Bureaus Investment Group #1, LLC v. Stewart

Filing 244

MEMORANDUM OPINION AND ORDER that: (1) the 188 MOTION to Dismiss for Lack of Subject Matter Jurisdiction under Rule 12(b)(1) is GRANTED IN PART and DENIED in part, as further set out in order; the 188 motion is DENIED as to Bureaus Investmen t Group, LLC; (2) the 192 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM is GRANTED IN PART and DENIED IN PART, as further set out in order; the 192 Motion is DENIED as moot, as further set out in order; (3) the 192 MOTION to Dismiss for Lack of Jurisdiction is DENIED as moot. Signed by Chief Judge William Keith Watkins on 11/24/15. (Attachments: # 1 civil appeals checklist)(djy, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
EASTERN DIVISION
ALLIE J. STEWART,
Plaintiff,
v.
BUREAUS INVESTMENT
GROUP, LLC, et al.,
Defendants.

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CASE NO. 3:10-CV-1019-WKW
[WO, PUBLISH]

MEMORANDUM OPINION AND ORDER
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.)

1

The first group, hereinafter “the Claimless Defendants,”1 consists of

The parties adopted this moniker in their briefing. (Doc. # 189.) The Claimless
Defendants group can further be divided into two subgroups. The “Claimless Portfolio
Defendants” includes 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,

Bureaus 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 consideration
LLC, Bureaus Investment Group Portfolio No. 10, LLC, and Bureaus Investment Group
Portfolio No. 11, LLC. The other subgroup consists of only Bureaus Investment Group, LLC.
Because the arguments regarding dismissal apply differently to these two subgroups, they will be
addressed separately. See Appendix A.
2

of 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.
I. JURISIDICTION AND VENUE
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.
II. STANDARDS OF REVIEW
A.

Rule 12(b)(1)
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.)
1.

Facial Attack

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 and
3

employs 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)).
2.

Factual Attack

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 the
4

moving party can show that there is no genuine dispute as to any material
jurisdictional fact.
B.

Rule 12(b)(6)
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).
III. BACKGROUND
A.

Facts
Bureaus Investment Group Portfolio No. 1, LLC brought a debt recovery

action against Ms. Stewart in Macon County Circuit Court on May 22, 2008. In
5

that 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., hereinafter
2

Bureaus Defendants are quick to point out Ms. Stewart’s representation in a previous
briefing that “[a]ny decision to falsely state that the collection-plaintiff was ‘a corporation
licensed to do business in Alabama’ . . . was made by [Attorney Mark] Chambless.” (See Doc.
# 147, at 9.)
3

The record does not reveal the total amount Ms. Stewart paid in these eight installments.
The initial representation regarding the payments can be found in the record from the state court
collection action. (Doc. #1-1, at 26.)
6

the “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. #

4

Mr. Burton A. Slotky died November 5, 2014. (Doc. # 218 (Suggestion of Death).) His
Estate has been substituted as a party, and the court attributes all of Mr. Burton Slotky’s
arguments to his Estate. Mr. Burton A. Slotky owned 50% of The Bureaus, Inc. and 20% of
Bureaus Investment Group, LLC. (Doc. # 173, at 5.) Mr. Michael Slotky owns the other 50% of
The Bureaus, Inc. and 40% of Bureaus Investment Group, LLC. (Doc. # 173, at 5.) A non-party
owns the remaining 40% of Bureaus Investment Group, LLC. Mr. Sangalang is past vice
president and current president of The Bureaus, Inc. (Doc. # 173, at 5.) Mr. Sangalang was vice
president in 2008 when Ms. Stewart commenced the original action.

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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.
B.

Procedural History
1.

Origin of the Suit

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 this
5

The Bureaus Defendants are in the business of buying “charged-off consumer debt (i.e.,
consumer debts that were in default at the time they were purchased.).” (Doc. # 210, at 16
(citing M. Slotky Dep. 13:9–14:12).) Defendants contend that the reason for maintaining the
various Portfolio Defendant entities “is to ensure that their assets (i.e., their accounts) are kept
separate” – a requirement of the “lenders and investors who finance the [debt] purchases.” (Doc.
# 190, at 7.)
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case 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.
2.

Third Amended Complaint

In the governing Third Amended Complaint (Doc. # 173), Ms. Stewart sues
the Portfolio Defendants, Bureaus Investment Group, LLC, The Bureaus, Inc.,
Michael Slotky, the Estate of Burton A. Slotky, and Aristotle Sangalang for
violations of the FDCPA (Count II); “Wanton and/or Intentional Conduct” (Count
III); Money Had and Received (Count IV); and Negligent, Reckless and/or Wanton
Training, Monitoring and/or Supervision (Count V). Ms. Stewart asserts that
Michael Slotky, Aristotle Sangalang, and the Bureaus, Inc. can be held liable as
promoters on behalf of legally non-existent Bureaus entities (Counts VI and VII).
She claims that Michael Slotky and Aristotle Sangalang can be held liable as
“Central Figures,” and that the Bureaus, Inc. is vicariously liable for their conduct
(Counts VIII and IX).
Ms. Stewart further contends that the corporate veil may be pierced, and
personal liability may be imposed on the Individual Defendants, because the
Bureaus entities are or were the alter egos of Michael Slotky, Burton Slotky, and
Aristotle Sangalang (Count X) (Doc. # 173, at 57-58).

She claims that The

Bureaus, Inc. and the Individual Defendants “exercise complete control and
9

domination of the finances, policy[,] and business practices of the Bureaus
Investment Group, LLC, Portfolio Defendants, and/or The Bureaus, Inc. to the
extent that [those Bureaus entities] have no separate will, mind[,] or existence of
their own.” (Doc. # 173, at 58.) She supports her alter ego theory by alleging that:
(1) the Slotkys jointly own 100% of The Bureaus, Inc. and 60% of Bureaus
Investment Group, LLC; (2) The Bureaus, Inc. is the only capitalized Bureaus
entity; (3) Bureaus Investment Group, LLC and the Portfolio Defendants only have
capital that is “funneled” to them from and at the direction of The Bureaus, Inc; (4)
only the Bureaus, Inc. has (or ever has had) any employees; and (5) The Bureaus,
Inc. makes all of the day-to-day business decisions for Bureaus Investment Group,
LLC and the Portfolio Defendants, including the purchase and collection of debt.
3.

Previous Opinions and Orders Relevant to the Instant Motions

In the court’s September 26, 2013 opinion and order, Defendant John
Hedges was dismissed pursuant to Federal Rule of Civil Procedure 4(m) for Ms.
Stewart’s failure to timely serve him with process. (Doc. # 125.) Ms. Stewart did
not seek the court’s leave to join him in the Third Amended Complaint.
In two prior opinions and orders, the court denied motions by certain
Bureaus entities to dismiss claims against them on the basis of Ms. Stewart’s lack
of Article III standing. (See Docs. # 102, 157.) These motions relied on the theory
that, because Ms. Stewart dealt solely with Bureaus Investment Group Portfolio
10

No. 1, LLC, she lacks standing to sue other entities. (See Doc. # 140 (Motion to
Dismiss Certain Defendants Under Rule 12(h)(3) for Lack of Subject Matter
Jurisdiction).) In its November 5, 2012 order, the court found that “it [was] not
clear . . . which Defendants actually had contact with Ms. Stewart.” (Doc. # 102.
at 3.)
In its June 2, 2014 opinion and order, the court found that Ms. Stewart’s
class allegations enabled her to sue all existent Bureaus Portfolio entities because
of (1) the concerted scheme by the Bureaus entities and their owners to unlawfully
sue numerous debtors in Alabama state courts and (2) the juridical relationship
between Bureaus Investment Group Portfolio No. 1, LLC and all other Portfolio
Defendants (i.e., through Bureaus Investment Group, LLC as their common single
member-owner and through Bureaus, Inc. as the master servicer of debts they
owned). (Doc. # 157, at 23–25.) The court applied this “juridical link” doctrine
sua sponte.6

6

The juridical link doctrine derives from La Mar v. H & B Novelty & Loan Co., 489 F.2d
461 (9th Cir. 1973), where the United States Court of Appeals for the Ninth Circuit explained:
[A] plaintiff who has no cause of action against the defendant cannot “fairly and
adequately protect the interests” of those who do have such causes of action. This
is true even though the plaintiff may have suffered an identical injury at the hands
of a party other than the defendant and even though his attorney is excellent in
every material respect. Obviously this position does not embrace situations in
which all injuries are the result of a conspiracy or concerted schemes between the
defendants at whose hands the class suffered injury. Nor is it intended to apply in
instances in which all defendants are juridically related in a manner that suggests
a single resolution of the dispute would be expeditious.
11

Additionally, in its June 2, 2014 opinion and order, the court stated:
Based on the allegations in the proposed Third Amended Complaint,
Plaintiff has standing to sue Michael Slotky, irrespective of the
success of a future motion for class certification and regardless of his
deposition testimony denying responsibility for the debt collection
activity of the business entities he owns and allegedly controls.
(Doc. # 157, at 25.) Hence, the court denied Mr. Michael Slotky’s previous motion
to be dismissed as a defendant.
The Portfolio Defendants, Bureaus Investment Group, LLC, and Mr.
Michael Slotky filed a motion to certify the court’s opinion and order for
interlocutory review, but the motion was denied without prejudice in light of
Defendants’ opportunity to raise their objections anew in the instant motions to
dismiss the Third Amended Complaint pursuant to Rule 12(b)(1).

(See Doc.

489 F.2d 461, 466 (9th Cir. 1973) (emphasis added). These exceptional situations represent what
has become known as the juridical link doctrine. 6803 Boulevard E., LLC v. DIRECTV, LLC, 17
F. Supp. 3d 427, 430 (D.N.J. 2014). The Eleventh Circuit has acknowledged the existence of the
juridical link doctrine, but it has never definitively accepted or rejected it. There is controversy
as to whether the doctrine conflicts with the requirement that a class representative have Article
III standing as to every defendant.
Decisions adopting the juridical link doctrine in La Mar’s wake have generally
dealt with the Article III standing issue in one of two ways – or ignored it
altogether. First, a number of decisions have merged the issue with the Rule 23
analysis, concluding that a plaintiff entitled under the juridical link doctrine to
represent a class against non-injurious defendants has Article III standing to sue
the non-injurious defendants. Other decisions have maintained the distinction
between class certification and Article III standing, but have held that a court
should decide class certification first and treat the class as a whole as the relevant
entity for Article III purposes.
Mahon v. Ticor Title Ins. Co., 683 F.3d 59, 63 (2d Cir. 2012).

12

# 232.) The propriety of the juridical link doctrine as a justification for the joinder
of certain Bureaus defendants is the primary issue in the instant Rule 12(b)(1)
motion to dismiss.
IV. DISCUSSION
Before the court are numerous motions to dismiss brought pursuant to Rule
12, which will be discussed in the following order: the Claimless Defendants’
12(b)(1) motion (Part IV.A); the Individual Defendants’ 12(b)(1) motion (Part
IV.B); Bureaus Investment Group Portfolio No. 1, LLC’s 12(b)(6) motion (Part
IV.C); Bureaus Investment Group, LLC’s 12(b)(6) motion (Part IV.D); and The
Bureaus, Inc.’s 12(b)(6) motion (Part IV.E).
A.

Claimless Defendants’ 12(b)(1) Motion
In their 12(b)(1) motion to dismiss, the Claimless Defendants argue that the

court lacks subject-matter jurisdiction to decide the claims against them. More
specifically, they contend that Ms. Stewart lacks standing to sue. Article III,
Section 2 of the Constitution empowers federal courts to hear only “cases” or
“controversies.” U.S. Const. Art. III § 2. The concept of standing emerged from
this case or controversy requirement. In order to establish that she has standing to
bring this action against the Claimless Defendants, Ms. Stewart must show (1) that
she suffered an actual injury, (2) that the conduct of the Claimless Defendants
caused her injury, and (3) that a favorable decision on her claim will redress her
13

injury. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992). The
motion to dismiss is due to be granted in part and denied in part.
1.

Claimless Portfolio Defendants

The motion is due to be granted with respect to the 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 (hereinafter the “Claimless Portfolio
Defendants”). First, Ms. Stewart fails to allege facts sufficient to support the
causation element of the standing inquiry. Second, the juridical link doctrine is
inapposite with respect to the threshold issue of standing as to these defendants.
a.

Ms. Stewart Fails to Sufficiently Plead Causation

With respect to the Claimless Portfolio Defendants, Ms. Stewart fails to
allege sufficient facts to support her standing to sue. Ms. Stewart does not allege
that the Claimless Portfolio Defendants had any involvement in the debt collection
suit that gave rise to this litigation. As the Claimless Defendants note, Ms. Stewart
has not made any allegation indicating that the Claimless Portfolio Defendants are
liable for her injuries. (Doc. # 189, at 13.) Since Ms. Stewart fails to allege that
14

any of the Claimless Portfolio Defendants had contact with her (See Doc. # 189, at
6), she fails to sufficiently allege the element of causation to support her standing
to sue.
b.

