Benjamin v. Allied Interstate Inc.

Filing 28

ORDER Denying as Moot 9 Motion to Dismiss Complaint, Granting 17 Motion to Dismiss Amended Complaint, Denying 18 Motion to File Amended Complaint, and Denying in Part and Granting in Part, respectively, 22 Motion to Strike Sur-Reply, or in the Alternative, for Leave to File Response to Sur-Reply. Signed by Judge Larry R. Hicks on 5/17/12. (Copies have been distributed pursuant to the NEF - ASB)

1
2
3
4
5
6

UNITED STATES DISTRICT COURT

7

DISTRICT OF NEVADA

8

***
)
)
)
)
)
)
)
)
)
)
)
)

9

STEVEN BENJAMIN

10

Plaintiff,

11

v.

12

ALLIED INTERSTATE, a Minnesota
Business Entity, et al.,

13
Defendants.
14
15

2:11-CV-00881-LRH-CWH
ORDER

Before the court is Defendant Allied Interstate’s Motion to Dismiss Plaintiff’s Complaint

16

(#91). In response, Plaintiff Steven Benjamin timely filed an Amended Complaint (#14) as of right,

17

rendering the motion moot.

18

Also, before the court is Defendant’s Motion to Dismiss Plaintiff’s First Amended

19

Complaint (#17). In response, Plaintiff filed an Opposition, or in the Alternative, Motion for Leave

20

to File Amended Complaint (#18), Defendants filed a Reply (#19), and Plaintiff filed a Response

21

Supporting His Motion, in the Alternative, for Leave to File Amended Complaint (#21).

22

Also before the court is Defendant’s Motion to Strike Plaintiff’s Sur-reply or in the

23

Alternative, Motion for Leave to File Response to Sur-reply (#22), Plaintiff’s opposition (#23), and

24

Defendant’s reply (#24).

25
26

1

Refers to the court’s docket entry number.

1

I.

2

Facts and Procedural History
This is an action under the Nevada Deceptive Trade Practices Act (DTPA) and the federal

3

Fair Debt Collection Practices Act (FDCPA). Plaintiff allegedly owes a past-due consumer debt

4

that Defendant, a debt collection agency, is seeking to collect. In June 2010, Plaintiff received a

5

collection letter from Defendant demanding payment of the debt. The letter identifies the debt

6

sought to be collected as “Amount Due: $1,062.39.” Plaintiff alleges, based on information and

7

belief, that “this amount exceeds the principal amount allegedly owed, and includes unspecified

8

sums for interest, charges, fees and/or expenses which are incidental to the principal amount

9

allegedly owed.” Amended Complaint (#14), ¶ 21. Plaintiff further alleges that this failure to

10

itemize charges in addition to principal violates Nevada and federal law.

11

II.

12

Legal Standard
Defendants seek dismissal of the complaint pursuant to Federal Rule of Civil Procedure

13

12(b)(6). To survive a motion to dismiss for failure to state a claim, a complaint must satisfy the

14

Federal Rule of Civil Procedure 8(a)(2) notice pleading standard. See Mendiondo v. Centinela

15

Hosp. Med. Ctr., 521 F.3d 1097, 1103 (9th Cir. 2008). A complaint must contain “a short and

16

plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).

17

The Rule 8(a)(2) pleading standard does not require detailed factual allegations; however, a

18

pleading that offers only “labels and conclusions” or “a formulaic recitation of the elements of a

19

cause of action” will not suffice. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell

20

Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

21

Furthermore, Rule 8(a)(2) requires a complaint to “contain sufficient factual matter,

22

accepted as true, to state a claim to relief that is plausible on its face.” Id. at 1949 (internal

23

quotation marks omitted). A claim has facial plausibility when the pleaded factual content allows

24

the court to draw the reasonable inference, based on the court’s judicial experience and common

25

sense, that the defendant is liable for the misconduct alleged. See id. at 1949-50. “The plausibility

26

2

1

standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a

2

defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a

3

defendant’s liability, it stops short of the line between possibility and plausibility of entitlement to

4

relief.” Id. at 1949 (internal quotation marks and citation omitted).

5

In reviewing a motion to dismiss, the court accepts the facts alleged in the complaint as

6

true. Id. (citation omitted). However, “bare assertions . . . amount[ing] to nothing more than a

7

formulaic recitation of the elements of a . . . claim . . . are not entitled to an assumption of truth.”

8

Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quoting Iqbal, 129 S. Ct. at 1951)

9

(alteration in original) (internal quotation marks omitted). The court discounts these allegations

10

because they do “nothing more than state a legal conclusion – even if that conclusion is cast in the

11

form of a factual allegation.” Id. (citing Iqbal, 129 S. Ct. at 1951.) “In sum, for a complaint to

12

survive a motion to dismiss, the non-conclusory ‘factual content,’ and reasonable inferences from

13

that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.” Id. (quoting

14

Iqbal, 129 S. Ct. at 1949).

15

III.

