Scherer v. Credit Bureau Systems Inc et al
MEMORANDUM OPINION. Signed by Chief Judge Karon O Bowdre on 5/15/2018. (TLM, )
2018 May-15 PM 02:31
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
CREDIT BUREAU SYSTEMS,
INC., et al.,
Case No. 2:18-cv-00125-UJB-KOB
This matter comes before the court on Defendant the Water Works Board of
the City of Birmingham’s “Motion to Dismiss.” (Doc. 9). Plaintiff Scherer alleges
various state law claims against the Board arising out of a delinquent account that
the Board deemed to belong to Ms. Scherer, which it ultimately turned over for
collections. The Board has filed this motion to dismiss on the sole basis that
Alabama’s statute of limitations bars Ms. Scherer’s claims against it. As explained
below, the court concludes that the Board’s motion to dismiss is due to be
As alleged in the Complaint, Plaintiff Kaori Scherer purchased a home in
Vestavia, Alabama in June 2014. Upon purchasing the home, Ms. Scherer opened
an account for water and sewer services for the property with the Defendant
Birmingham Water Works Board. That account was the first and only account Ms.
Scherer opened with the Board for that particular property. She always paid her
monthly bill and never owed any past due amount on the account.
However, sometime after purchasing the home, Defendant Credit Bureau
Systems, Inc. began collection activities against Ms. Scherer for a water and sewer
services account that Ms. Scherer contends did not belong to her. The debt was for
a past-due amount of $46.00 on a second account on the same property, which Ms.
Scherer alleges the Board incorrectly attributed to her name. The collection
activities included reporting the alleged debt on Ms. Scherer’s credit file with
Defendants Equifax and Experian Information Services. The Board contends that
this second account became delinquent in April 2014—approximately two months
before Ms. Scherer purchased the property or opened any account pertaining to that
Ms. Scherer made various attempts to dispute the alleged delinquency with
the Board, CBS, and Defendants Equifax and Experian Information Services. The
last dispute in which Plaintiff asked Equifax for the removal of the alleged debt
was April 5, 2017. Despite Ms. Scherer’s efforts, the Board and Credit Bureau
Systems did not cease their attempts to collect on the debt.
Unable to convince the Board that the second account did not belong to her,
or to cease its collections efforts, Ms. Scherer filed her claims against the Board
and the other Defendants on January 24, 2018. Her claims against the Board
include negligent, reckless, and wanton debt collection activities; and negligent,
reckless, and wanton training and supervision. She also asserts the Board is
vicariously liable for the improper collection activities of Defendant CBS.
STANDARD OF REVIEW
A Rule 12(b)(6) motion to dismiss attacks the legal sufficiency of the
complaint. Generally, the Federal Rules of Civil Procedure require only that the
complaint provide “‘a short and plain statement of the claim’ that will give the
defendant fair notice of what the plaintiff’s claim is and the grounds upon which it
rests.” Conley v. Gibson, 355 U.S. 41, 47 (1957) (quoting Fed. R. Civ. P. 8(a)). A
plaintiff must provide the grounds of her entitlement, but Rule 8 generally does not
require “detailed factual allegations.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007) (quoting Conley, 355 U.S. at 47). It does, however, “demand[ ] more
than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v.
Iqbal 556 U.S. 662, 678 (2009). Pleadings that contain nothing more than “a
formulaic recitation of the elements of a cause of action” do not meet Rule 8
standards nor do pleadings suffice that are based merely upon “labels or
conclusions” or “naked assertions” without supporting factual allegations.
Twombly, 550 U.S. at 555, 557.
The Supreme Court explained that “[t]o survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as true, to ‘state a claim
to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting and
explaining its decision in Twombly, 550 U.S. at 570). To be plausible on its face,
the claim must contain enough facts that “allow[ ] the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S.
at 678. Although “[t]he plausibility standard is not akin to a ‘probability
requirement,’” the complaint must demonstrate “more than a sheer possibility that
a defendant has acted unlawfully.” Id.
