McMullen v. McHughes Law Firm

• Decision Date: 22 January 2015
• Docket Number: No. CV–14–307,CV–14–307
• Citation: McMullen v. McHughes Law Firm, 2015 Ark. 15, 454 S.W.3d 200 (Ark. 2015)
• Parties: Lillie McMullen, Appellant v. McHughes Law Firm, Appellee
• Court: Arkansas Supreme Court

2015 Ark. 15

454 S.W.3d 200

Lillie McMullen, Appellant

v.McHughes Law Firm, Appellee

No. CV–14–307

Supreme Court of Arkansas.

Opinion Delivered January 22, 2015

Cook Law Firm, by: Harold F. Cook, Little Rock, AR, for appellant.

Taylor & Taylor Law Firm, P.A., by: Andrew M. Taylor and Tasha C. Taylor, Little Rock, AR, for appellee.

Opinion

KAREN R. BAKER, Associate Justice

This is an appeal from the Pulaski County Circuit Court's December 16, 2013 order granting a motion to dismiss a complaint filed by appellant, Lillie McMullen, against appellee, McHughes Law Firm (“McHughes”). In her complaint, McMullen alleged that McHughes violated the Arkansas Fair Debt Collection Practices Act (“AFDCPA”) and the federal Fair Debt Collection Practices Act (“FDCPA”). McMullen also alleged that McHughes invaded her privacy and engaged in malicious prosecution while trying to collect a consumer debt owned by Precision Analytics, Inc. (“Precision”), McHughes's client. Our jurisdiction is proper pursuant to Arkansas Supreme Court Rule 1–2(b)(1), (5), and (6) as the question of whether there is a cause of action under the AFDCPA is an issue of first impression for this court, this case involves significant issues needing clarification or development of the law, and it requires interpretation or construction of an act of the General Assembly.

I. Facts and Procedure

On November 16, 2012, McHughes filed a lawsuit on behalf of Precision against McMullen asserting that McMullen was responsible for a consumer debt incurred on a credit card issued to her ex-husband Owen McMullen.¹ The credit card at issue was a personal revolving credit-card-debt account opened sometime in 1983. The account was used for personal, family, or household purchases between 1983 and 1987, and for some period of time after McMullen and Owen McMullen divorced on December 17, 1987. Sometime after December 17, 1987, the debt was consigned, or otherwise transferred to Precision, which hired McHughes to attempt to collect the debt from McMullen. In her answer and counterclaim filed on December 19, 2012, McMullen denied ever having made any purchases on the credit card, and asserted violations of the AFDCPA. On August 28, 2013, Pulaski County Circuit Court Judge Timothy Fox entered an order dismissing the lawsuit brought by McHughes against McMullen.

After Precision's lawsuit against her was dismissed, McMullen filed a complaint in circuit court against McHughes on September 10, 2013. In her complaint, McMullen alleged that McHughes violated the AFDCPA, codified at Arkansas Code Annotated sections 17–24–501 through –512, and the FDCPA, codified at 15 U.S.C. § 1692 et seq., and 28 U.S.C. § 1337. In addition, McMullen asserted claims for negligence, invasion of privacy, abuse of process, and malicious prosecution. On November 12, 2013, McMullen amended her complaint. McMullen's second amended complaint alleged causes of action under the AFDCPA, the FDCPA, and state-law claims for invasion of privacy and malicious prosecution.

According to her second amended complaint, McMullen first received a notice and demand for payment in 2012, via a telephone call from an employee of McHughes. McMullen contended that McHughes filed a lawsuit as a means of collecting a debt without verification of, or conducting an adequate investigation into, the facts and circumstances surrounding the validity, correct ownership, or correct and proper amount due. McMullen alleged that McHughes's actions of making a demand for an improper amount and filing a lawsuit against her as coercion to collect a consumer debt when she was not a signatory or an authorized user, and did not otherwise have any ownership interest in the credit card at issue, constituted an unfair and unconscionable act in violation of 15 U.S.C. § 1629f.

In addition to her allegations of statutory violations, McMullen alleged in her second amended complaint that McHughes invaded her privacy by revealing private financial facts. She alleged that McHughes “repeatedly and unlawfully” disclosed information about a “baseless, false and groundless consumer debt to the general public and third parties,” and, thereby, invaded her privacy. McMullen contended that McHughes engaged in “highly offensive conduct” in the course of attempting to collect the debt. McMullen further asserted an action for malicious prosecution, alleging that McHughes “initiated civil proceedings ... without probable cause, and without making a reasonably diligent inquiry into the facts or the legal basis of instituting a lawsuit, and without any knowledge of the truth or merit of the allegations contained within the lawsuit.” According to her complaint, McHughes continued to

vehemently, zealously, and fervently prosecute and pursued [sic] a course of malicious prosecution of civil proceedings ... for a period of six (6) months after ascertaining unequivocal knowledge and information that the initial debt collection lawsuit was brought without probable cause, and lacked a factual and legal basis and/or merit of allegations contained therein and against the wrong party.

