Stewart v. Bureaus Inv. Grp., LLC
| Decision Date | 24 November 2015 |
| Docket Number | CASE NO. 3:10-CV-1019-WKW |
| Parties | ALLIE J. STEWART, Plaintiff, v. BUREAUS INVESTMENT GROUP, LLC, et al., Defendants. |
| Court | U.S. District Court — Middle District of Alabama |
[WO, PUBLISH]
Before the court are three motions to dismiss brought pursuant to Rule 12(b) of the Federal Rules of Civil Procedure. They include a 12(b)(1) motion to dismiss for lack of subject-matter jurisdiction, a 12(b)(2) motion to dismiss for lack of personal jurisdiction, and a 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted.
The complex nature of these motions necessitates some unpacking. Two groups of Bureaus Defendants filed briefs in support of the 12(b)(1) motion. (Doc. # 188.) The first group, hereinafter "the Claimless Defendants,"1 consists ofBureaus Investment Group, LLC, Bureaus Investment Group Portfolio No. 2, LLC, Bureaus Investment Group Portfolio No. 3, LLC, Bureaus Investment Group Portfolio No. 4, LLC, Bureaus Investment Group Portfolio No. 5, LLC, Bureaus Investment Group Portfolio No. 6, LLC, Bureaus Investment Group Portfolio No. 7, LLC, Bureaus Investment Group Portfolio No. 8, LLC, Bureaus Investment Group Portfolio No. 10, LLC, and Bureaus Investment Group Portfolio No. 11, LLC. (See Doc. # 189.) The second group, hereinafter "the Individual Defendants," consists of Aristotle Sangalang, the Estate of Burton A. Slotky, and Michael Slotky. (See Doc. # 190.) Mr. Sangalang (see Doc. # 197) and the Estate of Burton A. Slotky (see Doc. # 198) filed briefs in support of the 12(b)(2) motion (Doc. # 192). Finally, Bureaus Investment Group Portfolio No. 1, LLC (see Doc. # 193), the Claimless Defendants (see Doc. # 194), The Bureaus, Inc. (see Doc. # 195), Mr. Michael Slotky (see Doc. # 196), Mr. Sangalang (see Doc. # 197), and the Estate of Burton A. Slotky (see Doc. # 198) filed briefs in support of the 12(b)(6) motion (Doc. # 192).
Plaintiff Allie J. Stewart submitted a consolidated opposition to the motions. (Doc. # 210.) Defendants submitted reply briefs corresponding to their original briefs. (Docs. # 219, 220, 221, 222, 223, 224, 225, and 226.) Upon considerationof the briefing, evidence, and relevant law, the 12(b)(1) motion is due to be granted in part and denied in part. The 12(b)(6) motion is due to be granted in part and denied in part. Because the 12(b)(1) motions dispose of the issues raised in the 12(b)(2) motions, the 12(b)(2) motions need not be decided.
Subject-matter jurisdiction is exercised pursuant to 28 U.S.C. § 1331, 28 U.S.C. § 1367, and 15 U.S.C. § 1692k(d). Venue is uncontested. Mr. Sangalang and the Estate of Burton A. Slotky contest personal jurisdiction. As to the other parties, personal jurisdiction is uncontested.
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) challenges the court's subject-matter jurisdiction. McElmurray v. Consol. Gov't of Augusta-Richmond Cnty., 501 F.3d 1244, 1251 (11th Cir. 2007). Defendants may attack subject-matter jurisdiction facially or factually. The Claimless Defendants raise a facial attack. (Doc. # 189, at 11.) The Individual Defendants raise a factual attack. (Doc. # 190, at 10.)
On a Rule 12(b)(1) facial attack, the court evaluates whether the plaintiff "has sufficiently alleged a basis of subject matter jurisdiction" in the complaint andemploys standards similar to the standard governing Rule 12(b)(6) review. Houston v. Marod Supermarkets, Inc., 733 F.3d 1323, 1335 (11th Cir. 2013). Hence, the court examines the pleading and decides whether the plaintiff has alleged jurisdictional facts that are facially plausible. See infra Part II.C (Standard of Review for Rule 12(b)(6)).
A factual attack "challenge[s] the existence of subject matter jurisdiction in fact, irrespective of the pleadings, and matters outside the pleadings, such as testimony and affidavits, are considered." Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir. 1990) (internal quotation marks omitted). The court does not presume that the plaintiff's allegations are true, and the court may "weigh the evidence and satisfy itself" as to its jurisdiction, even when there are disputed material facts. Id.
