Faircloth v. AR Res., Inc.

Decision Date19 February 2020
Docket NumberCase No. 19-cv-05830-JCS
PartiesJAMES FAIRCLOTH, Plaintiff, v. AR RESOURCES, INC., Defendant.
CourtU.S. District Court — Northern District of California
ORDER GRANTING MOTION TO DISMISS
ORDER TO SHOW CAUSE
I. INTRODUCTION

Plaintiff James Faircloth brings this action against Defendant AR Resources, Inc., for alleged violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., and the Rosenthal Fair Debt Collection Practices Act, Cal. Civ. Code § 1788 et seq. Presently before the Court is Defendant's Motion to Dismiss Plaintiff's First Amended Complaint. The Court held a hearing on February 14, 2020, at which Plaintiff's counsel did not appear. The hearing was continued to February 28, 2020. The Court now finds the motion suitable for resolution without oral argument and VACATES that hearing, although the case management conference set for the same time remains on calendar. For the reasons stated below, the motion is GRANTED with leave to amend, and Plaintiff is further ORDERED TO SHOW CAUSE on February 28, 2020 at 2:00 PM why the case should not be dismissed for failure to prosecute and failure to appear at the hearing.1

II. ORDER TO SHOW CAUSE

Pursuant to the Court's January 8, 2020 order on the parties' stipulation to continue, theinitial case management conference and the hearing on Defendant's present motion were set for 2:00 PM on February 14, 2020. Dkt. 26. Defense counsel appeared in person. Plaintiff's counsel requested and received leave to appear by telephone, dkt. 28, but failed to do so. Plaintiff is therefore ORDERED to appear through counsel on February 28, 2020 at 2:00 PM in Courtroom F and SHOW CAUSE why this case should not be dismissed for failure to prosecute and failure to appear as ordered.

III. BACKGROUND
A. The Complaint and FAC

Plaintiff is a "debtor" and "consumer" who resides in Contra Costa County, California. First Amended Complaint ("FAC," dkt. 14) ¶ 2 (citing Cal. Civ. Code § 1788.2(h); 15 U.S.C. § 1681a). Defendant is a "debt collector" assigned to collect Plaintiff's "consumer debt." Id. ¶ 3 (citing Cal Civ Code § 1788.2(c), (d)). The FAC also names ten Doe Defendants, whose names "are currently unknown to Plaintiff" but who Plaintiff alleges are "legally responsible for the unlawful acts alleged herein." Id. ¶ 5.

Plaintiff alleges that Defendant violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. (the "FDCPA") and the Rosenthal Fair Debt Collection Practices Act, Cal. Civ. Code § 1788 et seq. (the "RFDCPA"), "in multiple ways, including but not limited to falsely representing the character, amount, or legal status of Plaintiff's debt by reporting to Plaintiff's consumer credit report without notifying Plaintiff." FAC ¶ 13 (citing § 1692e(2)(A)). In his original complaint, Notice of Removal (dkt. 1) Ex. A, Plaintiff also asserted a claim under the California Consumer Credit Reporting Agencies Act, Cal. Civ. Code § 1785.25 et seq. ("CCRAA") which was erroneously omitted from the FAC. See Opp'n (dkt. 23) at 1 n.1 (acknowledging "an error in the First Amended Complaint" and noting Plaintiff's intent to amend the FAC to include a CCRAA claim).

Plaintiff filed a complaint in Contra Costa Superior Court on August 15, 2019. Notice of Removal Ex. A at 7. Defendant removed the case to this Court on September 18, 2019 under 28 U.S.C. §§ 1331 and 1441(a). Id. at 1. Defendant filed a motion to dismiss the complaint on October 16, 2019. Dkt. 10. Plaintiff did not oppose the motion but filed the FAC on November12, 2019. Dkt. 14. The Court denied Defendant's motion to dismiss the original Complaint as moot. Dkt. 16.

According to the FAC, Plaintiff incurred a medical bill from San Ramon Regional Medical Center on January 10, 2018. FAC ¶ 8. Plaintiff's insurance paid $975.80 of the $1026.00 bill on March 21, 2018, leaving Plaintiff responsible for paying $50.20. Id. Plaintiff alleges that he received a notice from Defendant on July 14, 2018, dated July 2, 2018, informing him that Defendant was a debt collector trying to collect the $50.20 debt. Id. ¶ 10; see also Mot. (dkt. 21) Ex. A (copy of the July 2018 letter).2 It read in part:

Please be advised that our client is a credit reporting client. Your credit report may have a negative impact if we do not hear from you.
Unless you notify this office within 30 days from receiving this notice that you dispute the validity of the debt, or any portion thereof, this office will assume this debt is valid.

Mot. Ex. A. However, Plaintiff alleges that Defendant had already reported the debt to credit agencies on June 21, 2018, before it sent the letter. FAC ¶ 9. Plaintiff also alleges that "the information Defendant reported is misleading and false, including, but not limited to the age of the debt, the status of the account as 'Open' and the date of last payment." Id.

