McCoy et al v. U.S. Collections West Incorporated et al

Filing 23

ORDER granting 10 Defendant Donald Darnell's Motion to Dismiss. Defendant Donald Darnell is hereby dismissed without prejudice as a named defendant in this lawsuit. Defendant Darnell's affidavit, (Doc. 22 -1, attached to Darnell's Reply is hereby STRICKEN as an unauthorized filing. Counsel must jointly and promptly contact the chambers of the newly-assigned magistrate judge to schedule a Rule 16 case management conference after re-assignment of this case. Signed by Magistrate Judge Lawrence O Anderson on 8/11/14.(LSP)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Donald and Patricia McCoy,
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Plaintiffs,
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vs.
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U. S. Collections West, Inc.; Donald
Darnell,
Defendants.

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No. CV-14-0048-PHX-LOA
ORDER

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This action arises on Defendant Donald Darnell’s (“Darnell”) Motion to Dismiss
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Pursuant to Rule 12(b)(6) on the ground that the Complaint fails to state a claim against
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Darnell upon which relief may be granted. (Doc. 10) In their Complaint, Plaintiffs Donald
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and Patricia McCoy (“Plaintiffs”) allege violations of the Fair Debit Collection Practices Act.
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(Doc. 1) Darnell contends that 1) the Complaint does not allege sufficient facts to state a
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plausible claim for relief against him, and 2) he has no personal liability under any legal
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theory for the alleged acts of a representative, employee or agent of Defendant U.S.
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Collections West, Inc. (“Collections West”), an Arizona corporation. Plaintiffs oppose the
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motion.
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After considering the parties’ briefings and relevant case law, the Court will grant the
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motion and dismiss Darnell from this action without prejudice.
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I. Background
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On January 10, 2014, Plaintiffs, through counsel, filed this action, alleging Defendants
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are debt collectors and violated various provisions of the Fair Debit Collection Practices Act

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(“FDCPA”) in attempting to collect debt from Plaintiffs. Specifically, the Complaint alleges

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that, inter alia, Darnell “controls U.S. Collections West, Inc[;]” “the Defendants, acting

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through representatives, employees and/or agents attempted to collect the debt from

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Plaintiffs[;]” “Defendant’s agent falsely advised Plaintiffs that if they contested the

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garnishment that the amount of the garnishment would go up to $4,288.17[;]” and “[a]s a

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consequence of the Defendant’s collection activities and communication(s), the Plaintiff (sic)

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seeks damages pursuant to FDCPA 1692k(a).” (Docs. 1, ¶¶ 15, 27, 34, 44) The Complaint

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requests the Court grant judgment in favor of “the Plaintiff (sic) and against the

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Defendant[,]” and award damages and reasonable attorney’s fees and costs pursuant to 15

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U.S.C. § 1692k(a)(3). (Id. at 5-6)

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On February 11, 2014, Defendants’ common counsel filed Collections West’s Answer

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and the pending dismissal motion. (Docs. 8, 10) All parties have expressly consented in

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writing to magistrate-judge jurisdiction pursuant to 28 U.S.C. § 636(c). (Docs. 7, 11)

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In his Motion to Dismiss, Darnell contends that the Complaint fails to identify the

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specific representative, employee, or agent of Collections West, who allegedly spoke to one

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or both Plaintiffs, giving rise to claims alleged herein. Darnell points out that “[n]owhere in

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Plaintiffs’ complaint are there any allegations that Defendant Donald Darnell discussed,

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talked to or had any contact or involvement with Plaintiffs regarding the collection of the

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debt on behalf of Defendant U.S. Collections West, Inc.” (Id.) In other words, there is no

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allegation that Darnell himself violated the FDCPA. According to Darnell, the only reason

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Darnell was named personally as a defendant is because Darnell allegedly “controls U.S.

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Collections, West, Inc.” (Doc. 10 at 1) (citing paragraph 15 of the Complaint). Citing Rule

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8(a)(2), Fed.R.Civ.P., Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v.

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Iqbal, 556 U.S. 662 (2009), Darnell argues that because the Complaint is “devoid of any

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facts” against him individually to raise a plausible claim under federal law that Darnell is

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liable for the misconduct alleged, it fails to state a claim for relief against Darnell personally.

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(Id. at 1-2)

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Additionally, Darnell contends that the Complaint also fails to allege sufficient facts
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to show that Darnell could be personally liable for the allegedly wrongful acts of a

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representative, employee or agent of Collections West under any cognizable legal theory.

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Even assuming as true, as the Court must, that Collections West is an Arizona corporation

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controlled by Darnell, he claims that the Complaint does not allege sufficient facts to support

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a cognizable legal theory against him for the conduct of others employed by Collections

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West. (Id. at 3) (citing Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990).

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In their Response to Defendant Darnell’s Motion to Dismiss, Plaintiffs initially noted

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that “[i]f discovery shows that Darnell was not personally involved in the conversations or

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did not personally direct his agent resulting in the alleged violations, Plaintiff (sic) agrees

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that the suit against Darnell personally should be dismissed.” (Doc. 17, ¶ 5 at 2) Later,

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Plaintiffs argue that “[t]aking all of the allegations of Plaintiffs’ Complaint as true, Plaintiff

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(sic) has stated plausible claims against Defendant Darnell for violation of the FDCPA.” (Id.

