Delgado v. Midland Credit Mgmt.

• Jurisdiction: United States,Federal,Minnesota
• Parties: Diana Delgado, Plaintiff, v. Midland Credit Management, Inc., Defendant.
• Decision Date: 25 March 2024
• Court: U.S. District Court — District of Minnesota
• Docket Number: 23-cv-2128 (ECT/JFD)

1

Diana Delgado, Plaintiff, v. Midland Credit Management, Inc., Defendant.

No. 23-cv-2128 (ECT/JFD)

United States District Court, D. Minnesota

March 25, 2024

Darren B. Schwiebert, Briol & Benson, PLLC, Minneapolis, MN, and John Michael Buhta, Southern Minnesota Regional Legal Services, Inc., Rochester, MN, for PlaintiffDiana Delgado.

Kiralyn Locke and Patrick D. Newman, Bassford Remele Minneapolis, MN, for DefendantMidland Credit Management Inc.

OPINION AND ORDER

Eric C. Tostrud, United States District Court.

PlaintiffDiana Delgado brings several claims under the Fair Debt Collection Practices Act (“FDCPA”) against DefendantMidland Credit Management, Inc.In Minnesota state district court, Midland sought, and received, default judgment against Delgado in the amount of $1,350.56.Now Delgado alleges that Midland's state-court summons notice of intent to enter default mailed to Delgado, and declaration of no answer filed in state court violated § 1692f(1),§ 1692e(10), and§ 1692e(10) of the FDCPA because the documents were inaccurate or misleading in some respect.She also claims the state-court lawsuit and Midland's related collection efforts violated § 1692f(1) of the FDCPA because Midland did not own the debt.Midland moves to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(c).

Midland's motion will be granted.The summons-related and notice-related FDCPA claims will be dismissed for lack of Article III standing because Delgado was not concretely injured by the challenged conduct.Delgado's claim that Midland attempted to collect a debt it didn't own in violation of § 1692f(1) will be dismissed because the claim is collaterally estopped by the state-court judgment.And Delgado's declaration-related FDCPA claims will be dismissed for failure to state a claim because the state-court summons was not fatally defective.

I^[1]

On September 1, 2022, “Midland served what purported to be a Summons and Complaint” on Delgado.Compl.[ECF No. 1]¶ 20.In relevant part, the summons reads as follows:

YOU ARE BEING SUED.Plaintiff has started a lawsuit against you.Plaintiff's Complaint against you is attached to this Summons.Do not throw these papers away.They are official papers that affect your rights.You must respond to this lawsuit even though it may not yet be filed with the Court and there may be no Court file number on this Summons.YOU MUST REPLY WITHIN21 DAYS TO PROTECT YOUR RIGHTS.You must give or mail to the person who signed this Summons a written response called an Answer within 21 days of the date on which you received this Summons.You must send a copy of your Answer to the person who signed this Summons located at Messerli & KramerP.A., 3033 Campus Drive, Suite 250, Plymouth, MN 55441. ....

YOU WILL LOSE YOUR CASE IF YOU DO NOT SEND A WRITTEN RESPONSE TO THE COMPLAINT TO THE PERSON WHO SIGNED THIS SUMMONS.If you do not Answer within 21 days, you will lose this case.You will not get to tell your side of the story, and the Court may decide against you and award the Plaintiff everything asked for in the Complaint.If you do not want to contest the claims stated in the Complaint, you do not need to respond.A Default Judgment can then be entered against you for the relief requested in the Complaint.

ECF No. 16at 12.^[2] In Midland's state-court complaint, it alleged (1) the original creditor, Synchrony Bank, issued a credit account number to Delgado; (2) Delgado “made purchases and/or received cash advances on the account”; (3) the last payment made on the account was received on May 21, 2019; (4) the balance of the account was $790.56; (5) Midland purchased the account on November 25, 2020; and (6) Midland owns the account as successor in interest to Synchrony Bank.Id. at 14-15.

On November 3, 2022, “Midland filed the Summons and Complaint in Olmsted County District Court, along with a Declaration of No Answer, Identification, NonMilitary Status, Amount Due and Costs and Disbursements . . ., a Notice of Intent to Apply for Default Judgment . . ., and a Proposed Order.”Compl.¶ 21.The notice of intent is dated September 26, 2022, ECF No. 16at 20, but the Complaint in this case does not allege whether Delgado received the notice.See generally Compl.In the notice, Midland represented that “[it] will ask the Court to enter a judgment against you without any further court proceedings, unless you mail a written Answer or written response contesting the debt within 14 days from the date below.”Id.¶ 34.In its declaration of no answer, Midland stated Delgado had been duly served and was in default.ECF No. 16at 17; Compl.¶¶ 2728.The declaration further stated, “there is now due by [Delgado] to [Midland] on the debt set forth the amount of $790.56.”Compl.¶ 30.Midland also requested costs and disbursements in the amount of $560.Id.¶ 31.

