Zimmerman v. Cambridge Credit Counseling Corp., No. CIV.A.03-30261-MAP.
| Court | U.S. District Court — District of Massachusetts |
| Writing for the Court | Ponsor |
| Citation | 322 F.Supp.2d 95 |
| Parties | Andrew and Kelly ZIMMERMAN, Plaintiffs v. CAMBRIDGE CREDIT COUNSELING CORP., et al., Defendants |
| Decision Date | 24 June 2004 |
| Docket Number | No. CIV.A.03-30261-MAP. |
v.
CAMBRIDGE CREDIT COUNSELING CORP., et al., Defendants
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Gregory S. Duncan, Charlottesville, VA, Stephen G. Hennessy, Milton, MA, Garrett M. Smith, Michie Hamlett, Lowry Rasmussen & Tweel, PLLC, Charlottesville, VA, David J. Vendler, Morris, Polich & Purdy, LLP, Angeles, CA, for Andrew Zimmerman, Kelly Zimmerman, Plaintiffs.
Lawrence M. Kraus, Epstein, Becker & Green, PC, Boston, MA, for Brighton Credit Corp., Brighton Credit Corp. of Massachusetts, Cambridge Credit Corp., Cambridge Credit Counseling Corp., Cambridge/Brighton Budget Planning Corp., John Puccio, Richard Puccio, Defendants.
Michael J. Tuteur, Epstein, Becker & Green, PC, Boston, MA, for Brighton Credit Corp., Brighton Credit Corp. of Massachusetts, Cambridge Credit Corp., Cambridge Credit Counseling Corp., Cambridge/Brighton Budget Planning Corp., John Puccio, Richard Puccio, Defendants.
PONSOR, District Judge.
Plaintiffs Andrew and Kelly Zimmerman filed a class action suit against defendants
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Cambridge Credit Counseling Corp. ("Cambridge"), Cambridge/Brighton Budget Planning Corporation ("C/B"), Cambridge Credit Corp. ("CCC"), Brighton Credit Corp. ("BCC"), Brighton Credit Corporation of Massachusetts ("BCCM"), John Puccio, and Richard Puccio (collectively the "defendants"). The five defendant corporations, owned by the Puccio brothers, purport to provide consumer credit counseling.
Along with various state law claims, the complaint alleges violations of two federal statutes, the Credit Repair Organizations Act (15 U.S.C. § 1679 et seq.) ("CROA") and the Federal Debt Collection Practices Act (15 U.S.C. § 1692 et seq.) ("FDCPA"). Subject matter jurisdiction is predicated upon the claims pursuant to CROA and the FDCPA. Defendants' motion posits several alternative grounds for dismissing plaintiffs' federal claims, thereby eliminating federal jurisdiction over this suit. For the reasons discussed below, plaintiffs' claims based on CROA and the FDCPA will be dismissed. Without adequate basis for jurisdiction, the court will exercise its discretion to dismiss the plaintiffs' remaining state law claims without prejudice to their re-filing in state court.
The facts, of course, are accepted for purposes of this motion as true, as they are alleged in the complaint.
Burdened by debt, the Zimmermans sought help from Cambridge on December 20, 2001. They had become aware of Cambridge through its advertisements on television, on the radio, and in print, and were attracted by its claims about lowering interest rates, eliminating fees, "re-aging" accounts, and otherwise helping consumers manage their debt. Because Cambridge advertised itself as a nonprofit corporation, the Zimmermans believed that they would charge less than a typical for-profit company.1
The Zimmermans signed a Service Agreement with Cambridge dated January 3, 2002 (the "Agreement"). They signed an identical agreement on January 7, 2002, because the first January 3 agreement was not entirely legible. The Agreement stated that Cambridge would create a debt management program ("DMP") for the Zimmermans in order to consolidate their debt, obtain concessions from their creditors where possible, and distribute their monthly payments to the creditors. The Zimmermans agreed to pay Cambridge a fee of $948 per month for this service.
Four months later, the Zimmermans were dissatisfied with the counseling they had received: their accounts had not been re-aged, they owed more money than they did prior to seeking Cambridge's help, and their credit report was worse than ever. On September 20, 2002, the Zimmermans cancelled their account with Cambridge because they had decided to use another credit counseling agency. The Zimmermans claim that Cambridge failed to offer the sort of unbiased educational programs that they expected from a nonprofit organization, and also that Cambridge's non-profit status is a sham because the Puccios are making a substantial income.2 Nevertheless,
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Cambridge was and remains classified by the Internal Revenue Service ("IRS") as a nonprofit, tax-exempt entity pursuant to section 501(c)(3) of the tax code.3
Plaintiffs assert federal jurisdiction on the basis of 28 U.S.C. § 1331 because their complaint involves federal questions pursuant to CROA and the FDCPA. Defendants have offered four grounds for dismissing the FDCPA claim and two grounds for dismissing the CROA claim. According to the defendants, the FDCPA claim must be dismissed because (1) the claim is barred by the statute of limitations; (2) the FDCPA applies only to "debt collectors" and Cambridge is not a debt collector; (3) Cambridge is statutorily exempt from the FDCPA because it is classified by the IRS as an entity within section 501(c)(3) of the tax code; or (4) plaintiffs have failed to state a claim as required pursuant to Fed.R.Civ.P. 12(b)(6). Similarly, defendants assert that the CROA claim must be dismissed because (1) CROA applies only to "credit repair organizations" and Cambridge is not a credit repair organization; and (2) Cambridge is exempt from CROA because of its 501(c)(3) status. Because this court concludes that the FDCPA claim should be dismissed based on the applicable statute of limitations and that the CROA claim should be dismissed based on Cambridge's statutory exemption as a 501(c)(3) entity, further discussion of the less compelling grounds for dismissal offered by defendants is unnecessary. Each statute is addressed separately below.
