Atkinson v. National Credit Systems Inc.

Filing 37

ORDER granting 27 Motion to Dismiss for Lack of Jurisdiction; granting in part 30 Motion to Dismiss for Failure to State a Claim. Signed by District Judge James C. Dever III on 6/5/2024. (Pro se party has consented to receiving electronic service of all motions, notices, orders, and documents in civil cases in the Eastern District of North Carolina.) (Sellers, N.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DMSION
No. 5:23-CV-640-D

CARLOS ATKINSON,

)
)
Plaintiff,
)
)
~
)
)
NATIONAL CREDIT SYSTEMS INC., et al., )
)
- Defendants.
)

ORDER

On November 6, 2023, Carlos Atkinson ("Atkinson" or ''plaintiff''), proceeding pro

~

submitted a complaint against National Credit Systems Inc. ("National") and moved to proceed in
forma pauperis under 28 U.S.C. § 1915 [D.E. 1, 2]. On November 13, 2023, pursuant to 28 U.S.C.

§ 636(b)(1 ), the court referred the case to Magistrate Judge Robert B. Jones, Jr. for a Memorandum
and Recommendation ("M&R") and for a frivolity review [D.E. 6]. On December 19, 2023, Judge
Jones issued an M&R recommending that the court grant Atkinson's motion to proceed in forma
pauperis and allow Atkinson's complaint to proceed. See [D.E. 8] 1. On January 22, 2024, this
court adopted the M&R, granted Atkinson's motion to proceed in forma pauperis, and granted
Atkinson's motion to amend his complaint to add Penn Rose Management Co. (''Penn")
(collectively with National, "defendants") as a defendant [D.E. 10].
On February 21, 2024, National moved to dismiss the complaint for failure to state a claim
[D.E. 15] and attached a memorandum in- support [D.E. 15-1]. See Fed. R. Civ. P. 12(b)(6). On
February 22, 2024, Atkinson responded in opposition and asked for leave to amend his complaint.
See [D.E. 19] 1. On March 27, 2024, the court granted Atkinson's motion to amend his complaint
and dismissed as moot National's motion to dismiss· [D.E. 23].

On March 29, 2024, Atkinson amended his complaint [D.E. 24]. He now alleges (1)
violations of his consumer rights under the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§
1681, e t ~ (2) defamation; (3) unfair and deceptive trade practices under North Carolina's
Unfair and Deceptive Trade Practice Act (''UDTPA"); (4) unfair practices under the Fair Debt
Collection Practices Act (''FDCPA"), 15 U.S.C. §§ 1692, e t ~ (5) willful noncompliance; and
(6) negligent noncompliance. On April 12, 2024, Penn moved to dismiss [D.E. 27] and filed a
memorandum in support [D.E. 28]. See Fed. R Civ. P. 12(b)(2), (6). The same day, National
moved to dismiss [D.E. 30] and filed a memorandum in support [D.E. 31]. See Fed. R Civ. P.
12(b)(6).

On April 15, 2024, the court notified Atkinson of the motion to dismiss, the

consequences of failing to respond, and the response deadline [D.E. 32]. See Roseboro v.
Garrison, 528 F.2d 309; 310 (4th Cir. 1975) (per curiam). On May 3, 2024, Atkinson responded
in opposition [D.E. 33]. On May 9, 2024, National replied [D.E. 34]. Penn did not reply.
As explained below, the court grants defendant Penn's motion to dismiss for lack of
personal jurisdiction and dismisses without prejudice Atkinson's claims against Penn. The court
grants in part National's motion to dismiss, dismisses Atkinson's federal claims against National,
and declines to exercise supplemental jurisdiction over Atkinson's state law claims against
National.
I.
Penn hired National, a third-party debt collector, on behalf of the Residence at Hayes
apartment community. See Am. Compl. [D.E. 24] 2: National contacted Atkinson by phone
''multiple" times to collect on a non-existent consumer debt to Residence at Hayes. Id. When
Atkinson did not pay the alleged debt, National placed "false information" on Atkinson's credit
report for three years. Id. As a result of this false reporting, Atkinson suffered a divorce, financial

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loss, medical expenses for therapy, depression, anxiety, an inability to secure additional credit, and
homelessness. See id. at 2-3. He seeks damages of$50,000,000. See id. at 3.
II.

