McAdory v. M.N.S & Associates, LLC et al
Opinion and Order re Plaintiff's motion to amend 29 , construed as a motion for reconsideration, is denied. Signed on 3/11/2018 by Judge Marco A. Hernandez. (sss)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
M.N.S. & ASSOCIATES, and DNF
ASSOCIATES, LLC, foreign limited
Kelly D. Jones
KELLY D. JONES, ATTORNEY AT LAW
89 S.E. Morrison Street, Suite 255
Portland, Oregon 97214
Kevin A. Mehrens
LAW OFFICE OF KEVIN A. MEHRENS
319 S.W. Washington Street, Suite 614
Portland, Oregon 97204
Attorneys for Plaintiff
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OPINION & ORDER
Jordan M. New
THE LAW OFFICE OF JORDAN MICHAEL NEW
1001 S.W. Fifth Avenue, Suite 1100 #483
Portland, Oregon 97204
Brendan H. Little
LIPPES MATHIAS WEXLER FRIEDMAN LLP
50 Fountain Plaza, Suite 1700
Buffalo, New York 14202
Attorneys for Defendant
HERNANDEZ, District Judge:
Plaintiff Jillian McAdory brings this Fair Debt Collection Practices Act (FDCPA) action
against Defendants M.N.S. & Associates and DNF Associates, LLC, contending that M.N.S's
conduct in attempting to collect a consumer debt from Plaintiff violated various provisions of the
FDCPA, 15 U.S.C. §§ 1692-1692p, and that DNF is vicariously liable for M.N.S's actions. In a
November 3, 2017 Opinion & Order, I granted DNF's motion to dismiss after concluding that as
a matter of law, DNF was not be a "debt collector" as defined by the FDCPA. McAdory v.
M.N.S. & Assocs., No. 3:17-cv-00777-HZ, 2017 WL 5071263 (D. Or. Nov. 3, 2017), ECF 27.
Plaintiff moves for leave to amend, contending that facts now asserted in her Proposed
Second Amended Complaint (PSAC) establish that DNF is a debt collector. I construe the
motion as a motion for reconsideration and I deny it.
I. Nature of the Motion & Standards
DNF's motion to dismiss contended that DNF could not be a debt collector as defined by
statute and alternatively, even if it could, Plaintiff failed to plausibly allege that DNF was a debt
collector. See id. at *1, *2 (noting the two separate arguments made by DNF). I made clear that
I agreed with Defendant on its first argument, meaning that the issue was not the plausibility of
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the claim based on the facts alleged against DNF but was the viability of the claim as a matter of
law. Id. at *1, *4. I expressly declined to reach DNF's alternative argument based on the
sufficiency of the facts alleged. Id.
In granting DNF's motion to dismiss, I neglected to expressly state that the claim against
DNF was dismissed with prejudice. However, I also did not give Plaintiff leave to amend. The
Opinion's discussion of the issue presented, the analysis upon which the conclusion was based,
and my express statement that I was not considering DNF's alternative argument directed to the
adequacy of the factual allegations because I agreed with DNF that as a matter of law a debt
purchaser is not a debt collector under the FDCPA's "principal purpose" definition of debt
collector, should have made clear to the parties that dismissal of the claim with prejudice was
intended. Moreover, "a dismissal for failure to state a claim under Rule 12(b)(6) is presumed . . .
to be rendered with prejudice." McLean v. United States, 566 F.3d 391, 396 (4th Cir. 2009).
Given that the dismissal of DNF was with prejudice, Plaintiff's current motion is more
appropriately considered a motion for reconsideration rather than a motion for leave to amend.
Reconsideration is an "extraordinary remedy, to be used sparingly in the interests of
finality and conservation of judicial resources." Kona Enters., Inc. v. Estate of Bishop, 229 F.3d
877, 890 (9th Cir.2000). Federal Rule of Civil Procedure 54(b) allows a district court to revise at
any time "any order or other decision, however designated," that does not fully resolve all the
claims for all of the parties. Fed. R. Civ. P. 54(b)1; see also Lyden v. Nike Inc., No.
3:13–cv–00662–HZ, 2014 WL 4631206, at *1–2 (D. Or. Sept. 15, 2014) (setting forth standards
Because the November 3, 2017 Opinion resolved only the claim against DNF, the claim
against M.N.S. is still pending and thus, the Opinion did not resolve "all claims for all of the
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for reconsideration under Rule 54(b)).
A motion for reconsideration can be granted if the court (1) is presented with new
evidence, (2) committed clear error or the first decision was manifestly unjust, or (3) is aware of
an intervening change in law. Sch. Dist. No 1J v. ACandS, Inc. 5 F.3d 1255, 1263 (9th Cir.
