Pfountz v. Navient Solutions, LLC

Filing 17

MEMORANDUM AND ORDER - IT IS HEREBY ORDERED that the Motion to Dismiss Amended Complaint (ECF 10 ) filed by Defendant Navient Solutions, LLC, is DENIED. Signed by District Judge Jean C. Hamilton on 1/24/18. (KJS)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

AMANDA PFOUNTZ,

Plaintiff,
vs.
NAVIENT SOLUTIONS, LLC,
Defendant.

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Case No. 4:17CV2753JCH

MEMORANDUM AND ORDER
Before the Court is the Motion to Dismiss Amended Complaint filed by
Defendant Navient Solutions, LLC. (EF 10). The matter is fully briefed and ready
for disposition.
LEGAL STANDARD FOR MOTION TO DISMISS
Federal Rule of Civil Procedure 8(a)(2) requires “a short and plain statement
of the claim showing that the pleader is entitled to relief.” Allegations are to be
“simple, concise, and direct.” Fed. R. Civ. P. 8(d)(1). Federal Rule of Civil
Procedure 10(b) provides that in his or her complaint:
A party must state its claims or defenses in numbered paragraphs,
each limited as far as practicable to a single set of circumstances. . . .
If doing so would promote clarity, each claim founded on a separate
transaction or occurrence--and each defense other than a denial--must
be stated in a separate count or defense.

When a claim is so “vague or ambiguous that [a] party cannot reasonably
prepare a response” a party can move for a more definite statement. Fed. R. Civ.
P. 12(e). Also, a court may strike, either pursuant to the motion of a party or on its
own, “any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ.
P. 12(f).
Fed. R. Civ. P. 12(b)(6) provides for a motion to dismiss based on the
“failure to state a claim upon which relief can be granted.” To survive a motion to
dismiss a complaint must show that “‘the pleader is entitled to relief,’ in order to
‘give the defendant fair notice of what the . . . claim is and the grounds upon which
it rests.’” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting
Conley v. Gibson, 355 U.S. 41, 47 (1957)). See also Erickson v. Pardus, 551 U.S.
89, 93 (2007).
“Threadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice” to defeat a motion to dismiss. Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). “[O]nly a
complaint that states a plausible claim for relief survives a motion to dismiss.”
Ashcroft, 556 U.S. at 679 (citing Twombly, 550 U.S. at 556).

The pleading

standard of Rule 8 “does not require ‘detailed factual allegations,’ but it demands
more than an unadorned, the-defendant-unlawfully-harmed-me accusation.”
Ashcroft, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555).
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Further, in regard to a Rule 12(b)(6) Motion, the Supreme Court holds:
While a complaint attacked by a Rule 12(b)(6) motion to dismiss does
not need detailed factual allegations, [citations omitted] a plaintiff's
obligation to provide the “grounds” of his “entitle[ment] to relief”
requires more than labels and conclusions, and a formulaic recitation
of the elements of a cause of action will not do, see Papasan v. Allain,
478 U.S. 265, 286, 106 S. Ct. 2932, 92 L. Ed.2d 209 (1986) (on a
motion to dismiss, courts “are not bound to accept as true a legal
conclusion couched as a factual allegation”). Factual allegations must
be enough to raise a right to relief above the speculative level, see 5 C.
Wright & A. Miller, Federal Practice and Procedure ' 1216, pp. 235236 (3d ed. 2004).
Twombly, 550 U.S. at 555. See also Gregory v. Dillard=s, Inc., 565 F.3d 464, 473
(8th Cir. 2009) (en banc) (“[A] plaintiff ‘must assert facts that affirmatively and
plausibly suggest that the pleader has the right he claims . . . , rather than facts that
are merely consistent with such a right.’”) (quoting Stalley v. Catholic Health
Initiative, 509 F.3d 517, 521 (8th Cir. 2007)).
Additionally, “a well-pleaded complaint may proceed even if it strikes a
savvy judge that actual proof of those facts is improbable.” Twombly, 550 U.S. at
556 (citation omitted). “The issue is not whether plaintiff will ultimately prevail
but whether the claimant is entitled to offer evidence to support [his or her]
claims.”

Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) (abrogated on other

grounds, Horlow v. Fitzgerald, 457 U.S. 800 (1982)).

