Smith v. Encore Capital Grp. Inc.

• Decision Date: 23 August 2013
• Docket Number: Case No. 12–C–0859.
• Citation: 966 F.Supp.2d 817
• Parties: Christopher J. SMITH, Plaintiff, v. ENCORE CAPITAL GROUP INC., Midland Funding LLC, Midland Credit Management INC., Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

966 F.Supp.2d 817

Christopher J. SMITH, Plaintiff,

v.ENCORE CAPITAL GROUP INC., Midland Funding LLC, Midland Credit Management INC., Defendants.

Case No. 12–C–0859.

United States District Court, E.D. Wisconsin.

Aug. 23, 2013.

Christopher J. Smith, Milwaukee, WI, pro se.

Anna–Katrina S. Christakis, Raechelle D. Norman, Pilgrim Christakis LLP, Chicago, IL, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS (DOC. 20)

C.N. CLEVERT, JR., District Judge.

Christopher Smith brings this action seeking to recover damages from Encore Capital Group Inc., Midland Funding LLC., and Midland Credit Management Inc. (“MCM”) Smith claims that the defendants are debt collectors and violated numerous provisions of the Fair Credit Reporting Act (“FCRA”) along with the Fair Debt Collection Practices Act (“FDCPA”). Defendants are asking the court to dismiss the action for failure of the Second Amended Complaint to state a claim pursuant to Fed.R.Civ.P. 12(b)(6). As discussed below, the motion will be granted in part and denied in part.

RULE 12(b)(6) STANDARD

A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint to state a claim upon which relief may be granted. SeeFed.R.Civ.P. 12(b)(6). The complaint must contain a short and plain statement of the claim showing that the pleader is entitled to relief. Fed.R.Civ.P. 8(a)(2). However, enough facts must be set forth in the complaint to state a claim that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007); St. John's United Church of Christ v. City of Chicago, 502 F.3d 616, 625 (7th Cir.2007).

Rule 12(b)(6) requires a plaintiff to clear two hurdles. EEOC v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir.2007). First, the complaint must describe the claim in sufficient detail to give a defendant fair notice of the claim and the grounds on which it rests. Id. Although specific facts are not necessary, “at some point the factual detail in a complaint may be so sketchy that the complaint does not provide the type of notice of the claim to which the defendant is entitled under Rule 8.” Airborne Beepers & Video, Inc. v. AT & T Mobility LLC, 499 F.3d 663, 667 (7th Cir.2007). Second, the “allegations must plausibly suggest that the plaintiff has a right to relief, raising that possibility above a ‘speculative level’; if they do not, the plaintiff pleads itself out of court.” Concentra Health Servs., 496 F.3d at 776 (citing Bell Atl., 550 U.S. at 555–56, 569 n. 14, 127 S.Ct. 1955). If, even assuming all of a plaintiff's facts are accurate, he has no legal claim, the case should be dismissed. See Payton v. Rush–Presbyterian–St. Luke's Med. Ctr., 184 F.3d 623, 627 (7th Cir.1999).

A complaint “ ‘may not be amended by the briefs in opposition to a motion to dismiss.’ ” Agnew v. NCAA, 683 F.3d 328, 348 (7th Cir.2012) (quoting Thomason v. Nachtrieb, 888 F.2d 1202, 1205 (7th Cir.1989)). However, exhibits to a pleading are part of the pleading, Fed.R.Civ.P. 10(c), and consideration of such documents does not convert a motion to dismiss into a motion for summary judgment, Tierney v. Vahle, 304 F.3d 734, 738 (7th Cir.2002).

When considering a Rule 12(b)(6) motion, the court must construe the complaint in the light most favorable to the plaintiff, accepting as true all well-pleaded facts and drawing all possible inferences in the plaintiff's favor. Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir.2008).

Further, because Smith represents himself the court must liberally construe his allegations, no matter how inartfully drafted. Haines v. Kerner, 404 U.S. 519, 520–21, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972). Nevertheless, “pro se litigants are not entitled to a general dispensation from the rules of procedure.” Jones v. Phipps, 39 F.3d 158, 163 (7th Cir.1994).

ALLEGATIONS

A. Allegations in the Second Amended Complaint

According to the Second Amended Complaint, which is the operative pleading, defendants Encore Capital Group, Inc., Midland Funding LLC, and Midland Credit Management Inc. (“MCM”) operate together in the debt buying and debt collection business. (Doc. 15, ¶¶ 10–12.)

