Dash v. Midland Funding LLC

Filing 33

ORDER granting 15 Defendant's Motion to Dismiss. Plaintiff's Complaint is dismissed, with leave to amend. Plaintiff may file an amended complaint within fourteen (14) days of the date of this Order, which cures the deficiencies discussed herein. Signed by Judge Charlene Edwards Honeywell on 3/3/2017. (JJH)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
NIKI DASH,
Plaintiff,
v.

Case No: 8:16-cv-2128-T-36AAS

MIDLAND FUNDING LLC,
Defendant.
___________________________________/
ORDER
This matter comes before the Court upon the Defendant's Motion to Dismiss (Doc. 15), to
which Plaintiff filed a response in opposition (Doc. 17) and Defendant replied (Doc. 25). In the
motion, Defendant argues that Plaintiff’s Complaint does not state a claim for relief because it
contains conclusory allegations that its reporting of a purported improper creditor classification
code under the Metro II Credit Reporting Resource Guide violates the Fair Debt Collection
Practices Act. The Court, having considered the motion and being fully advised in the premises,
will grant Defendant's Motion to Dismiss.
I.

STATEMENT OF FACTS 1

On or about July 2009, Plaintiff Niki Dash allegedly incurred debt to Chase Bank, N.A.
(“Chase”) relating to credit card charges for the purchase of consumer goods and services primarily
for personal, family, or household purposes. Doc. 2 at ¶¶ 10, 12. On July 27, 2010, Chase
transferred the debt to Defendant Midland Funding, LLC (“Midland”). Chase conveyed the nature
of the debt to Midland. Id. at ¶ 14. On May 19, 2016, Midland reported the debt to Trans Union, a

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The following statement of facts is derived from the Complaint (Doc. 1), the allegations of which the Court must
accept as true in ruling on the instant Motion. See Linder v. Portocarrero, 963 F.2d 332, 334 (11th Cir. 1992); Quality
Foods de Centro Am., S.A. v. Latin Am. Agribusiness Dev. Corp. S.A., 711 F. 2d 989, 994 (11th Cir. 1983).

credit reporting agency (“CRA”). Id. at ¶ 15. Midland reports its debt to CRAs using “Metro II”
reporting language which includes certain creditor classification codes (“CCC”) in its Credit
Reporting Resource Guide (“CRRG”). Id. at ¶¶ 16-17. The CRRG assigns “01” as the CCC for
debts related to retail transactions and “12” for debts related to financial transactions. Id. at ¶ 19.
Dash alleges that Midland reported the incorrect code for his alleged debt, and that the
misrepresentation of a CCC could confuse unsophisticated consumers about the nature of the
alleged debt owed. Id. at ¶ 20. Based on those factual allegations, Dash seeks relief for violations
of 15 U.S.C. § 1692e(2)(a), § 1692e(8), and § 1692e(10) due to Midland’s false representation
about the character of his alleged debt. Id. at ¶¶ 26-27.
II.

LEGAL STANDARD

To survive a motion to dismiss, a pleading must include a “short and plain statement of the
claim showing that the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009)
(quoting Fed. R. Civ. P. 8(a)(2)). Labels, conclusions and formulaic recitations of the elements of
a cause of action are not sufficient. Id. (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
(2007)). Furthermore, mere naked assertions are not sufficient. Id. A complaint must contain
sufficient factual matter, which, if accepted as true, would “state a claim to relief that is plausible
on its face.” Id. (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility 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. (citation omitted). The court, however, is not
bound to accept as true a legal conclusion stated as a “factual allegation” in the complaint. Id.
III.

DISCUSSION

Midland argues that Dash’s Complaint does not state a claim for relief under the FDCPA.
The Metro II CRRG provides certain industry standards for the reporting of credit information by

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furnishers to CRAs. Midland argues that Dash has not identified any provision in the FDCPA or
the CRRG which mandates its use of code “12” to identify the original creditor in this case. And,
Midland argues, there is no allegation to support the contention that classifying the underlying debt
as “retail” was false or improper because the CRRG does not define the CCCs.
The FDCPA prohibits unfair or unconscionable collection methods, conduct which
harasses, oppresses or abuses any debtor, and the making of any false, misleading, or deceptive
statements in connection with a debt, and it requires that collectors make certain disclosures. 15
U.S.C. §§ 1692d, 1692e, 1692f. The FDCPA applies to “debt collectors,” defined as “any person
who uses any instrumentality of interstate commerce or the mails in any business the principal
purpose of which is the collection of any debts, or who 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). Section 1692e generally prohibits the use of any false, deceptive, or misleading
representations or means to collect a debt. Id. at § 1692e.
To state a claim under the FDCPA, a plaintiff must allege: “(1) the plaintiff has been the
object of collection activity arising from consumer debt, (2) the defendant is a debt collector as
defined by the FDCPA, and (3) the defendant has engaged in an act or omission prohibited by the
FDCPA.” Fuller v. Becker & Poliakoff, P.A., 192 F. Supp. 2d 1361, 1366 (M.D. Fla. 2002); see
also Bohringer v. Bayview Loan Servicing, LLC, 141 F. Supp. 3d 1229, 1235 (S.D. Fla. 2015).
As for Plaintiff’s specific FDCPA claims, section 1692e(2)(a) prohibits “false
representation of … the character, amount, or legal status of any debt[.]” 15 U.S.C. § 1692e(2)(a).
Section 1692e(8) prohibits “[c]ommunicating or threatening to communicate to any person credit
information which is known or which should be known to be false, including the failure to
communicate that a disputed debt is disputed.” Id. at § 1692e(8). And § 1692e(10) prohibits “[t]he

