Davidson v. Capital One Bank (USA), N.A.

• Decision Date: 21 August 2015
• Docket Number: No. 14–14200.,14–14200.
• Citation: 797 F.3d 1309
• Parties: Keith DAVIDSON, on behalf of plaintiff and a class, Plaintiff–Appellant, v. CAPITAL ONE BANK (USA), N.A., Defendant–Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

797 F.3d 1309

Keith DAVIDSON, on behalf of plaintiff and a class, Plaintiff–Appellant

v.CAPITAL ONE BANK (USA), N.A., Defendant–Appellant.

No. 14–14200.

United States Court of Appeals, Eleventh Circuit.

Aug. 21, 2015.

Daniel A. Edelman, Catherine A. Ceko, Cathleen M. Combs, James O. Latturner, Edelman Combs Latturner & Goodwin, LLC, Chicago, IL, E. Talley Gray, Fort Lauderdale, FL, for Plaintiff–Appellant.

Joshua Howard Threadcraft, Rik Stanford Tozzi, Burr & Forman, LLP, Birmingham, AL, Jennifer Ziemann, Burr & Forman, LLP, Atlanta, GA, for Defendant–Appellant.

Appeal from the United States District Court for the Northern District of Georgia.

Before WILSON and MARTIN, Circuit Judges, and HODGES,^* District Judge.

Opinion

WILSON, Circuit Judge:

In this appeal, we decide whether a bank that collects or attempts to collect on a debt, which was in default at the time it was acquired by the bank, qualifies as a “debt collector” under the Federal Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 –1692p. Keith Davidson appeals the dismissal of his amended complaint, filed on behalf of himself and a class of similarly situated individuals, alleging that Capital One Bank (USA), N.A. (Capital One) violated certain provisions of the FDCPA in attempting to collect on defaulted or delinquent credit card accounts that Capital One had acquired from HSBC Bank Nevada, N.A. (HSBC). The district court dismissed Davidson's amended complaint on the ground that Capital One was not a “debt collector” as defined by the Act and was thus not subject to the Act.

We need look no further than the statutory text to conclude that, under the plain language of the FDCPA, a bank (or any person or entity) does not qualify as a “debt collector” where the bank does not regularly collect or attempt to collect on debts “owed or due another” and where “the collection of any debts” is not “the principal purpose” of the bank's business, even where the consumer's debt was in default at the time the bank acquired it. See id. § 1692a(6).

As discussed below, the amended complaint's factual matter establishes that Capital One's collection efforts in this case related only to debts owed to it and that debt collection is only some part of, and not the principal purpose of, Capital One's business. See id. In short, Capital One's activity, as alleged by Davidson, is not the activity of a “debt collector” under the FDCPA, and Davidson cannot state a claim under the Act. We therefore affirm the district court's dismissal of Davidson's amended complaint.

I.

In 2007, HSBC filed suit against Davidson in state court to collect on a credit card account belonging to Davidson that he had used for “personal, family, or household purposes.”¹ See id. § 1692a(5). During the course of the litigation, the parties entered into a settlement agreement, whereby Davidson agreed to pay $500.00 to HSBC, and, in return, HSBC agreed to dismiss its collection action. When Davidson failed to pay the $500.00 to HSBC, the state court entered a judgment in favor of HSBC and against Davidson in the amount of $500.00.

In May 2012, Capital One acquired approximately $28 billion of HSBC's United States-based credit card accounts, over $1 billion of which were shown as delinquent or in default at the time of Capital One's acquisition, including the credit card account belonging to Davidson. Shortly thereafter, in August 2012, Capital One filed suit against Davidson in state court to collect on the same credit card account that had been the subject of HSBC's prior lawsuit. Capital One's state court complaint alleged that Davidson's account was delinquent in the amount of $1,149.96. An affidavit attached to the complaint asserted that Capital One had acquired Davidson's credit card account as of May 2012.

In July 2013, Davidson filed suit in district court, on behalf of himself and a purported class of similarly situated individuals, claiming that Capital One's state court activities violated the FDCPA. Specifically, Davidson alleged that Capital One's complaint falsely stated the amount of Davidson's debt, which had been reduced to a $500.00 judgment in the HSBC litigation, and that the affidavit was “mass produced,” “robo-signed,” and not based on the affiant's personal knowledge and contained false statements in violation of the FDCPA. See id. § 1692e. Capital One moved to dismiss Davidson's action under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. In response, Davidson filed an amended complaint pursuant to Federal Rule of Civil Procedure 15(a).

