Beeler v. C.S.D. L.L.C. et al

Filing 9

MEMORANDUM AND ORDER denying 6 Motion to Dismiss for Failure to State a Claim; setting deadline for Plaintiff to arrange a case planning telephone conference. Signed by Judge Marvin J. Garbis on 6/5/12. (dass, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
MEGAN E. BEELER

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Plaintiff

vs.

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CIVIL ACTION NO. MJG-12-254

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C.S.D., L.L.C., et al.
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*

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Defendants
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MEMORANDUM AND ORDER RE: MOTION TO DISMISS
The Court has before it the Motion to Dismiss Defendants
C.S.D., L.L.C. and Maryland Oral Surgery Associates for Falure
[sic] to State a Claim upon Which Relief can be Granted
[Document 6] and the materials submitted relating thereto.

The

Court has reviewed the exhibits and considered the materials
submitted by the parties. The Court finds a hearing unnecessary.

I.

BACKGROUND1
The plaintiff, Megan E. Beeler (“Ms. Beeler”), is a

Maryland resident who incurred a medical debt with defendant,
Maryland Oral Surgery Associates (“MOSA”), which was later
referred to defendant, C.S.D., L.L.C. (“CSD”), a debt collection
agency.

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On December 13, 2011, CSD made an attempt to collect

The “facts” herein are as alleged by Plaintiff and are not
necessarily agreed upon by Defendants.

the debt by sending a letter to Ms. Beeler demanding that
payment be made to avoid “further legal action” (emphasis added)
although there had not been any prior legal action.
A.

Compl. Ex.

Additional letters were sent on December 27, 2011 and

January 10, 2012.

Compl. Ex. B, Ex. C. discussed herein.

By the instant motion, the Defendants seek dismissal of all
claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure.2

II.

DISMISSAL STANDARD
A motion to dismiss filed pursuant to Federal Rule of Civil

Procedure 12(b)(6) tests the legal sufficiency of a complaint.
A complaint need only contain “a short and plain statement of
the claim showing that the pleader is entitled to relief, in
order to give the defendant fair notice of what the . . . claim
is and the grounds upon which it rests.”

Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 555 (2007) (citations omitted).

When

evaluating a 12(b)(6) motion to dismiss, a plaintiff’s wellpleaded allegations are accepted as true and the complaint is
viewed in the light most favorable to the plaintiff.

However,

conclusory statements or a “formulaic recitation of the elements
of a cause of action” will not suffice.
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Id.

A complaint must

All Rule references herein refer to the Federal Rules of Civil
Procedure unless otherwise indicated.

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allege sufficient facts to “cross ‘the line between possibility
and plausibility of entitlement to relief.’”

Francis v.

Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (quoting Twombly,
550 U.S. at 557).
Inquiry into whether a complaint states a plausible claim
is “a context-specific task that requires the reviewing court to
draw on its judicial experience and common sense.”

Id.

Thus,

if the well-pleaded facts contained within a complaint “do not
permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged – but it has not shown –
that the pleader is entitled to relief.”

Id. (quoting Ashcroft

v. Iqbal, 556 U.S. 662, 679 (2009)) (internal quotation marks
omitted).

III. DISCUSSION
Ms. Beeler contends that CSD’s debt collection
communications violated the Federal Debt Collection Practices
Act (“FDCPA”) and the Maryland Consumer Protection Act (“MCPA”).
She further contends that MOSA is liable for CSD’s violations of
the MCPA under a theory of respondeat superior.
Ms. Beeler asserts that the debt collection communications
contained false or misleading representations by implying that
legal action had been taken, by threatening to take actions that
were not actually intended, by misrepresenting the amount past

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due, and misrepresenting that CSD was a law firm. Ms. Beeler
alleges that the communications caused her emotional distress
and anxiety as exhibited by intense migraines and exacerbated
acid reflux disease.

A.

COUNT I - FDCPA VIOLATIONS

There is a violation of the FDCPA if a debt collector uses
“any false, deceptive or misleading representations or means” in
debt collection.

15 U.S.C. § 1692e.

The FDCPA is a strict liability statute.
prove only one violation to trigger liability.

A consumer need
Spencer v.

Hendersen-Webb, Inc., 81 F. Supp. 2d 582, 590-91 (D. Md. 1999).
If there is a violation, the only defense to liability is
provided in § 1692k(c) if a violation is both unintentional and
a result of “a bona fide error notwithstanding the maintenance
of procedures reasonably adapted to avoid any such error.”
U.S.C. § 1692(c).

