Fulk v. Cavalry Portfolio Services, LLC et al

Filing 21

MEMORANDUM OPINION & ORDER: 1. defendant's 6 MOTION to Dismiss for failure to state a claim is GRANTED in part and DENIED in part as set forth herein; 2. plaintiff's claims alleging violations of 15 U.S.C. § 1692e(5), and 15 U.S.C. §§ 1692e and 1692f for seeking to collect a time-barred debt, are DISMISSED, with prejudice. Signed by Judge Danny C. Reeves on 10/21/2014.(STC)cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION
(at Lexington)
KYLE FULK,
Plaintiff,
V.
LVNV FUNDING LLC,
Defendant.

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Civil Action No. 5: 14-125-DCR

MEMORANDUM OPINION
AND ORDER

*** *** *** ***

This matter is pending for consideration of Defendant LVNV Funding LLC’s

(“LVNV”) motion to dismiss. [Record No. 6] The defendant seeks to dismiss Plaintiff Kyle
Fulk’s Complaint, arguing that it fails to state a claim upon which relief may be granted
under Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons outlined below,
the defendant’s motion will be granted in part and denied in part.
I.
On July 22, 2013, LVNV filed a Complaint in the Fayette District Court in an attempt
to collect an alleged debt (“Yamaha Account”) owed by Fulk. [Record No. 8-1, p. 2] The
debt arose when, on November 18, 2008, Fulk stopped making payments on a credit card
issued by HSBC Bank Nevada, N.A./Yamaha-RBP (“HSBC”).1 [Record No. 1, p. 4 ¶ 28;

1
At the time relevant to this action, Fulk was a resident of Ohio. He remained an Ohio resident
until February of 2010, when he moved to Kentucky. [Record No. 11, pp. 5, 25]
-1 

Record No. 8, p. 2] Upon his failure to pay the amount due, on June 30, 2009, HSBC
“charged-off”2 the $3,487.67 debt.3 [Record No. 1, p. 4 ¶ 28; Record No. 8, p. 2]
On July 14, 2009, HSBC sold the Yamaha Account to the defendant, a company that
purchases charged-off debts, for around $173.00. [Record No. 1, p. 5 ¶37; Record No. 11, p.
13] At the time the debt was sold, the total amount due remained $3,487.67, indicating that
HSBC did not charge any interest on the account from the June 30, 2009 charge-off date,
until LVNV bought the debt. On July 22, 2013, LVNV filed a Complaint in the Fayette
District Court, seeking to recover the full debt ($3,487.67), plus statutory prejudgment
interest under KRS § 360.010. [Record No. 8-1, p. 2] The state court Complaint alleges, in
its entirety:
1.

The Defendant(s) is indebted to the Plaintiff under an agreement or
account.

2.

Lvnv Funding LLC purchased this account. The original credit grantor
is HSBC Bank Nevada, N.A./Yamaha-RBP.

3.

Defendant(s) has failed to pay the Plaintiff the remaining balance of its
account in the sum of $3,487.67, plus accrued interest in the amount of
$.00, together with interest at the annual rate of 8% from June 30, 2009,
until the date of Judgment, then at 12% per annum on the Judgment
until satisfied.

WHEREFORE, Plaintiff respectfully demands Judgment against the
Defendant(s) for the sums, plus interest as set forth above, court costs and any
other relief to which it may appear entitled.

