Stennett v. Midland Funding, LLC

Filing 17

MEMORANDUM OPINION signed by Senior Judge Charles R. Simpson, III on 3/29/2017, re Defendant's 7 MOTION TO DISMISS.cc: Counsel (RLK)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE
MICHAEL STENNETT

PLAINTIFF

CIVIL ACTION NO. 3:16-CV-00656-CRS

v.

MIDLAND FUNDING, LLC

DEFENDANT

MEMORANDUM OPINION
I.

Introduction

Michael Stennett filed this claim alleging violations of the Fair Debt Collection Practices
Act (FDCPA), 15 U.S.C. § 1692, et seq. Compl. ¶ 1, ECF No. 1.1 Midland Funding, LLC
(“Midland”) moves to dismiss for failure to state a claim under Federal Rule of Civil Procedure
12(b)(6), asserting that Stennett’s complaint is barred by the FDCPA’s one-year statute of
limitations. Mot. Dismiss 1, ECF No. 7. Stennett responded, ECF No. 14. Midland replied, ECF
No. 16. For the reasons below, the Court will grant Midland’s motion to dismiss and will dismiss
Stennett’s claims with prejudice.
II.

Legal Standard

Federal Rule of Civil Procedure 12(b)(6) permits a party to move to dismiss a cause of
action for “failure to state a claim upon which relief can be granted.” To survive a motion to
dismiss, a complaint must contain sufficient facts to state a claim that is “plausible on its face.”
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Stennett also cites to Kentucky Revised Statutes § 360.020 in the introduction of his complaint.
See Compl. ¶ 1, ECF No. 1. This is the sole mention of the statute in his complaint. Stennett fails
to show entitlement to relief on the basis of this statute. Moreover, he asserts that this Court has
jurisdiction under 28 U.S.C. § 1331, the statute allowing for federal question jurisdiction.
Because Stennett does not fully address this claim in his complaint and has not shown this Court
why it has subject matter jurisdiction over the state claim, the Court will dismiss this claim.
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Bell Atl. Corp. v. Twombly, 55 U.S. 544, 570 (2007). A complaint states a plausible claim for
relief when the court may “draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A court is not required to
accept legal conclusions or “threadbare recitals of the elements of a cause of action.” Id. When
resolving a motion to dismiss, the court must “construe the complaint in the light most favorable
to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the
plaintiff.” Wesley v. Campbell, 779 F.3d 421, 428 (6th Cir. 2015) (quoting Directv, Inc. v.
Treesch, 487 F.3d 471, 476 (6th Cir. 2007)). Generally, a motion to dismiss for failure to state a
claim is “an inappropriate vehicle for dismissing a claim based upon the statute of limitations.
But, sometimes the allegations in the complaint affirmatively show that the claim is timebarred.” Cataldo v. United States Steel Corp., 676 F.3d 542, 547 (6th Cir. 2012).
III.

Background

On March 9, 2010, Midland filed suit against Stennett in the Meade County, Kentucky
Circuit Court in an attempt to collect a charged-off credit card. Compl. ¶¶ 4, 6, ECF No. 1. On
December 14, 2011, Midland obtained a default judgment against Stennett. Id. ¶ 8. On December
27, 2011, Midland filed a judgment lien in connection with the default judgment. Id. ¶ 12. The
default judgment awarded Midland its court costs but did not specify an amount. Id. ¶ 15. The
judgment lien included court costs of $413.62. Id. ¶ 14. Midland did not file a bill of costs with
the court and did not serve a bill of costs on Stennett. Id. ¶¶ 19–20. On October 18, 2016,
Stennett filed the present complaint. Civil Cover Sheet, ECF No. 1-1.
Stennett alleges that Midland violated the FDCPA by (1) “including court costs in the
amount due in the Judgment Lien where no Bill of Costs was filed in the Meade Circuit Court
Case,” and (2) “maintaining a judgment lien that misrepresents the amount due in the Judgment

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Lien.” Compl. ¶ 22, ECF No. 1. Stennett cites Currier v. First Resolution Inv. Corp., 762 F.3d
529, 535 (6th Cir. 2014) for the position that “[m]aintaining an invalid lien against a debtor’s
home falls comfortably within the kinds of practices Congress has identified as unfair under [the
FDCPA].” Id.
IV.

