Naranjo v. UNIVERSAL SUR. OF AMERICA, Civil Action No. C-09-240.

• Decision Date: 14 January 2010
• Docket Number: Civil Action No. C-09-240.
• Citation: 679 F. Supp.2d 787
• Parties: Maria O. NARANJO, Plaintiff, v. UNIVERSAL SURETY OF AMERICA, et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

679 F.Supp.2d 787

Maria O. NARANJO, Plaintiff, v. UNIVERSAL SURETY OF AMERICA, et al., Defendants.

Civil Action No. C-09-240.

United States District Court, S.D. Texas, Corpus Christi Division.

January 14, 2010.

Ahmad Keshavarz, The Law Offices of Ahmad Keshavarz, Brooklyn, NY, Christina E. Trejo, Texas Rio Grand Legal Aid Inc, Houston, TX, for Plaintiff.

ORDER

JANIS GRAHAM JACK, District Judge.

On this day came on to be considered (1) Defendant Sherman General Partners SPE LLC's Rule 12(b)(1), 12(b)(4), 12(b)(5), and 12(b)(6) Motion to Dismiss and Memorandum of Points and Authorities (D.E. 14), (2) Defendant Sherman Acquisitions LP's Rule 12(b)(1), 12(b)(4), 12(b)(5), and 12(b)(6) Motion to Dismiss and Memorandum of Points and Authorities (D.E. 15), (3) Defendant James N. Hull & Associates, PC's Rule 12(b)(1) and 12(b)(6) Motion to Dismiss and Memorandum of Points and Authorities (D.E. 16), and (4) Defendant Universal Surety of America's Rule 12(b)(1) and 12(b)(6) Motion to Dismiss and Memorandum of Points and Authorities (D.E. 17). For the reasons stated herein, Defendants' Motions are DENIED in their entirety. Plaintiff, however, is ORDERED to file an amended complaint that complies with the pleading requirements of Federal Rules of Civil Procedure 8(a) and 9(b) within ten (10) days after entry of this Order.

I. Factual and Procedural Background

Plaintiff filed her Original Complaint in this action on September 14, 2009. (D.E. 1.) Named as Defendants in this Complaint are James N. Hull & Associates PC ("Hull"), Universal Surety of America ("Universal Surety"),¹ Sherman Acquisitions LP ("Sherman Acquisitions"), Sherman General Partner SPE LLC (the general partner of Sherman Acquisitions LP) ("Sherman GP"), and certain other as-yet unidentified related entities designated as "Sherman John Does 1, 2, & 3." Collectively, the Sherman entities are referred to as "Sherman" in the Complaint and in this Order. (D.E. 1 at 2-4.) The following facts are derived from Plaintiff's Original Complaint. (D.E. 1.)

On or about August 3, 2001, Defendant Hull, a debt collection law firm, obtained a default judgment against Plaintiff in Providian National Bank v. Mary O. Naranjo, Cause No. 3,588, Justice Court, Pct. 1, San Patricio County, for alleged credit card debt. According to Plaintiff, when Defendant Hull sought default judgment it knew that the debt was barred by the statute of limitations, but nevertheless "intentionally sought and obtained judgment." (D.E. 1 at 5.)

Plaintiff states that Hull twice abstracted the judgment pursuant to Texas law. On May 15, 2002, Hull abstracted the judgment under the style of Providian National Bank v. Mary O. Naranjo. Then, on October 20, 2008, Hull again abstracted the judgment, now styled as Sherman Acquisition LP as assignee of Providian National Bank v. Mary Naranjo. Plaintiff alleges that, when Defendants Hull and Sherman abstracted the judgment, they knew that the judgment was based on a time barred debt. (D.E. 1 at 5.)

On or about August 5, 2008, Plaintiff's home was destroyed by a fire, rendering Plaintiff homeless. Plaintiff sought to obtain financing to purchase a mobile home in which to live, but the abstracted judgment allegedly prevented Plaintiff from being able to obtain financing. (D.E. 1 at 5.) Plaintiff claims that Hull and Sherman knew that Plaintiff lost her home, knew she had to obtain financing, and knew that the default judgment prevented her from doing so. Plaintiff further states that Hull and Sherman double abstracted the judgment and maintained the abstract of judgment for a debt they knew was time barred "for the purpose of attempting to extract money from Plaintiff, who is indigent." (D.E. 1 at 5-6.)

Plaintiff states that, on October 28, 2008, Defendant Sherman, acting though Hull sent Plaintiff discovery in aid of execution on the judgment on the time barred debt. Plaintiff states that the discovery and accompanying cover letter constituted an "initial communication" by Defendant Sherman within the meaning of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692g(a), but Sherman did not include the statutorily required disclosures to Plaintiff in this communication, or within 5 days of the communication, advising Plaintiff of her rights, including her right to dispute the debt. (D.E. 1 at 6.) Plaintiff retained an attorney, who then entered into a Rule 11 Agreement as to discovery issues and communicated about the case with Defendants. (D.E. 1 at 6.)

