Stickler et al v. AnswerConnect Teleservices, Inc. et al

Filing 30

ORDERED that Defendants' # 10 Motion to Dismiss is GRANTED without prejudice. Plaintiffs shall have 30 days in which to file a First Amended Complaint if they elect to do so. Signed by Judge Larry R. Hicks on 6/25/2015. (Copies have been distributed pursuant to the NEF - DRM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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MICHAEL STICKLER, an individual; and
THE VISION GROUP, LTD., a Nevada
corporation;

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3:15-CV-00271-LRH-VPC

Plaintiffs,
ORDER

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v.
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ANSWERCONNECT TELESERVICES,
INC., an Oregon corporation, and
RECOVERY SOLUTIONS GROUP, LLC, a
Delaware corporation,

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Defendants.
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Before the Court is Defendants AnswerConnect Teleservices, Inc. (“AnswerConnect”)

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and Recovery Solutions Group, LLC’s (“RSG”) Motion to Dismiss Plaintiffs Michael Stickler

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(“Stickler”) and the Vision Group, Ltd.’s (“Vision Group”) Complaint. Doc. #10.1 Plaintiffs filed

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an Opposition (Doc. #20), to which Defendants Replied (Doc. #22).

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I. Factual Background

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Plaintiff Stickler was the Managing Partner of Vision Group, a Nevada corporation. Doc.

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#1-2 at 18. Stickler brings this action pro se on behalf of himself and Vision Group. Id. at 16.

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Plaintiffs allege that they suffered damages when Defendant AnswerConnect, an Oregon

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corporation, breached an agreement to “port” Vision Group’s phone number and provide voice

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answering services. Id. at 6 ¶¶6-8. Plaintiffs also contend that Defendants AnswerConnect and

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Refers to the Court’s docket number.

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RSG, a Delaware corporation, engaged in improper debt collection practices against Plaintiffs

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that resulted in financial loss and emotional harm. Id. at 7-8 ¶¶12, 13-14 ¶43, 14-15 ¶¶49-54.

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Subsequently, Plaintiffs filed a complaint against AnswerConnect and RSG, alleging

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seven causes of action: (1) breach of contract, (2) Federal Debt Collection Practices Act

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violations, (3) unfair business practices, (4) fraud, (5) breach of the implied covenant of good

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faith and fair dealing, (6) intentional infliction of emotional distress, and (7) damages. Doc. #1-2.

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Thereafter, Defendants filed the present Motion to Dismiss or, in the alternative, Motion for

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Change of Venue. Doc. #10.

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II. Legal Standard

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To survive a motion to dismiss for failure to state a claim, a complaint must satisfy the

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

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

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and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.

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

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however, a pleading that offers “‘labels and conclusions’ or ‘a formulaic recitation of the

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elements of a cause of action’” will not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

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(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

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

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accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. (quoting Twombly,

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550 U.S. at 570). A claim has facial plausibility when the pleaded factual content allows the

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

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sense, that the defendant is liable for the misconduct alleged. See id. at 678-79. “The plausibility

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

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

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

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to relief.” Id. at 678 (internal quotation marks and citation omitted).

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Pursuant to Federal Rule of Civil Procedure 9(b), parties must allege with particularity
the circumstances constituting fraud or mistake. Fed. R. Civ. P. 9(b). To satisfy Rule 9(b), a
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pleading must identify “the who, what, when, where, and how of the misconduct charged,” as

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well as “what is false or misleading about [the purportedly fraudulent] statement, and why it is

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false.” Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010) (internal

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quotation marks and citations omitted). If fraud or fraud-based claims are alleged, the entire

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complaint must fulfill the heightened pleading requirements of Rule 9(b). Kearns v. Ford Motor

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Co., 567 F.3d 1120, 1125 (9th Cir. 2009).

