HALL v. EQUIFAX INFORMATION SERVICES LLC et al

Filing 33

MEMORANDUM. SIGNED BY HONORABLE LAWRENCE F. STENGEL ON 8/31/2016. 8/31/2016 ENTERED AND COPIES E-MAILED.(amas)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
FRANCIS HALL,
Plaintiff,
v.

EQUIFAX INFORMATION
SERVICES LLC, et al.,

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CIVIL ACTION

NO. 15-2938

Defendants.
MEMORANDUM
Stengel, J.

August

, 2016

The plaintiff, Francis Hall, filed this action against Equifax Information Services,
Berks Credit & Collection and Reading Health System (“RHS”) alleging violations of the
Fair Credit Reporting Act (“FCRA”), the Fair Debt Collection Practices Act (“FDCPA”),
the Pennsylvania Fair Credit Extension Uniformity Act (“FCEUA”) and the Pennsylvania
Unfair Trade Practices and Consumer Protection Law (“UTPCPL”). The plaintiff filed
an amended complaint on December 1, 2015, and Equifax Information Services and
Berks Credit & Collection filed separate answers. Presently before the Court is RHS’s
motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal
Rules of Civil Procedure. For the reasons discussed below, I am denying the defendant’s
motion to dismiss.

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I.

BACKGROUND
In February 2012, Hall was severely injured in an accident and was treated at

Reading Hospital for these injuries. Pl.’s Am. Compl. ¶¶ 13-14. In October 2012, Hall
told Reading Hospital that his medical bills would be paid through the proceeds of a
personal injury claim that he had filed. Id. at ¶ 15. In May 2014, Hall and Reading
Hospital agreed to a payment amount which would satisfy the medical debt that Hall
incurred for his treatment in 2012. Id. at ¶ 16. This agreement was placed in writing and
stated that the debt that Hall had incurred for his treatment between February 25, 2012
and May 7, 2012 would be satisfied by the agreement and thereafter, Hall’s account
would reflect a zero balance for treatment given between February 25, 2012 and May 7,
2012. Id. at ¶ 17.
In June of 2014, Hall received the proceeds from his personal injury lawsuit, and
pursuant to the written agreement with Reading Hospital, Hall paid his debt in full to
Reading Hospital. Id. at ¶ 18. Although Hall paid his debt in full with Reading Hospital,
Reading Hospital did not close Hall’s debt and continued to attempt to collect on the
debt. Id. at ¶¶ 19-20. By the end of June 2014, Reading Hospital assigned Hall’s debt to
Berks Credit & Collection (“Berks Credit”), a debt collector, who immediately began its
own collection attempts. Id. at ¶ 21. During its collection attempts, Berks Credit began
to report Hall’s “satisfied” debt as unsatisfied debt to the credit reporting agencies. Id. at
¶ 22. Despite repeated notifications from Hall that his debt had already been satisfied,
Berks Credit refused to close Hall’s account or to report Hall’s debt to credit reporting

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agencies as paid. Id. at ¶¶ 22-23. The credit reporting agencies, namely Equifax,
continue to distribute this inaccurate information. Id. at ¶¶ 24-27.
Hall filed a complaint on May 26, 2015, and an amended complaint on December
1, 2015, seeking to hold RHS, Berks Credit and Equifax liable for violations of the
FCRA, the FDCPA, the FCEUA, and the UTPCPL. Berks Credit filed their answer on
December 9, 2015 and Equifax filed their answer on December 15, 2015. RHS filed a
motion to dismiss on December 21, 2015.
II.

