Williams v. National Credit Adjusters, LLC. et al
MEMORANDUM AND ORDER IT IS HEREBY ORDERED that defendant National Credit Adjusters, LLC's motion to dismiss plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b) (6) is DENIED. [Doc. 9 ] Signed by District Judge Charles A. Shaw on 9/4/14. (KXS)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
NATIONAL CREDIT ADJUSTERS, LLC,
VICTOR PEREZ, and RACHEL DOE,
No. 4:14-CV-267 CAS
MEMORANDUM AND ORDER
This matter is before the Court on defendant National Credit Adjusters, LLC’s (“NCA”)
motion to dismiss plaintiff’s complaint for failure to state a claim pursuant to Federal Rule of Civil
Procedure 12(b)(6). Plaintiff opposes the motion. The matter has been fully briefed. Recently, both
parties submitted as supplemental authority the Missouri Supreme Court’s decisions in Conway v.
CitiMortgage, Inc., --- S.W.3d at ---, No. SC 93951 (Mo. banc Aug. 19, 2014), and Watson v. Wells
Fargo Home Mortgage, Inc., --- S.W.3d at ---, No. SC 93769 (Mo. banc Aug. 19, 2014).1 For the
following reasons, the Court will deny defendant’s motion.
Plaintiff Calvin Williams brings this action against NCA and two of its agents, defendants
Victor Perez and Rachel Doe, for violations of the Missouri Merchandising Practices Act
(“MMPA”). Mr. Williams alleges defendants used racial epithets, abusive language, threats of
arrest, and deception in telephone conversations with Mr. Williams in an attempt to collect an
Although plaintiff filed a two-page motion for leave to file supplemental authority,
neither party requested supplemental briefing.
Prior to August 8, 2013, Mr. Williams obtained a personal loan from Castle Pay Day Loans.
NCA is a debt collection company that services or purchases delinquent debt from companies that
originate loans to individuals. Although not specifically alleged in the complaint, apparently NCA
purchased Mr. Williams’ debt from Castle Pay Day Loans. On August 8, 2013, defendants began
contacting Mr. Williams at work and at home in an attempt to settle or resolve the alleged debt.
NCA moves to dismiss plaintiff’s complaint, stating its alleged activities were not “in
connection with” the origination of the loan under the MMPA. NCA states that its conduct was
solely related to its efforts to collect on the debt it had purchased from another company who
originated the loan to plaintiff, and thus its alleged activities are not actionable under the MMPA.
On a motion to dismiss, the Court accepts as true the factual allegations contained in the
complaint and grants the plaintiff the benefit of all reasonable inferences that can be drawn from
those allegations. See Lustgraaf v. Behrens, 619 F.3d 867, 872-73 (8th Cir. 2010). “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, 570 (2007)). “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Id.
Plaintiff alleges violations of the Missouri Merchandising Practices Act, Mo. Rev. Stat. §§
407.010 et seq. Under Missouri Revised Statute § 407.020.1:
The act, use or employment by any person of any deception, fraud, false pretense,
false promise, misrepresentation, unfair practice or the concealment, suppression, or
omission of any material fact in connection with the sale or advertisement of any
merchandise in trade or commerce . . . in or from the state of Missouri, is declared
to be an unlawful practice.
Plaintiff alleges defendants violated the MMPA “in connection with the advertisement or
sale of debt settlement or debt restructuring services” by: (1) not acting in good faith; (2) using
racially hateful and abusive language; (3) misrepresenting their authority to settle or resolve the
debt; (4) imposing unauthorized fees; (5) misrepresenting to Mr. Williams that he might be arrested
or incarcerated; and (6) harassing Mr. Williams. (Compl. ¶ 47).
Defendant moves to dismiss the complaint under Rule 12(b)(6) because plaintiff did not
obtain his loan from NCA. “The MMPA does not apply where the alleged acts of deception and
unfair practices were not committed in connection with the origination of the loan, but rather in
connection with subsequent efforts to collect on the debt. State ex rel. Koster v. Professional Debt
Mgmt., LLC, 351 S.W.3d 668, 670 (Mo. Ct. App. 2011).” (Def. Mem. at 4-5).
The cases relied upon by defendant in its motion to dismiss have been overruled by the
Missouri Supreme Court’s recent decisions in Conway and Watson. In these cases, the Missouri
Supreme Court interpreted the MMPA’s requirement that the deceptive conduct occur “in
connection with the sale or advertisement of any merchandise” to include, in the debt collection
context, conduct of loan servicers who were not original parties to the loan transaction. See
Conway, No. SC 93951, slip op. at 10. “Because a loan is an ongoing transaction, loan collection
procedures, whether initiated by a loan originator or a loan servicer, are done ‘in connection with’
the original procurement of the loan. To the extent Professional Debt and Portfolio Recovery Assets
conflict with this holding, they should no longer be followed.” Id. at 9. The Missouri Supreme
Court decisions in Conway and Watson require defendant NCA’s motion to dismiss be denied.
IT IS HEREBY ORDERED that defendant National Credit Adjusters, LLC’s motion to
dismiss plaintiff’s complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) is DENIED.
CHARLES A. SHAW
UNITED STATES DISTRICT JUDGE
Dated this 4th day of September, 2014.
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