NEWMAN et al v. ENCORE CAPITAL GROUP, INC. et al

Filing 39

OPINION and ORDER (1) Dismissing Some of Plaintiffs' Claims for Lack of Subject-Matter Jurisdiction; and (2)Granting in Part and Denying in Part Defendants' 20 MOTION to Dismiss. Signed by District Judge Matthew F. Leitman. (HMon)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
JOANNE NEWMAN, et al.,
Plaintiffs,

Case No. 16-cv-11395
Hon. Matthew F. Leitman

v.
ENCORE CAPITAL GROUP, et al.,
Defendants.
_________________________________/
OPINION AND ORDER (1) DISMISSING SOME OF PLAINTIFFS’
CLAIMS FOR LACK OF SUBJECT-MATTER JURISDICTION; AND (2)
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION TO DISMISS (ECF #20)
On April 19, 2016, Plaintiffs Joanne Newman and Saundra Ryan filed this
action against Defendants Encore Capital Group, Inc., Asset Acceptance Capital
Corp., Midland Funding, LLC, Karli Anne Peterson, Elizabeth M. Smith, Andrew
Perry, Stephanie Carrington Pettway, and Omar Najor. In Plaintiffs’ Amended
Complaint, they allege that Defendants violated the Fair Debt Collection Practices
Act, 15 U.S.C. § 1692 et seq. (the “FDCPA”); the Michigan Regulation of Collection
Practices Act, M.C.L. § 445.251 et seq. (the “MRCPA”); and the Racketeer
Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. (the “RICO
Act”). On July 1, 2016, Defendants moved under Rule 12(b)(6) of the Federal Rules
of Civil Procedure to dismiss Plaintiffs’ Amended Complaint. For the reasons that

1

follow, some of Plaintiffs’ claims are DISMISSED for lack of subject-matter
jurisdiction. With respect to the remaining claims, Defendants’ motion to dismiss is
GRANTED IN PART and DENIED IN PART as set forth below.
I
Plaintiffs’ Amended Complaint spans 155 paragraphs over 63 pages. (See
ECF #13.) It is repetitive, disjointed, and often difficult to follow and understand.
In an effort to bring some clarity to the issues in dispute, the Court sets forth in this
section (1) the parties, (2) Defendants’ alleged collection practices against Michigan
consumers, and (3) the manner in which Newman and Ryan allege that Defendants’
practices affected them.
A
Plaintiffs Newman and Ryan are Michigan residents. (See Am. Compl. at
¶¶ 12-13, ECF #13 at Pg. ID 193.) At some time prior to May 2016, they stopped
making payments on debts they owed to Citibank, N.A. (See Newman and Ryan
Declarations, ECF #13-12 at Pg. ID 400-01, attached to the Am. Compl.)
Defendant Encore is a publicly traded company. (See Am. Compl. at ¶3, ECF
#13 at Pg. ID 190.) Encore owns subsidiaries that are in the business of purchasing
and collecting delinquent consumer debts. (See id.) Defendants Midland and Asset
Acceptance are two of those subsidiaries. (See id.) Defendants Smith, Perry,
Pettway, and Najor (the “Defendant Attorneys”) are Michigan attorneys employed

2

by Asset Acceptance. (See id. at ¶¶ 7-10, ECF #13 at Pg. ID 191-92.) They assist
Asset Acceptance, Midland, and Encore in the collection of delinquent consumer
debts. (See id.) Peterson is a notary public employed by Encore and Midland. (See
id. at ¶71, ECF #13 at Pg. ID 218.)
B
Plaintiffs allege that Defendants used a number of unlawful collection
practices to secure default judgments in lawsuits against Michigan consumers. (See
id. at ¶2, ECF #13 at Pg. ID 189-90.) Defendants’ alleged collection practices are
easiest to understand when set forth in chronological order:
1. Midland purchases “portfolios consisting of [the] old and defaulted
debt” of Michigan consumers. (Id. at ¶54, ECF #13 at Pg. ID 212.)1
2. To begin the collection process against a Michigan consumer,
Midland prepares an affidavit stating that Midland owns the
consumer’s delinquent debt (the “Ownership and Delinquency
Affidavit”). (See id. at ¶¶ 53, 58, 66, 81, ECF #13 at Pg. ID 212-14,
216, 224.) The Ownership and Delinquency Affidavit identifies the
amount of the debt, the creditor to whom the debt was originally
owed, and the last four digits of the consumer’s account number
with the creditor. (See, e.g., Ownership and Delinquency Affidavit
as to Ryan, ECF #13-7 at Pg. ID 278-79, attached to Am. Compl.)
Even though no lawsuit is pending against the consumer at the time
the Ownership and Delinquency Affidavit is signed, the affidavit
nonetheless refers to the debt as “the obligation sued upon.” (Am.
Compl. at ¶59, ECF #13 at Pg. ID 214.)

1

Plaintiffs also allege that Encore purchases some debt portfolios directly and then
transfers the portfolios to Midland for collection. (See Am. Compl. ¶54, ECF #13 at
Pg. ID 212.)
3

3. An officer of Midland signs the Ownership and Delinquency
Affidavit. (See id. at ¶58, ECF #13 at Pg. ID 213-14.) The officer’s
signature purports to be notarized by Peterson. (See id. at ¶¶ 63-73,
ECF #13 at Pg. ID 215-22.) However, the signature is not actually
notarized by Peterson; instead, Midland “robo-signs” Peterson’s
signature in the notary block bearing her name. (Id.)
4. Midland sends the fraudulently-notarized Ownership and
Delinquency Affidavit to one of the Defendant Attorneys who work
for Asset Acceptance. (See Am. Compl. at ¶58, ECF #13 at Pg. ID
213-14.)
5. The Defendant Attorney prepares and files a complaint against the
Michigan consumer in state court (the “Collection Complaint”).
(See id. at ¶41, ECF #13 at Pg. ID 206-07.) The Defendant Attorney
attaches the fraudulently-notarized Ownership and Delinquency
Affidavit to the Collection Complaint. (See id. at ¶¶ 72, 84, ECF #13
at Pg. ID 218-19, 225.) The Collection Complaint lists Midland as
the plaintiff and seeks payment of the debt identified in the
Ownership and Delinquency Affidavit. (See id. at ¶41, ECF #13 at
Pg. ID 206-07.)
6. The Defendant Attorney also “verifies” the Collection Complaint by
signing his or her name under the following statement (the
“Verification Statement”):
I declare under the penalty of contempt of court that
to the best of my knowledge, information and
believe [sic] that this is good ground to support the
contents of this pleading.
(See Am. Compl. at ¶¶ 43, ECF #13 at Pg. ID 208-09.)
7. The Defendant Attorney signs the Verification Statement without
actually reading the Collection Complaint and without any actual
knowledge of the facts that he or she purports to verify.2 (See id. at

2

Plaintiffs also contend that the Defendant Attorney’s verification of the Collection
Complaint is invalid because no provision of Michigan law or of the Michigan Court
4

¶¶ 42-43, 49, 52, ECF #13 at Pg. ID 207-208, 210-12.) The
Defendant Attorney places the words “Verified Complaint Account
Stated” in underlined and capital letters at the top of the Collection
Complaint. (See id. at ¶¶ 41, 46, ECF #13 at Pg. ID 206-07, 209.)
8. The Defendant Attorney then serves the Collection Complaint and
the fraudulently-notarized Ownership and Delinquency Affidavit on
the Michigan consumer. (See id. at ¶117, ECF #13 at Pg. ID 236.)
According to Plaintiffs, Defendants’ unlawful collection practices have the
following effects:
Time is money and a [d]efault [j]udgment is the ultimate
goal of Defendants. . . . The use of false verifications and
[fraudulent notarization by] robo-signers eliminates the
cost of verifying that Defendants truly own the debt and
that the debtor owes the amount [indicated by] the
[Ownership and Delinquency Affidavit] and [Collection]
Complaint. A ‘sworn’ affidavit takes the place of the
necessary proof and paperwork and eliminates the
associated cost of proving [that] the debt is owed to
Defendants by class members. The fraud saves time and
makes money.
(Id. at ¶¶ 78-79, ECF #13 at Pg. ID 223-24.)
C
Plaintiffs Newman and Ryan allege that they were the victims of the abovedescribed collection practices.
Ryan contends that in November 2015, Midland filed a Collection Complaint
against her in Michigan state court (the “Ryan Collection Complaint”). (See ECF

Rules permits a pleading to be “verified” using the above quoted statement. (See id.
at ¶¶ 44-45, ECF #13 at Pg. ID 209.)
5

#13-7 at Pg. ID 275-79.)

