MARIENTHAL et al v. WRIGHT, LERCH & LITOW, LLP
Filing
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ORDER granting Defendants' 34 Motion to Dismiss; granting 36 Motion for Judgment on the Pleadings. For the reasons set forth above, the Defendants' motions for judgment on the pleadings are GRANTED on the venue claim and judgment will be entered in favor of the Defendants on that claim. The remainder of the claims in Count 1 are DISMISSED WITHOUT PREJUDICE for lack of subject matter jurisdiction. The Court declines to exercise supplemental jurisdiction over the state law conversion claim; accordingly, it is DISMISSED WITHOUT PREJUDICE. (S.O.). Signed by Judge William T. Lawrence on 3/1/2016. (MAC)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
MICHAEL MARIENTHAL et al.,
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) Cause No. 1:14-cv-1636-WTL-DKL
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Plaintiffs,
vs.
ASSET ACCEPTANCE, LLC, and
WRIGHT, LERCH & LITOW, LLP
Defendants.
ENTRY ON DEFENDANTS’ MOTIONS TO DISMISS
This cause is before the Court on Defendant Wright, Lerch & Litow, LLP’s (“WLL”)
Motion to Dismiss (Dkt. No. 34) and Defendant Asset Acceptance, LLC’s (“Asset”) Motion for
Judgment on the Pleadings (Dkt. No. 36). The motions are fully briefed, and the Court, being
duly advised, GRANTS the motions for the reasons set forth below.
I.
BACKGROUND
On May 23, 2011, WLL filed an action in the Perry Township Small Claims Court on
behalf of its client, Asset, against the Plaintiff. The Complaint sought to recover an unpaid credit
card debt that the Plaintiff owed. On August 3, 2011, the parties agreed to the entry of judgment
in the amount of $2,068.00 plus prejudgment interest of $1,252.70, for a total judgment of
$3,320.70, plus costs and post-judgment interest.
The Plaintiff did not pay the agreed judgment, and WLL filed a Motion for Proceedings
Supplemental on May 21, 2012. The Jewish Community Center Association (“JCCA”) was
determined to be the Plaintiff’s employer, and on August 30, 2013, the JCCA answered
interrogatories propounded to it as a garnishee defendant by WLL on behalf of Asset. On
October 18, 2013, Perry Township Small Claims Court entered a Final Order of Garnishment
directing the JCCA to garnish the Plaintiff’s wages and pay to Asset the amount set forth in the
Order.
On November 25, 2014, the Plaintiff filed a Motion to Set Aside and Revoke Final Order
of Judgment in the Perry Township Small Claims Court. The Plaintiff later withdrew that motion
on the grounds that he had filed the instant action in this court.
II.
DISCUSSION
The Plaintiff filed a three-count complaint alleging several violations of the Fair Debt
Collection Practices Act (“FDCPA”) and a state law conversion claim. 1 The Defendants seek
dismissal of all of the claims; their arguments are addressed, in turn, below.
A. Statute of Limitations
The Plaintiff alleges that WLL violated Section 1692i of the FDCPA by filing the
complaint and other legal proceedings in the wrong venue. The Plaintiff’s claim is based on
Suesz v. Med-1 Solutions, LLC, 757 F.3d 636 (7th Cir. 2014) (en banc), which held that, pursuant
to the FDCPA, 15 U.S.C. ' 1692i(a)(2), a debt collector must file the action in the small claims
court in which the debtor lived or signed the contract giving rise to the alleged debt. 2 In Newsom
v. Friedman, 76 F.3d 813 (7th Cir. 1996), the Seventh Circuit had held that Section 1692i(a)(2)
allowed a debt collector to file a collection suit in a municipal district of the Cook County Circuit
Court other than the one where the debtor resided. Id. at 819 (holding that because “the
Municipal Department districts are neither defined as judicial districts, nor . . . function as
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Count 3 of the Complaint seeks class certification pursuant to Federal Rule of Civil
Procedure 23. As no class has been certified, this ruling does not affect any party’s rights other
than the named Plaintiff.
2
The FDCPA requires debt collectors to file collection actions in the “judicial district or
similar legal entity” where the relevant contract was signed or where the debtor resides. 15
U.S.C. § 1692i(a)(2).
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judicial districts,” they “do not fit within the definition of ‘judicial district’ as employed by the
FDCPA.”). In July 2014, however, the Seventh Circuit, sitting en banc, overruled Newsom,
concluding that the statutory reference to “judicial district or similar legal entity” means the
“smallest geographic area that is relevant for determining venue in the court system in which the
case is filed.” Suesz, 757 F.3d at 643.
The Defendants argue that the Plaintiff’s claim that WLL violated 15 U.S.C. ' 1692i by
filing its debt collection action in the wrong township is barred by the statute of limitations. The
FDCPA contains a one-year statute of limitations. See 15 U.S.C. ' 1692k(d) (“an action to
enforce liability created by this subchapter may be brought . . . within one year from the date on
which the violation occurs.”) WLL filed the debt collection lawsuit on May 23, 2011, but the
Plaintiff did not file his FDCPA complaint until October 7, 2014.
