Durthaler v. Accounts Receivable Management, Inc.

Filing 22

OPINION AND ORDER granting in part and denying in part 15 Motion for Leave to File and Amended Complaint. Plaintiff is granted leave to file, within seven days, an amended complaint that is identical to his initial complaint with the addition of the allegation contained in paragraph 23(e) of the proposed amended complaint as well as the exhibit identified as Exhibit B to the proposed amended complaint. Signed by Magistrate Judge Terence P Kemp on 10/20/2011. (pes1)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION

Michael Durthaler,

:

Plaintiff,

:

v.

:

:
Accounts Receivable Management,
Inc.,
:
Defendant.

Case No. 2:10-cv-1068
JUDGE EDMUND A. SARGUS, JR.
Magistrate Judge Kemp

:
OPINION AND ORDER

Plaintiff Michael Durthaler brought this action against
Defendant Accounts Receivable Performance Management, Inc.
alleging violations of the Fair Debt Collection Practices Act, 15
U.S.C. §§1692 et seq. (“FDCPA”).

Mr. Durthaler filed a motion to

amend the complaint, which has been briefed by the parties.

For

the reasons that follow, the motion will be granted in part and
denied in part.
I.

Background

Plaintiff filed this action on November 29, 2010.

On April

13, 2011, the Court issued a Scheduling Order providing that
“[a]ny motion to amend the pleadings or to join parties shall be
filed by April 22, 2011.”
The parties propounded discovery requests upon one another
and served responses to those discovery requests.

On July 18,

2011, in response to one of the discovery requests, Defendant
provided voicemail recordings to Mr. Durthaler relating to the
alleged debt.

According to Mr. Durthaler’s motion, “some of the

messages reveal that Defendant’s collector(s) would call
Plaintiff without providing the disclosures required by 15 U.S.C.
§1692e(11) otherwise known as the ‘Mini-Miranda’. . .

[and] the

voicemails confirm that Defendant failed to provide written
notice required by §1692g in the proper time frame.”
15 at 2.)

(See Doc. #

On July 27, 2011, approximately three months after the

deadline for motions to amend the pleadings, Mr. Durthaler filed
a motion for leave to file an amended complaint.

That motion

was denied without prejudice for failure to comply with the Local
Rules of Court.

On August 1, 2011, he re-filed his motion with a

certificate of compliance with the Local Rules.
The initial complaint alleges that Defendant violated §1692d
and, specifically, §1692d(5).

The proposed amended complaint

seeks to allege additional facts and also to allege violations of
three additional sections of the FDCPA.

The new allegations may

be summarized as follows:
•

First, Mr. Durthaler seeks to add a claim that Defendant
violated §1692c(b) “by contacting unauthorized third parties
without the prior consent of the consumer . . .”
15-1 at ¶ 23(a).)

(Doc. #

This is supported by new allegations that

Defendant placed calls to Mr. Durthaler’s roommate at a
telephone number that did not belong to Mr. Durthaler, that
Mr. Durthaler informed Defendant that the number did not
belong to him and asked Defendant to stop calling that
number, that Defendant again called the number on October 5,
2010, and that Mr. Durthaler then called Defendant a second
time to demand that the calls to that number cease. (Id. at
¶¶ 13-16.)
•

Second, he seeks to add an allegation setting forth the
dates and times of specific calls made by Defendants as
further support for his §1692d claim.
12.)

(Doc. # 15-1 at ¶

He also seeks to change two paragraphs so that instead

of alleging that Defendant started constantly calling him
in July of 2010, he would allege that Defendant began that
conduct in “July or August of 2010,” and instead of alleging
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that Defendant contacted him “virtually every day,” he would
allege that Defendant did so “multiple days per week.”

(Id.

at ¶¶ 10-11.)
•

Third, he seeks to add a claim that Defendant violated
§1692g by failing to send him a written notice within five
days of its initial communication with him.
¶ 23(d).)

(Doc. # 15-1 at

This is supported by new allegations that

Defendant’s “Dunning Letter” was returned to Defendant, that
Defendant admitted it had the wrong address in its system,
and that it did not resend a collection letter until more
than five days after calling Mr. Durthaler to try to collect
a debt.
•

(Id. at ¶¶ 17-20.)