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BACKGROUND and LEGAL FRAMEWORK OF THE FAIR DEBT
COLLECTIONS PRACTICES ACT
In the First Amended Complaint Plaintiff alleges that Defendant violated the
Fair Debt Collections Practices Act (FDCPA), 15 U.S.C. § 1692, et seq. The
FDCPA is designed to “eliminate abusive debt collection practices by debt
collectors.” Dunham v. Portfolio Recovery Assocs., 663 F.3d 997, 1000 (8th Cir.
2011) (quoting Richmond v. Higgins, 435 F.3d 825, 828 (8th Cir. 2006)). “[D]ebt
collectors are liable for failure to comply with ‘any provision’” of the FDCPA.
Dunham, 663 F.3d at 1000 (quoting Richmond, 435 F.3d at 828 (quoting 15 U.S.C.
§§ 1692(e), 1692k(a)).
The FDCPA, 15 U.S.C. § 1692a(3) defines “consumer” as “any natural
person obligated or allegedly obligated to pay any debt.” The FDCPA, 15 U.S.C. §
1692a(6) defines “debt collector” as follows:
The term “debt collector” means any person who uses any
instrumentality of interstate commerce or the mails in any business the
principal purpose of which is the collection of any debts, or who
regularly collects or attempts to collect, directly or indirectly, debts
owed or due or asserted to be owed or due another. Notwithstanding
the exclusion provided by clause (F) of the last sentence of this
paragraph, the term includes any creditor who, in the process of
collecting his own debts, uses any name other than his own which
would indicate that a third person is collecting or attempting to collect
such debts. For the purpose of section 1692f(6) of this title, such term
also includes any person who uses any instrumentality of interstate
commerce or the mails in any business the principal purpose of which
is the enforcement of security interests. The term does not include—
(A) any officer or employee of a creditor while, in the name of the
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creditor, collecting debts for such creditor;
(B) any person while acting as a debt collector for another person, both
of whom are related by common ownership or affiliated by corporate
control, if the person acting as a debt collector does so only for persons
to whom it is so related or affiliated and if the principal business of
such person is not the collection of debts;
. . . .; and
(F) any person collecting or attempting to collect any debt owed or due
or asserted to be owed or due another to the extent such activity (i) is
incidental to a bona fide fiduciary obligation or a bona fide escrow
arrangement; (ii) concerns a debt which was originated by such person;
(iii) concerns a debt which was not in default at the time it was
obtained by such person; or (iv) concerns a debt obtained by such
person as a secured party in a commercial credit transaction involving
the creditor.
(emphasis added).
Some sections of the FDCPA specify “‘the actors to which the section
applies.’” Dunham, 663 F.3d at 1001 (quoting Richmond, 435 F.3d at 828). In
particular, 15 U.S.C. § 1692e of the FDCPA provides that:
A debt collector may not use any false, deceptive, or misleading
representation or means in connection with the collection of any debt.
Without limiting the general application of the foregoing, the
following conduct is a violation of this section:
....
(11) The failure to disclose in the initial written communication with
the consumer and, in addition, if the initial communication with the
consumer is oral, in that initial oral communication, that the debt
collector is attempting to collect a debt and that any information
obtained will be used for that purpose, and the failure to disclose in
subsequent communications that the communication is from a debt
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collector, except that this paragraph shall not apply to a formal
pleading made in connection with a legal action.
(emphasis added).
In the First Amended Complaint, Plaintiff alleges that Defendant violated
Section 1692e(11).

Specifically, Plaintiff alleges as follows.

Plaintiff is a

“consumer” within the meaning of the FDCPA. (ECF 8, ¶ 7). The debt which is
the subject of Plaintiff’s First Amended Complaint arose from a “defaulted student
loan that was acquired by Defendant [] after default.” (ECF 8, ¶ 8).

Defendant

“services and collects on student loans acquired in its office after the loans [are]
delinquent and defaulted upon with the loan originator or original servicer.” (ECF
8, ¶ 13). Defendant is Navient Corporation’s “holding/parent company.” (ECF ¶
14). In its 2015 10-K filings, Navient Corporation stated that it “is the nation’s
leading loan management, servicing and asset recovery company.” (ECF 8, ¶ 15)
(emphasis in original).