1993); Transp. Credit Serv. Ass'n v. Systran Fin. Servs. Corp., No. CIV. 03–1342–MO, 2004
WL 1920799, at *1 (D. Or. Aug. 26, 2004); see also Lyden, 2014 WL 4631206, at *1 (applying a
similar four-factor analysis to a presumptive Rule 54(b) motion for reconsideration, and
collecting cases). Motions for reconsideration are generally disfavored, and may not be used to
present new arguments or evidence that could have been raised earlier. See Fuller v. M.G.
Jewelry, 950 F.2d 1437, 1442 (9th Cir.1991) (trial court did not abuse its discretion in denying
motion for reconsideration when moving party presented no arguments which the court had not
already considered); see also Sam v. Deutsche Bank Nat. Trust Co., No. 03:13–cv–01521–MO,
2013 WL 6817888, at *2 (D. Or. Dec. 23, 2013) (a party asking for reconsideration must show a
"legitimate basis for reconsideration, meaning something other than re-raising arguments
previously made or asserting new legal theories or new facts which could have been presented
before the initial hearing").
Plaintiff's PSAC presents facts not asserted in the First Amended Complaint. A
comparison of the two pleadings reveals that the new facts are contained in Paragraphs 7 and 8 of
the PSAC. In Paragraph 7, Plaintiff alleges that if the third parties hired by DNF to collect the
debts owned by DNF are unsuccessful in their collection efforts, DNF files collection lawsuits
against the debtors. PSAC ¶ 7, Pl.'s Mot. to Amend, Ex. A, ECF 29-1. Plaintiff alleges that
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DNF has filed at least forty-seven such lawsuits against Oregon consumers in Oregon state
courts. Id. In Paragraph 8, Plaintiff alleges that DNF is licensed as a debt collection agency in
multiple states. An attachment to the PSAC shows such licenses in seven states. PSAC, Ex. 2,
Plaintiff provides no basis for why the facts in Paragraph 8 of the PSAC were omitted
from her Complaint and First Amended Complaint. Plaintiff fails to explain how this is "new
evidence" that was previously unavailable. Thus, it is not a proper basis for reconsideration.
Even if I consider it, however, it does not detract from the analysis in my November 3,
2017 Opinion. The heart of my discussion was that debt purchasing companies who rely on third
parties to collect on the purchased debts are not debt collectors under the "principal purpose"
prong of the definition of debt collector as provided in 15 U.S.C. § 1692a(6). McAdory, 2017
WL 5071263, at *3. This is because the statutory definition requiring that debt collection be the
entity's principal purpose means that the debt collection be the most important or most influential
purpose that the entity has. Id. As I explained, the "fact that a business benefits from the
collection of debt by an entirely separate third party does not necessarily make the principal
purpose of that business the collection of those debts." Id.
My focus was on the language of the federal statute. As Defendant explains in
responding to Plaintiff's motion, certain states require debt buyers to obtain a debt collection
license. In Illinois, for example, debt buyers are expressly subject to the debt collection statutes.
225 Ill. Comp. Stat. § 425/2 (defining "debt buyer" as "a person or entity that is engaged in the
business of purchasing delinquent or charged-off consumer loans or consumer credit accounts or
other delinquent consumer debt for collection purposes, whether it collects the debt itself or hires
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a third-party for collection or an attorney-at-law for litigation in order to collect such debt"); §
425/8.5 (explicitly providing that a "debt buyer shall be subject to all of the terms, conditions,
and requirements of this Act, . . . ."). In Kansas, debt buyers must obtain a license as a
"supervised lender" before "taking assignments of and directly and indirectly, including through
the use of servicing contracts or otherwise, undertaking collection of payments from debtors
arising from supervised loans[.]" Kan. Stat. Ann. §§ 16a-1-301(45), 16a-2-301. Because other
state laws are ambiguous as to whether licenses are required for debt buyers as opposed to debt
collectors, DNF and similarly situated companies find it prudent to obtain licenses in those states
DNF's seven state "debt collector" licenses do not affect DNF's status as a debt collector
under federal law. That certain state statutes expressly subject debt buyers to their consumer debt
regulatory schemes does not impact the analysis under the completely distinct federal definitions.
Thus, even if I consider the fact that DNF is licensed as a debt collector in several states, it does
not justify reconsidering my prior conclusion.
The allegations in Paragraph 7 are that DNF has filed at least forty-seven debt collection
lawsuits against Oregon consumers in Oregon state courts. PSAC ¶ 7. Attached as an exhibit to
the PSAC is a list of the cases, beginning with one filed July 27, 2017 and continuing through
November 20, 2017. PSAC, Ex. 1, Pl's Mot. to Amend, Ex. A, ECF 29-2. Each one shows DNF
as the plaintiff. Id. The First Amended Complaint was filed July 14, 2017. ECF 16. Thus,
because the first of the cited lawsuits was not filed until July 27, 2017, the information about the
lawsuits was not available to Plaintiff at the time the First Amended Complaint was filed.
