Klein v. Credico Inc.

Filing 23

ORDER granting 9 Motion to Dismiss. (Written Opinion) Signed by Senior Judge David S. Doty on 7/12/2018. (DLO)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 18-659(DSD/BRT)
Dina Klein,
Plaintiff,
v.

ORDER

Credico, Inc.,
Defendant.
Darren B. Schwiebert, Esq. and DBS Law LLC, 301 Fourth Avenue
South, Suite 280N, Minneapolis, MN 55415, counsel for
plaintiff.
Jessica L. Klander, Esq. and Bassford Remele, 100 South 5th
Street, Suite 1500, Minneapolis, MN 55402, counsel for
defendant.
This matter is before the court upon the motion to dismiss by
defendant Credico Inc.

Based on a review of the file, record, and

proceedings herein, and for the following reasons, the motion is
granted.

BACKGROUND
This debt-collection dispute arises out of Credico’s attempt
to collect, on behalf of High Pointe Surgery Center, a $3,902.46
debt from plaintiff Dina Klein, a Minnesota resident. Compl. ¶¶ 4,
6; Klander Decl. Ex. A.

On March 14, 2017, Credico, which also

does business under the registered name of Credit Collections
Bureau, sent a collection letter to Klein informing her that a
lawsuit would be brought against her unless she contacted its

collector, Shane Gold, to pay the debt in full or pursue one of
other several options listed. Compl. ¶ 6; see Klander Decl. Ex. A.
On March 9, 2018, Klein filed suit against Credico alleging
that the letter violated the Fair Debt Collections Practices Act
(FDCPA), 15 U.S.C. § 1692, et seq.

Klein contends that the letter

was false, deceptive, and misleading because it: (1) listed a
return address in Portland, Oregon, although Credico is based in
South Dakota; (2) falsely identified Credico as “Professional Debt
Collectors,” an entity that does not exist; (3) invited her to pay
her debt or correspond with “CCB” at www.payccb.com even though the
letter did not state the identity of “CCB” and the name “CCB” is
not a registered name of Credico; (4) was signed by an individual
debt collector, Kathy Mitchell, who was not licensed in Minnesota,
and (5) stated that Credico could seek pre-judgment interest
against her, which Klein asserts Credico had no legal basis to
recover.

Compl. ¶¶ 12-14, 16-20.

Credico now moves to dismiss.

DISCUSSION
I.

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.’”
Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009)
(quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
2

“A claim

has facial plausibility when the plaintiff [has pleaded] factual
content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”

Iqbal, 556

U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556
(2007)).

Although a complaint need not contain detailed factual

allegations, it must raise a right to relief above the speculative
level.

Twombly, 550 U.S. at 555.

“[L]abels and conclusions or a

formulaic recitation of the elements of a cause of action” are not
sufficient to state a claim.

Iqbal, 556 U.S. at 678 (citation and

internal quotation marks omitted).
The court does not consider matters outside the pleadings
under Rule 12(b)(6).

Fed. R. Civ. P. 12(d).

The court may,

however, consider matters of public record and materials that are
“necessarily embraced by the pleadings.”

Porous Media Corp. v.

Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999) (citation and
internal quotation marks omitted).

Here, the court properly

considers Credico’s letter.
II.

Identity of the Debt Collector
Credico argues that Klein’s claims that the letter created

confusion regarding the identity of the debt collection agency fail
as a matter of law.

The court agrees.

The FDCPA prohibits a debt collector from employing “any
false, deceptive, or misleading representation in connection with
the collection of the debt” or using the name of a “business,

3

company, or organization ... other than the true name of the debt
collector’s business ....”

15 U.S.C. §§ 1692e, 1692e(14).

In

determining whether a debt collection letter is false, deceptive,
or misleading, the court must view it “through the eyes of an
unsophisticated consumer.”

Peters v. Gen. Serv. Bureau, Inc., 277

F.3d 1051, 1055 (8th Cir. 2002).
protect

consumers

of

Although the test is meant to

“below

average

sophistication

or

intelligence,” the court must also apply an “objective element of
reasonableness.”
omitted).

Id. (citations and internal quotations marks

In other words, a plaintiff cannot prevail on “bizarre

or idiosyncratic interpretations of collection notices.”
(citations and internal quotation marks omitted).

Id.

Viewed through

the eyes of an unsophisticated consumer, the letter is not false,
deceptive, or misleading.
A.

Address

First, although the letter lists a Portland, Oregon return
address, it also lists a Sioux Falls, South Dakota address in the
upper-right corner under the name of the sender. See Klander Decl.
Ex. A.

An unsophisticated consumer would understand that the

address

below

the

sender’s

name

is

the

sender’s

address.

Additionally, there is no allegation that the Portland address is
invalid, and a valid address cannot reasonably be characterized as
being false, misleading or deceptive.

Accordingly, the use of a

Portland, Oregon post office box as the return address does not

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violate the FDCPA.
B.

