Kelly v. Great Seneca Financial Corp., No. 1:04CV615.

• Decision Date: 16 June 2005
• Docket Number: No. 1:04CV615.
• Citation: 443 F.Supp.2d 954
• Parties: Alice G. KELLY and Norman P. Kelly, Plaintiffs v. GREAT SENECA FINANCIAL CORP., et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

443 F.Supp.2d 954

Alice G. KELLY and Norman P. Kelly, Plaintiffs v. GREAT SENECA FINANCIAL CORP., et al., Defendants.

No. 1:04CV615.

United States District Court, S.D. Ohio, Western Division.

June 16, 2005.

COPYRIGHT MATERIAL OMITTED

Steven Charles Shane, Bellevue, KY, Stephen R. Felson, Cincinnati, OH, for Plaintiffs.

Michael J. Chapman, Javitch Block & Rathbone LLP, Cincinnati, OH, Michael D. Slodov, Javitch Block & Rathbone LLP, Cleveland, OH, for Defendants.

ORDER

BECKWITH, Chief Judge.

Before the Court is a motion to dismiss (Doc. 8) filed by the defendants Great Seneca Financial Corporation ("Great Seneca") and Javitch, Block & Rathbone LLP, a law firm ("JBR").¹ Plaintiffs allege that the defendants violated the Federal Fair Debt Collection Practices Act ("FDCPA") when defendants filed a debt collection lawsuit against Plaintiffs. Plaintiffs have opposed the motion (Doc. 14), and defendants filed a reply (Doc. 16). Defendants also filed two motions, seeking leave to file supplemental memoranda (Doc. 9 and 24).

Factual Background

Plaintiffs allege that on September 10, 2003, JBR filed a "Complaint for Money" against them in Adams County, Ohio common pleas court. JBR filed the lawsuit on behalf of Great Seneca, a Maryland corporation. The state court complaint (which is attached as Exhibit A to the Complaint in this action) alleged that the Kellys owed Great Seneca $5,389.15 "upon an account." Attached to the state court complaint was a one-page account statement from Great Seneca, showing the Kellys' balance due as of July 28, 2003 was $5,389.15. The document describes the debt by stating that Great Seneca was an "assignee of Sagres Company, assignee of Direct Merchant Bank," with an address in Rockville, Maryland.

The Kellys allege that they answered Great Seneca's state court complaint and also sought discovery from Great Seneca. Before the Kellys received responses to their discovery requests, however, Great Seneca (through JBR) voluntarily dismissed the state court lawsuit without prejudice, as permitted under Ohio law.

The Kellys then filed this suit against Great Seneca and JBR under the FDCPA, 15 U.S.C. § 1692 et seq, and the Ohio Consumer Sales Practices Act ("OCSPA"), Ohio Rev.Code § 1345.01 et seq. The Kellys allege that both Great Seneca and JBR are "debt collectors," and that the Kellys' debt is a "consumer debt," triggering application of the FDCPA. They allege that the Great Seneca document attached to the state court complaint was "bogus" and did not accurately reflect any debt obligation the Kellys may have had with the original creditor. They allege that Great Seneca and JBR violated several sections of the FDCPA and the OCSPA, and seek both damages and injunctive relief.

The defendants seek dismissal of the Kellys' complaint, primarily arguing that they are immune from FDCPA liability. They claim that this immunity is grounded both in the common law witness or litigation privileges, as well as First Amendment guarantees of freedom of speech and the "right to petition." Defendants argue that the filing of a lawsuit by an attorney in the course of client representation should not be the basis for an FDCPA claim. They also attack the constitutionality of the FDCPA as applied to their conduct of filing and then voluntarily dismissing a `lawsuit. Finally, defendants argue that, if they are not absolutely immune, the Kellys' allegations fail to state a cognizable claim for relief.

ANALYSIS

A motion to dismiss pursuant to Rule 12(b)(6) operates to test the sufficiency of the complaint. In its consideration of a motion to dismiss under Rule 12(b)(6), the court is required to construe the complaint in the light most favorable to the Plaintiff, and accept all well-pleaded factual allegations in the complaint as true. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) and Roth Steel Products v. Sharon Steel Corp., 705 F.2d 134, 155 (6th Cir.1983). A court, however, will not accept conclusions of law or unwarranted inferences which are presented as factual allegations. Blackburn v. Fisk University, 443 F.2d 121, 124 (6th Cir. 1971). A court will, though, accept all reasonable inferences that might be drawn from the complaint. Fitzke v. Shappell, 468 F.2d 1072, 1076-77 n. 6 (6th Cir.1972).

When considering the sufficiency of a complaint pursuant to a Rule 12(b)(6) motion, this Court recognizes that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the Plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).