On May 5, 2009, Sherman, through Hull, allegedly made a settlement demand directly to Plaintiff, even though it was aware that Plaintiff was represented by counsel. The settlement demand was for $11,993.79, on a principal amount of $3,391.40.² Plaintiff claims that Sherman Acquisitions and Hull continue to maintain an abstract on the judgment "they know was obtained on a time barred debt," and this continues to inflict damages on Plaintiff. (D.E. 1 at 6.)

Plaintiff states that Sherman never posted a bond with the Texas Secretary of State, which is a condition precedent to be able to collect an alleged consumer debt in Texas. Alternatively, Plaintiff states that Sherman and Hull took the above actions recklessly and with a conscious disregard for Plaintiff's rights. (D.E. 1 at 7.)

Plaintiff brings several causes of action based upon these allegations. First, Plaintiff brings a claim for violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"). According to Plaintiff, when Defendants sought to collect on the debt, they allegedly misrepresented the character, status, and amount of the debt, attempted to collect an amount not permitted by law or contract, threatened to take, and actually took actions prohibited by law, used false, deceptive or misleading representations or means, used unfair or unconscionable means, contacted a consumer represented by counsel, and engaged in conduct meant to harass, in violation of 15 U.S.C. § 1692b-g. (D.E. 1 at 8.) Second, Plaintiff alleges violations of the Texas Fair Debt Collection Act, Tex. Fin. C. § 392.001 et seq., ("TDCA") based primarily on the same allegations raised with respect to the FDCPA, and claiming that Defendants made repeated telephone calls in an attempt to harass Plaintiff. (D.E. 1 at 9.) Third, Plaintiff brings a claim for tortious unfair debt collection, based on the conduct outlined above. (D.E. 1 at 10.) Finally, Plaintiff brings claims for fraud and intentional misrepresentation, alleging that Hull and Sherman made false statements of fact and made statements of opinion based on false statements of fact, and Plaintiff relied upon these misrepresentations. (D.E. 1 at 10-11.) Plaintiff seeks broad relief, including statutory damages, equitable relief, actual, economic, punitive, and exemplary damages, attorney's fees, and an injunction preventing Defendant from engaging in similar unlawful conduct now and in the future. (D.E. 1 at 11-12.)

This action was initially dismissed on November 10, 2009 pursuant to Federal Rule of Civil Procedure 41(b) for failure to prosecute. (D.E. 3.) Plaintiff thereafter filed a motion to reinstate, which the Court granted on December 1, 2009. (D.E. 7; Naranjo v. Universal Surety of America, et al., 2009 WL 4667402 (S.D.Tex. Dec. 1, 2009).)

After reinstatement, Defendants Sherman GP, Sherman Acquisitions, Hull, and Universal Surety each filed a Motion to Dismiss, all of which raise similar arguments. (D.E. 14, 15, 16, 17.) Specifically, the Sherman Defendants request dismissal pursuant to (1) Rule 12(b)(1), as the Court lacks subject matter jurisdiction based on the Rooker-Feldman doctrine (D.E. 14 at 2-6; D.E. 15 at 2-6), (2) Rule 12(b)(4) and Rule 12(b)(5), due to insufficient process and insufficient service of process (D.E. 14 at 6-9; D.E. 15 at 6-9), and (3) Rule 12(b)(6) for failure to state a claim (D.E. 14 at 9-17; D.E. 15 at 9-17). Defendants Hull and Universal Surety also bring motions to dismiss based upon Rule 12(b)(1) and Rule 12(b)(6), but do not challenge sufficiency of process or service of process. (D.E. 16, 17.)

II. Discussion

It is well established that, "when a Rule 12(b)(1) motion is filed in conjunction with other Rule 12 motions, the court should consider the Rule 12(b)(1) jurisdictional attack before addressing any attack on the merits." Ramming v. U.S., 281 F.3d 158, 161 (5th Cir.2001). Therefore, the Court first considers Defendants' Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction, based upon the Rooker-Feldman doctrine.

A. Subject Matter Jurisdiction (Rule 12(b)(1))

1. General Rules Applicable to Rule 12(b)(1) Motion to Dismiss

When a party challenges a court's subject matter jurisdiction under Rule 12(b)(1), it can make either a "facial attack" or a "factual attack." As the Fifth Circuit has explained, "a `facial attack' on the complaint requires the court merely to look and see if plaintiff has sufficiently alleged a basis of subject matter jurisdiction, and the allegations in his complaint are taken as true for the purposes of the motion. A `factual attack,' however, challenges the existence of subject matter jurisdiction in fact, irrespective of the pleadings, and matters outside the pleadings, such as testimony and affidavits, are considered. Moreover, a `factual attack' under Rule 12(b)(1) may occur at any stage of the proceedings, and plaintiff bears the burden of proof that jurisdiction does in fact exist." Menchaca v. Chrysler Credit Corp., 613 F.2d 507, 511 (5th Cir.1980) (internal citations omitted); see also Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir.1981) ("Simply stated, if the defense merely files a Rule 12(b)(1) motion, the trial court is required merely to look to the sufficiency of the allegations in the complaint because they are presumed to be true. If those jurisdictional allegations are sufficient the complaint stands. If a defendant makes a `factual attack' upon the court's subject...