Eads v. Wolpoff & Abramson Llp

• Decision Date: 27 February 2008
• Docket Number: No. EP-07-CV-229-PRM.,EP-07-CV-229-PRM.
• Citation: 538 F.Supp.2d 981
• Parties: John W. EADS, Plaintiff, v. WOLPOFF & ABRAMSON, LLP, Defendant.
• Court: U.S. District Court — Western District of Texas

538 F.Supp.2d 981

John W. EADS, Plaintiff, v. WOLPOFF & ABRAMSON, LLP, Defendant.

No. EP-07-CV-229-PRM.

United States District Court, W.D. Texas, El Paso Division.

February 27, 2008.

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Ahmad Keshavarz, The Law Office of Ahmad Keshavarz, Brooklyn, NY, Alberto Mesta, Jr., Texas Riogrande Legal Aid, Inc., El Paso Migrant Office, Jaime Sanchez, El Paso Legal Assistance, El Paso, TX, Virginia Marie Schramm, Texas Riogrande Legal Aid, Inc., San Antonio, TX, for Plaintiff.

Stewart W. Forbes, Susan M. Forbes, Forbes Forbes, El Paso, TX, for Defendant.

MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

PHILIP R. MARTINEZ, District Judge.

On this day, the Court considered Defendant Wolpoff & Abramson, LLP's ("Wolpoff") "Motion to Dismiss and Memorandum of Points and Authorities in Support Thereof," filed on August 3, 2007; Plaintiff John W. Eads's ("Eads") "Original Memorandum in Opposition to Wolpoff's Motion to Dismiss for Failure to State a Claim," filed on August 21, 2007; and Wolpoff's "Reply to Plaintiff's Response to Motion to Dismiss," filed on August 31, 2007, in the above-captioned cause. After due consideration, the Court is of the opinion that Wolpoff's Motion to Dismiss should be granted in part and denied in part for the reasons set forth below.

I. FACTUAL AND PROCEDURAL BACKGROUND

Wolpoff is a law firm practicing in the field of consumer debt collection. Def.'s Mot. to Dismiss Exs. 1-2. The instant suit arises in connection with a suit filed in state court by Wolpoff on behalf of its client, MBNA America Bank, N.A. ("MBNA"), against Eads. Acting on behalf of MBNA, Wolpoff initiated a suit in the 34th Judicial District Court of El Paso County, Texas on March 29, 2006, (hereinafter "the state court action") against Eads by filing an "Original Petition to Confirm Arbitration Award." The state court action sought to enforce an arbitration award arising out of a debt which Eads allegedly owed to MBNA pursuant to a credit agreement.¹ Pl.'s Resp. ¶ 10. On September 4 2006, Wolpoff moved for summary judgment on behalf of MBNA in the state court action.² Def.'s Mot. to Dismiss 2.

On June 26, 2007, Eads filed his Original Complaint with the Court, asserting Wolpoff violated the law in various respects in connection with the state court action. Pl.'s Org. Compl. ¶¶ 7-41. On August 3, 2007, Wolpoff filed the instant Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure ("Rule 12(b)(6)"). Wolpoff argues that Eads falls to state a claim upon which relief can be granted. On August 21, 2007, Eads filed his First Amended Complaint, wherein he amended his Original Complaint and alleged Wolpoff violated: (1) the Fair Debt Collection Practices Act ("FDCPA"), 15 "U.S.C. § 1692 et seq.; (2) the Texas Debt Collection Act ("TDCA"), Texas Finance Code § 392.001 et seq.; and (3) the Texas Deceptive Trade Practices-Consumer Protection Act ("DTPA"), Texas Business and Commerce Code § 17.50(h).³ Pl.'s First Am. Compl. ¶¶ 15-30.

II. LEGAL STANDARD

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). However, "the motion to dismiss for failure to state a claim is viewed with disfavor and is rarely granted." Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir.1982). The Court must determine "whether in the light most favorable to the plaintiff and with every doubt resolved on his behalf, the complaint states any valid claim for relief." Gregson v. Zurich Am. Ins. Co., 322 F.3d 883, 885 (5th Cir.2003) (internal quotation omitted).

"To survive a Rule 12(b)(6) motion to dismiss, a complaint `does not need detailed factual allegations,' but must provide the plaintiff's grounds for entitlement to relief — including factual allegations that when assumed to be true `raise a right to relief above the speculative level.'" Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, ___ U.S. ___, ___-___, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007)).

A Rule 12(b)(6) motion challenging the adequacy of a pleading must be evaluated in light of the liberal "notice pleading" requirements of Rule 8 of the Federal Rules of Civil Procedure. Walker v. South Cent. Bell Tel. Co., 904 F.2d 275, 277 (5th Cir.1990). A complaint need only contain "a short and plain statement of the claim showing that the pleader is entitled to relief." FED.R.CIV.P. 8(a)(2). Under this standard, "a complaint will be deemed inadequate only if it fails to (1) provide notice of the circumstances which give rise to the claim, or (2) set forth sufficient information to outline the elements of the claim or permit inferences to be drawn that these elements exist." Gen. Star. Indem. Co. v. Vesta Fire Ins. Corp., 173 F.3d 946, 950 (5th Cir.1999).