Fourth, he seeks to add a claim that Defendant violated
§1692e(11) by failing to disclose in subsequent
communications that the communication was from a debt
collector.

(Doc. # 15-1 at ¶ 23(e).)

In conjunction with

this allegation, he adds new allegations of two specific
dates upon which Defendant left a voicemail for Mr.
Durthaler without indicating that it was attempting to
collect a debt.

(Id. at ¶¶ 21-22.)

Pursuant to the Scheduling Order, discovery was due to be
completed on September 30, 2011 and dispositive motions are due
on November 15, 2011.

No trial date has been set.
II.

Standard

Although motions to amend are evaluated under the standards
in Fed. R. Civ. P. 15(a), which states that leave to amend shall
be given freely when justice so requires, that rule cannot be
read in isolation.

Rather, as the Court of Appeals pointed out

in Leary v. Daeschner, 349 F.3d 888 (6th Cir. 2003), Rules 15(a)
and 16(b) must be read together.

Consequently, the Court is

permitted to examine the standard factors governing amendments of
the complaints under Rule 15(a) only if it is satisfied that any
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prior date for the filing of a motion for leave to amend either
has been met or is properly extended under the good cause
provisions of Rule 16(b).
Fed.R.Civ.P. 16(b) requires the Court, in each civil action
which is not exempt from that rule, to “enter a scheduling order
that limits the time” to, inter alia, file motions, identify
expert witnesses, and complete discovery.

The rule further

provides that “[a] schedule shall not be modified except upon a
showing of good cause ....”
Although the Court has broad discretion to modify its own
pretrial orders, it must be remembered that “[a]dherence to
reasonable deadlines is ... critical to maintaining integrity in
court proceedings,” Rouse v. Farmers State Bank, 866 F.Supp.
1191, 1199 (N.D. Iowa 1994), and that pretrial scheduling orders
are “the essential mechanism for cases becoming trial-ready in an
efficient, just, and certain manner.”

Id. at 1198.

In

evaluating whether the party seeking modification of a pretrial
scheduling order has demonstrated good cause, the Court is
mindful that “[t]he party seeking an extension must show that
despite due diligence it could not have reasonably met the
scheduled deadlines.”

Deghand v. Wal-Mart Stores, 904 F.Supp.

1218, 1221 (D. Kan. 1995); see also Fed. R. Civ. P. 16, 1983
advisory committee’s notes.

The focus is primarily upon the

diligence of the movant; the absence of prejudice to the opposing
party is not equivalent to a showing of good cause.
McCann, 160 F.R.D. 568, 571 (N.D. Ind. 1995).

Tschantz v.

Of course,

“[c]arelessness is not compatible with a finding of diligence and
offers no reason for a grant of relief.”

Dilmer Oil Co. v.

Federated Mut. Ins. Co., 986 F. Supp. 959, 980 (D.S.C. 1997).
Further, although the primary focus of the inquiry is upon the
moving party’s diligence, the presence or absence of prejudice to
the other party or parties is a factor to be considered.
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Inge v.

Rock Financial Corp., 281 F.3d 613 (6th Cir. 2002).

The Court of

Appeals has made it clear that this standard applies to any
deadline set in a Rule 16 order, such as a date by which motions
to amend the pleadings must be made (see Inge, supra), a
discovery cutoff date (see Commerce Benefits Group v. McKesson
Corp., 326 Fed. Appx. 2369 (6th Cir. May 20, 2009)), or a date
for filing summary judgment motions (see Andretti v. Borla
Performance Industries, 426 F.3d 824 (6th Cir. 2005)).

It is

with these standards in mind that the instant motion will be
decided.
III.

Discussion

In considering whether Mr. Durthaler has shown good cause
for modifying the deadline to amend the complaint, the Court will
examine the different subjects of the proposed amendments in
turn.
First, Mr. Durthaler seeks to add a claim that Defendant
violated §1692c(b) “by contacting unauthorized third parties
without the prior consent of the consumer . . .”