The Juridical Link Doctrine is Inapposite

In an attempt to rectify her failure to adequately plead the requisite
causation, Ms. Stewart urges the court to find that she has standing by operation of
the juridical link doctrine. As discussed in note 6, supra, the juridical link doctrine
derives from La Mar v. H & B Novelty & Loan Co., 489 F.2d 461 (9th Cir. 1973).
In the class action context, a putative class representative must “fairly and
adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). A class
representative encounters a La Mar problem where she does not have an individual
cause of action against all of the named defendants. 489 F.2d at 466. In such a
case, the class representative does not meet the adequate representation
prerequisite embodied in Rule 23(a)(4). Id. The juridical link doctrine recognizes
an exception to this rule where the named defendants are “related in a manner that
suggests a single resolution of the dispute would be expeditious.” Id. In relation to
Ms. Stewart’s claims against the Claimless Portfolio Defendants, the juridical link
doctrine is inapposite.
Though a sufficient juridical relationship among defendants may suffice to
overcome issues of adequate representation for purposes of class certification, such
15

a relationship has no bearing on the issue of Article III standing. Under the Rules
Enabling Act, a Federal Rule of Civil Procedure cannot enlarge a substantive right.
28 U.S.C. § 2072(b).

A plaintiff’s invocation of Rule 23, therefore, cannot

augment the jurisdiction of a federal court where the plaintiff otherwise cannot
establish her standing to sue. See Weiner v. Bank of King of Prussia, 358 F. Supp.
684, 694 (E.D. Pa. 1973) (“A plaintiff may not use the procedural device of a class
action to bootstrap himself into the standing he lacks under the express terms of
substantive law.”); Brown v. Sibley, 650 F.2d 760, 771 (5th Cir. 1981) (“[S]tanding
cannot be acquired through the back door of a class action.”). The juridical link
doctrine recognized in La Mar should be confined to analysis of issues arising
under Rule 23. In re Eaton Vance Corp. Sec. Litig., 220 F.R.D. 162, 171 (D. Mass.
2003).7
The cases on which Ms. Stewart relies for support are unavailing. She refers
to Wu v. MAMSI Life & Health Ins. Co., 256 F.R.D. 158 (D. Md. 2008), a case in
which the court permitted the plaintiffs in a class action to include class members
insured by two plans with whom the plaintiffs had no “contract, communication, or
7

The Claimless Defendants refer to other decisions reaching the same conclusions as
those reached in Eaton Vance. These include Mahon v. Ticor Title Ins. Co., 683 F.3d 59, 66 (2d
Cir. 2012) (holding that Article III prohibited the plaintiff’s joinder of defendants that did not
cause the plaintiff’s injury); Forsythe v. Sun Life Fin., Inc., 417 F. Supp. 2d 100, 119 n.19 (D.
Mass. 2006) (finding that the juridical link doctrine should only be applied when evaluating
certification under Rule 23); Siemers v. Wells Fargo & Co., No. C 05-04518 WHA, 2006 WL
3041090, at *6-*7 (N.D. Cal. Oct. 24, 2006) (finding that the juridical link doctrine has no
application at the pleading stage).
16

interaction.”

Id. at 166.

The Wu decision did not arise, however, from a

defendant’s motion to dismiss for lack of standing. Rather, it was a ruling on a
motion to modify the class definition. The court found that the plaintiffs could
“represent a class of individuals that are members of different plans when it is
alleged that the plans are administered by the same defendant and the wrongful
conduct or policy applies uniformly to all of those plans.”

Id. at 167.

Significantly, the plaintiffs did not name as defendants the insurance plans with
which they lacked a relationship.
Ms. Stewart also relies on Cassese v. Wash. Mut., Inc., 262 F.R.D. 179
(E.D.N.Y. 2009). In that case, the plaintiffs asserted claims not only against
Washington Mutual Bank, the entity that financed their mortgages, but also against
Washington Mutual, Inc., the parent company, and other related entities. The
Cassese court rejected the plaintiffs’ argument that they had standing to sue the
related entities by operation of the juridical link doctrine. But it did find that
plaintiffs could join Washington Mutual, Inc. as a defendant in the class action
because of its “direct control” over Washington Mutual Bank. Id. at 184–85.
Caseese is unremarkable in that it offers Ms. Stewart no support on the issue of
whether she has standing to sue the Claimless Portfolio Defendants. None of those
entities is alleged to be a corporate parent of Bureaus Investment Group Portfolio
No. 1, LLC.
17

The court is not bound by its interlocutory order applying the juridical link
doctrine, Stewart v. Bureaus Inv. Grp. No. 1, LLC, 24 F. Supp. 3d 1142 (M.D. Ala.
2014) (Doc. # 157), and, upon full briefing on the doctrine, that order is vacated to
the extent that it allows, by virtue of class allegations, the joinder of defendants
with whom the plaintiff alleged no dealings. See United States v. Williams, 728
F.2d 1402, 1406 (11th Cir. 1984) (“[A] court’s previous rulings may be
reconsidered as long as the case remains within the jurisdiction of the district
court.”). It is also unnecessary to address the Claimless Defendants’ alternative
motion for dismissal under Rule 12(b)(6) as it pertains to the Claimless Portfolio
Defendants. (See Doc. # 194 (Brief 4 of 8).)
2.

Bureaus Investment Group, LLC

The 12(b)(1) motion to dismiss is due to be denied, however, with respect to
Bureaus Investment Group, LLC. The allegations in the complaint are sufficient to
adequately plead Ms. Stewart’s standing to sue that entity. Unlike the Claimless
Portfolio Defendants, Bureaus Investment Group, LLC can be linked to the
conduct that caused Ms. Stewart’s alleged injury.

In the Third Amended

Complaint, Ms. Stewart alleges that Bureaus Investment Group, LLC is the sole
member of each of the Portfolio Defendants, including Bureaus Investment Group
Portfolio No. 1, LLC. (Doc. # 173, at 3.) She further alleges that Bureaus
Investment Group, LLC attempted to collect debts from her through Bureaus
18

Investment Group Portfolio No. 1, LLC. (Doc. # 173, at 3.) More specifically, she
alleges that Bureaus Investment Group, LLC funneled capital contributions to
Bureaus Investment Group Portfolio No. 1, allowing it to purchase the debt and
initiate the collection action that gave rise to the instant controversy. (Doc. # 173,
at 15.)
The Claimless Defendants argue that, with respect to Bureaus Investment
Group, LLC, Ms. Stewart merely alleges that it is an instrumentality of the other
defendants. (Doc. # 189, at 8.) They further contend that “no allegation is made
that Bureaus Investment Group, LLC took any action or caused Ms. Stewart any
injury.” (Doc. # 189, at 8.) The above-referenced allegations from belie this
assertion. They at least, for the purposes of this facial attack, allow the inference
of a fairly traceable connection between Ms. Stewart’s injury and the conduct of
Bureaus Investment Group, LLC. Even indirect causation is sufficient to establish
standing. Resnick v. AvMed, Inc., 693 F.3d 1317, 1324 (11th Cir. 2012). Relief
under the civil damages provision of the FDCPA would redress Ms. Stewart’s
injuries. Ms. Stewart has alleged a sufficient factual basis to support the elements
of causation and redressability with respect to Bureaus Investment Group, LLC.
3.

Summary

All claims against the Claimless Portfolio Defendants are due to be
dismissed. This includes Counts II, III, IV, and V as they relate to the Claimless
19

Portfolio Defendants.

Since Ms. Stewart does have standing to sue Bureaus

Investment Group, LLC, the 12(b)(6) motion as to claims against it will be
addressed.
B.

Individual Defendants’ 12(b)(1) Motion
In support of their Rule 12(b)(1) motion to dismiss all claims against them,

the Individual Defendants argue that Ms. Stewart does not adequately plead a
sufficient causal nexus between their conduct and her injuries to satisfy the
requirements for Article III standing. The motion is due to be granted. First, the
jurisdictional issues raised in this motion are not inextricably intertwined with the
merits of the FDCPA claims. Second, Ms. Stewart fails to allege facts sufficient to
establish that the Individual Defendants personally caused the representations at
issue. Third, Ms. Stewart fails to allege sufficient facts to support the alter ego
theory of liability.
1.

The Jurisdictional Issues Are Not Inextricably Intertwined with the
Merits of the Case

The Individual Defendants style this 12(b)(1) motion as a factual attack. In
such an attack, the moving party “challenges the existence of subject matter
jurisdiction in fact, irrespective of the pleadings.” Lawrence, 919 F.2d at 1529. But
where the factual attack also implicates an element of the plaintiff’s cause of action,
the court should apply a Rule 56 summary judgment standard in response to the
20

motion. Id at 1530. This sort of review is only appropriate where the jurisdictional
basis is “inextricably intertwined with the merits.” Id. A challenge is inextricably
intertwined with the merits when “[t]he pertinent inquiry will resolve both the
question of subject matter jurisdiction and a necessary element of the . . . claim.”
Id. at 1529. Because the standing issue raised in this 12(b)(1) motion is not
inextricably intertwined with the merits, the Rule 56 standard does not apply.
Article III standing, which forms the basis for the instant 12(b)(1) motion, is
a threshold inquiry. Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 94
(1998). To proceed with this action against the Individual Defendants, Ms. Stewart
must show at the outset that she has suffered an actual injury, that her injury is
fairly traceable to the conduct of the Individual Defendants, and that a favorable
ruling will redress her injury. See id. at 103. In support of their motion, the
Individual Defendants contend that Ms. Stewart cannot satisfy the causation prong
of the standing analysis. The Rule 56 standard only applies, therefore, if the issue
of causation for standing purposes is inextricably intertwined with the merits of the
Ms. Stewart’s claims.
According to Ms. Stewart, who relies on Gonzalez v. United States, 284 F.3d
281 (1st Cir. 2002), the jurisdictional issue of causation is intertwined with the
merits of the case because the claims arise under the FDCPA, a federal statute.
(Doc. # 210, at 32.) This argument rests on a mischaracterization of the holding in
21

Gonzalez. In that case, the First Circuit did hold that “a jurisdictional issue is
intertwined with the merits where the court’s subject matter jurisdiction depends
upon the statute that governs the substantive claims of the case.” Gonzalez, 284
F.3d at 287. The true import of that statement, however, is not as Ms. Stewart
would have it. The fact that a claim invokes federal question jurisdiction does not,
without more, indicate that the jurisdictional question is inextricably intertwined
with the merits of the case. In Gonzalez, the First Circuit went on to explain that
“while [a federal statute] provides the basis for the cause of action here, it is clear
that the facts relevant to the determination of subject matter jurisdiction do not go
directly to the merits of the plaintiff’s claim.” Id. The Gonzalez court then held
that a jurisdictional challenge based on the statute of limitations was not
inextricably intertwined with the merits of the claim. Id.
Much like the statute of limitations issue in Gonzalez, the standing issue
raised in this motion does not go directly to the merits of Ms. Stewart’s claims. The
scenario at bar implicates two distinct questions of causation. To make out an
FDCPA claim, Ms. Stewart must show that the representations at issue caused her
an injury such that she is entitled to damages under 15 U.S.C. § 1692k. To satisfy
the standing requirements, however, Ms. Stewart must show that the Individual
Defendants themselves caused the representations to be made. An answer to the
former question does not provide an answer to the latter. As a result, there is no
22

singular inquiry. That is, a resolution of the issue of causation for purposes of
standing will not “resolve both the question of subject matter jurisdiction and a
necessary element of the . . . claim.” See Lawrence, 919 F.3d at 1529. The Rule 56
standard does not apply to this motion, and the remaining arguments raised in this
factual 12(b)(1) attack will be addressed.
2.

Ms. Stewart Fails to Show that the Individual Defendants Caused
the Representations at Issue

At the heart of the Individual Defendants’ motion is their contention that
they did not in fact cause the representations at issue in this litigation. For the sake
of clarity, it bears repeating that those representations are as follows: (1) that the
owner of the debt was named Bureaus Investment Group #1, LLC, and (2) that this
entity was licensed to do business in the state of Alabama.

The Individual

Defendants identify the parties truly responsible for the representations and offer
evidence establishing that they did not cause the representations to be made. Since
Ms. Stewart offers no evidence to rebut these contentions, she fails to establish
causation by virtue of the Individual Defendants’ personal actions.
First, the Individual Defendants identify the parties responsible for the
representations that gave rise to this suit. They attribute these representations to
Mark Chambless and John Hedges. Mr. Chambless, the attorney representing the
Bureaus entity in the debt collection suit, allegedly provided an erroneous name for
23

the entity and misrepresented its licensed status.8 Mr. Hedges, a former legal
manager for The Bureaus, Inc., swore to the “Authorization and Verification”
form, which initiated the debt collection action against Ms. Stewart. (Doc. # 190,
at 9-10 (citing Doc. # 147, at 9, Doc. # 190-1, at 11).)
Second, the Individual Defendants offer evidence establishing that they had
no involvement in making the representations at issue. Mr. Burton Slotky assumed
only a “limited” advisory role in the operations of The Bureaus, Inc. (Decl. of
Burton Slotky, at ¶ 5 (Doc. # 190-1).)

