Plummer v. Atl. Credit & Fin., Inc.

• Decision Date: 08 December 2014
• Docket Number: No. 13 Civ. 7562AT.,13 Civ. 7562AT.
• Citation: 66 F.Supp.3d 484
• Parties: Patrick PLUMMER, on behalf of himself individually and all others similarly situated, Plaintiff, v. ATLANTIC CREDIT & FINANCE, INC., Capital Management Services, LP, and Velocity Investments, LLC, Defendants.
• Court: U.S. District Court — Southern District of New York

66 F.Supp.3d 484

Patrick PLUMMER, on behalf of himself individually and all others similarly situated, Plaintiff

v.ATLANTIC CREDIT & FINANCE, INC., Capital Management Services, LP, and Velocity Investments, LLC, Defendants.

No. 13 Civ. 7562AT.

United States District Court, S.D. New York.

Signed Dec. 8, 2014.

Novlette Rosemarie Kidd, Fagenson & Puglisi, New York, NY, for Plaintiff.

Arthur Jay Sanders, Law Offices of Arthur Sanders, New City, NY, Aaron R. Easley Sessions, Fishman, & Nathan & Israel LLC, Flemington, NJ, Concepcion A. Montoya, Elizabeth Kathryn Devine, Matthew E. Lewitz, Hinshaw & Culbertson LLP, New York, NY, for Defendants.

OPINION AND ORDER

ANALISA TORRES, District Judge:

In this proposed class action, Plaintiff, Patrick Plummer, alleges that Defendants, Atlantic Credit & Finance, Inc. (“Atlantic Credit”), Capital Management Services, LP (“Capital Management”), and Velocity Investments, LLC (“Velocity”) violated provisions of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq. Velocity moves to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure on the ground that it is not a “debt collector” under the FDCPA. For the reasons stated below, the motion is DENIED.

BACKGROUND

The following facts are taken from the amended class action complaint (the “complaint”) and are accepted as true for the purposes of this motion. See ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir.2007).

Plaintiff incurred credit card debt to Union Plus Credit Card/HSBC. Am. Compl. ¶¶ 5, 35. Plaintiff made his last payment on the account no later than September 2006, after which HSBC alleged that Plaintiff's debt fell into default. Id. ¶¶ 36–37. Atlantic Credit subsequently purchased Plaintiff's credit card debt from HSBC. Id. ¶ 38. Atlantic Credit placed the debt with various debt collectors for the purpose of collecting from Plaintiff. Id. ¶ 39. Beginning no later than 2007, several debt collectors, on behalf of Atlantic Credit, sent collection letters to Plaintiff. Id. ¶¶ 40–42. Plaintiff's attorney responded to each debt collector, informing them that Plaintiff was disputing the debt and that Plaintiff was represented by counsel and should not be contacted directly. Id. ¶¶ 43–46.

By letter dated February 7, 2011, Plaintiff's attorney sent a dispute and representation letter to Atlantic Credit. Id. ¶¶ 58–59. Atlantic Credit responded to counsel on February 15, 2011, acknowledging receipt of Plaintiff's attorney's letter and providing “purported verification” of the debt. Id. ¶¶ 60–61. Atlantic Credit's letter indicated that Plaintiff's last payment to HSBC was on September 21, 2006. Id. ¶ 61.

Atlantic Credit subsequently sold the debt to Velocity, Id. ¶¶ 66–67, a New Jersey limited liability company, with a principal business described as “the purchase of defaulted consumer debts originally owed or due or alleged to be originally owed or due to others.” Id. ¶¶ 23, 28. Velocity “regularly collects or attempts to collect such debts either through itself or through others.” Id. ¶ 26. Velocity placed Plaintiff's debt with Capital Management for the purpose of collection. Id. ¶ 65. Atlantic Credit had informed Velocity that Plaintiff disputed his debt and was represented by counsel. Id. ¶ 121. Plaintiff alleges that, upon placing the debt with Capital Management for collection, Velocity failed to provide this information to Capital Management. Id. ¶¶ 106, 122–25. Plaintiff alleges, in the alternative, that Velocity did inform Capital Management that Plaintiff disputed his debt and was represented by counsel. Id. ¶ 107.

On October 24, 2012, Capital Management sent a collection letter to Plaintiff, stating that Capital Management was collecting on behalf of Velocity. Id. ¶¶ 62–64. The letter demanded $744.82 as settlement for a debt balance of $3,724.12. Id. ¶¶ 68–69. The letter was sent more than six years after the date of Plaintiff's last payment on the account, id. ¶¶ 61, 70, and failed to inform Plaintiff that the applicable six-year statute of limitations had expired and that any payment by Plaintiff would revive the statute of limitations, Id. ¶¶ 71–74.