This is

supported by new allegations that Defendant placed calls to Mr.
Durthaler’s roommate at a telephone number that did not belong to
Mr. Durthaler, and that Defendant called the number after Mr.
Durthaler informed Defendant that the number did not belong to
him and asked Defendant to stop calling that number.

Mr.

Durthaler has not set forth any reason why these allegations
could not have been raised in the initial complaint, much less
before the deadline for filing a motion to amend the complaint.
Indeed, if the allegations are to be believed, he had knowledge
of Defendant’s actions as early as October 5, 2010, which was
more than a month before he filed his complaint.

Further,

because these allegations set forth a new statutory violation
involving a non-party not identified in the initial complaint,
and because the close of discovery has passed, Defendant could be
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prejudiced by the amendment of the complaint to add these claims.
There is no showing of good cause sufficient to permit modifying
the scheduling order to add these allegations.
Second, Mr. Durthaler seeks to add an allegation setting
forth specific facts relating to his claims that Defendant
violated §1692d and seeks to change the wording of two
allegations relating to that violation.

He does not specifically

address the reason that these amendments could not have been made
prior to the deadline for filing a motion to amend, so it is
unclear whether these changes were based on discovery provided
after the deadline.

Further, Mr. Durthaler has not made a

showing of good cause for extending the deadline in order to
modify slightly the language of two paragraphs and add another
that does nothing more than provide dates and times relating to
his original allegations.

Given that Defendant answered the

original claim rather than filing a motion to dismiss, Mr.
Durthaler did not need to rely upon the pleadings to keep his
§1692d claim alive, but rather may point to the evidence adduced
in discovery should a summary judgment motion be directed to this
claim.

Accordingly, although this amendment does not prejudice

Defendant, Mr. Durthaler has failed to demonstrate good cause for
granting leave to amend the complaint after the deadline in order
to add or modify these allegations.
Third, Mr. Durthaler seeks to add a claim that Defendant
violated §1692g by failing to send him a written notice within
five days of the initial communication with him.
¶ 23(d).)

(Doc. # 15-1 at

Mr. Durthaler asserts that on July 18, 2011, after the

deadline for filing a motion to amend had passed, Defendant
produced voicemail recordings that “confirm that Defendant failed
to provide written notice required by §1692g in the proper time
frame.”

That explanation does not demonstrate that despite due

diligence Mr. Durthaler could not have reasonably met the
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scheduled deadlines.

Rather, if his allegations are to be

believed, he knew when Defendant initially contacted him and he
knew when he received a written notice.

Discovery providing

confirmation of facts does not provide good cause for modifying a
scheduling order.

Furthermore, because discovery has closed,

Defendant could be prejudiced by the amendment of the complaint
to add these claims.

Mr. Durthaler has not demonstrated good

cause for modifying the scheduling order to add these
allegations.
Fourth, Mr. Durthaler seeks to add a claim that Defendant
violated §1692e(11) by failing to disclose in certain
communications that the communications were from a debt
collector.

Mr. Durthaler asserts that on July 18, 2011, after

the deadline for filing a motion to amend, Defendant produced
voicemail recordings that “reveal that Defendant’s collector(s)
would call Plaintiff without providing the disclosures required
by 15 U.S.C. §1692e(11) otherwise known as the ‘Mini-Miranda.’”
It is conceivable that Mr. Durthaler did not listen to or retain
copies of these voicemails and that he did not learn of the
alleged violation until he received the voicemails through
discovery after the deadline to seek leave to amend the pleadings
had passed.

Furthermore, unlike the other proposed amendments,

this new claim is not likely to require additional discovery
because the communications at issue have already been produced
and the key issue will be whether, as a matter of law, Defendant
failed to disclose that the communications were from a debt
collector.

15 U.S.C.A. §1692e(11).

Accordingly, Mr. Durthaler

has demonstrated good cause for modifying the scheduling order to
add the allegations discussed in this paragraph.
Defendant argues that it would be futile to amend the
complaint to assert allegations of a claimed violation of
§1692e(11).