Penn moves to dismiss Atkinson's claims for lack of personal jurisdiction. See [D.E. 27];
[D.E. 28] 7-11; Fed. R. Civ. P. 12(b)(2). The court does not have personal jurisdiction over a
nomesident defendant unless jurisdiction comports with North Carolina's long-arm statute and the
Fourteenth Amendment's Due Process Clause. See,~ Mitrano v. Hawes, 377 F.3d 402,406
(4th Cir. 2004). North Carolina's long-arm statute extends personal jurisdiction over nomesident
defendants consistent with the Fourteenth Amendment's Due Process Clause. See Christian Sci.
Bd. ofDirs. v. Nolan, 259 F.3d 209, 215 (4th Cir. 2001). Thus, the statutory inquiry merges with
the constitutional inquiry. See i!t.; Atl. Com. of Wilmington, Inc. v. TBG Tech Co., 565 F. Supp.
3d 748, 759 (E.D.N.C. 2021).
Due process requires a defendant to have "certaiD minimum contacts with the forum such
that the maintenance of the suit does not offend traditional notions of fair play and substantial
justice." Helicopteros Nacionales de Colom., S.A. v. Hall, 466 U.S. 408,414 (1984) (alteration
and quotations omitted). The minimum contacts analysis considers ''the relationship among the
defendant, the forum, and the litigation." Walden v. Fiore, 571 U.S. 277, 284 (2014) (quotation
omitted); see Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 592 U.S. 351, 358-60 (2021); BristolMyers Squibb Co. v. Super. Ct., 582 U.S. 255, 264 (2017). This analysis ensures that a defendant
is not haled into a court's jurisdiction "solely as a result of random, fortuitous, or attenuated
contacts." Burger King Com. v. Rudzewicz, 471 U.S. 462, 475 (1985) (quotations omitted); see
Ford Motor Co., 592 U.S. at 359.

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The mjnjmum contacts analysis focuses on whether a defendant ''purposefully directed his
activities at residents of the forum" and whether the causes of action arise out of or relate to those
activities. Burger King. 471 U.S. at 472; see Ford Motor Co., 592 U.S. at 359; Bristol-Myers
Squibb, 582 U.S. at 262; ALS Scan, Inc. v. Dig. Serv. Consultants, Inc., 293 F.3d 707, 712 (4th
Cir. 2002); Atl. Con,., 565 F. Supp. 3d at 760. If a defendant's contacts with the state are the basis
for the suit, specific jurisdiction may exist. See ALS Scan, 293 F.3d at 712. In determining
specific jurisdiction, the court considers: "(1) the extent to which the defendant purposefully
availed itself of the privilege of conducting activities in the State; (2) whether the plaintiffs· claims
arise out of those activities directed at the State; and (3) whether the exercise of personal
jurisdiction would be constitutionally reasonable." Id (alteration and quotations omitted). Thus,
the "constitutional touchstone" of specific personal jurisdiction ''remains whether the defendant
purposefully established minimum contacts in the forum State." Burger King. 471 U.S. at 474
(quotation omitted); see Bristol-Myers Squibb, 582 U.S. at 264--66; Walden, 571 U.S. at 284-91.
First, in analyzing the extent to which a defendant purposefully availed itself of the
privilege of conducting activities within a State, a court· examines ''various non-exclusive factors"
including:
(1) whether the defendant maintained offices or agents in the State; (2) whether the
defendant maintained property in the State; (3) whether the defendant reached into
the State to solicit or initiate business; (4) whether the defendant deliberately
engaged in significant or long-term business activities in the State; (5) whether a
choice of law clause selects the law of the State; (6) whether the defendant made
in-person contact with a resident of the State regarding the business relationship;
(7) whether the relevant contracts required performance of duties in the State; and
(8) the nature, quality, and extent ofthe parties· communications about the business
being transacted.