The state court entered default judgment against Delgado in the claimed amount of $1,350.56.Compl.¶ 43.The judgment resulted in “harm to [Delgado's] credit rating.”Id.¶ 63.Since the state court entered default judgment against Delgado, Midland has been attempting to collect on the judgment.Id.¶ 44.

On July 13, 2023, Delgado filed the Complaint.Delgado alleges several distinct claims under § 1692f(1),§ 1692e(5), and§ 1692e(10) of the FDCPA. Compl. ¶¶ 45-58.Delgado claims: (1) Midland violated § 1692f(1) by bringing the state-court suit and subsequently attempting to collect Delgado's debt despite not owning the debt, id.¶¶ 3842, 56; (2) Midland's summons violated § 1692f(1),§ 1692e(5), and§ 1692e(10),id.¶¶ 25-26, 49; (3) Midland's notice of intent violated § 1692f(1),§ 1692e(5), and§ 1692e(10),id.¶¶ 49-50; and (4) Midland's declaration violated § 1692e(5)and§ 1692e(10),id.¶ 47.Midland now moves to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(c).

II

Both the jurisdictional and merits aspects of Midland's motions are evaluated under the Rule 12(b)(6) standard.Midland relies only on the Complaint and materials in the public record, meaning it brings a “facial” challenge to subject-matter jurisdiction.Branson Label, Inc. v. City of Branson, 793 F.3d 910, 914(8th Cir.2015).In analyzing a facial challenge, a court“restricts itself to the face of the pleadings, and the non-moving party receives the same protections as it would defending against a motion brought under Rule 12(b)(6).”Osborn v. United States, 918 F.2d 724, 729 n.6(8th Cir.1990)(citations omitted).“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).

A Rule 12(c)motion for judgment on the pleadings is assessed under the same standard as a Rule 12(b)(6) motion.Ashley Cnty. v. Pfizer, Inc., 552 F.3d 659, 665(8th Cir.2009).Under the familiar Rule 12(b)(6) standard, a court must accept as true all of the factual allegations in the complaint and draw all reasonable inferences in the plaintiff's favor.Gorog v. Best Buy Co., Inc., 760 F.3d 787, 792(8th Cir.2014)(citation omitted).Although the factual allegations need not be detailed, they must be sufficient to “raise a right to relief above the speculative level.”Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555(2007)(citation omitted).The complaint must “state a claim to relief that is plausible on its face.”Id. at 570.“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.”Iqbal, 556 U.S. at 678.

III

A

Although the parties did not brief Article III standing, it is necessary to start there.The United States Constitution limits the subject-matter jurisdiction of federal courts to ongoing cases and controversies.SeeU.S. Const art. III, § 2, cl. 1.Article III standing “is a jurisdictional prerequisite and thus a threshold issue that [a court is] obligated to scrutinize, sua sponte if need be.”Bernbeck v. Gale, 829 F.3d 643, 646(8th Cir.2016)(internal quotation marks and citation omitted).“To show Article III standing, a plaintiff has the burden of proving: (1) that he or she suffered an ‘injury-in-fact,'(2) a causal relationship between the injury and the challenged conduct, and (3) that the injury likely will be redressed by a favorable decision.”Steger v. Franco, Inc., 228 F.3d 889, 892(8th Cir.2000)(quotingLujan v. Defs. of Wildlife,504 U.S. 555, 560-61(1992)).A plaintiff must demonstrate standing “with the manner and degree of evidence required at the successive stages of the litigation.”Lujan, 504 U.S. at 561.“And standing is not dispensed in gross; rather, plaintiffs must demonstrate standing for each claim that they press and for each form of relief that they seek.”Trans Union LLC v. Ramirez, 594 U.S. 413, 431(2021).

To establish an injury in fact, a plaintiff must show “an invasion of a legally protected interest” that is “concrete and particularized” and “actual or imminent.”Lujan, 504 U.S. at 560.The Supreme Court has explained in some detail what makes an injury “concrete” for Article Ill's purposes.See, e.g., Ramirez,594 U.S. at 424-30.A “concrete” injury is “real, and not abstract.”Spokeo, Inc. v. Robins, 578 U.S. 330, 340(2016)(cleaned up).Complaints that allege “economic or physical harms” are almost always no-doubters.Hein v. Freedom from Religion Found., Inc., 551 U.S. 587, 642(2007)(Souter, J., dissenting).This is true even if the alleged harm is “only a few pennies.”Wallace v. ConAgra Foods, Inc., 747 F.3d 1025, 1029(8th Cir.2014).“Various intangible harms can also be concrete,” though they also may...