The sole issue before the court is whether Alabama’s statute of limitations
bars Ms. Scherer’s claims against the Board. The court first recognizes that “[a]
statute of limitations bar is an affirmative defense, and . . . plaintiffs are not
required to negate an affirmative defense in their complaint.” La Grasta v. First
Union Securities, Inc., 358 F.3d 840, 845 (11th Cir. 2004) (internal quotation
marks omitted). Also, “a Rule 12(b)(6) dismissal on statute of limitations grounds
is appropriate only if it is apparent from the face of the complaint that the claim is
time-barred.” Id. (internal quotation marks omitted). Therefore, a statute of
limitations defense is “generally not appropriate for evaluation on a motion to
dismiss pursuant to Rule 12(b)(6.)” McMillian v. AMC Mortg. Servs., Inc., 560 F.
Supp. 1210, 1213 (S.D. Ala. 2008).
Because this court sits in diversity, Alabama substantive law, including the
statute of limitations, governs these proceedings. See Mississippi Valley Title Ins.
Co. v. Thompson, 802 F.3d 1248, 1251 n.2 (11th Cir. 2015). Alabama law provides
a two-year statute of limitations for claims of negligence, wantonness, and
vicarious liability. Ala. Code § 6-2-38(l), (n). The limitations period begins at the
time the action “accrues.” Booker v. United Am. Ins. Co., 700 So. 2d 1333, 1339
In Alabama, the statute of limitations commences “on the date the first legal
injury occurs, but not necessarily from the date of the act causing the injury.”
Smith v. Medtronic, Inc., 607 So. 2d 156, 159 (Ala. 1992) (citing Brotherhood of
Locomotive Firemen & Enginemen v. Hammett, 140 So. 2d 832 (1962)).
Therefore, a defendant may take a particular action that eventually injures the
plaintiff, but the plaintiff’s cause of action does not accrue until the injury occurs.
Ms. Scherer filed this suit on January 24, 2018. Therefore, to establish at this
stage of litigation that her claims are untimely, the Board must show that it is
apparent from the face of Ms. Scherer’s complaint that her claims accrued before
January 24, 2016. Adding further difficulty to the Board’s burden is the fact that
the court must construe the pleadings broadly and resolve inferences in Ms.
Scherer’s favor at the motion to dismiss stage. See Levine v. World Fin. Network
Nat’l Bank, 437 F.3d 1118, 1120 (11th Cir. 2006).
Ms. Scherer’s claims are simple. She alleges that the Board erroneously
placed her name on a delinquent water and sewer services account, and then turned
that account over for collections. As a result, she endured the painful process of the
Defendants’ collection efforts, disputing the allegedly inaccurate allegations, and
the consequences of having the debt reflected on her credit file with the consumer
credit reporting agencies. For her injuries, Ms. Scherer claims that the “inaccurate
information published by the Defendant Equifax negatively reflected on Plaintiff,
her financial responsibility as a debtor, her credit worthiness, and was published to
third-parties.” (Doc. 1 at 5). She also claims she “suffered physical damage, worry,
anxiety, nervousness, and mental anguish.” (Id. at 5).
As noted above, to be timely, Ms. Scherer’s claims against the Board must
have accrued less than two years before she filed this action on January 24, 2016.
And, her claims “accrued” on the first date on which she could have maintained a
cause of action against the Board. Therefore, the timeliness of her claims turns on
the question of when she first suffered a legal injury. The parties dispute when
exactly that alleged injury occurred.
The Board urges that Ms. Scherer’s alleged injury occurred when her
account became delinquent, in April 2014. If the Board is correct, then Ms.
Scherer’s claims are clearly barred as untimely because they would have been
nearly four years old at the time she filed this suit. However, unless it is apparent
on the face of the complaint that Ms. Scherer’s injury occurred in April 2014, or
any time before January 24, 2016, then the court must deny the Board’s motion.
