Stewart v. XRIMZ, LLC et al

Filing 30

MEMORANDUM AND ORDER granting 24 Motion of Myers, Brier & Kelly, LLP to Dismiss Stewart's crossclaims. Signed by Honorable A. Richard Caputo on 7/12/11 (jam, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
JONATHAN STEWART,
CIVIL ACTION NO. 3:10-CV-2147

Plaintiff,

(JUDGE CAPUTO)
XRIMZ, LLC and FIRST CHOICE
FINANCIAL, INC., a/k/a 1st CHOICE
FINANCIAL, INC.
Defendants,

JONATHAN STEWART,
Counterclaim Defendant,

MYERS, BRIER & KELLY, LLP
Crossclaim Defendant.
MEMORANDUM
Crossclaim defendant Myers, Brier & Kelly, LLP’s (“MBK”) moves to dismiss or for
the Court to grant summary judgment on plaintiff\counterclaim defendant Jonathan
Stewart’s claims against it. Stewart has filed crossclaims against MBK under the Fair
Debt Collection Practices Act (“FDCPA”), the Pennsylvania Fair Credit Extension
Uniformity Act (“FCEUA”), and the Pennsylvania Uniform Trade Practices & Consumer
Protection Law (“UTPCPL”).

MBK contends that it is not a debt collector under the

FDCPA and FCEUA, and that Stewart did not rely on it under the UTPCPL. The Court
agrees, and will grant MBK’s motion.

BACKGROUND
Stewart initially sued defendants Xrimz, L.L.C. and First Choice Financial, Inc. over
car rims he purchased from them. Stewart alleged Xrimz employees berated and
harassed him after he told them he lost his job and could not pay for the rims. Stewart’s
complaint alleged: violations of the FCEUA (count I) and UTPCPL (count II); intentional
infliction of emotional distress (count III); and invasion of privacy\false light (count IV).
Xrimz and First Choice Financial brought a motion to dismiss, which the Court granted as
to all counts except Stewart’s FCEUA claim. MBK, defendants’ counsel at the time, then
filed an answer, affirmative defenses, and counterclaims (for breach of contract and unjust
enrichment) in response to the remaining count. Stewart answered the counterclaims
and brought three crossclaims against MBK for violations of the FDCPA, the FCEUA, and
the UTPCPL.
Stewart alleges that MBK violated these laws in filing breach of contract and unjust
enrichment claims over the cost of the rims because a state court had already entered
judgment against him for the outstanding balance. MBK contends that it is not a “debt
collector” under the FDCPA and the FCEUA, and that Stewart did not rely on MBK’s
conduct – an element required to satisfy the UTPCPL. MBK filed an affidavit from
attorney Daniel Brier with its motion. The parties have fully briefed the motion and it is
ripe for review.
LEGAL STANDARD
The Court will treat MBK’s motion as a motion to dismiss because it does not need
to address attorney Brier’s affidavit to dismiss Stewart’s crossclaims.

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Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint,
in whole or in part, for failure to state a claim upon which relief can be granted. Dismissal
is appropriate only if, accepting as true all the facts alleged in the complaint, a plaintiff has
not pleaded “enough facts to state a claim to relief that is plausible on its face,” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007), meaning enough factual allegations “‘to raise
a reasonable expectation that discovery will reveal evidence of’” each necessary element,
Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550
U.S. at 556); see also Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993) (requiring a
complaint to set forth information from which each element of a claim may be inferred).
In light of Federal Rule of Civil Procedure 8(a)(2), the statement need only “‘give the
defendant fair notice of what the ... claim is and the grounds upon which it rests.’”
Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (quoting Twombly, 550 U.S. at
555). “[T]he factual detail in a complaint [must not be] so undeveloped that it does not
provide a defendant [with] the type of notice of claim which is contemplated by Rule 8.”
Phillips, 515 F.3d at 232; see also Airborne Beepers & Video, Inc. v. AT&T Mobility LLC,
499 F.3d 663, 667 (7th Cir. 2007).
When considering a Rule 12(b)(6) motion, the Court’s role is limited to
determining if a plaintiff is entitled to offer evidence in support of her claims. See Scheuer
v. Rhodes, 416 U.S. 232, 236 (1974). The Court does not consider whether a plaintiff will
ultimately prevail. See id. A defendant bears the burden of establishing that a plaintiff’s
complaint fails to state a claim. See Gould Elecs. v. United States, 220 F.3d 169, 178 (3d
Cir. 2000).

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DISCUSSION
I.

