Turnbull v. O'Reilly Rancilio PC
ORDER Denying 17 Motion for Leave to to Amend - Signed by Magistrate Judge Mona K. Majzoub. (LBar)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
ROBERT A. TURNBULL,
Case No. 16-cv-11971
District Judge Gershwin A. Drain
O’REILLY RANCILIO P.C.,
Magistrate Judge Mona K. Majzoub
OPINION AND ORDER DENYING PLAINTIFF’S
MOTION FOR LEAVE TO AMEND
This matter is before the Court on Plaintiff’s Motion to Amend Complaint. (Docket no.
17.) Defendant opposes Plaintiff’s request, contending that the proposed amended complaint
would fail to state a claim upon which relief can be granted. (Docket no. 19.)
With consent of the Parties, this case has been referred to the undersigned for all
proceedings in accordance with 28 U.S.C. § 636(c) and Federal Rule of Civil Procedure 73.
(Docket no. 11.) The Court has reviewed the pleadings and determined that the Motion will be
resolved without oral argument pursuant to Eastern District of Michigan Local Rule 7.1(f)(2).
For the reasons set forth below, Plaintiff’s proposed amended complaint fails to state a
viable claim under the Fair Debt Collection Practices Act (FDCPA), and the Court must deny
Plaintiff’s motion for leave to amend.
This matter arises from Defendant’s efforts to collect on a student loan debt. Plaintiff
filed a two-count complaint alleging that Defendant violated the FDCPA by (1) suing Plaintiff in
a judicial district in which Plaintiff did not reside at the time of the commencement of the action
and by (2) asserting that it had the right to garnish Plaintiff’s wages on the basis of the allegedly
defective underlying judgment.
(Docket no. 1.)
Plaintiff also contended that Defendant’s
actions violated Michigan law. (Id.)
Defendant filed a motion to dismiss Plaintiff’s claims pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure and, in the alternative, for summary judgment under Rule
56(c). (Docket no. 8.) In support of its motion, Defendant contended that any violation of the
FDCPA was the result of a “bona-fide error,” for which a debt collector may not be held liable.
(Docket no. 8, pp. 8-9 (citing 15 U.S.C. § 1692(k)).) Plaintiff contested Defendant’s assertion of
the bona-fide error defense, and, within his responsive pleading, sought leave to file an amended
complaint in order to add “additional plausible claims that are not futile,” including that the
garnishment efforts undertaken by Defendant violated the venue provision of the FDCPA, 15
U.S.C. § 1692i. (Docket no. 13, pp. 8-9, 23-24.)
The Court partially granted Defendant’s motion, dismissing Plaintiff’s FDCPA claims on
the basis that Defendant had at most committed a bona-fide error. (Docket no. 16.) However,
the Court observed that Plaintiff’s proposed amended claims based on the garnishment
proceedings might be viable. (Id. at p. 11.) Accordingly, the Court permitted Plaintiff to file a
procedurally proper motion for leave to amend. (Id.) The Court further indicated that if Plaintiff
failed to add a valid federal claim, the Court would decline to exercise jurisdiction over the statelaw claims and dismiss the entire matter. (Id. at p. 13.)
On April 5, 2017, Plaintiff filed his motion for leave to amend (docket no. 17), asserting
that the proposed amended pleading would state an FDCPA claim that would not be subject to
the same basis for dismissal of his originally-pleaded claims. Defendant contends that the
proposed amended complaint would remain subject to dismissal as a matter of law, and on that
basis opposes Plaintiff’s motion for leave to amend. (Docket no. 19.)
STANDARD OF REVIEW
A party may amend its pleading only with the opposing party’s written consent or the
court’s leave. The court should freely give leave when justice so requires. Fed. R. Civ. P.
15(a)(2). Such leave should be granted in the absence of undue delay, bad faith or dilatory
motive, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice
to the opposing party, and futility of the amendment. Foman v. Davis, 371 U.S. 178, 182, 83
S.Ct. 227, 9 L.Ed.2d 222 (1962).