The Board has provided no authority supporting its proposition that simply
declaring an account delinquent amounts to a legal injury, and in the absence of
such authority, the court disagrees. Although frustrating and annoying to Ms.
Scherer, the Board’s declaration that an account in Ms. Scherer’s name was
delinquent did “not itself constitute a legal injury at the time, but the plaintiff’s
injury [came] only as a result of, and in furtherance and subsequent development
of” that declaration. Smith v. Medtronic, Inc., 607 So. 2d 156, 159 (Ala.1992). In
such cases, “the cause of action ‘accrues,’ and the statutory period of limitations
begins to run, when, and only when, the damages are sustained.” Id.
Moreover, Ms. Scherer’s complaint does not purport to hold the Board liable
for simply declaring delinquent an account that did not belong to her. If that were
her case, the Board would have a more compelling argument at this stage.
However, Ms. Scherer is suing the Board for its subsequent efforts to improperly
collect the unpaid debt from her. Thus, the alleged injury occurred at some point
after the Board determined the account was delinquent, and began its efforts to
hold her responsible for that debt.
Ms. Scherer argues in her response to the Board’s motion to dismiss that she
suffered no legal injury until the Board began collection efforts against her in
2016—a date that is not found in her complaint. Her complaint states that
Defendant CBS, the Board’s collection agency, reported the alleged debt of $46.00
to the credit reporting agencies “at some point” after Ms. Scherer purchased the
property in June 2016. (Doc. 1 at 3). Discovery may reveal that the Defendants’
collection efforts began—and, therefore, any legal injury must have occurred—
more than two years prior to this suit. However, taking the facts of the complaint as
true, the Defendants’ collection efforts must have begun at some point between
April 2014 (when the account became delinquent) and April 2017 (when Ms.
Scherer last disputed the issue with Equifax). Given that window, the face of the
complaint does not reveal that Ms. Scherer’s claims necessarily accrued before
January 24, 2016.
The court also disagrees with the Board’s contention that Ms. Scherer’s
claims should be dismissed “because she alleges no other specific dates that she
disputed such debt to [the Board] or its collection agent, other than the vague
allegations that it was ‘sometime after’ she purchased the property.” (Doc. 9 at 3)
(emphasis in original). While a specific date would be helpful in determining when
the alleged injury occurred, Ms. Scherer’s failure to include one does not invite
dismissal at this stage. As noted above, a plaintiff is not required “to negate an
affirmative defense in [her] complaint.” La Grasta v. First Union Securities, Inc.,
358 F.3d 840, 845 (11th Cir. 2004) (internal quotation marks omitted). Also, “a
Rule 12(b)(6) dismissal on statute of limitations grounds is appropriate only if it is
apparent from the face of the complaint that the claim is time-barred.” Id. (internal
quotation marks omitted). A plaintiff has a low bar to clear to survive a defendant’s
motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), which is why “a statute of
limitations defense is generally not appropriate for evaluation on a motion to
dismiss pursuant to Rule 12(b)(6).” McMillian v. AMC Mortg. Servs., Inc., 560 F.
Supp. 1210, 1213 (S.D. Ala. 2008).
The Board has failed to establish that Ms. Scherer’s alleged injury forming
the basis of this action occurred more than two years before she filed this suit.
Consequently, the court cannot find that the complaint demonstrates that Ms.
Scherer’s claims are untimely. Although the court recognizes that discovery could
ultimately reveal otherwise, that determination is reserved for the summary
For the reasons explained above, the court finds that the Board has failed to
show that Ms. Scherer’s claims against it are untimely on the face of her
complaint. Therefore, the court will DENY the Board’s motion. The court will
enter a separate order consistent with this Memorandum Opinion.
DONE this 15th day of May, 2018.
KARON OWEN BOWDRE
CHIEF UNITED STATES DISTRICT JUDGE
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