Packard v. Mariner Fin., LLC

• Decision Date: 26 May 2020
• Docket Number: CIVIL ACTION NO. 3:19-CV-00553-GNS
• Parties: BRYAN PACKARD; and DEBORAH PACKARD PLAINTIFFS v. MARINER FINANCE, LLC; and PERSONAL FINANCE COMPANY, LLC DEFENDANTS
• Court: U.S. District Court — Western District of Kentucky

BRYAN PACKARD; and DEBORAH PACKARD PLAINTIFFS v. MARINER FINANCE, LLC; and PERSONAL FINANCE COMPANY, LLC DEFENDANTS

CIVIL ACTION NO. 3:19-CV-00553-GNS

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY LOUISVILLE DIVISION

May 26, 2020

MEMORANDUM OPINION AND ORDER

This matter is before the Court on Defendants' Motions to Dismiss (DNs 15, 23). These matters are now ripe for adjudication. For the reasons that follow, Defendants' first motion to dismiss is DENIED AS MOOT, and Defendants' second motion to dismiss is GRANTED IN PART and DENIED IN PART.

I. BACKGROUND

A. Statement of Facts

This matter arises from a series of financial and judicial interactions between Plaintiffs Bryan Packard ("Bryan") and Deborah Packard ("Deborah") (collectively, the "Plaintiffs") and Defendants Mariner Finance, LLC ("Mariner") and Personal Finance Company, LLC ("PFC") (collectively, the "Defendants"). On August 29, 2017, Plaintiffs entered into a Promissory Note, Disclosure Statement, and Security Agreement (the "Note") with PFC that included $1,723.53 in financing and a precomputed finance charge of $775.92, which corresponds to a 35.94% APR and a 33.15% annual interest rate. (Am. Compl. ¶¶ 13-19, DN 21; Am. Compl. Ex. A, at 1-2, DN 21-1). Plaintiffs made several payments on the Note but ultimately became unable to pay and ceased payments. (Am. Compl. ¶ 20). In the meantime, Mariner purchased PFC, although PFC still remains an active LLC with the Kentucky Secretary of State. (Am. Compl. ¶¶ 20-21).

On July 10, 2018, Defendants, through their attorneys P'Pool & Roy, PLLC, filed a collection action against Plaintiffs in Hardin District Court, Case No. 18-C-60854, which identified the plaintiff as "Mariner Finance f/k/a Personal Finance Company."¹ (Am. Compl. ¶ 22; Am. Compl. Ex. B, at 1, DN 21-2). When Plaintiffs did not answer the collection complaint, the state court judge entered a default judgment on September 12, 2018, (the "Default Judgment"), which provided for recovery "of $1,820.87, plus attorney's fee in the amount of $600.89, plus interest in accordance with the terms of the agreement from 06/29/2018 until date of judgment, then balance plus interest at the rate of 6.00% until paid, and its court costs herein[.]" (Am. Compl. ¶¶ 38-40; Am. Compl. Ex. D, at 1, DN 21-4). Shortly thereafter, on December 17, 2018, Defendants' attorneys served a wage garnishment on Bryan's employer for $2,864.36, which Plaintiffs allege misrepresented and overstated the total amount due. (Am. Compl. ¶¶ 55-59; Am. Compl. Ex. E, at 1, DN 21-5).

B. Procedural History

On August 2, 2019, Plaintiffs filed the present lawsuit alleging violations of the Fair Debt Collection Practices Act ("FDCPA"), the Fair Credit Reporting Act ("FCRA"), and the Kentucky Consumer Protection Act, KRS 367.110-.360 ("KCPA"). (Compl. ¶¶ 1-4, DN 1). On September 27, 2019, Defendants filed their first motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) and12(b)(6). (Defs.' Mot. Dismiss, DN 15). On November 15, 2019, Plaintiffs filed a First Amended Complaint dropping the claim under the FCRA, retaining claims under the FDCPA and the KCPA, and adding additional state law claims. (Am. Compl. ¶ 1, DN 21).² On November 29, 2019, Defendants again moved to dismiss. (Defs.' Mot. Dismiss, DN 23). Plaintiffs responded, and Defendants replied. (Pls.' Resp. Defs.' Mot. Dismiss, DN 41; Defs.' Reply Mot. Dismiss, DN 42).

II. JURISDICTION

The Court has subject matter jurisdiction over this action via federal question, 28 U.S.C. § 1331, because the Complaint alleges violations of the FDCPA. (Am. Compl. ¶¶ 1-2). The Court has supplemental jurisdiction over the remaining state law claims because they arise from the same case and controversy as the federal claim. 28 U.S.C. § 1367(a); (Am. Compl. ¶¶ 1-2).

