Leonardo v. MSW Capital, LLC et al
MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that: 1. Defendant's Motion to Dismiss 15 is GRANTED; and 2. Leonardo's Amended Complaint 13 is DISMISSED with prejudice. LET JUDGMENT BE ENTERED ACCORDINGLY. (Written Opinion) Signed by The Hon. Paul A. Magnuson on 05/12/2017. (LLM)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Case No. 16-cv-3845 (PAM/FLN)
MEMORANDUM AND ORDER
MSW Capital, LLC, and
Messerli & Kramer, P.A.,
This matter is before the Court on Defendants’ Motion to Dismiss.
following reasons, the Motion is granted.
Plaintiff Frank Leonardo obtained a credit card through Credit One Bank, N.A.
and over time incurred a debt in the amount of $1,283.74. (Weber 2d Decl. Ex. F
(Docket No. 22-1) at 1.) Eventually, Credit One Bank “charged off” Leonardo’s debt and
Defendant MSW Capital, LLC became the successor in interest to the account. (Id. at 2.)
Following the charge-off, neither Credit One Bank nor MSW Capital sent Leonardo any
periodic billing statements detailing the interest accumulating on the account. (Am.
Compl. (Docket No. 13) ¶ 12, 14.)
On October 13, 2015, Defendant Messerli & Kramer, P.A., on behalf of its client
MSW Capital, served Leonardo with a summons and complaint seeking to collect the
debt. (Weber Aff. (Docket No. 17) Exs. A & B.) Defendants eventually filed the
complaint in Minnesota state court on August 11, 2016. (Id. Ex. D.) In the complaint,
Defendants alleged that Leonardo owed MSW Capital the $1,283.74 balance, and an
additional $1,291.09 in interest based on a 23.90% interest rate, plus continuing interest
and attorney’s fees. (Id.) Defendants also attached a “true and correct copy” of the
“Credit Agreement” that purportedly governed Leonardo’s credit card account. (Id.) The
fees outlined in the attached agreement, however, did not match the fees Leonardo paid.
(Am Compl. ¶ 46, 47.)
On November 7, 2016, Leonardo filed this lawsuit alleging that Defendants’ statecourt lawsuit violated the Fair Debt Collection Practices Act (“FDCPA”). Defendants
initially filed a motion to dismiss on January 13, 2017, but Leonardo subsequently filed
an Amended Complaint within the 21 days allowed under Rule 15 to amend as a matter
of course. In his Amended Complaint, Leonardo claims that Defendants violated the
FDCPA by making four misrepresentations in the state-court complaint.
alleges that Defendants misrepresented (1) the amount of debt he owed by including
interest that MSW Capital had allegedly waived when it failed to send Leonardo periodic
billing statements that calculated the accrued interest (id. ¶¶ 27-31); (2) the amount of
debt he owed by improperly calculating interest-on-interest in violation of the agreement
and Minnesota law (id. ¶¶ 32-39); (3) that the agreement attached to the state court
complaint was a true and correct copy of the agreement between Leonardo and Credit
One Bank (id. ¶¶ 40-52); and (4) that Defendants were entitled to attorney’s fees under
the agreement (id. ¶¶ 53-57).
On February 16, 2017, Defendants filed this Motion to Dismiss. 1
Standard of Review
To survive a motion to dismiss for failure to state a claim, 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, 570 (2007)); see also Fed. R. Civ. P. 12(b)(6). A claim
bears facial plausibility when it allows the Court “to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Id. When evaluating a motion to
dismiss, the Court must accept factual allegations as true, Gomez v. Wells Fargo Bank,
N.A., 676 F.3d 655, 660 (8th Cir. 2012), but it need not give effect to those that simply
assert legal conclusions, McAdams v. McCord, 584 F.3d 1111, 1113 (8th Cir. 2009).
“Threadbare recitals of the elements of a cause of action, supported by mere conclusory
statements,” are insufficient to support a claim. Iqbal, 556 U.S. at 678.
While the parties briefed the Motion, the Minnesota state court granted Defendants’
motion for summary judgment in the underlying action and awarded MSW Capital
$4,108.54 in principal, interest, costs, plus to-be-determined attorney’s fees. (Weber 2d
Decl. Ex. F at 4.) In their reply memorandum, Defendants argue that Leonardo’s claims
are now barred by the Rooker-Feldman doctrine, claim preclusion, and issue preclusion,
in addition to their original arguments. Because Leonardo did not have the opportunity to
brief those issues, and because the statute of limitations bars Leonardo’s claims in any
event, the Court declines to address whether Leonardo’s claims fail on those bases as
Materials Outside of the Pleadings
Leonardo insists that the Court must convert Defendants’ Motion to Dismiss into a
motion for summary judgment and allow him to conduct discovery because Defendants
submitted additional affidavits and exhibits outside of the pleadings. Leonardo is wrong.