III. ANALYSIS

A. FDCPA Claims

Eads alleges Wolpoff violated several provisions of the FDCPA. Specifically, but without limitation,⁴ Eads claims Wolpoff (1) misrepresented the character, status, and amount of the debt; (2) threatened to take, and actually took, an act prohibited by law; (3) contacted him directly despite knowing he was represented by counsel in connection with the debt; (4) failed to provide him with notice of his right to verify and dispute the debt; and (5) harassed, oppressed, or abused him by continuing to attempt collection of the disputed debt.⁵ Pl.'s First Am. Compl. ¶ 18. Wolpoff argues Eads "cannot prove any set of facts" which would entitle him to relief. Def.'s Mot. to Dismiss 4-6.

The FDCPA is designed to "eliminate abusive debt collection practices by debt collectors." 15 U.S.C. § 1692(e). It "prohibits debt collectors from making false or misleading representations and from engaging in various abusive and unfair practices." Heintz v. Jenkins, 514 U.S. 291, 292, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995).

1. Misrepresenting the character, nature or amount of debt in violation of § 1692f(1)

Eads maintains Wolpoff violated the FDCPA by filing a petition in state court seeking to recover from Eads "`the current amount of $13,397.23,'" which is "$225.00 more than the amount of the arbitration award, $13,172.23." Pl.'s First Am. Compl. ¶ 18 (quoting Pl.'s Org. Pet. to Confirm Arb. Award ¶ 8).

Wolpoff argues Eads cannot show a violation of § 1692f(1) because Wolpoff filed a "Supplemental Trial Petition" in the state court action, wherein the amount of recovery sought was changed from $13,397.23 to $13,172.23. Def. Mot. to Dismiss 4. Neither party disputes that $13,172.23 is the accurate value of the arbitration award, or that Wolpoff originally filed a claim seeking $13,397.23.

§ 1692f(1) prohibits a debt collector from collecting or attempting to collect any amount, including interest, fees, charges, or expenses incidental to the principal obligation, "unless such amount is expressly authorized by the agreement creating the debt." 15 U.S.C. § 1692f(1). Debt collectors are entitled to a good faith defense for conduct which otherwise violates the FDCPA. Id. at § 1692k(c). To invoke this defense, a party must show "that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid such error." Id.

In the Supplemental Trial Petition filed in the state court action, Wolpoff admitted that the amount of recovery set forth in the Original Petition to Confirm Arbitration Award "consisted of the arbitration award ... and the filing fees incurred in the filing of this petition in this court, which at that point were in the sum of $225.00." Def. Mot. to Dismiss Ex. 2. Though Wolpoff amended the state court petition to reflect the accurate value of the arbitration award, it can still be held liable for violating the FDCPA. See Goins v. JBC & Assocs., P.C., 352 F.Supp.2d 262 (D.Conn.2005) (holding that the defendants violated the FDCPA by overstating the amount of debt due though they later clarified their misrepresentation). There is no indication that Wolpoff had authority to collect any of the costs associated with pursuing the arbitration award, including filing fees. Wolpoff has not invoked the statutory good faith defense, or otherwise asserted that the amount of debt was stated in error. Thus, the Court finds Eads states a legally cognizable claim that Wolpoff's collection efforts violated § 1692f(1).

2. Threatening to and actually taking an act prohibited by law in violation of § 1692e(5)

To violate § 1692e(5), Wolpoff "must have threatened to take action which [it was] in fact prohibited by law from taking." Poirier v. Alco Collections, 107 F.3d 347, 349 (5th Cir.1997). A debt collector may be liable for violating § 1692e(5) if it adds an unauthorized collection fee to the amount of debt owed. Newman v. Checkrite Cal., Inc., 912 F.Supp. 1354 (E.D.Cal.1995).

Eads alleges Wolpoff acted to collect an unlawful amount of debt by adding an unauthorized $225.00 filing fee to the value of the arbitration award. Pl.'s Resp. ¶ 10. Thus, Eads sets forth a legally cognizable claim that Wolpoff undertook an unlawful action and violated § 1692e(5).⁶ Accordingly, the Court finds Eads states a claim upon which relief may be granted.

3. Communicating with a debtor with knowledge that the debtor is represented by counsel in violation of §§ 1692b and 1692c

Eads alleges Wolpoff "bypassed [Eads's] attorney of record and communicated directly with [Eads] ... when it knew [he] was represented by counsel" when it served him with a copy of the summary judgment motion filed in the state court action and a notice of a hearing on the matter. Pl.'s First Am. Comp. ¶ 11. Wolpoff maintains its pleadings are immune from liability because "delivery of pleadings in pending litigation to parties is absolutely privileged." Def.'s Mot. to Dismiss 5.

A debt collector...