The Ryan Collection Complaint is titled “Verified

Complaint Account Stated,” and it alleges that Ryan owed payments on a credit card
account through Citibank, that Midland had purchased Ryan’s account from
Citibank, and that Midland was now seeking a judgment against Ryan for the
$8,407.11 she allegedly owed. (See id.) Defendant Attorney Smith signed the Ryan
Collection Complaint. (See id.) Attached to the Ryan Collection Complaint was an
Ownership and Delinquency Affidavit signed by Midland officer, Jenna Taylor. (See
id.) This affidavit stated:

(Id., pen marks in original.) Taylor’s affidavit purported to have been notarized by
Peterson. But Ryan alleges that Peterson did not personally sign the affidavit and
that instead Peterson’s signature was “robo-signed.” (Am. Compl. at ¶135, ECF #13
at Pg. ID 241.) The notarization signature was as follows:

6

(See ECF #13-7 at Pg. ID 279.)
Ryan says that she had the following reaction when she received the
Collection Complaint and attached Ownership and Delinquency Affidavit:
1. I was sued in the 52-4 District Court . . . by Midland
Funding, LLC. They were suing me for a debt from
Citibank, N.A. I had previously been unable to pay the
debt off.
2. Attached to the lawsuit from Midland was a sworn
affidavit saying that they had business records from
Citibank and that I owed them money. The affidavit of
[sic] was signed by Jenna Taylor and notarized by a Karli
Anne Peterson.
3. As the Affidavit was signed and notarized by them I
believed them when they said they had the right to sue me
on the debt and they had all the records. I did not know
how I was going to fight as their affidavit proved I owed
the debt to Midland.
4. I believe that Midland could win the lawsuit against me
and make me pay them as their affidavit said they could.
(Ryan Declaration, ECF #13-12 at Pg. ID 401.)
Similarly, Newman alleges that in December 2015, Midland filed a Collection
Complaint against her in Michigan state court (the “Newman Collection
Complaint”) seeking payment for $6,525.34 in alleged debt. (See ECF #13-7 at Pg.
ID 280-84.) Defendant Attorney Perry signed the Newman Collection Complaint,
and the complaint is titled “Verified Complaint Account Stated.” (See id.) Attached

7

to the Newman Collection Complaint was an Ownership and Delinquency Affidavit
signed by Midland officer, Donna Dubois. (See id.) This affidavit stated:

(Id., pen marks in original.) Dubois’ affidavit also purported to have been notarized
by Peterson. But Newman alleges that Peterson did not personally sign the affidavit
and that instead Peterson’s signature was “robo-signed.” (Am. Compl. at ¶135, ECF
#13 at Pg. ID 241.) The notarization signature was as follows:

(See ECF #13-7 at Pg. ID 284.)
Newman says that she had the following reaction when she received the
Collection Complaint and attached Ownership and Delinquency Affidavit:

8

1. I was served a lawsuit by Defendant Midland Funding,
LLC from the 52-4 District Court. . . .It appeared to be
based upon a debt I had owed to Citibank, N.A. Due to
financial hardship, I was unable to pay that debt to
Citibank N.A.
2. At the time I was served with the lawsuit, I was not
familiar with being sued or legal documents. Midland had
an affidavit attached to the lawsuit that stated that they
were the owner of the debt based on business records it
possessed and that I owed them money.
3. The Affidavit was signed by a [] Midland employee,
Donna Dubois and notarized by a Karli Anne Peterson.
Because it was a sworn Affidavit, I assumed that Midland
did in fact own the debt and had business records from
Citibank to prove that I owed the debt to them. It is what
they were swearing to.
4. This was the only piece of paper that Midland gave me
with the lawsuit that looked official and notarized.
Because of that affidavit, it felt as though I had no choice
but to believe them and I would lose the lawsuit.
(Newman Declaration, ECF #13-12 at Pg. ID 400.)
Newman and Ryan retained counsel and filed answers and counterclaims
against Midland in the state court collection suits. (See State Court Docket, ECF
#20-3.) Ryan also moved to strike the Ownership and Delinquency Affidavit. (See
id. at Pg. ID 489.) She even persuaded the presiding state court judge that Peterson’s
signature on the notary block had likely been “forged.” (State Court Transcript, ECF
#13-2 at Pg. ID 255.) The state court judge therefore granted Ryan a hearing on her
challenge to the Ownership and Delinquency Affidavit. But before that hearing

9

could occur, Midland and Ryan agreed to dismiss the state court action without
prejudice so that the dispute could be litigated in this Court. (See State Court Docket,
ECF #20-3.) Likewise, Midland and Newman agreed to dismiss their state court
claims and counterclaims without prejudice so that those claims could be litigated
here. (See id.)
D
On April 19, 2016, Newman and Ryan filed a proposed class-action lawsuit
in this Court against the Defendants. (See ECF #1.) Plaintiffs filed an Amended
Complaint on May 24, 2016. (See ECF #13.) Plaintiffs’ Amended Complaint
nominally contains three counts, but Counts One and Two actually consist of a
number of individual claims. (See Am. Compl. at Pg. ID 246-50.) In Count One,
Plaintiffs allege that Defendants’ collection practices violated various sections of the
FDCPA. (See id.) In Count Two, Plaintiffs allege that Defendants’ collection
practices violated various sub-sections of the MRCPA. (See id.) In Count Three,
Plaintiffs allege that Defendants’ collection practices violated the RICO Act. (See
id.) Plaintiffs seek to sue on behalf of all Michigan consumers that were subject to
Defendants’ above-described collection practices within the statute of limitations of
each respective statute. (See id.at ¶¶ 140-53, ECF #13 at Pg. ID 243-46.)

10

E
On July 1, 2016, Defendants moved under Rule 12(b)(6) to dismiss the
Amended Complaint. (See ECF #20.) The Court held a hearing on the motion on
October 24, 2016. At the hearing, the Court raised concerns about, among other
things, whether Plaintiffs had standing, under Article III of the United States
Constitution, to challenge Defendants’ collection practices in federal court.
Specifically, the Court questioned whether Newman and Ryan had adequately
pleaded that they personally had suffered a “concrete” injury due to each of
Defendants’ allegedly unlawful collection practices. After the hearing, the Court
ordered Plaintiffs to show cause why their claims should not be dismissed for lack
of standing. (See Order to Show Cause, ECF #34.) Plaintiffs filed their response to
the show cause order on March 20, 2017, and Defendants replied on April 10, 2017.
(See ECF ## 35, 37.)
II
Federal courts are courts of limited jurisdiction. As the United States Court
of Appeals for the Sixth Circuit has explained:
The threshold question in every federal case is whether the
court has the judicial power to entertain the suit. Article
III of the United States Constitution prescribes that federal
courts may exercise jurisdiction only where an actual ‘case
or controversy’ exists. See U.S. Const. art. III, § 2. Courts
have explained the ‘case or controversy’ requirement
through a series of ‘justiciability doctrines,’ including,

11

‘perhaps the most important,’ that a litigant must have
‘standing’ to invoke the jurisdiction of the federal courts.
Parsons v. U.S. Dep’t of Justice, 801 F.3d 701, 709 (6th Cir. 2015) (internal
quotation marks and citations omitted). Thus, the Court will first consider whether
Plaintiffs have Article III standing to bring their claims in this forum.
A
1
As the party invoking federal jurisdiction, the plaintiff bears the burden of
establishing standing. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992).
A plaintiff “must have standing for each claim pursued in federal court.” Parsons,
801 F.3d at 710 (citing DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 352 (2006)).
“To satisfy the ‘irreducible minimum of standing,’ the plaintiff must establish
that: (1) he has suffered an injury in fact that is (a) concrete and particularized and
(b) actual or imminent rather than conjectural or hypothetical; (2) that there is a
causal connection between the injury and the defendant’s alleged wrongdoing; and
(3) that the injury can likely be redressed.” Lyshe v. Levy, 854 F.3d 855, 857 (6th
Cir. 2017) (quoting Lujan, 504 U.S. at 560-61). “Where, as here, a case is at the
pleading stage, the plaintiff must clearly … allege facts demonstrating each element
[of standing].” Spokeo Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016) (citing Warth v.
Seldin, 422 U.S. 490, 518 (1975)) (internal quotation marks omitted).