Generally, a court “may not consider materials outside of the pleadings when
deciding a motion to dismiss for failure to state a claim.” Greenman v. Jessen, 787 F.3d
882, 887 (8th Cir. 2015) (citation omitted). But a court may “consider some materials
that are part of the public record or do not contradict the complaint, as well as materials
that are necessarily embraced by the pleadings.” Id. (quotations and citations omitted.)
A court is not required to convert a motion to dismiss into a summary judgment motion
“simply because one party submits additional matters in support of or opposition to the
Levy v. Ohl, 477 F.3d 988, 991 (8th Cir. 2007) (quotations and citation
Along with their Motion, Defendants submitted an affidavit with several
accompanying exhibits. Leonardo argues that many of these exhibits are not matters of
public record. But all of the exhibits are documents that have been filed in the underlying
state-court action and are therefore clearly matters of public record. Moreover, although
Leonardo claims that his Amended Complaint does not reference these documents, it in
fact repeatedly references the state-court action and Defendants’ state-court complaint.
(See, e.g., Am. Compl. ¶¶ 22, 27, 41.) Defendants’ exhibits are a quintessential example
of materials that are “necessarily embraced by the pleadings.” Greenman, 787 F.3d at
887. The Court may consider the state-court documents without converting Defendants’
Motion into a motion for summary judgment.
Statute of Limitations
A cause of action under the FDCPA must be brought “within one year from the
date on which the violation occurs.” 15 U.S.C. § 1692k(d). A violation occurs “when
the debtor is on notice of the misrepresentation and unconscionable debt collection
means.” Kirscher v. Messerli & Kramer, P.A., No. 05cv1901, 2006 WL 145162, at *3
(D. Minn. Jan. 18, 2006) (Magnuson, J.) (citation and quotations omitted).
communications concerning an old claim do not start a new period of limitations.
Fraenkel v. Messerli & Kramer, P.A., No. 04cv1072, 2004 WL 1765309, at *4 (D. Minn.
July 29, 2004) (Tunheim, J.). When an FDCPA claim involves misrepresentations in a
debt-collection lawsuit, a new violation is not committed merely because pleadings and
memoranda are the continuing effects of the initial violation. Dakowa v. MSW Capital,
LLC, No. 16cv2753, 2017 WL 662975, at *4 (D. Minn. Feb. 17, 2017) (Montgomery, J.).
The plaintiff is not deceived or abused anew each time the defendants reaffirm their
deceptive statements throughout the litigation. Id.
Leonardo was first put on notice of the alleged misrepresentations and
unconscionable debt collection means when Defendants served him with their state-court
complaint on October 13, 2015. But Leonardo did not file this lawsuit until more than a
year later on November 7, 2016. Because Leonardo filed lawsuit more than one year
from the date on which the violation occurred, the statute of limitations bars Leonardo’s
Leonardo attempts to bypass the statute of limitations by claiming that he does not
intend to impose liability on Defendants for any actions or omissions that occurred before
November 8, 2015, and “does not ask the Court to look back at anything Defendants did
or did not do before that time period.” (Id. ¶ 24, 26.) Leonardo essentially demands that
he be allowed to choose when the statute of limitations began to run. But allowing
Leonardo to make that choice would defeat the purpose of the statute of limitations.
Leonardo was put on notice of the alleged violations on October 13, 2015. He is not
allowed to ignore that fact.
Leonardo also argues that this case is similar to Boldon v. Riverwalk Holdings,
Ltd., No. 15cv2105, 2016 WL 900639, (D. Minn. Mar. 9, 2016) (Tunheim, C.J.). In
Boldon, the defendants filed their state court complaint seventeen months after they first
served the plaintiff with the complaint. Id. at *1. Chief Judge Tunheim reasoned that if
the statute of limitations barred the plaintiff’s claims, the court would
be endorsing a framework whereby a debt collector could violate the
FDCPA and then lull the debtor into thinking that it had reformed its
violative conduct, only to recommence the same violative conduct after one
year and a day, leaving the debtor without any recourse. A debt collector
could gain immunity from liability simply by laying in the weeds until the
expiration of the limitations period.
Id. at *3. Chief Judge Tunheim found such a result to not comport with the remedial
purpose of the FDCPA to eliminate abusive debt-collection practices and considered the
filing of the complaint a new claim that triggered a new limitations period. Id. at *3-4.
In contrast, however, Defendants filed their state court complaint ten months after
they served Leonardo, leaving two months for Leonardo to bring this lawsuit if he so
desired. But Leonardo waited another three months before filing. Boldon is therefore
The FDCPA’s statute of limitations bars Leonardo’s claims. Accordingly, IT IS
HEREBY ORDERED that:
Defendants’ Motion to Dismiss (Docket No. 15) is GRANTED; and
Leonardo’s Amended Complaint (Docket No. 13) is DISMISSED with
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated: May 12, 2017
s/ Paul A. Magnuson
Paul A. Magnuson
United States District Court Judge
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?