DEFAZIO v. LEADING EDGE RECOVERY SOLUTIONS, LLC et al

Filing 14

LETTER OPINION. Signed by Judge William J. Martini on 12/13/10. (gh, )

Download PDF
-MF DEFAZIO v. LEADING EDGE RECOVERY SOLUTIONS, LLC et al Doc. 14 UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY MARTIN LUTHER KING JR. FEDERAL BLDG. & U.S. COURTHOUSE 50 WALNUT STREET, P.O. BOX 419 NEWARK, NJ 07101-0419 (973) 645-6340 WILLIAM J. MARTINI JUDGE LETTER OPINION D e c e m b e r 13, 2010 M r. Joseph K. Jones L a w Offices of Joseph K. Jones, LLC 3 7 5 Passaic Avenue, Suite 100 F a irf ie ld , NJ 07004 A tto r n e y for Plaintiff M r. Richard J. Perr F in e m a n , Krekstein & Harris, PC M e llo n Bank Center 1 7 3 5 Market Street, Suite 600 P h ila d e lp h ia , PA 19103-7513 A tto r n e y for Defendants M s . Kellie A. Lavery R e e d Smith, LLP 1 3 6 Main Street, Suite 250 P rin c e to n , NJ 08543 A tto r n e y for Defendant, LVNV Funding, LLC R e: D e F a z io , et al v. Leading Edge Recovery Solutions, LLC et al. C a s e No. 2:10-cv-02945-WJM-MF D e a r Litigants: This matter comes before the Court on the motion to dismiss of Defendant LVNV F u n d in g , LLC ("LVNV" or "Defendant") for failure to state a claim upon which relief Dockets.Justia.com may be granted pursuant to Fed. R. Civ. P. 12(b)(6). There was no oral argument. Fed. R . Civ. P. 78. For the reasons stated below, the motion is GRANTED and Plaintiff's C o m p la in t is DISMISSED WITHOUT PREJUDICE as to LVNV Funding, LLC. BACKGROUND P la in tif f , Lori DeFazio, on behalf of herself and all others similarly situated, brings th is Complaint arising from Defendants', LVNV Funding, LLC (hereinafter "LVNV") a n d Leading Edge Recovery Solutions, LLC (hereinafter "LERS"), alleged violation of 1 5 U.S.C. 1692, et seq., the Fair Debt Collection Practices Act (hereinafter "FDCPA"), w h ic h prohibits debt collectors from engaging in abusive, deceptive and unfair practices. S e e DeFazio, et al v. Leading Edge Recovery Solutions, LLC, et al, No. 10-2945, D o c u m e n t No. 1 (Compl. at 12). The Complaint alleges that on or before November 27, 2 0 0 9 , LVNV acquired from GE Capital a debt allegedly owed by Plaintiff to GE Capital a n d assigned it to LERS for the purpose of collections. (Id. at 15-16.) At that time, P la in tif f received a collection letter from LERS demanding payment of $1,929.13 for the a lle g e d debt. (Id. at 17.) Later, on or before April 13, 2010, Plaintiff received another c o lle c tio n letter from LERS demanding payment of $2,039.00 for the same alleged debt a s set forth in the November 27 th letter. (Id. at 18.) N o w , Defendant LVNV brings this 12(b)(6) motion to dismiss Plaintiff's C o m p la in t for failure to state a claim. Id. at Document No. 7 (Mot. to Dismiss). LVNV b a s e s its motion on three arguments. First, Plaintiff's Complaint fails to meet the 12(b)(6) p le a d in g standard as controlled by Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955 (2 0 0 7 ). Second, Plaintiff's Complaint lacks any legal basis because Defendant LVNV c o n te n d s that it is not a "debt collector" subject to potential liability under the FDCPA. T h ird , Plaintiff's Complaint lacks any factual basis since the collection letters were sent b y Defendant LERS, not LVNV. Id. Plaintiff has filed a memorandum opposing LVNV's m o tio n to dismiss. Id. at Document No. 12 (Br. in Opp'n). Plaintiff contends that the C o m p la in t is sufficient, that LVNV is in fact a "debt collector" subject to liability under th e FDCPA, and that LVNV is vicariously liable for the actions of LERS. Id. Thus, the is su e s are: 1) whether Plaintiff's Complaint meets the 12(b)(6) pleading standard d e s c rib e d in Twombly, 2) whether LVNV is a "debt collector" subject to liability under th e FDCPA and 3) whether LVNV can be held vicariously liable for letters sent by LERS. T h e s e issues are addressed in turn. 2 ANALYSIS 1. L e g a l Standard In evaluating a motion to dismiss under Fed. R. Civ. P. 12(b), all allegations in the c o m p la in t must be taken as true and viewed in the light most favorable to the plaintiff. S e e Warth v. Seldin, 422 U.S. 490, 501 (1975); Trump Hotels & Casino Resorts, Inc. v. M ira g e Resorts, Inc., 140 F. 3d 478, 483 (3d Cir. 1998). When deciding a Rule 12(b)(6) m o tio n to dismiss for failure to state a claim, a court may consider only the complaint, e x h ib its attached to the complaint, matters of public record, and undisputedly authentic d o c u m e n ts if the plaintiff's claims are based upon those documents. See Pension Benefit G u a r . Corp. v. White Consol. Indus., 998 f.2d 1192, 1196 (3d Cir. 1993). If after viewing th e allegations in the complaint in the light most favorable to the plaintiff, it appears that n o relief could be granted "under any set of facts that could be proved consistent with the a lle g a tio n s ," a court may dismiss a complaint for failure to state a claim. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984). A lth o u g h a complaint does not need to contain detailed factual allegations, "the `g ro u n d s ' of [the plaintiff's] `entitlement to relief' requires more than labels and c o n c lu s io n s , and a formulaic recitation of the elements of a cause of action will not do." T w o m b ly , 127 S. Ct. at 1965. In other words, the United States Supreme Court has a d m o n is h e d that Federal Rule of Civil Procedure 8 "demands more than an unadorned, th e -d e f e n d a n t-u n la w f u lly-h a rm e d -m e accusation." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1 9 4 9 (2009). In Iqbal, the Supreme Court outlined the analytical framework for e v a lu a tin g the sufficiency of a claim under the standards announced in Twombly, holding th a t "[a] pleading that offers `labels and conclusions' or a `formulaic recitation of the e le m e n ts of a cause of action will not do. Nor does a complaint suffice if it tenders `naked a s s e rtio n [ s ]' devoid of `further factual enhancement'." Id. (quoting Twombly, internal c ita tio n s omitted). Thus, the factual allegations must be sufficient to raise a plaintiff's rig h t to relief above a speculative level. Twombly, 127 S. Ct. at 1964-65. Furthermore, a lth o u g h a court must view the allegations as true in a motion to dismiss, it is "not c o m p e lle d to accept unwarranted inferences, unsupported conclusions or legal c o n c lu s io n s disguised as factual allegations." Baraka v. McGreevey, 481 F. 3d 187, 211 (3 d Cir. 2007). A . It is unclear whether Defendant LVNV is a "debt collector" under the F D C P A , thus the Complaint does not meet the Twombly standard T h e FDCPA applies only to "debt collectors," not "creditors." 15 U.S.C. 1 6 9 2 a (6 ); Pollice v. Nat'l Tax Funding, L.P., 225 F. 3d 379, 403 (3d Cir. 2000); Staub v. H a r r is , 626 F.2d 275, 277 (3d Cir. 1980). The FDCPA defines a "debt collector" as: 3 Any person who uses any instrumentality of interstate commerce of the m a ils in any business the principal purpose of which is the collection of any d e b ts , or who regularly collects or attempts to collect, directly or indirectly, d e b ts owed or due or asserted to be owed or due another. 1 5 U.S.C. 1692a(6). "Creditor" is defined as: Any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he re c e iv e s an assignment or transfer of a debt in default solely for the purpose o f facilitating collection of such debt for another. 15 U.S.C. 1692a(4). (Emphasis added). Moreover, a "debt collector" does not include a n y person collecting or attempting to collect any debt owed or due or asserted to owed or d u e another to the extent such activity concerns a debt which was not in default at the tim e it was obtained by such person. 15 U.S.C. 1692a(6)(F)(iii); FTC v. Check Investors, In c ., 502 F. 3d 159, 171-175 (3d Cir. 2007). (Emphasis added). Although the Complaint c o n c lu s iv e ly states that LVNV is in the business of collecting debt and is a "debt c o lle c to r" as defined by 15 U.S.C. 1692a(6), it fails to state whether LVNV is in fact a d e b t collector as to Plaintiff's alleged individual debt specifically. See DeFazio, et al v. L e a d in g Edge Recovery Solutions, LLC, et al, No. 10-2945, Document No. 1 (Compl.). T h e re f o re , one of the questions that needs to be determined is whether Plaintiff's alleged d e b t owed to GE Capital was already in default at the time LVNV acquired the debt. Additionally, Plaintiff's Complaint alleges that "LVNV is primarily in the business o f acquiring and/or collecting debts that are allegedly due to another and is therefore a `D e b t Collector' as that term is defined by 15 U.S.C. 1692a(6)." Id. at 10. This statement is not sufficient to identify LVNV as a debt collector. This is a formulaic recitation of the f irs t sentence of the definition of "debt collector," which is precisely what Iqbal and T w o m b ly advise against. This Court is not finding that LVNV is a "debt collector" based s o le ly on Plaintiff's statement in her Complaint that LVNV is a "debt collector." This is a n unsupported conclusion disguised as a factual allegation. Whether LVNV is a "debt c o lle c to r" as defined