The Plaintiff argues that two principles are relevant in determining whether his claim is
barred by the statute of limitations: the discovery rule and equitable tolling. With respect to the
discovery rule, the Plaintiff argues that the relevant date is the date he discovered he had been
injured. The Plaintiff argues that, although he knew he had been sued on the date of filing, he did
not know that he had been injured until Suesz was decided in July 2014. The Plaintiff also argues
that equitable tolling applies because he could not obtain the information necessary to decide
whether the injury was actionable until March 2014, when a portion of his wages were seized.
While a plaintiff is not normally required to anticipate or defeat an affirmative defense in
his complaint, if the complaint reveals that the defendant has an “airtight defense,” it is
appropriate for the Court to dismiss the suit on the pleadings. Richards v. Mitcheff, 696 F.3d 635,
637 (7th Cir. 2012). A case may be dismissed at the pleading stage based on a statute of
limitations defense when “a complaint plainly reveals that an action is untimely under the
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governing statute of limitations.” Andonissamy v. Hewlett–Packard Co., 547 F.3d 841, 847 (7th
Cir. 2008) (quotation and citation omitted).
The FDCPA does not specify exactly when the limitations period begins to run for a
violation of the venue provision, nor has the Seventh Circuit ruled on this issue. Two circuit
courts have determined that the clock begins to run when the alleged wrongful litigation begins.
Naas v. Stolman, 130 F.3d 892, 893 (9th Cir. 1997); Johnson v. Riddle, 305 F.3d 1107, 1113
(10th Cir. 2002). As a general matter, a statute of limitations “begins to run upon injury . . . and
is not tolled by subsequent injuries.” Limestone Dev. Corp. v. Vill. of Lemont, Ill., 520 F.3d 797,
801 (7th Cir. 2008).
The Plaintiff concedes that he “knew he had been sued as of the date of the filing.” Dkt.
No. 49 at 6. Because the violation of Section 1692i was complete when the suit was filed, the
Plaintiff’s injury occurred on that date. “It does not matter whether the plaintiff knows the injury
is actionable -- he need only know that he has been injured.” Kovacs v. United States, 614 F.3d
666, 674 (7th Cir. 2010) (quotation and citation omitted). Because the Plaintiff’s complaint was
not filed until October 7, 2014, which is more than two years past the date the statute of
limitations ran, the Plaintiff’s claim is barred. As such, the Court GRANTS the Defendants’
motion for judgment on the pleadings with respect to the Plaintiff’s claim under 15 U.S.C. '
1692i. 3
WLL moved to dismiss this portion of the Plaintiff’s Complaint pursuant to Federal
Rule of Civil Procedure 12(b)(6), arguing that the Complaint fails to state a claim for which
relief can be granted. Because WLL had filed an Answer to the Complaint, the Court will treat
WLL’s motion as a Rule 12(c) motion. Asset brought its motion for judgment on the pleadings
pursuant to Federal Rule of Civil Procedure 12(c).
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B. Rooker-Feldman
The Plaintiff also alleges the following additional violations of the FDCPA: violation of
15 U.S.C. ' 1692e(10) for presenting deceptive final orders of garnishment; violation of 15
U.S.C. ' 1692c(b) for causing deceptive and misleading forms to be delivered to third persons;
violation of 15 U.S.C. ' 1692f(1) for collecting through garnishment proceedings in excess of
that which is permissible; and violation of 15 U.S.C. ' 1692 et seq. by receiving and retaining
monies garnished from the Plaintiff’s wages in excess of the amount allowed by law to be
garnished. The Defendants argue that the remainder of the Plaintiff’s federal claims in Count 1,
all related to the garnishment proceedings, should be dismissed for lack of subject matter
jurisdiction based on the Rooker-Feldman doctrine.
Under the Rooker-Feldman doctrine, there are two categories of federal claims that are
jurisdictionally barred: (1) instances where “a plaintiff[] request[s] . . . a federal district court to
overturn an adverse state court judgment”; or (2) instances where federal claims were not raised
in state court or do not require review of a state court’s decision but yet 1`are “inextricably
intertwined” with a state court judgment. Brown v. Bowman, 668 F.3d 437, 442 (7th Cir. 2012)
(citation omitted). The Rooker-Feldman doctrine “deprives federal district and circuit courts of
jurisdiction to hear ‘cases brought by state-court losers complaining of injuries caused by statecourt judgments rendered before the district court proceedings commenced and inviting district
court review and rejection of those judgments.’” Commonwealth Plaza Condo. Ass’n v. City of
Chicago, 693 F.3d 743, 745 (7th Cir. 2012) (quoting Exxon Mobil Corp. v. Saudi Basic Indus.