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However, the proper place for an inquiry into

a statutory defense – necessarily dependent upon evidence to be
produced by a defendant - is not at the Rule 12(b)(6) stage.
See Sayyed v. Wolpoff & Abramson, 485 F.3d 226, 235 (4th Cir.
2007).

Thus, the question now presented is whether the

Complaint alleges facts that would establish a plausible claim
that CSD committed at least one FDCPA violation.

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The Fourth Circuit has held that the language of debt
collection letters must be evaluated from the perspective of the
“least sophisticated debtor.”

United States v. Nat’l Fin.

Servs., Inc., 98 F.3d 131, 135-36 (4th Cir. 1996).

This

standard ensures “that the FDCPA protects all consumers, the
gullible as well as the shrewd.” Id. at 136.
Beeler alleges that CSD, by stating that she must make
payment to avoid further legal action, falsely implied that
legal action had been taken.

This, alone, is sufficient to

present a plausible claim that CSD violated the FDCPA.
CSD presents evidence - outside the four corners of the
Complaint – that might (but might not) refute Beeler’s
contention that CSD overstated her liability.

While CSD may,

ultimately, be determined to have a valid defense to the
allegation, the Court must accept Plaintiff’s allegations as
correct.
CSD contends that there is no factual support for the
allegations that false or misleading representations were made
in violation of 15 U.S.C. § 1692e(3),(4),(5), and (10).

A false

representation or implication that the debt collector is an
attorney or that the communication is from an attorney is a
violation of § 1692e(3).
she received as exhibits.

Ms. Beeler attached all three letters
Compl. Ex. A, B, C.

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In paragraph 11,

Ms. Beeler alleges that the letter of December 13, 2011 implies
that CSD is a law firm.

She also alleges that the language

“further legal action” falsely implies that legal action had
already been taken.

Although the matter is not free from doubt,

when measured through the eyes of the least sophisticated
consumer, it is plausible that the letter gave an impression
that it was from a lawyer and that legal action had been taken.
Accordingly, the Court will not dismiss the claim that CSD
misrepresented its status.
Section 1692e(4) prohibits “[t]he representation or
implication that nonpayment of any debt will result in . . . the
seizure, garnishment, attachment, or sale of any property or
wages of any person unless such action is lawful and the debt
collector or creditor intends to take such action.”

Ms. Beeler

alleges that “the letter [of December 27, 2011] implied that
actions would be taken to garnish Ms. Beeler’s wages or bank
accounts, even though Defendant CSD had no intention of suing
Ms. Beeler or legally garnishing her wages.”

Compl. ¶ 17.

The

letter from CSD to MOSA, provided to Ms. Beeler by CSD,
implicated garnishing her wages.

Compl. ¶ 17.

The attached

letter stated: “We recommend that a lawsuit be filed to collect
the amount owed and, if necessary, other proceedings such as
attachment of wages and/or bank accounts.”

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Compl. Ex. B.

Beeler alleges that there was, in reality, no intent to take
such actions.

It has been held that even though a plaintiff may

make conclusory allegations as to intent in this context, these
allegations are sufficient to satisfy pleading requirements at
this stage. See Harrison v. Westinghouse Savannah River Co., 176
F.3d 776, 784 (4th Cir. 1999)(noting that conclusory allegations
of defendant’s intent are allowed under Rule 9(b)). Moreover, it
is certainly plausible that the purported letter to MOSA is a
sham.
A threat to take an action that cannot legally be taken or
that is not intended to be taken is a violation of FDCPA under §
1692e(5).

Ms. Beeler alleges that CSD threatened to file a

lawsuit “unless payment was received within five (5) business
days” but no such lawsuit was filed.

Compl. ¶ 21.

She also

alleges that the threat was not real because CSD has not
instituted legal proceedings against her or other consumers.
Compl. ¶ 16.

These allegations are sufficient to state a claim.

Ms. Beeler alleges that § 1692e(10) was violated by CSD
using false representations and deceptive methods while
attempting to collect the debt.

She states that the term

“further legal action” in the December 13, 2011 letter was false
or deceptive by implying that legal action had already been
taken.

Compl. ¶ 11.

Further, the letters of December 27, 2011

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and January 10, 2012 represented that a judgment “will be
entered” and would affect Ms. Beeler’s credit rating for 12
years.

Compl. ¶ 15, 22, Ex. B, C.