"[W]hen the defendant's [factual] attack also implicates an element of the [plaintiff's] cause of action," however, the court should "find that jurisdiction exists and deal with the objection as a direct attack on the merits of the plaintiff's case." Id. "When the jurisdictional basis of a claim is intertwined with the merits, the district court should apply a Rule 56 summary judgment standard" in response to a factual attack on subject matter jurisdiction. Id. at 1530. In accordance with the summary judgment standard, the court may not order dismissal unless themoving party can show that there is no genuine dispute as to any material jurisdictional fact.
A defendant may raise a statute of limitations defense in a Rule 12(b)(6) motion when the complaint shows on its face that the limitations period has run. Avco Corp. v. Precision Air Parts, Inc., 676 F.2d 494, 495 (11th Cir. 1982).
Otherwise, when evaluating a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the court must take the facts alleged in the complaint as true and construe them in the light most favorable to the plaintiff. Resnick v. AvMed, Inc., 693 F.3d 1317, 1321-22 (11th Cir. 2012). To survive Rule 12(b)(6) scrutiny, "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)). "[F]acial plausibility" exists "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556).
Bureaus Investment Group Portfolio No. 1, LLC brought a debt recovery action against Ms. Stewart in Macon County Circuit Court on May 22, 2008. Inthat initial suit, Bureaus Investment Group Portfolio No. 1, LLC erroneously identified itself as "Bureaus Investment Group #1, LLC." (Doc. # 173, at 21.) The complaint also erred in representing Bureaus Investment Group #1, LLC as "a corporation licensed to do business in Alabama." (Doc. # 173, at 22.) The Macon County Circuit Court entered a consent judgment against Ms. Stewart on November 19, 2008, and Ms. Stewart began making payments to Chambless, Math & Carr, P.C., the law firm representing "Bureaus Investment Group #1, LLC." Ms. Stewart later learned, however, that Bureaus Investment Group #1, LLC was neither licensed nor registered in Alabama.2 She therefore requested that the consent judgment be vacated, allowing her to reanimate her defense. In February 2010, over the plaintiff's objection, the Macon County Circuit Court granted Ms. Stewart's Rule 60(b) motion and vacated the consent judgment. Before the court granted that relief, Ms. Stewart made eight payments to Chambless, Math & Carr.3
The true legal owner of Ms. Stewart's debt is an entity named Bureaus Investment Group Portfolio No. 1, LLC. Bureaus Investment Group Portfolio No. 1, LLC, and other similarly named entities (e.g., No. 2, No. 3, etc., hereinafterthe "Portfolio Defendants") are Illinois limited liability companies whose sole member is Bureaus Investment Group, LLC. Bureaus Investment Group, LLC is also an Illinois limited liability company of which Mr. Michael Slotky, the late Mr. Burton Slotky, and a non-party are members. The Portfolio Defendants and Bureaus Investment Group, LLC have no employees and are allegedly run by a corporation with employees, The Bureaus, Inc. (Doc. # 173, at 7, 11, 13.) The Bureaus, Inc. is or was owned or operated by three individuals named as Defendants in this action: Mr. Michael Slotky; Mr. Burton A. Slotky; and Mr. Aristotle Sangalang (or "the Individual Defendants").4 The Portfolio Defendants, Bureaus Investment Group, LLC, and The Bureaus, Inc. will be referred to collectively as "the Bureaus entities." See Appendix A.
The Bureaus, Inc. is the alleged "master servicer" of debts owned by the Portfolio Defendants. (Doc. # 173, at 7, 14.) Bureaus Investment Group, LLC and the Portfolio Defendants are "merely 'special purpose vehicles' that exist[ ] only . . . to receive and/or secure debt at the direction of The Bureaus, Inc." (Doc. #173, at 9.)5 The Portfolio Defendants have, through The Bureaus, Inc. and the Individual Defendants, "initiated and maintained collection lawsuits throughout Alabama against Alabama consumers . . . without first registering as [ ] foreign limited [liability] corporation[s] with the Secretary of State" and have filed suits "using false names and false designations." (Doc. # 173, at 15-16.)
Ms. Stewart complains that the Bureaus entities violated the Fair Debt Collection Practices Act ("FDCPA") and state law by bringing collection suits in Alabama's state courts while fraudulently misrepresenting both their legal status as corporations and their licenses to do business in Alabama. She sues on her own behalf and on behalf of other similarly situated consumers.
The instant case arises from a counterclaim Ms. Stewart filed in the underlying debt collection action in state court on March 9, 2010. (Doc. # 1-3.) After the state court dismissed the original claims against Ms. Stewart, it realigned the parties. Bureaus Investment Group #1, LLC, a nonexistent entity later properly identified as Bureaus Investment Group Portfolio No. 1, LLC, then removed thiscase to federal court in December 2010. (Doc. # 1.) In response to several motions to dismiss, and after acquiring more facts, Ms. Stewart sought and was granted leave to amend her complaint three times.
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