Jacques v. Solomon & Solomon P.C. et al

Filing 40

MEMORANDUM OPINION re 25 MOTION for Judgment on the Pleadings. Signed by Judge Richard G. Andrews on 8/21/2012. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

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ROSE M. JACQUES,
Plaintiff,

v.

Civil Action No. 11-801-RGA

SOLOMON & SOLOMON P.C., et al.,
Defendants.

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MEMORANDUM OPINION

Rose M. Jacques, Pro se Plaintiff.
Tracy A. Burleigh, Esq., MARSHALL, DENNEHEY, WARNER, COLEMAN & GOGGIN,
Wilmington, DE, Attorney for Defendant Northland Group, Inc.

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August1l, 2012

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PlaintiffRose M. Jacques, appearing prose, filed this action against defendants
Northland Group, Inc., 1 Solomon & Solomon P.C., Todd M. Sardella, Capital One Bank (USA)
N.A., Lyons, Doherty & Veldhuis, and NCO Financial Systems, Inc., alleging violations ofthe
Fair Debt Collection Practices Act (the "FDCPA"), 15 U.S.C. § 1692 et seq., and the Fair Credit
Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq. (D.I. 1). Currently before the Court is
Northland's Motion for Judgment on the Pleadings Pursuant to Federal Rule of Civil Procedure
12(c) or, Alternatively, Motion for Summary Judgment Pursuant to Federal Rule of Civil
Procedure 56. (D.I. 25). For the reasons that follow, the Court grants Northland's Motion for
Judgment on the Pleadings. 2
I.

BACKGROUND
The following facts are taken from Plaintiffs complaint. Plaintiff is a resident of

Delaware. (D.I. 1 at~ 6). Northland is a corporation engaged in the business of collecting debts,
often by mail or telephone. (!d.

at~

11 ). On November 26, 2010, Northland sent a notice of

collection of a debt on behalf of creditor Capital One. (!d.

at~~

26, 27). Plaintiff sent various

letters to Northland disputing the debt, to which Northland did not respond. (!d.

at~~

27-29; D.I.

33 at 4). Other debt collectors also attempted to collect alleged debts from Plaintiff prior to
Northland's attempt. (!d.

at~~

these collectors as well. (!d.

14, 17, 20). Plaintiff sent written notice disputing the debt to

at~~

15, 18, 21). Plaintiff further alleges that Northland and the

Northland is improperly listed in the caption as Northland Financial Group, Inc.
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The Court bases its decision solely on the pleadings and, therefore, this motion is
addressed only as a motion for judgment on the pleadings.
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other collectors failed to report to the credit reporting agencies that the debt was disputed. (/d. at
~

29). Northland admits that it did not report that Plaintiff had disputed the debt. (D.I. 33 at 4-

5).
Plaintiff alleges that Northland violated the FDCP A by failing to verify the debt after
Plaintiff sent notice that she disputed the debt, failing to show that it had a contract with Capital
One, failing to notify the credit reporting agencies that the debt was disputed, and attempting to
collect a debt that was previously disputed to other agencies. Plaintiff also alleges that Northland
violated the FCRA by accessing Plaintiffs credit report without a permissible purpose and
failing to report that the debt was disputed.

II. STANDARD OF REVIEW
Northland moves for judgment on the pleadings pursuant to Federal Rule of Civil
Procedure 12(c) or, in the alternative, for summary judgment pursuant to Federal Rule of Civil
Procedure 56. A motion under Rule 12(c) is reviewed under the same standard as a motion to
dismiss under Rule 12(b)(6). Turbe v. Gov't ofthe Virgin Islands, 938 F.2d 427,428 (3d Cir.
1991). The court must accept all factual allegations in a complaint as true and "draw[] all
reasonable inferences in the plaintiffs favor." Trump Hotels & Casino Resorts, Inc. v. Mirage

Resorts, Inc., 140 F.3d 478,483 (3d Cir. 1998). The motion can be granted only if no relief
could be afforded under any set of facts that could be proved. Turbe, 938 F.2d at 428. However,
the "court need not credit a complaint's 'bald assertions' or 'legal conclusions' when deciding a
motion to dismiss." Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997). Thus,
the court is "not bound to accept as true a legal conclusion couched as a factual allegation."