There is some conceptual difficulty presented when
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the primary basis for a party’s opposition to the filing of an
amended pleading is that the pleading is futile, i.e. that it
fails to state a claim upon which relief can be granted.

A

Magistrate Judge cannot ordinarily rule on a motion to dismiss,
see 28 U.S.C. §636(b)(1)(A), and denying a motion for leave to
amend on grounds that the proposed new claim is legally
insufficient is, at least indirectly, a ruling on the merits of
that claim.
At least where the claim is arguably sufficient, it is
usually a sound exercise of discretion to permit the claim to be
pleaded and to allow the merits of the claim to be tested before
the District Judge by way of a motion to dismiss.

Even a

District Judge may choose to adopt this approach: “The trial
court has the discretion to grant a party leave to amend a
complaint, even where the amended pleading might ultimately be
dismissed.” Morse/Diesel, Inc. v. Fidelity and Deposit Co. of
Md., 715 F. Supp. 578, 581 (S.D.N.Y. 1989).

Consequently, rather

than determining the actual legal sufficiency of the new claim,
in many cases it will suffice to determine if there is a
substantial argument to be made on that question and, if so, to
allow the amended pleading to be filed with the understanding
that a motion to dismiss for failure to state a claim may follow.
Here, Mr. Durthaler has made one allegation that is arguably
sufficient to support a claim that Defendant violated §1692e(11).
Defendant argues that the new allegations fail to state a claim
because they do not relate to the initial communication.
However, this ignores the second part of §1692e(11).

Section

1692e states that the following conduct is a violation of that
section:
The failure to disclose in the initial written
communication with the consumer and, in addition, if
the initial communication with the consumer is oral, in
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that initial oral communication, that the debt
collector is attempting to collect a debt and that any
information obtained will be used for that purpose, and
the failure to disclose in subsequent communications
that the communication is from a debt collector, except
that this paragraph shall not apply to a formal
pleading made in connection with a legal action.
15 U.S.C.A. §1692e(11) (emphasis added).

While Defendant is

correct that Mr. Durthaler’s proposed amendments do not allege
the violation of §1692e(11) in connection with the initial oral
communication, one of the proposed allegations states “Defendant
violated §1692e(11) by failing to disclose in subsequent
communications that the communication is from a debt collector.”
(Doc. 15-1 at ¶ 23(e) (emphasis added).)

Given that the

allegation in paragraph 23(e) does allege facts supporting a
violation of §1692e, and given that Mr. Durthaler presumably will
seek to incorporate Exhibit B to demonstrate failure to indicate
that a communication is from a debt collector, there is a good
faith argument to be made on this question.

Therefore, the Court

will allow Mr. Durthaler to amend the complaint to add the
allegation contained in paragraph 23(e) of the proposed amended
complaint, as well as the exhibit identified as Exhibit B to the
proposed amended complaint.
IV.

Conclusion and Order

For the reasons set forth above, the Court grants in part
and denies in part Mr. Durthaler’s motion for leave to file an
amended complaint (#15).

Mr. Durthaler is granted leave to file,

within seven days, an amended complaint that is identical to his
initial complaint with the addition of the allegation contained
in paragraph 23(e) of the proposed amended complaint as well as
the exhibit identified as Exhibit B to the proposed amended
complaint.
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V.

Procedure for Reconsideration

Any party may, within fourteen days after this Order is
filed, file and serve on the opposing party a motion for
reconsideration by a District Judge.

28 U.S.C. §636(b)(1)(A),

Rule 72(a), Fed. R. Civ. P.; Eastern Division Order No. 91-3, pt.
I., F., 5.

The motion must specifically designate the order or

part in question and the basis for any objection.

Responses to

objections are due fourteen days after objections are filed and
replies by the objecting party are due seven days thereafter.
The District Judge, upon consideration of the motion, shall set
aside any part of this Order found to be clearly erroneous or
contrary to law.
This order is in full force and effect, notwithstanding the
filing of any objections, unless stayed by the Magistrate Judge
or District Judge.

S.D. Ohio L.R. 72.4.

/s/ Terence P. Kemp
United States Magistrate Judge

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