Salermo v. Hughes Watters & Askanase LLP
| Decision Date | 28 January 2021 |
| Docket Number | Civil Action No. 4:19-cv-02791 |
| Parties | Lucero SALERMO, Plaintiff, v. HUGHES WATTERS & ASKANASE LLP, et al., Defendants. |
| Court | U.S. District Court — Southern District of Texas |
Keren Gesund, Pro Hac Vice, Gesund & Pailet, LLC, Metairie, LA, Sarah Melissa Cox, Spector Cox PLLC, Dallas, TX, O. Randolph Bragg, Horwitz Horwitz et al., Chicago, IL, for Plaintiff.
George Billy Shepherd, III, Shepherd Prewett PLLC, Nathan Joseph Milliron, The Milliron Law Firm, PLLC, Houston, TX, Robbie LuAnn Malone, Malone Frost Martin PLLC, Dallas, TX, for Defendants.
MEMORANDUM AND ORDER GRANTING MOTION TO DISMISS IN PART
Plaintiff Lucero Salermo brings claims under the Fair Debt Collection Practices Act against Defendant Hughes, Watters, & Askanase, LLP. The motion by HWA to dismiss for lack of standing and for failure to state a claim is granted in part and denied in part. Dkt 24.
Salermo lacks standing to pursue her claim under 15 USC § 1692g, regarding failure to include required information in the debt-collection letter sent by HWA that is the subject of this action. Salermo has standing to pursue her claim under 15 USC § 1692e, regarding use of false, deceptive, or misleading representation or means in connection with that letter.
The former claim is dismissed. The latter claim will proceed, as HWA doesn't otherwise attack it as failing to state a claim.
Salermo incurred a loan with Cy-Fair Federal Credit Union to repay credit-card debt. Dkt 18 at ¶ 9. She describes HWA as a Texas law firm that "regularly collects or attempts to collect, directly or indirectly, debts owed or alleged to be owed or due to another." Id at ¶ 6. Cy-Fair "obtained the services of HWA" for purposes of debt collection. Id at ¶ 10. Named as additional defendants are an unspecified number of John Does , being "lawyers and employees of HWA, who regularly engage in the collection of debts allegedly due another." Id at ¶ 7.
HWA sent the subject debt-collection letter to Salermo in April 2019. Id at ¶ 11; see Dkt 18-1. Salermo attached it to her complaint, making it appropriate to consider on motion to dismiss. See Collins v. Morgan Stanley Dean Witter , 224 F.3d 496, 498–99 (5th Cir. 2000). The John Doe Defendants are alleged to have "created, approved, directed, and/or supervised the preparation and sending of letters" such as the one in dispute. Dkt 18 at ¶ 19.
The complaint doesn't itself indicate the amount of the debt. But the letter asserts a payoff amount of approximately $9,000. Dkt 18-1 at 3. The complaint also doesn't allege that Salermo ever intended to dispute that debt. To the contrary, counsel to Salermo acknowledged at hearing that the debt was in fact valid and past due. Even so, Salermo alleges in her complaint that the letter caused her various forms of anxiety for two reasons that purport to coincide with requirements imposed by the FDCPA upon debt-collection letters.
First , the letter is on HWA firm letterhead and signed on behalf of the law firm itself. Dkt 18 at ¶ 12; Dkt 18-1. Salermo alleges "upon information and belief" that the letter wasn't drafted by a lawyer, but instead "was drafted by non-lawyer ‘/kchavez.’ " Dkt 18 at ¶ 14. She further alleges "[u]pon information and belief" that "no attorney had been involved in the debt collection process" at the time the letter was sent to Salermo. Id at ¶ 15. HWA allegedly "failed to notify" her of this fact, and indeed, "deliberately omitted" that information. Id at ¶¶ 16–17. She alleges that she was "misled and believed an attorney had reviewed her" case. Id at ¶ 18. This caused her to be "upset and frightened" because she "thought something imminent would happen, perhaps a lawsuit would be filed against her." Id at ¶ 13.
She asserts that these facts violate FDCPA protections codified at 15 USC § 1692e, e(3), and e(10). These provide:
See Dkt 18 at ¶¶ 36–45.
Second , the letter contained the following language:
NOTWITHSTANDING ANYTHING ELSE IN THIS LETTER YOU HAVE THE FOLLOWING RIGHTS: UNLESS WITHIN THIRTY (30) DAYS AFTER RECEIPT OF THIS NOTICE YOU DISPUTE THE VALIDITY OF THE DEBT, OR ANY PORTION THEREOF, AND NOTIFY THE UNDERSIGNED OF SUCH DISPUTE, THE DEBT WILL BE PRESUMED TO BE VALID. IF WITHIN SUCH TIME PERIOD YOU DISPUTE THE DEBT, OR ANY PORTION THEREOF, UPON REQUEST THE UNDERSIGNED WILL FURNISH YOU WITH VERIFICATION OF THE DEBT.