12

Moreover, “[t]hat a suit may be a class action adds nothing to the question of
standing, for even named plaintiffs who represent a class must allege and show that
they personally have been injured, not that injury has been suffered by other,
unidentified members of the class to which they belong.” Id. at 1547 n.6 (citations
and internal quotation marks omitted) (emphasis added).
2
The component of standing primarily at issue in this case is the requirement
that a plaintiff personally suffer a “concrete” injury. To be “concrete,” a plaintiff’s
injury “must be ‘de facto’; that is, it must actually exist” and cannot be “abstract.”
Id. at 1548.
A plaintiff cannot satisfy its burden to show a concrete injury merely by
pleading that the defendant violated a federal statute. As the Supreme Court
explained in Spokeo:
Congress’ role in identifying and elevating intangible
harms does not mean that a plaintiff automatically satisfies
the injury-in-fact requirement whenever a statute grants a
person a statutory right and purports to authorize that
person to sue to vindicate that right. For that reason, [a
plaintiff] could not, for example, allege a bare procedural
violation, divorced from any concrete harm, and satisfy
the injury-in-fact requirement of Article III.
Spokeo, 136 S.Ct. 1549. Accordingly, allegations of “a statutory violation in and
itself [are] insufficient to establish standing” because not all statutory violations
cause the plaintiff to suffer a concrete injury. Lyshe, 854 F.3d at 859. Put differently,
13

“a mere wave of the Congressional hand – i.e. the creation of a cause of action – is
not enough to render an abstract injury concrete” for purposes of Article III standing.
Bock v. Pressler & Pressler, LLP, --- F.Supp.3d ----, 2017 WL 2304643, at *5 (D.
N.J. May 25, 2017) (citing Spokeo, 136 S.Ct. at 1549.)
B
In response to the Court’s show cause order, Plaintiffs identified a number of
alleged injuries that they claim are sufficiently concrete to satisfy Article III. Below,
the Court analyzes whether each alleged injury is concrete and whether Newman
and Ryan personally suffered that injury.
1
First, Plaintiffs argue that they suffered a concrete injury under Article III
because they received false information from Defendants. (See Pl.’s Resp. to Order
to Show Cause, ECF #35 at Pg. ID 838, 841-42.) In support of this “receipt of false
information” theory of concrete injury, Plaintiffs cite a number of district court cases
that each trace back to the unpublished decision of the United States Court of
Appeals for the Eleventh Circuit in Church v. Accretive Health, 654 Fed. App’x 990
(11th Cir. 2016). In Church, the Eleventh Circuit held that a consumer suffered a
concrete injury when she did not receive certain disclosures required by the FDCPA,
despite the fact that she suffered no actual harm from this error. See id. at 991, 995.
Here, Plaintiffs argue that Section 1692e of the FDCPA similarly granted them “a

14

right to truthful information,” and thus they suffered a concrete injury when
Defendants denied them this right. (Pl.’s Resp. to Order to Show Cause, ECF #35 at
Pg. ID 841-42.)
In Lyshe, supra, however, the Sixth Circuit rejected the notion that a consumer
suffers a concrete injury any time that she receives false information, no matter how
trivial, during the collection process. Lyshe, 854 F.3d at 860-61. In that case, Lyshe
sought damages under the FDCPA because the defendant debt collector had
misrepresented to him that Ohio court rules require that responses to requests for
admission be sworn and notarized. See id. at 858. But Lyshe did not “allege that he
was misled, that he felt compelled to make a sworn verification or engage a notary,
or that he even responded to the challenged requests.” Id. at 857. Instead, Lyshe
argued, based upon the Eleventh Circuit’s decision Church, that he suffered a
concrete injury when the debt collector infringed upon his “right not to receive false
information in connection with the collection of a debt.” Id. at 860. The Sixth Circuit
“decline[d] to follow” Church and held that a consumer’s receipt of false
information, standing alone, does not automatically result in a concrete injury under
Article III. See id. at 859-62.
In light of Lyshe, the Court cannot conclude that Plaintiffs suffered a concrete
injury simply because they received allegedly-false information. Rather, in order to

15

determine whether Plaintiffs suffered a concrete injury, the Court must examine how
the Plaintiffs’ receipt of that allegedly-false information actually impacted them.
In the Amended Complaint, Plaintiffs allege that they personally received the
following false information from Defendants:
 The “Verified” label on the Newman and Ryan
Collection Complaints was false because the
Defendant Attorneys did not verify the complaints in
accordance with the Michigan Court Rules. (See Am.
Compl. at 43-46, ECF #13 at Pg. ID 208-09; Newman
and Ryan Collection Complaints, ECF #13-7.)
 The Defendant Attorneys’ signature on the Newman
and Ryan Collection Complaints falsely implied that
they had meaningfully reviewed the content of those
complaints. (See Am. Compl. at ¶154i, ECF #13 at Pg.
ID 247-48.)
 The Ownership and Delinquency Affidavits created the
false impression that, prior to their creation, Midland
had commenced a collection action when, in fact, no
collection action was pending when the Midland
officers signed the affidavits. The Ownership and
Delinquency Affidavits created this false impression
by referring to Newman and Ryan’s debts as “the
obligation sued upon” and using a “case caption” (e.g.
Midland Funding v. Ryan). (See id. at ¶¶ 59, 107-108,
ECF #13 at Pg. ID 214, 233-34.)
Critically, Plaintiffs do not allege that their receipt of this allegedly-false
information caused them any harm – much less harm that the FDCPA was designed
to prevent. Indeed, Plaintiffs do not allege that they, personally, were affected in
any way by their receipt of the information in the above bullet-points. For instance,

16

they do not allege that they saw the word “verified” in the captions of the Collection
Complaints nor do they claim that the purported “verification” of the Collection
Complaints had any impact upon their consideration of the allegations in the
complaints. Likewise, Plaintiffs do not allege that they saw the “fake” captions of
the Ownership and Delinquency Affidavits or the references in those affidavits to
the “obligation sued upon,” nor do they allege that those features of the affidavits
had any impact on them at all. Finally, Plaintiffs do not allege that they saw the
Defendant Attorneys’ signatures on the Collection Complaints nor do they allege
that those signatures led them (Plaintiffs) to conclude that the attorneys had been
meaningfully involved in preparing the complaints. Because Plaintiffs have not
alleged that their receipt of the allegedly-false information described in the bulletpoints above affected or harmed them in any way, they have plainly failed to allege
that their receipt of that information resulted in a concrete harm.3

3

In the Amended Complaint, Plaintiffs allege that they received an additional item
of false information. Specifically, Plaintiffs allege that the Ownership and
Delinquency Affidavits falsely stated that they had been notarized by Peterson. (See
Am. Compl. at ¶¶ 63-73, ECF #13 at Pg. ID 215-22.) And Plaintiffs allege that this
allegedly-false notarization did impact their assessment of the Collection
Complaints. (See Newman and Ryan Declarations, ECF #13-12.) For the reasons
explained in Section II-B-5, infra, the Court finds that this fraudulent notarization
did cause Plaintiffs to suffer a concrete injury.
17