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UMG Recordings, Inc. v. Kurbanov, 963 F.3d 344,352 (4th Cir. 2020) (quotation omitted); see
Consulting Eng'rs Com. v. Geometric Ltd., 561 F.3d 273,278 (4th Cir. 2009); Atl. Com .• 565 F.
- Supp. 3d at 760.
Second, the plaintiff's claims must have arisen out of or relate to those activities that the
defendant directed at the State. See Ford Motor Co., 592 U.S. at 361-71; UMG Recordings, 963
F.3d at 354-55; Atl. Com., 565 F. Supp. 3d at 760.
Third, the court must analyze whether the exercise of personal jurisdiction is
constitutionally reasonable. See Ford Motor Co., 592 U.S. at 368; Bristol-Myers Squibb, 582 U.S.
at 262-65; Burger King. 471 U.S. at 476-78; World-Wide Volkswagen Com. v. Woodson, 444
. U.S. 286, 292 (1980); Consulting Eng'rs, 561 F.3d at 279; Atl. Com., 565 F. Supp. 3d at 760--61.
This analysis '1>ermits a court to consider additional factors to ensure the appropriateness of the
forum once it has determined that a defendant has purposefully availed itself of the privilege of
doing business there." Consulting Eng'rs, 561 F.3d at 279. Such factors include:
(1) the burden 9n the defendant of litigating in the forum; (2) the interest of the
forum state in adjudicating the dispute; (3) the plaintiff's interest in obtaining
convenient and effective relief; (4) the shared interest of the states in obtaining
efficient resolution of disputes; and (5) the interests of the states in furthering
substantive social policies.

Atkinson does not plausibly allege that Penn has any principal place of business in North
Carolina or is incorporated in North Carolina. Moreover, Atkinson does not plausibly allege that
Penn has any contacts with North Carolina. In fact, Atkinson does not plausibly allege any actions,
including the phone calls between Atkinson and National, took place in North Carolina. See, e..:.&,
Small Bus. Fin. Sols., LLC v. Com. Client Servs., LLC, Civ. No. 21-811, 2023 WL 1995414, at

*5 (D. Md. Feb. 13, 2023) (unpublished). Accordingly, the court lacks personal jurisdiction over

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Penn, dismisses Penn from this action, and dismisses without prejudice Atkinson's claims against

Penn.

m.
A motion to dismiss under Rule 12(b)(6) tests the complaint's legal and factual sufficiency.
See Ashcroft v. Iqbal, 556 U.S. 662, 677-80 (2009); Bell Atl. Con,. v. Twombly, 550 U.S. 544,
554-63 (2007); Coleman v. Md. Ct. ofAP,Peals, 626 F.3d 187, 190 (4th Cir. 2010), aff'd, 566 U.S.
30 (2012); Giarratano v. Johnson, 521 F.3d298, 302 (4th Cir. 2008). To withstand a Rule 12(b)(6)
motion, a pleading ''must contain sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face." Iqbal, 556 U.S. at 678 (quotation omitted); see Twombly. 550
U.S. at 570; Giarratano, 521 F.3d at 302. In considering the motion, the court must construe the
facts and reasonable inferences "in the light most favorable to [the nonmoving party]." Massey v.
Ojaniit, 759 F.3d 343, 352 (4th Cir. 2014) (quotation omitted); see Clatterbuck v. City of
Charlottesville, 708 F.3d 549, 557 (4th Cir. 2013), abrogated on other grounds Qy Reed v. Town of
Gilbert, 576 U.S. 155 (2015). A court need not accept as true a complaint's legal conclusions,
''unwarranted inferences, unreasonable conclusions, or arguments." Giarratano, 521 F.3d at 302
(quotation omitted); see Iqbal, 556 U.S. at 678-79. Rather, a plaintiff's factual allegations must
''nudge[] [his] claims," Twombly. 550 U.S. at 570, beyond the realm of ''mere possibility'' into
''plausibility." Iqbal, 556 U.S. at 678-79.
"Determining whether a complaint states a plausible claim for relief ... [is] a context
specific task that requires the reviewing court to draw on judicial experience and common sense."
Iqbal, 556 U.S. at 679. "[W]here the well-pleaded facts do not permit the court to infer more than
the mere possibility of misconduct," the complaint does not suffice. Id.
When evaluating a motion to dismiss, a court considers the pleadings and any materials