Dkt 18-1 at 2 (emphasis omitted); see also Dkt 18 at ¶ 21.
She alleges that this language was "deliberately" drafted to omit the words " ‘by the debt collector’ or words to that effect in order to confuse consumers regarding who may assume the debt to be valid." Dkt 18 at ¶ 23. This "deceived" her, Salermo says, and she "believed that if she failed to dispute the debt, then her debt would be ‘assumed to be valid’ by everyone, e.g. —creditor, the courts, the lawyers, etc." Id at ¶ 24. She was also "confused, frightened, and misled" by the letter, understanding "that provision to mean that if she fails to dispute the debt to the Defendants, then she has waived her right to dispute it later." Id at ¶¶ 53–54.
She asserts that these facts again constitute violations of § 1692e and e(10). She also asserts a violation of § 1692g(a)(3), which provides:
See Dkt 18 at ¶¶ 46–55.
Salermo seeks redress under the FDCPA in her individual capacity. She also brings this lawsuit on behalf of all similarly situated persons within Texas, seeking certification of a class of those who may have received a letter in this form from HWA. Id at ¶¶ 28–35.
HWA moved to dismiss, asserting both lack of standing and failure to state a claim under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. See Dkt 24.
Rule 12(b)(1) of the Federal Rules of Civil Procedure permits a defendant to seek dismissal of an action for lack of subject-matter jurisdiction. This includes a challenge, as here, to the standing of the plaintiff to assert a claim.
Federal courts are ones of limited jurisdiction. Howery v. Allstate Insurance Co , 243 F.3d 912, 916 (5th Cir. 2001), citing Kokkonen v. Guardian Life Insurance Co of America , 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). The Fifth Circuit holds that dismissal is appropriate "when the court lacks the statutory or constitutional power to adjudicate the claim." In re FEMA Trailer Formaldehyde Products Liability Litigation (Mississippi Plaintiffs) , 668 F.3d 281, 286 (5th Cir. 2012), quoting Home Builders Association, Inc v. City of Madison , 143 F.3d 1006, 1010 (5th Cir. 1998).
The burden is on the party asserting jurisdiction to establish by a preponderance of the evidence that subject-matter jurisdiction is proper. New Orleans & Gulf Coast Railway Co v. Barrois , 533 F.3d 321, 327 (5th Cir. 2008), citing Howery , 243 F.3d at 919 ; Paterson v. Weinberger , 644 F.2d 521, 523 (5th Cir. 1981). Indeed, a presumption against subject-matter jurisdiction exists that "must be rebutted by the party bringing an action to federal court." Coury v. Prot , 85 F.3d 244, 248 (5th Cir. 1996).
The motion also asserts a challenge under Rule 12(b)(6) for failure to state a claim as to the claim under 15 USC § 1692g(a)(3). This aspect of the motion is discussed in limited fashion below because that particular claim fails as to standing.
Action here arises under the Fair Debt Collection Practices Act, presenting questions of standing under both the Act and the United States Constitution.
Congress has authority through the legislative power to create statutory rights or entitlements "the alleged deprivation of which can confer standing to sue even where the plaintiff would have suffered no judicially cognizable injury in the absence of statute." Warth v. Seldin , 422 U.S. 490, 514, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). In such instances, establishing a violation of the statutory scheme and an entitlement to enforce it are necessary preconditions to stating a claim for which relief can be granted—often referred to as statutory standing. See Lexmark International, Inc v. Static Control Components , 572 U.S. 118, 128 n. 4, 134 S.Ct. 1377, 188 L.Ed.2d 392 (2014). But that alone is insufficient. A plaintiff who alleges a statutory violation must also meet the requirements of Article III of the Constitution —often referred to as constitutional standing. Id. at 125, 134 S.Ct. 1377, citing Lujan v. Defenders of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).
The precise demarcation between statutory and constitutional standing is at times difficult to discern. At the pleading stage, the determination of standing depends upon scrutiny of the statutory prohibitions and protections enacted by Congress, the nature of the alleged conduct, and the character of the alleged injury. For example, see Spokeo Inc v. Robins , 578 U.S. 330, 136 S. Ct. 1540, 1547–49, 194 L.Ed.2d 635 (2016), as considered below.
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