LEGAL STANDARD
A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure

for failure to state a claim upon which relief can be granted examines the legal
sufficiency of the complaint. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Following
the Supreme Court decisions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
(2007) and Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009), pleading standards in federal
actions have shifted from simple notice pleading to a more heightened form of pleading,
requiring a plaintiff to allege facts sufficient to show that the plaintiff has a “plausible
claim for relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009). A
facially plausible claim may not be supported by conclusory allegations, but must allow
the court “to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Iqbal, 556 U.S. at 678.
When presented with a motion to dismiss for failure to state a claim under Rule
12(b)(6), district courts should conduct a three-part analysis. Benner v. Bank of America,
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N.A., 917 F.Supp.2d 338, 350 (E.D. Pa. 2013). The court must: “(1) identify[] the
elements of the claim, (2) review[] the complaint to strike conclusory allegations, and
then (3) look[] at the well-pleading components of the complaint and evaluate[] whether
all of the elements identified in part one of the inquiry are sufficiently alleged.” Malleus
v. George, 641 F.3d 560, 563 (3d Cir. 2011).
“Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a short
and plain statement of the claim showing that the plaintiff is entitled to relief.” Iqbal, 556
U.S. at 677-78. While Federal Rule of Civil Procedure 8(a)(2) does not require the
plaintiff to plead detailed factual allegations, it does demand “more than an unadorned,
the-defendant-unlawfully-harmed-me accusation.” Id. at 678. In other words, a pleading
that offers “labels and conclusions” or “a formulaic recitation of the elements of a cause
of action will not do.” Twombly, 550 U.S. at 555. Moreover, a pleading is not sufficient
if it tenders “naked assertion[s]” devoid of “further factual enhancement.” Id.
III.

DISCUSSION
Hall’s amended complaint alleges that RHS violated Pennsylvania’s FCEUA and

UTPCPL when RHS continued to attempt to collect Hall’s debt despite having
represented to Hall that his debt would be satisfied upon payment pursuant to their
written agreement. RHS moves to dismiss Hall’s amended complaint for failure to state a
claim upon which relief can be granted. RHS argues that Hall failed to allege that he
justifiably relied on any conduct of RHS or that he suffered an ascertainable loss. RHS
claims that justifiable reliance and ascertainable loss are “conditions precedent to
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recovery under the theories of liability asserted against Reading Hospital.” Def’s Mot. to
Dismiss 2. Accordingly, RHS states that Hall’s allegations against them are insufficient
as a matter of law to establish a claim for violation of the FCEUA and the UTPCPL.
The FCEUA prohibits unfair or deceptive acts or practices in the collection of
debt. 73 P.S. § 2270.2. Section 2270.4 of the FCEUA “establishes rules for creditors,
setting forth what constitutes unfair or deceptive acts or practices.” Levy-Tatum v.
Navient and Sallie Mae Bank, No. CIV. A.15-3794, 2016 WL 75231, *9 (E.D. Pa. Jan. 7,
2016). Specifically, § 2270.4 prohibits debt collectors from “engag[ing] in any conduct
the natural consequence of which is to harass, oppress or abuse any person in connection
with the collection of a debt,” 73 P.S. § 2270.4(b)(4); from “us[ing] any false, deceptive
or misleading representation or means in connection with the collection of any debt,” 73
P.S. § 2270.4(b)(5); or from “us[ing] unfair or unconscionable means to collect or
attempt to collect any debt,” 73 P.S. § 2270.4(b)(6). The enforcement provision of the
FCEUA states that “[i]f a debt collector or creditor engages in an unfair or deceptive debt
collection act or practice under this act, it shall constitute a violation of the [UTPCPL].”
73 P.S. § 2270.5(a). Essentially, this language indicates that the FCEUA “does not
provide individuals with the right to institute private causes of action for violations,” and
therefore, “individual plaintiffs must use 73 P.S. § 201-9.2, the remedial provision of the
UTPCPL, to obtain relief.” Benner, 917 F.Supp.2d at 359.
The UTPCPL, like the FCEUA, is “a remedial statute intended to protect
consumers from unfair or deceptive practices or acts” in the conduct of trade or