“Professional Debt Collectors”

Next, Klein argues that the use of the name “Professional Debt
Collectors” in the heading of the letter violates the FDCPA because
it is not a registered name of Credico.

Credico argues that

“Professional Debt Collectors” is not a name, it is simply a
description of the company Credit Collections Bureau.
agrees with Credico.

The court

The name “Credit-Collections-Bureau” is

printed on the upper-right corner of the letter. Klander Decl. Ex.
A.

Below the name of the company, the phrase “Professional Debt

Collectors” is printed.

Id.

An unsophisticated consumer would

understand that “Professional Debt Collectors” is a description of
the company listed above - not a separate company. Klein’s reading
of

the

letter

is

strained

and

the

type

of

“idiosyncratic”

interpretation that the Eighth Circuit has held is not actionable.
C.

“CCB”

Finally, Klein argues that the use of the term “CCB” violated
the FDCPA because it is not a registered name of Credico and
confused her as to the true identity of the debt collection agency.
The court disagrees.
“CCB” was used in the sentence “Pay on-line or correspond with
CCB at www.payccb.com” at the very bottom of the letter.

Id.

Although “CCB” was not previously used in the letter or explicitly
linked

to

the

name

of

the

5

debt

collection

agency,

an

unsophisticated consumer would not believe that “CCB” referred to
a different company.

The court agrees with Credico that “CCB” is

a commonsense abbreviation of “Credit-Collection-Bureau” and is
therefore not false, misleading, or deceptive.
In addition, the cases that Klein cites in support of her
position are factually distinguishable.

Those cases involved the

use of a false name by a defendant that gave the impression that it
was a debt collectors when it was not, Lester E. Cox Med. Ctr.,
Springfield, Mo. v. Huntsman, 408 F.3d 989, 992-93 (8th Cir. 2005),
or a government agency when it was not, Peter v. GC Servs. L.P.,
310 F.3d 344, 352-53 (5th Cir. 2002).

That is not the case here.

In the letter, Credico provided a correct registered name, a
correct contact number, and accurately identified itself as a debt
collector. This is not the type of false, deceptive, or misleading
information that the FDCPA was intended to protect against.
D.

Materiality

Even if the allegations addressed above technically violated
§ 1962e, the court must also determine whether the violation was
material.

See Hill v. Accounts Receivable Servs., LLC, 888 F.3d

343, 345-46 (adopting a materiality standard for violations of
§ 1692e).1

A violation is material if it undermines the ability of

1

Klein argues that a materiality standard applies only to
§ 1692e, not to its subdivisions such as § 1692e(14). In Hill,
however, the Eighth Circuit applied a materiality standard to
several subdivision of § 1692e.
Hill, 888 F.3d at 345-46.
Therefore, Klein’s argument is without merit.
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the consumer to obtain information to intelligently make a decision
regarding the alleged debt.

Id.; see also Elyazidi v. SunTrust

Bank, 780 F.3d 227, 234 (4th Cir. 2015)(citations and internal
quotation

marks

omitted)(second

alternation

in

original)(“To

violate [§ 1692e], a representation must be material, which is to
say, it must be important in the sense that [it] could objectively
affect the least sophisticated consumer’s decisionmaking.”).
Here, there is nothing in the complaint or otherwise to
suggest

that

the

alleged

violations

would

undermine

an

unsophisticated consumer’s ability to obtain relevant information
regarding the debt.

Klein was correctly provided the name,

address, and telephone number of the debt collection agency; the
name and number of the individual debt collector to contact; the
alleged balance due; and the name of the company to whom she owned
the debt. Therefore, any violation alleged by Klein was immaterial
and

not

actionable

under

the

FDCPA.

As

a

result,

Klein’s

allegations that the letter obfuscated the identity of the debt
collector fail as a matter of law and must be dismissed.
III. Signature of an Unlicensed Collector
Credico also moves for dismissal of Klein’s claim that it
violated the FDCPA because Kathy Mitchell, who is not registered in
Minnesota, signed the collection letter in violation of Minn. Stat.

7

§ 332.33.2

Specifically, it argues that even if Minnesota law was

violated, it does not amount to a violation of the FDCPA. Klein
argues that the signature of an unregistered creditor amounts to a
violation of § 1692f(1) of the FDCPA because it is an attempt to
collect a debt that was not permitted by law.3

The court agrees

with Credico.
Although Mitchell’s signature on the collection letter may
have violated Minnesota law, the FDCPA “was not meant to convert
every violation of a state debt collection law into a federal
violation.”

Carlson v. First Revenue Assurance, 359 F.3d 1015,

1018 (8th Cir. 2004).

Only collection activities that are false,

deceptive, or misleading or threaten “to take any action that
cannot legally be taken under state law” will also amount to FDCPA
violations.

Id. (citations and internal quotation marks omitted).

Klein relies on Goetze v. CRA Collections, No. 15-3169, 2017
WL 5891693 (D. Minn. Nov. 28, 2017) for the proposition that a
violation of Minnesota’s debt collection license statute amounts to
a violation of the FDCPA.