A. Federal Debt Collection Practices Act
The FDCPA contains an explicit one-year statute of limitations: a suit must be filed "within one year from the date on which the violation occurs." 15 U.S.C. § 1692k(d). The Zimmermans filed suit on November 3, 2003, more than one year after they severed ties with Cambridge on September 20, 2002. Because any violation had to have occurred before the Zimmermans severed their relationship with Cambridge, the statute of limitations is fatal to plaintiffs' FDCPA claim.
Plaintiffs' attempt to resuscitate their FDCPA claim using the doctrine of equitable...
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Banker v. Family Credit Counseling Copr., Civil Action No. 04-5508.
...behind a credit repair organization's 501(c)(3) status for purposes of CROA liability. Zimmerman v. Cambridge Credit Counseling Corp., 322 F.Supp.2d 95, 101 (D.Mass. 2004). That holding was overruled by the First Circuit Court of Appeals. Zimmerman v. Cambridge Credit Counseling Corp., 409 ......
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Zimmerman v. Cambridge Credit Counseling Corp., C.A. No. 03-30261-MAP.
...court initially allowed a motion to dismiss the Zimmermans' federal claims in June 2004. Zimmerman v. Cambridge Credit Counseling Corp., 322 F.Supp.2d 95 (D.Mass.2004). Plaintiffs appealed that ruling only as to the CROA claim. On May 31, 2005, the First Circuit vacated the dismissal, rulin......
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Zimmerman v. Cambridge Credit Counseling, No. 04-2039.
...to exercise jurisdiction over the state law claims under 28 U.S.C. § 1367(b). See Zimmerman v. Cambridge Credit Counseling Corp., 322 F.Supp.2d 95, 98 & 101 (D.Mass.2004). The plaintiffs have not appealed these 4. The parties dispute whether the defendants' motion should have been raise......
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Robb Evans & Assocs., LLC v. United States, No. 15-2540
...(Zimmerman III ) 529 F.Supp.2d 254, 256–64 (D. Mass. 2008) ; 850 F.3d 28Zimmerman v. Cambridge Credit Counseling Corp. (Zimmerman I ), 322 F.Supp.2d 95, 96–98 (D. Mass. 2004).2 Consequently, we rehearse here only those skeletal facts needed to put these appeals into workable perspective.In ......
-
Banker v. Family Credit Counseling Copr., Civil Action No. 04-5508.
...behind a credit repair organization's 501(c)(3) status for purposes of CROA liability. Zimmerman v. Cambridge Credit Counseling Corp., 322 F.Supp.2d 95, 101 (D.Mass. 2004). That holding was overruled by the First Circuit Court of Appeals. Zimmerman v. Cambridge Credit Counseling Corp., 409 ......
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Zimmerman v. Cambridge Credit Counseling Corp., C.A. No. 03-30261-MAP.
...court initially allowed a motion to dismiss the Zimmermans' federal claims in June 2004. Zimmerman v. Cambridge Credit Counseling Corp., 322 F.Supp.2d 95 (D.Mass.2004). Plaintiffs appealed that ruling only as to the CROA claim. On May 31, 2005, the First Circuit vacated the dismissal, rulin......
-
Zimmerman v. Cambridge Credit Counseling, No. 04-2039.
...to exercise jurisdiction over the state law claims under 28 U.S.C. § 1367(b). See Zimmerman v. Cambridge Credit Counseling Corp., 322 F.Supp.2d 95, 98 & 101 (D.Mass.2004). The plaintiffs have not appealed these 4. The parties dispute whether the defendants' motion should have been raise......
-
Robb Evans & Assocs., LLC v. United States, No. 15-2540
...(Zimmerman III ) 529 F.Supp.2d 254, 256–64 (D. Mass. 2008) ; 850 F.3d 28Zimmerman v. Cambridge Credit Counseling Corp. (Zimmerman I ), 322 F.Supp.2d 95, 96–98 (D. Mass. 2004).2 Consequently, we rehearse here only those skeletal facts needed to put these appeals into workable perspective.In ......