Papasan v. Allain, 478 U.S. 265, 286 (1986). Because Jacques proceeds prose, her pleading is
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liberally construed, and her complaint, "however inartfully pleaded, must be held to less stringent
standards than formal pleadings drafted by lawyers." Erickson v. Pardus, 551 U.S. 89, 94 (2007)
(citations omitted).

III. DISCUSSION
A.

FDCPA Claims

The FDCPA "provides a remedy for consumers who have been subjected to abusive,
deceptive, or unfair debt collection practices by debt collectors." Pollice v. Nat 'I Tax Funding,
L.P., 225 F.3d 379, 400 (3d Cir. 2000); see also Wright v. Portfolio Recovery Affiliates, 2011

WL 1226115, at* 4 (D. Del. Mar. 30, 2011). The purpose ofthe FDCPA is to "eliminate
abusive debt collection practices by debt collectors." 15 U.S.C. § 1692e. A debt collector "may
not use any false, deceptive, or misleading representation or means in connection with the
collection of any debt," id, nor may a debt collector "use unfair or unconscionable means to
collect or attempt to collect any debt." Id § 1692f.
Count 1 of the Complaint raises claims under the FDCPA. Specifically, Plaintiff alleges
that Northland violated§§ 1692e(2)(A), 1692e(8), and 1692e(l0), which provide that:

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

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

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(8) Communicating or threatening to communicate to any person
credit information which is known or which should be known to be
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false, including the failure to communicate that a disputed debt is
disputed.

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15 U.S.C. §§ 1692(e)(2)(A), 1692e(8) and 1692e(10). Plaintiff further alleges that Northland
violated §§ 1692 f and 1692f( 1), which provide that:
A debt collector may not use unfair or unconscionable means to
collect or attempt to collect any debt. Without limiting the general
application of the foregoing, the following conduct is a violation of
this section:
( 1) The collection of any amount (including any interest, fee,
charge, or expense incidental to the principal obligation) unless
such amount is expressly authorized by the agreement creating the
debt or permitted by law.
/d. § 1692f. Finally, Plaintiff alleges that Northland violated § 1692g(b), which provides that, if

the consumer disputes the debt in writing within thirty days, "the debt collector shall cease
collection of the debt, or any disputed portion thereof, until the debt collector obtains verification
ofthe debt." Plaintiffs claims seem to rest on four allegations: (1) Northland failed to validate
the debt upon Plaintiffs dispute (D.I. 1 at~ 29; D.l. 31
at~

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35); (2) Northland failed to show that

34); (3) Northland attempted to collect on a debt

that was previously disputed to other agencies (D.I. 1 at~ 52; D.I. 31

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25); and (4) Northland

failed to notify the credit reporting agencies that Plaintiff disputed the debt. (D.I. 1 at ~29; D.l.
31

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

it had a contract with Capital One (D.I. 31

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36).
As to the first three allegations, each of which relate to the validity of the debt and

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whether Northland had the authority to attempt to collect it, the Complaint fails to state a claim
against Northland. Northland had no obligation to verify the debt. Once a consumer disputes a
debt, the debt collector has a choice whether to verify the debt or cease collection efforts. 15
U.S.C. § 1692g(b); see Guerrero v. RJM Acquisitions, LLC, 499 F.3d 926, 940 (9th Cir. 2007)
(stating that "[n]othing in[§ 1692g(b)] suggests an independent obligation to verify a disputed
debt where the collector abandons all collection activity with respect to the consumer"); Jang v.