Defendant, doing business as “Navient Corporation

consented to, has knowledge of, has materially participated in, and has controlled
the activities of Navient Solutions, Inc. and all other relevant Navient predecessor
or subsidiary business entities material to the facts pleaded in [the First Amended]
Complaint.” (ECF 8, ¶ 16). Defendant is a “‘debt collector’ as defined by the
FDCPA, 15 U.S.C. § 1692a(6),” “is engaged in the collection of debts from
consumers using the mail and telephone,” “regularly attempts to collect debts
alleged to be due another,” and, at all times material to the First Amended
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Complaint, “engaged in debt collection activities related to outstanding and
delinquent student loans on behalf of several owners of federal student loans.”
(ECF 8, ¶¶ 17-20).
The First Amended Complaint further alleges as follows.

Defendant’s

conduct in violation of the FDCPA “consisted of several voicemails left on
Plaintiff’s cell phone, and Plaintiff’s mother’s phone.”

(ECF 8, ¶ 23).

On

November 11, 2016, Defendant sent Plaintiff a letter regarding her student loan
account, which letter stated that Plaintiff’s “private student loan[s] is now
seriously past due and is in jeopardy of default.” (emphasis in original). The
letter proceeded to state what the consequences of Plaintiff’s student loan
defaulting would be, including that Plaintiff’s defaulted loan would be assigned to
Defendant’s “recovery Department or a collection agency for resolution.” The
letter also stated that Defendant “prefer[red] to work directly with [Plaintiff] to
resolve [her] account,” and that Defendant “intend[ed] to declare [Plaintiff’s]
student loan[] in default if acceptable payment arrangements [were] not made
before November 29, 2016.” (ECF 8, ¶ 24) (emphasis in original).
Additionally, the First Amended Complaint alleges that Plaintiff’s student
loan “was already delinquent and defaulted [] before it was acquired by Defendant
[] for debt collection”; that “the alleged student loan originated from Parks
College of St. Louis University in 2006, an institution which Plaintiff never
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attended at any point in time”; and that Plaintiff never made payments on the
alleged loan. (ECF 8, ¶¶ 25-27) (emphasis added). The First Amended Complaint
also alleges that, after the November 29, 2016 default date specified in Defendant’s
November 11, 2016 letter to Plaintiff, “Defendant left numerous messages on
Plaintiff’s cellular telephone and Plaintiff’s mother’s telephone requesting
Plaintiff’s return call,” and that these voicemails “were debt collection attempts.”
(ECF 8, ¶¶ 28-29).
In regard to Defendant’s alleged violations of the FDCPA, 15 U.S.C. § 1692,
et seq., and specifically § 1692e(11), Plaintiff alleges that, in its attempt to collect
the alleged debt from Plaintiff, Defendant “failed to disclose in a debt collection
communication that it was a debt collector attempting to collect a debt.” (ECF 8,
¶¶ 30, 33(a)).
DISCUSSION
Defendant admits that it “does engage in the collection of student loan
debts,” that it is “a student loan servicer,” and that “the collection of loan payments
is an inherent part of the student loan servicing business.” (ECF 11 at 3). In
support of its Motion to Dismiss, however, Defendant contends that Plaintiff’s
First Amended Complaint fails to establish, as a matter of law, that Defendant is a
“debt collector” subject to regulation under the FDCPA. (ECF 10 at 1). In support
of this contention, Defendant argues that its November 11, 2016 letter establishes
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that the “subject loans are private loans,” and that Defendant was “servicing the[]
loans prior to default.” (ECF 11 at 4) (emphasis in original). Defendant further
argues that, “[i]n the private loan arena, [Defendant] commences servicing its
customer’s student loans at origination and there is an abundance of case law
finding that [Defendant] is not a FDCPA ‘debt collector’ when servicing such
loans.” (ECF 11 at 4-5). Defendant provides citations to such cases, and argues
that Plaintiff’s “reliance on bare conclusory legal assertions” to establish that
Defendant acquired Plaintiff’s “debt after default or was servicing another entity
[is] insufficient to state a claim.” (ECF 11 at 5).
As a preliminary matter, to the extent the cases upon which Defendant relies
are not from the Eighth Circuit, this Court is bound by Eighth Circuit precedent.
See Hood v. United States, 342 F.3d 861, 864 (8th Cir. 2003) (holding that a
district court in the Eighth Circuit is bound to apply Eighth Circuit precedent). The
Eighth Circuit holds that, upon reviewing a Rule 12(b)(6) motion to dismiss, a
court must accept factual allegations as true, Gomez v. Wells Fargo Bank, N.A.,
676 F.3d 655, 660 (8th Cir. 2012), although it need not give effect to factual
allegations that simply assert legal conclusions, McAdams v. McCord, 584 F.3d
1111, 1113 (8th Cir. 2009). Notably, the Eighth Circuit holds that a complaint
survives a motion to dismiss where it raises “plausible inferences” of a cause of
action, and that, where there are “competing inferences,” “[w]hich inference will
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prove to be correct is not an issue to be determined by a motion to dismiss.”
Hamilton v. Palm, 621 F.3d 816, 819 (8th Cir. 2010). Further, to the extent that
other courts have held, based on the alleged facts in cases before them, that
Defendant is not a FDCPA “debt collector,” the issue before this Court is whether
the allegations of Plaintiff’s First Amended Complaint sufficiently allege, in the
circumstances of Plaintiff’s case, that Defendant is a FDCPA “debt collector.” See
Ashcroft, 556 U.S. at 679. As acknowledged by Defendant, an entity may not meet
the FDCPA’s definition of “debt collector” in one case and meet it in another.
(ECF 11 at 3). Thus, Plaintiff’s claim will survive Defendant’s Motion to Dismiss
if the First Amended Complaint contains sufficient factual matter, which if
accepted as true, states a plausible claim for relief. See id. at 678.
To establish a defendant violated the FDCPA when attempting to collect a
debt, a plaintiff must allege that the defendant was a debt collector under the
FDCPA, 15 U.S.C. § 1692a(6), in that the defendant regularly collects or attempts
to collect debts owed, due, or asserted to be owed to another.