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use of any false representation or deceptive means to collect or attempt to collect any debt or to
obtain information concerning a consumer.” Id. at § 1692e(10). All of Dash’s claims are based on
Defendant’s failure to use the correct classification code to describe the original creditor in its
report to the CRA which allegedly violates § 1692e because it does not communicate that the debt
derived from a creditor who is in the financial industry as opposed to the retail industry. See Doc.
2 at ¶¶ 25-27.
The parties do not dispute, and the Court will assume for purposes of the Motion, that Dash
was the object of debt collection activity, and Midland is a debt collector as defined by the FDCPA.
But Dash’s claims do not sufficiently allege that Midland engaged in an act or omission prohibited
by the FDCPA. The Complaint’s conclusory allegations do not lend factual support as to why
Midland’s failure to follow the Metro 2 guidelines is a violation of the FDCPA. Several courts
have examined this issue and found that the allegations that a creditor did not follow industry
standards or otherwise erroneously reported information to a CRA were insufficient to state a claim
under the FDCPA. See, e.g., Lee v. Sec. Check, LLC, 3:09-CV-421-J-12TEM, 2010 WL 3075673,
at *8 (M.D. Fla. Aug. 5, 2010) (“The [FDCPA] does not purport to impose civil liability for
furnishing erroneous information to a credit reporting agency or for failing to correct erroneous
information

provided

to

a

credit

reporting

agency.”);

Acosta

v.

Campbell,

6:04CV761ORL28DAB, 2006 WL 146208, at *13 (M.D. Fla. Jan. 18, 2006) 2 (“The FDCPA does
not prohibit a debt collector from communicating to agencies, and a communication, in and of
itself, to a consumer reporting agency, does not support a cause of action under the FDCPA.”)
(quoting In re Creditrust Corp., 283 B.R. 826, 832 (Bkrtcy. D.Md. 2002)).

2

The Court ultimately found that the Plaintiff stated a claim for violation of § 1692e(8) based on the allegation that
the plaintiff notified the defendant that he disputed the debt and the defendant did not communicate that dispute to the
CRA. Plaintiff in this case does not allege those facts.

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Although Midland relies on two cases that dealt with the Fair Credit Reporting Act as
opposed to the FDCPA, the Court finds them persuasive regarding the proposition that a debt
collector’s failure to comply with industry practices does not equate to a violation of the law. See
Mestayer v. Experian Info. Sols., Inc, 15-CV-03645-EMC, 2016 WL 631980, at *4 (N.D. Cal. Feb.
17, 2016) (“Ms. Mestayer has failed to point to any authority indicating that a failure to comply
with an industry standard is a failure to comply with the law. Furthermore, other courts have
rejected an attempt to rely on the Metro 2 standard.”); Mortimer v. Bank of Am., N.A., C-12-01959
JCS, 2013 WL 1501452, at *12 (N.D. Cal. Apr. 10, 2013)(concluding that “Defendant's alleged
noncompliance with the Metro 2 Format is an insufficient basis to state a claim under the FCRA”;
noting, e.g., that “Plaintiff has not pled any basis to conclude that...any entity would have expected
Defendant to report in compliance with the [Consumer Data Industry Association] guidelines”).
See also Giovanni v. Bank of Am., Nat. Ass'n, C 12-02530 LB, 2013 WL 1663335, at *3 (N.D. Cal.
Apr. 17, 2013) (dismissing plaintiff’s claims and noting that “the [complaint] does not allege that
[defendant] was required to follow the Metro 2 Format, the [Consumer Data Industry
Association]'s instructions on credit reporting, or that deviation from those instructions constitutes
an inaccurate or misleading statement.”).
In this case, the Complaint does not allege any facts to support the contention that the
classification code of “01” for the underlying debt is false, i.e. details of the transactions which
form the basis of the alleged debt from which the Court could infer that they were financial
transactions and not retail. Exhibit C to the Complaint is a list of the classification codes, but it
contains no definition as to what constitutes “retail” versus “financial”. See Doc. 2 at 10. Further,
there are no allegations that Dash disputed the debt or that Midland failed to notify the credit

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reporting agencies of the dispute from which the Court could construe the complaint as violating
§1692e(8).
The Complaint’s allegations, without more, are insufficient to state a claim. At this early
point in the litigation, the Court cannot conclude that any purported misrepresentations based on
using the wrong classification code fail as a matter of law or that the allegedly false statement is
immaterial. 3 Plaintiff will be given one opportunity to amend his complaint to allege more facts in
support of his claim under the FDCPA.
Accordingly, it is ORDERED:
1.

Defendant's Motion to Dismiss (Doc. 15) is GRANTED.

2.

Plaintiff’s Complaint is dismissed, with leave to amend. Plaintiff may file an

amended complaint within fourteen (14) days of the date of this Order, which cures the deficiencies
discussed herein.
DONE AND ORDERED in Tampa, Florida on March 3, 2017.

Copies to:
Counsel of Record and Unrepresented Parties, if any

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Although not explicitly required by the FDCPA, many courts have held that statements must be materially false or
misleading to be actionable under the FDCPA. See, e.g, Miljkovic v. Shafritz and Dinkin, P.A., 8-14-CV-635-T33TBM, 2014 WL 3587550, at *8 (M.D. Fla. July 18, 2014), aff'd on other grounds, 791 F.3d 1291 (11th Cir.
2015)(“[T]o state a § 1692e claim, the plaintiff must allege that the conduct was materially misleading.”). Anselmi v.
Shendell & Associates, P.A., 12-61599-CIV, 2015 WL 11121357, at *7 (S.D. Fla. Jan. 7, 2015), upon which Midland
relies, stands for the proposition that Plaintiff’s failure to allege materiality is fatal to his claim. The Court finds
Anselmi distinguishable; in that case the court converted the motion to dismiss to a motion for summary judgment,
and permitted evidence and additional briefing from the parties.

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