2
Plaintiffs further argue that they suffered a concrete injury because they faced
a “substantial risk” of default judgment when they received the Collection
Complaints and the attached Ownership and Delinquency Affidavits. (Pl.’s Resp. to
Order to Show Cause, ECF #35 at Pg. ID 844, 848.) In support of this theory,
Plaintiffs rely upon the Supreme Court’s opinion in Clapper v. Amnesty Int’l, 133 S.
Ct. 1138, 1150 n.5 (2013). (See id.) Clapper does not support Plaintiffs having
Article III standing in this case.
In Clapper, the Supreme Court considered whether plaintiffs had Article III
standing to challenge the constitutionality of a government electronic surveillance
program. The Clapper plaintiffs argued that they had Article III standing because
“there [was] an objectively reasonably likelihood that their communications with
their foreign contacts [would be] intercepted [by the program] in the future.” Id. at
1447. The Supreme Court disagreed and held that the plaintiffs did not have Article
III standing because the “risk of harm” was too speculative and “the threatened
injury” was not “certainly impending.” Id. at 1147-48 (quoting Whitmore v.
Arkansas, 495 U.S. 149, 158 (1990)).
The Supreme Court’s analysis in Clapper confirmed that the risk-based
standing inquiry is forward looking – at the time of suit, the plaintiff must face “a
substantial risk that the harm will occur.” Id. at 133 S.Ct. at 1150 n.5 (emphasis

18

added). Here, Plaintiffs do not allege in their Amended Complaint that they continue
to face the risk of default judgment as a result of Defendants’ collection practices.
Indeed, Plaintiffs have already responded to, and secured a dismissal of, Midland’s
collection suits. Because any risk of default judgment passed before Plaintiffs filed
this action, Clapper is of no help to Plaintiffs and does not provide them standing to
sue based on this risk.4
3
Next, Plaintiffs argue that Defendants’ failure to maintain adequate
procedures to prevent violations of the FDCPA and MRCPA, itself, caused a
concrete injury sufficient to confer standing. (See Pl.’s Resp. to Order to Show
Cause, ECF #35 at Pg. ID 838, 844-846, 852.) In support of that theory, Plaintiffs
cite only one case: the decision of the United States District Court for the Southern
District of Ohio in Galaria v. Nationwide Mut. Co., 998 F. Supp. 2d 646 (S.D. Ohio
2014). (See id.) Galaria does not support Plaintiffs’ position here.
The district court in Galaria held that the plaintiff lacked standing. See id. at
660.

And while the Sixth Circuit later reversed that ruling, see Galaria v.

4

In Plaintiffs’ response to the Court’s Order to Show Cause, they also argue that
they suffered a concrete injury because the “substantial risk” of default judgment
“necessitated [Plaintiffs] incurring legal costs to avoid” the default judgment. (ECF
#35 at Pg. ID 848.) But Plaintiffs do not plead in the Amended Complaint that they
personally incurred any legal costs (or any other mitigation costs) in defending the
state court collection suits.
19

Nationwide Mut. Co., 663 Fed. App’x 384 (6th Cir. 2016), nothing in the Sixth
Circuit’s decision supports Plaintiffs’ argument that the Defendants’ alleged failure
to maintain adequate procedures to prevent FDCPA violations inflicted a concrete
injury upon them. See id. The Sixth Circuit held only that a sufficiently serious risk
of future harm, coupled with reasonably-incurred mitigation costs, was sufficient to
confer standing. The Sixth Circuit did not hold that a defendant’s failure to
implement preventative measures, standing alone, amounts to a concrete injury. See
id. at 388-89. Simply put, Plaintiffs have not cited any authority to support their
assertion that a defendant’s failure to adopt sufficient preventive measures, standing
alone, constitutes a concrete injury for Article III purposes, and this Court declines
to so hold here.
4
Plaintiffs also suggest that they may sue for injuries allegedly suffered by
members of the class they seek to certify. (See, e.g., Am. Compl. at ¶76, ECF #13 at
Pg. ID 223.)

Plaintiffs sometimes refer to these members as “Michigan

Consumer[s].” (See e.g., Am. Compl. at ¶84, ECF #13 at Pg. ID 225.) Among other
injuries, Plaintiffs’ assert that class members were allegedly tricked into believing
that they had “no defense” to the Collection Complaints and class members allegedly
had default judgments improperly entered against them. (Id. at ¶¶ 84-85, 87, 113,
ECF #13 at Pg. ID 225-26, 235.)

20

But Plaintiffs’ did not personally suffer these injuries. Neither Newman nor
Ryan concluded that they had “no defense” in the state court collection action filed
against them. Indeed, both Newman and Ryan hired counsel and successfully
secured dismissals of Midland’s actions against them. And the Plaintiffs did not
suffer a “default judgment” as a result of Defendants’ alleged collection practices.
Article III does not confer Plaintiffs standing to act as private attorneys
general seeking recovery on behalf of other Michigan residents who allegedly
suffered injuries above and beyond those allegedly suffered by Plaintiffs themselves.
Rather, to have standing, Plaintiffs “must allege and show that they personally have
been injured, not that injury has been suffered by other, unidentified members of the
class to which they belong.” Warth, 422 U.S. at 502; see, also, Spokeo, 136 S.Ct. at
1547 n.6 (same), Soehnlen v. Fleet Owners Insurance Fund, 844 F.3d 576, 583 (6th
Cir. 2016) (same).

Therefore, the alleged injuries suffered by putative class

members or “Michigan Consumers,” but not by Plaintiffs themselves, are
insufficient (and irrelevant) to Plaintiffs’ standing in this case.
5
Finally, Plaintiffs allege that they suffered a concrete injury because
Defendants’ filing of the fraudulently-notarized Ownership and Delinquency
Affidavits in the Collection Actions “eliminate[ed]” Defendants’ “burden of proof”
in those actions. (Am. Compl. at ¶77, ECF #13 at Pg. ID 223.) Plaintiffs are partly
21

correct. Contrary to Plaintiffs’ description, the filing of the fraudulently-notarized
affidavits did not eliminate the “burden of proof” in the Collection Actions. Instead,
as described below, that filing shifted the burden of production. And that shift did
inflict a concrete injury upon Plaintiffs. Thus, Plaintiffs correctly argue that they
have standing to assert claims based upon the filing of the fraudulently-notarized
Ownership and Delinquency Affidavits.
In order to understand the effect of the fraudulently-notarized Ownership and
Delinquency Affidavits in the Collection Actions, one must begin with the Michigan
Court Rule that governs responsive pleadings, MCR 2.111(C). Under that rule, a
defendant may respond to an allegation by, among other things, denying the truth of
the allegation, MCR 2.111(C)(2), or by stating that he “lacks knowledge or
information sufficient to form a belief as to the truth of an allegation” – a response
that “has the effect of a denial.” MCR 2.111(C)(3). Where a defendant denies the
truth of an allegation or pleads that he lacks information concerning its truth, he has
no burden to come forward with any evidence unless and until the plaintiff carries
its burden of production at trial or in connection with a dispositive motion.
But a Michigan statute, MCL § 600.2145 (the “Affidavit Statute”), creates an
exception to this ordinary course of events when a plaintiff bringing an action for an
account stated attaches to his complaint an affidavit attesting to the amount owing.

22

The Affidavit Statute provides that such an affidavit, unless countered by an
opposing sworn affidavit, is prima facie evidence of the defendant’s indebtedness:
In all actions brought in any of the courts of this state, to
recover the amount due on an open account or upon an
account stated, if the plaintiff or someone in his behalf
makes an affidavit of the amount due, as near as he can
estimate the same, over and above all legal counterclaims
and annexes thereto a copy of said account, and cause a
copy of said affidavit and account to be served upon the
defendant, with a copy of the complaint filed in the cause
or with the process by which such action is commenced,
such affidavit shall be deemed prima facie evidence of
such indebtedness, unless the defendant with his answer,
by himself or agent, makes an affidavit and serves a copy
thereof on the plaintiff or his attorney, denying the same.
… Any affidavit in this section mentioned shall be deemed
sufficient if the same is made within 10 days next
preceding the issuing of the writ or filing of the complaint
or answer.

