Espinosa v. Metcalf
| Decision Date | 01 December 2021 |
| Docket Number | Case No. 21-cv-10356-DJC |
| Citation | 575 F.Supp.3d 250 |
| Parties | Sergio ESPINOSA Sr. and Sergio Espinosa Jr., Plaintiffs v. Andrew C. METCALF d/b/a Judgment Acquisitions Unlimited, Champion Funding, Inc. and Export Enterprises Inc., Defendants. |
| Court | U.S. District Court — District of Massachusetts |
Kevin V.K. Crick, Rights Protection Law Group, PLLC, Boston, MA, Yitzchak Zelman, Pro Hac Vice, Marcus & Zelman, LLC, Asbury Park, NJ, for Plaintiffs.
Brendan R. Pitts, Flavin Pitts P.C., Milton, MA, for Defendants Andrew C. Metcalf, Champion Funding, Inc.
Efpraxia P. Salpoglou, Law Office of E. Pamela Salpoglou, Stoughton, MA, for Defendant Export Enterprises Inc.
Plaintiffs Sergio Espinosa Sr. and Sergio Espinosa Jr. (collectively, the "Espinosas") have filed this lawsuit against Andrew C. Metcalf ("Metcalf") d/b/a Judgment Acquisitions Unlimited ("JAU"), Champion Funding, Inc. ("Champion") and Export Enterprises Inc. ("Export") (collectively, "Defendants") alleging violations of the Fair Debt Collection Practices Act ("FDCPA") codified at 15 U.S.C. § 1692 et seq. (Counts I, II, III, IV, VI, VII and VIII), violations of Mass. Gen. L. c. 93 and 93A (Counts V and IX) and conversion (Count X) arising from an attempted debt collection. D. 13. Export now moves to dismiss. D. 18. For the reasons stated below, the Court ALLOWS IN PART and DENIES IN PART Export's motion.
On a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6), the Court must determine if the facts alleged "plausibly narrate a claim for relief." Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55 (1st Cir. 2012) (citation omitted). Reading the complaint "as a whole," the Court must conduct a two-step, context-specific inquiry. García-Catalán v. United States, 734 F.3d 100, 103 (1st Cir. 2013). First, the Court must perform a close reading of the claim to distinguish the factual allegations from the conclusory legal allegations contained therein. Id. Factual allegations must be accepted as true, while conclusory legal conclusions are not entitled credit. Id. Second, the Court must determine whether the factual allegations present a "reasonable inference that the defendant is liable for the conduct alleged." Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir. 2011) (citation omitted). In sum, the complaint must provide sufficient factual allegations for the Court to find the claim "plausible on its face." García-Catalán, 734 F.3d at 103 (citation omitted).
The following factual allegations in the Espinosas’ amended complaint, D. 13, are accepted as true for consideration of the motion to dismiss.
In 2006, Champion obtained a judgment against Sergio Espinosa Sr. ("Senior") for a credit card debt he incurred for the purchase of personal and household items. D. 13 ¶¶ 25–27. At the time, Senior's son Sergio Espinosa Jr. ("Junior") was still a minor. Id. ¶ 30. Junior had no connection to the credit card debt or related judgment. Id. ¶ 29.
At some point, Champion hired Metcalf and his company JAU to collect on the 2006 judgment. Id. ¶ 31. Metcalf and JAU use the mail, telephone or facsimile in a business the principal purpose of which is the collection of judgments and debts owed to another. Id. ¶¶ 11, 13. Metcalf and JAU in turn hired and arranged for Export to seize Senior's personal property to satisfy the 2006 judgment. Id. ¶ 32. "Upon information and belief," Export "uses the mail, telephone, or facsimile in a business the principal purpose of which is the collection of debt and the enforcement of security interests, namely the repossession of vehicles by secured lenders." Id. ¶ 21. Also "[u]pon information and belief," Export "also regularly collects, or attempts to collect, debts owed or due another, by seizing vehicles, boats and other assets in order to collect on outstanding judgments owed to other creditors and debt collectors." Id. ¶ 22.
Senior and Junior live together in Dracut, Massachusetts at a private residence owned by Senior and rented in part by Junior (the "Espinosa Residence"). Id. ¶¶ 33–34. On September 22, 2020, at approximately 3:30 a.m., the Espinosas awoke to the sound of a truck in their driveway. Id. ¶ 35. Junior went outside and saw Defendants attempting to tow his Mini Cooper vehicle from the driveway. Id. ¶ 36. As the person moving the vehicle was securing it, Junior confronted the individual—identified as an employee of Export—and advised him that he had no right to tow the vehicle. Id. ¶¶ 37–38. Defendants claimed they had a right to seize the vehicle and drove off with it. Id. ¶ 39.
