Plaintiff claims that Defendant violated 15 U.S.C. § 1692e, 1692e(5), and 1692e(10) by using a false representation or deceptive means to collect or attempt to collect a debt when Defendant has no legal ability to collect in the State of Florida. (Id. ¶ 29(d)). Defendant responded with the instant Motion to Dismiss.

II. STANDARD OF REVIEW

Under Federal Rule of Civil Procedure 12(b)(6), dismissal is proper if a complaint fails to allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). While “detailed factual allegations” are not required, mere “labels and conclusions” or “a formulaic recitation of the elements of a cause of action” are not enough. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). In considering a motion to dismiss pursuant to Rule 12(b) (6), the factual allegations in the Complaint must be accepted as true and construed in the light most favorable to the Plaintiff. See Hill v. White, 321 F.3d 1334, 1335 (11th Cir.2003).

III. DISCUSSION

Finding “abundant evidence” of “abusive, deceptive, and unfair debt collection practices by many debt collectors,” Congress passed the FDCPA in 1977 to curb such practices. 15 U.S.C. § 1692(a). The FDCPA regulates the conduct of debt collectors, which it defines as “any person who ... regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6). Among other things, it forbids various types of “false, deceptive, or misleading” representations or means to collect a debt, 15 U.S.C. § 1692e, as well as those that are “unfair or unconscionable,” 15 U.S.C. § 1692f, and it arms consumer debtors with a private right of action against any debt collector who fails to comply with its provisions. Debt collectors may be found liable for actual damages, statutory damages up to $1,000, and reasonable attorneys' fees and costs. 15 U.S.C. § 1692k(a)(1)–(3).

On July 10, 2014, the United States Court of Appeals for the Eleventh Circuit considered “whether a proof of claim to collect a stale debt in Chapter 13 bankruptcy violates the [FDCPA]” and answered the question in the affirmative. Crawford, 758 F.3d at 1256–57. The plaintiff in the case owed approximately $2,000 in consumer debt that had become unenforceable under Alabama law in October of 2004. id. at 1257. In February of 2008, the plaintiff filed for Chapter 13 bankruptcy in the Middle District of Alabama and, during the proceedings, the defendant filed a proof of claim to collect the debt, notwithstanding the expiration of the state limitations period some four years earlier. Id. In response, the plaintiff filed a counterclaim against the defendant via an adversary proceeding in the bankruptcy court. Id. The bankruptcy court dismissed the claim and the district court affirmed. Id. On appeal, the Eleventh Circuit vacated the dismissal. After the defendant acknowledged that its conduct would likely subject it to FDCPA liability had it filed a lawsuit to collect the time-barred debt, the Eleventh Circuit stated that “[t]he same is true in the bankruptcy context.”Id. at 1259–60. According to the Eleventh Circuit, “[s]imilar to the filing of a stale lawsuit, a debt collector's filing of a time-barred proof of claim creates the misleading impression to the debtor that the debt collector can legally enforce the debt.” Id. at 1261. “The ‘least sophisticated’ Chapter 13 debtor may be unaware that a claim is time barred and unenforceable and thus fail to object to such a claim ... [and,] [g]iven the Bankruptcy Code's automatic allowance provision, the otherwise unenforceable time-barred debt will be paid from the debtor's future wages as part of his Chapter 13 repayment plan.” Id. For these reasons, the Eleventh Circuit held that, “under the ‘least-sophisticated consumer standard,’ ” the defendant's “filing of a time-barred proof of claim against [the plaintiff] in bankruptcy was ‘unfair,’ ‘unconscionable,’ ‘deceptive,’ and ‘misleading’ within the broad scope of § 1692e and § 1692f.” Id. In doing so, the Eleventh Circuit expressly stated that the filing of a proof of claim in the bankruptcy court constitutes collection activity aimed at the debtor. Id. (“[W]e conclude that LVNV's filing of a proof of claim fell well within the ambit of a ‘representation’ or ‘means' used in ‘connection with the collection of any debt.’ It was an effort ‘to obtain payment’ of Crawford's debt ‘by legal proceeding.’ ”).

Though the claims here are not based on a stale debt, it is upon this backdrop that Plaintiff's claims arise. As Plaintiff states, “[t]he premise of the suit ... is simple: If the 11 th Circuit has applied the provisions of the FDCPA to the filing of Proofs of Claims in Chapter 13 cases, then it has applied the entire FDCPA statutory provisions.” (Response, Doc. 12 at 6). Generally speaking, Plaintiff contends that Defendant violated the FDCPA in two main ways: (1) Defendant failed to provide Plaintiff with the debt validation notices and “mini-Miranda” warnings required for “initial communications” under the FDCPA, and (2) Defendant failed to register as a “consumer collection agency.” See generally (Class Action Complaint, Doc. 1 ¶ 29). Defendant argues that “Crawford did not deal with the conduct asserted here” and that Plaintiffs claims fail as a matter of law for a variety of reasons. See (Motion, Doc. 9 at 3).

A. Plaintiff's “Notice Claims.”

Plaintiff alleges two violations of the FDCPA which the Court refers to as the “Notice Claims.” First, under 15 U.S.C. § 1692e, “[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” The following is a violation of that section:

The failure to disclose in the initial written communication with the consumer ... that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose, and the failure to disclose in subsequent

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