A.M Miller & Assocs., 122 F.3d 480,482 (7th Cir. 1997) ("When a collection agency cannot
verify a debt, the statute allows the debt collector to cease all collection activities at that point
without incurring any liability for the mistake."); Smith v. Transworld Sys., Inc., 953 F.2d 1025,
1031 (6th Cir. 1992) (holding that debt collector did not violate the FDCPA when it ceased
collection activity after receiving request for validation); F.T.C. Staff Opinion Letter, 1997 WL
33791232 (Dec. 23, 1997) ("There is nothing in the FDCPA that requires a response to a written
dispute if the debt collector chooses to abandon its collection effort with respect to the debt at
issue."); F.T.C. Staff Opinion Letter, 1992 WL 12144210 (Mar. 3, 1992) ("In the event the
collector decides not to pursue the collection efforts, there is no requirement to furnish the
documentation of the indebtedness to the consumer."). Thus, Northland had no obligation to
verify the debt so long as it ceased collection efforts after Plaintiff disputed the debt. 3

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Plaintiff also makes the argument that her notice of dispute to Northland
constituted a "self executing contract," to which Northland's failure to respond constituted a
"tacit acquiescence that no lawful debt existed." (D .I. 31 at ~ 31 ). This purported "contract" is
not enforceable. A valid contract exists when (1) the parties intend that the contract would bind
them; (2) the terms of the contract are sufficiently definite; (3) the parties exchange legal
consideration. Osborn ex ref. Osborn v. Kemp, 991 A.2d 1153, 1158 (Del. 2010). Merely
sending an unsolicited offer does not impose upon the party receiving it any duty to speak or
deprive the party of its privilege of remaining silent without accepting. Restatement (Second) of
Contracts§ 69 cmt. a, c. Accordingly, Northland did not "contract" with Plaintiff nor did it agree
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Plaintiff does not allege that Northland continued collection efforts after she disputed the

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debt. Rather, she asserts that Northland's attempt to collect the debt was improper because
Capital One and other prior debt collectors had failed to validate the debt. (D.I. 31 at 8, ,-r H).
Plaintiff does not allege that Northland had actual knowledge of the prior disputes with Capital
One and other debt collectors but instead seeks to impute their knowledge to Northland. The
FDCPA does not impose upon a debt collector any duty to investigate independently the validity
of the debt. See Slanina v. United Recovery Sys., LP, 2011 WL 5008367, at *3 (M.D. Pa. Oct.
20, 2011) ("The FDCP A did not require [the debt collector] to validate the debt prior to its initial
contact with [the consumer]."); Yentin v. Michaels, Louis & Assocs., Inc., 2011 WL 4104675, at
*9 (E.D. Pa. Sept. 15, 2011) (concluding that no provision ofthe FDCPA "impos[es] upon a debt
collector any duty to 'investigate' debts that it seeks to collect- either before collection activities
begin or after a consumer disputes a debt"); see also Clark v. Capital Credit & Collection Servs.,
Inc., 460 F.3d 1162, 1174 (9th Cir. 2006) ("[T]he FDCPA did not impose upon [the debt
collector] any duty to investigate independently the claims presented by [the creditor].").
Furthermore, "[ c]ourts do not impute to debt collectors other information that may be in
creditors' files- for example, that debt has been paid or was bogus to start with." Randolph v.
IMBS, Inc., 368 F.3d 726,729 (7th Cir. 2004). Capital One's knowledge that Plaintiffhad
previously disputed the debt with other debt collectors, therefore, is not imputed to Northland.
Accordingly, Northland did not violate the FDCPA by attempting to collect the debt when it had
previously been disputed to Capital One and other debt collectors.
Plaintiff also claims that Northland violated the FDCPA by failing to prove that it had a

