Lewis v. LVNV Funding, LLC

• Decision Date: 05 October 2015
• Docket Number: Case No. 15-CIV-61313-BLOOM/Valle
• Court: United States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Southern District of Florida
• Parties: ERNEST LEWIS, Plaintiff, v. LVNV FUNDING, LLC, Defendant.

ERNEST LEWIS, Plaintiff, v. LVNV FUNDING, LLC, Defendant.

Case No. 15-CIV-61313-BLOOM/Valle

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

October 5, 2015

ORDER

THIS CAUSE is before the Court upon Defendant LVNV Funding, LLC's Motion to Dismiss Amended Complaint, ECF No. [17] ("Motion to Dismiss"), and Motion to Stay, ECF No. [23] ("Motion to Stay") (collectively, the "Motions"). The Court has reviewed the Motions, the parties supporting and opposing filings, the record, and all relevant law. Being fully advised, it is hereby adjudged that the Motion to Dismiss is granted and the Motion to Stay is denied.

I. INTRODUCTION

This case presents a novel question concerning the interplay between the Fair Debt Collection Practices Act, 15 U.S.C. § 1691 et seq. (the "FDCPA" or "Act"), the United States Bankruptcy Code, 11 U.S.C. § 101 et seq. (the "Bankruptcy Code" or "Code"), and relevant rules and practices. According to Defendant LVNV Funding, LLC ("Defendant"), the provisions of the Code preclude the Plaintiff Ernest Lewis' cause of action under the FDCPA. After careful review of the applicable law, the Court agrees.

On June 22, 2015, Defendant removed this action from the Seventeenth Judicial Circuit in and for Broward County, Florida, invoking this Court's original jurisdiction pursuant to 28U.S.C. § 1331. See Notice of Removal, ECF No. [1]. On July 15, 2015, Plaintiff Ernest Lewis ("Plaintiff") filed his First Amended Complaint, ECF No. [12]. The First Amended Complaint (hereinafter, "FAC") alleges that on January 21, 2015, Plaintiff filed a voluntary petition for protection under Chapter 13 of the Bankruptcy Code. FAC at ¶ 14; see also In re Lewis, No. 14-11293-JKO (S.D. Fla. Jan. 21, 2014) (the "Bankruptcy Proceedings"). On June 13, 2014, Defendant filed a Proof of Claim in the Bankruptcy Proceedings, seeking to collect a consumer debt which Defendant claimed it was entitled to collect upon (the "Proof of Claim" and "Claim"). FAC at ¶ 15. The Proof of Claim explicitly indicated a last charge or payment occurring prior to May 25, 1992. Id. at ¶ 16; see also Exhibit "A" to FAC (Proof of Claim). Because § 95.11(3), Florida Statutes, imposes a four year limitations period to collect the debt, the debt was clearly barred by the applicable statute of limitations and Defendant was well aware of this fact. FAC at ¶¶ 17-19. On this basis, Plaintiff objected to the Claim, which was disallowed by the presiding bankruptcy judge. See In re Ernest L. Lewis, No. 14-11293-JKO, ECF Nos. [39], [47] (S.D. Fla. Br. July 3, 2014).¹

Recognizing Defendant's eventual challenge, Plaintiff cites Crawford v. LVNV Funding, LLC, 758 F.3d 1254 (11th Cir. 2014), and contends that the filing of the unenforceable Claim was "unfair," "unconscionable," "deceptive," and "misleading" as the words are utilized in theFDCPA. See FAC at ¶¶ 21-22. Accordingly, Plaintiff brings one cause of action for a violation of the FDCPA, 15 U.S.C. § 1692(e) which prohibits, inter alia, deceptive or misleading acts in connection with the collection of any debt including the false representation of "the character, amount, or legal status of any debt" and the use of false representations to collect any debt. See id. at ¶¶ 24-35 (citing 15 U.S.C. §§ 1692(e)(2)(a) and 1692e(10)). Defendant now moves to dismiss, claiming that the FDCPA count exists in direct conflict with the Bankruptcy Code and, therefore, cannot be enforced in this context. See Motion, ECF No. [17].

II. LEGAL STANDARD

A pleading in a civil action must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). While a complaint "does not need detailed factual allegations," it must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); see Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (explaining that Rule 8(a)(2)'s pleading standard "demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation"). Nor can a complaint rest on "'naked assertion[s]' devoid of 'further factual enhancement.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557 (alteration in original)). When reviewing such a motion, a court, as a general rule, must accept the plaintiff's allegations as true and evaluate all plausible inferences derived from those facts in favor of the plaintiff. See Chaparro v. Carnival Corp., 693 F.3d 1333, 1337 (11th Cir. 2012); Miccosukee Tribe of Indians of Fla. v. S. Everglades Restoration Alliance, 304 F.3d 1076, 1084 (11th Cir. 2002); AXA Equitable Life Ins. Co. v. Infinity Fin. Grp., LLC, 608 F. Supp. 2d 1349, 1353 (S.D. Fla. 2009) ("On a motion to dismiss, the complaint is construed in the light most favorable to the non-moving party, and all facts alleged by the non-moving party are accepted as true.").