Capital One moved to dismiss the amended complaint. It argued that the amended complaint failed to plausibly allege that Capital One was a “debt collector” for purposes of the FDCPA and only debt collectors are subject to liability under the Act. Specifically, Capital One asserted that it did not qualify as a “debt collector” because it regularly collected debts that were owed to it and not debts “owed or due another.” Davidson countered that the amended complaint sufficiently alleged that Capital One met the definition of “debt collector” by stating that Capital One “regularly acquired delinquent and defaulted consumer debts that were originally owed to others” and “attempted to collect such ... debts in the regular course of its business.” Companies that regularly purchase and collect defaulted consumer debts, Davidson argued, are regulated by the Act.

The district court agreed with Capital One. According to the district court, whether Davidson's debt was in default at the time it was acquired by Capital One did not bear on whether Capital One satisfied the statutory definition of “debt collector.”² It further found that, to qualify as a debt collector under the FDCPA, Capital One had to “regularly” collect or attempt to collect on debts “owed or due another” or the principal purpose of Capital One's business had to be “the collection of any debts,” see id. § 1692a(6), and Capital One did not satisfy either requirement. The district court dismissed Davidson's amended complaint pursuant to Rule 12(b)(6) for failure to state a claim, and Davidson timely appealed.

II.

We review de novo a district court's interpretation of a statute. Bankston v. Then, 615 F.3d 1364, 1367 (11th Cir.2010) (per curiam). We also review de novo the grant of a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Hill v. White, 321 F.3d 1334, 1335 (11th Cir.2003) (per curiam). In so doing, we accept as true all well-pleaded factual allegations in the complaint, see Randall v. Scott, 610 F.3d 701, 710 (11th Cir.2010), which we construe “in the light most favorable to the plaintiff,” Hill, 321 F.3d at 1335. To survive a motion to dismiss, a complaint must “state a claim to relief that is plausible on its face,” meaning it must contain “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, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (internal quotation marks omitted).

III.

The FDCPA was passed “to eliminate abusive debt collection practices,” to ensure that “debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged,” and to promote consistent state action in protecting consumers against debt collection abuses. See 15 U.S.C. § 1692(e) ; see S.Rep. No. 95–382, at 1–2 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1696 (nature and purpose of FDCPA). In accordance with its stated purposes, the FDCPA bans certain debt collection practices and allows individuals to sue debt collectors who fail to comply with the Act. See § 1692b –1692f, 1692k.

Davidson alleges that Capital One violated multiple subsections of 15 U.S.C. § 1692e. Section 1692e generally prohibits a debt collector from using “any false, deceptive, or misleading representations or means in connection with the collection of any debt.” § 1692e. Conduct constituting a violation includes “[t]he false representation of ... the character, amount, or legal status of any debt” and “[t]he use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain any information concerning a consumer.” Id. § 1692e(2), (10). Davidson contends that the complaint and affidavit that Capital One filed in state court violated § 1692e and each of subsections 1692e(2) and 1692e(10).

There is no dispute that § 1692e applies only to debt collectors. Therefore, in order to survive Capital One's motion to dismiss, Davidson must plead “factual content that allows the court to draw the reasonable inference that” Capital One is a “debt collector” under the FDCPA and therefore liable for the misconduct alleged. See Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949.

A.

Before we can determine whether Davidson's amended complaint plausibly alleges that Capital One is a “debt collector” for purposes of the FDCPA, we must resolve the parties' dispute regarding the meaning of the term “debt collector.”

The Act defines “debt collector” to mean “[1] any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or [2] who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.”³ § 1692a(6). The definition excludes several categories of persons, see § 1692a(6)(A)-(F) (listing excluded persons), including “any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity ... concerns a debt which was not in default at the time it was obtained by such person,” § 1692a(6)(F)(iii).

Unlike debt collectors, creditors typically are not subject to the FDCPA. See, e.g., Pollice v. Nat'l Tax Funding, L.P., 225 F.3d 379, 403 (3d Cir.2000). A “creditor” is “any person who offers or extends credit creating a debt or to whom a debt is...