Lewis v. Sole Law, PLLC

• Decision Date: 22 June 2022
• Docket Number: 1:21-cv-12846
• Parties: COTY LEWIS, Plaintiff, v. SOLE LAW, PLLC, KATHRYN SOLE, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

COTY LEWIS, Plaintiff,
v.
SOLE LAW, PLLC, KATHRYN SOLE, Defendants.

No. 1:21-cv-12846

United States District Court, E.D. Michigan, Northern Division

June 22, 2022

THOMAS L. LUDINGTON, DISTRICT JUDGE

REPORT AND RECOMMENDATION

PATRICIA T. MORRIS, UNITED STATES MAGISTRATE JUDGE

I. RECOMMENDATION

For the following reasons, I RECOMMEND that the Court GRANT Defendants' motion to dismiss (ECF No. 6) and DISMISS Plaintiff's complaint.

II. REPORT

A. INTRODUCTION

The Fair Debt Collection Practices Act (“FDCPA”) protects individuals from abusive debt collection practices-but only for a particular type of debt. To receive the FDCPA's expansive assortment of protections, an individual's debt must arise from a transaction for a good or service for personal, family, or household purposes. At issue here is whether a company who refers clients to a real estate brokerage has provided a service for personal, family, or household purposes, such that an individual responsible for payment of the referral fee can benefit from the FDCPA's protections.

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B. BACKGROUND

Acuity Real Estate Services operates a website which refers prospective clients to real estate brokerages throughout the country. (ECF No. 1-3, PageID.43). Seeking new clients who wished to purchase homes in the mid-Michigan area, a Re/Max New Image franchise located in Saginaw County entered into a referral agreement with Acuity through Acuity's website. (ECF No. 1, PageID.3-4, ¶ 13). Under their agreement, Acuity referred a group of prospective clients to Re/Max in exchange for thirty-five percent of the commission Re/Max received from any sale involving the prospective clients. (ECF No. 1-1, PageID.29). Coty Lewis, a “salesperson” for Re/Max, signed the agreement on behalf of his franchise. (ECF No. 1, PageID.3-4, ¶ 13; ECF No. 1-1, PageID.29-30).

The following year, Acuity sued Lewis in a Florida court, alleging that while Lewis brokered a sale on behalf of a client provided by Acuity, neither Lewis nor Re/Max paid Acuity its referral fee. (ECF No. 1, PageID.4-5, ¶¶ 16, 18). Kathryn Sole, a Florida attorney and the “managing member” of Sole Law PLLC, represented Acuity in this lawsuit and successfully obtained a judgment against Lewis. (Id. at PageID.2, 4-5, ¶¶ 2-3, 18, 21). With Sole's help, Acuity later obtained a garnishment of Lewis's wages. (Id. at PageID.5, ¶ 23).

According to Lewis, his case is not unique. Since 2014, Sole represented Acuity in thirty collection lawsuits. (Id. at PageID.7). In each case, despite entering into a referral agreement with a brokerage company, Acuity sued the individual “salesperson” who handled the referred clients. (Id.; ECF No. 1-6). Acuity sued each salesperson “in their personal capacity,” and brought each suit in its “home forum of Hillsborough County, Florida.” (ECF No. 1, PageID.14, ¶ 60; ECF No. 1-6).

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After Sole obtained a garnishment on behalf of Acuity, Lewis filed a complaint against Sole and her law firm in this Court, alleging that Sole violated various provisions of the FDCPA by pursuing Acuity's lawsuit in a Florida court. (ECF No. 1). Sole-individually and on behalf of her firm-responded by moving for dismissal of Lewis's entire complaint, arguing that this Court lacks personal jurisdiction over Sole, and alternatively, that Lewis failed to state a plausible claim for relief under the FDCPA. (ECF No. 6).

B. LEGAL STANDARDS

Defendants move for dismissal of Lewis's complain under Federal Rule of Civil Procedure 12(b)(2), for lack of personal jurisdiction, and, alternatively, under Rule 12(b)(6) for failure to state a claim. Where a defendant files a motion to dismiss under both 12(b)(2) and 12(b)(6), the Rule 12(b)(2) challenge must be addressed first because “the Rule 12(b)(6) challenge becomes moot if this court lacks” jurisdiction. See Moir v. Greater Cleveland Reg'l Transit Auth., 895 F.2d 266, 269 (6th Cir. 1990); see also Kroger Co. v. Malease Foods Corp., 437 F.3d 506, 510 (6th Cir. 2006) (“[P]ersonal jurisdiction is a threshold determination ....”).

1. Federal Rule of Civil Procedure 12(b)(2)

Federal Rule of Civil Procedure 12(b)(2) allows defendants to move for dismissal for lack of personal jurisdiction. When faced with a “properly supported 12(b)(2) motion,” district courts must choose between one of three procedural alternatives. Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir, 1991). Specifically, the Court may (1) “rule” on the parties' “written submissions alone,” (2) “permit discovery in aid of the motion,” or (3) “conduct an evidentiary hearing on the merits of the motion.” Serras v. First Tenn. Bank Nat. Ass'n., 875 F.2d 1212, 1214 (6th Cir. 1989). This decision is well within the district court's discretion.