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

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true. Id. However, “bare assertions . . . amount[ing] to nothing more than a formulaic recitation

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of the elements of a . . . claim . . . are not entitled to an assumption of truth.” Moss v. U.S. Secret

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Serv., 572 F.3d 962, 969 (9th Cir. 2009) (citing Iqbal, 556 U.S. at 681) (brackets in original)

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(internal quotation marks omitted). The Court discounts these allegations because “they do

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nothing more than state a legal conclusion—even if that conclusion is cast in the form of a

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factual allegation.” Id. (citing Iqbal, 556 U.S. at 681). “In sum, for a complaint to survive a

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

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

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III. Discussion

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A. Representation of Vision Group

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Plaintiff Stickler brings this suit pro se on behalf of himself and Vision Group, a Nevada

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corporation. However, a corporation may only appear in federal court through licensed counsel.

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Rowland v. Calif. Men’s Colony, 506 U.S. 194, 201-02 (1993); see also 28 U.S.C. § 1654. “It is a

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longstanding rule that ‘[c]orporations and other unincorporated associations must appear in court

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through an attorney.’” D-Beam Ltd. P’ship v. Roller Derby Skates, Inc., 366 F.3d 972, 973-74

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(9th Cir. 2004) (brackets in original) (quoting Licht v. Am. W. Airlines, 40 F.3d 1058, 1059 (9th

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Cir. 1994). Plaintiffs stipulate that counsel must represent corporations but argue that because

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Vision Group is “closely held” by Stickler as its Managing Partner, Plaintiffs should be allowed

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to continue pro se in joint capacity. Doc. #20 at 9. However, even a pro se litigant who is the

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president and sole shareholder of a corporation may not represent that corporation in federal

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court. See United States v. High Country Broad. Co., 3 F.3d 1244, 1245 (9th Cir. 1993).
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Vision Group may not “assign its claims to an individual in an expedient effort to thwart

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the public policy of not allowing [the corporation] to appear pro se.” Jaguar Assocs. Grp. v. U.S.

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Postal Serv., No. C07-5022 PVT, 2008 WL 686820, at *2 (N.D. Cal. Mar. 11, 2008) (internal

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quotation marks omitted) (citing Mercu-Ray Indus., Inc. v. Bristol-Myers Co., 392 F. Supp. 16

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(S.D.N.Y.1974)). Furthermore, “[e]very action shall be prosecuted in the name of the real party

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in interest.” Fed. R. Civ. P. 17(a). Here, Stickler may not assign claims to himself when Vision

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Group is the party in interest. Thus, to the extent that Vision Group is the real party in interest,

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the action is dismissed on the ground that a corporation may not be represented by a non-

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attorney. Because Stickler may also be a real party in interest and because he may properly

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represent himself pro se, the Court will examine the Complaint to determine if Stickler

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individually states claims on which relief may be granted. See Maydak v. Bonded Credit Co., 892

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F. Supp. 1304, 1308 (D. Or. 1995), aff'd sub nom. Maydak v. Bonded Credit Co. Inc., 96 F.3d

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1332 (9th Cir. 1996).
B. Motion to Dismiss

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1. Breach of Contract

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Plaintiffs claim that AnswerConnect breached a contract by failing to transfer, or “port,”

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Plaintiffs’ toll free number and by failing to provide answering services and direct sales on

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Plaintiffs’ behalf. Under both Nevada and Oregon law, a breach of contract claim requires “the

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existence of a contract, ‘its relevant terms, plaintiff’s full performance and lack of breach and

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defendant’s breach resulting in damage to plaintiff.’” Slover v. Or. State Bd. of Clinical Soc.

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Workers, 927 P.2d 1098, 1101 (Or. Ct. App. 1996) (internal citation omitted); see also Saini v.

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Int’l Game Tech., 434 F. Supp. 2d 913, 919-20 (D. Nev. 2006).2 Plaintiffs here fail to sufficiently

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allege the elements of a breach of contract claim. The Complaint and the attached emails do not

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identify valid contract provisions that require AnswerConnect to provide the phone number

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porting process or answering services. Furthermore, it is not clear from the complaint that

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Stickler is a party to the alleged contract as an individual, and thus Stickler fails to state a claim

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Defendants contend that Oregon, not Nevada, law should apply to this claim. Defendants argue that
Plaintiffs are party to a Service Agreement that includes an Oregon choice of law provision. Doc. #10-1 at
8, 46. However, the Court finds that determining the applicable law is not necessary at this time.

