Sharon Southwood v. Credit Card Solution
| Decision Date | 23 October 2012 |
| Docket Number | No. 7:09-CV-81-F,7:09-CV-81-F |
| Court | U.S. District Court — Eastern District of North Carolina |
| Parties | SHARON SOUTHWOOD, for herself, and all others similarly situated, Plaintiff, v. THE CREDIT CARD SOLUTION, a Texas general partnership or sole proprietorship; CCDN, LLC, a Nevada limited liability company; R.K. LOCK & ASSOCIATES, an Illinois general partnership d/b/a Credit Collections Defense Network or CCDN; ROBERT K. LOCK, JR., ESQ.; COLLEEN LOCK; PHILIP M. MANGER, ESQ.; and ROBERT M. "BOB" LINDSEY, Defendants. |
This matter is before the court on several motions: the Motion to Dismiss [DE-9] filed by Defendants The Credit Card Solution, CCDN, LLC, R.K. Lock & Associates, Robert K. Lock, Jr., Esq., Colleen Lock, Philip M. Manger, and Robert M. "Bob" Lindsey (collectively, "Defendants"); the Amended Motion for Appointment of Receivers for All Defendants [DE-15], Supplemental Motion to Appoint Receiver [DE-30], Supplemental Motion to Appoint Receiver Second [DE-32], and Third Motion to Appoint Receiver Supplemental [DE-41], all filed by Named Plaintiff Sharon Southwood ("Named Plaintiff" or "Southwood"), for herself and for all others similarly situated; the Motion for Summary Judgment [DE-17] filed by Southwood; the Amended Motion to Certify Class [DE-34] filed by Southwood, the Motion to Dismiss Lindsey and TCCS per Rule 41(a)(2) [DE-43] filed by Southwood, and the Motion to Withdraw asAttorney [DE-39] filed by Attorney Stephen A. Dunn and the firm of Emanuel & Dunn, PLLC. These motions have long been ripe for ruling.
Southwood initiated this action by filing a 56-page verified complaint on January 7, 2009, in the Superior Court Division of Bladen County, North Carolina, alleging seven claims for relief for herself and others: Count I alleges a claim for unfair and deceptive trade practices under North Carolina law, Count II alleges fraud, Count III alleges gross and willful legal malpractice, Count IV alleges a violation of the North Carolina Racketeer and Corrupt Organizations Act ("NC RICO"), Count V alleges a violation of the Credit Repair Organizations Act ("CROA"), Count VI alleges a violation of the Racketeer Influence and Corrupt Organizations Act ("RICO"), and Count VII alleges a claim for civil conspiracy. Additionally, Southwood seeks to pierce the corporate veil of any entity defendants in an effort to hold the individual defendants personally liable for the alleged corporate misdeeds.
Defendants assert their counsel was served with a copy of the complaint on April 14, 2009, and they filed a Notice of Removal [DE-1] in this court on May 14, 2009. Defendants invoke federal jurisdiction on the grounds of federal question jurisdiction pursuant to 28 U.S.C. § 1331 and diversity jurisdiction pursuant to 28 U.S.C. § 1332(a).
Prior to Defendants' filing of the Notice of Removal, Southwood filed several motions in North Carolina state court, including a motion for arrest & bail of Defendant Robert M. Lindsey, a motion for appointment of receivers for all entity defendants, and a motion for class certification. After receiving extensions of time to file an answer to the complaint, Defendants filed a Motion to Dismiss [DE-11].
Thereafter, Southwood filed an Amended Motion to Appoint Receiver for All Defendants [DE-15] and a Motion for Summary Judgment [DE-17]. Southwood later filed a Supplemental Motion to Appoint Receiver [DE-30], followed by a Suggestion of Bankruptcy [DE-31] as to Defendants Robert M. Lindsey and the The Credit Card Solution. Southwood later filed a Second Supplement to the Motion to Appoint Receiver [DE-32], a Suggestion of Dismissal of Bankruptcy and Lifting all Stays as to Defendant Robert M. Lindsey [DE-33], and an Amended Motion to Certify Class [DE-34].
Counsel for Defendants filed a Motion to Withdraw [DE-3 9] as counsel of record for all Defendants. Shortly afterwards, Southwood filed another Supplement to the Motion to Appoint a Receiver [DE-41], and another Suggestion of Bankruptcy as to Robert M. Lindsey and The Credit Card Solution [DE-42]. Southwood then filed a Motion to Dismiss Defendants Lindsey and The Credit Card Solution pursuant to Rule 41(a)(2) [DE-43], followed by a Notice of Bankruptcy Dischage of Defendants Lindsey and The Credit Card Solution [DE-44].
After Southwood filed her second Notice of Suggestion of Bankruptcy as to Defendants Robert M. Lindsey and The Credit Card Solution [DE-42], she filed a Motion to Dismiss Defendants Lindsey and The Credit Card Solution Without Prejudice per Fed. R. Civ. P. 41(a)(2) [DE-43]. In the Motion to Dismiss, Southwood opined that the bankruptcy case would stay the entry of final judgment as to the other defendants, and she therefore requested that her claims against Mr. Lindsey and The Credit Card Solution be dismissed without prejudice.