Plaintiff did bring the existence of at least one lawsuit to the Court's attention in oral argument.
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However, because those facts were not alleged in the pleading to which DNF's motion to dismiss
was directed, I did not address them in the November 3, 2017 Opinion.
The new facts do not alter my prior conclusion. In my November 3, 2017 Opinion, I
explained that a debt purchaser's hiring of a third party to collect on a debt does not make debt
collection the principal purpose of the purchaser entity. McAdory, 2017 WL 5071263, at *3. I
further explained that the FDCPA's statutory proscriptions are directed to "interactions" between
the debtor and the debt collector. Id. Because of the statute's focus, I concluded that the
language of the statute offered "little to suggest" that a company which purchases debt and then
contracts with a third party for actual collection activities was considered by Congress to be debt
Here, the lawsuits filed in an effort to collect on the debts purchased and owned by DNF
are just a different form of collection activity which DNF hires third party attorneys to perform.
While the lawsuits are brought in DNF's name because it is the owner of the debt, DNF itself is
not "interacting" with the debtor because it is not executing the litigation activities. Thus, this
new evidence provides no basis for altering my prior conclusion.2
The cases relied on by Plaintiff are distinguishable. In Heintz v. Jenkins, 514 U.S. 291,
297 (1995), the Supreme Court held that litigation to collect a debt is collection activity under the
FDCPA. But, in that case, the FDCPA claim was brought directly against the attorney who had
filed the lawsuit on behalf of the debt owner. The claim was not brought against the debt owner
Additionally, even if I were to consider the facts relevant to the analysis, I note that
these collection lawsuits were all filed after MNS interacted with Plaintiff to collect her debt,
after she paid the debt, and after this lawsuit was filed. Thus, at best, the evidence of collection
lawsuits shows that D.N.F. may now be a debt collector but it does not show that it was a debt
collector at the time the claims in this case arose.
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itself. Id. at 293 (debt was owed to bank which hired law firm to sue debtor in state court; during
litigation, law firm attorney wrote a letter to debtor's attorney which debtor alleged violated the
FDCPA by falsely representing the amount owed by debtor; debtor then sued lawyer, not debt
owner). While Heintz stands for the proposition that litigation activity may be subject to suit
under the FDCPA, it says nothing about whether a debt owner which hires an attorney to conduct
the litigation is itself a debt collector under the statute.
In Bradshaw v. Hilco Receivables, LLC, 765 F. Supp. 2d 719 (D. Md. 2011), the
defendant had purchased a defaulted debt and then filed suit in state court to collect on that debt.
The plaintiffs sued in federal court under the FDCPA, contending that in filing suit against them
in state court, the defendant acted as a "collection agency" and because it was not licensed as
such under Maryland law, the defendant violated both Maryland law and the FDCPA. Id. at 72223. The court concluded that it was "clear that Hilco is a debt collector within the meaning of 15
U.S.C. § 1692a(6) and has engaged in collection activity as a result of its initiation of state court
lawsuits brought against Bradshaw and the class members." Id. at 725.
In support, the Bradshaw court first cited to Heintz, which, as explained above, is relevant
only for the proposition that litigation is collection activity under the FDCPA. It is not support
for the Bradshaw court's conclusion that the debt purchaser is a debt collector. The Bradshaw
court also cited a Fourth Circuit case which involved facts similar to those in Heintz because the
debt owner, Discover Bank, was not a defendant. Sayyed v. Wolpoff & Abramson, 485 F.3d 226,
228 (4th Cir. 2007). Instead, the FDCPA claim was brought against the law firm which the bank
had retained to pursue an action against the debtor.
Lastly, the Bradshaw court cited to an Eleventh Circuit case which concerned the actions
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of the defendant Unifund CCR Partners in collecting a debt. LeBlanc v. Unifund CCR Partners,
601 F.3d 1185 (11th Cir. 2010). With no analysis, the court, citing the "principal purpose"
definition of debt collector under the FDCPA, wrote that "Unifund is a general partnership
organization incorporated under the laws of Ohio and is in the business of purchasing and
collecting consumer debt. As such, Unifund is a 'debt collector' for purposes of the FDCPA." Id.