2
“Creditors charge-off debt in accordance with federal regulations that permit the creditor to
remove the debt from their financial records.” McDonald v. Asset Acceptance LLC, No. 2:11-cv-13080,
2013 WL 4028947, at *1 (E.D. Mich. Aug. 7, 2013).
3
Fulk’s Complaint listed the charged-off debt as $3,488.00. [Record No. 1, p. 4 ¶35] However,
the plaintiff later acknowledged that the true amount charged-off was $3,487.67. [Record No. 11, p. 5]
-2 

[Id.] On March 3, 2014, Fulk received a consumer credit report issued by Creditexpert, Inc.,
in conjunction with an application for a home loan or loan modification. [Record No. 1, p. 3
¶12] The report stated that $4,771.00 was the amount due and owing on the Yamaha
Account as of February 2014: an increase of $1,283.33. [Id., p. 5 ¶38]
On March 28, 2014, Fulk filed the current action against LVNV. [Record No. 1] He
alleges that LVNV’s state court action is barred by the applicable statute of limitations. [Id.,
p. 4 ¶ 31] Further, he contends that LVNV violated the Fair Debt Collection Practices Act
(“FDCPA”) by seeking statutory prejudgment interest in the state court action and by
including prejudgment interest in the March 3, 2014 credit report. [Id., p. 4 ¶ 32, 33]
Specifically, Fulk maintains that LVNV violated the FDCPA by: (i) falsely representing the
character, amount, or legal status of Fulk’s debt, in violation of 15 U.S.C. § 1692e(2)(A); (ii)
threatening to take an “action that cannot legally be taken,” in violation of 15 U.S.C. §
1692e(5); (iii) communicating or threatening to communicate personal credit information
which is known or which should be known to be false, in violation of 15 U.S.C. § 1692e(8);
(iv) using false representation or deceptive means to collect or attempt to collect a debt, in
violation of 15 U.S.C. § 1692e(10); (v) attempting to collect interest on a debt that is neither
authorized by agreement nor permitted by law, in violation of 15 U.S.C. 1692f(1); and (vi)
filing suit to collect a debt barred by the applicable statute of limitations, in violation of 15
U.S.C. §§ 1692e and 1692f. [Record No. 1, pp. 6–7]
LVNV argues that Fulk’s claims should be dismissed because the four-year statute of
limitations set out in KRS § 355.2-724 does not apply to an account or agreement for the
extension of credit.

[Record No. 8, pp. 4–12]
-3-

Additionally, it contends that Fulk’s

allegations regarding interest do not rise to a violation of the FDCPA and that state court
actions under an agreement or account are liquidated and allow for prejudgment interest.
[Id., pp. 12–14; Record No. 14, pp. 2–7] Fulk responds that his Complaint states actionable
violations of the FDCPA and that the motion to dismiss should be denied. [Record No. 11]
II.
When evaluating a motion to dismiss under Rule 12(b)(6), the Court must determine
whether the complaint alleges “sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The plausibility standard is met “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. (citing Twombly, 550 U.S. at 556).
Although the complaint need not contain “detailed factual allegations” to survive a motion to
dismiss, “a plaintiff’s obligation to provide the grounds of his entitlement to relief requires
more than labels and conclusions, and a formulaic recitation of the elements of a cause of
action will not do.” Twombly, 550 U.S. at 555 (internal quotation marks and alteration
omitted).
In considering a 12(b)(6) motion, the Court is required to “accept all of plaintiff’s
factual allegations as true and determine whether any set of facts consistent with the
allegations would entitle the plaintiff to relief.” G.M. Eng’rs & Assoc., Inc. v. W. Bloomfield
Twp., 922 F.2d 328, 330 (6th Cir. 1990) (citation omitted). However, the Court need not
accept as true legal conclusions cast in the form of factual allegations if those conclusions
cannot be plausibly drawn from the facts, as alleged. See Iqbal, 556 U.S. at 678 (“[T]he
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tenet that a court must accept as true all of the allegations contained in a complaint is
inapplicable to legal conclusions.”); see also Papasan v. Allain, 478 U.S. 265, 286 (1986)
(noting that in reviewing a motion to dismiss, the district court “must take all the factual
allegations in the complaint as true,” but that the court is “not bound to accept as true a legal
conclusion couched as a factual allegation”). Thus, Rule 12(b)(6) essentially “allows the
Court to dismiss, on the basis of a dispositive issue of law, meritless cases which would
otherwise waste judicial resources and result in unnecessary discovery.”

