Koller v. Midland Credit Management, Inc.
Order Granting 7 Defendant's Motion to Dismiss. Signed on 9/15/17 by Chief District Judge Greg Kays. (Strodtman, Tracy)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
MIDLAND CREDIT MANAGEMENT, INC., )
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
This case arises out of Defendant Midland Credit Management, Inc.’s (“MCM”) attempt
to collect a debt incurred by Plaintiff Sharla Koller (“Plaintiff”). Plaintiff alleges MCM made a
false or misleading representation to her and its communication overshadowed or was
inconsistent with its disclosure of her right to dispute the debt, in violation of the Fair Debt
Collection Practices Act (“FDCPA”). 15 U.S.C. §§ 1692e, 1692g(b).
Now pending before the Court is Defendant’s Motion to Dismiss for Failure to State a
Claim (Doc. 7). For the reasons set forth below, Defendant’s motion is GRANTED.
A complaint may be dismissed if it fails “to state a claim upon which relief can be
granted.” Fed. R. Civ. P. 12(b)(6). A complaint must meet two conditions to survive a Rule
12(b)(6) motion. First, it must “contain sufficient factual matter, accepted as true, to state a
claim to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While the complaint does not need
detailed factual allegations, it must include “enough facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A “formulaic
recitation of the elements of a cause of action will not do.” Id. at 555 (citations omitted). “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.” Ashcroft,
556 U.S. at 678. The plaintiff need not demonstrate the claim is probable, only that it is more
than just possible. Id. In reviewing a motion to dismiss, the court assumes the facts alleged in
the complaint are true and draws all reasonable inferences from those facts in the plaintiff’s
favor. Monson v. Drug Enforcement Admin., 589 F.3d 952, 961 (8th Cir. 2009). The court
generally ignores materials outside the pleadings but may consider materials that are necessarily
embraced by the pleadings. Miller v. Toxicology Lab. Inc., 688 F.3d 928, 931 (8th Cir. 2012);
see also Gorog v. Best Buy Co., 760 F.3d 787, 791(8th Cir. 2014) (contract held to be embraced
by complaint where plaintiff quoted from contract and contract was the sole basis for plaintiff’s
On December 21, 2016, MCM1 sent Plaintiff a collection letter (the “Letter”).2 Compl. ¶
10 (Doc. 1-1); Letter (Doc. 1-1 at 10-11). It is titled “NOTICE OF NEW OWNERSHIP AND
PRE-LEGAL REVIEW.” Letter at 1. The body of the Letter’s first page states:
[MCM] is considering forwarding this account to an attorney in your state for possible
litigation. However, such forwarding will not occur until after the expiration of the
validation period described on the back of this letter. Upon receipt of this notice, please
call to discuss your options.
MCM is a “debt collector.” Compl. ¶¶ 7-9; 15 U.S.C. § 1692a(6) (defining “debt collector” as “any person who
uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the
collection of debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or
asserted to be owed or due another.”).
The Letter is attached to the Complaint. Letter (Doc. 1-1 at 10-11). Matters outside the pleading may not be
considered in deciding a Rule 12 motion to dismiss. Gorog, 760 F.3d at 791 (citing Ashanti v. City of Golden
Valley, 666 F.3d 1148, 1151 (8th Cir. 2012)). However, “documents necessarily embraced by the complaint are not
matters outside the pleading.” Id. Here, the complaint quotes directly from the Letter and the Letter is the sole basis
for Plaintiff’s Complaint. The Court concludes the Letter is necessarily embraced by the Complaint and it may
consider the relevant terms of the Letter in ruling on the Rule 12 motion to dismiss. See id. at 791-92.
If we don’t hear from you or receive payment by 02-04-2017, we may proceed with
forwarding this account to an attorney.
In addition to the validation rights described on the back of this letter, here are some
— Pay your full balance . . .
— Call us to see how to qualify for discounts and payment plans.
Id. At the top of the Letter, in large font, is a direction to call MCM “by 02-04-2017 to Discuss
Options.” Id. And, in the left margin, the Letter states in bold, “Once your account is paid:
collection calls will stop on this account [and] collection letters will stop on this account,”
followed by, “Reply by 02-04-2017.” Id. The Court refers to this February 4, 2017, deadline as
the “reply-by” deadline.
At the bottom of the first page, the Letter directs the reader to “PLEASE SEE REVERSE
SIDE FOR IMPORTANT DISCLOSURE INFORMATION.” Id. On the reverse, below a
shaded table providing account and contact information, the Letter states, in part:
Unless you notify MCM within thirty (30) days after receiving this notice that you
dispute the validity of the debt, or any portion thereof, MCM will assume this debt to be
valid. If you notify MCM, in writing, within thirty (30) days after receiving this notice
that the debt, or any portion thereof, is disputed, MCM will obtain verification of the debt
or a copy of a judgment (if there is a judgment) and MCM will mail you a copy of such
verification or judgment. If you request, in writing, within thirty (30) days after receiving
this notice, MCM will provide you with the name and address of the original creditor.
Please remember, even if you make a payment within thirty (30) days after receiving this
notice, you still have the remainder of the thirty (30) days to exercise the rights described
Id. at 2. The Letter then informs the reader of state-specific rights, noting it “does not contain a
complete list of the rights consumers have under state and federal law.” Id.
On May 1, 2017, Plaintiff filed suit in state court alleging violations of the FDCPA.
MCM removed to this Court and filed the instant motion.
