McDonald v. Richard J. Boudreau & Associates, LLC
Filing
9
MEMORANDUM AND ORDER denying 5 Motion to Dismiss for Failure to State a Claim; denying 5 Motion to Dismiss for Lack of Jurisdiction. So Ordered by Chief Judge Mary M. Lisi on 7/10/2013. (Duhamel, John)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
CHRISTOPHER MCDONALD, individually
and on behalf of others similarly situated,
Plaintiff,
v.
C.A. No. 13-259-ML
RICHARD J. BOUDREAU
& ASSOCIATES, LLC
Defendant.
MEMORANDUM AND ORDER
The plaintiff in this case, Christopher McDonald (“McDonald”),
brings
this
action1
for
alleged
violations
of
the
Fair
Debt
Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq.,
against the defendant, Richard J. Boudreau & Associates, LLC
(“RJBA”), a debt collector. The gravamen of McDonald’s complaint
(the “Complaint”) is that RJBA attempted to collect a debt from
McDonald by threatening to add, and adding, an unauthorized amount
of money to such debt. Complaint at 1 (Docket # 1). The matter
before the Court is RJBA’s motion to dismiss the complaint for lack
of
subject
matter
jurisdiction,
pursuant
to
Fed. R.
Civ.
P.
1
Within
the
complaint,
certification on behalf of all
of Rhode Island from whom RJBA
same manner as that alleged
McDonald acknowledges that the
Id. ¶ 34.
McDonald
also
requests
class
persons with addresses in the State
has sought to collect a debt in the
by McDonald. Complaint ¶¶ 32-38.
number of class members is unknown.
1
12(b)(1), and for failure to state a claim upon which relief can be
granted, pursuant to Fed. R. Civ. P. 12(b)(6).
I. Factual Background and Procedural History
As set forth in the Complaint, McDonald, a Rhode Island
resident, opened a credit card account with Citizens Bank-RBS N.B.
(“RBS”) on March 5, 2008. Complaint ¶ 22. McDonald then incurred
consumer credit card debt to RBS relating to consumer purchases.
Id. ¶ 13.
According to the Complaint, since August 2011, McDonald
did not incur any new debt or make any payments on the RBS account.
Id. ¶ 30. McDonald alleges that, “[a]s of March 28, 2012, RBS
charged off2 the debt that [McDonald] allegedly owed to RBS,” id.
¶ 24, and that, as of that date, he has not received any periodic
credit card statements from RBS. Id. ¶ 25. McDonald alleges that
RBS reported the debt to Equifax on March 28, 2012 as $6,447.00 Id.
¶ 31. According to McDonald, “[o]n information and belief, RBS
stopped charging interest, late charges and other charges on the
account by at least March 28, 2012.” Id. ¶ 26. McDonald also
asserts that “RBS waived its right to charge and collect post
charge off interest, late charges and other charges on the account
by at least March 28, 2012.” Id. ¶ 27.
2
McDonald explains in the Complaint that “[c]harge-off means
that a creditor bank no longer carries the credit card account
receivable on the credit card bank’s books as an asset” and,
[u]nder federal regulations, a credit card bank must charge-off a
credit card receivable after it has been delinquent for 180 days.”
Complaint ¶ 17.
2
On April 19, 2012, RJBA mailed a letter to McDonald, stating
that it had been hired by RBS CARD SERVICES, the current owner of
McDonald’s debt, to assist it in the collection of McDonald’s
credit card account. Id. ¶ 28. The letter indicated that McDonald’s
debt was $7,166.43; it also noted that “[b]ecause of interest
accruing, the amount due on the day you pay may be greater than the
above balance.” April 19, 2012 letter (Docket # 1-1).
McDonald asserts that, if a credit card account has been
charged off, the credit card issuer must send periodic statements
on all accounts “for any period during which fees and/or interest
are added to the debt.” Id. ¶ 18. A periodic statement need not be
sent if the creditor has charged off the account “and will not
charge any additional fees or interest on the account.” Id. ¶ 19.