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commerce. Balderston v. Medtronic Sofamor Danek, Inc., 152 F.Supp.2d 772, 776 (E.D.
Pa. 2001). Section 201-2(4) of the UTPCPL “lists specific unfair methods of competition
and unfair or deceptive acts or practices, and includes a catchall provision.” Hunt v. U.S.
Tobacco Co., 538 F.3d 217, 221 (3d Cir. 2008). The remedial provision of the UTPCPL,
73 P.S. § 201-9.2, creates a private cause of action for “[a]ny person who purchases or
leases goods or services. . . and thereby suffers any ascertainable loss . . ., as a result of
the use or employment by any person of a method, act or practice declared unlawful by
section 3 of this Act.” 73 P.S. § 201-9.2(a). To establish a claim under the UTPCPL for
deceptive conduct, a plaintiff must demonstrate: “(1) a deceptive act that is likely to
deceive a consumer acting reasonably under similar circumstances; (2) justifiable
reliance; and (3) that the plaintiff’s justifiable reliance caused ascertainable loss.”
Slapikas v. First American Title Ins. Co., 298 F.R.D. 285, 292 (W.D. Pa. 2014)(citing
Seldon v. Home Loan Servs., 647 F.Supp.2d 451, 470 (E.D. Pa. 2009).
In response to the defendant’s motion to dismiss, Hall denies that he is required to
plead justifiable reliance or ascertainable loss. Hall points to § 2270.5(a) of the FCEUA
which states that if “a debt collector or creditor engages in an unfair or deceptive debt
collection act or practice under this act, it shall constitute a violation of the [UTPCPL].”
73 P.S. § 2270.5(a). Hall interprets this language to mean that “[a]n [sic] FCEUA
violation is a per se violation of the UTPCPL” and therefore, “[b]y sufficiently pleading
that Reading Hospital has violated the FCEUA, Plaintiff has satisfied the pleading
requirements for the UTPCPL.” Pl.’s Resp. 6-7.

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Contrary to Hall’s contention, a plaintiff bringing a FCEUA claim under the
UTPCPL’s remedial provision is required to plead both justifiable reliance and
ascertainable loss. In Kern v. Lehigh Valley Hosp., Inc., 108 A.3d 1281 (Pa. Super. Ct.
2015), the Pennsylvania Superior Court stated:
The inclusion of a violation of the FCEUA as also being a
violation of the UTPCPL, evinces a clear intent by our
Legislature that FCEUA claims be treated in the same manner
as other private action claims under the UTPCPL. . . . As a
private action under Section 201-9.2 of the UTPCPL, FCEUA
claims therefore must plead that a plaintiff suffered an
ascertainable loss as a result of a defendant’s prohibited
action. As stated earlier, this requires that justifiable reliance
be pled.
Id. at 1290. Simply stated, the Kern court clarified that a plaintiff proceeding under the
UTPCPL’s remedial provision on a FCEUA claim must plead an ascertainable loss
resulting from justifiable reliance on the defendant’s conduct in order to survive a Rule
12(b)(6) motion. Courts have consistently adopted Kern’s interpretation of the pleading
requirements under the FCEUA and UTPCPL and required plaintiffs asserting FCEUA
claims under the UTPCPL’s remedial provision to plead ascertainable loss and justifiable
reliance. See Kaymark v. Bank of America, N.A., 783 F.3d 168, 182 (3d Cir.
2015)(finding that Kern’s interpretation of the pleading requirements for FCEUA claims
brought under the UTPCPL is “persuasive and indeed, logical.”); Walkup v. Santander
Bank, N.A., No. CIV. A.15-3929, 2015 WL 7770072, *4-*5 (E.D. Pa. Dec. 3, 2015)
(requiring the plaintiff to plead both ascertainable loss and justifiable reliance).

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Therefore, Hall’s FCEUA and UTPCPL claims may only proceed if he has set forth
sufficient factual allegations demonstrating ascertainable loss and justifiable reliance. 1
A.