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Theunissen, 935 F.2d at 1458; see also MAG IAS Holdings, Inc. v. Schmuckle, 854 F.3d 894, 899 (6th Cir. 2017).

The plaintiff carries the burden of establishing personal jurisdiction. Malone v. Stanley Black & Decker, Inc., 965 F.3d 499, 502 (6th Cir. 2020). The extent of the plaintiff's burden, however, depends on the court's method for resolving the motion. Id. at 505 (citing Serras, 875 F.2d at 1214). Where the Court decides to resolve the motion on “written submissions alone,” the plaintiff need only make a prima facie showing of personal jurisdiction, and a plaintiff can make this showing “merely through the complaint.” Schnieder v. Hardesty, 669 F.3d 693, 697 (6th Cir. 2012) (internal quotation marks omitted) (quoting Serras, 875 F.2d at 1214); Malone, 965 F.3d at 505. To determine whether a Plaintiff has established a prima facie showing, the court must construe all facts “in the light most favorable to the plaintiff”-any factual disputes are “irrelevant.” Theunissen, 935 F.2d at 1459; Malone, 965 F.3d at 505.

If the Court rules exclusively on the parties' written submissions, then the court's inquiry ends after determining whether the Plaintiff has made a prima facie showing. See Malone, 965 F.3d at 505. But if the Court instead chooses to conduct an evidentiary hearing, it must then employ a burden shifting framework which takes the defendant's factual allegations into consideration. Id. at 504-05. Under this framework, the plaintiff retrains the initial burden of establishing a prima facie showing of personal jurisdiction. Id. (citing American Greetings Corp. v. Cohn, 839 F.2d 1164, 1169 (6th Cir. 1988)). Once the plaintiff makes this showing, the burden shifts to the defendant to “properly” support his or her motion “with evidence.” Id. (citing Theunissen, 935 F.2d at 1458). If the defendant can provide evidence in support of its position, the burden then shifts back to the plaintiff to prove, by a preponderance of the evidence, that the

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court has personal jurisdiction over the defendant.^[1] Malone, 965 F.3d at 504; see also Schneider, 669 F.3d 693, 697. At this stage, the plaintiff “may no longer ‘stand on his pleadings but must, by affidavit or otherwise, set forth specific facts showing that the court has jurisdiction.'” Malone, 965 F.3d at 504 (quoting Theunissen, 935 F.2d at 1458).

Here, I suggest that the Court need not conduct a hearing or allow for additional discovery. Accordingly, Lewis need only establish a prima facie case of personal jurisdiction.

2. Federal Rule of Civil Procedure 12(b)(6)

A complaint must provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Accordingly, a plaintiff's complaint shall be dismissed for failure to state a claim if it lacks sufficient “factual matter (taken as true) to” provide “plausible grounds to infer” that the elements of a claim for relief could be met. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007); see Fed.R.Civ.P. 12(b)(6). A complaint must “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. Mere labels, conclusory statements, or “formulaic recitations” of the elements of a cause of action are not sufficient to meet this burden if they are unsupported by adequate factual allegations. Id. (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). The requirement to provide a plausible claim does not require that a claim be “probable”; however, a claim must be more than merely “conceivable.” Ashcroft v. Iqbal, 556 U.S. 662, 678-80 (2009).

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C. ANALYSIS

Defendants moves to dismiss Lewis's entire complaint, arguing that this Court does not have personal jurisdiction over them, and even if it did, Lewis fails to state a plausible claim for relief. I suggest that while the Court does have personal jurisdiction over the Defendants, Lewis has not stated a plausible claim under the FDCPA, and his complaint should be dismissed.

1. Personal Jurisdiction

Personal jurisdiction is a court's power to exercise authority over a defendant; without it, a court cannot adjudicate a claim against an individual defendant. 4 Charles Alan Wright et al., Federal Practice and Procedure § 1063 (4th ed. 2022) § 1063; Jurisdiction, Black's Law Dictionary (11th ed. 2019). To hold personal jurisdiction over a defendant, a federal court must be authorized by statute issue summons for that defendant. See Omni Capital Intern., Ltd. v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104 (1987) (citing Mississippi Publishing Corp. v. Murphree, 326 U.S. 438, 444-45 (1946)); Bridgeport Music, Inc. v. Still N the Water Pub., 327 F.3d 472, 477 (6th Cir. 2003). However, even if the court is authorized to effect service on a defendant, its exercise of personal jurisdiction also must not deny the defendant due process.

Here, Federal Rule of Civil procedure 4(k) authorizes the Court to exercise personal jurisdiction over the Defendants. Rule 4(k) provides that “[s]erving a summons or filing a waiver of service establishes personal jurisdiction over a defendant . . . when authorized by a federal statute.” Fed.R.Civ.P. 4(k)(1)(C). Thus, as long as there some federal...