MCL § 600.2145. The Affidavit Statute, “when correctly followed, eases the burden
on a creditor” because “[a] proper affidavit … shifts to the debtor the burden of going
forward with proof that the amount claimed is inaccurate.” Lipa v. Asset Acceptance,
LLC, 572 F. Supp. 2d 841, 850 (E.D. Mich. 2008). If a debtor faced with a proper
affidavit cannot come forward with such evidence, judgment will be entered against
him. However, “[i]f the affidavit is defective or is rebutted by the [debtor] with
competent proof, the [creditor] simply is left with the burden to prove its case in the
usual fashion.” Id.

23

Against this background, it is clear that the Defendants’ filing of the
fraudulently-notarized Ownership and Delinquency Affidavits with the Collection
Complaints caused both Newman and Ryan to suffer a real and concrete harm. Due
to the filing of the affidavits, Newman and Ryan could not respond to the Collection
Complaints by merely denying the allegations and/or pleading that they lacked
information concerning the allegations as they could in a normal case; doing so
would have given Midland a clear path to the entry of judgment. In order to avoid
the entry of judgment against them, Newman and Ryan had to come forward with a
competing affidavit denying that they owed the debt to Midland. But they could not
do so because at the time they received the Collection Complaints, they had no idea
who Midland was and did not know whether Midland had, in fact, purchased their
debts to Citibank. (See Newman and Ryan Declarations, ECF #13-12.) Thus, the
only way that Newman and Ryan could avoid the entry of judgment against them
was to file a motion attacking the validity of the affidavits.
In summary, the filing of the falsely-notarized affidavits (1) shifted to
Newman and Ryan a burden of production that they could not carry and (2) forced
Newman and Ryan to file a motion to strike the affidavits in order to prevent the
entry of judgment against them.

Put differently, the Defendants’ fraudulent-

notarization forced Newman and Ryan’s hand in state court and put them at an unfair

24

disadvantage in the state court collection proceedings. This was a real and concrete
injury.
C
The fact that Plaintiffs suffered the single concrete injury identified above
does not automatically grant them Article III standing to challenge all of Defendants’
collection practices that are identified in the Amended Complaint. That is because
Plaintiffs must also satisfy the causation element of Article III standing – i.e., each
must demonstrate that her concrete injury is “fairly traceable to the challenged action
of the defendant.” Lujan, 504 U.S. at 560-561 (internal quotations marks omitted).
Plaintiffs’ sole concrete injury – facing an unfair burden of production in state
court and having to take steps to get out from under that burden – is fairly traceable
to only one of Defendants’ collection practices: the filing of the fraudulentlynotarized Ownership and Delinquency Affidavits. Thus, Plaintiffs only have Article
III standing to pursue claims based upon the Defendants’ filing of those affidavits.5
Plaintiffs’ single concrete injury is not fairly traceable to any of Defendants’
other alleged collection practices that Plaintiffs identify in the Amended Complaint.
More specifically, the burden of production that Plaintiffs faced under the Affidavit
Statute was not the result of any of the following collection practices:

5

Defendants do not dispute that Plaintiffs have satisfied the “redressability” prong
of Article III standing by seeking damages under the FDCPA, MRCPA, and RICO
Act.
25

 Defendants’ labeling the Collection Complaints” as
“Verified”;
 Defendants’ use of case captions and the words “the
obligation sued upon” in the Ownership and
Delinquency Affidavits;
 Defendant Attorneys’ failure to meaningfully review
the substance of the Collection Complaints prior to
signing those complaints;
 Defendants’ failure to attach documents to the
Collection Complaint proving the underlying
obligation; and
 Defendants’ use of the collection practices to secure
default judgments from Michigan consumers and to
collect debt that Midland does not own.
Thus, Plaintiffs lack Article III standing to bring claims that challenge the above
collection practices, and these claims in the Amended Complaint are DISMISSED
for lack of subject-matter jurisdiction. More specifically, to the extent that Plaintiffs’
claims in the Amended Complaint are based on anything other than the Defendants’
filing of the fraudulently-notarized Ownership and Delinquency Affidavits in state
court, those claims are DISMISSED for lack of subject-matter jurisdiction.
III
The Court now considers the merits of Plaintiffs’ claims that the Defendants’
filing of fraudulently-notarized Ownership and Delinquency Affidavits violated the
FDCPA, MRCPA, and RICO Act. Defendants move to dismiss these claims under
Federal Rule of Civil Procedure 12(b)(6).
26

A
Rule 12(b)(6) provides for dismissal of a complaint when a plaintiff fails to
state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). “To survive
a motion to dismiss, a complaint must contain 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, 555
(2007)). A claim is facially plausible when a plaintiff pleads factual content that
permits a court to reasonably infer that the defendant is liable for the alleged
misconduct. Id. (citing Twombly, 550 U.S. at 556). When assessing the sufficiency
of a plaintiff’s claim, a district court must accept all of a complaint's factual
allegations as true. See Ziegler v. IBP Hog Mkt., Inc., 249 F.3d 509, 512 (6th Cir.
2001). “Mere conclusions,” however, “are not entitled to the assumption of truth.
While legal conclusions can provide the complaint's framework, they must be
supported by factual allegations.” Iqbal, 556 U.S. at 664. A plaintiff must therefore
provide “more than labels and conclusions,” or “a formulaic recitation of the
elements of a cause of action” to survive a motion to dismiss. Twombly, 550 U.S. at
556. “Threadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.” Id.

27

B
The Court begins with Plaintiffs’ claim that the Defendants’ filing of
fraudulently-notarized Ownership and Delinquency Affidavits violated the FDCPA.
“Congress passed the FDCPA to address the widespread and serious national
problem of debt collection abuse by unscrupulous debt collectors.” Currier v. First
Resolution Inv. Corp., 762 F.3d 529, 533 (6th Cir. 2014) (citing S. Rep. No. 95-382,
at 2 (1977)). The stated purpose of the FDCPA is “to eliminate abusive debt
collection practices by debt collectors, to insure that those debt collectors who
refrain from using abusive debt collection practices are not competitively
disadvantaged, and to promote consistent State action to protect consumers against
debt collection abuses.” 15 U.S.C. § 1692(e). Defendants do not dispute that they
are “debt collectors” for purposes of FDCPA liability.
The FDCPA “prohibits a wide array of specific conduct, but it also prohibits,
in general terms, any harassing, unfair, or deceptive collection practice.” Currier,
762 F.3d at 533. These general terms enable “courts, where appropriate, to proscribe
other improper conduct which is not specifically addressed.” Id. (quoting S. Rep.
No. 95-382 at 4 (1977)). Thus, the Sixth Circuit has characterized the reach of the
FDCPA as “extraordinarily broad.” Id. (quoting Barany-Snyder v. Weiner, 539 F.3d
327, 333 (6th Cir. 2008)).

28

“To determine whether conduct fits within the broad scope of the FDCPA, the
conduct is viewed through the eyes of the ‘least sophisticated consumer.’” Id. The
least-sophisticated-consumer standard protects “the gullible and shrewd alike” but
presumes “a basic level of reasonableness and understanding on the part of the
[consumer].” Id. The standard thus insulates debt collectors from “liability for
bizarre or idiosyncratic interpretations of debt collection notices.” Id.
In Count One of the Amended Complaint, Plaintiffs allege that Defendants’
filing of the fraudulently-notarized Ownership and Delinquency Affidavits violated
three sections of the FDCPA: 1692d, 1692e, and 1692f. (See Am. Compl. at ¶154,
ECF #13 at Pg. ID 246-47.) Section 1692d prohibits “harassment and abuse”;
Section 1692e prohibits the use of “false or misleading representations”; and Section
1692f prohibits the use of “unfair practices.” 15 U.S.C. §§ 1692d, 1692e, 1692f. The
Court will analyze each of these sections in turn.
1
The Court first considers whether Defendants violated Section 1692d of the
FDCPA by allegedly filing fraudulently-notarized Ownership and Delinquency
Affidavits.
Section 1692d provides:
Harassment or abuse
A debt collector may not engage in any conduct the natural
consequence of which is to harass, oppress, or abuse any
29