He further declared that he had no

involvement in the lawsuit or other debt collection activities regarding Ms.
Stewart’s debt. (Decl. of Burton Slotky, at ¶¶ 7-10 (Doc. # 190-1).) Mr. Michael
Slotky was an officer of The Bureaus, Inc., but he declared that he had no
involvement in the debt collection action. (Decl. of Michael Slotky, at ¶¶ 2-8
(Doc. # 190-1).) Mr. Sanglang was also an officer of The Bureaus, Inc., but he
similarly avers that he played no role in the debt collection action. (Decl. of
Aristotle Sangalang, at ¶¶ 2-10 (Doc. # 190-1).)
Finally, Ms. Stewart offers no evidence to rebut these declarations. Though
she refers generally to depositions, verified pleadings, and court documents, she
points to no specific evidence supporting her position. Instead of coming forth
8

In a previous briefing concerning the addition of Mark Chambless and his law firm as
defendants, Ms. Stewart herself represented that “[a]ny decision to falsely state that the
collection-plaintiff was ‘a corporation licensed to do business in Alabama’ . . . was made by
Chambless. . . .” (Doc. # 147, at 9.)
24

with the requisite rebuttal evidence to defend this factual attack, Ms. Stewart
makes arguments about the nature of her standing burden. Though she is correct
that indirect causation is sufficient to establish standing,9 her recitation of the law
is insufficient to rebut the evidence put forth by the Individual Defendants. See
OSI, Inc. v. United States, 285 F.3d 947, 951 (11th Cir. 2002) (“In the face of a
factual challenge to subject matter jurisdiction, the burden is on the plaintiff to
prove that jurisdiction exists.”). Accordingly, Ms. Stewart fails to establish that
the Individual Defendants, by their personal actions, caused the representations to
be made.
3.

Ms. Stewart Fails to Allege Sufficient Facts Supporting an Alter
Ego Theory of Liability

Because Ms. Stewart fails to establish standing based on the personal
conduct of the Individual Defendants, her only hope in surviving this 12(b)(1)
motion is the alter ego theory. That theory is part of the broader doctrine of
piercing the corporate veil,10 a remedial doctrine that allows litigants to impose
personal liability where the corporate form would otherwise deny it.

See 1

William Meade Fletcher et al., Fletcher Cyclopedia of the Law of Corporations §
9

See Resnick, 693 F.3d at 1324.

10

The doctrine of piercing the corporate veil applies with equal force to impose liability
on the owners of limited liability companies. See Hill v. Fairfield Nursing & Rehab. Ctr., LLC,
134 So. 3d 396, 406–07 (Ala. 2013) (applying the veil piercing doctrine to determine whether a
limited liability company was the alter ego of its owners).
25

41 (2015). Under the alter ego theory, a court will pierce the corporate veil where
an individual and the corporation are so unified that the corporation retains no
separate identity.

Id. at § 41.10.

To establish the propriety of piercing the

corporate veil by virtue of the alter ego theory, the proponent must show (1) that
the dominant party exercises complete control of the corporation, (2) that the
dominant party misused that control, and (3) that the misuse of control caused the
harm complained of. Messick v. Moring, 514 So. 2d 892, 894–95 (Ala. 1987).
While fraud or other illegal conduct is sufficient to constitute misuse, it is by no
means a sine qua non of the alter ego inquiry. Id. The court may presume misuse
of control where necessary to prevent injustice. Id.
As indicated by the relevance of the justice principle, the authority to pierce
the corporate veil derives from the court’s equitable discretion. Heisz v. Galt
Indus., Inc., 93 So. 3d 918, 929 (Ala. 2012). The doctrine is also remedial in
nature, providing no independent cause of action.

Ex parte Thorn, 788 So. 2d

140, 145 (Ala. 2000). Therefore, the alter ego theory allows a claimant to impose
liability on an individual where the cause of action would otherwise only reach the
corporation. See id. In the context of this 12(b)(1) standing challenge, the theory
defies tidy application. As discussed in the findings above, Ms. Stewart has
standing to sue Bureaus Investment Group, LLC. And the parties do not dispute
that Ms. Stewart has standing to sue The Bureaus, Inc. and Bureaus Investment
26

Group Portfolio No. 1, LLC. If these entities are in fact the mere instrumentalities
of one or more of the Individual Defendants, then Ms. Stewart has standing to sue
the individuals pulling the corporate strings. That is, since piercing the corporate
veil allows a court to disregard the corporate personality, standing to sue can be
ascribed to the Individual Defendants through standing to sue the certain Bureaus
Entities.
Inartful briefing on the subject obfuscates the relevant veils due to be
pierced.11 For the sake of clarity, a little unpacking is necessary. As to both
Slotkys, Ms. Stewart seeks to pierce the corporate veils of both Bureaus
Investment Group, LLC and The Bureaus, Inc. As for Mr. Sangalang, the only
relevant veil to be pierced is that of The Bureaus, Inc. The application of the alter

11

For instance, Ms. Stewart argues that “the corporate veil between Bureaus Investment
Group Portfolio No. 1, LLC and all other Defendants should be pierced.” (Doc. # 210, at 55
(emphasis added).) Ms. Stewart pleaded that the Portfolio Defendants and Bureaus Investment
Group, LLC are alter egos of The Bureaus, Inc. (Doc. # 173, at 58.) The Individual Defendants
dispute how veil piercing could occur when The Bureaus, Inc. is not a parent company of
Bureaus Investment Group, LLC or any of the Portfolio Defendants. (Doc. # 220, at 21 n.6.)
They further explain that “[t]he only inter-entity veil even potentially relevant. . . is the veil
between Bureaus Investment Group Portfolio No. 1, LLC[,] and its sole member Bureaus
Investment Group, LLC. But Ms. Stewart did not allege that the two are alter egos.” (Doc.
# 220, at 21 n.6.)
In her arguments regarding the control and domination elements of an alter ego claim,
Ms. Stewart discusses at length the factors to be assessed when a claimant attacks the corporate
veil between a parent company and its subsidiary. (Doc. # 210, at 43–45 (citing Duff v. S. Ry.
Co., 496 So. 2d 760 (Ala. 1986)).) Because the veil piercing argument at issue involves
individual defendants rather than a parent corporation, this lengthy discussion is misplaced.
What is relevant to this challenge is the alleged control or domination the Individual Defendants
exercise over the relevant entities. Whether The Bureaus, Inc. exercised control over Bureaus
Investment Group, LLC or Bureaus Investment Group No. 1, LLC does not dispose of the
question whether the Individual Defendants exercised control over each of those entities.
27

ego theory must and will be applied to each Individual Defendant. Importantly, as
it applies to issues of the alter ego theory, the Individual Defendants characterize
their challenge as merely facial. (Doc. # 220, at 16.) The inquiry is thus whether
Ms. Stewart made sufficient allegations in the Third Amended Complaint to
support the application of the doctrine.
With respect to Mr. Burton Slotky, the motion to dismiss is due to be
granted. Beyond numerous conclusory allegations, Ms. Stewart pleads few facts
suggesting that Mr. Burton Slotky exercised complete control over The Bureaus,
Inc. or Bureaus Investment Group, LLC. The Third Amended Complaint alleges
that he was a part owner of both entities. (Doc. # 173, at 58.) It further alleges that
he served in an advisory capacity for the Bureaus, Inc. (Doc. # 173, at 49.)
Ownership and advisory management alone are insufficient to constitute complete
control and domination such that The Bureaus, Inc. or Bureaus Investment Group,
LLC “had no separate mind, will, or existence of its own.” See First Health, Inc.
v. Blanton, 585 So. 2d 1331, 1334-35 (Ala. 1991). Since Ms. Stewart’s pleading
fails to include facts sufficient to support the control element of her alter ego claim
with respect to Mr. Burton Slotky, it is unnecessary to discuss the remaining
elements.
The motion is also due to be granted as to Mr. Michael Slotky. As with Mr.
Burton Slotky, Ms. Stewart alleges that Michael is a part owner of The Bureaus,
28

Inc. and Bureaus Investment Group, LLC. (Doc. # 173, at 58.) She also alleges
that Michael served as President and CEO of The Bureaus, Inc. (Doc. # 173, at
16.) But beyond these facts, Ms. Stewart makes no allegations indicating the sort
of extraordinary control necessary to pierce the corporate veil. See Gilbert v.
James Russell Motors, Inc., 812 So. 2d 1269, 1273 (Ala. 2001) (setting out the
“extraordinary circumstances” under which a court should disregard the separate
corporate personality).

Without allegations suggesting domination, Michael’s

ownership alone is insufficient to pierce the corporate veil. Messick, 514 So. 2d at
895 (“The mere fact that a party owns a majority or all of the corporation’s stock
does not, of itself, destroy the corporate identity.”). While it is true that Michael
had some control over corporate activities by virtue of his role as President and
CEO, the pleadings make it clear that he was not the only individual taking part in
the business of the Bureaus Entities. Mr. Sangalang also took part as a Vice
President and President of The Bureaus, Inc. (Doc. # 173, at 16.) Taking the Third
Amended Complaint as a whole, Ms. Stewart’s pleading is insufficient to plausibly
allege the control element of an alter ego claim.

Since the pleadings are

insufficient to plausibly allege complete control and domination, there is no need
to address the remaining elements.
As it applies to Mr. Sangalang, the motion is similarly due to be granted.
Ms. Stewart alleges that Mr. Sangalang was a former Vice President and is the
29

current President of The Bureaus, Inc. (Doc. # 173, at 16.) Ms. Stewart does not
allege that Mr. Sangalang holds any ownership interest in the corporation. Though
it is unclear whether ownership is required to pierce the corporate veil under
Alabama law,12 there is authority suggesting that a mere manager cannot be in an
alter ego relationship with the corporation.

See, e.g., Bollore S.A. v. Imp.

Warehouse, Inc., 448 F.3d 317, 236 (5th Cir. 2006).

Without deciding the

significance of ownership in the alter ego calculus, it is clear that the bare
allegations in the Third Amended Complaint are insufficient to even suggest
complete control or domination on the part of Mr. Sangalang.

As with the

allegations made with respect to the Slotkys, the allegations regarding Mr.
Sangalang do not indicate the extraordinary level of control necessary for the
application of the alter ego theory. Since Ms. Stewart fails to plausibly allege the
control element, the remaining elements need not be addressed.
In addition, the liability of the Individual Defendants under the doctrine of
piercing the corporate veil depends upon the liability of the entities of which they
are a part. For the reasons that will follow in the 12(b)(6) analyses, Ms. Stewart’s
12

In Heisz, the Alabama Supreme Court considered whether ownership is a necessary
element of a claim for piercing the corporate veil. 93 So. 3d at 930. Instead of deciding the
ownership issue, however, the court disposed of the alter ego theory based on the alternative
element of misuse. According to the Individual Defendants, the Heisz court “indicated that [the
Alabama Supreme Court] had never pierced a veil to hold a non-owner personally liable for a
company’s debts.” (Doc. # 220, at 19 n.8 (citing Heisz, 93 So. 3d at 930 n.7).) The Heisz court
made no such indication, but Mr. Sangalang’s ownership vel non ultimately is not dispositive of
this motion.
30

pleading is insufficient to state a claim with respect to Bureaus Investment Group
Portfolio No.1, LLC, Bureaus Investment Group, LLC, and The Bureaus, Inc. If
Ms. Stewart’s claims are due to be dismissed as to those defendants, then her
arguments in favor of piercing the corporate veil are unavailing.
4.

Summary

Ms. Stewart lacks standing to sue the Individual Defendants. Accordingly,
her 12(b)(1) motion to dismiss is granted as to both Slotkys and Mr. Sangalang.
The claims against some or all of them, as they appear in Counts II, III, IV, V, VI,
VIII, and X, are dismissed. In light of this finding, it is unnecessary to reach the
Individual Defendants’ 12(b)(2) motion to dismiss for lack of personal jurisdiction.
There is also no need to decide the Individual Defendants’ 12(b)(6) motion to
dismiss for failure to state a claim upon which relief can be granted.
C.

Bureaus Investment Group Portfolio No. 1, LLC’s Rule 12(b)(6) Motion
In this 12(b)(6) motion, Bureaus Investment Group Portfolio No. 1, LLC

seeks dismissal of all claims raised against it.

The claims can be generally

categorized as those arising under the FDCPA and those arising under state law.
1.

Claims Arising Under the FDCPA

The Third Amended Complaint asserts several claims arising under the
FDCPA. Since Bureaus Investment Group Portfolio No. 1, LLC is a debt collector
covered by the statute, the substance of each claim must be considered.
31

a.

Bureaus Investment Group Portfolio No. 1, LLC Is a “Debt
Collector” Under the FDCPA

Congress enacted the FDCPA with the purpose of eliminating “abusive debt
collection practices.” 15 U.S.C. § 1692(e). Importantly, the scope of the statute is
limited in that it only reaches actions taken by “debt collectors.” Id. The threshold
inquiry in any FDCPA analysis, therefore, is whether the defendant qualifies as a
debt collector within the meaning of the statute. See Birster v. Am. Home Mortg.
Servicing, Inc., 481 F. App’x 579, 582 (11th Cir. 2012). Under the statutory
definition, a debt collector is any person who (1) “uses any instrumentality of
interstate commerce or the mails in any business the principal purpose of which is
the collection of any debts,” or (2) “regularly collects or attempts to collect,
directly or indirectly, debts owed or due or asserted to be owed or due another.”
15 U.S.C. § 1692a(6).

For the two reasons explicated below, Ms. Stewart

sufficiently alleges facts indicating that Bureaus Investment Group Portfolio No. 1,
LLC is a debt collector under the FDCPA.
First, Ms. Stewart’s allegations are sufficient to allow the reasonable
inference that Bureaus Investment Group Portfolio No. 1, LLC is engaged in a
business for which the principal purpose is the collection of debts. In the Third
Amended Complaint, Ms. Stewart alleges that Bureaus Investment Group Portfolio
No. 1, LLC exists as a special purpose vehicle with the purpose of collecting debt.
32

(Doc. # 173, at 14.)