Glassman,

Edwards, Wade & Wyatt, P.C. v. Wolf Haldenstein Adler Freeman & Herz, LLP, 601 F.
Supp. 2d 991, 997 (W.D. Tenn. 2009).
III.
A. Statute of Limitations
Fulk alleges that LVNV’s civil action is barred by the applicable statute of
limitations. [Record No. 1, p. 7] The initial purchase leading to the Yamaha Account
occurred in Ohio on October 1, 2006. [Record No 11, p. 25] At that time and until February
of 2010, Fulk was a resident of Ohio before moving to Kentucky. Thus, on July 14, 2009,
while Fulk was still living in Ohio, HSBC sold the debt to LVNV. LVNV filed suit for
collection of the debt on July 22, 2013. [Record No. 8-1, p. 2] Fulk argues that the purchase
of the ATV qualifies as a purchase-money security interest under Article 9 of Ohio’s U.C.C.,
ORC § 1303.103, and that the applicable statute of limitations is four years under U.C.C § 2725.4 [Record No. 11, p. 26] In the alternative, he alleges that the four-year statute of

4
It is not contested that the cause of action in this case arose more than four years before LVNV
filed its Complaint in state court.
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limitation applies under KRS §355.2-725 for breach of contract on a sale. LVNV claims that
the debt qualifies as an account and that regardless of the state law applied (either Ohio or
Kentucky), the applicable statute of limitations is more than four years, allowing for the state
court claim to be brought.
The debt at issue results from Fulk’s failure to pay a debt owed on a credit card,
financed by HSBC, for the purchase of an ATV. However, Fulk’s attempt to categorize the
transaction as a sale of goods fails.

May Co. v. Trusnik, 375 N.E.2d 72, 75 (Ohio Ct. App.

1977) (“[W]hen the purchase money is advanced by a third party . . . an action to recover a
balance due is removed from Article 2 of the U.C.C.). The creation of a credit card leading
to an underline debt is distinct and independent from the sale of goods. See Fisher Sand and
Gravel Co. v. Neal A. Sweebe, Inc., 837 N.W.2d 244 (Mich. 2013) (describing the difference
between an account resulting from debt on a credit card and a sale of goods); see also
Conway v. Portfolio Recovery Assoc., LLC, Civil No. 13-07-GFVT, 2014 WL 1331370, at
*3–4 (E.D. Ky. Mar. 31, 2014) (discussing that the applicable statutes of limitations for
unwritten or written contracts apply to credit card debt).
Here, the agreement which Fulk signed twice stated that, “[b]y completing and
signing this application, you request a Card issued to you by us which will allow you to make
purchases under this account.” [Record No. 8-2, p. 2] Further, the sales slip which Fulk also
signed stated that the account holder “promise[d] to pay the Unpaid Balance plus any
Finance Charges and fees due in accordance with the terms of the Cardholder Agreement.”
[Record No. 8-3, p. 3] It is clear that the agreement between Fulk and HSBC was for the
extension of credit, resulting in an account and not a contract for the sale of goods.
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Under Ohio law, “[c]redit card agreements are contracts whereby the issuance and use
of a credit card creates a legally binding agreement.” Bank One, Columbus, N.A. v. Palmer,
579 N.E.2d 284, 285 (Ohio Ct. App. 1989). The agreement can constitute either a written or
oral contract. See Dudek v. Thomas & Thomas Attorneys & Counselors at Law, LLC, 702 F.
Supp. 2d 826, 839 (N.D. Ohio 2010). If a credit card agreement is signed by the applicant, it
may qualify as a contract in writing for statute of limitations purposes. Id. Ohio has a
fifteen-year statute of limitations for breach of a written contract. O.R.C. § 2305.06. Where
there is no evidence of the cardholder’s signature on the card application, courts have applied
Ohio’s six-year statute of limitation for oral contracts. Dudek, 702 F. Supp. 2d, at 839;
O.R.C. § 2305.07. Fulk signed the agreement with HSBC for the credit card [Record No. 82, p. 2], allowing a written contract to be found in this case. However, whether the contract
is characterized as oral or written, LVNV’s claim is not barred under Ohio law. The claim
was brought less than five years after the statute of limitations began to run, satisfying both
the six and fifteen-year periods. 5
There is a lack of controlling precedent on this issue in Kentucky. However, credit
card debts are usually treated as contracts not in writing because they lack the essential terms
necessary to create a written contract. See Conway, 2014 WL 1331370, at *3. Here, similar
to the analysis of Ohio law, the claim will not be barred regardless of how the agreement is
defined. The statute of limitations for unwritten contracts in Kentucky is five years and
fifteen years for written contracts. KRS §§ 413.120, and 413.090. LVNV brought its suit