As described above, the Court dismissed Plaintiff’s FDCPA claim as originally pleaded,
but permitted Plaintiff to file a motion for leave to amend in order to address whether
Defendant’s garnishment efforts could give rise to a viable FDCPA claim. Because Defendant
opposes Plaintiff’s request, the Court must determine whether justice requires granting leave to
amend. See Fed. R. Civ. P. 15(a)(2). In determining whether “justice so requires,” the Court
will look to “the substance of the proposed amendment.” Roskam Baking Co., Inc. v. Lanham
Machinery Co., Inc., 288 F.3d 895, 906 (6th Cir. 2002) (citation omitted).
amendment is futile if it could not withstand a Rule 12(b)(6) motion to dismiss. Rose v. Hartford
Underwriters Ins. Co., 203 F.3d 417, 420 (6th Cir. 2000).
Plaintiff seeks leave to amend his complaint in order to allege that Defendant violated the
FDCPA by filing a writ of garnishment in a venue in which (1) Plaintiff did not reside at the time
of filing and (2) Plaintiff did not sign the contract sued upon. (Docket no. 17, exh. 7.) The
FDCPA venue provision (§ 1692i) states in pertinent part as follows:
Any debt collector who brings any legal action on a debt against any consumer
shall [in cases other than actions to enforce an interest in real property securing
the consumer's obligation] bring such action only in the judicial district or similar
legal entity (A) in which such consumer signed the contract sued upon; or (B) in
which such consumer resides at the commencement of the action.
15 U.S.C. § 1692i.
Defendant contends that granting leave to add this claim would be futile because the
garnishment action at issue is not subject to § 1692i. (Docket no. 19, pp. 6-11.) The Parties do
not dispute that (1) Defendant is a debt collector, (2) a garnishment is a legal action on a debt,
and (3) Plaintiff is a consumer.
Accordingly, the question before the Court is whether
garnishment proceedings at issue constitute a legal action “against any consumer” under § 1692i.
The Sixth Circuit has not had occasion to rule on this issue. See Adkins v. Weltman, Weinberg &
Reis Co., L.P.A., No. 2:11-CV-00619, 2012 WL 604249 (S.D. Ohio Feb. 24, 2012). The Parties
rely on competing case law from various jurisdictions, which the Court will proceed to address
In the context of a similar claim under § 1692i, the First Circuit determined that the
Massachusetts “trustee process” (akin to wage-garnishment proceedings) “is an action against a
third-party trustee and not the consumer.” Smith v. Solomon & Solomon, P.C., 714 F.3d 73, 76
(1st Cir. 2013). The court concluded that the trustee process was “geared toward compelling the
trustee to act, not the debtor,” notwithstanding the fact that the debtor “must be given notice of
the hearing and an opportunity to contest the attachment.” Id. The court emphasized “the fact
that a trustee process action in Massachusetts can only be initiated in the venue in which the
trustee is located,” and went on to observe that if the FDCPA required the debt collector to file a
garnishment proceeding where a debtor resides, “it would be impossible for a debt collector to
enforce a prior judgment through trustee process in Massachusetts unless the judgment debtor
happened to reside or to have signed the underlying contract in the same county in which the
trustee had a usual place of business.” Id. at 77.
Similarly, the Seventh Circuit determined that Illinois’ garnishment procedure “makes
clear that its focus is on the third-party employer, not the judgment debtor” and is not an action
against a consumer for purposes of the FDCPA. Jackson v. Blitt & Gaines, P.C., 833 F.3d 860,
864 (7th Cir. 2016). In reaching this conclusion, the court highlighted several aspects of a
garnishment action in Illinois, including that “the judgment debtor is not a necessary participant”
and that such actions “must be filed in the county where the third-party employer resides,
regardless of the judgment debtor’s residence.” Id.
