Grice v. VIM Holdings Grp., LLC

• Decision Date: 08 December 2017
• Docket Number: CIVIL ACTION NO. 17–10944–WGY
• Parties: Sheena GRICE, Plaintiff, v. VIM HOLDINGS GROUP, LLC, Michael D'Ambrose, Hirsch Mohindra, B Financial, LLC, John Bartlett, U Solutions Group, LLC, Theresa D'Ambrose, Global Service Group, LLC, Ruth Poutanen, KRW Attorneys & Associates, LLC, and George Wahbeh, Defendants.
• Court: U.S. District Court — District of Massachusetts

280 F.Supp.3d 258

Sheena GRICE, Plaintiff,

v.VIM HOLDINGS GROUP, LLC, Michael D'Ambrose, Hirsch Mohindra, B Financial, LLC, John Bartlett, U Solutions Group, LLC, Theresa D'Ambrose, Global Service Group, LLC, Ruth Poutanen, KRW Attorneys & Associates, LLC, and George Wahbeh, Defendants.

CIVIL ACTION NO. 17–10944–WGY

United States District Court, D. Massachusetts.

Signed December 8, 2017

Josef C. Culik, Kristin L. Thurbide, Culik Law PC, Boston, MA, for Plaintiff.

Benjamin R. Davis, John A. Houlihan, Locke Lord LLP, Providence, RI, Mark C. Rossi, Jager Smith P.C., Boston, MA, for Defendants.

MEMORANDUM OF DECISION

YOUNG, D.J.

I. INTRODUCTION

The plaintiff, Sheena Grice ("Grice"), filed this action against the defendants VIM Holdings Group, LLC ("VIM"), its manager Michael D'Ambrose and its member Hirsch Mohindra ("Mohindra"), B Financial, LLC ("B Financial") and its manager John Bartlett ("Bartlett"), U Solutions Group, LLC ("U Solutions"), its organizer Theresa D'Ambrose and its owner Michael D'Ambrose, Global Service Group, LLC ("Global") and its manager Ruth Poutanen ("Poutanen"), and KRW Attorneys & Associates, LLC ("KRW")¹ and its member attorney George Wahbeh ("Wahbeh"), asserting violations of the Massachusetts Small Loan Laws ("MSLL"), Massachusetts General Laws chapter 140, sections 96 – 113 (Count I)(against VIM Holdings, LLC and B Financial, LLC), the Massachusetts Debt Collection Practices Act ("MDCPA"), Massachusetts General Laws chapter 93, section 24 (Count II), the Federal Debt Collection Practices Act ("FDCPA"), 15 U.S.C. sections 1692, et seq. (Count III)(against VIM Holdings Group, B Financial, U Solutions Group, Global Service Group. KRW, and Wahbeh), asserting fraud (Count IV), civil conspiracy to commit fraud (Count V), and violations of the Consumer Protection Act ("CPA"), Massachusetts General Laws chapter 93A, section two (Count VI). The defendants² filed a joint motion to dismiss all counts for lack of personal jurisdiction and moved to compel Grice to submit her claims to the forum selection clause.

A. Procedural History

On or about April 21, 2017, Grice filed this suit against the defendants in the Massachusetts Superior Court sitting in the and for the County of Suffolk. Notice Removal, ECF No. 1. On May 22, 2017, the defendants removed the suit to the United States District Court for the District of Massachusetts on diversity grounds. Id. Grice's complaint contains six claims: (1) a MSLL claim against VIM and B Financial, id. at ¶¶ ,56–72, (2) a MDCPA claim against all defendants, id. at ¶¶ 73–86, (3) a FDCPA claim against VIM, B Financial, U Solutions, Global, KRW and Wahbeh, id. at ¶¶ 87–110, (4) a claim for fraud against all defendants, id. at ¶¶ 111–17, (5) a claim for civil conspiracy to commit fraud against all defendants, id. at ¶¶ 118–23, and (6) a CPA claim, id. at ¶¶ 124–30.

On October 10, 2017, the Defendants moved to dismiss all counts for lack of jurisdiction, Joint Mot. Dismiss Lack of Jurisdiction ("Defs.' Joint Mot. Lack of Jurisdiction"), ECF No. 51; Joint Mem. Supp. Joint Mot. Dismiss Lack of Jurisdiction ("Defs.' Joint Mem. Lack of Jurisdiction"), ECF No. 52, and moved to dismiss all counts for failure to state a claim or, in the alternative, to transfer venue. Joint Mot. Dismiss Failure to State a Claim, ECF No. 49; Joint Mem. Supp. Joint Mot. Dismiss Failure to State a Claim ("Defs.' Joint Mem. Failure to State a Claim"), ECF No. 50. On October 20, 2017, Grice filed her opposition to the defendants' joint motions to dismiss. Pl.'s Opp'n Joint Mot. Dismiss Lack of Jurisdiction ("Pl.'s Mem. Opp'n Lack of Jurisdiction"), ECF No. 56; Pl.'s Opp'n Joint Mot. Dismiss Failure to State a Claim ("Pl.'s Mem. Opp'n Failure to State a Claim"), ECF No. 55. The parties appeared before the Court for oral argument on November 9, 2017, Electronic Notice, ECF No. 57.