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"attached or incorporated into the complaint." E.I. du Pont de Nemours & Co. v. Kolon Indus.,
Inc., 637 F.3d 435,448 (4th Cir. 2011); see Fed. R. Civ. P. IO(c); Goines v. Valley Cmty. Servs.
Bd., 822 F.3d 159, 165-66 (4th Cir. 2016); Thompson v. Greene, 427 F.3d 263,268 (4th Cir. 2005).
. A court also may consider a document submitted by. a moving party if it is "integral to the
complaint and there is no dispute about the document's authenticity" without converting the
motion into one for summary judgment. Goines, 822 F.3d at 166. "[I]n the event of conflict
between the bare allegations of the complaint and any exhibit attached ... , the exhibit prevails."
Id. (quotation omitted); see Fayetteville lnvs. v. Com. Builders, Inc., 936 F.2d 1462, 1465 (4th Cir.
1991). Additionally, a court may take judicial notice of public records. See,~ Fed. R. Evid.
201; Tellabs, Inc. v. Makor Issues & Rts., Ltd., 551 U.S. 308, 322 (2007); Philips v. Pitt Cnty.
Mem'l Hos,p., 572 F.3d 176, 180 (4th Cir. 2009).
The standard used to evaluate the sufficiency· of a pleading is flexible, "and a pro se
complaint, however inartfully pleaded, must be held to less stringent standards than formal
. pleadings drafted by lawyers." Erickson v. Pardus, 551 U.S. 89, 94 (2007) (per curiam) (quotation
omitted). Erickson, however, does not ''undermine [the] requirement that a pleading contain 'more
than labels and conclusions."' Giarratano v. Johnson, 521 F.3d 298, 304 n.5 (4th Cir. 2008)
(quoting 1\vombly, 550 U.S. at 555); see Iqbal, 556 U.S. at 678-79; Coleman, 626 F.3d at 190;
Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255-56 (4th Cir. 2009); Francis
v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009).
A.

Atkinson alleges that National "collect[ed] an alleged consumer debt that [he] did not owe"
and "furnished false information to [his] [c]redit [r]eport." Am. Compl. 2. The court construes
Atkinson's allegations as violations of 15 U.S.C. § 1681s-2(a) of the FCRA. No private right of

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action, however, exists under 15 U.S.C. § 1681s-2(a). See,~ 15 U.S.C. § 1681s-2(c)(l), (d);
Saunders v. Branch Banking & Tr. Co. of Va., 526 F.3d 142, 149 (4th Cir. 2008); McDaniel v.
Credit Mgmt. LP, No. 5:23-CV-408, 2024 WL 84704, at *4 (E.D.N.C. Jan. 8, 2024), aff'd, No. 241098, 2024 WL 2558920 (4th Cir. May 24, 2024) (per curiam) (unpublished); Weber v. Specialized
Loan Servicing, LLC, 627 F. Supp. 3d 538, 545 (E.D.N.C. 2022). Accordingly, the court dismisses
Atkinson's FCRA claim.