The next day, Junior contacted JAU and spoke with Metcalf, advising him that they had no right to take his vehicle and that they had taken the wrong car since Junior had no connection to the 2006 judgment obtained against Senior. Id. ¶ 40. Metcalf responded to Junior "you are lying," "I deal with liars everyday" and that the Mini Cooper was in fact registered to Senior. Id. ¶ 41. The Mini Cooper was, however, registered to Junior, not Senior, who leases a Honda Accord through Honda Financial. Id. ¶¶ 42–43.
Even after being advised that they had seized the wrong vehicle, JAU and Metcalf told Junior that they would "settle" for $4,000 and that Junior would need to pay $3,000 of that sum within twenty-four hours if he wanted his Mini Cooper back. Id. ¶ 44. Further, Junior was advised that an attorney named Michael Zola ("Zola") was representing JAU in connection with the judgment enforcement proceedings. Id. ¶ 45. Junior spoke with Zola, who advised Junior to offer Metcalf $4,000 to resolve Senior's debt. Id. ¶ 46. Junior emailed Zola on September 24, 2020 to demand the immediate return of the Mini Cooper, stating that his vehicle was wrongfully taken, that he had no connection to Senior's debt and that he was only fifteen years old when the 2006 judgment entered against Senior. Id. ¶ 47. Junior further advised Zola that his ownership of the Mini Cooper could be verified through correspondence with the bank that provided him a loan for the vehicle, which Junior attached to the email, or by reference to the registration located in the vehicle's glove compartment. Id. ¶¶ 47–48.
Metcalf, JAU and Export refused to return Junior's Mini Cooper over the next sixteen days. Id. ¶ 49. On October 9, 2020, Export returned Junior's car to the Espinosa Residence and immediately towed Senior's leased Honda Accord. Id. ¶ 52.
The Espinosas and Honda Financial repeatedly advised Defendants that they could not legally seize the Honda Accord since Senior does not own the vehicle but instead leases it and provided Defendants with a copy of the lease. Id. ¶¶ 53–54. Defendants refused to return Senior's vehicle unless he paid thousands of dollars in storage fees. Id. ¶ 55. As of the amended complaint's filing, Defendants continued to possess the Honda Accord. Id. ¶ 56.1
The Espinosas commenced this action on March 3, 2021, D. 1, and filed an amended complaint on April 19, 2021, D. 13. Export now moves to dismiss. D. 18. The Court heard the parties on the pending motion and took the matter under advisement. D. 26.
The Espinosas allege several violations of the FDCPA, which provides a private right of action against "debt collector[s]" who violate the act's provisions, see 15 U.S.C. § 1692k. In moving to dismiss all counts based on the FDCPA, Export argues that it is not a "debt collector" as defined by statute and, therefore, cannot be held liable under the FDCPA. D. 18 at 4–6. Section 1692a defines "debtor 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." 15 U.S.C. § 1692a(6). Additionally, "[f]or the purpose of section 1692f(6) of this title, such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests." Id. Export argues that its principal business purpose is not to collect debt but rather to provide towing and storage services. D. 18 at 4.
While the First Circuit has not addressed whether a repossession company may qualify as a "debt collector" under the FDCPA, at least six circuit courts have concluded that "a person whose business has the principal purpose of enforcing security interests but who does not otherwise satisfy the definition of a debt collector is subject only to § 1692f(6)." See Kaltenbach v. Richards, 464 F.3d 524, 527 (5th Cir. 2006) ; Burnett v. Mortg. Elec. Registration Sys., Inc., 706 F.3d 1231, 1236 (10th Cir. 2013) ; Ausar-El ex rel. Small, Jr. v. BAC (Bank of Am.) Home Loans Servicing LP, 448 F. App'x 1, 2 (11th Cir. 2011) ; Piper v. Portnoff L. Assocs., Ltd., 396 F.3d 227, 236 (3d Cir. 2005) ; Montgomery v. Huntington Bank, 346 F.3d 693, 700–01 (6th Cir. 2003) (); James v. Ford Motor Credit Co., 47 F.3d 961, 962 (8th Cir. 1995) ; Goodwin v. His Choice Towing & Recovery, LLC, No. 1:17-CV-753-MLB-LTW, 2019 WL 1212119, at *9 (N.D. Ga. Jan. 14, 2019), report and recommendation adopted, No. 1:17-CV-00753, 2019 WL 7944075, at *3 (N.D.) (); see also Speleos v. BAC Home Loans Servicing, L.P., 824 F. Supp. 2d 226, 232–33 (D. Mass. 20...
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