by the FDCPA is a question of law. Pollice, 225 F. 3d at 379. H o w e v e r, this Court has not heard sufficient factual allegations that support whether L V N V is a "debt collector" or a "creditor" beyond a mere speculative level. For example, th e Complaint does not state the principal purpose of LVNV's business, how often L V N V collects debts due to third parties in its regular business practice, how long it has b e e n doing so, etc. Furthermore, there are no factual allegations in the Complaint as to w h e re the debt in question originated from or as to the status of the debt owed to GE C a p ita l at the time the debt was acquired by LVNV. The Plaintiff did not state in the C o m p la in t whether the alleged debt owed to GE Capital was already in default at the time L V N V acquired the debt or any other factual allegations to support Plaintiff's contention th a t LVNV is a debt collector for the purposes of this case. These are all questions of f a c t, not of law. Thus, this Court cannot determine whether LVNV is a debt collector 4 subject to liability under the FDCPA at this time; therefore, the Complaint is dismissed f o r failure to meet the pleading standard described in Twombly. B . It is unclear whether LVNV can be held vicariously liable based on letters s e n t by LERS T h e conduct Plaintiff complains of states the following: O n or about November 27, 2009, Plaintiff received a collection letter from L E R S . Upon receipt Plaintiff read said letter. Said letter demanded payment o f $1,929.13, for the alleged debt. A copy of said letter is annexed hereto as E x h ib it A. O n or before April 13, 2010, Plaintiff received a collection letter from L E R S . Upon receipt Plaintiff read said letter. Said letter demanded payment o f $2,039.00, for the same alleged debt as set forth in the letter of N o v e m b e r 27, 2010. A copy of said letter is annexed hereto as Exhibit B. Id. at 17 and 18. Even though LVNV was identified on these letters as a "creditor," this a lle g e d conduct was done by LERS, not LVNV. See Exhibits A and B attached to the C o m p la in t. Defendant LVNV asserts that it cannot be held liable for violating the F D C P A based on letters it did not send. Id. at Document No. 7 (Mot. to Dismiss). The P la in tif f contends that LVNV should be held vicariously liable for violating the FDCPA b a s e d on letters sent on its behalf by LERS. Id. at Document No. 12 (Br. in Opp'n). The T h ird Circuit has recognized that there are federal cases supporting a claim for vicarious lia b ility under the FDCPA in certain circumstances. Pollice, 225 F. 3d. When considering v ic a rio u s liability between debt collectors, the United States Court of Appeals in Pollice f o u n d , "[t]hat is a fair result because an entity that is itself a `debt collector'-and hence s u b je c t to the FDCPA-should bear the burden of monitoring the activities of those it e n lis ts to collect debts on its behalf." Id., at 405-406. "[A]n entity that itself falls within th e FDCPA's definition of `debt collector' may be found vicariously liable for unlawful c o lle c tio n activities carried out by another on its behalf." Sankowski v. Citibank (South D a k o ta ), N.A., No. 06-CV-02469, 2006 WL 2037463, at *2 (E.D. Pa. July 14, 2006). In S c h u tz v. Arrow Financial Services, LLC, 465 F.Supp.2d 876, 876 (N.D. Illinois 2006), th e court agreed with the Pollice court, "that a debt collector may be held vicariously lia b le for the actions of a second debt collector working as an agent for the first." As p re v io u s ly discussed, this Court does not find that LVNV is a "debt collector" based a lo n e on the fact that the Complaint contains a conclusory statement that named LVNV as a "debt collector." Moreover, for the same reasons, this Court does not find that LVNV is a "creditor" based alone on the fact that the letters identified LVNV as a "creditor." In the instant case, for reasons outlined above, it is unclear on the face of the C o m p la in t whether LVNV is a "debt collector" as defined by the FDCPA. As such, this 5 Court cannot determine if both Defendants are debt collectors in order for vicarious lia b ility to apply. C O N C L U S IO N F o r the reasons stated above, Defendant LVNV's motion to dismiss pursuant Fed. R . Civ. P. 12(b)(6) is hereby GRANTED and Plaintiff's Complaint is DISMISSED W I T H O U T PREJUDICE as to LVNV Funding, LLC. An appropriate order follows. /s/William J. Martini WILLIAM J. MARTINI, U.S.D.J. 6

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.


Why Is My Information Online?