Corp., 544 U.S. 280, 284 (2005)). Importantly, the purpose of the doctrine is to “preclude[]
lower federal court jurisdiction over claims seeking review of state court judgments . . .
[because] no matter how erroneous or unconstitutional the state court judgment may be, the
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Supreme Court of the United States is the only federal court that could have jurisdiction to
review a state court judgment.” Taylor v. Fed. Nat’l Mortg. Ass’n, 374 F.3d 529, 532 (7th Cir.
2004) (quotation and citation omitted) (emphasis added).
The Seventh Circuit has applied the Rooker-Feldman doctrine in several cases that, like
this one, involve FDCPA claims that relate to state court judgments and garnishment orders. In
Harold v. Steel, 773 F.3d 884 (7th Cir. 2014), the Seventh Circuit held that the Rooker–Feldman
doctrine barred a federal suit attacking an Indiana state court’s garnishment order on FDCPA
grounds. In that case, an Indiana small claims court entered a judgment against the plaintiff. Id.
at 885. Nearly twenty years later, the creditor in that small claims action (who would later
become the defendant in the federal action) asked to garnish the plaintiff’s wages. Id. The small
claims court entered a garnishment order. Id. The plaintiff moved to vacate that order, but the
small claims court denied his motion. Id. Rather than appealing the small claims court’s denial,
the plaintiff filed a federal suit, claiming that the defendant creditor and his law firm had violated
the FDCPA by making false statements regarding the identity of the defendant creditor. Id. The
district court dismissed the federal suit as barred by the Rooker–Feldman doctrine. Id. The
Seventh Circuit affirmed, holding that the garnishment order was a state court judgment, entitled
to the protection of the Rooker–Feldman doctrine. Id. at 885–87. As the Seventh Circuit noted,
“Section 1692e forbids debt collectors to tell lies but does not suggest that federal courts are to
review state-court decisions about whether lies have been told. Section 1692e does not even hint
that federal courts have been authorized to monitor how debt-collection litigation is handled in
state court.” Id. at 887.
As the Defendants point out, the instant case has several similarities to Harold. The
Plaintiff, as did the plaintiff in Harold, attacks the validity of a final order of garnishment entered
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by a state small claims court. The Plaintiff, as did the plaintiff in Harold, seeks to recover as
damages amounts that were garnished from his wages pursuant to the small claims court’s order
of garnishment. As in Harold, for the Plaintiff to recover the damages claimed, the Court would
be required to determine that the small claims court erred. The Plaintiff concedes that “proof of
the Plaintiff’s claims based upon the garnishment order will require proof of the fact [of] its
invalidity.” Dkt. No. 49 at 8. The Rooker-Feldman doctrine prohibits such a result.
Further, while “federal courts retain jurisdiction to award damages for fraud that imposes
extrajudicial injury,” Iqbal v. Patel, 780 F.3d 728, 730 (7th Cir. 2015), the Plaintiff’s complaint
alleges no extrajudicial injury. Thus, no exception to the Rooker-Feldman doctrine applies. The
Court simply has no jurisdiction to review the state court’s actions. As such, the remainder of the
Plaintiff’s federal claims will be dismissed.
C. The State Conversion Claim
The only remaining claim is the Plaintiff’s state law claim of conversion. The Court’s
jurisdiction over this claim is based upon 28 U.S.C. ' 1367, which provides for the exercise of
supplemental jurisdiction over claims based on state law that are closely related to the federal
claim(s) in a case. However, “[w]hen the federal claim in a case drops out before trial, the
presumption is that the district judge will relinquish jurisdiction over any supplemental claim to
the state courts.” Leister v. Dovetail, Inc., 546 F.3d 875, 882 (7th Cir. 2008). There are
exceptions to that general rule, and the court should decide the merits of a supplemental state
claim when (1) the statute of limitations has run, precluding the filing of a separate suit in state
court; (2) substantial judicial resources have already been committed, so that sending the case to
another court will cause a substantial duplication of effort; or (3) when it is “absolutely clear”
how the state claims should be decided. Davis v. Cook Cty., 534 F.3d 650, 654 (7th Cir. 2008).
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None of those exceptions apply here. Accordingly, the Court declines to exercise supplemental
jurisdiction over the state law claims asserted in the Plaintiff’s Complaint.
III.
CONCLUSION
For the reasons set forth above, the Defendants’ motions for judgment on the pleadings
are GRANTED on the venue claim and judgment will be entered in favor of the Defendants on
that claim. The remainder of the claims in Count 1 are DISMISSED WITHOUT PREJUDICE
for lack of subject matter jurisdiction. The Court declines to exercise supplemental jurisdiction
over the state law conversion claim; accordingly, it is DISMISSED WITHOUT PREJUDICE.
SO ORDERED: 3/1/16
_______________________________
Hon. William T. Lawrence, Judge
United States District Court
Southern District of Indiana
Copies to all counsel of record via electronic communication.
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