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for breach of contract. Accordingly, Stickler’s breach of contract claim is dismissed without

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prejudice.

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2. FDCPA Violations
Plaintiffs argue that AnswerConnect and RSG violated the Fair Debt Collection Practices

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Act § 1692a by collecting a debt that was not due and by using false and deceptive means to

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collect a debt. As a preliminary matter, the Complaint merely restates the text of the statute and

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does not provide sufficient factual support to satisfy the Rule 8(a)(2) pleading standard.

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Furthermore, the FDCPA only protects “consumer debt” that is generated from a transaction

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pursued “primarily for personal, family, or household purposes.” 15 U.S.C. 1692a(5); Bloom v.

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I.C. Sys., Inc., 972 F.2d 1067, 1068 (9th Cir. 1992). As currently alleged, Plaintiffs’ claim arises

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out of debt accrued from the provision of phone services for his business, Vision Group. Doc.

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#1-2 at 6 ¶6; id. at 19 (email stating that AnswerConnect was handling Stickler’s “business

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calls”). A debt arising out of commercial transactions is not “consumer debt” and thus is not

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protected by 15 U.S.C. § 1692. See Slenk v. Transworld Sys., Inc., 236 F.3d 1072, 1075 (9th Cir.

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2001). Plaintiffs thus cannot state a claim under 15 U.S.C. § 1692. Therefore, the Court

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dismisses the FDCPA violations claim.

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3. Fraud
Plaintiffs allege that Defendants engaged in fraudulent debt collection practices. In order

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to establish fraud, Plaintiffs must prove: (1) a misrepresentation, (2) its falsity, (3) its materiality,

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(4) the speaker's knowledge of its falsity or ignorance of its truth, (5) his intent that it should be

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acted upon by a person and in a manner reasonably contemplated, (6) the hearer's ignorance of

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its falsity, (7) his reliance on its truth, (8) his right to rely thereon, and (9) his consequent and

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proximate injury. Kaufman Inv. Corp. v. Johnson, 623 F.2d 598, 601 (9th Cir. 1980) (applying

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Oregon law, however, basic elements of fraud are the same across jurisdictions). Furthermore,

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Plaintiffs must allege with particularity the circumstances constituting fraud or mistake. Fed. R.

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Civ. P. 9(b). To satisfy Rule 9(b), a pleading must identify “the who, what, when, where, and

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how of the misconduct charged,” as well as “what is false or misleading about [the purportedly

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fraudulent] statement, and why it is false.” Ebeid, 616 F.3d at 998 (internal quotation marks
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omitted). “Mere conclusory allegations of fraud are insufficient.” Moore, 885 F.2d at 540. Here,

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Plaintiffs’ allegations fail to sufficiently allege the elements of fraud and are conclusory in

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nature. Furthermore, Plaintiffs’ allegations do not meet the specificity requirements of Rule 9(b)

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because they do not specify any misleading actions on Defendants’ part and why these alleged

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actions were misleading or false. The Complaint is also insufficient because it does not make

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clear “to whom” the misrepresentations were made or that the misrepresentations were made to

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Plaintiff Stickler himself. For these reasons, Plaintiffs’ fraud claim is dismissed without

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prejudice.

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The Court also notes that if Plaintiffs allege fraud or fraud-based claims in any amended

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complaint, the pleadings as a whole must comply with Rule 9(b)’s heightened pleading standard.

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See Kearns, 567 F.3d at 1125.

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4. Unfair Business Practices
The Complaint asserts that Defendants’ debt collection practices violated provisions of

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Nevada Revised Statute § 649. Chapter 649 authorizes administrative investigation of collection

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agency practices and criminal penalties for breaches of those regulations. See Nev. Rev. Stat. §

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649.051, et seq.; Smith v. Cmty. Lending, Inc., 773 F. Supp. 2d 941, 945 (D. Nev. 2011).