Analysis

Midland now moves to dismiss Stennett’s complaint. Mot. Dismiss, ECF No. 7. Midland
argues that the FDCPA’s statute of limitations bars Stennett’s claim. Id. at 2. In support of this
argument, it asserts that (1) the FDCPA’s statute of limitations runs from the date the judgment
lien was filed, (2) “maintaining” a judgment lien is not a “discrete act” that starts the running of
the FDCPA’s statute of limitations each day the lien is in place, (3) the continuing-violation
doctrine does not apply to FDCPA claims, and (4) Currier does not apply to this case. Id. at 6, 9,
11, 14. Stennett responded without directly addressing Midland’s arguments. He instead argues
that it was Midland’s failure to file a bill of costs that created the FDCPA violation and that the
statute of limitations only began to run after the five years passed during which Midland could
file a bill of costs. Resp. Mot. Dismiss 2–4, ECF No. 14.
A. Whether the FDCPA’s Statute of Limitations Began to Run from the Date
Midland Filed the Judgment Lien
Turning to Midland’s first argument, it asserts that the FDCPA’s statute of limitations
began to run from the date the judgment lien was filed. Mot. Dismiss 6, ECF No. 7. The FDCPA
provides that an action to enforce liability under its provisions may be brought “within one year
from the date on which the violation occurs.” 15 U.S.C. § 1692k(d). An FDCPA claim will not
be time barred so long as it alleges “a discrete violation of the FDCPA within the limitations
period.” Purnell v. Arrow Fin. Servs., LLC, 303 F. App’x 297, 301 (6th Cir. 2008) (citations
omitted). A “later effect[] of an earlier time-barred violation” does not constitute a discrete
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violation of the FDCPA. Malone v. Cavalry Portfolio Servs., LLC, No. 3:14-CV-00428-CRS,
2015 WL 7571881, at *2 (W.D. Ky. Nov. 24, 2015) (citing Slorp v. Lerner, Sampson &
Rothfuss, 587 F. App’x 249, 259 (6th Cir. 2014)). Other courts outside this circuit have held that
filing an invalid judgment lien is a discrete violation of the FDCPA. See, e.g., Osinubepi-Alao v.
Plainview Fin. Servs., Ltd., 44 F. Supp. 3d 84, 91 (D.D.C. 2014) (holding that “the act of placing
a lien on a debtor’s property is its own separate and discrete violation”); Fontell v. Hassett, 870
F. Supp. 2d 395, 404 (D. Md. 2012) (“[I]t makes sense that the limitations period would begin at
the time the lien was placed on Plaintiff’s property, since this was the definitive action taken by
Defendants that is alleged to constitute an abusive debt collection practice.”); Weiner v. McCoon,
No. 06-CV-1328-IEG (POR), 2007 WL 2782843, at *4 (S.D. Cal. Sept. 24, 2007) (holding that
the statute of limitations began to run on the date that the lien was filed).
Midland asserts that Stennett’s FDCPA claims accrued in December 2011, when it filed
the judgment lien. Mot. Dismiss 2, ECF No. 7. Thus, Midland argues that Stennett’s complaint,
filed almost five years later, is barred by the FDCPA’s statute of limitations. Id. The Court
agrees that the most recent discrete act that Midland took, according to the complaint, was filing
the judgment lien on December 27, 2011. Compl. ¶ 12, ECF No. 1. This discrete act began the
statute of limitations period. The statute of limitations ran until December 27, 2012, before
Stennett filed suit.
B. Whether Maintaining a Judgment Lien is a Discrete Act for Purposes of
the Statute of Limitations
Second, Midland argues that “maintaining” a judgment lien is not a “discrete act” that
starts the running of the FDCPA’s statute of limitations each day the lien is in place. Mot.
Dismiss 9, ECF No. 7. Because Stennett relies upon Currier to support his “maintaining a
judgment lien” claim, see Compl. ¶ 22, ECF No. 1, the Court will now address Midland’s fourth
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argument, that Currier does not apply in this case, Mot. Dismiss 14, ECF No. 7. The Sixth
Circuit determined that, notwithstanding the defendant’s maintenance of an allegedly invalid
lawsuit, “when a debt collector initiates a deceptive, abusive, or otherwise unfair lawsuit, there is
no doubt that the FDCPA claim—insofar as it is viable—accrues on that date.” Slorp, 587 F.
App’x at 258. The appellate court held that even though the maintenance of that suit may
continue to harm the plaintiff, “the initiation of the suit was [the] discrete, immediately
actionable event.” Id. Thus, it would appear that maintaining a judgment lien is not a discrete act
for purposes of the FDCPA’s statute of limitations in the Sixth Circuit.
As to Stennett’s reliance on Currier, the Currier court held that “filing and failing to
release an invalid judgment lien against a debtor’s home while the related state court collection
action remains pending falls within the broad scope of practices prohibited by the FDCPA.” 762
F.3d 532. Thus, Stennett relies upon it for the principle that “maintaining a judgment lien” is a
valid cause of action. Compl. ¶ 22, ECF No. 1. Without deciding whether his interpretation of
the holding in Currier is valid, the Court finds that Currier does not change that the statute of
limitations begins to run after “a discrete violation of the FDCPA.” Purnell, 303 F. App’x at 301.
Because Currier is not a statute of limitations case, and the Currier court expressed no opinion
on when an FDCPA’s one-year statute of limitations expires when an allegedly invalid judgment
lien is filed and not released, this Court is not persuaded that Currier prevents the statute of
limitations from barring this cause of action.
C. Whether the Continuing-Violation Doctrine Applies to the FDCPA
Third, Midland argues that the continuing-violation doctrine does not apply to FDCPA
claims. Mot. Dismiss 11, ECF No. 7. Stennett alleges in his complaint that Midland violated the
FDCPA by “maintaining a judgment lien,” implying that Midland violated the FDCPA each day