that the debt at issue was not valid.
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contract with Capital One to collect the debt. Plaintiff does not cite any provision in the FDCP A
that requires a collection agency to prove that it had a contract with the creditor, and the Court is
likewise unable to identify one. Even if the FDCPA required a debt collector to prove that it had
authority from the creditor to collect an alleged debt, Plaintiff here has conceded that Capital One
placed the account with Northland. (D.I. 31 at 4, ~ 25). There is no dispute that Capital One
placed the account with Northland for collection. Thus, the complaint fails to state a claim that
Northland violated the FDCPA by failing to prove it had authority from Capital One to collect
the alleged debt.
As to the fourth allegation, the complaint also fails to state a claim that Northland
violated§ 1692e(8) ofthe FDCPA because Northland did not have a duty to report that Plaintiff
disputed the validity of the debt. The duty to report a debt under this section arises only if one
elects to report credit information. As the Eighth Circuit has stated:
Section 1692e generally prohibits "false, deceptive, or misleading
representation." "Communication" is defined as "the conveying of
information regarding a debt directly or indirectly to any person
through any medium." § 1692(a)(2). Reading these provisions
together, as we must, the relevance of the portion of§ 1692e(8) on
which [the Plaintiff] relies "including the failure to communicate
that a disputed debt is disputed" - is rooted in the basic fraud law
principle that, if a debt collector elects to communicate "credit
information" about a consumer, it must not omit a piece of
information that is always material, namely that the consumer has
disputed a particular debt. This interpretation is confirmed by the
relevant part of the Federal Trade Commission's December 1988
Staff Commentary on the Fair Debt Collection Practices Act:
1. Disputed debt. If a debt collector knows that a debt is
disputed by the Consumer ... and reports it to a credit
bureau, he must report it is disputed.
2. Post-report dispute. When a debt collector learns ofa
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dispute after reporting the debt to a credit bureau, the
dispute need not also be reported.
Wilhelm v. Credico, Inc., 519 F.3d 416,418 (8th Cir. 2008) (quoting FTC Staff Commentary, 53
Fed. Reg. 50097-02, 50106) (Dec. 13, 1988)).
Plaintiff does not allege that Northland reported the debt to any credit agency. Northland,
therefore, had no affirmative duty to report that the debt was disputed. See Wilhelm, 519 F.3d at
418; see also Donatelli v. Warmbrodt, 2011 WL 2580442, at *7-8 (W.D. Pa. June 28, 2011)
(holding that "[b ]ecause [Plaintiff] has failed to establish that the Defendants reported a debt to a
credit bureau, his assertion that they are liable for failing to report that the debt was disputed is
inaccurate"). Accordingly, the complaint fails to state a claim that Northland violated § 1692e(8)
by failing to report that Plaintiff disputed the debt.

B.

FCRA Claims

The purpose of the FCRA is to ensure that "consumer reporting agencies adopt
reasonable procedures for meeting the needs of commerce for consumer credit, personnel,
insurance, and other information in a manner which is fair and equitable to consumers, with
regard to the confidentiality, accuracy, relevancy, and proper utilization of such information in
accordance with the requirements ofthis title." 15 U.S.C. § 1681. The complaint alleges that
Northland violated§ 1681b(t) and§ 1681s-2. (D.I. 1 at~~ 70, 76).
Section 1681 b(t) provides: "A person shall not use or obtain a consumer report for any
purpose unless ... the consumer report is obtained for a purpose for which the consumer report
is authorized to be furnished under this section." Section 1681 permits a consumer reporting
agency to furnish a consumer report to a person which it has reason to believe "intends to use the

