Layton v. Frontline Asset Strategies, LLC et al

Filing 26

MEMORANDUM AND ORDER... IT IS HEREBY ORDERED that Defendants' motion for partial dismissal is GRANTED. [Doc. No. 10 .]. Signed by District Judge Audrey G. Fleissig on 8/5/2016. (NEB)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

CAROLINE LAYTON,
Plaintiff,
v.

FRONTLINE ASSET STRATEGIES,
LLC, and MAIN STREET
ACQUISITION CORP.,
Defendants.

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No. 4:16CV00454 AGF

MEMORANDUM AND ORDER
This action for statutory damages brought under the Fair Debt Collection Practices
Act (“FDCPA”), 15 U.S.C. §§ 1692-1692p, is before the Court on the motion of
Defendants Frontline Asset Strategies, LLC (“Frontline”) and Main Street Acquisition
Corp. (“Main Street”) for partial dismissal of Plaintiff’s complaint for failure to state a
claim. The only issue presented is whether a debt collector violates the FDCPA by
seeking to collect post-judgment interest on an unpaid Missouri judgment in a nontort
case where the state court judgment itself did not award such interest. For the reasons set
forth below, the Court answers that question in the negative, and will, accordingly, grant
Defendants’ motion for partial dismissal.

BACKGROUND
Accepting Plaintiff’s factual allegations as true for purposes of this motion, the record
establishes the following. On December 6, 2010, Main Street filed a collection lawsuit
against Plaintiff in Missouri state court for money owed on a past-due consumer credit
card account, an account Main Street purchased from the original creditor. On February
7, 2011, Main Street obtained a default judgment against Plaintiff in the amount of
$1,318.60 plus costs, to be determined by the court. The default judgment was silent as
to the recovery of post-judgment interest. On June 22, 2012, as a result of garnishment
efforts, Main Street received $745.55 toward the default judgment.
On August 3, 2015, Frontline sent Plaintiff a collection letter on behalf of Main
Street stating that Plaintiff owed an outstanding balance of $1,210.49. This amount
included post-judgment interest on the default judgment. Plaintiff filed the present suit in
state court claiming that Defendants violated the FDCPA in that they falsely represented
the character and amount of Plaintiff’s debt, and attempted to collect an amount not
permitted by law, and that Frontline failed to state the accurate amount of Plaintiff’s debt.
Plaintiff bases her allegations, in part, on the inclusion of post-judgment interest in the
August 2015 collection letter.1 Defendants removed the action to this Court on the basis
of federal question jurisdiction. Defendants seek partial dismissal of Plaintiff’s complaint
to the extent that it is based on the legal theory that under Missouri law, post-judgment
interest must be awarded in the judgment in order to be collected.