5
Whether the date of last payment on the debt (November 18, 2008) or the date the debt was
charged-off (July 30, 2009) is used to begin the statute of limitations, the July 22, 2013, state court action
was brought within five years.
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against Fulk less than five years after the statute of limitations began to run, satisfying both
statutory provisions. In summary, regardless of whether Ohio or Kentucky law is applied in
determining the applicable statute of limitations, LVNV’s state court claim is not timebarred.
B. Statutory Prejudgment Interest
LVNV argues that it could not have violated the FDCPA by including prejudgment
interest in the March 3, 2014 credit report, because “Kentucky cases show one is entitled to
interest as a matter of law on a liquidated claim.”6 [Record No. 14, pp. 2–3] Absent an
agreement to the contrary, “[t]he legal rate of interest is eight percent (8%) per annum,”
which runs as a matter of right on a liquidated demand. KRS § 360.010. Further, interest
begins to accrue from the date of breach. Lang v. Bach, 134 S.W. 188, 191 (Ky. 1911)
(“[T]he law is now well settled that a liquidated claim, whether oral or written, carries with
it, as a matter of law, interest from the time it was due, in the absence of any agreement to
the contrary.”).
Fulk claims that, even if liquidated claims are entitled to prejudgment interest as a
matter of course, there is no right to extra-judicially accrue prejudgment interest prior to
entry of a state court judgment. [Record No. 11, pp. 8–16] LVNV asserts that it does have
the right, but relies solely on case law addressing prejudgment interest awarded by trial
courts as part of a judgment. Under Kentucky law, prejudgment interest follows as a matter
of course in claims for liquidated debt, and it “may be allowed as justice requires” in

6
Although the plaintiff sporadically objects to categorizing the debt as liquidated in his reply brief
[Record No. 11 pp. 9, 11, 13], the Court assumes arguendo that the debt is liquidated.
-8 

instances of unliquidated debt. Nucor Corp. v. General Electric Co., 812 S.W.2d 136, 144
(Ky. 1991). However, an award for either type of claim presupposes that “the trier of fact,
judge or jury, has decided both the question of breach of contract and the amount due for the
breach before reaching the question of interest as damages.” Id. Thus, a creditor may not
collect prejudgment interest from a debtor until a judgment has been awarded.
Further, equity requires a state court judgment prior to an award of prejudgment
interest. Allowing extra-judicial accrual of interest would not allow for disputes regarding
the amount of debt or when the right to prejudgment interest begins to run to be brought
before a trier of fact. Id. Instead, it would provide creditors with the ability to unilaterally
impose statutory prejudgment interest rates on debt claims without judicial oversight. Such
as result is not supported by Kentucky law. Accordingly, the Court concludes that, although
statutory prejudgment interest is available as a matter of course for liquidated claims under
Kentucky law, it was not proper for LVNV to include it prior to receiving a judgment.
C. The FDCPA
Fulk argues that LVNV violated six sections of the FDCPA by adding interest and
fees to debts it had no legal right to collect, reporting false credit information, and bringing
the state action: specifically, violations of 15 U.S.C. § 1692e(2)(A); § 1692e(5); § 1692e(8);
§ 1692e(10); § 1692f(1); and §§ 1692e, f. [Record No. 1, pp. 6–7] The FDCPA prohibits
the use of “false, deceptive, or misleading representation or means in connection with the
collection of any debt” and the “collection of any amount (including any interest, fee, charge,
or expense incidental to the principal obligations) unless such amount is expressly authorized
by the agreement creating the debt or permitted by law.” 15 U.S.C. §§ 1692e, f(1). Where a
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plaintiff brings claims under the FDCPA, the claims are tested under the “least sophisticated
consumer” standard; that is, “whether the least sophisticated consumer would be misled by
the defendant’s actions.” Wallace v. Wash. Mut. Bank, F.A., 683 F.3d 323, 326–27 (6th Cir.
2012) (internal quotation marks omitted).

