Barrett v. Avco Financial Services Management Co.
| Decision Date | 17 April 2003 |
| Docket Number | No. CIV.A. 99-30009-MAP.,CIV.A. 99-30009-MAP. |
| Citation | 292 B.R. 1 |
| Parties | Wayne G. BARRETT, et al., Plaintiffs, v. AVCO FINANCIAL SERVICES MANAGEMENT COMPANY, et al., Defendants. |
| Court | U.S. District Court — District of Massachusetts |
Daniel A. Edelman, Cathleen M. Combs, Tara L. Goodwin, Edelman, Combs & Latturner, Chicago, IL, Christopher M. Lefebvre, Law Offices of Claude Lefebvre & Sons, Pawtucket, RI, for Wayne G. Barrett Kim A. Barrett, for themselves and on behalf of all others similarly situated Plaintiffs.
Marc A. Crisafulli, Edwards & Angell, LLP, Providence, RI, Patricia A. Sullivan, Edwards & Angell, LLP, Boston, MA, for Avco Financial Services Management Company, Avco Financial Services of Massachusetts, Inc., Defendants.
MEMORANDUM AND ORDER REGARDING REPORT AND RECOMMENDATION RE: DEFENDANTS' MOTION TO STRIKE CLASS ALLEGATIONS
Plaintiff has brought this action, purportedly for himself and all others similarly situated in the United States, alleging that the defendant collection agencies (together "AVCO"), by seeking to collect a debt which had been incurred prior to filing a Chapter 7 bankruptcy petition, violated the Bankruptcy Court's discharge order. The case has been delayed substantially while parallel Rhode Island litigation has worked its way through the District of Rhode Island, up to the First Circuit Court of Appeals and back. See Bessette v. Avco Fin. Servs., Inc., 230 F.3d 439 (1st Cir.), as amended 2000 U.S. at LEXIS 33737 (Dec. 15, 2000).
On September 27, 2002, based upon Bessette and the Rhode Island District Court's opinion on remand, the defendants filed a motion to strike the class action allegations in this case. The motion was thereafter referred to Magistrate Judge Kenneth P. Neiman for Report and Recommendation, and on March 25, 2003, Magistrate Judge Neiman recommended that the motion be allowed with regard to any nationwide class, but denied without prejudice with regard to a class of debtors within the Commonwealth of Massachusetts.
Magistrate Judge Neiman's recommendation is well reasoned and supported by the predominant weight of authority both within the First Circuit and throughout the country.1 For this reason, upon de novo review, the Report and Recommendation of March 25, 2003 (Docket No. 71) is hereby ADOPTED. The defendants' Motion to Strike (Docket No. 60) is hereby ALLOWED with regard to any claim for nationwide class certification. With regard to a potential class comprising solely debtors in Massachusetts, the Motion to Strike is hereby DENIED, without prejudice.
The clerk will set this matter down for a status conference to determine the course of future proceedings in the case. Since this matter is one of the oldest cases on the court's docket, counsel should be prepared to move promptly through the pretrial phase to disposition.
It is So Ordered.
REPORT AND RECOMMENDATION WITH REGARD TO DEFENDANTS' MOTION TO STRIKE CLASS ALLEGATIONS (Docket No. 60)
In his one count complaint, Wayne Barrett ("Plaintiff"), for himself and other similarly situated individuals, alleges that the defendant collection agencies (together "Avco"), by seeking to collect a debt which had been incurred prior to filing his Chapter 7 bankruptcy petition, violated the Bankruptcy Court's discharge order. Pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6), and in conjunction with Rule 23, Avco has moved to strike Plaintiff's class allegations. According to Avco, the court lacks jurisdiction over the claims of putative class members whose bankruptcies were discharged outside the District of Massachusetts. Moreover, Avco argues, Plaintiff cannot satisfy certain class action requirements with regard to those remaining debtors whose bankruptcies were discharged in this district.
Avco's motion to strike has been referred to this court for a report and recommendation. See 28 U.S.C. § 636(b)(1)(B); Rule 3(a)(8) of the Rules for United States Magistrate Judges in the United States District Court for the District of Massachusetts. For the reasons which follow, the court will recommend that Avco's motion be allowed insofar as Plaintiff seeks to represent a nationwide class. However, to the extent Avco targets putative class members within the District of Massachusetts, the court will recommend that the motion to strike be denied.
Rule 23 governs class actions. Subsection (a) of the rule sets forth four prerequisites for filing a class action, often referred to as numerosity, commonality, typicality and adequacy of representation:
One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.