Plaintiff makes two claims: (1) the Letter was misleading, in violation of 15 U.S.C. §
1692e; and (2) that MCM’s representations regarding the February 4, 2017, deadline for a reply
overshadowed or were inconsistent with her 30-day window to dispute the debt, in violation of
15 U.S.C. § 1692g(b). Compl. ¶¶ 26, 29. Plaintiff essentially makes the same argument under
both claims: that because the “reply-by” deadline overshadowed and was inconsistent with her
validation rights and the notice deadline, it constituted a false and misleading representation.
The “reply-by” deadline does not contradict or overshadow the validation
First, the Court addresses Plaintiff’s argument that the “reply-by” deadline overshadowed
and was inconsistent with the 30-day validation period, in violation of 15 U.S.C. § 1692g.
Section 1692g(b) provides, “[a]ny collection activities and communication during the 30day [validation] period may not overshadow or be inconsistent with the disclosure of the
consumer’s right to dispute the debt or request the name and address of the original creditor.” Id.
§ 1692g(b). In evaluating whether collection activities overshadow or are inconsistent with the
validation notice, courts use the “unsophisticated consumer” standard. See Read v. Messerli &
Kramer, P.A., No. 11-3729, 2012 WL 1439046, at *2 (D. Minn. Apr. 26, 2012) (applying the
“unsophisticated consumer” test to alleged violations of section 1692g). The “unsophisticated
consumer” test is “designed to protect consumers of below average sophistication or intelligence,
but [it] also contain[s] an objective level of reasonableness that prevents liability for bizarre or
idiosyncratic interpretations of collection notices.” Peters v. Gen. Serv. Bureau, Inc., 277 F.3d
1051, 1055 (8th Cir. 2002) (internal citations and quotations omitted) (applying the
“unsophisticated consumer” test to violations of section 1692e).
First, the “reply-by” date was not inconsistent with Plaintiff’s rights. The parties agree
the “reply-by” deadline falls outside of the 30-day validation notice window. See Def.’s Br. in
Supp. at 5 (Doc. 8) (“The February 4, 2017 deadline is almost two weeks after the expiration of
th[e] validation period.”); Pl.’s Br. in Opp. at 4 (Doc. 9) (arguing the Letter’s February 4, 2017,
deadline to contact MCM is misleading because it “falls well outside of the [30-day notice]
deadline.”).3 Because the “reply-by” date was after the expiration of Plaintiff’s validation notice
period, it was not inconsistent with Plaintiff’s right to dispute her debt within 30 days. The
Letter did not suggest Plaintiff was required to pay the debt prior to the 30-day window’s
expiration. It clarified that action by MCM would not occur until after the expiration of the
validation period described on the back page, and any payment received by MCM within the 30day window would not bar Plaintiff from exercising her validation rights. Cf. Vasquez v. Gertler
& Gertler, Ltd., 987 F. Supp. 652, 657 (N.D. Ill. 1997) (collecting cases where letters demanding
payment or other action within a period shorter than the 30 days required for a validity dispute
were held to be direct contradictions under section 1692g).
Next, though the “reply-by” date was mentioned three times on the front of the letter and,
in one case, was in a larger font than the rest of the document, it did not overshadow the
validation notice. The Letter states that, in addition to disputing the debt, Plaintiff has the
“possible options” of paying her full balance or calling MCM. Cf. Oberther v. Midland Credit
Mgmt., Inc., 45 F. Supp. 3d 125, 131-32 (D. Mass. 2014) (finding letter overshadowed validation
notice where, on the front, it referenced only two options for preventing referral of the account to
an attorney without providing the additional option of disputing the debt). The front of the Letter
Plaintiff uses the date of the Letter in asserting her validation notice deadline was January 20, 2017. However, a
consumer has 30 days from the receipt of the notice to dispute a debt. See 15 U.S.C. § 1692g(a)(3). It is unclear
when Plaintiff received the notice, but that fact is immaterial to the Court’s resolution of this matter. Even allowing
for a three-day mailing period results in a validation notice deadline of January 23, 2017, more than a week before
the “reply-by” deadline.
mentioned Plaintiff’s validation notice option twice, and in both instances directed Plaintiff to
the back of the page to review those rights. The bottom of the first page also referred her to the
back of the Letter “FOR IMPORTANT DISCLOSURE INFORMATION.” These directions
were sufficient to inform even an unsophisticated consumer of her right to dispute the debt
within 30 days.
Accordingly, the Plaintiff has failed to state a claim under 15 U.S.C. § 1692g(b).
The Letter was not misleading as a matter of law.
Next, Plaintiff asserts the Letter was false or misleading in violation of 15 U.S.C. §
1692e. In support, Plaintiff essentially argues the “reply-by” deadline overshadowed her 30-day
validation notice window, misleading her to believe she had until February 4, 2017, to dispute
the debt’s validity.
Section 1692e of the FDCPA deals with false and misleading statements made during
collection efforts. It provides a non-exhaustive list of specific examples, but makes clear that
“any false, deceptive, or misleading representation…in connection with the collection of any
debt” violates this section. 15 U.S.C. § 1692e. The “unsophisticated consumer” standard also
applies to alleged violations of section 1692e. See Peters, 277 F.3d at 1055 (8th Cir. 2002)
(citing Duffy v. Landberg, 215 F.3d 871, 873 (8th Cir. 2000)).
For the reasons set forth in the section above, the Court finds even an unsophisticated
consumer, if reasonable, would not assign the “reply-by” deadline to her validation rights. Thus,
Plaintiff’s claim the Letter violated 15 U.S.C. § 1692e fails as a matter of law.
Because Plaintiff has not stated a plausible claim upon which relief can be granted,
Defendant’s Motion to Dismiss for Failure to State a Claim (Doc. 7) is GRANTED.
IT IS SO ORDERED.
Date: September 15, 2017
/s/ Greg Kays
GREG KAYS, CHIEF JUDGE
UNITED STATES DISTRICT COURT
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