A. The Fair Debt Collection Practices Act.

Congress first enacted this statute in 1977 "to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." 15 U.S.C. § 1692(e). The Sixth Circuit has noted that the Act is "extraordinarily broad" and must be enforced as written, even when eminently sensible exceptions are proposed in the face of innocent and/or de minimis violations. See Frey v. Gangwish, 970 F.2d 1516, 1521 (6th Cir.1992). The Court must evaluate the defendant's conduct under the "least sophisticated consumer" test, and objectively determine whether that consumer would be misled by the defendant's statement. Smith v. Transworld Systems, Inc., 953 F.2d 1025, 1029 (6th Cir.1992).

B. Absolute Immunity.

This Court has recently addressed arguments that are similar to those made here concerning immunity from FDCPA claims. See, Hartman v. Asset Acceptance Corp., Case No. 1:03-cv-113, Order dated Sept. 29, 2004 (Doc. 59); and, Blevins v. Hudson & Keyse, Inc., et al., 395 F.Supp.2d 662 (S.D.Ohio 2004) (Does. 20 and 21).

In Hartman, this Court rejected an argument that a debt collector's affidavit, filed with its state court complaint, was protected from FDCPA liability by a common law "witness" privilege. This Court also found that the FDCPA contained no "litigation or litigation-related exception" for debt collectors filing lawsuits, or for their attorneys. Id. at p. 14.² In Blevins, this Court denied motions to dismiss FDCPA claims against a law firm and the debt collector it represented. The debt collector's affidavit, attached to and incorporated by reference into a complaint the attorneys filed, stated that the debt collector was a "holder in due course" of the debt, a statement the Blevins Plaintiff alleged was false. This Court held that neither the debt collector nor its attorneys were absolutely immune from FDCPA liability based on their act of preparing and filing the state court debt collection complaint.

Here, defendants urge this Court to depart from its prior rulings and hold that they are entitled to absolute immunity from the Kellys' complaint. Defendants cite Etapa v. Asset Acceptance Corp., 373 F.Supp.2d 687 (E.D.Ky.2004). There, on facts almost identical to those in Hartman, supra, the district court granted Asset's motion for judgment on the pleadings, holding that the FDCPA did not abrogate common law witness immunity. Etapa relied on the analysis in Briscoe v. LaHue, 460 U.S. 325, 103 S.Ct. 1108, 75 L.Ed.2d 96 (1983), which held that trial witnesses are absolutely immune from liability under 42 U.S.C. § 1983. The Supreme Court found that Congress did not intend to abrogate the common law doctrine immunizing a trial witness from subsequent tort liability, when Congress passed the 1871 Civil Rights Acts.

To similar effect is Beck v. Codilis & Stawiarski, P.A., 2000 U.S. Dist. LEXIS 22440 (N.D.Fla., Dec. 26, 2000). There, a lender's attorney filed an affidavit in the lender's foreclosure action attesting to the hours he spent on the foreclosure suit, and the hourly rate he charged to the lender. In fact, the attorney charged the lender a flat fee for the foreclosure. The district court held that witness immunity absolutely protected the attorney from the borrowers' FDCPA claims, and that any sanction for the false affidavit must come from the state bar, not the FDCPA.

However, as this Court noted in Hartman, many courts have concluded that the FDCPA applies to "testimonial" documents and to pleadings filed in state court debt collection actions. See, e.g., Miller v. Wolpoff & Abramson, 321 F.3d 292 (2nd Cir.2003) [verified complaint filed by defendant attorneys subject to FDCPA]; Gearing v. Check Brokerage Corporation, 233 F.3d 469 (7th Cir.2000) [debt collector's complaint subject to FDCPA]; Tomas v. Bass & Moglowski, P.C., 1999 U.S. Dist. LEXIS 21533 (W.D. Wis., June 29, 1999) [summons and complaint in state replevin action subjected attorney to FDCPA liability]; Campos v. Brooksbank, 120 F.Supp.2d 1271 (D.C.N.M.2000) [attorney's fee affidavit and deposition notice subject to FDCPA]; Jacquez v. Diem Corp., 2003 U.S. Dist. LEXIS 8333 (D.C.Ariz. Feb. 20, 2003) [writ of garnishment signed by debt collector subject to FDCPA]. None of these cases discuss any potential immunity defense.

Congress legislates against a background of common-law adjudicatory principles. Where a common law principle is well established, "... the courts may take it as given that Congress has legislated with an expectation that the principle will apply except when a statutory purpose to the contrary is evident." Astoria Fed Savings & Loan Assn. v. Solimino, 501 U.S. 104, 108, 111 S.Ct. 2166, 115 L.Ed.2d 96 (1991). Congressional findings concerning the FDCPA noted that "Existing laws and procedures for redressing [abusive debt collection practices] are inadequate to protect consumers." The FDCPA, as noted above, is a broad remedial statute, regulating conduct far broader than that which might lead to tort liability for defamation or libel, the types of claims to...