Washington v. Roosen, Varchetti & Oliver, PPLC

• Citation: 894 F.Supp.2d 1015
• Decision Date: 17 September 2012
• Docket Number: No. 1:11–cv–945.,1:11–cv–945.
• Court: U.S. District Court — Western District of Michigan
• Parties: Gail WASHINGTON and Troy Merrill, Plaintiffs, v. ROOSEN, VARCHETTI & OLIVER, PPLC, Web Equity Holdings, LLC, and Main Street Acquisitions Corp., Defendants.

894 F.Supp.2d 1015

Gail WASHINGTON and Troy Merrill, Plaintiffs,

v.ROOSEN, VARCHETTI & OLIVER, PPLC, Web Equity Holdings, LLC, and Main Street Acquisitions Corp., Defendants.

No. 1:11–cv–945.

United States District Court,

W.D. Michigan,

Southern Division.

Sept. 17, 2012.

Michael O. Nelson, Grand Rapids, MI, for Plaintiffs.

Kathleen H. Klaus, Maddin Hauser Wartell Roth & Heller PC, Southfield, MI, Jeffrey Steven Hengeveld, Plunkett Cooney, Bloomfield Hills, MI, Randall J. Groendyk, Varnum Riddering Schmidt & Howlett LLP, Grand Rapids, MI, for Defendants.

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT WEB EQUITY'S MOTION TO DISMISS and OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT ROOSEN, VARCHETTI, & OLIVER'S MOTION TO DISMISS

PAUL L. MALONEY, Chief Judge.

This matter comes before the Court on two motions to dismiss. (ECF Nos. 5 and 6.) Defendant Web Equity (“Web Equity”) filed the first motion to dismiss, along with a supporting brief. (ECF No. 5.) Defendant Roosen, Varchetti & Oliver (“Roosen”) filed the second motion to dismiss, along with a supporting brief. (ECF No. 6.) Defendant Main Street Acquisitions (“Main Street”) has not filed any motion. Plaintiffs Gail Washington and Troy Merrill (collectively “Plaintiffs”) filed a collective response to the two motions. (ECF No. 7.) Defendant Roosen filed a reply in support of its motion. (ECF No. 10.) Defendant Web Acquisitions did not file a reply brief. A hearing on the two motions was held on August 18, 2012.

Gail Washington (“Washington”) and Troy Merrill (“Merrill”) filed a class-action lawsuit against Web Equity, Roosen, and Main Street (collectively “Defendants”). Plaintiffs allege that Defendants routinely file debt-collection actions in Michigan state courts. Plaintiffs allege that, as part of the state-court debt-collection actions, Defendants fraudulently accused the debtors of fraud. Plaintiffs allege that Defendants' accusations were made without any factual basis. Plaintiffs assert three counts: (1) violations of the Fair Debt Collection Practices Act (“FDCPA”), (2) violations of the Michigan Collection Practices Act (“MCPA”), and (3) violations of the Michigan Occupational Code (“MOC”). In short, Defendants are being sued for falsely accusing Plaintiffs of making false statements.

THE COMPLAINT¹

Plaintiffs allege, on September 7, 2010, Roosen, on behalf of Web Equity, filed suit against Washington in the 59th District Court in Grandville, Michigan. (Compl. ¶ 11.) As the fifth cause of action in that state lawsuit, Web Equity stated that Washington knowingly and intentionally made false statements as part of her application for a credit card.² ( Id. ¶ 13.) Web Equity also alleged that its claim was based on a written instrument, and that the written instrument was in Washington's possession. ( Id. ¶ 15.)

Mirroring the allegations based on the state suit brought against Washington, Plaintiffs allege, on September 8, 2010, Roosen, on behalf of Main Street, filed suit against Merrill in the 77th District Court in Big Rapids, Michigan. ( Id. ¶ 17.) As the fifth cause of action in that lawsuit, Main Street stated that Merrill knowingly and intentionally made false statements as part of his application for a credit card.³ ( Id. ¶ 19.) Main Street also stated that its claim was based on a written instrument, and that Merrill was in possession of the written instrument. ( Id. ¶ 21.)

Plaintiffs allege that the fraud or false representation statements and the written instrument statements are both false and made without any factual basis. (Compl. ¶¶ 14 and 22.) Plaintiffs allege that Roosen has filed hundreds of similar debt-collection suits in Michigan using a standardized form. ( Id. ¶ 25.) Plaintiffs allege that Roosen includes the fraud or false representation claim in order to prevent the defendants from later discharging the debt through bankruptcy. ( Id. ¶ 23.) Plaintiffs allege that Roosen includes the written instrument statement so that it does not have to obtain a copy of the underlying contract.⁴ ( Id. ¶ 24.)