III. STANDARD OF REVIEW

A motion to dismiss under Fed. R. Civ. P. 12(b)(1) considers whether the court has subject matter jurisdiction over the matter. The standards for dismissal under Fed. R. Civ. P. 12(b)(1) and 12(b)(6) differ in the Sixth Circuit. See RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir. 1996). Threshold challenges to subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1) should generally be decided before any ruling on the merits under Fed. R. Civ. P. 12(b)(6). See Bell v. Hood, 327 U.S. 678, 682 (1946). In most circumstances, a plaintiff bears the burden to survive Fed. R. Civ. P. 12(b)(1) motions to dismiss for lack of subject matter jurisdiction. Id.

A motion to dismiss under Fed. R. Civ. P. 12(b)(6) considers the sufficiency of the complaint. In order to survive dismissal for failure to state a claim under Fed. R. Civ. P. 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "[A] district court must (1) view the complaint in the light most favorable to the plaintiff and (2) take all well-pleaded factual allegations as true." Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478, 488 (6th Cir. 2009) (citing Gunasekera v. Irwin, 551 F.3d 461, 466 (6th Cir. 2009)). Even so, the Court need not accept a party's "bare assertion of legal conclusions." Columbia Nat. Res., Inc. v. Tatum, 58 F.3d 1101, 1109 (6th Cir. 1995) (citation omitted). Ultimately, this inquiry is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679.

IV. DISCUSSION

As clarified in the First Amended Complaint, Plaintiffs allege the following claims against Defendants: (1) violations of the FDCPA; (2) violations of the KCPA; (3) violations of KRS 360.020, the usury statute; (4) violations of both KRS 453.050 and KRS 286.4-533(3), as actionable under Kentucky's negligence per se statute, KRS 446.070; (5) abuse of process; and (6) unjust enrichment. (Am. Compl. ¶¶ 82-173). Defendants contend that each of these claims must be dismissed in full for claim-specific reasons and generally under the Rooker-Feldman doctrine. (Defs.' Mot. Dismiss 1-2).

A. Fair Debt Collection Practices Act

The FDCPA generally prohibits a "debt collector" from using "any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692e. To establish a prima facie case for a violation of the FDCPA, a plaintiff must show (1) theplaintiff is a "consumer" within the meaning of 15 U.S.C. § 1692a, (2) the debt arises out of a transaction entered primarily for personal, family, or household purposes, (3) the defendant collecting the debt is a "debt collector" within the meaning of 15 U.S.C. § 1692a, and (4) the defendant violated the FDCPA. Whittiker v. Deutsche Bank Nat'l Tr. Co., 605 F. Supp. 2d 914, 939 (N.D. Ohio 2009) (citing Duncan v. Citibank, No. Civ. 06-0246, 2006 WL 4063022, at *5 (D.N.M. June 30, 2006); Grimard v. Palmer, Reifler & Assocs., No. 07-CV-12128, 2007 WL 2287831, at *2 (E.D. Mich. July 31, 2007)).

Plaintiffs assert that each of these elements is met with regards to both Mariner and PFC. (Am. Compl. ¶¶ 5-8, 68-81). Rather than arguing that Plaintiffs' allegations do not demonstrate a violation of the FDCPA, Defendants primary argument at this point is that they are "creditors" rather than "debt collectors" under 15 U.S.C. § 1692a. (Defs.' Mot. Dismiss 4-9). If Defendants are creditors with regards to the debt in question, then Plaintiffs' FDCPA claim must fail. The FDCPA provides the relevant definitions:

The term "creditor" means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.

The term "debt collector" means any person who [1] uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or [2] who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. . . . [3] the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts.

15 U.S.C. § 1692a(4), (6). With regards "to a specific debt, one cannot be both a 'creditor' and a 'debt collector,' as defined in the FDCPA, because those terms are mutually exclusive." Bridge v. Ocwen Fed. Bank, FSB, 681 F.3d 355, 359 (6th Cir. 2012) (citations omitted).

Plaintiffs first contend that Mariner is a debt collector because Mariner filed the state collection complaint in the name of a non-existent entity—Mariner Finance—rather than its real name—Mariner Finance LLC. (Am. Compl. ¶ 70). This allegation appears to implicate the third definition of debt collector—i.e., Mariner used a name other than its own when attempting to collect debt. This rule, often known as the "false-name exception," is an exception to the general rule that the FDCPA is not applicable to a creditor collecting its own debt. Pinson v. JPMorgan Chase Bank, Nat'l Ass'n, 942 F.3d 1200, 1209 (11th Cir. 2019); see also Shula v. Lawent, 359 F.3d 489, 492 (7th Cir. 2004) (noting that the FDCPA can apply when "a creditor uses a pseudonym to collect a debt—that is, poses as a debt collector." (citing 15 U.S.C. 1692a(6))). It is a stretch, however, to conclude that the mere omission of "LLC" from Mariner's name would transform it from a creditor to a debt collector. See Hart v. Pac. Rehab of Maryland, P.A., No. CV-12-2608, 2013 WL 5212309, at *12 (D. Md. Sept. 13, 2013) ("The errors, variations, or misnomers in the iteration of the names of the State plaintiff entities . . . do not transform the State plaintiff into a debt collector."). In other words, the use...