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information in connection with a credit transaction involving the consumer on whom the
information to be furnished and involving the extension of credit to, or review or collection of an
account of, the consumer." 15 U.S.C. § 1681b(a)(3)(A). Thus, accessing a consumer's credit
report in connection with collection of a debt is a permissible purpose. See, e.g., Huertas v.
Galaxy Asset Mgmt., 641 F.3d 28, 34 (3d Cir. 2011) (holding that the FCRA authorizes use of

credit reports in connection with collection of a delinquent account).
To survive a Rule 12(c) motion for a violation of§ 1681 b, therefore, "a plaintiff must
allege with sufficient factual support, that the defendant willfully obtained the plaintiffs credit
report without having a purpose to review or collect a debt." Huertas v. US. Dep 't. of Educ.,
2009 WL 3165442, at *9 (D.N.J. Sept. 28, 2009). In other words, "the complaint must allege
facts sufficient to demonstrate that the defendant should have known either that it did not intend
to use the credit report in connection with a credit transaction involving the plaintiff or involving
the collection of an account of the plaintiff." Id (internal quotations and citations omitted).
Plaintiffs conclusory allegation that Northland "accessed Plaintiff['s] TransUnion
consumer report without a permissible purpose" (D.I. 1 at~ 42), without more, does not satisfy
this burden. The complaint does not allege any facts to suggest that Northland did not intend to
collect a debt from plaintiff. Indeed, the complaint affirmatively alleges that Northland contacted
Plaintiff in an effort to collect a debt. (D.I. 1 at~ 26). Although Plaintiff may subjectively
believe that Northland only wanted Plaintiffs personal information, she must support that belief
with some factual allegations. Ashcroft v. Iqbal, 556 U.S. 662 (2009). She has failed to do so
and, accordingly, judgment must be entered in favor of Northland as to her claim that Northland
violated § 1681 b(f).
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Plaintiffs claim that Northland violated§ 1681s-2 also fails. 4 Although Plaintiff raises
this claim in Count III of her Complaint (D.I. 1 at~ 76), Plaintiff nowhere addresses it in her
brief. Plaintiffs claim rests on her allegation that Northland failed to indicate that Plaintiff
disputed the alleged account. Section 1681s-2(a)(3) provides: "lfthe completeness or accuracy
of any information furnished by any person to any consumer reporting agency is disputed to such
person by a consumer, the person may not furnish the information to any consumer reporting
agency without notice that such information is disputed by the consumer." First, Plaintiffs claim
fails because there is no private right of action to enforce§ 1681s-2(a)(3). See 15 U.S.C. 1681s2(d) (setting forth that enforcement of§ 1681s-2(a) lies exclusively with federal and state
agencies and officials); see also Wright v. Portfolio Recovery Affiliates, 2011 WL 1226115, at *3
(D. Del. March 30, 2011). Even assuming there was a private right of enforcement, as discussed
in connection with Plaintiffs claim that Northland violated§ 1692e(8) ofthe FDCPA, Northland
had no duty to report that the debt was disputed. The complaint does not allege that Northland
elected to furnish any information to a consumer reporting agency and, therefore, Northland had
no affirmative duty to report that the debt is disputed. 5

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The Complaint alleges a violation of§ 1681s-2(f), a subsection which does not
exist. Because the Complaint alleges that Northland violated this provision of the FCRA "by
failing to indicate that the Plaintiff disputed the alleged account" (D.I. 1 at~ 76), the Court will
analyze Plaintiffs claim under § 1681 s-2(a)(3), which sets forth a duty to provide notice of a
disputed debt.
It is unclear to the Court whether Plaintiff intended to assert Counts IV and V
against Northland. Those counts appear to be addressed only to Capital One. Count V, however,
at least makes reference to Defendants (plural). To the extent Plaintiff intended to assert these
counts against Northland, these counts also fail to state a claim against Northland. For the
reasons discussed in this opinion, Northland had no duty to report that Plaintiff disputed the debt
and, therefore, cannot be liable for willful or negligent non-compliance with the FCRA reporting
requirement.
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IV.

CONCLUSION

For the reasons set forth above, the Court will grant Northland's Motion for Judgment on
the Pleadings Pursuant to Fed. R. Civ. P. 12(c). An order consistent with this Opinion will be

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