She further alleges, more specifically, that all Portfolio

Defendants routinely purchase or receive ownership of debts like Ms. Stewart’s.
(Doc. # 173, at 14-15.)

Finally, she alleges that Bureaus Investment Group

Portfolio No. 1, after taking ownership of Ms. Stewart’s debt, filed the underlying
lawsuit to collect the debt. (Doc. # 173, at 21.) The reasonable inference to be
drawn from these allegations is that Bureaus Investment Group Portfolio No. 1,
LLC exists for the purpose of acquiring and collecting debts. Accordingly, Ms.
Stewart plausibly alleges that Bureaus Investment Group Portfolio No. 1, LLC is
“debt collector” subject to the various provisions of the FDCPA.
Second, the allegations are sufficient to allow the reasonable inference that
Bureaus Investment Group Portfolio No. 1, LLC is not shielded from liability by
virtue of its purported status as a creditor under the FDCPA.13 It is true that
Bureaus Investment Group Portfolio No. 1, LLC owned Ms. Stewart’s debt when it
filed the underlying collection action, but this fact alone does not determine
whether the statute reaches its conduct. The FDCPA allows for two scenarios
under which the owner of a debt is still subject to the provisions of the statute. See

13

Subject to the exceptions discussed here, the FDCPA does not cover the actions of
creditors. See Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985) (“The legislative
history of section 1692a(6) indicates conclusively that a debt collector does not include the
consumer’s creditors[.]”). Though an entity’s status as a creditor establishes that it is not a debt
collector for purposes of FDCPA liability, the inverse is not true. That is, a non-creditor is only
a debt collector if it meets the statutory definition set out in § 1692a(6). Davidson v. Capital One
Bank (USA), N.A., 797 F.3d 1309, 1314 (11th Cir. 2015).
33

Davidson v. Capital One Bank (USA), N.A., 797 F.3d 1309, 1313 (11th Cir. 2015)
(explaining that the person to whom a debt is owed falls within the general
definition of creditor, but further interpreting the exceptions under which the
person to whom a debt is owed does not constitute a “creditor”).
The statutory definition of creditor does not include an entity that “receives
an assignment or transfer of a debt in default solely for the purpose of facilitating
collection of debt for another.” 15 U.S.C. § 1692a(4). Ms. Stewart alleges that the
Portfolio Defendants take ownership of debt through the operations of The
Bureaus, Inc.

(Doc. # 173, at 14–15.)

Sometimes the Portfolio Defendants

purchase the debts with funds advanced by The Bureaus, Inc. or Bureaus
Investment Group, LLC. (Doc. # 173, at 14–15.) Otherwise, they take ownership
by direct transfer from one of those entities. (Doc. # 173, at 14–15.) Ms. Stewart
clearly alleges that the Portfolio Defendants act “at the direction and for the benefit
of The Bureaus, Inc.” (Doc. # 173, at 16.) These allegations allow the reasonable
inference that Bureaus Investment Group Portfolio No. 1, LLC took ownership of
Ms. Stewart’s delinquent account for the purpose of allowing The Bureaus, Inc.
and/or Bureaus Investment Group, LLC to collect the proceeds of that account.
The owner of a debt is also not immune from liability as a creditor where it
“uses any name other than its own which would indicate that a third person is
collecting or attempting to collect such debts.” 15 U.S.C. § 1692a(6). Here, Ms.
34

Stewart clearly alleges that Bureaus Investment Group Portfolio No. 1, LLC filed
suit under the name “Bureaus Investment Group #1, LLC.” (Doc. # 173, at 21.)
The parties make various arguments regarding the extent to which Ms. Stewart or
any other consumer might be misled by such a misstatement. Because it is clear
that the assignee exception applies, the issue need not be decided.
Because Ms. Stewart plausibly alleges that Bureaus Investment Group
Portfolio No. 1, LLC is in fact a debt collector within the meaning of the FDCPA,
the substance of her claims will be considered. Count II of the Third Amended
Complaint asserts claims pursuant to 15 U.S.C. §§ 1692d, 1692e, 1692f, and 1692j.
b.

Harassment or Abuse Under § 1692d

The allegations in the Third Amended Complaint are insufficient to state a
claim for harassment or abuse under § 1692d.

Under that provision, a debt

collector is prohibited from engaging in conduct that will harass, oppress, or abuse
a debtor. The statute enumerates examples of conduct constituting a violation,
including (1) threats of violence, (2) use of obscene language, (3) publication of
debtor lists, (4) advertising the sale of a debt to coerce payment, (5) repeated phone
calls, and (6) anonymous phone calls. 15 U.S.C. § 1692d. Bureaus Investment
Group Portfolio No. 1, LLC’s filing of the collection lawsuit is the only conduct
that might be actionable under this provision. But merely filing a collection action
is not the sort of conduct that rises to the level of harassment, oppression, or abuse.
35

Harvey v. Great Seneca Fin. Corp., 453 F.3d 324, 330 (6th Cir. 2006). As it
relates to a claim of harassment or abuse under § 1692d, Bureaus Investment
Group Portfolio No. 1, LLC’s motion to dismiss is due to be granted.
c.

False or Misleading Representations Under § 1692e

As they apply to a claim for false or misleading representations under §
1692e, the allegations in the Third Amended Complaint are also insufficient to
survive this motion to dismiss. The general purpose of § 1692e is to ensure the
veracity of debt collectors’ communications.

See LeBlanc v. Unifund CCR

Partners, 601 F.3d 1185, 1193 (11th Cir. 2010). Without limiting the general
application of the provision, § 1692e provides a list of conduct that constitutes a
violation. The Third Amended Complaint alleges violations under §§ 1692e(1),
1692e(2)(A), 1692e(9), 1692e(10), and 1692e(14). The appropriate legal standard
will first be explained. Ms. Stewart’s claims under each provision of § 1692e will
then be discussed in turn.
i.

Appropriate Legal Standard

To establish that a communication runs afoul of § 1692e, a claimant must
show that the communication would be misleading to the “least sophisticated
consumer.” LeBlanc, 601 F.3d at 1193–94. The Eleventh Circuit adopted this
approach from cases interpreting the Federal Trade Commission Act. Jeter v.
Credit Bureau, Inc., 760 F.2d 1168, 1173 (11th Cir. 1985).
36

Under the least

sophisticated consumer standard, courts should determine whether the false
representation would mislead the consumer possessing a “rudimentary amount of
information about the world.” LeBlanc, 601 F.3d at 1194.14
The parties dispute the relevance of materiality to the § 1692e inquiry.
Upon examination of the language of the least sophisticated consumer standard
generally, it appears that technical falsehoods are insufficient to give rise to
liability under § 1692e. Many circuit courts agree with this general reading,
holding that only material misrepresentations are relevant under FDCPA. See, e.g.,
Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1030 (9th Cir. 2010); Wahl v.
Midland Credit Mgmt., Inc., 556 F.3d 643, 645 (7th Cir. 2009); Jensen v. Pressler
& Pressler, 791 F.3d 413, 421 (3d Cir. 2015) (“A debtor simply cannot be
confused, deceived, or misled by an incorrect statement unless it is material.”).
Additionally, several lower courts within the Eleventh Circuit apply a materiality
limitation to their analysis of § 1692e claims. See, e.g., Samuels v. Midland
Funding, LLC, 921 F. Supp. 2d 1321, 1332 (S.D. Ala. 2013); In re MicMillen, 440
B.R. 907, 913 (Bankr. N.D. Ga. 2010); Miljkovic v. Shafritz & Dinkin, P.A., No. 814-cv-635-T-33TBM, 2014 WL 3587550, at *8 (M.D. Fla. July 18, 2014). If only
materially misleading statements give rise to liability under this provision, then

14

Some deficiencies in the doctrine are discussed in note 21, infra.
37

Ms. Stewart must properly allege that the misstatements at issue would actually
deceive the least sophisticated consumer.
A review of Eleventh Circuit jurisprudence, however, calls into question
whether courts within the circuit properly may consider materiality under § 1692e.
In Bourff v. Rubin Lublin, LLC, the Eleventh Circuit clearly repudiated the
materiality approach. 674 F.3d 1238, 1241 (11th Cir. 2012). Focusing on the
disjunctive wording of the statute, the Bourff court held that any false
representation constitutes a violation of the FDCPA, “even where no misleading or
deception is claimed.” Id. A closer read of Jeter also reveals that the Eleventh
Circuit initially did not intend for the least sophisticated consumer approach to
apply to all provisions of § 1692e. In that case, the court held that the newly
adopted least sophisticated consumer standard did not apply to a claim under §
1692e(5).15 Jeter, 760 F.2d at 1176. Since the Subsection 5 inquiry only concerns
whether the debt collector intended to take the threatened action, the court
reasoned, consumer sophistication is of no moment.

Taken together, these

decisions suggest that the materiality question inherent in the application of the
least sophisticated consumer standard does not enjoy uniform application.

15

The Ninth Circuit sharply criticized this limited application of the least sophisticated
consumer standard. Swanson v. S. Or. Credit Serv., Inc., 869 F.2d 1222, 1226-27 (9th Cir.
1988). The Eleventh Circuit itself later retreated from its original course, explicitly applying the
least sophisticated consumer approach to a claim arising under § 1692e(5). LeBlanc, 601 F.3d at
1195.
38

Even so, to apply the Bourff approach to all alleged violations would be to
distort the intended scope of the statute.

Following the least sophisticated

consumer standard, the Eleventh Circuit has noted that it must preserve a “quotient
of reasonableness” when addressing alleged FDCPA violations. LeBlanc, 601 F.3d
at 1194 (quoting United States v. Nat’l Fin. Servs., Inc., 98 F.3d 131, 136 (4th Cir.
1996)).

To preserve the reasonableness of the FDCPA’s application, courts

should, in most cases, only impose liability where the misrepresentations at issue
actually affect the consumer’s behavior.
The Bourff approach can be limited to the context from which it arose. The
debt collection practice at issue in that case was the misidentification of the
creditor in an initial communication letter. Bourff, 674 F.3d at 1241. Where §
1692g(a)(2) imposed an affirmative duty to identify the creditor in that initial
communication, the court found that even an immaterial false representation as to
creditor identity constituted a violation of the FDCPA. Id. Other circuit courts
have dispensed with the materiality requirement, but only where the act imposes
some independent affirmative duty to make disclosures in conjunction with debt
collection activities. See, e.g., Warren v. Sessoms & Rogers, P.A., 676 F.3d 365,
374 (4th Cir. 2012) (holding that materiality of the misrepresentation was
irrelevant only where the FDCPA prohibits the exact omission at issue).
Materiality may thus be ignored, and the Bourff approach therefore should apply,
39

only where the conduct at issue involves a failure to disclose required information.
Outside of this context, materiality should still guide the ultimate determination.
Since the Third Amended Complaint does not allege failure to make
required disclosures, Ms. Stewart must allege sufficient facts suggesting that the
misrepresentations at issue were material. That is, if the pleading does not allege
sufficient facts to allow the inference that the misrepresentation would actually
mislead a least sophisticated consumer, the claim is due to be dismissed.
ii.

§ 1692e(1)

First, Ms. Stewart alleges a violation under §1692e(1). A debt collector
violates that provision where it falsely represents that it is “vouched for, bonded
by, or affiliated with the United States or any State.” 15 U.S.C. § 1692e(1). Ms.
Stewart contends that Bureaus Investment Group Portfolio No. 1, LLC violated
this provision by filing the collection lawsuit while claiming that it was licensed to
do business in the state of Alabama. (Doc. # 173, at 37.) But licensure to do
business in the state is not commensurate with “affiliation” with the state
government. See Sullivan v. Credit Control Servs., Inc., 745 F. Supp. 2d 2, 8 (D.
Mass. 2010) (dismissing debtor’s claims where debt collector’s use of the word
“Government” in its name was insufficient to suggest that the communication
came from the United States government and where other elements of the name
clearly indicated that the communication came from a private entity); DeSantis v.
40

Roz-Ber, Inc., 51 F. Supp. 2d 244, 247 (E.D.N.Y. 1999) (finding that a debt
collector’s use of the name “New Jersey Credit Collection Agency” would not
constitute a violation of § 1692e(1) because there was no possibility that the least
sophisticated debtor would be misled into thinking that the debt collector was
affiliated with the State of New Jersey). Even if a debt collector is not in fact
licensed to do business in the state, a representation suggesting otherwise would
not mislead the least sophisticated consumer into thinking that the debt collector is
somehow in partnership with the state. See Gammon v. GC Servs. Ltd. P’ship, 27
F.3d 1254, 1258 (7th Cir. 1994) (finding a violation of § 1692e(1) based on other
misrepresentations, but noting that “the unsophisticated consumer is likely to
understand that being licensed by the State does not mean being vouched for by the
state”); Smith v. Transworld Sys., Inc., 953 F.2d 1025, 1029 (6th Cir. 1992)
(affirming the district court’s finding that the defendant’s representation that it was
a licensed debt collector did not violate § 1692e(1), reasoning that “[t]he least
sophisticated consumer would not have been misled by . . . the statement
concerning its licensing status . . .”); Lane v. Fein, Such & Crane, LLP, 767 F.
Supp. 2d 382, 389 (E.D.N.Y. 2011) (finding that a debt collector’s representation
that it was a licensed banking corporation, though false, was not sufficient to
mislead the least sophisticated consumer into thinking that the debt collector was

41

acting on behalf of the United States).16 As the court noted in Lane, even a false
representation as to the location of a debt collector’s place of licensing would not
suggest to the least sophisticated consumer that the debt collector is acting on
behalf of the government. 767 F. Supp. 2d at 389. With respect to § 1692e(1), Ms.
Stewart’s claims are due to be dismissed.
iii.