Discussion

16

A. Motion to Dismiss

17

The Nevada DTPA prohibits collection agencies from collecting or attempting to collect

18

“any interest, charge, fee or expense incidental to the principal obligation unless:” the incidental

19

item was added to the principal of the debt either (a) “by the [original] creditor before receipt of the

20

item of collection,” or (b) “by the collection agency and described as such in the first written

21

communication with the debtor.” NRS 649.375(2). In other words, collection agencies may

22

attempt to collect such incidental charges beyond the principal owing. Itemization is required only

23

if the incidental charges were added by the collection agency after the original creditor sent the debt

24

to collections. Accordingly, in an action against a collection agency premised on the failure to

25
26

3

1

itemize incidental charges, a consumer must allege that the charges were added by the collection

2

agency in order to state a claim for violation of NRS 649.375(2).

3

Here, Plaintiff merely alleges that the amount sought to be collected “is more than the

4

principal amount allegedly owed, and includes unspecified [i.e., un-itemized] sums for interest,

5

charges, fees and/or expense which are incidental to the principal amount allegedly owed.”

6

Amended Complaint (#14), ¶ 21 (emphasis added). Yet this fails to identify who added the

7

incidental charges—the original creditor or the collection agency—thus creating a critical

8

ambiguity in the application of NRS 649.375(2)(a) and (b). By failing to allege that Defendant, as

9

opposed to Plaintiff’s original creditor, added the alleged additional amounts, Plaintiff’s complaint

10

is “merely consistent” with Defendant’s liability and “stops short of the line between possibility

11

and plausibility of entitlement to relief.” Iqbal, 129 S. Ct. at 1949. The complaint therefore fails to

12

state a claim for violation of the Nevada DTPA. Further, Plaintiff’s second claim for relief under

13

the federal FDCPA also fails, as Plaintiff himself regards the claim as “purely derivative” of the

14

alleged state law violations. Opposition (#18), p. 5.

15

B. Motion for Leave to Amend

16

Plaintiff requests leave to amend pursuant to Rule 15(a)(2) in the event the court does not

17

deny the motion to dismiss. See Opposition (#18), p. 5. However, Plaintiff’s request, which

18

consists of a single sentence and is devoid of any explanation of the amendments that might be

19

made, is wholly insufficient to be regarded as a proper motion to amend. See L.R. 15-1 (“the

20

moving party shall attach the proposed amended pleading to any motion to amend”).

21

Furthermore, even considering Plaintiff’s proposed amendment, as described in his reply in

22

support of the motion to amend, the court finds that amendment would be futile. Plaintiff proposes

23

adding “an additional sentence” to the complaint stating that Defendant “violated NRS 649.375 by

24

attempting to collect incidental charges over and above the principal amount allegedly owed to the

25

original creditor when it had no evidence that such amounts were added to the principal amount by

26

4

1

the collector under color or law or by agreement of the parties to the original credit transaction.”

2

Plaintiff’s Response (#21), p. 4.

3

Whether directed at subsection (a) or (b) of NRS 649.375(2), the court finds this

4

supplemental allegation to be insufficient. To the extent Plaintiff intends this allegation to buttress

5

its failure-to-itemize claim under subsection (b), Plaintiff still fails to include any allegation that the

6

incidental charges were added by Defendant, rather than by the original creditor. And to the extent

7

the amendment is directed at subsection (a), Plaintiff fails to allege that the incidental charges that

8

Defendant is attempting to collect were in fact unauthorized by law or not agreed to by the parties.

9

See NRS 649.375(2)(a) (authorizing the collection of incidental charges that are “authorized by law

10

or . . . agreed to by the parties” and that have been added by the original creditor before being sent

11

to collections). Instead, the proposed amendment alleges only that Defendants failed to confirm

12

whether or not the incidental charges added by the original creditor were valid. As subsection (a)

13

imposes no such duty to verify, but only prohibits the collection of incidentals that are in fact

14

unauthorized, the complaint would continue to fail to state a claim for violation of NRS 649.375(2)

15

even with the proposed supplemental allegation.

16

The identified deficiencies in the complaint would be easily cured if only Plaintiff were

17

willing and able to make the necessary factual allegations. After all, it is hardly difficult to allege

18

that the incidental charges that Defendant is attempting to collect were (a) added by the original

19

creditor but unauthorized, or (b) added by Defendant and not itemized. Yet Plaintiff’s proposed

20

amendments fail to include such factual allegations and even appear designed to scrupulously avoid

21

them. The court therefore can only conclude that such allegations cannot be made and that

22

amendment would be futile. The action shall be dismissed accordingly.

23
24

IT IS THEREFORE ORDERED that Defendant’s Motion to Dismiss Plaintiff’s Complaint
(#9) is DENIED as moot.

25
26

5

1
2
3
4
5

IT IS FURTHER ORDERED that Defendant’s Motion to Dismiss Plaintiff’s First Amended
Complaint (#17) is GRANTED.
IT IS FURTHER ORDERED that Plaintiff’s Motion for Leave to File Amended Complaint
(#18) is DENIED.
IT IS FURTHER ORDERED that Defendant’s Motion to Strike Plaintiff’s Sur-reply or in

6

the Alternative, Motion for Leave to File Response to Sur-reply (#22) is DENIED in part and

7

GRANTED in part, respectively.

8

IT IS SO ORDERED.

9

DATED this 17th day of May, 2012.

10
11
12

__________________________________
LARRY R. HICKS
UNITED STATES DISTRICT JUDGE

13
14
15
16
17
18
19
20
21
22
23
24
25
26

6