Ascertainable Loss

Hall claims that his injuries consist of: (1) increased interest rates and payments
on his current automobile loan; (2) fees associated with disputing the inaccurate debt and
credit information; and (3) legal fees. Pl.’s Am. Compl. ¶ 41. While the Pennsylvania
Supreme Court has not yet specifically identified what constitutes “ascertainable loss”
under the UTPCPL, federal courts in this district and lower Pennsylvania state courts
require that the loss asserted be “an actual, non-speculative, loss of money or property.”
Levy-Tatum, 2016 WL 75231, at *9. Thus, Hall is required to plead facts demonstrating
an ascertainable loss by “point[ing] to money or property that he would have had but for
the defendant’s [deceptive] actions.” Walkup, 2015 WL 7770072, at *4.
Hall cannot demonstrate ascertainable loss on the basis of legal fees. Grimes v.
Enterprise Leasing Co. of Phila., LLC, 105 A.3d 1188, 1193 (Pa. 2014) (“Appellee’s
reading would allow a plaintiff to manufacture the ‘ascertainable loss’ required to bring a
private UTPCPL claim simply by obtaining counsel to bring a private UTPCPL claim;
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RHS’s briefing also raises issues regarding the distinction between the pleading requirements for a claim of
deceptive conduct and a claim for fraudulent conduct under the UTPCPL’s catch-all provision. According to RHS,
Hall’s claim “largely arises from allegedly fraudulent conduct,” rather than deceptive conduct. Def.’s Reply 3.
Therefore, to the extent Hall alleges fraudulent conduct, Hall must plead the elements of common law fraud in
accordance with Rule 9(b).
RHS correctly argues that a claim for fraudulent conduct under the UTPCPL requires a plaintiff subjects
the plaintiff to the heightened pleading standard of Rule 9(b) of the Federal Rules of Civil Procedure. Seldon, 647
F.Supp.2d at 469-70 (evaluating the statutory language and legal authority of the Legislature’s 1996 amendment to
the UTPCPL). The Seldon court also stated that a plaintiff does not need to allege the elements of common law
fraud or meet the heightened pleading standards of Rule 9(b) to successfully plead a claim for deceptive conduct
under the UTPCPL. Id. In this case, Hall alleges that “Reading Hospital engaged in unfair methods of competition
and unfair or deceptive acts or practices.” Pl.’s Am. Compl. ¶ 69. Hall alleges that RHS engaged in deceptive
conduct; therefore, he need not meet the heightened pleading standard of Rule 9(b).

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we presume that such an unreasonable result was not intended by the General
Assembly.”); Levy-Tatum, 2016 WL 75231, at *9 (“Merely retaining counsel to sue
under the UTPCPL is not an ascertainable loss.”). However, Hall’s increased interest
rates and payments on his automobile loan, and the fees associated with disputing the
inaccurate debt and credit information are cognizable as a “loss of money or property”
under the UTPCPL at this point in the pleading stage. Walkup, 2015 WL 7770072, at *4
(finding that the late fees/charges and increased interest rates on the plaintiff’s mortgage
loan constituted ascertainable losses for purposes of the plaintiff’s UTPCPL claim).
Discovery may later reveal that these injuries are not a result of RHS’s alleged violation
of the UTPCPL and at that time, these losses will no longer be recoverable under the
UTPCPL. For now, I find that these injuries are sufficient to plead ascertainable loss.
B.

Justifiable Reliance

In addition to demonstrating that he suffered ascertainable losses, Hall must also
set forth sufficient factual allegations showing that “he justifiably relied on the
defendant’s wrongful conduct or representation.” Yocca v. Pittsburgh Steelers Sports,
Inc., 854 A.2d 425, 438 (2004); Hunt v. U.S. Tobacco Co., 538 F.3d 217, 221 (3d Cir.
2008). Hall contends that he justifiably relied upon the agreement that he reached with
RHS regarding the satisfaction of his debt. According to Hall, RHS agreed that upon
Hall’s payment to them, Hall’s debt would be satisfied and his account balance would be
zero. Relying upon that representation, Hall made payment to RHS; however, despite his
payment, RHS continued to collect on that debt, resulting in ascertainable losses to Hall.

