Avina v. Patenaude & Felix, APC

• Decision Date: 09 March 2021
• Docket Number: Case No. 20-cv-00166-BAS-MDD
• Court: U.S. District Court — Southern District of California
• Parties: JORGE ESCAMILLA AVINA, on behalf of himself and all others similarly situated, Plaintiff, v. PATENAUDE & FELIX, APC; CREDIT CORP. SOLUTIONS, INC.; THOMAS FLYNN, Defendants.

JORGE ESCAMILLA AVINA, on behalf of himself and all others similarly situated, Plaintiff, v. PATENAUDE & FELIX, APC; CREDIT CORP. SOLUTIONS, INC.;

THOMAS FLYNN, Defendants.

Case No. 20-cv-00166-BAS-MDD

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

March 9, 2021

ORDER:

(1) GRANTING IN PART AND DENYING IN PART DEFENDANT PATENAUDE & FELIX, APC AND CREDIT CORP. SOLUTIONS, INC.'S MOTION TO DISMISS (ECF No. 16);

AND

(2) DENYING DEFENDANT THOMAS FLYNN'S MOTION TO DISMISS (ECF No. 17)

Before the Court are two Motions to Dismiss filed by Defendants Patenaude & Felix, APC and Credit Corp. Solutions, Inc. (the "Entity Defendants") and individual Defendant Thomas Flynn. (ECF Nos. 16, 17.) Plaintiff opposes both Motions (ECF Nos. 19, 20) and Defendants reply. (ECF Nos. 21, 22.) The Court finds both Motions suitable for determination on the papers submitted and without oral argument. See Fed. R. Civ. P. 78(b); CivLR 7.1(d)(1). For the reasons stated below, the Court GRANTS IN PART and DENIES IN PART the Entity Defendants' Motion and DENIES Defendant Flynn's Motion.

I. FACTUAL BACKGROUND

Plaintiff Jorge Escamilla Avina ("Plaintiff") commenced this action on January 24, 2020. (ECF No. 1.) Plaintiff filed the operative First Amended Complaint ("FAC") on April 14, 2020. (ECF No. 9.)

This action stems from Plaintiff's alleged default on a consumer credit card account in 2016. (FAC ¶ 13.) The original creditor, Synchrony Bank, assigned the debt to Defendant Credit Corp. Solutions, Inc. ("CCS"). (Id.) CCS retained Defendant Patenaude & Felix, APC ("P&F"), which then filed a debt collection lawsuit in state court on June 11, 2019. (Id. at 14.) P&F hired Defendant Flynn as a private process server to serve the summons and complaint on Plaintiff. (Id.)

On July 12, 2019, Flynn filed a proof of service with the state court representing that on July 1, 2019, Flynn completed personal service upon Plaintiff at his residence. (FAC ¶ 15.) However, Plaintiff states that he was not home at this time and therefore could not have been personally served. (Id.) Consequently, Plaintiff filed a motion to quash service and attached a timecard showing that he was working at the time of the alleged personal service. (Id. ¶ 16.) In response, the Entity Defendants sent Flynn to re-serve the summons and complaint; he again filed a proof of service indicating that he personally served Plaintiff at his residence on November 9, 2019, mooting the motion to quash. (Id.) Again, however, Plaintiff alleges he was not home at this time and claims that his mother "found CCS' lawsuit lying on the front porch[.]" (Id.) Plaintiff filed a second motion to quash, which was again mooted by Defendants' request to dismiss the action without prejudice on January 2, 2020. (Id. ¶ 17.)

Plaintiff states that Flynn's filing of false proofs of service violates the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692, et seq. (FAC ¶ 19.) Specifically, Plaintiff claims that Flynn's actions: (1) constitute conduct the natural consequence of which is to harass the debtor in connection with the collection of a debt (15 U.S.C. § 1692d); (2) falsely represent the legal status of the debt and use false representations anddeceptive means in an attempt to collect a debt (id. § 1692e(2)(A), 1692e(10)); and (3) use unfair and unconscionable means in an attempt to collect a debt (id. § 1692f). (FAC ¶ 27.)

In addition, Plaintiff states that CCS and P&F are vicariously liable for Flynn's violations because they knew or should have known that Flynn regularly conducts "sewer service"¹ on plaintiffs yet continue to use him to serve CCS's debt collection lawsuits and that their compensation arrangement with Flynn incentivizes his dishonest conduct. (Id. ¶¶ 29-35.)