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at 4) Specifically, Plaintiffs write that the Complaint “alleges that Defendant Darnell or his

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agent falsely stated that if Plaintiffs contested the garnishment, that the amount of the

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garnishment would go up to $4,288.17. . . [and] that Defendants had no legal authority to

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raise the garnishment from $1,362.88 to $4,288.17 and that Defendants’ false statements

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were in violation of 15 U.S.C. § 1692e[.]” (Id.)

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Plaintiffs’ Response does not address Darnell’s asserted argument that the Complaint

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does not allege sufficient facts to support a cognizable legal theory against him for the

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conduct of others employed by Collections West.

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II. Standard of Review

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Federal Rule of Civil Procedure 8(a)(2) requires that each claim in a pleading be

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supported by “a short and plain statement of the claim showing that the pleader is entitled to

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relief.” Fed.R.Civ.P. 8(a). To meet this requirement, the Supreme Court has held that an

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“entitlement to relief” requires “more than labels and conclusions . . . Factual allegations

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must be enough to raise a right to relief above a speculative level.” Twombly, 550 U.S. at

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555. A complaint or counterclaim must contain “sufficient factual matter, accepted as true,

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to ‘state a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting
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Twombly, 550 U.S. at 570); see also Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).

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Even where a complaint has the factual elements of a cause of action present, but is factually

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scattered throughout the complaint and not organized into a “short and plain statement of the

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claim,” it may be dismissed for failure to satisfy Rule 8(a). Sparling v. Hoffman Constr. Co.,

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864 F.2d 635, 640 (9th Cir. 1988). A motion to dismiss under Rule 12(b)(6) for failure to

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state a claim upon which relief can be granted “tests the legal sufficiency of a claim.”

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Conservation Force v. Salazar, 646 F.3d 1240, 1241-42 (9th Cir. 2011) (quoting Navarro

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v. Block, 250 F.3d 729, 732 (9th Cir. 2001)).

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Establishing the plausibility of a complaint’s allegations is a two-step process that is

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“context-specific” and “requires the reviewing court to draw on its judicial experience and

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common sense.” Iqbal, 556 U.S. at 679; see also Eclectic Properties East, LLC v. Marcus

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& Millichap Co., 751 F.3d 990, 995-96 (9th Cir. 2014). First, a district court should

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“identif[y] pleadings that, because they are no more than conclusions, are not entitled to the

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assumption of truth.” Id. Then, a court should “assume the[ ] veracity” of “well pleaded

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factual allegations” and “determine whether they plausibly give rise to an entitlement to

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relief.” Id. “Where a complaint pleads facts that are merely consistent with a defendant’s

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liability, it stops short of the line between possibility and plausibility of entitlement to relief.”

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Id. at 678 (citation omitted). When considering plausibility, courts must also consider an

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“obvious alternative explanation” for defendant’s behavior. Id. at 682 (quoting Twombly,

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550 U.S. at 567).

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Dismissal is also proper where a complaint does not make out a cognizable legal

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theory or fails to allege sufficient facts to support a cognizable legal theory. Mendiondo v.

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Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1102 (9th Cir. 2008); Balistreri, 901 F.2d at 699.

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In order to assist litigants to understand federal pleading requirements, Rule 84 of the

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Federal Rules of Civil Procedure provides samples in an Appendix of Forms, which

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“illustrate the simplicity and brevity that the[] rules contemplate.” See also McHenry v.

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Renne, 84 F.3d 1172, 1177 (9th Cir. 1996). An example is Form 11 (Complaint for

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Negligence):
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1. (Statement of Jurisdiction - See Form 7).

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2. On date, at place, the defendant negligently drove a motor vehicle against the
plaintiff.

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3. As a result, the plaintiff was physically injured, lost wages or income,
suffered physical and mental pain, and incurred medical expenses of $____.
Therefore, the plaintiff demands judgment against the defendant for $____, plus
costs.