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RHS argues that Hall cannot establish justifiable reliance on the basis of his
payment to satisfy his February 2012 medical debts. According to RHS, Hall’s amended
complaint does not dispute the validity of the debt owed to them from his February 2012
treatment nor does it allege that Hall paid his debt based upon RHS’s fraudulent or
deceptive conduct. Thus, Hall cannot allege that he justifiably relied on any fraudulent or
deceptive conduct when he paid his medical debt pursuant to the agreement. Rather,
RHS contends that the fraudulent and deceptive conduct of which Hall complains is
RHS’s continued efforts after satisfaction of the agreement to collect a debt which was
already paid and their representation to collectors that Hall’s debt was still outstanding.
Therefore, RHS argues that Hall must plead that he justifiably relied on RHS’s postagreement conduct. RHS states that Hall’s amended complaint lacks any factual
allegations demonstrating that Hall justifiably relied on RHS’s post-agreement conduct.
Viewing the allegations in the light most favorable to Hall, I find that Hall has set
forth sufficient factual allegations to establish that he justifiably relied on RHS’s
representation that his account balance would reflect a zero balance upon payment of his
medical debts. Hall’s complaint alleges the following:
17.

The written agreement between Plaintiff and Reading
Hospital specified that services rendered by Reading
Hospital to Plaintiff on February 25, 2012 and May 7,
2012 would be satisfied by the agreement and reflect a
zero balance.

18.

In June 2014, upon Plaintiff’s resolution of a personal
injury lawsuit and pursuant to their agreement,
Plaintiff satisfied his debt in full with Reading
Hospital, including debts associated with medical
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services rendered on February 25, 2012 and May 7,
2012.
19.

Notwithstanding the foregoing, Reading Hospital did
not close the debt in question and instead continued to
attempt to collect on the debt, absent legal justification
and despite Reading Hospital’s admission that the debt
was satisfied and no longer Plaintiff’s responsibility.

Pl.’s Am. Compl. ¶¶ 17-19. Taking these allegations as true, Hall has sufficiently pled
justifiable reliance. Hall and RHS came to a mutual agreement that Hall would pay his
medical debt from the proceeds of his personal injury settlement. RHS represented in
writing to Hall that when Hall paid the agreed-upon amount his medical debts would be
satisfied and his account would reflect a zero balance. Pursuant to the agreement, Hall
paid his debt in reliance on RHS’s written representation that his payment would satisfy
his debt and bring his account balance to zero. To the extent that RHS claims that Hall’s
payment is “not the operative fact upon which Plaintiff’s claims are based,” I disagree.
Def.’s Reply 5. Hall’s complaint alleges that RHS’s wrongful conduct originated in
RHS’s misrepresentation that Hall’s debt would be satisfied by his payment not, as the
defendant claims, in RHS’s subsequent efforts to collect on a debt that had already been
satisfied. Hall clearly alleges that RHS’s misrepresentation that his account would be
satisfied induced him to make payment.
Furthermore, there are no allegations indicating that Hall’s reliance on RHS’s
misrepresentation was unjustifiable or that Hall’s actions were misplaced. Hall knew that
he owed payment to RHS, engaged in discussion with RHS in order to reach a payment
agreement and signed a written document delineating the terms of the agreement. The
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validity of the debt only serves to underscore Hall’s reasonableness in paying the debt.
Under the circumstances, and in light of RHS’s choice to pursue collections efforts after
Hall paid his debt, RHS’s statement in its agreement with Hall could be seen as a
misrepresentation. The “wrongful conduct” is the affirmative promise to satisfy his debt
when RHS apparently intended to pursue collection. Accordingly, I find that Hall has set
forth sufficient factual allegations demonstrating that he justifiably relied on RHS’s
wrongful conduct.
IV.

CONCLUSION
Hall has sufficiently pled that he justifiably relied on RHS’s deceptive conduct

and that he suffered ascertainable losses. Therefore, I find that he has established a
plausible claim for relief under the FCEUA and the UTPCPL. Accordingly, I am
denying the defendant’s motion to dismiss.
An appropriate Order follows.

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