person in connection with the collection of a debt.
Without limiting the general application of the foregoing,
the following conduct is a violation of this section:
(1) The use or threat of use of violence or other criminal
means to harm the physical person, reputation, or
property of any person.
(2) The use of obscene or profane language or language the
natural consequence of which is to abuse the hearer or
reader.
(3) The publication of a list of consumers who allegedly
refuse to pay debts, except to a consumer reporting
agency . . .
(4) The advertisement for sale of any debt to coerce
payment of the debt.
(5) Causing a telephone to ring or engaging any person in
telephone conversation repeatedly or continuously
with intent to annoy, abuse, or harass any person at the
called number.
(6) Except as provided in [15 U.S.C. 1692b], the
placement of telephone calls without meaningful
disclosure of the caller’s identity.
15 U.S.C. § 1692d.
In Harvey v. Great Seneca Fin. Corp, 453 F.3d 324 (6th Cir. 2006), the Sixth
Circuit considered the scope of liability under Section 1692d. More specifically, the
court considered whether the defendants had violated Section 1692d when they filed
“a debt-collection lawsuit without immediate means of proving the debt.” Id. at 330.
The Sixth Circuit advised that “although the question of ‘whether conduct harasses,
oppresses, or abuses will ordinarily be a question for the jury, Congress has indicated

30

its desire for the courts to structure the confines of §1692d.” Id. at 330 (quoting Jeter
v. Credit Bureau, 760 F.2d 1168, 1179 (11th Cir. 1985)) (internal quotation marks
and punctuation marks omitted). The court then described the scope of conduct that
falls within the confines of Section 1692d as follows:
Although non-exhaustive, the examples of oppressive
conduct listed in §1692d concern tactics intended to
embarrass, upset, or frighten a [consumer]. They are
likely to cause the “suffering and anguish” which occur
when the debt collector attempts to collect money which
the [consumer], through no fault of his own, does not have.
These tactics are not comparable to the single filing of a
debt-collection lawsuit.”
Id. (quoting Montgomery v. Huntington Bank, 346 F.3d 693, 700 (6th Cir. 2003).
In their response to Defendants’ motion to dismiss, Plaintiffs do not cite a
single case in which a debt collector was held liable under Section 1692d for a false
statement in an affidavit. Indeed, Plaintiffs do not cite any cases in support of their
claim under Section 1692d. (See Pl.’s Resp. Br., ECF #23 at Pg. ID 554-55.) And
contrary to Plaintiffs’ position, courts in this circuit have held that a false statement
within an affidavit is insufficient to trigger liability under Section 1692d. See, e.g.,
Delawder v. Platinum Financial Services Corp., 443 F.Supp.2d 942, 947-49 (S.D.
Ohio. 2005) (holding that “the filing of . . . an affidavit is not the kind of conduct
intended to be covered by Section 1692d” despite that affidavit allegedly inflating
the amount of debt owed by the consumer); Hartman v. Asset Acceptance
Corporation, 467 F.Supp.2d 769, (S.D. Ohio 2004) (holding that the filing of an
31

affidavit that misrepresented that the collector was a “holder in due course” is “not
the kind of conduct covered by [Section] 1692d as a matter law”). Plaintiffs do not
attempt to distinguish these cases or explain how the reasoning in these cases is
flawed. Thus, the Court finds that Plaintiffs have failed to plausibly allege that
Defendants’ filing of fraudulently-notarized Ownership and Delinquency Affidavits
constituted harassment, oppression, or abuse that is actionable under Section 1692d.
Plaintiffs’ Section 1962d claim is therefore dismissed.
2
Next, the Court considers whether the Plaintiffs have plausibly alleged that
the Defendants’ filing of the fraudulently-notarized Ownership and Delinquency
Affidavits violated Section 1692e of the FDCPA.
Section 1692e provides that a “debt collector may not use any false, deceptive,
or misleading representation in connection with the collection of any debt.” 15
U.S.C. § 1692e. The section then identifies sixteen specific debt collection practices
that are “violation[s] of [the] section.” 15 U.S.C. § 1692e.6 One prohibited debt

6

The scope of Section 1692e is broader than just the sixteen specifically-identified
examples of prohibited conduct listed in Section 1692e. See 15 U.S.C. § 1692e,
(expressly stating that the sixteen examples of prohibited conduct do not “limit[]
general application” of Section 1692e’s prohibition of false, deceptive and
misleading representations in connection with the collection of any debt); see, also,
Currier, 762 F.3d at 533 (“The [FDCPA] prohibits a wide array of conduct, but it
also prohibits, in general terms, any harassing, unfair, or deceptive debt collection
practice, which enables the courts, where appropriate, to proscribe other improper
32

collection practice identified in Section 1692e is the “use of any false representation
or deceptive means to collect or attempt to collect any debt or to obtain information
concerning a consumer.” 15 U.S.C. § 1692e(10).
The Sixth Circuit has established the following standard for evaluating claims
under Section 1692e:
Whether a debt collector’s actions are false, deceptive, or
misleading under §1692e is based on whether the “least
sophisticated consumer” would be misled by defendant’s
actions. In addition, in applying this standard, we have
also held that a statement must be materially false or
misleading to violate Section 1692e. The materiality
standard simply means that in addition to being technically
false, a statement would tend to mislead or confuse the
reasonable unsophisticated consumer.
Wallace v. Washington Mutual Bank, F.A., 683 F.3d 323, 326 (6th Cir. 2012)
(internal citations omitted).
Plaintiffs’ allegations satisfy this standard. Plaintiffs plausibly allege that:
 Defendants’ allegedly fraudulent notarization was a
false representation to Plaintiffs (and the state court)
that the Ownership and Delinquency Affidavits had
been reviewed, certified, and signed by a notary.
 This allegedly false representation was made during
the course of state court debt collection proceedings,
and therefore falls squarely within both Section
1692e’s general prohibition against the “use any false,
deceptive, or misleading representation in connection
with the collection of any debt” and Section 1692e’s

conduct which is not specifically addressed.”) (internal quotation marks and
citations omitted). 
33

specific prohibition against the “use of any false
representation or deceptive means to collect or attempt
to collect any debt.” 15 U.S.C. § 1692e(10) (emphasis
added).
 Defendants’ use of the fraudulent notarization was
“material” because it “would tend to mislead or
confuse the reasonable unsophisticated consumer,”
Wallace, 683 F.3d at 326, into accepting that the
Ownership and Delinquency Affidavits was a valid
affidavit under the Affidavit Statute that would shift a
burden of production to the consumer that the
consumer could not carry. (See Part II-B-5 supra.) See
Delawder, 443 F.Supp.2d at 948 (upholding claims
under 15 U.S.C. § 1692e(10), where the debt collector
allegedly attached an affidavit to the collection
complaint that contained “false and frivolous”
assertions).7
Accordingly, the Court declines to dismiss Plaintiffs’ claim under Section 1692e to
the extent that that claim is based on Defendants’ filing of the fraudulently-notarized
Ownership and Delinquency Affidavits in state court.
3
Finally, the Court considers whether Defendants’ filing of the fraudulentlynotarized Ownership and Delinquency Affidavits violated Section 1692f of the

7

In an attempt to distinguish Delawder, Defendants argue that in that case, the debt
collector had misrepresented the amount of the debt, while Plaintiffs here “challenge
only technical aspects of the [Delinquency and Ownership Affidavits].” (See Def.’s
Reply Br, ECF #25 at Pg. ID 576.) But Defendants’ alleged fraudulent-notarization
of the Ownership and Delinquency Affidavits was not merely a “technical”
misrepresentation that had no impact on Plaintiffs. As explained in Part II-B-5
supra, the alleged fraud put Plaintiffs at a disadvantage in the state court collection
proceedings and thereby caused them to suffer concrete and material harm.
34

FDCPA. (See Am. Compl. at ¶154b, ECF #13 at Pg. ID 246.) Section 1692f
provides that a “debt collector may not use unfair or unconscionable means to collect
or attempt to collect any debt.” 15 U.S.C. § 1692f.
The Court concludes that Plaintiffs have plausibly alleged that Defendants’
filing of the fraudulently-notarized Ownership and Delinquency Affidavits was an
“unfair” practice prohibited by Section 1692f.