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However, Chapter 649 does not provide a civil private right of action. See, e.g., Smith, 773 F.

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Supp. 2d at 945. The unfair business practices claim thus cannot be maintained and is dismissed.

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5. Breach of the Covenant of Good Faith and Fair Dealing
To survive a Motion to Dismiss, a claim for breach of implied covenant of good faith and

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fair dealing must (1) identify the contract that is the basis for the claim, (2) identify the conduct

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that allegedly constituted the breach of the covenant, (3) indicate that this conduct was

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deliberate, and (4) show how the alleged breach caused damage. See Morris v. Bank of Am. Nev.,

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886 P.2d 454, 457 (Nev. 1994). Oregon law similarly requires evidence of a breach of contract to

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sustain a claim for breach of the covenant of good faith and fair dealing. See Davis v. Pac. Saw

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& Knife Co., No. CIV. 08-676-HU, 2008 WL 4319981, at *2 (D. Or. Sept. 16, 2008). Here,

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Stickler’s breach of contract claim has been dismissed and no valid contract has been identified

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as the basis for the claim. Accordingly, the Court finds that the breach of the covenant of good

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faith and fair dealing claim cannot be maintained and is dismissed without prejudice.
6. Intentional Infliction of Emotional Distress

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The Court finds that Stickler has not sufficiently alleged the elements of a claim for

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intentional infliction of emotional distress. Under Nevada law, to prove intentional infliction of

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emotional distress, Plaintiff must demonstrate (1) extreme and outrageous conduct on behalf of

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the defendant with the intention of or reckless disregard for causing emotional distress, (2) the

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Plaintiff’s having suffered severe or extreme emotional distress and (3) actual or proximate

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causation. Dillard Dep’t Stores, Inc. v. Beckwith, 989 P.2d 882, 886 (Nev. 1999) (internal

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quotation marks and citation omitted). Here, Plaintiffs fail to identify either the alleged extreme

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and outrageous conduct or that it was intentional or reckless. Additionally, the Court finds that

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causation is insufficiently alleged. Therefore, Stickler’s intentional infliction of emotional

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distress claim is dismissed without prejudice.
7. Claim for “Damages”

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Plaintiffs improperly assert a separate claim for damages. Damages should be pled with

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the claim from which they arise. See Fed. R. Civ. P. 8(a)(3). The Court thus finds that Plaintiffs

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do not state a claim for which relief can be granted and dismisses the damages claim.
8. Leave to Amend

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The Court finds that Plaintiffs have not stated a claim upon which relief can be granted

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and thus dismisses Plaintiffs’ complaint in its entirety. Plaintiffs have requested leave to amend

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and to employ an attorney but have not fulfilled the Local Rule 15-1 requirement of filing an

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amended complaint with the request for leave to amend. However, a pro se litigant’s pleadings

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must be read more liberally than pleadings drafted by counsel. Haines v. Kerner, 404 U.S. 519,

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520–21 (1972); Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004). The Ninth Circuit directs

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district courts to provide a pro se litigant an opportunity to amend the complaint if its

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deficiencies can be cured. See Eldridge v. Block, 832 F.2d 1132, 1137 (9th Cir. 1987). For this

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reason, the Court grants Plaintiffs thirty (30) days to amend their complaint.

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C. Motion for Change of Venue

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Defendants filed an alternative Motion for Change of Venue to the District of Oregon.

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Because the Court has dismissed all of Plaintiffs’ claims without prejudice, it is not necessary to

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resolve the Motion for Change of Venue at this time. Defendants may resubmit their Motion for

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Change of Venue should Plaintiffs file an amended complaint.

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IV. Conclusion

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IT IS THEREFORE ORDERED that Defendants’ Motion to Dismiss (Doc. #10) is

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GRANTED without prejudice. Plaintiffs shall have thirty (30) days in which to file a First

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Amended Complaint if they elect to do so.

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IT IS SO ORDERED.

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DATED this 25th day of June 2015.

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LARRY R. HICKS
UNITED STATES DISTRICT JUDGE

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