at 1188 & n.3. The facts of the case were that after it purchased the charged-off debt from a
bank, Unifund directly engaged in collection activities such as sending a letter to the debtor from
Unifund's "Legal Department" concerning the debt. Id. at 1188. The letter itself identified
Unifund as a debt collector. Id. The debtor did not contact Unifund which later filed suit against
the debtor in state court. Thus, although the Fourth Circuit did not analyze the facts, the facts
supported the court's conclusion that Unifund was subject to the FDCPA because it was
undisputed that Unifund was a debt collector. Id. at 1193. Given that Unifund itself "interacted"
with the debtor before filing a lawsuit, and given that Unifund's letter affirmatively stated it was a
debt collector, the facts are distinguishable from those in Bradshaw and thus, Bradshaw's
reliance on LeBlanc is misplaced. None of the cases Bradshaw relies on supports its conclusion
that a debt purchaser which has itself taken no affirmative conduct in attempting to collect a debt,
including in its litigation activities, is a debt collector under the FDCPA. Thus, Bradshaw is not
Fox v. Citicorp Credit Services., Inc., a 1994 Ninth Circuit case decided before Heintz, is
also distinguishable. 15 F.3d 1507 (9th Cir. 1994). In that case, the Ninth Circuit concluded,
foreshadowing the conclusion reached by the Supreme Court in Heintz, that litigation activity by
an attorney is actionable under the FDCPA. Id. at 1511-13 (concluding that an attorney who
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regularly collected or attempted to collect debts owed or due another, including by "purely legal"
activity such as filing a writ of garnishment, was a debt collector under the FDCPA). The Fox
court went on to reject the defendant's argument that it could not be vicariously liable for the
attorney's conduct. Id. at 1516. Plaintiff contends that Fox demonstrates DNF's liability in the
instant case because just as the defendant in Fox was the named plaintiff in the underlying state
court collection litigation, DNF is the named plaintiff in the underlying state court collection
lawsuits here. And, the argument continues, just as the defendant in Fox was vicariously liable
for the attorney's conduct, DNF must be found to be an appropriate defendant in the FDCPA
Plaintiff fails to acknowledge that the facts in Fox are distinguishable. There, Citibank
was the debt owner. It "referred the matter for collection to Citicorp Credit Services" which then
hired the attorney who allegedly violated the FDCPA by filing a writ of garnishment against the
debtors in the wrong venue. Id. 1510. Before the attorney was involved, however, a Citicorp
employee directly engaged in debt collection activity by repeatedly contacting the debtor about
the debt. Id. Even after Citicorp instructed the attorney to proceed with the garnishment, but
before the attorney had done so, Citicorp was still making contact with the debtors. Id. It is
unclear if ownership of the debt transferred from Citibank to Citicorp when Citibank "referred
the matter for collection." Either way, the facts show that Citicorp itself engaged in collection
activity and interacted with the debtor. In Fox, even assuming that Citicorp was a debt buyer, its
own debt collection conduct apparently made it a debt collector and allowed for vicarious
liability for the conduct of its attorney. Because there are no facts that DNF itself has
participated in any collection efforts, it is not similarly situated to the defendant in Fox. Fox is
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not on point.
Finally, Plaintiff relies on a recent decision by the Northern District of Indiana which
found a triable issue of fact as to whether a debt buyer had "debt collection" as the principal
purpose of its business when the buyer (1) purchased and owned defaulted debt, (2) had no
employees, (3) had a written agreement and power of attorney with a debt collector collection
agency, (4) had filed thousands of collection lawsuits in its name, (5) had described the general
character of its business as "consumer debt collection" in an application for registration in
Massachusetts, and which (6) the Massachusetts Supreme Court had determined obtained at least
99% of its gross revenue from collecting on unpaid consumer debt, had "debt collection" as the
principal purpose of its business. Mitchell v. LVNV Funding, LLC, No. 2:12-cv-533-TLS, 2017
WL 6406594, at *6 (D. Or. Dec. 15, 2017).
The Court in Mitchell concluded that the "principal purpose" determination was an issue
of fact for the jury. While I agree that in some contexts, this might be a jury question, my
analysis, based on the FDCPA's statutory language, resolves the question in this case as a matter
of law. Plaintiff's "new evidence" exposes no interaction between DNF and a debtor. DNF
continues to hire third parties, whether they be collection agencies or attorneys, to conduct
collection activities up to and including litigation. As a result, nothing in my original analysis
has changed. The fact that DNF "benefits from the collection of a debt by an entirely separate
third party does not necessarily make the principal purpose of [DNF's] business the collection of
those debts." McAdory, 2017 WL 5071263, at *3. And, given the lack of interaction between
DNF and the consumer, "there is little to suggest that a company which only purchases debt and
then contracts with a third party for all actual collection activity was considered by Congress" to
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be a debt collector. Id.
Plaintiff's new evidence does not warrant a change in my prior conclusion.
Plaintiff's motion to amend , construed as a motion for reconsideration, is denied.
IT IS SO ORDERED.
Marco A. Hernandez
United States District Judge
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