§ 1692e(2)(A)

Second, Ms. Stewart alleges a violation of § 1692e(2)(A). That subsection
proscribes false representations regarding the “character, amount, or legal status”
of the debt.

15 U.S.C. § 1692e(2)(A).

Ms. Stewart alleges that Bureaus

Investment Group Portfolio No. 1, LLC violated this provision (1) by using a false
name, (2) by filing suit in the state of Alabama when it was not licensed to do
business there, and (3) by representing that it was licensed to do business in
Alabama when in fact it was not. (Doc. # 173, at 37.) Bureaus Investment Group

16

Perhaps these holdings trivialize the imprimatur of legitimacy that such
misrepresentations lend to the debt collector’s communication. They ignore the effect that this
imprimatur has on the least sophisticated consumer. Where a consumer sees a badge of state
affiliation in connection with a collection communication, he may be induced to pay a debt that
he otherwise would have challenged. It is, of course, the least sophisticated consumer who is
most likely to rely, to his detriment, on this imprimatur of legitimacy. For a more robust
discussion of the infirmities of the least sophisticated consumer standard, see note 21, infra.
Ultimately, these decisions stand for the proposition that a tenuous suggestion as to
affiliation with the government is insufficient to give rise to FDCPA liability. It is only where
the misrepresentation is a more egregious attempt at deception, giving the consumer the false
impression that the communication actually emanated from an official government entity, that
the debt collector can be held accountable under the FDCPA. In Ms. Stewart’s case, the
misrepresentation that Bureaus Investment Group Portfolio No. 1, LLC was licensed to do
business in the state is not sufficiently deceptive to be actionable under § 1692e(1).
42

Portfolio No. 1, LLC contends that these representations cannot be fairly described
as pertaining to the “character, amount, or legal status” of the debt.
Ms. Stewart argues that the use of a false name is actionable under
§1692e(2)(A). It is conceivable that the use of a false name would constitute a
misstatement of the “legal status” of the debt. Ownership of a right to payment is
arguably relevant to “legal status.” Even so, the alleged nominal misrepresentation
at issue was not likely to mislead even a least sophisticated consumer.

See

Starosta v. MBNA Am. Bank, N.A., 244 F. App’x 939, 942 (11th Cir. 2007)
(affirming dismissal of a § 1692e claim where the complaint failed to allege that an
error in the debt collector’s name misled the claimant); McLain v. Gordon, No.
C09-5362BHS, 2010 WL 3340528, at *7 (W.D. Wash. Aug. 24, 2010) (finding
that the creditor’s use of the wrong name in a complaint was immaterial, and thus
not actionable under § 1692e).

The Third Amended Complaint is devoid of

allegations suggesting that the false name actually misled Ms. Stewart. The use of
the name “Bureaus Investment Group # 1, LLC” in place of the name “Bureaus
Investment Group Portfolio No. 1, LLC” is not likely to cause the least
sophisticated consumer to change her behavior or cause her to pay a debt that she
otherwise would have challenged. And Ms. Stewart does not allege that she would
have behaved differently had the complaint made use of the correct name.

43

Accordingly, the misidentification of the owner of the debt is immaterial, and thus
is not actionable under § 1692e(2)(A).
Ms. Stewart next contends that, by filing suit in the state court without the
proper license to do business there, Bureaus Investment Group Portfolio No. 1,
LLC violated § 1692e(2)(A).17 Ms. Stewart advances the argument that a foreign
entity may not file suit in the state of Alabama without first registering to do
business within the state. It follows, according to Ms. Stewart, that to file a
collection suit without first registering to do business in the state is to falsely
represent the legal status of the debt. In this respect, she argues that the filing of a
collection action on an uncollectible debt is an implicit misrepresentation. See
Kimber v. Fed. Fin. Corp., 668 F. Supp. 1480, 1489 (M.D. Ala. 1987) (“By
threatening to sue [the debtor], [the creditor] implicitly represented that it could
recover in a lawsuit, when in fact it cannot properly do so.”). She maintains that
initiating legal action prior to licensure is analogous to filing a time-barred claim.18
For the reasons that follow, the analogy is too thin to warrant the finding she seeks.
17

Throughout the Third Amended Complaint, Ms. Stewart refers to the entity’s
misrepresentation that it was “licensed” to do business in the state. Under the relevant Alabama
statute, an entity transacting business in the state is required to “register” with the state prior to
filing suit in an Alabama court. Ala. Code § 10A-1-7.21. For purposes of resolving this motion
to dismiss, the court will use the concepts of licensure and registration interchangeably.
18

It is well settled that filing a time-barred claim to collect on a debt constitutes a false
representation of the “legal status” of the debt. See Crawford v. LVNV Funding, LLC, 758 F.3d
1254, 1259 (11th Cir. 2014) (“Federal circuit and district courts have uniformly held that a debt
collector’s threatening to sue on a time-barred debt and/or filing a time-barred suit in state court
44

Under Alabama Law, a foreign entity transacting business in the state must
be registered in the state before “maintain[ing] any action, suit, or proceeding in
any court of this state.” Ala. Code § 10A-1-7.21.19 Ms. Stewart is correct, as a
general matter, that the door-closing statute bars some foreign entities from filing
suit in Alabama’s tribunals. Her interpretation is deficient in that it misunderstands
the statute’s scope. A foreign entity is only prohibited from bringing an action in
the state if it is not registered but nevertheless is “transacting business” in the state.
See Assocs. Capital Servs. Corp. v. Loftin’s Transfer & Storage Co., 554 F.2d 188,
189 (5th Cir. 1977) (holding that, since a foreign entity was not doing business in
the state, it was not required to register prior to filing suit in the state).20 While one
door closes to an unregistered entity already transacting business in the state,
another door remains ajar for entities not (or not yet) transacting business within
the state.
to recover that debt violates §§ 1692e and 1692f.”). But the debt at issue in this case is not timebarred.
19

At the time Bureaus Investment Group Portfolio No. 1, LLC filed the underlying suit,
separate provisions of the Alabama code dealt respectively with actions of foreign corporations
and actions of foreign limited liability companies. Under the former § 10-12-52, foreign limited
liability companies transacting business in the state were not allowed to maintain any suit in an
Alabama court before registration. The language of the statute, applying the door-closing
provision only to entities transacting business in the state, tracks that of the currently operative
provision. The analysis is thus unchanged based on the intervening revisions to the statutory
scheme.
20

In Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981) (en banc), the Eleventh
Circuit adopted as binding precedent all of the decisions of the former Fifth Circuit handed down
prior to the close of business on September 30, 1981. Id. at 1209.
45

To show that Bureaus Investment Group Portfolio No. 1, LLC lacked
authority to bring the underlying action, Ms. Stewart must sufficiently allege that
the entity was transacting business in the state. She does allege that Bureaus
Investment Group Portfolio No. 1, LLC filed the collection action, but that sort of
conduct does not rise to the level of transacting business. Royal Ins. Co., Ltd. v.
All States Theatres, 6 So. 2d 494, 497 (Ala. 1942) (“[E]ngaging in litigation within
the state before qualification under the law does not constitute doing business
within the State.”). The Third Amended Complaint contains no other allegations
suggesting that Bureaus Investment Group Portfolio No. 1, LLC was transacting
business in the state when it filed the collection action. As an entity not transacting
business in the state, Bureaus Investment Group Portfolio No. 1, LLC was legally
authorized to file suit in an Alabama court. Accordingly, the pleadings allege
insufficient facts to allow the inference that Bureaus Investment Group Portfolio
No. 1, LLC falsely represented the legal status of the debt. With respect to claims
arising under § 1692e(2)(A), the motion to dismiss is due to be granted.
Ms. Stewart also argues that Bureaus Investment Group Portfolio No. 1,
LLC ran afoul of § 1692e(2)(A) by representing that it was licensed to do business
in the state, when in fact it was not. This is a thornier issue. It is well established
that, so long as the entity is not doing business in the state, being licensed has no
bearing on its right to file suit there. Bureaus Investment Group Portfolio No. 1,
46

LLC was entitled to sue Ms. Stewart with or without licensure because it was not
doing business in Alabama at the time. It made a false representation by stating
that it was so licensed, but that misrepresentation was not material. As an entity
not conducting business in Alabama, its licensure was of no moment. Viewing this
issue through the lens of the least sophisticated consumer standard, and dutifully
applying the materiality limitation, the licensure misrepresentation is not
actionable under § 1692e(2)(A).

Ms. Stewart does not allege that the

misrepresentation affected her behavior or misled her in any way. And under these
facts, licensure is not material to the legal status of the debt. 21 Accordingly, Ms.
Stewart fails to state a claim under § 1692e(2)(A).

21

In this context, the infirmities of the least sophisticated consumer standard are laid
bare. Courts view FDCPA claims through this lens of naïveté in order to protect those debtors
most vulnerable to abuse. But the least sophisticated consumer, presumably unschooled in the
finer points of the law of business associations, would not appreciate the import of an entity’s
licensure with the state. Where a false representation regarding license to do business in the state
might be uncovered by the most sophisticated consumer, one would not expect such a falsehood
to affect the behavior of his least sophisticated counterpart. The uninitiated consumer, having no
grasp what “licensed by the state” means, relies on the substance of the representation. It is
precisely because the consumer is unsophisticated that the debt collector escapes liability for
these misrepresentations. Yet the sophisticated debt collector, with its sophisticated attorney, is
unaccountable for this sophisticated misrepresentation. The lie gives at least an imprimatur of
legitimacy to an unsuspecting debtor.
Suppose the state court complaint had alleged the truth: “Entity is not licensed to do
business in Alabama and this is not its true and correct name.” These true representations may
well have caused concern in the mind of the least sophisticated consumer. Ms. Stewart admits
that the lies did not affect her behavior, but perhaps the test should be whether the truth would
affect consumer conduct. This is a fanciful test, but it exposes the ironic use of the least
sophisticated consumer standard. In light of the overarching purpose with which Congress
enacted the FDCPA, and when applied to this particular set of facts, the standard seems to
demand a perverse result. That is, it seems to protect the most sophisticated consumer rather
than the least.
47

iv.

§ 1692e(9)

Third, Ms. Stewart alleges a violation of § 1692e(9). That provision makes
it unlawful for a debt collector to use any written communication that “simulates or
is falsely represented to be a document authorized, issued, or approved by any
court, official, or agency of the United States or any State.” 15 U.S.C. § 1692e(9).
Courts generally limit this provision to instances in which the debt collector
“overtly impersonates a government agency” or “attempts to hide its identity by
using a false alias.” Sullivan v. Credit Control Servs., Inc., 745 F. Supp. 2d 2, 10
(D. Mass. 2010). Ms. Stewart alleges that Bureaus Investment Group Portfolio No.
1, LLC made such a false representation when it held itself out as licensed to
conduct business in the state of Alabama. (Doc. # 173, at 37.) Stating that the
entity is licensed to do business is not the sort of conduct contemplated by the
provision.

It does not tend to mislead the least sophisticated consumer into

believing that the Bureaus Investment Group Portfolio No. 1, LLC’s complaint
bore the imprimatur of the Alabama government. See Gammon, 27 F.3d at 1258.
Ms. Stewart fails to state a claim under § 1692e(9).

Courts must navigate this confusion by kedging toward reasonableness, which is the
anchor that ultimately secures any FDCPA inquiry. LeBlanc, 601 F.3d at 1194. It is reasonable
to conclude, especially considering Ms. Stewart’s testimony that the licensure representation did
not affect her behavior in this case (Doc. # 191-2, at 16), that Bureaus Investment Group
Portfolio No. 1, LLC’s behavior in this respect is not actionable under § 1692e.
48

v.

§ 1692e(10)

Fourth, Ms. Stewart alleges a violation of § 1692e(10).