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that it did not remove the allegedly violative judgment lien. See Compl. ¶ 22, ECF No. 1. This
allegation appears to assert that the Court should apply the “continuing-violation doctrine,”
which allows for violations “which occur beyond the limitations period” to be “actionable where
a plaintiff challenges not just one incident of unlawful conduct but an unlawful practice that
continues into the limitations period.” See Slorp, 587 F. App’x at 257 (citing Haithcock v. Frank,
958 F.2d 671, 677 (6th Cir. 1992)). But the Sixth Circuit held that the continuing-violation
doctrine does not apply to FDCPA claims. Id. at 258. Therefore, Stennett cannot rely upon the
continuing-violation doctrine to toll his limitations period.
D. Whether the Statute of Limitations Began to Run Only After Midland was
Given a Reasonable Amount of Time to File a Bill of Costs
In his response, Stennett argues that his claim is not time-barred because recovery of
court costs under Kentucky law requires the filing of a bill of costs. Resp. Mot. Dismiss 2, ECF
No. 14. According to Kentucky Rule of Civil Procedure 54.04(2), the “party entitled to recover
costs shall prepare and serve upon the party liable therefor a bill itemizing the costs incurred by
him in the action.” Thus, Stennett asserts that it was Midland’s failure to file and serve a bill of
costs itemizing the $413.62 in costs that creates the FDCPA violation. Resp. Mot. Dismiss 4,
ECF No. 14. He argues that since Midland never filed a bill of costs, the statute of limitations
began to run only after Midland was given a reasonable amount of time to file its bill of costs in
the Meade Circuit Court. Id. at 2–4. Stennett submits that this Court should consider the fiveyear statute of limitations for filing a bill of costs to be the aforementioned reasonable amount of
time. Id. at 4. According to Stennett, the statute of limitations for Midland to file its bill of costs
ran out on December 27, 2016, five years after it filed the judgment lien. Id. Thus, Stennett
would have this Court decide that “the statute of limitations under 15 U.S.C. [§ 1692k] for Mr.

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Stennett to bring [sic] had not yet begun to run when he filed the instant complaint on October
18, 2016.” Id.
Midland argues in its reply that Stennett’s argument is meritless because (1) failing to file
a bill of costs is not a means to collect a debt constituting a violation of the FDCPA, and (2) it is
inconsistent with Stennett’s complaint because it implies that Stennett filed suit before Midland
allegedly violated the FDCPA. Reply 6–10, ECF No. 16.
First, the FDCPA states that a “debt collector may not use any false, deceptive, or
misleading representation or means in connection with the collection of any debt” or use “unfair
or unconscionable means to collect or attempt to collect any debt.” 15 U.S.C. §§ 1692e–f. In this
case, the only means by which Midland attempted to collect a debt was the filing of the judgment
lien on December 27, 2011. See Compl. ¶ 12, ECF No. 1. Moreover, even if the failure to file a
bill of costs is the violation at issue in this case, the only “discrete” act that Midland performed
was the filing of the judgment lien, and a discrete act is required to begin the statute of
limitations period. See Purnell, 303 F. App’x at 301. As such, much like in Slorp, even though
Midland’s failure to file its bill of costs might have harmed Stennett, the filing of the judgment
lien was the “discrete, immediately actionable event.” See Slorp, 587 F. App’x at 258.
Second, Midland is correct that Stennett’s argument is inconsistent with his complaint.
To believe Stennett’s argument that “the statute of limitations . . . had not yet begun to run when
he filed the instant complaint,” Resp. Mot. Dismiss 4, ECF No. 14, is to believe that Stennett
filed his complaint before Midland allegedly violated the FDCPA and before his cause of action
accrued. This contradicts Stennett’s assertion in his complaint that Midland’s actions and
omissions constituted violations of the FDCPA. See Compl. ¶ 23, ECF No. 1. Therefore,

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Stennett’s argument that the statute of limitations only began to run after Midland was given a
reasonable amount of time to file its bill of costs in the Meade Circuit Court lacks merit.
V.

Conclusion

The Court will grant Midland’s motion to dismiss Stennett’s claims against it with
prejudice. The Court will enter an order in accordance with this memorandum opinion.

March 29, 2017

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