Consideration of a Rule 12(b) motion limits the Court to the facts contained in the complaint and attached exhibits, including documents referred to in the complaint that are central to the claim. See Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949, 959 (11th Cir. 2009); Maxcess, Inc. v. Lucent Technologies, Inc., 433 F.3d 1337, 1340 (11th Cir. 2005) ("[A] document outside the four corners of the complaint may still be considered if it is central to the plaintiff's claims and is undisputed in terms of authenticity.") (citing Horsley v. Feldt, 304 F.3d 1125, 1135 (11th Cir. 2002)).

III. DISCUSSION

A lack of consistency has emerged among district courts interpreting the interaction between the Bankruptcy Code and Bankruptcy Rules and the FDCPA. In 2014, the Eleventh Circuit had occasion to resolve the dispute, but elected not to. See Crawford v. LVNV Funding, LLC, 758 F.3d 1254, 1262 n.7 (11th Cir. 2014). With no apparent resolution, this Court is now asked to offer its opinion on the matter.

A. The FDCPA versus the Bankruptcy Code

According to Defendant, because the Bankruptcy Code allows a creditor to file a proof of claim notwithstanding various defenses that may be available to the debtor—in this case, a limitations defense—an FDCPA action predicated on the filing of a proof of claim is in irreconcilable conflict. See Mot. to Dismiss at 2-8. Stated differently, "the Code prescribes precisely that which Plaintiff claims the FDCPA prohibits." Id. at 6. As a result, Defendant contends, the FDCPA must give way to the Code.

In Crawford v. LVNV Funding, LLC, 758 F.3d 1254 (11th Cir. 2014), the Eleventh Circuit "consider[ed] whether a proof of claim to collect a stale debt in Chapter 13 bankruptcy violates the Fair Debt Collection Practices Act." Id. at 1256. Recognizing the "deluge" ofconsumer debt buyers who, "armed with hundreds of delinquent accounts purchased from creditors," have filed proofs of claims "on debts deemed unenforceable under state statutes of limitations," the Eleventh Circuit answered the question in the affirmative. Id. at 1256-57. Relying on facts mimicking (but not necessarily identical to) the ones presented herein, the Crawford Court found that the filing of an unenforceable proof of claim could be deemed "unfair," "unconscionable," "deceptive," and "misleading," under the "least sophisticated consumer standard" utilized by courts in evaluating claims under the FDCPA. Id. at 1260-62. Thus, the Court determined that the defendant's conduct violated the FDCPA's plain language. Id. at 1262 ("[The defendant] violated the FDCPA by filing a stale claim in bankruptcy court.").

Plaintiff contends that Crawford has resolved the issue presented here, explicitly deeming it a violation of the FDCPA for a creditor to file a stale proof of claim in a Chapter 13 bankruptcy proceeding. Framing the inquiry in this manner misses the true nature of the pending dispute. The question is not whether the filing of an unenforceable proof of claim can provide a basis for an FDCPA violation; clearly, that question has been resolved in the affirmative by Crawford. See 758 F.3d at 1261-62. Rather, the precise inquiry is whether an FDCPA violation, like the one alleged here, is incompatible with the Bankruptcy Code as the Code seemingly places absolutely no prohibition on the filing of claims which may be defensible in some respect. See 11 U.S.C. § 101(5)(A). Crawford provides no such answer: because the defendant did not press the point on appeal, the Eleventh Circuit explicitly declined to consider whether the Bankruptcy Code displaces the FDCPA in this context. Id. at 1262 n.7 ("The Court also declines to weigh in on a topic the district court artfully dodged: Whether the Code 'preempts' the FDCPA when creditors misbehave in bankruptcy."). Thus, the Eleventh Circuit has not resolved the issue of preclusion.

Courts faced with this issue have reached differing results, some finding that the Code precludes the FDCPA and others concluding that the two statutes can coexist. Compare Simmons v. Roundup Funding, LLC, 622 F.3d 93, 96 (2d Cir. 2010) ("[T]he filing a proof of claim in bankruptcy court cannot form the basis for an FDCPA claim."); Walls v. Wells Fargo Bank, N.A., 276 F.3d 502, 504 (9th Cir. 2002) ("This appeal also raises the issue whether a discharged debtor may pursue a simultaneous claim under the [FDCPA]. We think not, as to do so would circumvent the Bankruptcy Code's remedial scheme."); Johnson v. Midland Funding, LLC, 528 B.R. 462, 473 (S.D. Ala. 2015) ("[B]ecause there is irreconcilable conflict, the Act must give way to the Code."); In re Williams, 392 B.R. 882, 886 (Bankr. M.D. Fla. 2008) ("FDCPA claims are precluded by the Bankruptcy Code . . . ."); B-Real, LLC v. Rogers, 405 B.R. 428, 434 (M.D. La. 2009) ("[T]his Court finds that while the FDCPA and Bankruptcy Code overlap but generally coexist peaceably, in this specific factual situation application of the FDCPA is precluded by the Bankruptcy Code." (quotation omitted)) with Simon v. FIA Card Servs., N.A., 732 F.3d 259, 278 (...