This provision

proscribes generally the use of any “false representation or deceptive means” in
debt collection activities. 15 U.S.C. § 1692e(10). In determining whether a debt
collector has violated this provision, courts must evaluate whether the least
sophisticated consumer would be misled by the representations at issue. Jeter, 760
F.2d at 1177. The sorts of misrepresentations giving rise to § 1692e(10) liability
are those that would lead a debtor to pay a debt that he otherwise would have
challenged. Sullivan, 745 F. Supp. 2d at 11.
The Third Amended Complaint’s conclusory allegations are unhelpful in
determining which false representations misled Ms. Stewart to pay where she
otherwise would have challenged the collection effort. Taking the pleading as a
whole, as is appropriate in consideration of a motion to dismiss, liability appears to
be premised on the notion that Bureaus Investment Group Portfolio No. 1, LLC
misstated its name and that it represented it was licensed to do business in
Alabama when it was not. As for the misstatement of the entity’s name, it is
unclear how this constitutes a misrepresentation that would mislead even the least
sophisticated consumer. The pleadings do not indicate that Ms. Stewart would
have acted differently had Bureaus Investment Group Portfolio No. 1, LLC

49

correctly identified itself and its legal status in strictest terms.22 See Starosta, 244
F. App’x at 942 (affirming dismissal of a § 1692e(10) claim where the complaint
failed to allege that an error in the debt collector’s name misled the claimant). And
it is difficult to see how this misstatement of the entity’s name would mislead any
other unsophisticated creditor into paying the debt it owed.
With respect to the misstatement regarding the entity’s license to do business
in the state, Ms. Stewart fails to state a plausible claim. As established in the
foregoing analysis, whether Bureaus Investment Group Portfolio No. 1, LLC was
licensed to do business in the state has no bearing on its right to file this collection
action. See Part IV.C.1.c.ii, supra. Ms. Stewart relies on the reasoning of Kimber
v. Fed. Fin. Corp., 668 F. Supp. 1480 (M.D. Ala. 1987), to establish the

22

In her response to the motion, Ms. Stewart attempts to allege new facts supporting
these § 1692e claims. Referring to her deposition testimony (Doc. # 191-1), she argues that the
misrepresentation regarding Bureaus Investment Group Portfolio No. 1, LLC’s license to do
business led her to believe that this entity was entitled to “come after her” to collect the debt
(Doc. # 210, at 54.), an argument that implicates the issues raised in note 21, supra.
When reviewing a motion to dismiss, courts are generally limited to the four corners of
the complaint. DeSouza v. Fed. Home Mortg. Corp., 572 F. App’x 719, 721 (11th Cir. 2014).
The court may consider documents outside of the complaint, but only if the plaintiff refers to
those documents in the complaint and the documents are central to the claims. Id. Courts
deciding a 12(b)(6) motion to dismiss may also consider items appearing in the record of the
case. Watson v. Bally Mfg. Corp., 844 F. Supp. 1533, 1535 n.1 (S.D. Fla. 1993), aff'd, 84 F.3d
438 (11th Cir. 1996). Even had the Third Amended Complaint made reference to these
statements from Ms. Stewart’s deposition testimony, a closer review of that testimony would
have revealed her directly contradictory statement that she did not rely in any way on the
statement that Bureaus Investment Group Portfolio No. 1, LLC was licensed to do business in
the state. (Doc. # 191-2, at 16.) Ultimately, this attempt to remedy the pleading’s deficiencies is
unavailing. See Kuhn v. Thompson, 304 F. Supp. 2d 1313, 1321 (M.D. Ala. 2004) (“It is
axiomatic that a plaintiff cannot amend the complaint by arguments of counsel made in
opposition to a motion to dismiss.”).
50

plausibility of her claims. But the facts of that case are distinguishable from the
scenario at bar. In Kimber, it was clear that the debt collector had no right to
recover the unpaid sums based on the expiration of the time limitations period.
668 F. Supp. at 1487. The registration statute does not prevent Bureaus Investment
Group Portfolio No. 1, LLC from filing suit in the way that a statute of limitations
would. Thus, the representation that it was licensed to do business in the state,
though false, was not material. Accordingly, the Third Amended Complaint offers
no basis from which to infer that this statement was misleading in violation of §
1692e(10).
vi.

§ 1692e(14)

Fifth, and finally, Ms. Stewart alleges a violation of § 1692e(14). Under that
provision, a debt collector may not use any name other than its true name when
engaged in debt collection activities. 15 U.S.C. § 1692e(14). Again, the relevant
inquiry with respect to § 1692e(14) is whether the alleged misrepresentations
would mislead the least sophisticated consumer. Crucially, the Third Amended
Complaint is devoid of allegations that the misstated name in any way misled Ms.
Stewart. Without these allegations, there is no basis upon which to conclude that
Ms. Stewart is entitled to relief. See Starosta, 244 F. App’x at 942. Therefore, Ms.
Stewart’s claims are due to be dismissed to the make claims under § 1692e(14).

51

d.

Unfair Practices Under § 1692f

Ms. Stewart’s allegations are also insufficient to state a claim for relief under
§ 1692f.

Under that provision, a debt collector may not use “unfair or

unconscionable means” to collect a debt. 15 U.S.C. § 1692f. As with § 1692e, this
provision enumerates specific examples of conduct constituting a violation. To
plausibly allege a violation of § 1692f, a claimant need not allege violations of any
of these eight specific subsections. Taylor v. Heath W. Williams, LLC, 510 F.
Supp. 2d 1206, 1217 (N.D. Ga. 2007). But if the complaint does not indicate
specific violations under the eight subsections, it must make additional allegations.
Those additional allegations must be sufficient to lend themselves to the inference
that the conduct at issue was unfair or unconscionable. Id. If the complaint fails to
specifically allege how the debt collector’s conduct is unfair or unconscionable
under the circumstances, it fails to state a claim upon which relief can be granted.
See id.
Here, Ms. Stewart makes the familiarly conclusive allegation that Bureaus
Investment Group Portfolio No. 1, LLC’s conduct violates § 1692f. (Doc. # 173,
at 38.) She is correct to note that her previous allegations are incorporated by
reference and thus should be considered with respect to her § 1692f claim. Her
previous allegations, however, do not resuscitate her deficient pleading.

The

complaint fails to allege any conduct that runs afoul of the specific examples
52

provided in § 1692f(1)-(8). This deficiency alone is not fatal, but the pleading
further fails to allege how the conduct at issue works any unfairness or is
unconscionable under these circumstances.

Under the pleading standards

announced in Twombly and Iqbal, the bare allegation here is insufficient to survive
this motion to dismiss. See Taylor, 510 F. Supp. 2d at 1217.
e.

Furnishing Certain Deceptive Forms Under § 1692j

The final FDCPA provision under consideration is § 1692j, which makes it
unlawful to “furnish any form knowing that such form would be used to create the
false belief in a consumer that a person other than the creditor of such consumer is
participating in the collection of . . . such debt . . . when in fact such person is not
so participating.” 15 U.S.C. § 1692j(a). This subsection is intended to prohibit
“flat-rating,” a practice in which a third party sends a dunning letter portraying
itself as a debt collector, when in fact the third party is uninvolved in the collection
effort. See Nielsen v. Dickerson, 307 F.3d 623, 639 (7th Cir. 2002). The third
party merely lends its name to the collection effort, presumably for the name’s
intimidating value. Id. Bureaus Investment Group Portfolio No. 1, LLC, as the
owner of the debt, is not a third party uninvolved in the debt collection process. To
the extent Ms. Stewart claims Bureaus Investment Group Portfolio No. 1, LLC is
liable under § 1692j, the motion to dismiss is due to be granted.

53

In light of the purpose with which Congress enacted the FDCPA, the
misrepresentations Ms. Stewart identifies do not give rise to liability. See 15
U.S.C. § 1692.

The misrepresentations regarding name and licensure to do

business in the state, under prevailing law, simply are not the sort of conduct that
would have “prevented the least sophisticated consumer from responding to or
disputing the action.” Gabriele v. Am. Home Mortg. Servicing, Inc., 503 F. App’x
89, 95 (2d Cir. 2012).

Because Ms. Stewart failed to allege sufficient facts

supporting her FDCPA claims against Bureaus Investment Group Portfolio No. 1,
LLC, they are due to be dismissed.
2.

Claims Arising Under State Law

In addition to her FDCPA claims, Ms. Stewart raises several state law
theories of liability. Specifically, as her claims relate to Bureaus Investment Group
Portfolio No. 1, LLC, Ms. Stewart alleges liability for Wanton and/or Intentional
Conduct (Count III), Assumpsit/Account (Money Had and Received) (Count IV),
and Negligent, Reckless and/or Wanton Training, Monitoring and/or Supervision
(Count V).
a.

Wanton and/or Intentional Conduct

As an initial matter, there is ample authority suggesting that wantonness
constitutes an independent cause of action under Alabama law. See Berry v. Fife,
590 So. 2d 884, 885 (Ala. 1991) (discussing the evidentiary rules that apply when a
54

party “alleges wanton conduct as a cause of action”); Rommell v. Automobile
Racing Club of Am., Inc., 964 F.2d 1090, 1096 (11th Cir. 1992) (addressing the
circumstances under which a defendant may be found “liable for wantonness”
under Alabama law); K.M. v. Ala. Dep’t of Youth Servs., 360 F. Supp. 2d 1253,
1265 (M.D. Ala. 2005) (considering whether claimant submitted sufficient
evidence to establish a “prima facie case of wantonness” under Alabama law).
Unfortunately for Ms. Stewart, however, Alabama law does not recognize
liability for wanton or intentional conduct under these particular circumstances.
The conduct upon which Ms. Stewart bases her claim, at least with respect to
Bureaus Investment Group Portfolio No. 1, LLC, is its prosecution of the
underlying civil collection action. When the prosecution of such a civil action is
the conduct at issue, the claimant cannot prevail on a general claim for wanton or
intentional conduct. Ex parte Miller, Hamilton, Snider & Odom, LLC, 942 So. 2d
334, 336 n.1 (Ala. 2006) (“[A] claim of negligent or wanton prosecution of a civil
action is not a cognizable tort in this state.”) (quoting Ex parte State Farm Mut.
Auto. Ins. Co., 924 So. 2d 706, 711 (Ala. 2005)); see also Ex parte Tuscaloosa
Cnty., 770 So. 2d 602, 605 (Ala. 2000) (holding that a plaintiff who cannot succeed
on a malicious prosecution claim cannot succeed on “general allegations of
negligence, willfulness, or wantonness”). Accordingly, Ms. Stewart’s claims for
wanton and/or intentional conduct are due to be dismissed.
55

b.

Assumpsit/Account (Money Had and Received)

In the claim styled Assumpsit/Account (Money Had and Received), Ms.
Stewart alleges that Bureaus Investment Group Portfolio No. 1, LLC is in
possession of money that, in equity and good conscience, it ought not hold.
Though the Third Amended Complaint makes no mention of the payments at issue,
the record in this case reveals that Ms. Stewart made eight payments pursuant to a
consent judgment before the state court granted a motion to vacate. (Doc. 1-1, at
26.)

The claim, which sounds in unjust enrichment, alleges that Bureaus

Investment Group Portfolio No. 1, LLC wrongfully took these payments.
To prevail at this stage, Ms. Stewart must adequately allege that Bureaus
Investment Group Portfolio No. 1, LLC holds these payment monies and that the
payment was improper because of fraud or mistake. Foshee v. Gen. Tel. Co. of Se.,
322 So. 2d 715, 717 (Ala. 1975). To the extent Ms. Stewart claims that Bureaus
Investment Group Portfolio No. 1, LLC is not entitled to these payments because it
was not licensed to do business in the state when it filed suit, this argument is
wrong. For the reasons already explained, Bureaus Investment Group Portfolio
No. 1, LLC did not lack legal authority to file the underlying collection suit. See
Part IV.C.1.c.ii, supra. And as for the allegation that Bureaus Investment Group
Portfolio No. 1, LLC misrepresented its name when filing suit, this fact alone
would not suffice to establish the fraud or mistake necessary to make out a claim
56

for unjust enrichment. There is no dispute that Ms. Stewart owed the underlying
debt. In the absence of allegations suggesting that the payments at issue resulted
from fraud, mistake, or other inequitable conduct, Ms. Stewart’s claims for
Assumpsit/Account (Money Had and Received) are due to be dismissed.
c.

Negligent, Reckless and/or Wanton Training, Monitoring
and/or Supervision

The final claim Ms. Stewart raises against Bureaus Investment Group
Portfolio No. 1, LLC is for Negligent, Reckless and/or Wanton Training,
Monitoring and/or Supervision. To sufficiently allege this claim, Ms. Stewart must
at least plausibly establish the existence of a master-servant relationship in which
Bureaus Investment Group Portfolio No. 1, LLC acted as master. See Southland
Bank v. A & A Drywall Supply Co., 21 So. 3d 1196, 1214-15 (Ala. 2008) (setting
out the standards under which a master will be liable for negligent training and
supervision of a servant). In the Third Amended Complaint, Ms. Stewart alleges
that Bureaus Investment Group Portfolio No. 1, LLC has no employees. (Doc. #
173, at 14.) The pleading makes no allegation that Bureaus Investment Group
Portfolio No. 1, LLC oversaw the operations of any other entity in a master-servant
fashion.

Because Ms. Stewart fails to allege facts sufficient to establish this

threshold showing, her claim is due to be dismissed.

57

3.

Summary

Bureaus Investment Group Portfolio No. 1, LLC’s motion to dismiss is due
to be granted in full. Ms. Stewart fails to sufficiently plead her claims arising
under the FDCPA and state law. Accordingly, Counts II, III, IV, and V are
dismissed as they relate to Bureaus Investment Group Portfolio No. 1, LLC.
D.

Bureaus Investment Group, LLC’s 12(b)(6) Motion
Bureaus Investment Group, LLC also filed a 12(b)(6) motion seeking

dismissal of all claims against it.23 As with Bureaus Investment Group Portfolio
No. 1, LLC, the Third Amended Complaint raises FDCPA and state law claims
against Bureaus Investment Group, LLC. According to Ms. Stewart, Bureaus
Investment Group, LLC is the sole member of each of the Portfolio Defendants.
(Doc. # 173, at 12-13.) She further alleges that Bureaus Investment Group, LLC
has no employees and only takes action at the direction of The Bureaus, Inc. or its
owners and officers. (Doc. # 173, at 13.) The sole purpose for which Bureaus
Investment Group, LLC exists, according to the pleadings, is to receive capital
contributions and funnel those contributions to the Portfolio Defendants. (Doc. #
173, at 13.)