Plaintiffs allege, because the state suits were an attempt to collect a debt, and because Defendants made false statements in those lawsuits, Defendants have violated the FDCPA, MCPA, and MOC. With regard to the FDCPA claims, the Complaint alleges the following violations:

38. Defendants violated the Fair Debt Collection Practices Act. Defendants' violations include, but are not limited to, the following:

a. By falsely representing that their claims are based on fraud, Defendants falsely represented the character and legal status of a debt, in violation of 15 U.S.C. § 1692e(2)(A).

b. By falsely representing that the persons they sue are guilty of fraud, defendants falsely represented that the consumers committed a crime or other dishonest conduct, in violation of 15 U.S.C. § 1692e(7).

c. By falsely representing that the persons they sue are guilty of fraud in attempt to deny those persons the right to discharge the debt in bankruptcy, defendants used a false representation to collect the debt in violation of 15 U.S.C. § 1692e(10).

d. Defendants' false representation that the persons they sue are in possession of the written instrument is a false representation or deceptive means to collect or attempt to collect the debt, in violation of 15 U.S.C. § 1692e(10).

e. Defendants' false allegations of fraud are an unfair or unconscionable means to collect or attempt to collect the debt, in violation of 15 U.S.C. § 1692f.

(Compl. ¶ 38.)

WEB EQUITY'S MOTION (ECF No. 5)

Web Equity asserts the complaint fails to state a claim under the FDCPA and seeks dismissal of the federal claim against it under Fed.R.Civ.P. 12(b)(6).

A. LEGAL FRAMEWORK FOR A RULE 12(b)(6) MOTION

Under the notice pleading requirements, a complaint must contain a short and plain statement of the claim showing how the pleader is entitled to relief. Fed.R.Civ.P. 8(a)(2). The complaint need not contain detailed factual allegations, but it must include more than labels, conclusions, and formulaic recitations of the elements of a cause of action. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). To survive a motion to dismiss under Rule 12(b)(6), the plaintiff must provide sufficient factual allegations that, if accepted as true, are sufficient to raise a right to relief above the speculative level, Id., 550 U.S. at 555, 127 S.Ct. 1955, and the “claim to relief must be plausible on its face” Id. at 570, 127 S.Ct. 1955. “A claim is plausible on its face if the ‘plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’ ” Ctr. for Bio–Ethical Reform, Inc. v. Napolitano, 648 F.3d 365, 369 (6th Cir.2011) (quoting Twombly, 550 U.S. at 556, 127 S.Ct. 1955). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citations omitted). When considering a motion to dismiss, a court must accept as true all factual allegations, but need not accept any legal conclusions. Ctr. for Bio–Ethical Reform., 648 F.3d at 369.

B. DISCUSSION

Congress enacted the FDCPA to prohibit abusive debt collection practices by debt collectors. 15 U.S.C. § 1692(e). Because the problems with debt collectors were widespread, the statutory provisions have extraordinary breadth. Miller v. Javitch, Block & Rathbone, 561 F.3d 588, 592 (6th Cir.2009). Plaintiffs alleging a claim under 15 U.S.C. § 1692e must establish that (1) the plaintiff is a consumer, as defined by the FDCPA, (2) the debt arises out of a transaction primarily for personal, family or household purposes, (3) the defendant is a debt collector, as that phrase is defined by the FDCPA, and (4) the defendant violated one of the prohibitions listed in § 1692e. Wallace v. Washington Mut. Bank, F.A., 683 F.3d 323, 326 (6th Cir.2012). Section 1692e prohibits debt collectors from using false or misleading statements in connection with the collection of a debt. In their complaint, Plaintiffs cite §§ 1692e(2)(A), (7), and (10) as the bases for their federal claims.⁵

A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

* * *

(2) The false representation of—

(A) the character, amount or legal status of any debt; or

* * * (7) The false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer.

* * *

(10) The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.

15 U.S.C. § 1692e. Web Equity challenges the second and fourth elements. Web Equity does not challenge either the first or third elements. In other words, for the purpose of this motion, Web Equity has not challenged that Plaintiffs are consumers under the FDCPA or that it is a debt collector under the FDCPA.

Of importance here, Web Equity filed a motion to dismiss, not a motion for summary judgment. Some of the circuit opinions cited by the parties in their briefs and in this opinion involve appeals of motions for summary judgment. In order for those precedents to be applicable, the court would have had to decide the motion as a matter of law, rather than on the facts in the record. In order for Web Equity to prevail, it must show that the complaint fails to set forth a claim on which relief may be granted.

1. Are the Alleged False Statements in the State–Court Complaint Actionable?

Web Equity insists that the statements made in the state-court complaints are not actionable under the FDCPA. Web Equity is not entitled to dismissal of the...