Fed.R.Civ.P. 23(a). For its part, subsection (b)(3) of the rule requires "that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members." Fed.R.Civ.P. 23(b)(3). See generally, Smilow v. Southwestern Bell Mobile Sys., Inc., 323 F.3d 32, 37-42 (1st Cir.2003). In turn, subsection (c)(1) provides that "[a]s soon as practicable after the commencement of an action brought as a class action, the court shall determine by order whether it is to be so maintained." Finally, subsection (d)(4) allows the court to make an appropriate order "requiring that the pleadings be amended to eliminate therefrom allegations as to representation of absent persons."
Rule 12(b)(1), upon which the first part of Avco's motion is grounded, empowers a party to seek dismissal of an action for "lack of jurisdiction over the subject matter." Rule 12(b)(6), upon which the second part of Avco's motion is based, allows a complaint to be dismissed for "fail[ing] to state a claim upon which relief can be granted." Both rules require the court to construe all allegations in favor of Plaintiff the non-moving party. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974); Negron-Gaztambide v. Hernandez-Torres, 35 F.3d 25, 27 (1st Cir.1994). See also Bessette v. Avco Fin. Servs., Inc., 279 B.R. 442, 451 (D.R.I.2002) () (citing Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 52 (1st Cir.1990)).
The following facts are alleged in the complaint. In June of 1994, Plaintiff and his wife, who has since passed away, (collectively "the Barretts"), purchased an aboveground swimming pool from a vendor for $2,358.55. (Second Amended Complaint (Docket No. 62) (hereinafter "Complaint") ¶ 30.) They financed the purchase through a loan from Avco. (Id.)
On June 9, 1995, the Barretts filed a Chapter 7 bankruptcy petition in the District of Massachusetts. (Id. ¶ 29.) A few weeks later, on July 17, 1995, they executed a "reaffirmation agreement," ostensibly under the authority of the Bankruptcy Court. (Id., Exhibit B.) The reaffirmation agreement purportedly required the Barretts to pay Avco $2,358.55 plus interest at the rate of $60 per month. (Id. ¶ 32.) Avco, Plaintiff asserts, intentionally did not file the agreement with the Bankruptcy Court. (Id. ¶¶ 33, 38.)
The Barretts made regular monthly payments to Avco from September of 1995 through May of 1998. (Id. ¶ 40 and Exhibit C.) Meanwhile, on October 29, 1997, the Bankruptcy Court issued an order discharging the Barretts from all dischargeable debts, including the Avco obligation. (Id. ¶ 39.) According to the complaint, at least three other "victims" — Cheryl Bessette and Nancy Pellogrino in Rhode Island and Francisco Gonzalez in California — signed reaffirmation agreements with Avco in circumstances similar to the Barretts'. (See id. ¶¶ 42-72.)
The Barretts commenced this action on January 20, 1999. At that time, a virtually identical case filed by Plaintiff's lawyer on Cheryl Bessette's behalf, Bessette v. Avco Fin. Servs., Inc., C.A. No. 97-487L, had been pending in the District of Rhode Island for approximately a year and a half. On April 12, 1999, Avco moved to stay the present action pending a ruling from District Judge Ronald R. Lagueux of the District of Rhode Island on Avco's motion to dismiss Cheryl Bessette's complaint. District Judge Michael A. Ponsor allowed the motion to stay on August 18, 1999. (Docket No. 34.)
The Bessette motion to dismiss, as described more fully below, took some time to be resolved. Eventually, the First Circuit remanded the matter to Judge Lagueux who, on June 1, 2002, issued an order dismissing much of that case. In essence, Judge Lagueux made clear that Cheryl Bessette's complaint consisted of a single contempt claim and that she would not be allowed to pursue a nationwide class.
Following Judge Lagueux's ruling, Judge Ponsor lifted the stay in the instant matter (Docket No. 52) and established a preliminary schedule (Docket No. 56). In accord with that schedule, Plaintiff amended the complaint avowedly to conform with Bessette — i.e., he eliminated all but a single contempt claim — after which Avco filed the instant motion to strike Plaintiff's class allegations.
The court will first lay out the statutory provisions relevant to Plaintiff's claim. It will then describe the posture of Bessette which, as indicated, is closely tied to the instant matter. Finally, the court will analyze the substance of Avco's motion to strike.
The Bankruptcy Code's automatic stay provision, commonly referred to as "section 362," prov...
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