23

The motion also seeks dismissal of all claims against the Claimless Portfolio
Defendants. Since Ms. Stewart does not have standing to sue the Claimless Portfolio Defendants
for the reasons stated in Part IV.A.1, supra, this 12(b)(6) motion need not be addressed in
relation to those defendants.
58

Based on these allegations, it is clear that Bureaus Investment Group, LLC’s
connection to the underlying collection lawsuit is more tenuous than that of
Bureaus Investment Group Portfolio No. 1, LLC. If Bureaus Investment Group,
LLC played any role in the collection lawsuit, it was only through the actions of
Bureaus Investment Group Portfolio No. 1. Ms. Stewart makes no allegations of
conduct on behalf of Bureaus Investment Group, LLC beyond the conduct
attributed to Bureaus Investment Group Portfolio No. 1, LLC. For the reasons set
forth in Part IV.D., supra, the Third Amended Complaint fails to state a claim as to
Bureaus Investment Group Portfolio No. 1, LLC.
If Ms. Stewart’s allegations are insufficient to state a claim as to Bureaus
Investment Group Portfolio No. 1, LLC, it follows a fortiori that the complaint
fails to state a claim against Bureaus Investment Group, LLC. The allegations in
the Third Amended Complaint are insufficient to raise even an inference that
Bureaus Investment Group, LLC is liable under the FDCPA or state law theories.
For the reasons set forth in Part IV.D, supra, the motion to dismiss is due to be
granted as to Bureaus Investment Group, LLC. Accordingly, as they relate to
Bureaus Investment Group, LLC, Counts II, III, IV, and V will be dismissed.
E.

The Bureaus, Inc.’s Rule 12(b)(6) Motion
The final motion under consideration is The Bureaus, Inc.’s 12(b)(6) motion

to dismiss.

The claims Ms. Stewart raises against The Bureaus, Inc. can be
59

generally categorized as claims arising under the FDCPA, claims arising under
state law, and other theories of liability. They will be addressed in that order.
1.

Claims Arising Under the FDCPA

In Count II of the Third Amended Complaint, Ms. Stewart alleges that The
Bureaus, Inc. is liable under several provisions of the FDCPA. Since The Bureaus,
Inc. does not dispute Ms. Stewart’s allegation that it is a “debt collector” within the
meaning of the statute (Doc. # 173, at 4), the merits of each claim will be
considered.
For the sake of clarity, it is worth noting the role that The Bureaus, Inc.
played in the collection action at issue. Ms. Stewart alleges that The Bureaus, Inc.
generally acted as a “master servicer” for Bureaus Investment Group, LLC and the
Portfolio Defendants. (Doc. # 173, at 7.) In that capacity, The Bureaus, Inc.
performed various debt collection functions, including overseeing licensing and
regulatory requirements, facilitating the purchase of debt, and running the daily
operations of the other Bureaus Defendants. (Doc. # 173, at 7-8.) With respect to
the controversy surrounding Ms. Stewart’s debt, The Bureaus, Inc. participated
from afar.

Though there is no allegation that it directly participated in the

collection lawsuit, The Bureaus, Inc. did correspond with Ms. Stewart regarding
the outstanding debt. On November 28, 2008, The Bureaus, Inc. sent a letter to
Ms. Stewart notifying her of the balance on her account. (Doc. # 173, at 22.) That
60

letter listed Bureaus Investment Group Portfolio No. 1, LLC, the true legal owner
of the debt, as the “client.” (Doc. # 195-2.)
Also of note is the makeup of The Bureaus, Inc.’s ownership and personnel.
Ms. Stewart alleges that Mr. Michael Slotky and Mr. Burton Slotky each owned a
50% interest in the corporation. (Doc. # 173, at 16.) Mr. Michael Slotky was once
the President and now serves as CEO of The Bureaus, Inc. (Doc. # 173, at 16.)
Mr. Sangalang is the past Vice President and current President of the corporation.
(Doc. # 173, at 16.) Mr. Hedges, no longer a party to this action, at one time
served as the legal manager for the corporation. (See Part IV.B.2, supra.)
In her pleading, Ms. Stewart alleges liability pursuant to 15 U.S.C. §§
1692d, 1692e, 1692f, and 1692j.

The Bureaus, Inc. contends that the Third

Amended Complaint fails to sufficiently allege conduct that constitutes a violation
of any FDCPA provision.24 To the extent the alleged misrepresentations made in
connection with the state court collection action can be attributed to The Bureaus,
Inc., they do not give rise to FDCPA liability for the reasons set forth above. Part
24

Ms. Stewart’s Response (Doc. # 210) gives short shrift to this crucial point. In a
solitary paragraph, Ms. Stewart addresses The Bureaus, Inc.’s contentions by arguing that the
conduct of the corporation’s attorneys can be imputed to the corporation. (Doc. # 210, at 52
(citing Kimber v. Fed. Fin. Corp., 668 F. Supp. 1480, 1486 (M.D. Ala. 1987)).) Even if the
conduct of its attorneys can be so imputed, such a relationship alone is insufficient to warrant
denial of this motion. As found in Part IV.C, supra, the conduct in which Bureaus Investment
Group Portfolio No. 1, LLC engaged when it filed the collection lawsuit, presumably through the
same attorney, does not rise to the level of actionable behavior under the FDCPA or Alabama
law. Ms. Stewart alleges no other conduct on behalf of the corporation’s attorneys that might
give rise to civil liability.
61

IV.C, supra. Thus, the only allegations under consideration in this final 12(b)(6)
motion are those concerning the collection letter. (See Doc. # 173, at 22; Doc. #
195-2.)
a.

Harassment or Abuse Under § 1692d

Ms. Stewart’s allegations are insufficient to state a claim under § 1692d. To
properly plead a claim under that provision, Ms. Stewart must allege conduct that
constitutes harassment or abuse. 15 U.S.C. § 1692d. The language of the letter
that The Bureaus, Inc. sent to Ms. Stewart is neither harassing nor abusive. As
alleged in the Third Amended Complaint, the letter merely “indicat[ed] that
Stewart had a balance of $14,923.21 remaining on the account” and “listed
Bureaus Investment Group Portfolio No. 1, LLC as the ‘client.’” (Doc. # 173, at
22.) Nothing in the letter can be fairly construed as having the tendency to “harass,
oppress, or abuse” Ms. Stewart.

See 15 U.S.C. § 1692d.

Accordingly, Ms.

Stewart’s § 1692d claim is due to be dismissed as to The Bureaus, Inc.
b.

False or Misleading Representations Under § 1692e

As to the claims premised on § 1692e, the Third Amended Complaint fails
to state a claim against The Bureaus, Inc. That provision generally prohibits all
“false, deceptive, or misleading” representations, but it also enumerates specific
conduct that constitutes a violation. 15 U.S.C. § 1692e. To sufficiently plead
actionable conduct under this provision, a claimant must plausibly allege that the
62

conduct at issue would be misleading to the least sophisticated consumer. Ms.
Stewart alleges violations under §§ 1692e(1), 1692e(2)(A), 1692e(9), 1692e(10),
and 1692e(14).
i.

§ 1692e(1)

Ms. Stewart fails to sufficiently allege facts supporting a violation under §
1692e(1). That subsection prohibits the false representation “that the debt collector
is vouched for, bonded by, or affiliated with the United States or any state.” 15
U.S.C. § 1692e(1). Aside from the conclusory allegation that The Bureaus, Inc.
violated § 1692e(1), the Third Amended Complaint alleges no facts supporting this
claim.

Ms. Stewart alleges nothing more than that The Bureaus, Inc. sent a

collection letter, which included the balance owed and identified Bureaus
Investment Group Portfolio No. 1, LLC as its client. (Doc. # 173, at 22.) Since the
pleading fails to allege facts even suggesting that the letter implied affiliation with
any government, this motion is due to be granted as to claims under § 1692e(1).
ii.

§ 1692e(2)(A)

The Third Amended Complaint also fails to state a claim under §
1692e(2)(A). That subsection prohibits false representations as to the “character,
amount, or legal status” of the debt. 15 U.S.C. § 1692e(2)(A). Ms. Stewart does
not allege that the collection letter contained any material misstatement as to the

63

character, amount, or legal status of the debt. The claims against The Bureaus, Inc.
arising under § 1692e(2)(A) are therefore due to be dismissed.
iii.

§ 1692e(9)

In addition, Ms. Stewart’s allegations are insufficient to support a claim
under § 1692e(9). To adequately plead a violation under that subsection, Ms.
Stewart must allege that The Bureaus, Inc. used a written communication that
“simulates or is falsely represented to be a document authorized, issued, or
approved by any court, official, or agency of the United States or any state, or
which creates a false impression as to its source, authorization, or approval.” 15
U.S.C. § 1692e(9).

The Third Amended Complaint is devoid of allegations

suggesting that the collection letter improperly represented government
authorization. This claim is due to be dismissed.
iv.

§ 1692e(10)

Ms. Stewart similarly fails to allege facts sufficient to sustain a claim under
§ 1692e(10).

This subsection generally proscribes 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(10). Count II
does plead a violation of this section on the part of The Bureaus, Inc., but only in a
conclusory fashion. The allegations concerning the letter do not suggest that the
letter was in any way deceptive or that it contained false representations. They
64

also do not support an inference that its contents would be misleading to the least
sophisticated consumer. For these reasons, Ms. Stewart fails to state a claim under
§ 1692e(10).
v.

§ 1692e(14)

Finally, the Third Amended Complaint fails to state a claim under §
1692e(14).

This subsection prohibits the “use of any business, company, or

organization name other than the true name of the debt collector’s business,
company, or organization. 15 U.S.C. § 1692e(14). In short, the pleading contains
no such allegations with respect to the collection letter. There is no suggestion that
The Bureaus, Inc. misrepresented its own name. Ms. Stewart affirmatively alleges
that the letter correctly identified Bureaus Investment Group Portfolio No. 1, LLC
as the client. The motion to dismiss is due to be granted as to the § 1692e(14)
claim.
c.

Unfair Practices Under § 1692f

The Third Amended Complaint also fails to sufficiently allege facts
supporting a claim under § 1692f. That provision bars the use of “unfair or
unconscionable means” to collect a debt. 15 U.S.C. § 1692f. Ms. Stewart does not
allege that The Bureaus, Inc.’s dispatch of this letter in any way runs afoul of the
eight subsections of this provision. Further, she does not allege that The Bureaus,
Inc.’s behavior in this respect was otherwise unfair or unconscionable. Since the
65

Third Amended Complaint fails to allege enumerated conduct under the § 1692f
subsections and does not further allege how the conduct related to the letter was
unfair or unconscionable, this claim is due to be dismissed as against The Bureaus,
Inc. See Taylor, 510 F. Supp. 2d at 1217.
d.

Furnishing Deceptive Forms Under § 1692j

As for the § 1692j claims, the Third Amended Complaint also fails to state
adequately a claim against The Bureaus, Inc. That provision imposes liability
where a defendant engages in flat-rating. See 15 U.S.C. § 1692j; Nielsen, 307 F.3d
at 639. It is well established in the record that The Bureaus, Inc. sent Ms. Stewart
a collection letter. What is not established, taking the allegations as true, is that the
collection letter The Bureaus, Inc. sent somehow created the “false belief in [Ms.
Stewart] that a person other than the creditor of [Ms. Stewart] [was] participating
in the collection of or in an attempt to collect a debt [Ms. Stewart] allegedly
owe[d] such creditor, when in fact such person [was] not so participating.” 15
U.S.C § 1692j(a).
According to the Third Amended Complaint, the collection letter accurately
listed Bureaus Investment Group Portfolio No. 1, LLC as the “client.” (Doc. #
173, at 22.) As the true legal owner of the debt, Bureaus Investment Group
Portfolio No. 1, LLC was participating in the collection of Ms. Stewart’s debt. The
only way this letter might conceivably evidence a violation under § 1692j is if The
66

Bureaus, Inc. only furnished its name to the letter when it in fact was not
participating in the collection effort. The Third Amended Complaint contains no
allegation that The Bureaus, Inc. lent its name to the collection letter for some
deceptive purpose.

Rather, the pleadings contemplate The Bureaus, Inc.’s

involvement in the collection effort as “master servicer” and “debt collector” in
connection with all Portfolio Defendants. (Doc. # 173, at 7.) Giving Ms. Stewart
every benefit to which she is entitled on a motion to dismiss, her complaint is
nonetheless inadequate to a state a § 1692j claim against The Bureaus, Inc.
Accordingly, this 12(b)(6) motion is due to be granted as to that provision.
2.

Claims Arising Under State Law

In addition to asserting claims under the FDCPA, the Third Amended
Complaint advances several state law theories of liability against The Bureaus, Inc.
Specifically, Ms. Stewart alleges that The Bureaus, Inc. is liable for Wanton and/or
Intentional Conduct, Assumpsit/Account (Money Had and Received), and
Negligent, Reckless, and/or Wanton Training, Monitoring and/or Supervision.
The Bureaus, Inc. argues in this 12(b)(6) motion that Ms. Stewart fails to
state claims for relief under these provisions.

To the extent the alleged

misrepresentations made in connection with the state court collection action can be
attributed to The Bureaus, Inc., they do not give rise to state law liability for the
reasons set forth above.