This alleged fraud provided

Defendants an unjustified advantage over Plaintiffs in the state court collection suits
by (1) shifting to Plaintiffs a burden of production that they could not satisfy and (2)
forcing Plaintiffs to file a motion to strike the affidavits in order to prevent an entry
of judgment against them. (See Part II-B-5 supra.)
In their motion to dismiss, Defendants rely upon cases outside this circuit to
argue that Plaintiffs cannot bring a claim under Section 1692f for “conduct that is
already explicitly addressed by other sections of the FDCPA.” (ECF #20 at Pg. ID
444-45.) According to Defendants, because Plaintiffs’ claim under Section 1692f is
based on the same conduct that Plaintiffs’ allege violated Section 1962e, the Court
should dismiss Plaintiffs’ Section 1962f claim. (See id.)
However, the Sixth Circuit has not adopted the rule upon which the
Defendants rely. Instead, the Sixth Circuit has explained that:
While “misleading” practices under § 1692e and “unfair”
practices under § 1692f reference separate categories of
prohibited conduct, they are broad, potentially
overlapping, and are not mutually exclusive. A debt
35

collector's action could be “misleading” under § 1692e,
“unfair” under § 1692f, or, as alleged here, both.
Currier, 762 F.3d at 536. Thus, the Court declines to dismiss Plaintiffs’ claim under
Section 1692f to the extent that that claim is based on Defendants’ filing of the
fraudulently-notarized Ownership and Delinquency Affidavits in state court.
C
The Court now moves to Plaintiffs’ claim that Defendants’ filing of the
fraudulently-notarized Ownership and Delinquency Affidavits violated the
MRCPA.
The MRCPA provides in relevant part:
M.C.L. §445.252
Prohibited Acts
A regulated person shall not commit 1 or more of the
following acts:
(a) Communicating with a debtor in a misleading or
deceptive manner, such as using the stationary of an
attorney or credit bureau unless the regulated person is an
attorney or is a credit bureau and it is disclosed that it is
the collection department of the credit bureau.
(b) Using forms or instruments which simulate the
appearance of judicial process.
(…)
(e) Making an inaccurate, misleading, untrue, or deceptive
statement or claim in a communication to collect a debt or
concealing or not revealing the purpose of a
communication when it is made in connection with
collecting a debt.
(f) Misrepresenting in a communication with a debtor 1 or
more of the following:
36

(i) The legal status of a legal action being taken or
threatened.
(ii) The legal rights of the creditor or debtor.
(…)
(…)
(n) Using a harassing, oppressive, or abusive method to
collect a debt . . .
(…)
M.C.L. § 445.252. (See Am. Compl. at Pg. ID 248-249.)
This Court has previously held that “[MRCPA] claims which ‘simply
duplicate … claims under the FDCPA’ need not be addressed separately.” Scheuer
v. Jefferson Capital Sys., LLC, 43 F. Supp. 3d 772, 786 (E.D. Mich. 2014) (quoting
Newman v. Trott & Trott, P.C., 889 F.Supp.2d 948, 967 (E.D. Mich. 2012)). Both
Plaintiffs and Defendants agree with this approach. (See Mot. To Dismiss, ECF #20
at Pg. ID 455-46; Pl.’s Resp. Br., ECF #23 at Pg. ID 567.)
Plaintiffs assert three claims under the MRCPA that duplicate their claims
under the FDCPA. First, Plaintiffs allege that Defendants’ fraudulent notarization
of the Ownership and Delinquency Affidavits violated MCL § 445.252(a). (See Am.
Compl. at ¶ 87f, ECF #13 at Pg. ID 249.) As noted above, this subsection prohibits
“[c]ommunicating with a debtor in a misleading or deceptive manner.” MCL
§445.252(a).

Plaintiffs’ claim under MCL § 445.252(a) essentially mirrors

Plaintiffs’ claim under Section 1692e of the FDCPA for false, misleading, and
deceptive practices. (See Part III-B-2, supra.) Thus, for the same reasons that the
Court declined to dismiss Plaintiffs’ Section 1692e claim based on the fraudulently37

notarized Ownership and Delinquency Affidavits, the Court declines to dismiss
Plaintiffs’ claim under MCL § 445.252(a) to the extent that that claim is based on
those affidavits. (See id.)
Second, Plaintiffs assert that Defendants’ alleged fraudulent notarization of
the Ownership and Delinquency Affidavits violated MCL § 445.252(e). (See Am.
Compl. at ¶87b, ECF #13 at Pg. ID 248.) This subsection prohibits the use of an
“inaccurate, misleading, untrue, or deceptive statement or claim in a communication
to collect a debt.” MCL §445.252(e). The Court declines to dismiss Plaintiffs’ claim
under MCL § 445.252(e) because it too duplicates Plaintiffs’ “false, misleading, and
deceptive practices” claim under Section 1692e of the FDCPA. (See Part III-B-2,
supra).
Third, Plaintiffs assert that Defendants’ alleged fraudulent notarization of the
Ownership and Delinquency Affidavits violated MCL § 445.252 (n). (Am. Compl.
at ¶87a, ECF #13 at Pg. ID 248.) This subsection prohibits the use of “a harassing,
oppressive, or abusive method to collect a debt.” MCL §445.252(n). Plaintiffs’
claim under MCL § 445.252 (n) duplicates Plaintiffs’ claim under Section 1692d of
the FDCPA for harassing, oppressive, and abusive conduct. (See Part III-B-1, supra.)
For the same reasons that the Court dismissed Plaintiffs’ claim under Section 1692d,
the Court concludes that Plaintiffs have failed to state a plausible claim under MCL
§ 445.252(n). (See id.)

38

Plaintiffs also bring two claims challenging Defendants’ fraudulent
notarization of the Ownership and Delinquency Affidavits that are not duplicative
of their claims under the FDCPA. Both claims are deficient as a matter of law. First,
Plaintiffs bring a claim under MCL § 445.252(b), which prohibits “using forms or
instruments which simulate the appearance of judicial process.” (See Am. Compl. at
¶87b, ECF #13 at Pg. ID 249). Plaintiffs’ claim under MCL § 445.252(b) fails
because Defendants’ alleged fraudulent notarization of the Ownership and
Delinquency Affidavits did not simulate the appearance of judicial process. Second,
Plaintiffs bring a claim under MCL § 445.252(f), which prohibits misrepresentations
regarding the “legal status of a legal action” or the “legal rights of the creditor or
debtor.” (See id. at ¶87c.) Plaintiffs’ claim under MCL § 445.252(f) fails because
Defendants’ alleged fraudulent notarization of the Ownership and Delinquency
Affidavits did not misrepresent the legal status of the debt collection action against
Newman and Ryan and did not misrepresent their legal rights.
In summary, Plaintiffs plead viable claims under MCL § 445.252(a) and (e)
to the extent that these claims are based on the Defendants’ alleged filing of
fraudulently-notarized Ownership and Delinquency Affidavits in state court.
Plaintiffs fail to state a plausible claim under MCL §§ 445.252(b), (f), and (n).

39

D
In Count Three of the Amended Complaint, Plaintiffs allege that Defendants
engaged in racketeering activity in violation of Section 1962 of the RICO Act. (See
Am. Compl. at ¶155.) They seek treble damages under the civil remedies provision
the RICO Act, 18 U.S.C. § 1964(c) (“Section 1964(c)”), which provides in relevant
part:
Any person injured in his business or property by reason
of a violation of [Section] 1962 of this chapter may sue
therefor in any appropriate United States district court and
shall recover threefold the damages he sustains and the
cost of the suit, including a reasonable attorney’s fee.
To state a claim under Section 1964(c), “a plaintiff must show (1) a violation of
[Section] 1962, (2) an injury to his business or property, and (3) that his injury was
proximately caused by the RICO violation.” Stooksbury v. Ross, 528 Fed. App’x
547, 446 (6th Cir. 2013) (citing Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258,
268-69 (1992)).
Here, Plaintiffs do not allege in the Amended Complaint that they have
suffered any injury to their “business or property” as a result of Defendants’ alleged
filing of the fraudulently-notarized Ownership and Delinquency Affidavits. In
Plaintiffs’ response to the motion to dismiss, they attempt to save their RICO claims
by asserting for the first time that the Defendants’ conduct caused them to suffer
financial losses in the form of litigation expenses and adverse “money judgments.”