In support of Plaintiff's first contention, the FAC includes data reflecting Flynn's "unrealistically high percentage" of lawsuits purportedly personally served on defendants in debt collection cases, the equally high number of nonresponsive defendants who were supposedly personally served, and Flynn's "inexplicable descriptions" of people allegedly personally served. (FAC ¶¶ 33-34.) Plaintiff claims that this data has "at all times been readily available to [P&F] and CCS," but that they nonetheless "continue to exclusively use Flynn to serve CCS' debt collection lawsuits," indicating that both the Entity Defendants "willfully ignored" and "knowingly profit off" Flynn's fraudulent conduct by continuing to use his services. (Id.) As to the second allegation, Plaintiff claims that because P&F and CCS pay Flynn only for completed service, "Flynn is incentivized . . . to complete service on the first attempt by either claiming 'personal service' or by claiming the address is not valid for service." (Id. ¶ 34.)

Plaintiff brings the action on behalf of himself and a class of all persons: (1) residing in California; (2) against whom Defendants "jointly filed proofs of 'personal service' of process in the San Diego County Superior Court of the State of California . . . in debt collection lawsuits in which the person was not personally served with process"; and (3) in an attempt to collect personal, family, or household debts from January 24, 2019 to the date of class certification. (Id. ¶ 37.)

II. LEGAL STANDARD

A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed. R. Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). The court must accept all factual allegations pleaded in the complaint as true and must construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed factual allegations, rather, it must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). 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). "Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it stops short of the line between possibility and plausibility of 'entitlement to relief.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557).

"[A] plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986) (alteration in original)). A court need not accept "legal conclusions" as true. Iqbal, 556 U.S. at 678. Despite the deference the court must pay to the plaintiff's allegations, it is not proper for the court to assume that "the [plaintiff] can prove facts that [he or she] has not alleged or that defendant[] ha[s] violated the...laws in ways that have not been alleged." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

III. ANALYSIS

The Entity Defendants' Motion to Dismiss and Flynn's Motion to Dismiss make several overlapping arguments to support dismissal under Federal Rule of Civil Procedure 12(b)(6). First, as threshold issues, they claim Plaintiff lacks standing to bring an FDCPAclaim and that the litigation privilege applies to preclude this action. Second, Defendant Flynn alleges that he falls under an FDCPA exemption for process servers and therefore does not meet the definition of a "debt collector." Correspondingly, the Entity Defendants argue that they cannot be held directly or vicarious liable for Flynn's actions. Lastly, the Entity Defendants argue that Plaintiff has not sufficiently stated violations of the FDCPA and all Defendants dispute that he has adequately stated class claims.

A. Standing

Defendants argue that Plaintiff has no standing to pursue this federal action because he has not alleged any concrete injury resulting from Defendants' purported filing of fraudulent proofs of serve in the state debt collection lawsuit. (Entity Defs.' Mot. to Dismiss ("Entity Defs.' Mot.") at 23-25, ECF No. 16; Flynn's Mot. to Dismiss ("Flynn's Mot.") at 2-3, ECF No. 17.) Plaintiff counters that he has sufficiently alleged several concrete injuries arising from Defendants' fraudulently filed proofs of service, including: "the simulations of legal process," the "greater risk of falling victim to denial of due process and . . . waiver of opportunity to defend," being subjected to an attempt to collect the cost of the fraudulent service of process, and "the common law harm of abuse of process." (Pl.'s Opp'n to Entity Defs.' Mot. at 18-24, ECF No. 19; see also Pl.'s Opp'n to Flynn's Mot. at 7-10.)

"Article III of the Constitution limits the jurisdiction of federal courts to 'Cases' and 'Controversies.'" Susan B. Anthony List v. Driehaus, 573 U.S. 149, 157 (2014). The doctrine of standing serves to identify whether a case or controversy appropriate for judicial resolution under Article III exists. See Lujan v. Defs.'' of Wildlife, 504 U.S. 555, 560 (1992). To satisfy the requirements for standing, a plaintiff must show

(1) it has suffered an "injury in fact" that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.

Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81 (2000) (citing Lujan, 504 U.S. at 560-61).

As to concreteness, which is the element of standing disputed in the instant action, the Supreme...