Part IV.C, supra. Thus, the only allegations under
67

consideration in this final 12(b)(6) motion are those concerning the collection
letter. (See Doc. # 173, at 22; Doc. # 195-2.) For the reasons below, the motion is
due to be granted with respect to all state law claims.
a.

Wanton and/or Intentional Conduct

In Count III of the Third Amended Complaint, Ms. Stewart alleges that The
Bureaus, Inc. is liable for wanton or intentional conduct. Again, and contrary to
the argument advanced by The Bureaus, Inc., Alabama law does recognize a cause
of action for wantonness. See Part IV.C.2.a, supra. Other than conduct relating to
the collection lawsuit, which does not give rise to liability for the reasons set forth
in Part IV.C, supra, the only conduct allegedly giving rise to liability for
wantonness or intentional conduct is The Bureaus, Inc.’s dispatch of collection
letters. According to the allegations, these collection letters contained false or
misleading information and failed to identify the true owner of the debt. (See Doc.
# 173, at 39.)
In simple terms, wantonness is a concept of “actionable culpability.”
Rommel, 964 F.2d at 1097 (quoting Lynn Strickland Sales & Serv., Inc. v. AeroLane Fabricators, Inc., 510 So. 2d 142, 146 (Ala. 1987)). Implicit in this notion of
culpability is that, in order to make out a claim for wantonness, a plaintiff must
allege the wrongfulness of the relevant act. See 2 Ala. Pattern Jury Instr. Civ.
29.01 (3d ed. 2014) (noting that the instruction for willful or wanton conduct
68

assumes that the defendant owed a legal duty to the plaintiff, but that whether the
defendant owed a legal duty to the plaintiff “is a matter of law to be decided by the
trial judge”). Cf. Lynn Strickland, 510 So. 2d at 145 (holding that liability for
wantonness requires a showing that the defendant “consciously and intentionally
did some wrongful act or omitted some known duty”) (quoting Smith v. Roland, 10
So. 2d 367, 369 (Ala. 1942)). The same is true of a claim for willful or intentional
conduct, though claims for willfulness involve a different state of mind.25

1

Michael Roberts & Gregory Cusimano, Alabama Tort Law § 3.01 (5th ed. 2010).
For Ms. Stewart to properly plead her claim for wanton or willful conduct,
she must allege more than the state of mind with which The Bureaus, Inc. took
action. The pleading must allege sufficient facts to give rise to the inference that
the conduct in which the corporation engaged was wrongful. See Lynn Strickland,
510 So. 2d at 145. The Third Amended Complaint is deficient in this respect. It is
clear that The Bureaus, Inc. sent a collection letter, but the dispatch alone of such a
letter does not give rise to liability in tort.

As established in the foregoing

analyses, the institution of the collection action against Ms. Stewart was not
wrongful under the FDCPA or state law. Nor was the dispatch of the letter
wrongful under the FDCPA or any other theory Ms. Stewart has raised. The Third
25

Wantonness and willfulness are not entirely interchangeable concepts under Alabama
law. But since the disposition of this motion, as it relates to Count III, turns on Ms. Stewart’s
failure to plead wrongful conduct, wantonness and willfulness will be addressed together.
69

Amended Complaint takes the position that The Bureaus, Inc. correctly identified
itself and the legal owner of the debt in the letter itself. (Doc. # 173, at 22.)
Without sufficient allegations suggesting that The Bureaus, Inc. breached some
duty by sending the collection letter, the pleading fails to state a claim upon which
relief can be granted. To the extent the Third Amended Complaint seeks to state a
claim for wanton or intentional conduct against The Bureaus, Inc., it is due to be
dismissed.
b.

Assumpsit/Account (Money Had and Received)

With respect to her claim for Assumpsit/Account, Ms. Stewart alleges that
The Bureaus, Inc. collected money from her to which it was not entitled. For that
reason, she alleges, The Bureaus, Inc. should be ordered to return that money. To
the extent this claim is premised on the eight payments Ms. Stewart made in
satisfaction of the original state court judgment, her claim is due to be dismissed.
See Part IV.C.2.b, supra. Beyond the allegations relating to those payments, Ms.
Stewart offers no other basis upon which this claim may properly be laid. There is
no dispute that Ms. Stewart owed the underlying debt, and the record fails to allege
any specific facts suggesting that The Bureaus, Inc. is in possession of money that,
in equity and good conscience, it should not hold. See Foshee, 322 So. 2d at 717.
Accordingly, The Bureaus, Inc.’s motion will be granted as to Count IV.

70

c.

Negligent, Reckless and/or Wanton Training, Monitoring
and/or Supervision

In Count V of the Third Amended Complaint, Ms. Stewart alleges that The
Bureaus, Inc. is liable for negligent or wanton supervision of its agents, officers,
and/or employees.

As the basis for this claim, Ms. Stewart alleges that The

Bureaus, Inc.’s failure to supervise resulted in her suffering the underlying state
court collection action. She further alleges that The Bureaus, Inc. should have
known of the incompetence of its employees, officers, or agents, and that the lack
of supervision caused her damages.
To plead adequately a claim for negligent or wanton supervision, Ms.
Stewart first must allege sufficient facts suggesting that the agents, officers, or
employees of The Bureaus, Inc. engaged in tortious conduct. Shuler v. Ingram &
Assocs., 441 F. App’x 712, 721 (11th Cir. 2011); Voyager Ins. Cos. v. Whitson,
867 So. 2d 1065, 1073 (Ala. 2003).

Here, Ms. Stewart’s allegations are

insufficient to suggest that any employee, agent, or officer of The Bureaus, Inc.
engaged in tortious conduct under Alabama law.26

26

As established in the

Ms. Stewart’s Response to the Motion to Dismiss makes mention of the need for
discovery with respect to this claim. (Doc. # 210, at 88.) But the Response only argues that
discovery is necessary to ascertain whether The Bureaus, Inc. knew or should have known of the
alleged incompetence of its employees, officers, or agents. What the corporation knew about its
officers or employees is irrelevant where Ms. Stewart does not sufficiently allege, as a threshold
matter, that any of the corporation’s officers, employees, or agents engaged in tortious conduct
71

foregoing, no actions taken in relation to the underlying collection lawsuit give rise
to liability in tort. The misrepresentations made in the filing of the suit do not give
rise to liability. The action of sending a collection notice does not give rise to
liability. Ms. Stewart does not allege any further conduct on the part of The
Bureaus, Inc.’s employees, officers, or agents that could be fairly described as
tortious. Since the Third Amended Complaint fails to sufficiently allege tortious
conduct on the part of the corporation’s employees, officers, or agents, The
Bureaus, Inc. cannot be liable for negligent or wanton supervision. See Jackson v.
Countrywide Home Loans, Inc., 2:11-cv-327, 2012 WL 777180, at *8 (M.D. Ala.
Mar. 7, 2012) (“Plaintiff’s negligent or wanton hiring claim is due to be dismissed
because the Court has dismissed all of Plaintiff’s other tort claims.”). Accordingly,
the motion is due to be granted with respect to Count V.
3.

Other Theories of Liability

In Count VII of the Third Amended Complaint, Ms. Stewart relies on
various theories to allege The Bureaus, Inc.’s liability for “Acts on Behalf of
Unincorporated Bureaus.” These theories include pre-incorporation liability, preformation liability, promoter liability, and agency liability. In Count IX, Ms.
Stewart includes a claim against The Bureaus, Inc. for vicarious liability. For the

for which The Bureaus, Inc. might be liable by operation of the negligent or wanton supervision
theory.
72

reasons that follow, none of these theories is availing. The motion is due to be
granted, and Counts VII and IX are due to be dismissed.
With respect to the claims alleged in Counts VII and IX, each theory of
liability is derivative in nature. Ms. Stewart alleges that, because the Bureaus, Inc.
acted on behalf of the other Defendants, it must answer for the transgressions of
those other Defendants. Ms. Stewart’s recitation of the law of derivative liability is
facially sound. Her pleading founders, however, on its failure to account for the
underlying liability upon which these counts are premised. Since Ms. Stewart
states no plausible claim to which the derivative liability may attach, her claims are
fatally deficient. Each theory will be discussed in detail.
a.

Pre-Incorporation Liability

To establish pre-incorporation liability under Alabama law, a plaintiff must
show (1) that the defendant acted as or on behalf of a corporation, (2) that the
defendant knew there was no corporation formed under state law, and, crucially,
(3) that the defendant incurred liability in the process. Ala. Code § 10A-2-2.04.
According to the Third Amended Complaint, The Bureaus, Inc. acted on behalf of
non-existing corporations where it authorized collection action on behalf of the
Legally Non-Existent Bureaus.

(Doc. # 173, at 47.)

These allegations are

sufficient to satisfy the first and second necessary elements of a pre-incorporation
claim.

They do not establish, however, that The Bureaus, Inc. incurred any
73

liability while purporting to act on behalf of these non-existent entities.

As

established in the foregoing analyses, the misrepresentations at issue in the
underlying collection action are insufficient to give rise to liability under federal
and state law. This claim is due to be dismissed.
b.

Pre-Formation Liability

To establish pre-formation liability under Alabama law, a plaintiff must
show (1) that the defendant acted as a limited liability company, (2) that the
defendant had no authority to act as a limited liability company, and (3) that the
defendant incurred debts or liabilities in the process. Ala. Code § 10A-5-2.05. To
the extent that The Bureaus, Inc. purportedly acted on behalf of a non-existent
limited liability company, the Third Amended Complaint fails to sufficiently allege
any liability incurred by and through those actions. Since there is no underlying
liability through which The Bureaus, Inc. can be reached, this claim is due to be
dismissed.
c.

Promoter Liability

Under the theory of promoter liability, agents purporting to act on behalf of
a nonexistent entity can be liable for any obligations incurred on behalf of the
nonexistent entity. See Ala. Corp. L. § 3.42 (4th ed.). This theory assumes that the
promoters themselves incurred some liability that, if not for its existential failure,
would be attributable to the non-existent entity. Ms. Stewart argues that The
74

Bureaus, Inc. acted through non-existent entities to collect debts, and as a result it
is liable as a promoter. Again, the allegations are insufficient to establish the
underlying liability upon which this theory depends.

Even assuming without

deciding that The Bureaus, Inc. acted as a promoter, the Third Amended Complaint
is insufficient to establish that the actions it took gave rise to any civil liability.
This claim is due to be dismissed.
d.

Agency Liability

As a matter of contract and agency law, an agent who contracts in the name
of a non-existent principal is personally liable on the contract. See 3. Am. Jur. 2d
Agency § 277; 12 Williston on Contracts § 35:39 (4th ed.). According to Ms.
Stewart, The Bureaus, Inc. is liable under this theory because it entered into
consent agreements on behalf of non-existent entities. The allegations do not
sufficiently plead, however, that entering such consent agreements was in violation
of law. This claim is due to be dismissed.
e.

Vicarious liability

Finally, The Third Amended Complaint alleges that The Bureaus, Inc. is
vicariously liable for the actions of Mr. Michael Slotky and Mr. Sangalang. To
proceed under this theory, Ms. Stewart must properly plead some liability with
respect to those individuals. In this respect, she has failed. For the reasons stated

75

in Part IV.B, supra, Ms. Stewart fails to state a viable claim against any Individual
Defendant. Accordingly, Count IX is due to be dismissed.
4.

Summary

For the reasons state above, The Bureaus, Inc.’s 12(b)(6) motion is due to be
granted in full. Counts II, III, IV, V, VII, and IX are due to be dismissed as to The
Bureaus, Inc.
V. CONCLUSION
Based on the foregoing analysis, it is ORDERED that:
(1) The Motion to Dismiss for Lack of Subject Matter Jurisdiction under
Rule 12(b)(1) (Doc. # 188) is GRANTED IN PART and DENIED IN PART. The
Motion is GRANTED as to 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, Bureaus Investment Group Portfolio No. 11, LLC,
the Estate of Burton A. Slotky, Michael Slotky, and Aristotle Sangalang and all
claims against them are DISMISSED with prejudice. The Motion is DENIED as
to Bureaus Investment Group, LLC.

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(2) The Motion to Dismiss for Failure to State a Claim (Doc. # 192) is
GRANTED IN PART and DENIED IN PART. The Motion is GRANTED as to
Bureaus Investment Group Portfolio No. 1, LLC, Bureaus Investment Group, LLC,
and The Bureaus, Inc., and all claims against them are DISMISSED with
prejudice. The Motion is DENIED as moot with respect to 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, Bureaus Investment
Group Portfolio No. 11, LLC, the Estate of Burton A. Slotky, Michael Slotky, and
Aristotle Sangalang.
(3) The Motion to Dismiss for Lack of Jurisdiction (Doc. # 192) is DENIED
as moot.
DONE this 24th day of November, 2015.
/s/ W. Keith Watkins
CHIEF UNITED STATES DISTRICT JUDGE

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Appendix A

Bureaus Investment
Group Portfolio No. 1,
LLC

Bureaus Investment
Group Portfolio No. 3,
LLC

The Bureaus,
Inc.

Bureaus
Investment
Group, LLC

(M. Slotky: 50%,
B. Slotky: 50%)

Bureaus Investment
Group Portfolio No. 2,
LLC

Bureaus Investment
Group Portfolio No. 4,
LLC

(M. Slotky: 40%,
B. Slotky: 20%,
Non-party: 40%)

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

Bureaus Investment
Group Portfolio No. 11,
LLC

78