Finally, McMullen requested damages for physical, mental, and emotional injuries suffered as a result of McHughes's conduct, statutory damages of $1000, and attorney's fees of $53,650 and costs of $3,118.92.

On November 18, 2013, McHughes filed an answer and a motion to dismiss McMullen's second amended complaint. Attached to McHughes's motion to dismiss were the following exhibits: information regarding ownership of the credit account; first demand letter and McHughes's case notes documenting two conversations with McMullen; copy of the complaint filed on behalf Precision against McMullen dated November 16, 2012; billing statement dated May 17, 2008; McMullen's answer, counterclaim, and motion to dismiss filed in the action with Precision; and a second statement of account. In its motion to dismiss, McHughes sought dismissal pursuant to Arkansas Rule of Civil Procedure 12(b)(6) (2012), contending that McMullen failed to set forth general facts upon which relief could be granted or that she failed to include specific facts pertaining to one or more elements of her claims. McHughes maintained that it did not use unfair or unconscionable means to collect a debt because the FDCPA does not impose a duty to independently investigate the validity of a certified amount of debt. McHughes contended that McMullen failed to show any violation of the FDCPA.

Additionally, McHughes contended that there was probable cause to file the Precision complaint based on the affidavit of Michael Crossan, vice president of operations for Precision. In his affidavit, Crossan swore that Owen McMullen and Lillie McMullen owed the debt owned by Precision. With regard to the remaining state-law claims, McHughes asserted that a violation of the FDCPA does not create a cause of action for invasion of privacy. In addition, McHughes contended that under this court's opinion in Born v. Hosto & Buchan, PLLC, 2010 Ark. 292, 372 S.W.3d 324, the attorney immunity statute protects attorneys from civil liability from those not in privity of contract for actions taken during the course of their employment. In addition, McHughes maintained that McMullen's complaint failed to show that McHughes was “substantially certain” it lacked the legal authority to intrude upon her privacy by filing the lawsuit. McHughes further asserted that because McMullen alleged that she did not owe the debt, she could not maintain a cause of action for revelation of private facts. Finally, McHughes asserted that McMullen's malicious-prosecution claim failed on its face because she had not alleged that McHughes acted with malice when it filed the debt-collection lawsuit.

McMullen responded to the motion to dismiss on November 22, 2013. Attached to her response were to following documents: an affidavit from Owen McMullen; a copy of the circuit court order dismissing Precision's claim against her; a copy of a letter from an attorney with McHughes regarding discovery in the debt-collection litigation; a copy of a GE Money Bank Credit Card Agreement; billing statements addressed to Owen McMullen; and a copy of the judgment in McMullen's favor against Precision.

At a hearing on McHughes's motion to dismiss, the circuit court stated that it would not consider anything beyond the complaint. On December 16, 2013, the circuit court entered an order dismissing McMullen's complaint. In its order, the circuit court stated that it considered the motion to dismiss, the response, arguments of counsel, “and all other matters properly before it,” in granting McHughes's motion to dismiss. McMullen filed a motion for reconsideration on December 16, 2013, to which McHughes responded on December 26, 2013.² On January 9, 2014, McMullen appealed the order dismissing her complaint. For reversal, McMullen contends that the circuit court erred in dismissing her complaint because the FDCPA and the AFDCPA contemplate an action based on false statements contained in a debt-collection pleading.

She contends that the fact that the underlying debt-collection lawsuit against her was dismissed is proof that McHughes's statements in connection with filing that lawsuit were false. She also maintains that the circuit court improperly dismissed her state-law claims for invasion of privacy and malicious prosecution.

II. Standard of Review

We review a trial court's decision on a motion to dismiss pursuant to Arkansas Rule of Civil Procedure 12(b)(6) by treating the facts alleged in the complaint as true and by viewing them in the light most favorable to the plaintiff. Biedenharn v. Thicksten, 361 Ark. 438, 441, 206 S.W.3d 837, 840 (2005). When matters outside the pleadings are presented and not excluded by the circuit court, a motion to dismiss will be treated as a motion for summary judgment. Travis Lumber Co. v. Deichman, 2009 Ark. 299, at 23, 319 S.W.3d 239, 253 ; see also Ruth R. Remmel Revocable Trust v....