B.
Atkinson alleges National engaged in willful noncompliance and negligent noncompliance.
See Am. Compl. 2. Under 15 U.S.C. § 1681h(e):
[N]o consumer may bring any action [for] . . . negligence with respect to the
reporting of information against any consumer reporting agency ... or any person
who furnishes information to a consumer reporting agency, based on information
disclosed pursuant to section 1681g, 1681h, or 1681m of this title, or based on
information disclosed by a user of a consumer report to or for a consumer against
whom the user has taken adverse action, based in whole or in part on the report
except as to false information furnished with malice or willful intent to injure such
consumer.
15 U.S.C. § 1681h(e). Section 1681h(e) requires a "two-step inquiry." Ross v. Fed. Dq,osit Ins.
~ 625 F.3d 808, 814 (4th Cir. 2010). A court first asks ''whether the claim falls within the

scope of§ 1681h(e)" and second asks ''whether the 'malice or wi11fu1 intent to injure' exception to
the general bar against state law actions applies." Id. At the first step, the preemption provision
applies when a consum~r has sued "any consumer reporting agency, any user of information, or
any person who furnishes information to a consumer reporting agency, based on information
disclosed pursuant to section 1681g, 1681h, or 1681m of this title, or based on information
disclosed by a user of a consumer report to or for a consumer against whom the user has taken
adverse action." Rogers v. Keffer, Inc., 243 F. Supp. 3d 650, 658-59 (E.D.N.C. 2017) (quotation
omitted).

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Section 1681h(e) preempts Atkinson's claims against National for negligence because the
claims arise out of Atkinson's allegations of an FCRA violation. See id. Furthermore, Atkinson
fails to plausibly allege acts or omissions that constitute malicious or willful violations. See 15
U.S.C. § 168lh(e); Am. Compl. 2.

Accordingly, the court dismisses Atkinson's willful

noncompliance and negligent noncompliance claims.

C.
Atkinson alleges National engaged in ''unfair practices." See Am. Compl. 2. The court
construes this as a FDCPA claim. To bring an FDCPA claim, Atkinson must plausibly allege that
(1) he was the object of collection activity arising from a "consumer debt" as defined by the
FDCPA, (2) the defendant is a "debt collector" as defined by the FDCPA, and (3) the defendant
engaged in an act or omission that the FDCPA prohibits. Boosahda v. Providence Dane LLC, 462
F. App'x 331, 333 n.3 (4th Cir. 2012) (per curiam) (unpublished); see Fonvielle v. Specialized
Loan Servicing, LLC, No. 7:23-CV-1300, 2024 WL 1099943, at *2 (E.D.N.C. Mar. 13, 2024)
(unpublished); Rogers, 243 F. Supp. 3d at 664;-Hardin v. Bank of Am., N.A., No. 7:16-CV-75,
2017 WL 44709, at *4 (E.D.N.C. Jan. 3, 2017) (unpublished); Campbell v. Wells Fargo Rank
N.A., 73 F. Supp. 3d 644, 648 (E.D.N.C. 2014).
A "debt" under the FDCPA is "any obligation or alleged obligation of a consumer to pay
money." 15 U.S.C. § 1692a(5). The FDCPA "defines a debt collector as (1) a person whose
principal purpose is to collect debts; (2) a person who regularly collects debts owed to another; or
(3) a person who collects its own debts, using a name other than its own as if it were a debt
collector." Henson v. Santander Consumer USA, Inc., 817 F.3d 131, 136 (4th Cir. 2016) (emphasis
omitted); see Fonvielle, 2024 WL 1099943, at *2.

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Atkinson fails to plausibly allege that National is a debt collector or engaged in an act or
omission prohibited by the FDCPA. See Am. Compl. 2. Accordingly, the court dismisses
Atkinson's FDCPA claim against National.
D.
Atkinson alleges National "defam[ed] [his] character'' by "furnish[ing] false information
to" his credit report and engaged in ''unfair practices." See Am. Compl. 2-3. The court construes
these allegations as North Carolina defamation and UDTPA claims. This court has jurisdiction
under 28 U.S.C. § 1331 over counts one, four, five, and six. This court has supplemental .
jurisdiction under 28 U.S.C. § 1367 over counts two and three because they arose from the same
nucleus of operative facts.
A court may decline to exercise supplemental jurisdiction over a state-law claim when (1)
''the claim raises a novel or complex issue of State law''; (2) ''the claim substantially predominates
over'' the federal claim or claims; (3) the court has "dismissed all claims over which it has original
jurisdiction"; or (4) other "exceptional circumstances" present "compelling reasons for declining
jurisdiction."