Plaintiff sent a letter disputing the account on July 16, 2018 and received a response from Defendant on September 21, 2018. Id. ¶ 11. He filed suit in Contra Costa Superior Court on August 15, 2019. Notice of Removal Ex. A at 7. "Due to Defendant's practice of failing to provide notice before reporting false and/or derogatory information to Plaintiff's consumer credit report," Plaintiff claims, "Plaintiff did not discover the derogatory information until some time after Plaintiff's dispute with Defendant." FAC ¶ 11. Plaintiff alleges that Defendant's conduct"violated the RFDCPA and FDCPA in multiple ways, including but not limited to falsely representing the character, amount, or legal status of Plaintiff's debt by reporting to Plaintiff's consumer credit report without notifying Plaintiff." Id. ¶ 13 (citing 15 U.S.C. § 1692e(2)(A)).

Plaintiff also alleges that:

Defendant violated . . . sections of the CCRA [sic] by engaging in the following conduct that violates 15 U.S.C. §1681s-2(b):
a. Willfully and negligently continuing to furnish and disseminate inaccurate and derogatory credit, account and other information concerning the Plaintiff to credit reporting agencies and other entities despite knowing that said information was inaccurate; and,
b. Willfully and negligently failing to comply with the requirements imposed on furnishers of information pursuant to 15 U.S.C. §1681s-2.

Id. ¶ 22.

Plaintiff claims that, through those violations, Defendant caused Plaintiff to suffer "emotional distress and mental anguish" as well as a "[d]ecreased credit score." Id. ¶ 19.

B. Defendant's Motion to Dismiss

Defendant filed a motion to dismiss Plaintiff's FAC on November 26, 2019. Dkt. 21. Defendant contends that, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, this Court should dismiss the FAC because Plaintiff's claims are untimely and because Plaintiff has not pleaded facts in the FAC that support his claims under the FDCPA and the RFDCPA. Mot. at 2-3.

1. Untimeliness

In its motion to dismiss, Defendant first argues that Plaintiff's claims are barred because they are untimely. Mot. at 6-7. Claims brought under the FDCPA and the RFDCPA, Defendant says, must be brought within a year of the alleged violation. Id. at 6 (citing 15 U.S.C. § 1692k(d); Cal. Civ. Code § 1788.30(f)). Defendant contends that even if the Court accepts the latest possible date as the occurrence of the violation (Plaintiff's July 14, 2018 receipt of the letter), Plaintiff's claim is still time-barred because he did not file the original complaint until August 15, 2019, more than a year after receiving the letter. Id. at 8; see also Notice of Removal at 1 (listing the date of filing for the original complaint in Contra Costa Superior Court).

Defendant argues that the "discovery rule," or the common law rule that the statute of limitations begins to run when the plaintiff discovers the violation rather when the violation occurs, does not apply to Plaintiff because Plaintiff was not "diligent in discovering the critical facts underlying his claims." Mot. at 6 (citing Laforge v. Richland Holdings, Inc., No. 2:17-CV-00782-APG-VCF, 2018 WL 525298, at *4 (D. Nev. Jan. 23, 2018)). Defendant also argues that the language of the July letter undermines Plaintiff's claim that he diligently pursued his rights in this action because "even if the Court assumes as true that Defendant began reporting the account to the consumer reporting agencies on June 21, 2018 without first notifying Plaintiff, he knew all the facts regarding his 'failure to warn' claim no later than July 14, 2018." Id. at 8.

Plaintiff disputes Defendant's assessment of the timing of the action. He argues that Defendant continued communicating with Plaintiff "through September 2018. . . . Thus, the claims did not fully accrue until Defendant responded to Plaintiff's request for verification on September 21, 2018." Opp'n at 5; see also FAC ¶ 12 (describing Defendant's conduct as "not 'discrete acts'" but as "a pattern of conduct").

In its reply, Defendant points to the Supreme Court's recent decision in Rotkiske v. Klemm, 140 S. Ct. 355 (2019).3 Reply (dkt. 23) at 1. In Rotkiske, the Court held that the "language [of 15 U.S.C. § 1692k, the FDCPA's statute of limitations section,] unambiguously sets the date of the violation as the event that starts the one-year limitations period" and that the discovery rule does not apply to FDCPA claims. 140 S. Ct. at 360. Defendant reasserts its claim that the "event" was Defendant's reporting the debt to credit agencies, which Plaintiff alleges happened on June 21, 2018. Id. at 2. Because the original complaint was filed on August 15, 2019, and the discovery rule does not apply under Rotkiske, Defendant contends that Plaintiff's action is time-barred.

Plaintiff argues that the violation did not occur until September 21, 2018, when he received a response from Defendant. Opp'n at 5. He references the doctrine of equitable tolling, which would mean "'the bar of the statute does not begin to run'" until Plaintiff discovered the "fraud" by which Defendant concealed...

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