The purpose of the FDCPA is to protect

consumers from abusive, deceptive, and unfair debt collection practices. 15 U.S.C. § 1692 et
seq. The abusive debt collection practices which the FDCPA seeks to remedy includes
“obscene or profane language, threats of violence, telephone calls at unreasonable hours,
misrepresentation of a consumer’s legal rights, disclosing a consumer’s personal affairs to
friends, neighbors, or an employer, obtaining information about a consumer through false
pretense, impersonating public officials and attorneys, and simulating legal process.” Miller
v. Javitch, Block & Rathbone, 561 F.3d 588, 591 (6th Cir. 2009).
Five of Fulk’s claims arise out of a credit report provided by LVNV on March 3,
2014. The Sixth Circuit has assumed, without concluding, that reporting a debt to a credit
agency constitutes a “collection activity” under the FDCPA. Purnell v. Arrow Fin’l Servs.,
LLC, 303 F. App’x 297, 304 n.5 (6th Cir. 2008); see also Sullivan v. Equifax, Inc., CIV.A.
01-4336, 2002 WL 799856, *4 (E.D. Pa. Apr. 19, 2002) (“Because reporting a debt to a
credit report agency can be seen as a communication in connection with the collection of a
debt, the reporting of such a debt in violation of the provisions of § 1692e(8) can subject a
debt collector to liability under the FDCPA.”).
1. 15 U.S.C. § 1692e(2)(A)
Fulk contends that LVNV violated § 1692e(2)(A) by “falsely representing to one or
more consumer reporting agencies that [his] debt was subject to prejudgment interest prior to
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entry of a judgment awarding LVNV prejudgment interest.”7 [Record No. 20]; 15 U.S.C. §
1692e(2)(A) (“A debt collector may not . . . [make a] false representation of–the character,
amount, or legal status of any debt.”). LVNV claims that Fulk cannot state a claim based on
the accrual of statutory prejudgment interest because it is allowed under Kentucky law as a
matter of right on liquidated claims.8
In support of its motion to dismiss, LVNV cites this Court’s decision in Stratton v.
Portfolio Recovery Assoc., No. 5:13-147-DCR, 2013 WL 6191804 (E.D. Ky. Nov. 26, 2013),
for the proposition that a “state court complaint requesting legal interest [does] not violate
the FDCPA.” [Record No. 14, p. 3] However, in Stratton, the Court’s decision was based at
least in part on the idea that a state court action “for prejudgment interest constitutes a
request and not an unsupervised demand.” Id. at *5. Further, Fulk’s allegation under §
1692e(2)(A) does not stem from a state court action but from an unsupervised demand for
prejudgment interest in the March 3 credit report.
As stated earlier, while LVNV is entitled to collect prejudgment interest on a
liquidated delinquent account, it had no legal right to do so prior to a trial court judgment
awarding the interest. As the court noted in Grace v. LVNV Funding, LLC, No. 3:13-cv1021-H, 2014 WL 2167487, at *5 (W.D. Ky. May 23, 2014), “[the] act of reporting an

