Delawder v. Platinum Financial Services Corp.

• Decision Date: 01 March 2005
• Docket Number: No. C-1-04-680.,C-1-04-680.
• Citation: 443 F.Supp.2d 942
• Parties: Herbert DELAWDER, Plaintiff, v. PLATINUM FINANCIAL SERVICES CORP. et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

Page 942

443 F.Supp.2d 942

Herbert DELAWDER, Plaintiff, v. PLATINUM FINANCIAL SERVICES CORP. et al., Defendants.

No. C-1-04-680.

United States District Court, S.D. Ohio, Western Division.

March 1, 2005.

COPYRIGHT MATERIAL OMITTED

Stephen R. Felson, Cincinnati, OH, Steven Charles Shane, Bellevue, KY, for Plaintiff.

Michael D. Slodov, Javitch Block & Rathbone LLP, Cleveland, OH, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS

DLOTT, District Judge.

This matter comes before the Court on Defendants' Motion to Dismiss for Failure To State a Claim and Motion to Dismiss for Lack of Subject Matter Jurisdiction (doe. # 10).¹ Defendants in this case are Platinum Financial Services Corp. ("Platinum Financial"), law firm Javitch, Block and Rathbone ("JB & R"), and Nena Pavlovic ("Pavlovic"), an attorney at JB & R (collectively, "Defendants"). For the reasons set forth below, the Court GRANTS IN PART and DENIES IN PART Defendants' Motion to Dismiss.

I. BACKGROUND

Plaintiff Herbert Delawder alleges that on October 1, 2003, Pavlovic filed a complaint in the Ironton Municipal Court on behalf of JB & R's client, Platinum Financial, asserting that Platinum Financial was the owner of a debt owed by Delawder and seeking collection of that debt. (Doc. # 1, ¶¶ 8,9.) The Ironton complaint alleged that Delawder owed a debt of $5355.60 plus interest and costs. (Id., ¶ 10.) Defendants attached to the complaint an affidavit signed by Dan Varner, Vice President of Platinum Financial, attesting that the account holders, Herbert and Emma Delawder, owed to Platinum Financial the amount of $5355.60, plus interest and costs, on their account number 6011005215005326. (Id., ex. A.) In response, Delawder filed an answer denying the allegations of the Ironton complaint and sought discovery from Defendants concerning the alleged debt. (Id. ¶ 11-12.) On December 2, 2003, before any discovery occurred, Defendants voluntarily dismissed the Ironton case without prejudice. (Id. ¶ 13.)

Delawder filed this complaint on September 30, 2004, alleging that Defendants violated several provisions of both the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, et seq., and the Ohio Consumer Sales Practices Act ("OCSPA"), Ohio Rev.Code § 1345.01, et seq. In sum, Delawder alleges that Defendants violated the FDCPA and the OCSPA by filing the Ironton complaint, and attaching a false affidavit to the complaint, all the while knowing that they did not have means of proving the debt.² Defendants now move to dismiss all of Delawder's claims.

II. JURISDICTION AND LEGAL STANDARD

The FDCPA specifically provides for federal jurisdiction over claims made pursuant to the Act. See 15 U.S.C. § 1692k(d). The Court has federal question jurisdiction under 28 U.S.C. § 1331, and supplemental jurisdiction over Delawder's state law claims under 28 U.S.C. § 1367. In considering Delawder's state law claims pursuant to its supplemental jurisdiction, this Court must follow Ohio law. See Super Sulky, Inc. v. U.S. Trotting Ass'n, 174 F.3d 733, 741 (6th Cir.1999).

Rule 12(b)(6) authorizes dismissal of a complaint for "failure to state a claim upon which relief can be granted." Fed. R.Civ.P. 12(b)(6). In assessing the sufficiency of a complaint, courts must follow "the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). This accords with the purpose of Rule 12(b)(6), which the Sixth Circuit has explained "is to allow a defendant to test whether, as a matter of law, the plaintiff is entitled to legal relief even if everything alleged in the complaint is true." Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir.1993).