B. Factual Allegations

Grice is a single parent and resides in Roslindale, MA. Compl. ¶ 4. She earns less than $15.00 an hour—her only source of income to support herself and her minor child. Id. at ¶ 49. VIM is a Delaware limited liability company with a principal place of business in Addison, Illinois. Id. at ¶ 5. It operates several payday loan websites, including www.guaranteedcashnow.net ("Website"). Id. Michael D'Ambrose resides in Chicago, Illinois and is the registered principal of VIM. Id. at ¶ 6. Mohindra also resides in Illinois and is a managing member of VIM. Id. at ¶ 7. B Financial is a Delaware limited liability company with a principal place of business in Bloomingdale, Illinois. Id. at ¶ 8. It is a payday lender affiliated with VIM. Id. Bartlett is the registered principal and managing member of B Financial. Id. at ¶ 9. Through the Website, VIM and B Financial conduct business together as Guaranteed Cash Now, a payday lender offering small loans to low income consumers with poor credit at high rates. Id. at ¶¶ 29–30.

U Solutions is a Wyoming limited liability company with principal places of business in Addison, Illinois and Wood Dale, Illinois. Id. at ¶ 10. U Solutions handles the debt collection for payday loans issued through the Website. Id. Theresa D'Ambrose, who resides in Chicago, Illinois, is the registered principal and organizer of U Solutions and is also the wife of Michael D'Ambrose. Id. Global is a Delaware limited liability company with a principal place of business in Chicago, Illinois. Id. at ¶ 12. It was registered with the Secretary of the Commonwealth of Massachusetts as a foreign limited liability company doing business as a "collection company" in Massachusetts.³ Pl.'s Mem. Opp'n Lack of Jurisdiction at 10. Global handles the Automatic Clearing House ("ACH") transactions on behalf of VIM and B Financial for loans issued through the Website. Compl. ¶ 12. Poutanen, who resides in Wausau, Wisconsin, is the managing member of Global and is also the mother of Theresa D'Ambrose. Id. at ¶ 13. In addition, the telephone number of Global is registered to Nascent Holdings, LLC, which is owned by Michael D'Ambrose. Id. at ¶¶ 26–27.

KRW is an Illinois law firm located in Chicago, Illinois, and is the corporate counsel for Guaranteed Cash Now. Id. at ¶ 14. Wahbeh, who resides in Morton Grove, Illinois, is an attorney licensed to practice in Illinois and is one of the three members of KRW. Id. at ¶ 15.

On July 14, 2015, Grice applied for and received a $200 loan ("Loan") through the Website using her Massachusetts address. Id. at ¶¶ 31, 65. Grice was directed to the Website after B Financial successfully bid on a consumer's loan application. Defs.' Joint Mem. Lack of Jurisdiction Ex. 2 at ¶¶ 7–8. After Grice submitted her loan application through the Website, a loan specialist contacted her regarding her application and then provided her with the login information to the customer section of the Website. Id. at ¶ 4.

Shortly after receiving the loan, Global began withdrawing money from Grice's online account with Citibank, N.A., which was registered with Grice's address in Massachusetts. Compl. at ¶¶ 41, 65. Because such withdrawals continued after Grice believed that she had fully repaid the Loan, at some unspecified time, Grice closed her account with Citibank, N.A., hoping to stop the withdrawals. Id. at ¶ 42.

After she closed the account, Grice received many telephone calls from U Solutions, informing her that she could be arrested and compelled to defend a lawsuit in Chicago, Illinois, if she did not provide her new account number. Id. at ¶ 43. U Solutions sent emails to Grice's work place, in which U Solutions threatened to garnish her wages if she did not make timely payments, id. at ¶ 44, and sent invoices to Grice for payments which she believed that she did not owe, id. at ¶ 114. U Solutions also left recorded messages for Grice stating that her balance would be reset to start over if she missed a payment. Id. On June 14, 2016, Wahbeh drafted and sent a letter on KRW letterhead to Grice's work email, stating that Guaranteed Cash Now had a right to garnish Grice's wages without a court order and would sue her and potentially add "thousands of dollars in attorney's fees, legal expenses and court costs to the judgment amount." Id. at ¶¶ 45, 114; Pl.'s Mem. Opp'n Lack of Jurisdiction Ex. 1. The letter was addressed to "Employer of Sheena Grice" without any specific mailing address. Pl.'s Mem. Opp'n Lack of Jurisdiction Ex. 2. Wahbeh's name appeared at the bottom of the letter. Id.

Grice informed U Solutions of her new bank account number with Account Now after she received the letter from Wahbeh. Id. at ¶¶ 46–47. Between June 21, 2016 and November 18, 2016, Global had withdrawn at least an additional $982 from Grice's new bank account. Id. at ¶ 47. Grice believes that she has paid more than $1,600 for the $200 loan. Id. at ¶ 48.

Grice was not asked to sign any loan documents or contracts and did not receive any agreement with regard to the Loan until U Solutions sent a copy of a loan agreement to Grice upon request on December 22, 2016. Id. at ¶ 32. The "Consumer Line of Credit" agreement ("Agreement") governs the Loan and indicates that B Financial is the lender. Id. at ¶ 33. The Agreement specifies Utah law as the governing body of law and the State of Illinois as the venue for any suits or proceedings arising from or relating in any way to the Agreement. Agreement, Ex. A, ECF No. 1–1 at 2.

The Agreement also includes a list of fees and payment requirements:

(1) a $15.00 annual membership fee, a draw fee of $5.00 every time money was taken out, and interest at 9.99% annually. The billing cycle was two weeks and repayments would be drawn from the borrower's account at the end of every billing cycle. Id. at ¶ 35;

(2) only 3% of each bi-weekly minimum payment would be applied toward the outstanding principal. Id. at ¶ 36;

(3) a transaction fee of $30.00 for every $100.00 of outstanding principal and a billing cycle fee of $2.50 would be assessed at every billing cycle. Id. at ¶ 37;

(4) late fee of $10.00 for

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