7
The plaintiff also asserts that the defendant has imposed an unlawful amount of prejudgment
interest (nearly 14%) as opposed to the 8% available under KRS § 360.010. However, as noted by the
defendant in their response, straight line interest of 8% on the $3,487.67 account balance over 4 years and
218 days rounds to $1,283.00. [Record No. 14, p. 7] This is the amount included by the defendant in the
credit report.
8
LVNV does not contest each claim individually but makes broad arguments concerning all of the
claims brought under §§ 1692e and 1692f. 
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amount owing that include[s] an unlawful amount of disguised interest apparently violates [§
1692e(2)(A)] of the FDCPA.” Therefore, Fulk has stated a valid claim under Rule 12(b)(6)
for a violation of § 1692e(2)(A).
2. 15 U.S.C. § 1692e(5)
Section 1692e(5) prohibits a debt collector from “[making a] threat to take any action
that cannot legally be taken.” LVNV contends that it had a right to prejudgment interest as a
matter of course under Kentucky law and, as a result, did not threaten any illegal action.
Fulk alleges that LVNV threatened to collect prejudgment interest by providing negative
credit information about Fulk to consumer reporting agencies and accruing prejudgment
interest assessed under Kentucky law while he was a resident of Ohio. [Record No. 11, p.
25]
Fulk fails to provide any binding or persuasive authority supporting his assertion that
inaccurately reporting a debt to a credit report agency qualifies as a threat under the FDCPA.
LVNV included prejudgment interest that could not be accrued prior to a state court
judgment in the credit report. However, it commenced its state court action on the debt
nearly eight months before providing the credit report. Even viewing LVNV’s actions
through the lens of the least sophisticated consumer, Fulk could not have believed that the
credit report was a threat to take unlawful action when LVNV had already brought the action
in state court. Thus, Fulk fails to state a claim under § 1692e(5).
3.

15 U.S.C. § 1692e(8)

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.” Fulk
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contends that LVNV violated § 1692e(8) by communicating false information regarding the
Yamaha Account to reporting agencies and by accruing interest under Kentucky law while
Fulk resided in Ohio. LVNV again asserts that no violation occurred because it had a right to
prejudgment interest as a matter of course.
As stated earlier, LVNV has not provided any authority supporting its argument that it
could accrue prejudgment interest prior to entry of a state court judgment. Further, LVNV’s
own Complaint in the state court action recognized that interest could not accrue prior to a
state court ruling. LVNV asserted that no interest had accrued on the debt at the time of the
filing and instead sought prejudgment interest of 8% prior to the date of judgment and 12%
following the judgment until the debt was satisfied. [Record No. 8-1, p. 2] The state court
Complaint implicitly acknowledged that LVNV was aware that it had no right to
prejudgment interest prior to entry of a state court judgment, but LVNV still reported
$4,771.00 to Creditexpert, Inc., as the amount due on the Yamaha Account. Further, the
credit report failed to distinguish prejudgment interest it had extra-judicially accumulated
from the underlying debt.