Thereafter, she filed another Notice [DE-44] stating that Defendant Robert M. Lindsey, and by extension, his sole proprietorship The Credit Card Solution, received a discharge per 11U.S.C, § 327 in case number 10-38408 in the U.S. Bankruptcy Court for the Southern District of Texas. In the Notice, she opines that her alleged recovery against Defendant Lindsey was not discharged in the bankruptcy proceeding, noting that Mr. Lindsey did not list all of his "victims" on his schedules. Nevertheless, Southwood indicates that she reiterates her motion to dismiss Lindsey and The Credit Card Solution as defendants "so that judgment may be entered against the remaining Defendants." Notice [DE-44] at p. 1.
Rule 41(a)(2) of the Federal Rules of Civil Procedure allows a plaintiff to move for a voluntary dismissal of an action without prejudice at any time. Davis v. USX Corp., 819 F.2d 1270, 1273 (4th Cir. 1987). "The decision to grant a voluntary dismissal under Rule 41(a)(2) is a matter for the discretion of the district court," but generally a plaintiff's motion for voluntary dismissal without prejudice should not be denied absent substantial legal prejudice to the defendant. Id.
Courts generally consider the following factors when ruling on a motion for voluntary dismissal without prejudice: "(1) the opposing party's effort and expense in preparing for trial; (2) excessive delay or lack of diligence on the part of the movant; (3) insufficient explanation of the need for dismissal; and (4) the present stage of the litigation, i.e., whether a motion for summary judgment is pending." Gross v. Spies, 133 F.3d 914, 1998 WL 8006, at *5 (4th Cir. 1998) (unpublished opinion) (citing Phillips USA, Inc. v. Allflex USA, Inc., 77 F.3d 354, 358 (10th Cir. 1996); Grover v. Eli Lilly & Co., 33 F.3d 716, 718 (6th Cir. 1994); Paulucci v. City of Duluth, 826 F.2d 780, 783 (8th Cir. 1987)). "These factors are not exclusive, however, and any other relevant factors should be considered by the district court depending upon the circumstances of the case." Id.
Having considered the preceding factors, the court finds no reason to deny Southwood's motion for voluntary dismissal. Accordingly, Southwood's Motion [DE-43] is ALLOWED, and her claims against Defendants Robert M. Lindsey and The Credit Card Solution are DISMISSED without prejudice.
The Credit Card Solution ("TCCS") is a general partnership or sole proprietorship with its principal address in Houston, Texas. Compl. [DE-1-3] at ¶ 6.1 Defendant CCDN, LLC is a limited liability company organized under Nevada law with its principal address in Chicago, Illinois. Compl. ¶ 8. Defendant R.K. Lock & Associates is a general partnership with its principal address in Chicago, Illinois. Compl. ¶ 10. According to Southwood, both CCDN, LLC and R.K. Lock & Associates do business under various names, including "CCDN," "The CCDN," and "The Credit Collections Defense Network."2 Compl. ¶¶ 8-10. Southwood alleges that each of these entities are "primarily in the business of obtaining advance payments of $2,500 to $8,000 by promising to restore credit, reduce debt to zero, and obtain damages from debt collectors, but then after obtaining the fee, do[] not restore credit, reduce debt, or obtain net damages from debt collectors." Compl. ¶¶ 6, 8,10.
Southwood alleges that attorneys Robert K. Lock, Jr. and Phillip M. Manger are owners and managers of R.K. Lock & Associates and CCDN, LLC. Compl. ¶¶ 18, 23. She also allegesthat Colleen Lock is a paralegal, married to Robert K. Lock, Jr., and is an owner of CCDN, LLC. Compl. ¶ 21. Robert M. "Bob" Lindsey is the managing partner of TCCS. Compl. ¶ 28.
Southwood alleges that the Defendants run a nationwide scheme that fraudulently promises "credit restoration" and purports to "reduce your debt to zero." Compl. ¶ 1. According to Southwood, Defendants promote the scheme and solicit business through several websites and videos posted on the websites and unrelated video-sharing websites. Compl. ¶¶ 46, 57. She also alleges that CCDN has contracted with other entities and persons to market its scheme. Compl. ¶ 44. Southwood contends that the CCDN's most successful marketer is Robert "Bob" M. Lindsey, and that TCCS (which is either a general partnership managed by Mr. Lindsey or his sole proprietorship) markets CCDN's scheme. Compl. ¶¶ 53, 54.
In the scheme, as represented by Southwood, Defendants require advance payment to enroll in their "process." Compl. ¶ 91. Defendants then require an enrol lee to execute a power of attorney authorizing Defendants to "prepare and sign all documents written with the intent of researching, challenging, negotiating, and otherwise corresponding with creditors, debt buyers, debt collectors, lw[sic] firms, credit reporting bureaus, and government agencies" with respect to specified accounts. Compl. ¶ 92. Southwood alleges that Defendants then send letters to enrollees' creditors demanding validation of enrollees' accounts, and asking the...
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