Stewart’s FDCPA claim

The Court will dismiss Stewart’s FDCPA claim because he has not made any
factual allegations that MBK is a “debt collector” under that Act.
The FDCPA provides a remedy for consumers subjected to abusive, deceptive or
unfair debt collection practices by debt collectors. Pollice v. Nat'l Tax Funding, L.P., 225
F.3d 379, 400 (3d Cir.2000) (citing Zimmerman v. HBO Affiliate Group, 834 F.2d 1163,
1167 (3d Cir.1987)). The FDCPA prohibits debt collectors from harassing or abusing
debtors, or using of “false, deceptive, or misleading representations” in connection with
the collection of a debt. 15 U.S.C.A. § 1692d and 1692e. Under the FDCPA, the term
“debt collector” generally refers to “any person who uses any instrumentality of interstate
commerce or the mails in any business the principal purpose of which is the collection of
any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed
or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6). Attorneys are not
exempt from the definition of “debt collector” to the extent that they are “regularly” involved
in debt collection activity. Crossley v. Lieberman, 868 F.2d 566, 569-70 (3d Cir.1989).
Here, Stewart has not set forth facts that state a plausible claim for relief under the
FDCPA. Stewart’s allegations consist almost entirely of labels and legal conclusions,
which are insufficient to survive a motion to dismiss. Stewart’s sole factual allegation is
that MBK filed counterclaims for breach of contract and unjust enrichment in this suit after
judgment was entered against him in state court. This allegation, on its own, is clearly
insufficient to bring MBK’s within the FDCPA’s reach. There are no factual allegations that

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MBK regularly collects debts or that the firm contacted Stewart regarding the outstanding
balance. The purpose of the FDCPA is to protect debtors from abusive and deceptive
debt collection practices, not to penalize lawyers who do nothing more than file a claim
in court. Therefore, the Court will dismiss this claim.
II.

Stewart’s FCEUA claim

The Court will also dismiss Stewart’s FCEUA claim because the FCEUA provides
an explicit exemption for MBK’s activities.
The FCEAU is “Pennsylvania’s analogue” to the FDCPA and it applies to both
debtors and creditors. Gigli v. Palisades Collection, LLC, No. 3:CV-06-1428, 2008 WL
3853295 at *11 (M.D. Pa. Aug. 14, 2008). The FCEAU states that it is a violation of the
FCEAU for a debt collector to violate any provision of the FDCPA. 73 P.S. § 2270.4(a).
The FCEAU clearly states that the term “debt collector” includes, “[a]n attorney, whenever
such attorney attempts to collect a debt, . . . except in connection with the filing or service
of pleadings or discovery or the prosecution of a lawsuit to reduce a debt to judgment.”
73 P.S. § 2270.3 (emphasis added).
Here, MBK’s filing the counterclaims on behalf of its clients falls squarely within this
statutory exemption. Therefore, the Court will also dismiss Stewarts’s FCEUA claim.
III.

Plaintiff’s UTPCPL Claim

Finally, the Court will dismiss Stewart’s UTPCPL claim because he has not pled
justifiable reliance on MBK’s conduct.
The UTPCPL prohibits any person from engaging in “[u]nfair methods of
competition and unfair or deceptive acts or practices,” 73 P.S. § 201-3, and provides a
non-exhaustive list of specific forbidden acts, Id. § 201-2(4). The Pennsylvania Supreme
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Court has instructed that courts “construe [the statute] liberally to effect its object of
preventing unfair or deceptive practices.” Creamer v. Monumental Properties Inc., 459 Pa.
450 (1974). The statute further makes available 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.” 73 P.S. § 201-9.2(a).
Because the loss must occur “as a result” of unlawful conduct under the UTPCPL,
“a private plaintiff pursuing a claim under the statute must prove justifiable reliance” on the
unlawful conduct, not merely that the wrongful conduct caused plaintiff's injuries. Hunt v.
U.S. Tobacco Co., 538 F.3d 217, 221 (3d Cir.2008); see also Yocca v. Pittsburgh Steelers
Sports, Inc., 578 Pa. 479 (2004) (holding that for any UTPCPL claim plaintiff must show
that he (1) “justifiably relied on [a] defendant's wrongful conduct or representation” and (2)
“suffered harm as a result of that reliance”). Moreover, “a plaintiff bringing an action under
the UTPCPL must prove ... reliance and causation with respect to all subsections of the
UTPCPL,” upon which plaintiff brings a claim. Santana Prods., Inc. v. Bobrick Washroom
Equip., Inc., 401 F.3d 123, 136 (3d Cir.2005) (emphasis added) (citing Weinberg v. Sun
Co., 565 Pa. 612 (2001)).
Here, Stewart alleges in a conclusory fashion that MBK violated the UTPCPL.
However, his crossclaim contains no allegations that he relied on representations made
by MBK or that he suffered any loss as a result of this reliance. As a result, this claim will
be dismissed.

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CONCLUSION
For the reasons stated above, the Court will grant MBK’s motion to dismiss. An
appropriate order follows.

7/12/11
Date

/s/ A. Richard Caputo
A. Richard Caputo
United States District Judge

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IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
JONATHAN STEWART,
CIVIL ACTION NO. 3:10-CV-2147

Plaintiff,

(JUDGE CAPUTO)
XRIMZ, LLC and FIRST CHOICE
FINANCIAL, INC., a/k/a 1st CHOICE
FINANCIAL, INC.
Defendants,

JONATHAN STEWART,
Counterclaim Defendant,

MYERS, BRIER & KELLY, LLP
Crossclaim Defendant.
ORDER
NOW, this

12th

day of July, 2011, IT IS HEREBY ORDERED that

MBK’s motion to dismiss Stewart’s crossclaims is GRANTED.

/s/ A. Richard Caputo
A. Richard Caputo
United States District Judge