Like the actions at issue in Jackson and Smith, the garnishment proceedings undertaken
by Defendant cannot be considered an action “against [a] consumer.” The factors emphasized by
Jackson and Smith are equally persuasive in the context of this case. Several provisions of
Michigan’s garnishment procedure clearly indicate that such an action is not “against” the
underlying debtor. In particular, Michigan law provides that a court has power to apply property
or an obligation to satisfy a claim “whether or not the state has jurisdiction over the person
against whom the claim is asserted” (i.e., the underlying debtor).
Mich. Comp. Laws §
600.4011. Furthermore, under the Michigan Court Rules, the underlying debtor may object only
on the basis of “defects in or the invalidity of the garnishment proceeding itself,” as opposed to
“the validity of the judgment previously entered.” Mich. Ct. R. 3.101(K). Finally, Michigan law
provides that the proper venue for a garnishment action is any venue that would be proper for
both the garnishee and the debtor, but if no such county exists, simply the venue that is proper
for the garnishee.
Mich. Comp. Laws § 600.4025.
Accordingly, to accept Plaintiff’s
interpretation of the FDCPA would create the same venue quandary highlighted by the Smith
Court. That is, if a Michigan garnishment action were “against [a] consumer” for purposes of the
FDCPA, a debt collector could not undertake a garnishment proceeding unless the debtor and
garnishee shared a common proper venue. Like the Smith Court, this Court does not “read the
FDCPA as mandating such a strange result.” Smith, 714 F.3d at 77.
In support of the opposite conclusion, Plaintiff relies on a Ninth Circuit case, Fox v.
Citicorp Credit Services, Inc., 15 F.3d 1507 (9th Cir. 1994), as well as the Adkins case cited
above, a matter decided in the Southern District of Ohio. In Fox, the Ninth Circuit held that the
plain meaning of the term “legal action” encompasses all judicial proceedings, including those in
enforcement of a previously-adjudicated right.
Fox, 15 F.3d at 1515.
In reaching this
conclusion, the Fox Court expressed concern that debtors might have to “defend against the
amount of garnishment in a distant court.” Id. Citing Fox with approval, the Adkins Court
determined that the garnishment action at issue in that case was “against the employee-judgment
debtor” as opposed to the employer-garnishee. Adkins, 2012 WL 604249 at *6. In support, the
Adkins Court reasoned that, under the Ohio garnishment procedure, “[o]nly the judgment creditor
and the judgment debtor have any beneficial interest at stake in a garnishment action.” Id.
The Court finds Fox and Adkins to be unavailing in the context of this case. Although the
court in Fox determined that “legal action” under § 1692i means all judicial proceedings, this
does not answer the question of whether a garnishment action is “against any consumer.” To
determine whether the action at issue is “against any consumer,” one must look to the nature of
judicial proceedings at issue, which in this case requires the Court to refer to the Michigan wagegarnishment scheme. See Jackson, 833 F.3d at 863. For this reason, Adkins, which addresses
Ohio’s garnishment procedure, is of limited persuasiveness. Most importantly, as noted by the
Seventh Circuit in Jackson, Ohio law does not require the garnishment action to be filed in the
county where the employer resides. Id. at 865.
Accordingly, Plaintiff’s proposed amended complaint fails to state a claim under the
FDCPA that would withstand a Rule 12(b)(6) motion to dismiss. Because granting leave to
amend would be futile under the circumstances, the Court must deny Plaintiff’s motion.
For the reasons set forth above, Plaintiff’s Motion for Leave to Amend (docket no. 17) is
DENIED. As provided in this Court’s order of partial dismissal (docket no. 16), the Court
declines to exercise supplemental jurisdiction over the state-law claims and now dismisses
Plaintiff’s complaint in its entirety.
Dated: October 13, 2017
s/ Mona K. Majzoub
MONA K. MAJZOUB
UNITED STATES MAGISTRATE JUDGE
PROOF OF SERVICE
I hereby certify that a copy of this Report and Recommendation was served upon Plaintiff
and counsel of record on this date.
Dated: October 13, 2017
s/ Lisa. C. Bartlett
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