Martin v. Trott Law, P.C.

• Decision Date: 12 July 2017
• Docket Number: Case Number 15–12838
• Parties: Brian J. MARTIN, Yahmi Nundley, and Kathleen Cadeau, Plaintiffs, v. TROTT LAW, P.C. and David A. Trott, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

265 F.Supp.3d 731

Brian J. MARTIN, Yahmi Nundley, and Kathleen Cadeau, Plaintiffs,

v.TROTT LAW, P.C. and David A. Trott, Defendants.

Case Number 15–12838

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

Signed July 12, 2017

Daniel R. Karon, Karon LLC, Cleveland, OH, Diana Gjonaj, Paul F. Novak, Weitz Luxenberg, P.C., Detroit, MI, Andrew J. McGuinness, Ann Arbor, MI, for Plaintiffs.

Charity A. Olson, Timothy B. Myers, Olson Law Group, Ann Arbor, MI, Bruce L. Segal, Joseph Aviv, Honigman, Miller, Bloomfield Hills, MI, for Defendants.

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR JUDGMENT ON THE PLEADINGS OR TO STRIKE CERTAIN AFFIRMATIVE DEFENSES, AND DENYING DEFENDANT DAVID TROTT'S MOTION TO DISMISS OR FOR SUMMARY JUDGMENT

DAVID M. LAWSON, United States District Judge

This second round of dispositive motions deals with the plaintiffs' second amended complaint and the defendants' answers and affirmative defenses to it. Plaintiffs Brian Martin, Yahmi Nundley, and Kathleen Cadeau, as members of a putative class, allege that the defendants violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq. , and the Michigan Regulation of Collection Practices Act (RCPA), Mich. Comp. Laws § 445.251, by sending certain letters to these consumers in an effort to foreclose their residential mortgages. The facts of the case are discussed at length in the Court's opinion adjudicating the first round of motions. Martin v. Trott Law, P.C. , 198 F.Supp.3d 794, 797–801 (E.D. Mich. 2016). They will not be repeated here.

The plaintiffs have filed a motion for judgment on the pleadings or to strike, directed at various affirmative defenses asserted by defendants Trott Law, P.C. and David Trott in their respective answers to the second amended complaint. Defendant David Trott has filed a motion to dismiss or for summary judgment arguing that the Court does not have subject matter jurisdiction under the Class Action Fairness Act, 28 U.S.C. § 1332(d), and the plaintiffs lack standing to pursue claims against him individually. For the reasons that follow, the plaintiffs' motion will be granted in part and denied in part. Defendant Trott's motion will be denied.

I. Plaintiffs' Motion to Strike or for Judgment on the Pleadings

The plaintiffs argue that the defendants' recitals of various pro forma or vestigial affirmative defenses in their answers to the second amended complaint are either defective as a matter of law, based on the Court's previous ruling on their motions to dismiss, or fail to disclose any discernible factual basis for the defenses. They contend that the defenses of "failure to state a claim," "statute of limitations," and that the defendants are not "regulated persons" under state law are precluded by the Court's rulings that the surviving claims in the complaint plausibly allege actionable violations of state and federal law, that those claims are timely, and that the defendants' behavior is controlled by the pertinent statutes. The plaintiffs contend that the bare recitations of putative defenses premised on estoppel, laches, consent, unclean hands, "bona fide error," and lack of intent, all are lacking any factual support, and have no apparent application to any of the circumstances so far disclosed by the record. The plaintiffs assert that exploration of these vestigial and unfounded defenses only will complicate and prolong discovery in the case, for no apparent productive purpose.

In responding to a complaint, a defendant generally must "state in short and plain terms its defenses to each claim asserted against it." Fed. R. Civ. P. 8(b)(1)(A). Avoidance defenses must be stated affirmatively, and the rules furnish a non-exhaustive list of certain specific affirmative defenses that must be raised in the answer. Fed. R. Civ. P. 8(c)(1). Those include the defenses of estoppel, laches, and the statute of limitations. Ibid.

The plaintiffs' motion is based alternatively on Rule 12(c) and Rule 12(f). A motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) applies the same standards that govern motions to dismiss under Rule 12(b)(6). See Fed. R. Civ. P. 12(c) ; Vickers v. Fairfield Med. Ctr. , 453 F.3d 757, 761 (6th Cir. 2006) ; Ziegler v. IBP Hog Mkt., Inc. , 249 F.3d 509, 511–12 (6th Cir. 2001). "The purpose of Rule 12(b)(6) is to allow a defendant to test whether, as a matter of law, the plaintiff is entitled to legal relief if all the facts and allegations in the complaint are taken as true." Rippy ex rel. Rippy v. Hattaway , 270 F.3d 416, 419 (6th Cir. 2001) (citing Mayer v. Mylod , 988 F.2d 635, 638 (6th Cir. 1993) ).