40

(ECF #23 at Pg. ID 567-68.) But Plaintiffs did not plead in the Amended Complaint
that they personally paid any court fees or attorney fees. Nor did Plaintiffs plead
that they personally had an adverse judgment entered against them. Plaintiffs cannot
cure deficiencies in their Amended Complaint through new allegations in their
response to Defendants’ motion to dismiss. See, e.g., Jocham v. Tuscola County, 239
F. Supp. 2d 714, 732 (E.D. Mich. 2003) (“Plaintiffs may not amend their complaint
through a response brief.”) Accordingly, Plaintiffs have failed to state a claim under
Section 1964(c). See Jackson v. Sedgwick Claims Mgmt. Servs., Inc., 731 F.3d 556,
562 (6th Cir. 2013) (en banc) (affirming dismissal of plaintiffs’ claim under Section
1964(c) because plaintiffs failed to allege that they “were injured in their business
or property”).8
IV
For ease of reference, the Court has to this point treated the Defendants as a
single group. But Plaintiffs’ fail to include allegations in the Amended Complaint
that plausibly establish the liability of some of the listed Defendants. Specifically,
the Plaintiffs have failed to plead facts that, if proven, would establish the liability
of Defendant Attorney Pettway. Indeed, the Amended Complaint does not contain

8

To the extent that Plaintiffs’ claim under Section 1964(c) is based on anything other
than Defendants’ filling of fraudulently-notarized Ownership and Delinquency
Affidavits, it is dismissed for lack of subject matter jurisdiction. (See Section II-C
supra.)
41

any specific allegations about how Pettway’s conduct injured Plaintiffs personally.9
Thus all claims against Pettway are dismissed.
In addition, Plaintiffs fail to plead allegations that plausibly establish the
liability of Encore. Encore was not a party to Midland’s collection suits against
Plaintiffs, and Encore was not the employer of the Defendant Attorneys who filed
Collection Complaints and fraudulently-notarized Ownership and Delinquency
Affidavits.10 And the Amended Complaint does not include any allegations about
how Encore itself took any actions that injured Plaintiffs. Although both Midland
and Asset Acceptance are subsidiaries of Encore, “[i]t is a general principle of
corporate law deeply ingrained in our economic and legal systems that a parent
corporation . . . is not liable for the acts of its subsidiaries.” United States v. Bestfoods
et. al., 524 U.S. 51, 61 (1998) (internal quotation marks and citations omitted).
There are exceptions to this general principle, but Plaintiffs neither plead in the

9

Defendant Attorneys Pettway, Perry, and Smith are all listed on the front of the
Newman and Ryan Collection Complaints, but only Perry and Smith signed those
complaints. (See Newman and Ryan Collection Complaints, ECF #13-7.) The
Amended Complaint does not include any allegations that Pettway affirmatively
acted in any way that could plausibly establish her liability.

10

The Amended Complaint makes a passing reference that Notary Peterson was
“hired by Encore and Midland,” (Am. Compl. at ¶71, ECF #13 at Pg. ID 218;
emphasis added), but there is no specific allegation that Peterson was under the
control of Encore or took any action on behalf of Encore.
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Amended Complaint, nor argue in their briefs, that such exceptions should apply in
this case. Accordingly, all claims against Encore are dismissed.
V
Finally, the Court declines to allow Plaintiffs to amend their complaint for a
second time. The Federal Rules of Civil Procedure instruct that leave to amend
should be “freely give[n] when justice so requires.” Fed. Rule Civ. Proc. 15(a)(2)
(emphasis added). But as explained below, justice does not require that Plaintiffs be
permitted to file a Second Amended Complaint in this action.
During the October 24, 2016, hearing on Defendants’ motion to dismiss, the
Court listed for Plaintiffs’ counsel many of the deficiencies in the Amended
Complaint identified in this Opinion and Order and shared with Plaintiffs’ counsel
several concerns that the Court had regarding the manner in which Plaintiffs had
pleaded their claims. For example, the Court raised the issue of Article III standing
and questioned whether Newman and Ryan had personally suffered a concrete injury
as a result of each of Defendants’ collection practices that Plaintiffs sought to
challenge.

The Court also informed Plaintiffs that they had failed to plead

allegations of “injury to business or property” necessary to establish statutory
standing under the RICO Act. The Court even noted that the Amended Complaint
did not include specific allegations regarding the separate liability of each
Defendant.

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At the end of the hearing, the Court determined that the best course of action
was to give Plaintiffs the opportunity to file a Second Amended Complaint in which
they could address the deficiencies and concerns that the Court had identified on the
record. Plaintiffs agreed on the record to file a Second Amended Complaint within
21 days.
But during a November 2, 2016, telephonic status conference, Plaintiffs
notified the Court that they had a change of heart. Even though the Court highlighted
problems with their Amended Complaint and offered them a chance to cure those
shortcomings, Plaintiffs told the court that they no longer wanted to file a Second
Amended Complaint. The Court then informed Plaintiffs that if they declined the
opportunity to amend at that time, the Court would be disinclined to allow a Second
Amended Complaint after the Court ruled on Defendants’ motion to dismiss.
Plaintiffs then confirmed that they no longer wanted to file a Second Amended
Complaint.
Given that (1) the Court offered Plaintiffs an opportunity to cure the
deficiencies described above and (2) Plaintiffs declined that opportunity, justice does
not require the Court to permit Plaintiffs to amend their Amended Complaint yet
again after they have read this Opinion and Order. Plaintiffs are “not entitled to an
advisory opinion from the Court informing them of the deficiencies of the
[Amended] [C]omplaint and then an opportunity to cure those deficiencies.” Begala

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v. PNC Bank, Ohio, Nat. Ass’n, 214 F.3d 776, 784 (6th Cir. 2000) (quoting and
affirming district court order denying leave to amend complaint). Thus, even though
the Federal Rules of Civil Procedure embody a liberal policy in favor of permitting
amendments, see Fed. Rule Civ. Proc. 15(a)(2), the Court declines to grant Plaintiffs
leave to file a Second Amended Complaint.
VI
For the reasons stated above, IT IS HEREBY ORDERED that:
 To the extent that Plaintiffs’ claims in the Amended
Complaint are based on anything other than
Defendants’ filing fraudulently-notarized Ownership
and Delinquency Affidavits in state court, such claims
are DISMISSED for lack of subject-matter
jurisdiction.
 With respect to Plaintiffs’ claims under 15 U.S.C. §
1692d, MCL § 445.252(b), MCL § 445.252(f), MCL §
445.252(n), and the RICO Act that are based on
Defendants’ filing of the fraudulently-notarized
Ownership and Delinquency Affidavits in state court,
Defendants’ motion to dismiss these claims under Rule
12 (b)(6) is GRANTED.
These claims are
DISMISSED WITH PREJUDICE.
 In addition, Plaintiffs’ claims against Defendant
Attorney Pettway and against Encore are DISMISSED
WITH PREJUDICE.

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 The only claims remaining in this action are Plaintiffs’
claims that Defendants (other than Pettway and
Encore) violated 15 U.S.C. § 1692e, 15 U.S.C. § 1692f,
MCL § 445.252 (a), and MCL § 445.252 (e), by filing
fraudulently-notarized Ownership and Delinquency
Affidavits in state court. The action may proceed with
respect to these claims.
IT IS SO ORDERED.
s/Matthew F. Leitman
MATTHEW F. LEITMAN
UNITED STATES DISTRICT JUDGE
Dated: August 14, 2017
I hereby certify that a copy of the foregoing document was served upon the parties
and/or counsel of record on August 14, 2017, by electronic means and/or ordinary
mail.
s/Holly A. Monda
Case Manager
[phone]

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