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Each claim must be stated in a separate count. Bautista v. Los Angeles County, 216 F.3d 837,
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840-41 (9th Cir. 2000).
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III. The Fair Debt Collection Practices Act
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It is well settled that FDCPA liability is limited to individuals or entities who meet the
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FDCPA’s definition of “debt collector.” See, e.g., Pollice v. Nat’l Tax Funding LP, 225 F.3d
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379, 403 (3d Cir. 2000) (“The FDCPA’s provisions generally apply only to ‘debt collectors.’
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. . . Creditors - as opposed to ‘debt collectors’ - generally are not subject to the FDCPA.”);
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Wadlington v. Credit Acceptance Corp., 76 F.3d 103, 108 (6th Cir. 1996) (finding that the
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liability for a debt collector should not be vicariously imposed on the assignee who was not
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a debt collector under the FDCPA); Miranda v. Field Asset Services, 2013 WL 124047, at
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*4 (S.D. Cal. Jan. 9, 2013); Plumb v. Barclays Bank Delaware, 2012 WL 2046506, at *4
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(E.D. Wash. June 5, 2012) (“[E]ven vicarious liability under the FDCPA has been restricted
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to principals who themselves are statutory ‘debt collectors.’”); Oei v. N. Star Capital
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Acquisitions, LLC, 486 F. Supp. 2d 1089, 1097 (C.D. Cal. 2006). The FDCPA defines “debt
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collector” as “any person who . . . in any business the principal purpose of which is the
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collection of any debts, or who regularly collects or attempts to collect, directly or indirectly,
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debts owed or due or asserted to be owed or due another. . . .” 15 U.S.C. § 1692a(6)
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(emphasis added). The FDCPA was designed to protect consumers who have been victimized
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by unscrupulous debt collectors, regardless of whether a valid debt actually exists. Baker v.
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G.C. Servs. Corp., 677 F.2d 775, 777 (9th Cir. 1982).
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IV. Motions to Dismiss
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When reviewing a motion to dismiss, a district court may “consider only allegations
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contained in the pleadings, exhibits attached to the complaint, and matters properly subject

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to judicial notice.” Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007) (per curiam).

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“When ruling on a Rule 12(b)(6) motion to dismiss, if a district court considers evidence

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outside the pleadings, it must normally convert the 12(b)(6) motion into a Rule 56 motion

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for summary judgment, and it must give the nonmoving party an opportunity to respond.”

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United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003) (citing Fed.R.Civ.P. 12(b)).

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In the Ninth Circuit and elsewhere, new issues and evidence may not be raised in

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reply briefs absent leave of the court. See Bazuaye v. I.N.S., 79 F.3d 118, 120 (9th Cir. 1996)

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(“Issues raised for the first time in the reply brief are waived.”). When new material is raised

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in a reply brief, a district court has the discretion to strike that material. See, e.g, Tovar v.

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U.S. Postal Serv., 3 F.3d 1271, 1273 (9th Cir. 1993) (striking portions of a reply brief that

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presented new information); Provenz v. Miller, 102 F.3d 1478, 1483 (9th Cir. 1996), cert.

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denied, 522 U.S. 808 (1997); Doebele v. Sprint/United Mgmt. Co., 342 F.3d 1117, 1139 n.

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13 (10th Cir. 2003) (finding district court abused its discretion to the extent it relied on new

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evidentiary materials presented for the first time in a summary judgment reply brief);

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Nautilus Grp., Inc. v. Icon Health & Fitness, Inc., 308 F.Supp.2d 1208, 1214 (W.D. Wash.

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2003) (striking a declaration with new evidence submitted in reply).

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Here, Defendant Darnell’s introduction of new evidence via his affidavit attached to

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his Reply leaves Plaintiffs without an adequate opportunity to respond. (Doc. 22-1) Darnell

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has not requested leave of the Court to file an untimely affidavit or provided any reason why

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he could not have raised the new information contained in his affidavit at an earlier time.

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Thus, the Court will strike Defendant Darnell’s affidavit attached to the Reply and will not

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consider the new evidence raised in his reply brief and affidavit in ruling on the pending

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motion.

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V. Discussion

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Plaintiffs have failed to state a plausible FDCPA claim for relief against Darnell as

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required by Rule 8(a)(2), Fed.R.Civ.P. Specific allegations regarding purported wrongdoing

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by Darnell are non-existent. Nowhere in the Complaint do Plaintiffs allege that Darnell
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discussed, talked to, or even had contact with Plaintiffs regarding the collection of debt on

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behalf of corporate Defendant Collections West. The Complaint frequently uses the singular

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word “Defendant” without being specific which of the two defendants Plaintiffs are referring.

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The Complaint’s vague allegations require the Court and Darnell to speculate whether

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Plaintiffs are referring to Darnell or someone else and do not raise a claim for relief against

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him above a speculative level. Twombly, 550 U.S. at 555. Candidly, the Complaint was

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poorly drafted. It fails to contain sufficient factual allegations that, if accepted as true, “state

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a claim to relief that is plausible on its face” against Darnell. Iqbal, 556 U.S. at 678. Clearly,

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the Complaint does not meet the federal pleading standard required by Rule 8(a)(2),

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Fed.R.Civ.P., and the Supreme Court.

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Based on the foregoing,

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IT IS ORDERED that Defendant Donald Darnell’s Motion to Dismiss, doc. 10, is

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GRANTED. Defendant Donald Darnell is hereby dismissed without prejudice as a named

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defendant in this lawsuit.

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IT IS FURTHER ORDERED that Defendant Darnell’s affidavit, doc. 22-1,
attached to Darnell’s Reply is hereby STRICKEN as an unauthorized filing.

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IT IS FURTHER ORDERED that counsel must jointly and promptly contact the

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chambers of the newly-assigned magistrate judge to schedule a Rule 16 case management

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conference after re-assignment of this case.

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Dated this 11th day of August, 2014.

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