Epps v. Fair Collections & Outsourcing, Inc.
| Decision Date | 10 August 2020 |
| Docket Number | Civil Action No. 7:20-cv-00176 |
| Court | U.S. District Court — Western District of Virginia |
| Parties | KRISTYN EPPS, Plaintiff, v. FAIR COLLECTIONS & OUTSOURCING, INC., et al., Defendants. |
MEMORANDUM OPINION AND ORDER
Kristyn Epps filed her complaint in this action asserting a claim for a violation of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692, et seq., on her own behalf and on behalf of a class of others similarly situated, against defendant Fair Collections & Outsourcing, Inc. (FCO). (Compl., Dkt. No. 1.) Specifically, she claims that a letter sent by FCO contained a false or misleading representation in violation of § 1692e. FCO seeks dismissal of Epps' claim under Federal Rule of Civil Procedure 12(b)(6), arguing that (1) Epps does not allege a "debt" as defined by the FDCPA; (2) the notice was not sent to collect on Epps' obligation because it was sent only after the obligation had been satisfied; (3) the notice did not have a material effect on Epps' decision to pay the obligation because it was sent after Epps made her final payment; and (4) even if Epps successfully alleged that FCO attempted to collect a debt, and that the notice contained a material statement, that statement would not deceive even the least sophisticated consumer. The court finds that Epps has failed to meet the threshold requirement that the obligation constitute a "debt" actionable under the FDCPA.1 Accordingly, the court will dismissthe complaint without prejudice for failure to state a claim.
Epps alleges that at "[s]ome time prior to March 25, 2019 an obligation was allegedly incurred to Home Properties L.P." (Compl. ¶ 21.) The "obligation arose out of transactions . . . primarily for personal, family or household purposes." (Id. ¶ 22.) Home Properties then contracted with the FCO to collect the debt. (Id. ¶ 25.)
On March 25, 2019, FCO mailed Epps a letter with the heading "NOTICE OF SETTLEMENT IN FULL." The letter notes that Epps' account was settled in full, and that FCO had requested consumer reporting agencies update her account to reflect that status. (Id. ¶¶ 27-29.)
Epps contends that the phrase "settled in full" is false and misleading because it suggests two contradictory resolutions of the debt: (1) the account was paid in full; or (2) the account was settled for less than the full amount. She asserts that the phrase is contradictory and materially misleading because it uses both the terms "settled," which indicates termination of the obligation with less than payment in full, and "in full," which would suggest payment in full of the obligation. As a result, she alleges that the phrase may cause improper credit reporting because it is unclear how the account will be reported—as settled or paid in full. (Id. ¶¶ 30-33.)
To survive a Rule 12(b)(6) motion to dismiss, a plaintiff's allegations must "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). This standard "requires the plaintiff to articulate facts, when accepted as true, that 'show' that the plaintiff has stated a claim entitling him to relief,i.e., the 'plausibility of entitlement to relief.'" Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (quoting Iqbal, 556 U.S. at 678). The plausibility standard requires more than "a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678.
In determining whether the plaintiff has met this plausibility standard, the court must accept as true all well-pleaded facts in the complaint and may also consider documents attached to or incorporated by reference into the complaint. Sec'y of State for Defence v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir. 2007); Fed. R. Civ. P. 10(c). Further, it must "draw[] all reasonable factual inferences from those facts in the plaintiff's favor," Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999), but it "need not accept legal conclusions couched as facts or 'unwanted inferences, unreasonable conclusions, or arguments,'" Wag More Dogs, LLC v. Cozart, 680 F.3d 359, 365 (4th Cir. 2012) (quoting Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008)).
"Congress enacted the Fair Debt Collection Practices Act to eliminate abusive debt collection practices." Carroll v. Wolpoff & Abramson, 961 F.2d 459, 460 (4th Cir. 1992). "Consequently, a threshold requirement for application of the FDCPA is that the prohibited practices are used in an attempt to collect a 'debt.'" Mabe v. G.C. Servs. Ltd. P'ship, 32 F.3d 86, 87-88 (4th Cir. 1994). The FDCPA defines a "debt" as:
any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.