Generally, a court may not consider matters outside the pleadings in ruling on a Rule 12(b)(6) motion to dismiss. The Sixth Circuit has held, however, that " Id]ocuments that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to [plaintiff s] claim.'" See Weiner v. Klais and Co., Inc., 108 F.3d 86, 89 (6th Cir. 1997) (citations omitted). Defendants attached three documents to their Motion to Dismiss: Delawder's Answer to the Ironton complaint, a letter from Delawder's counsel in the Ironton suit to Robert Lurie at JB & R regarding his noticed deposition, and Plaintiff's Notice of Voluntary Dismissal in the Ironton case. The two court filings are admissible as public records. See New England Health Care Employees Pension Fund v. Ernst & Young, LLP, 336 F.3d 495, 501 (6th Cir.2003) (courts may consider materials beyond the complaint "if such materials are public records or are otherwise appropriate for the taking of judicial notice"). Also, Delawder referenced, or at least referred to, all of these documents in his complaint, and actually attached one of them to the complaint. (See doc. # 1, ¶¶ 11-13, and ex. B.) As these documents are central to Delawder's claim, the Court will consider all three of them in ruling on Defendants' Motion to Dismiss.³

Finally, "[o]n a Fed.R.Civ.P. 12(b)(6) motion, all of the allegations contained in the plaintiff's complaint are accepted as true, and the complaint is construed liberally in favor of the party opposing the motion." Miller v. Currie, 50 F.3d 373, 377" (6th Cir.1995). At the same time, however, the Court "need not accept as true legal conclusions or unwarranted factual inferences." Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987).

IV. ANALYSIS

A. FDCPA Claims

The FDCPA was enacted "to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent state action to protect consumers against debt collection abuses." 15 U.S.C. § 1692e; accord Montgomery v. Huntington Bank, 346 F.3d 693, 698 (6th Cir.2003).

1. Defendants as Debt Collectors

Preliminarily, for the Defendants to be liable under the FDCPA, they must fall within the FDCPA's definition of a "debt collector." The FDCPA defines a "debt collector" as "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 who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." See 15 U.S.C. § 1692a(6).

Delawder has alleged that JB & R and Pavlovic are "engaged in the practice of collecting debts on behalf of the [sic] third parties" and therefore are "debt collectors" under Section 1692a(6). (See doc. # 1, ¶ 5.) The Supreme Court has held that lawyers and their law firms who regularly engage in consumer debt-collection litigation qualify as "debt collectors" under the FDCPA, and thus may be held liable under its provisions. See Heintz v. Jenkins, 514 U.S. 291, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995).

Delawder's allegations do not exactly mirror the statutory definition, and Delawder has not yet alleged any facts suggesting that either JB & R or Pavlovic regularly engage in debt collection. It may be that discovery shows that JB & R and Pavlovic do not regularly engage in debt collection, and thus are not debt collectors liable under the FDCPA, though the Court notes that they have not challenged their categorization as debt collectors. When construed in the light most favorable to Delawder, the Court finds that Delawder's allegation that JB & R and Pavlovic are debt collectors is sufficient to survive a motion to dismiss.

Similarly, Delawder has alleged that Platinum Financial "specializes in the purchase of and the collection of distressed consumer debt consisting of old defaulted and delinquent obligations or accounts which it purchases from original creditors" and that it is therefore a debt collector under Section 1692a(6). (See doc. # 1, 114.) Delawder has alleged facts suggesting that Platinum Financial is in the business of regularly collecting debts, and Platinum Financial has not challenged those allegations. Consequently, when taken in the light most favorable to Delawder, the Court finds that Delawder's allegation that Platinum Financial is a debt collector is sufficient to survive a motion to dismiss.

2. Alleged Conduct

a. Liability for Litigation Conduct Generally

Defendants suggest that their conduct is exempt from the strictures of the FDCPA because it occurred in the context of litigation, and to forbid such practices is an overbroad reading of the statute and of the Supreme Court's decision in Heintz. Defendants argue specifically that Heintz was only about a lawyer's sending of a letter, and should not be read to extend FDCPA liability to the filing of a pleading. (See doc. # 10, at 9.) Defendants misread Heintz, which was not limited to the context of the case.

In Heintz, the defendant-attorney argued that the Court should read the FDCPA as "containing an implied exemption for those debt-collecting activities of lawyers that consist of litigating." 514 U.S. at 295, 115 S.Ct. 1489. The Court noted that an earlier version of the FDCPA included an express exemption for lawyers, but that exemption was repealed. Id. at 294-95, 115 S.Ct. 1489. The Court took this as evidence of Congress' intent to subject lawyers to the FDCPA whenever they met the definition of "debt collector." Thus, the Court held that the FDCPA "applies to attorneys who regularly engage in consumer-debt-collection activity, even when that activity consists of litigation." See id. at 294, 299, 115 S.Ct. 1489.

Consequently, Defendants can be held liable for all litigation conduct, including the filing of the Ironton complaint, if that conduct violates the FDCPA.

b....