Smith received a letter from MCM dated February 15, 2012. (Doc. 15 ¶ 15, Ex. 2.) The letter said Midland Funding had recently purchased Smith's “CIT BANK account, previously serviced by, or on behalf of, Dell Financial Services L.L.C.,” and MCM, a debt collector, had become the servicer of the obligation. (Doc. 15, Ex. 2 at 1.) MCM offered Smith a discount of ten percent off Smith's debt if it received payment by March 31, 2012. (Doc. 15, Ex. 2 at 1.) The letter added that if such payment was made MCM would notify credit bureaus that the debt was paid in full and would immediately stop all recovery activity. (Doc. 15, Ex. 2 at 1.) The second page of the letter included a statement that unless Smith notified MCM within thirty days that he disputed the validity of the debt or any portion thereof, MCM would assume the debt to be valid. Smith was told that if he notified MCM in writing within thirty days that the debt was disputed, MCM would obtain verification of the debt and would mail him such verification and that, if Smith so requested in writing within thirty days, MCM would provide the name and address of the original creditor. Further, the letter advised that as of February 15, 2012, Smith owed $778.27 but if he did not accept the offer to settle the account by March 31, 2012, the amount he owed “may be greater because of interest, late charges, and other charges that may vary from day to day.” (Doc. 15, Ex. 2 at 2.) Smith was warned “that a negative credit report reflecting on your credit record may be submitted to a credit reporting agency if you fail to fulfill the terms of your credit obligations.” (Doc. 15, Ex. 2 at 2.)

Smith alleges that this letter contained an “implied threat to damage [his] credit worthiness in an attempt to coerce [him] into accepting MCM's offer to settle an alleged debt.” (Doc. 15, ¶ 16.) On March 6, 2012, Smith sent MCM a letter disputing the debt. (Doc. 15 ¶ 17.) MCM then responded with a letter dated April 2, 2012, stating that in accordance with Smith's request, “enclosed are documents for the above-referenced account.” (Doc. 15, Ex. 4 at 2.) The letter indicated that MCM was “requesting an immediate payment of balance in full. Upon receipt of the payment and payment clearing the bank, we will report a ‘paid’ status on your credit report.” (Doc. 15, Ex. 4 at 2.) Enclosed with the letter was an itemized statement with the heading “Dell Financial Services, L.L.C. Customer Account Information,” which set forth the customer name of “Christopher Smith” in Cudahy, Wisconsin; the balance as of May 10, 2009; orders; transactions; and an account balance history summary. (Doc. 15, Ex. 4 at 4–6.) At the bottom of each page of the statement is the following language: “Data printed by Midland Credit Management, Inc. from electronic records created, maintained, and provided by Dell Financial Services, L.L.C.” (Doc. 15, Ex. 4 at 4–6.)

Smith charges that this letter “contained no signed verification or accounting of the alleged account or copy of any signed contract or agreement.” (Doc. 15, ¶ 19.) Further, “MCM did not obtain anything from a bona fide original creditor pursuant to Smith's demand that MCM validate the alleged debt.” (Pl.'s 2d Am. Compl. ¶ 21.)

Additionally, Smith alleges that Midland Funding has been reporting “inaccurate information” to the three credit reporting agencies (TransUnion, CSC Credit Services/Equifax, and Experian) since at least March 30, 2012, “in an attempt to coerce Smith to pay money to MCM.” (Doc. 15, ¶ 22.) According to Smith, he disputed the inaccurate information provided by Midland Funding to all three credit reporting agencies. (Doc. 15, ¶¶ 24, 25.) The three agencies investigated by contacting Midland Funding, and thereafter, communicated to Smith that Midland Funding had verified the account as belonging to Smith. (Doc. 15, ¶¶ 26, 27.) CSC Credit Services, for instance, stated on June 4, 2012, that the item on Smith's report belonged to him from information “provided from the original source” and referred additional questions about the item to MCM. (Doc. 15, Ex. 6.)

MCM obtained Smith's consumer report from TransUnion on April 8, 2012, as well as July 11, 2012, without a permissible purpose. (Doc. 15, ¶ 23.) Afterward, on July 26, 2012, Smith phoned Encore and asked to speak to corporate counsel in an attempt to settle his claims, “but Encore's counsel was heard to say that Smith would need to ‘file suit.’ ” (Doc. 15, ¶ 28.)

Smith submits that defendants' conduct violated two provisions of the FCRA and eight provisions of the FDCPA. (Doc. 15 at 6–9.¹) He asserts that he is a “consumer” as defined in 15 U.S.C. §§ 1681a and 1692a, and each defendant is a “debt collector” as defined in 15 U.S.C. § 1692a. (Doc. 15, ¶¶ 4–7.) In addition, Smith maintains that Midland Funding is a “furnisher of information” for purposes of 15 U.S.C. § 1681s–2 and that MCM is “user of information” for purposes of 15 U.S.C. § 1681 m. (Doc. 15, ¶¶ 6–7.)

B. Allegations in Smith's Brief in Opposition to the Motion to Dismiss

As one argument in support of their motion to dismiss, defendants contend that the Second Amended Complaint suffers from pleading defects and is comprised of unsupported legal conclusions. Smith's response elaborates on the claims in his pleading. In reply, defendants contend that Smith's response brief tries to expand the allegations in the Second Amended Complaint and that despite Smith's pro se status the court should not consider such allegations as they were not included in the Second Amended Complaint. ( Id. at 2.)

After due consideration of the parties' arguments, the court finds that Smith's response to the defendants' motion to dismiss does not contain new claims. Instead, it elaborates the claims made in the ...