Under Rule 12(f), on the other hand, a court may "strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed. R. Civ. P. 12(f). Although the Sixth Circuit has not addressed the subject, the rigorous pleading rules applicable to complaints as outlined in Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Ashcroft v. Iqbal , 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), generally do not apply to pleading affirmative defenses. See The Odd State of Twiqbal Plausibility in Pleading Affirmative Defenses , 70 Wash & Lee L. Rev. 1573, 1602–05 (2013) ; see also Rosul v. Klockemann , No. 15-00996, 2015 WL 5233187, at *6 (N.D. Ohio Sept. 8, 2015). "An affirmative defense may be pleaded in general terms and will be held to be sufficient ... as long as it gives plaintiff fair notice of the nature of the defense." 5 Wright & Miller, Federal Practice and Procedure § 1274. However, "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b).

It appears that Rule 12(f) is more suited to a challenge to the sufficiency of affirmative defenses. "A motion to strike should be granted if ‘it appears to a certainty that plaintiffs would succeed despite any state of the facts which could be proved in support of the defense and are inferable from the pleadings.’ " Operating Engineers Local 324 Health Care Plan v. G & W Const. Co. , 783 F.3d 1045, 1050 (6th Cir. 2015) (quoting Williams v. Jader Fuel Co. , 944 F.2d 1388, 1400 (7th Cir. 1991) ).

A. Failure to State a Claim

Defendant Trott Law has agreed to withdraw this defense. Defendant David Trott has not done so. However, the Court's prior opinion on the defendants' respective motions to dismiss has settled the question whether that pleading adequately alleges plausible claims for relief under the surviving counts. That defense, therefore, will be struck.

B. Statute of Limitations

The plaintiffs correctly point out that the Court previously held that the surviving counts of the complaint allege claims that, at least in some part, describe conduct within the relevant limitation periods. However, the scope of the plaintiff class has yet to be defined, and the particulars of the defendants' respective conduct, although alleged in some detail in the complaint, have yet to be fully explored through discovery. The parties have not yet stipulated to a time frame for the class definition, and it appears possible that at least some of the conduct potentially at issue in the case may have occurred before the earliest possible date for the commencement of that time frame (e.g., defendant David Trott asserts that the composition of the original version of the letter templates at issue occurred in 2007).

Of course, the fact that the defendants first may have conceived some of the particulars of their allegedly deceptive dunning letters outside the limitations period does not absolve them from liability if they personally were involved in the ongoing use of those forms during more recent years. Also, there may be a dispute as to when the statute of limitations began to run. But the temporal scope of the potential liability in the case has not yet been fixed, and the determination of what conduct lies within and outside the relevant limitations period is not one amenable to resolution on the bare pleadings, without the benefit of a factual record to establish who did what, and when, and what were the results of their actions. The "statute of limitations" defense therefore may yet be pertinent to the decision of issues remaining in the case. At this early stage of the proceedings, it does not "appear[ ] to a certainty" that the plaintiffs would succeed in defeating every conceivable nuance of the limitations defense "despite any state of the facts which could be proved in support of the defense and are inferable from the pleadings." Operating Engineers , 783 F.3d at 1050. The Court will deny the plaintiffs' motion with respect to the statute of limitations defense.

C. "Regulated Person"

This affirmative defense is defective as a matter of law as pleaded by both defendants, because it purports to put at issue the question whether David Trott and his law firm qualify as "regulated persons" under Michigan state law. However, the defendants' arguments in their briefing merely regurgitate positions previously (and repeatedly) advanced in their several earlier motions, which the Court's previous opinion addressed directly:

The defendants insist that neither David Trott nor his law firm qualify as "regulated persons" subject to the prohibitions of the Michigan RCPA because the firm is a "collection agency" exempted from regulation under the Act, and neither he nor his firm acted "in [their] own name" when communicating with the plaintiffs and attempting to collect their debts. Those arguments are non-starters. The question has not squarely been addressed by either the Sixth Circuit or the Michigan state appellate courts, but every judge in this district that has confronted the question has held that a "law firm and its employees ‘fit squarely within the definition of a regulated person’ under the MCPA" regardless of whether the firm's

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