She alleges that such a

representation with no evidence is false and deceptive.
Certainly, CSD could not know that a judgment would be entered
against Ms. Beeler, and as such, the representation is
deceptive.
In sum, Ms. Beeler has adequately alleged at least one
FDCPA violation.

Therefore, the FDCPA claim shall not be

dismissed,

B.

COUNT II – MCPA VIOLATIONS

In her Complaint, paragraphs, 11, 16, 17, and 21, Ms.
Beeler alleges violations of MCPA Articles 13-301(1) and 13303(5).3

The MCPA expressly designates as “unfair or deceptive

trade practices” those that constitute any violation of the
Maryland Consumer Debt Collection Act (“MCDCA”).
301(14(iii).

§ 13-

Ms. Beeler alleges that defendants’ acts

constituted such unfair and deceptive acts.

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Compl. ¶ 35.

MCPA Article 13-301(1) prohibits false statements or
representations, which have “the capacity, tendency, or effect
of deceiving or misleading consumers.” The Complaint also refers
to Article 13-303(6). Defendants note they were unable to find
Article 13-303(6) and assume Ms. Beeler referred instead to 13303(4). The Court assumes the reference is actually to 13303(5), which is the collection of consumer debts.

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An individual alleging unfair or deceptive trade practices
under the Maryland Consumer Protection Act may file a complaint
with the Attorney General’s office or bring a private cause of
action.

Lloyd v. Gen. Motors Corp., 916 A.2d 257, 277 (Md.

2007). A person bringing a private cause of action must allege
(1) an unfair or deceptive practice or misrepresentation that is
(2) relied upon, and (3) caused an actual injury or loss.

Id.

The MCDCA provides that a “person collecting or attempting
to collect an alleged debt arising out of a consumer
transaction,” may not “[c]laim, attempt, or threaten to enforce
a right with knowledge that the right does not exist.”
Ann., Com. Law § 14-202(8).

Md. Code

A collector who violates the MCDCA

“is liable for any damages proximately caused by the violation,
including damages for emotional distress or mental anguish
suffered with or without accompanying physical injury.”

Id. §

14-203.
In addition to the defendants’ contention that Ms. Beeler
supports her allegations under the MCPA with mere conclusory
statements, defendants contend that Ms. Beeler has failed to
provide a factual basis for her allegations of actual injury or
loss.

For the same reasons as stated above, the Court finds Ms.

Beeler’s allegations more than “mere conclusory statements” as
described by the defendants.

See Bradshaw v. Hilco Receivables,

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LLC, 765 F. Supp. 2d 719, 732-33 (D. Md. 2011)(noting the
similarities between MCDCA and Section 1692e(5) of the FDCPA).
Further, she has alleged actual damages in the form of anxiety,
emotional distress, fear, migraines “that were so intense that
there were times where she was unable to function,” and a
worsening of her acid reflux disease.

Compl. ¶ 26.

While the MCDCA claim may have little practical
significance in view of the FDCPA claim, the Court does not find
it appropriate to dismiss the state law claim at the present
stage.

C.

MOSA LIABILITY

Ms. Beeler alleges in paragraphs 27 through 30 that
defendant MOSA is liable for the actions and omissions of
defendant CSD based on an agency relationship.

MOSA argues that

CSD is an independent contractor, and there are no factual
allegations that would establish it was a principal that is
liable for CSD’s actions.
Certainly, it appears that CSD was an independent
contractor vis-a-vis MOSA and CSD.

However, under Maryland

law, a principal may be held liable for the authorized acts of
its agent within the scope of the agency relationship.
Spencer, 81 F. Supp. 2d at 596.

See

Moreover, in the instant case,

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there are allegations that create a plausible claim that MOSA
had some involvement with the specific tortious actions of CSD.
For example, if MOSA participated in a “scheme” to have CSD
provide debtors with copies of purportedly (but not actually)
genuine recommendations.

Of course, MOSA may well have what is

determined to be a perfectly valid defense.

However, at the

present stage, the claims against it will not be dismissed.

IV.

CONCLUSION
For the foregoing reasons:
1.

The Motion to Dismiss Defendants C.S.D., L.L.C.
and Maryland Oral Surgery Associates for Falure
[sic] to State a Claim upon Which Relief can be
Granted [Document 6] is DENIED.

2.

Plaintiff shall arrange a case planning telephone
conference to be held by June 30, 2012.

SO ORDERED on Tuesday, June 5, 2012.

/s/__________
Marvin J. Garbis
United States District Judge

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