As a result, Fulk has stated a claim under § 1692e(8) for

communicating credit information known to be false. See Grace, 2014 WL 2167487, at *5
(“[The] act of reporting an amount owing that include[s] an unlawful amount of disguised
interest apparently violates [§ 1692e(8)] of the FDCPA . . . .”).
4. 15 U.S.C. § 1692e(10)
Section 1692e(10) prohibits “[t]he use of any false representation or deceptive means
to collect or attempt to collect any debt.” Fulk contents that LVNV violated this statutory
section by falsely representing that his debt was subject to prejudgment interest to one or
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more reporting agencies. [Record No. 11, p. 22] And again, LVNV contends that it had the
right to collect prejudgment interest as a matter of course under Kentucky law.
Most cases brought under § 1692e(10) involve the phrasing of dunning letters and are
not helpful in this context. See, e.g., Boyd v. Wexler, 275 F.3d 642, 644 (7th Cir. 2001).
However, as previously noted, the Sixth Circuit has assumed that reporting a debt to a credit
agency constitutes a “collection activity” under the FDCPA. Purnell, 303 F. App’x at 304
n.5; see also Williams v. LVNV Funding, LLC, No. 14-cv-01356-MEH, 2014 WL 4066612,
at *3–6 (D.Co. Aug. 14, 2014). In his Complaint, Fulk contests the amount of debt included
in the credit report because of the addition of interest or fees to the debt that LVNV had no
legal right to collect. [Record No. 1, p. 7] Further, as stated previously, LVNV’s state court
action implicitly acknowledged that it did not have the right to prejudgment interest until a
judgment had been ordered. By including prejudgment interest in the credit report, LVNV
used a false representation in an attempt to collect the debt owed. Thus, Fulk has stated a
claim under § 1692e(10).
5. 15 U.S.C. § 1692f(1)
LVNV also argues that Fulk has failed to state a claim under § 1692f(1). Section
1692f(1) states:
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.

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15 U.S.C. § 1692f(1). “In other words, if the agreement does not expressly authorize or state
law does not permit the amounts sought, [Plaintiff] has stated a viable claim under §
1692f(1).” Chulsky v. Hudson Law Offices, 777 F. Supp. 2d 823, 832 (D.N.J. Mar. 22, 2011)
(internal quotation marks omitted).
Here, Fulk alleges that by including prejudgment interest in the credit report, LVNV
attempted to collect prejudgment interest that was not authorized by state law and that was
greater than the amount owed at the time. [Record No. 11, p. 23] In its state court action,
LVNV does not request any interest under the agreement and only requests prejudgment
interest.

[Record No. 8-1]

As stated above, LVNV did not have a right to collect

prejudgment interest prior to entry of a judgment, and the Sixth Circuit has assumed that
reporting a debt qualifies as a “collection activity.” Purnell, 303 F. App’x at 304 n.5. By
including prejudgment interest in the credit report, LVNV attempted to collect an amount of
debt which was not authorized by state law. See Currier v. First Resolution Inv. Corp., 956
F. Supp. 2d 747, 752 (E.D. Ky. 2013) (stating that efforts to collect an amount that is not
authorized by law states a claim under § 1692f(1)); see also Grace, 2014 WL 2167487, at *5
(“[The] act of reporting an amount owing that include[s] an unlawful amount of disguised
interest apparently violates [§ 1692f(1)] of the FDCPA . . . .”). Therefore, Fulk has stated a
viable claim under § 1692f(1).
6. 15 U.S.C. §§ 1692e, 1692f
Fulk’s final claim alleges that LVNV violated §§ 1692e and 1692f by filing suit on a
time-barred debt in the Fayette District Court.

The Sixth Circuit has not specifically

addressed whether such action violates the FDCPA, but many jurisdictions have found that
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brining such a claim can constitute a violation of § 1692e. See Hall v. LVNV Funding, LLC,
No. 3:13-CV-00399-H, 2013 WL 5550838, at *2 (W.D. Ky. Oct. 8, 2013) (“Generally, a
violation is found when the debt collector knew or should have known the lawsuit was timebarred.”); Jackson v. Midland Funding, LLC, 754 F. Supp. 2d 711, 715 (D.N.J. 2010).
However, as stated above, the statute of limitations had not run on LVNV’s state court action
under either Ohio or Kentucky law. As a result, Fulk has failed to state a claim under §§
1692e or 1692f for bringing suit on a time-barred debt.
IV.
For the foregoing reasons, it is hereby
ORDERED as follows:
1.

The defendant’s motion to dismiss [Record No. 6] is GRANTED in part and

DENIED in part as set forth above.
2.

As outlined above, the plaintiff’s claims alleging violations of 15 U.S.C. §

1692e(5), and 15 U.S.C. §§ 1692e and 1692f for seeking to collect a time-barred debt, are
DISMISSED, with prejudice.
This 21st day of October, 2014.

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