28 U.S.C. § 1367(c)(l}-{4).

Additionally, a court may decline to exercise

supplemental jurisdiction when ''values of economy, convenience, fairness, and comity'' make
retaining jurisdiction inappropriate. Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 351 (1988),
superseded on other grounds J2I 28 U.S.C. § 1447(c); Hinson v. Norwest Fin. S.C., Inc., ·239 F.3d
611, 616-17 (4th Cir. 2001); Shanaghan v. Cahill, 58 F.3d 106, 109-10 (4th Cir. 1995).
The court dismisses counts one, four, five, and SIX. Eliminating all federal claims before
trial generally suffices to decline supplemental jurisdiction over pendent state-law claims. "[I]n
the usual case in which all federal-law claims are eliminated before trial, the balance of factors to
be considered under the pendent jurisdiction doctrine-judicial economy, convenience, fairness,

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and comity-will point toward declining to exercise jurisdiction over the remaining state-law
claims." Carnegie-Mellon, 484 U.S. ai 350 n.7; see Shanaghan, 58 F.3d at 110; see al~o Walsh v.
Mitchell, 427 F. App'x 282, 283 (4th Cir. 2011) (per curiam) (unpublished); Root v. Cnty. of
Fairfax, 371 F.App'x432, 435 (4th Cir. 2010) (percuriam) (unpublished). Thus, the court declines
to exercise jurisdiction over Atkinson's state-law claims and dismisses without prejudice those
claims. See Carnegie-Mellon, 484 U.S. at 350 n. 7. 1
Iv:
In sum, the court GRANTS defendant Penn's motion to dismiss [D.E. 27], DISMISSES
WITHOUT PREJUDICE plaintiff's claims against defendant Penn, DISMISSES defendant Penn,
GRANTS IN PART defendant National's motion to dismiss [D.E. 30], DISMISSES WITH
PREJUDICE plaintiff's Fair Credit Reporting Act, Fair Debt Collection Practices Act, willful
noncompliance, and negligent noncompliance claims against defendant National, declines to
exercise supplemental jurisdiction over plaintiff's state law defamation and UDTPA claims against
defendant National, and DISMISSES WITHOUT PREJUDICE those claims. The clerk shall close
the case.

1

On May 14, 2024, Atkinson filed a letter alleging that National also co1lllllltted mail
fraud. See [D.E. 35] I. Atkinson cannot use a surreply to amend his complaint. See United States
ex rel. Carter v. Halliburton Co., 866 F.3d 199, 210 n.6 (4th Cir. 2017); Murray Energy Com. v.
Adm.in. of EPA, 861 F.3d 529, 537 n.5 (4th Cir. 2017); vonRosenberg v. Lawrence, 849 F.3d 163,
167 n.1 (4th Cir. 2017); S. Walk at Broadlands Homeowner's Ass'n, Inc. v. QpenBand at
Broadlands, LLC, 713 F.3d 175, 184 (4th Cir. 2013); Wahi v. Charleston Area Med. Ctr., Inc., 562
F.3d 599,617 (4th Cir. 2009); Qptima Tobacco Com. v. U.S. Flue-Cured Tobacco Growers, Inc.,
No. 5:16-CV-889, 2019 WL 4858848, at •7 (E.D.N.C. Sept. 30, 2019) (unpublished); Hexion
Specialty Chems., Inc. v. Oak-Bark Com., No. 7:09-CV-105, 2011 WL 4527382, at •7--8
(E.D.N.C. Sept. 28, 2011) (unpublished). Moreover, this is a civil case, and mail fraud is a criminal
charge. Accordingly, Atkinson's mail fraud allegation is not in this case.
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SO ORDERED. This...£ day of June, 2024.

~hn,c&-A

J~.DEVERID
United States District Judge

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