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Plaintiff also claims that even if post-judgment interest had been awarded by the
court, Defendants impermissibly sought more than was due.
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The statute at issue, Mo. Rev. Stat. § 408.040, provides, in relevant part, as
follows:
1. Judgments shall accrue interest on the judgment balance as set forth in
this section. The ‘judgment balance’ is defined as the total amount of the
judgment awarded on the day the judgment is entered, including, but not
limited to, principal, prejudgment interest, and all costs and fees. . . .
2. In all nontort actions, interest shall be allowed on all money due upon
any judgment or order of any court from the date judgment is entered by the
trial court until satisfaction be made by payment, accord or sale of property;
all such judgments and orders for money upon contracts bearing more than
nine percent interest shall bear the same interest borne by such contracts,
and all other judgments and orders for money shall bear nine percent per
annum until satisfaction made as aforesaid.
3. Notwithstanding the provisions of subsection 2 of this section, in tort
actions, interest shall be allowed on all money due upon any judgment or
order of any court from the date judgment is entered by the trial court until
full satisfaction. All such judgments and orders for money shall bear a per
annum interest rate equal to the intended Federal Funds Rate, as established
by the Federal Reserve Board, plus five percent, until full satisfaction is
made. The judgment shall state the applicable interest rate, which shall not
vary once entered.
Defendants point to the fact that the statute states that “in tort actions . . . [t]he
judgment shall state the applicable interest rate [of post-judgment interest to accrue
thereon],” but does not state so with respect to nontort actions. Defendants argue that
thus the plain language of the statute establishes that postjudgment interest need not be
awarded in the judgment in nontort actions, such as the state court collection action in
this case, in order to be collectable.
Plaintiff argues that while the award of post-judgment interest is mandatory if a
party requests it, the statute does not contain any language which creates a right to postjudgment interest in the absence of an award from the court. Plaintiff contends that the
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requirement that tort judgments state the interest rate is necessary because the applicable
tort interest rate can vary day to day, but does not mean that in other cases a party may
self-award post-judgment interest.
DISCUSSION
The purpose of dismissal under Rule 12(b)(6) is “to eliminate actions which are
fatally flawed in their legal premises and deigned to fail, thereby sparing litigants the
burden of unnecessary pretrial and trial activity.” Young v. City of St. Charles, 244 F.3d
623, 627 (8th Cir. 2001). The court must accept the plaintiff’s factual allegations as true
and construe them in the plaintiff’s favor, but is not required to accept the legal
conclusions the plaintiff draws from the facts alleged. Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009); Retro Television Network, Inc. v. Lukien Comm’cns, LLC, 696 F.3d 766,
768-69 (8th Cir. 2012).
In Missouri,
the imposition of any interest from the date of judgment until payment is
fixed and determined by statute. . . . The purpose behind [§ 408.040] is to
compensate a judgment creditor for the judgment debtor’s delay in
satisfying the judgment pending the judgment debtor’s appeal. Read more
broadly, post-judgment interest is awarded on the theory that it is a penalty
for delayed payment of the judgment.
Peterson v. Discover Prop. & Cas. Ins. Co., 460 S.W.3d 393, 413 (Mo. Ct. App. 2015)
(citations omitted).
In McGuire v. Kenoma, LLC, 447 S.W.3d 659 (Mo. 2014), relied upon by
Plaintiff, the Supreme Court of Missouri held, in the context of a tort case, that where the
judgment in favor of the plaintiffs “did not award post-judgment interest or state an
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applicable interest rate as prescribed in section 408.040,” and the plaintiffs did not file a
timely post-trial motion to request the inclusion of post-judgment interest, seek to amend
the judgment, or file an appeal claiming error in the judgment, the plaintiffs could not use
the nunc pro tunc procedure after the judgment became final on appeal, to have the
judgment changed to include post-judgment interest. Id. at 666-67.
The Missouri Supreme Court rejected the McGuire plaintiffs’ argument that the
omission of post-judgment statutory interest was a clerical error, appropriate for nunc pro
tunc correction, that is, an error that did not change the substance of the judgment
because under § 408.040.3 the interest was automatic, as the statute did not “require any
party to make a request” and was “mandatory, and the interest rate [was] fixed as equal to
the Federal Funds Rate plus five percent.” Id. at 666-67; see also SKMDV Holdings, Inc.
v. Green Jacobson, P.C., No. ED 102493, 2016 WL 1469995, at *17 (Mo. Ct. App. Apr.
12, 2016) (relying on McGuire to hold that an untimely amendment adding postjudgment interest to a judgment in a legal malpractice action was void); Peterson, 460
S.W. 3d at 413 (relying on McGuire to hold that it was improper for the trial court in an
equitable garnishment action to amend a consent judgment issued two years previously in
a tort action, to reflect post-judgment interest not awarded therein).
Defendants argue that McGuire, Peterson, and SKMDV Holdings, Inc., are not
controlling here because they were tort cases, and the underlying judgment here arose out
of a contract case. The Court agrees. Section § 408.040 specifically addresses tort cases
and nontort cases separately. Only with respect to tort cases does the statute require that

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“[t]he judgment shall state the applicable interest rate,” language explicitly relied upon by
the court in McGuire.
Missouri courts hold that
[t]he primary rule of statutory interpretation is to ascertain the intent of the
legislature from the language used, to give effect to that intent if possible,
and to consider words used in the statute in their plain and ordinary
meaning. . . . The provisions of a legislative act are not read in isolation but
construed together, and if reasonably possible, the provisions will be
harmonized with each other.
State v. McLaughlin, 265 S.W.3d 257, 267 (Mo. 2008). “A familiar principle of statutory
construction . . . is that a negative inference may be drawn from the exclusion of
language from one statutory provision that is included in other provisions of the same
statute.” Hamdan v. Rumsfeld, 548 U.S. 557, 578 (2006). The Court does not believe
that a Missouri court would expand the holding of McGuire and its progeny to nontort
cases, and this Court declines to do so.
In sum, in Missouri, post-judgment interest is collectable in a nontort case even if
the judgment did not specifically award such interest. Plaintiffs’ legal theories for
violation of the FDCPA based on the silence of the underlying default judgment on postjudgment interest, therefore, fail.

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CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Defendants’ motion for partial dismissal is
GRANTED. [Doc. No. 10.]

AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE

Dated this 5th day of August, 2016.

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