Plaintiff alleges that Capital Management, in sending letters to collect on his debt, was acting as an agent of Velocity and that Velocity “exercised control or had the right to exercise control over the collection activities of Capital Management.” Id. ¶¶ 30–31. Plaintiff claims that Velocity used Capital Management in order to shield itself from liability under the FDCPA. Id. ¶ 32. Plaintiff alleges that Atlantic Credit, Capital Management, and Velocity are each debt collectors within the meaning of the FDCPA, 15 U.S.C. § 1692a(6). Id. ¶¶ 8, 16, 21.

DISCUSSION

I. Standard of Review

To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead sufficient factual allegations in the complaint that, accepted as true, “ ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A plaintiff is not required to provide “detailed factual allegations” in the complaint, but must assert “more than labels and conclusions[ ] and a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955. In addition, the facts pleaded in the complaint “must be enough to raise a right to relief above the speculative level.” Id. On such a motion, the court may consider only the complaint, documents attached to the complaint, matters of which a court can take judicial notice, or documents that the plaintiff knew about and relied upon. See Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir.2002). A district court considering a Rule 12(b)(6) motion must accept all factual allegations in the complaint as true, while also drawing all reasonable inferences in favor of the nonmoving party. ATSI Commc'ns, Inc., 493 F.3d at 98.

II. Claims Under the FDCPA

The FDCPA “establishes certain rights for consumers whose debts are placed in the hands of professional debt collectors for collection, and requires that such debt collectors advise the consumers whose debts they seek to collect of specified rights.” DeSantis v. Computer Credit, Inc., 269 F.3d 159, 161 (2d Cir.2001). “The purpose of the FDCPA is to “ ‘eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.’ ” ” Kropelnicki v. Siegel, 290 F.3d 118, 127 (2d Cir.2002) (quoting 15 U.S.C. § 1692(e) ). To this end, the FDCPA “grants a private right of action to a consumer who receives a communication that violates the Act.” Jacobson v. Healthcare Fin. Servs., Inc., 516 F.3d 85, 91 (2d Cir.2008). To establish a violation under the FDCPA,

(1) the plaintiff must be a “consumer” who allegedly owes the debt or a person who has been the object of efforts to collect a consumer debt, and (2) the defendant collecting the debt is considered a “debt collector,” and (3) the defendant has engaged in any act or omission in violation of FDCPA requirements.

Healy v. Jzanus Ltd., 02 Civ. 1061, 2002 WL 31654571, at *2 (E.D.N.Y. Nov. 20, 2002) (citing 15 U.S.C. § 1692(a) ).

A. Velocity is a Debt Collector under the FDCPA

The relevant provisions of the FDCPA apply only to the acts or omissions of “debt collectors” and not to those of “creditors.” Schuh v. Druckman & Sinel, LLP, 751 F.Supp.2d 542, 548 (S.D.N.Y.2010) (citations omitted); Schlosser v. Fairbanks Capital Corp., 323 F.3d 534, 536 (7th Cir.2003) (“For purposes of applying the [FDCPA] to a particular debt, these two categories—debt collectors and creditors—are mutually exclusive.”). A debt collector is defined in the statute as 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) “regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6) ; see also Schlegel v. Wells Fargo Bank, N.A., 720 F.3d 1204, 1208 (9th Cir.2013). A creditor, by contrast, is a “person who offers or extends credit creating a debt,” 15 U.S.C. § 1692a(4), and is not generally subject to the FDCPA. Maguire v. Citicorp Retail Servs., Inc., 147 F.3d 232, 235 (2d Cir.1998).

Velocity contends that it is not a debt collector under the FDCPA and, therefore, that the claims against it must be dismissed. Velocity does not claim to be a creditor here. Rather, Velocity maintains that it is not a “direct” debt collector because it did not participate in any debt collection activity against Plaintiff, Def. Mem. 3–5; Def. Reply 2–4, and that it is not an “indirect” debt collector because Plaintiff has failed to allege the interdependence or control necessary to establish an agency relationship, Def. Mem. 5–6; Def. Reply 5–6. In addition, Velocity argues that the fact that it has acted as a debt collector in other instances does not make it a debt collector in this case. Def. Reply 6.

Plaintiff has sufficiently alleged that Velocity is a debt collector for purposes of this action. Plaintiff states in the complaint that the “principal purpose of [Velocity's] business is the purchase of defaulted consumer debts originally owed or due or alleged to be originally owed or due to others.” Am. Compl. ¶ 23. More specifically, Plaintiff alleges that Velocity uses the mail in purchasing defaulted consumer debts, usually at a significant discount to their face value, and then seeks to collect on such debts. Id. ¶¶ 21–28. Plaintiff also states that Velocity purchased Plaintiff's defaulted debt from Atlantic Credit, placed it with Capital Management, and sought to collect on it....