15 U.S.C. § 1692a(5).
In Mabe, the Fourth Circuit clarified that "the type of 'transaction' which creates a 'debt' under the FDCPA is one in which 'a consumer is offered or extended the right to acquire money, property, insurance, or services which are primarily for household purposes and to defer payment.'" Mabe, 32 F.3d at 88 (internal quotations omitted) (quoting Zimmerman v. HBO Affiliate Grp., 834 F.2d 1163, 1168-69 (3d Cir. 1987)). This court has previously interpreted Mabe as excluding from the definition of "debt" obligations that "were not incurred to receive consumer goods or services." Nance v. Petty, Livingston, Dawson, & Devening, 881 F. Supp. 223, 225 (W.D. Va. 1994) (quoting Mabe, 32 F.3d at 88); see also Vaile v. Willick, No. 6:07cv00011, 2008 WL 204477, at *5-6 (W.D. Va. Jan. 24, 2008) ().
Epps has failed to allege a "debt" with enough particularity to state a claim under the FDCPA. Her complaint states that "[s]ome time prior to March 25, 2019 an obligation was allegedly incurred to Home Properties L.P.," which "obligation arose out of transactions in which money, property, insurance or services, which are the subject of the transaction, were primarily for personal, family or household purposes." (Compl. ¶¶ 20-21.) These allegations merely state a legal conclusion and track the FDCPA's definition of a "debt." However, "[t]o adequately plead facts showing a consumer debt, a plaintiff must do more than merely track the statute's language." Piper v. Meade & Assocs., Inc., 282 F. Supp. 3d 905, 911 (D. Md. 2017); see also Maleh v. United Collection Bureau, Inc., 287 F. Supp. 3d 265, 270-72 (E.D.N.Y. 2018) ().
Epps argues that "courts have often only found the bare-bones allegations that a debt was incurred for personal reasons insufficient on a motion to dismiss when the complaint otherwisecontains contrary inferences." (Pl.'s Resp. 6, Dkt. No. 18.) But the two cases on which Epps relies are distinguishable and are not supportive of her proposed standard. In Norton v. LVNV Funding, LLC, 396 F. Supp. 3d 901 (N.D. Cal. 2019), the plaintiff failed to plead facts about the nature of her credit card debt. The plaintiff alleged, however, that every credit card she owned was for personal use and that she had never operated a business. The court noted that it was clear the plaintiff did not have concrete information about the debt because of how much time had passed since it was incurred. The court held that the plaintiff sufficiently alleged a "debt," but not simply because she avoided pleading contrary facts. Rather, the court adopted the same standard stated above: "A plaintiff must allege a consumer debt but may do so through non-conclusory factual allegations that support plausible inferences." Id. at 912.
In Sayeed v. Cheatham Farms Master Homeowners' Ass'n, No. CV 18-2073 PA, 2018 WL 4297480 (C.D. Cal. Sept. 7, 2018), the court granted a motion for judgment on the pleadings where the plaintiffs' own factual allegations belied their conclusory statements that the obligation at issue was a "consumer debt." The alleged debt was delinquent homeowners' association dues for a house in Arizona, but the plaintiffs alleged that they "resided exclusively and continuously" in Los Angeles for years. The court granted the motion, finding that the property was used to generate rental income, not for personal, family, or household purposes. In Sayeed, the plaintiff affirmatively pled facts suggesting the obligation did not meet the FDCPA's definition of a "debt." Id. at *1-3. While Epps did not affirmatively plead facts contradicting her allegations that the obligation to Home Properties was a "debt," that does not save her from the inadequacies in her own complaint.2
Epps next argues that the letter from FCO attached to her complaint shows that the "debt" here was in fact a consumer debt because it refers to "Home Properties LP" and is related to a residential address. Relying on the definition of "home" from the Merriam-Webster Online Dictionary, Epps asserts that the name of the creditor, "Home Properties," suggests that the debt was associated with a personal residence. She further points the court to Home Properties Inc.'s filing with the U.S. Securities and Exchange Commission, noting that the filing indicates Home Properties invests in apartment complexes.3
Epps is correct that courts have previously looked to facts describing the owner of the debt to determine whether it was a consumer debt actionable under the FDCPA. See Piper, 282 F....
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