Indeed, the

definition of debt collector excludes a “person collecting or attempting to collect a
debt owed, or due or asserted to be owed or due to another, to the extent such
activity . . concerns a debt which was not in default at the time it was obtained by
such person.” 15 U.S.C. § 1692a(6)(F)(iii). Plaintiff’s First Amended Complaint
alleges that the debt which is the subject of this matter originated from Parks
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College of St. Louis University in 2006, an institution which Plaintiff never
attended at any point in time; that Defendant stated in its November 11, 2016 letter
that the loan would not be considered in default until November 29, 2016; and that
the phone calls made by Defendant, in an effort to collect the debt which is the
subject of Plaintiff’s First Amended Complaint, were made after the November 29,
2016 default date given by Defendant. As such, the Court finds, for purposes of
Defendant’s Rule 12(b)(6) Motion to Dismiss, that Plaintiff has sufficiently alleged
facts, which if true, establish that, when calling Plaintiff and her mother, after
November 29, 2016, Defendant was attempting to collect a debt of another and that
such debt was in default at the time Defendant acquired the alleged debt.
While Plaintiff’s First Amended Complaint provides competing inferences
as to when the debt was acquired by Defendant, the Court finds that, for purposes
Defendant’s Rule 12(b)(6) Motion to Dismiss,1 Plaintiff has alleged a plausible
claim that Defendant was a “debt collector” under FDCPA, 15 U.S.C. § 1692a(6)
when it made the phone calls described in the First Amended Complaint and which
Plaintiff alleges violated the FDCPA, 15 U.S.C. § 1692e(11). See Ashcroft, 556
U.S. at 679; Twombly, 550 U.S. at 555; Donnelly-Tovar v. Select Portfolio
Servicing, Inc., 945 F.Supp.2d 1037, 1047-49 (D. Neb. 2013) (finding that

The competing inferences regarding when Defendant acquired the debt at issue
may possibly be resolved after discovery and pursuant to a motion for summary
judgment.
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plaintiff's complaint supported “a plausible inference” that the defendant was a
debt collector and denying a motion to dismiss). As such, the Court further finds
that Defendant’s Motion to Dismiss should be denied.
Accordingly,
IT IS HEREBY ORDERED that the Motion to Dismiss Amended
Complaint (ECF 10) filed by Defendant Navient Solutions, LLC, is DENIED.

Dated this 24th Day of January 2018.

/s/ Jean C. Hamilton
UNITED STATES DISTRICT JUDGE

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