But Goetze is inapposite.

In that case,

the court granted default judgment in favor of the plaintiff and
found that because CRA Collections was not licensed to collect

2

Section 332.33 requires each person conducting business on
behalf of a collection agency in Minnesota to register with the
State. Minn. Stat. § 332.33 subdiv. 1.
3

15 U.S.C. § 1692f(1) prohibits “[t]he collection of any
amount ... unless such amount is expressly authorized by the
agreement creating the debt or permitted by law.”
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debts in Minnesota, it violated the FDCPA by threatening to take
action that it could not legally take.

Id.

at *3.

Here,

Mitchell’s signature was one of three signatures on the collection
letter,

and

Minnesota.

Mitchell

was

the

only

person

not

registered

in

Further, Credico, unlike CRA Collections, is licensed

to collect debts in Minnesota.

In contrast to the defendant

Goetze, Credico was not threatening to collect a debt that it
legally could not collect, nor was it misleading Klein into
believing it could sue her for collection of the debt when it
actually could not.

As a result, Mitchell’s signature on the

collection letter does not amount to a violation of the FDCPA, and
the court dismisses the claim.
IV. Pre-judgment Interest
Klein’s final claim is based on Credico’s statement in the
collection letter that it could seek pre-judgment interest on the
collection of the debt.

Klein argues that this claim was false

because Minnesota law does not permit the award of pre-judgment
interest on her debt.

Specifically, she contends that the only

applicable law under which Credico could seek pre-judgment interest
is Minn. Stat. § 549.09, but that statute does not allow prejudgment interest for the debt amount claimed by Credico.
court is not persuaded.

9

The

Klein is correct that Credico could not collect pre-judgment
interest under § 549.09. Section 549.09 provides that pre-judgment
interest shall not be awarded on “judgments or awards not in excess
of the amount specified in section 491A.01.”
subdiv. 1(b)(4).

Minn. Stat. § 549.09

Section 491A.01, in turn, provides that the

specified amounts are $15,000, or $4,000 “if the claim involves a
consumer credit transaction.”

Minn. Stat. § 491A.01 subdiv. 3a.

The amount Credico attempted to collect, $3,902.46, does not exceed
either of these amounts; therefore, Credico could not collect prejudgment interest under § 549.09.
But

Minnesota

also

provides

for

interest under Minn. Stat. § 334.01.

awards

of

pre-judgment

Klein contends that § 334.01

is inapplicable because § 554.09 is the exclusive interest statute
for a breach of contract claim.

Klein relies on Poehler v.

Cincinnati Insurance Co., 899 N.W. 2d 135 (Minn. 2017).

In that

case, the Minnesota Supreme Court concluded that the Minnesota
Court of Appeals erred in holding that § 549.09 only applied to
insurance appraisal award claims when there was a breach of
contract or actionable wrongdoing by the insurer. Id. at 139, 141.
Specifically, the court held that § 549.09 “unambiguously provides
for preaward interest on all awards of pecuniary damages that are
not specifically excluded by the statute, and does not restrict the
recovery

of

preaward

interest

to

wrongdoing or a breach of contract.”

10

cases

of

maters

Id. at 141.

involving

The Supreme

Court did not hold, however, that § 554.09 is the exclusive statute
under which a party can seek pre-judgment interest. Indeed, it did
not even address § 334.01, much less conclude that debt collectors
cannot seek pre-judgment interest under it.
The Eighth Circuit recognized as much in Hill when it held
that a debt collector did not violate Minnesota law by seeking prejudgment interest because a “whether § 334.01 applies to [the debt
collector’s] ... claim is a question of Minnesota law that has not
been decided by the Minnesota Supreme Court.”
346.

Hill, 888 F.3d at

Accordingly, because nothing in Minnesota law prohibits

Credico from seeking pre-judgment interest, it was not a violation
of the FDCPA for Credico to note as much in its collection letter.4

4

Klein also contends that Andersen v. Owners Insurance Co.
recognized that § 334.01 is no longer the applicable interest
statute, but that case only held that Poehler’s holding extends
beyond homeowner insurance appraisal awards to commercial insurance
appraisal awards. No. A16-0115, 2018 WL 1569837, at *2 (Minn. Ct.
App. Apr. 2, 2018). Contrary to Klein’s argument, the court did
not hold that, in light of Poehler, § 334.01 was no longer
generally applicable.
See id.
In any case, Andersen is an
unpublished case and, therefore, has no precedential value. See
Minn. Stat. § 480A.08 subdiv. 3.
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CONCLUSION
Accordingly, based on the above, IT IS HEREBY ORDERED that:
1.

Defendant’s motion to dismiss [ECF No. 9] is granted; and

2.

The case is dismissed with prejudice.

LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated: July 12, 2018
s/David S. Doty
David S. Doty, Judge
United States District Court

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