McDonald alleges that RJBA engages “in a practice of attempting to
collect from [McDonald] and the Class [an] additional unauthorized
‘amount of money’ during a time period when RBS did not send
[McDonald] periodic statements.” Id. at ¶ 20. In other words,
McDonald
indicates
that,
by
discontinuing
to
send
periodic
statements after it charged off McDonald’s credit card debt, RBS
waived future interest payments.
McDonald claims
two violations
of the FDCPA, for which he seeks class certification, statutory
damages, injunctive and declaratory relief and attorneys’ fees.
Complaint at 12-13. Specifically, McDonald asserts that RJBA has
3
violated
Sections
1692e3
and
1692f4
of
the
FDCPA
because
it
attempted to collect a debt by threatening to add an unauthorized
amount of money and by, in fact, adding such an amount. Complaint
¶¶ 48, 54.
The Complaint was filed in this Court on April 19, 2013,
exactly one year after RJBA’s letter was sent to McDonald. In
response, RJBA filed a motion to dismiss the Complaint on May 13,
2013. On June 12, 2013, McDonald filed an objection to RJBA’s
motion, to which RJBA filed a reply in response on June 21, 2013.
II.
Standard of Review
When considering a motion to dismiss for lack of subject
matter jurisdiction under Rule 12(b)(1), the court applies the same
standard of review which is applicable to motions under Rule
12(b)(6). Negron–Gaztambide v. Hernandez–Torres, 35 F.3d 25, 27
(1st Cir.1994). The party asserting jurisdiction bears the burden
of
demonstrating
jurisdiction.
the
Skwira
v.
existence
federal
States,
United
of
344
subject
F.3d
64,
matter
71
(1st
Cir.2003).
3
Section 1692e prohibits a debt collector from using “any
false, deceptive, or misleading representation or means in
connection with the collection of any debt.” 15 U.S.C. § 1692e
(listing conduct that constitutes a violation of Section 1692e).
4
Section 1692f prohibits a debt collector from using “unfair or
unconscionable means to collect or attempt to collect any debt.” 15
U.S.C. § 1692f (listing conduct that constitutes a violation of
Section 1692f).
4
In order to withstand a motion to dismiss for failure to state
a
claim
under
Rule
12(b)(6),
“the
‘complaint
must
contain
sufficient factual matter ... to ‘state a claim to relief that is
plausible on its face.’” Katz v. Pershing, LLC, 672 F.3d 64, 72-73
(1st Cir. 2012)(quoting Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct.
1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929
(2007)).
The
nonconclusory,
Court
takes
“the
non-speculative)
complaint's
facts
as
well-pled
true,
(i.e.,
drawing
all
reasonable inferences in the pleader's favor” in order to “see if
they plausibly narrate a claim for relief.” Schatz v. Republican
State Leadership Comm., 669 F.3d 50, 55 (1st Cir.2012)(internal
citations omitted).
If the complaint satisfies Rule 8(a)(2)'s requirement of “a
short and plain statement of the claim showing that the pleader is
entitled to relief,” Fed. R. Civ. P. 8(a)(2), dismissal of the
complaint is not warranted. Ocasio-Hernandez v. Fortuno-Burset, 640
F.3d 1, 11-12 (1st Cir.2011)(citing Iqbal, 129 S.Ct. at 1949;
Twombly, 550 U.S. at 555, 127 S.Ct. 1955)). The complaint need only
contain “enough detail to provide a defendant with ‘fair notice of
what the ... claim is and the grounds upon which it rests.’”
Ocasio-Hernandez v. Fortuno-Burset, 640 F.3d at 12 (“In short, an
adequate complaint must provide fair notice to the defendants and
state a facially plausible legal claim.”) Although “[s]pecific
5
facts are not necessary,” the complaint “must contain enough
factual material ‘to raise a right to relief above the speculative
level on the assumption that all the allegations in the complaint
are true (even if doubtful in fact).’” Id. (citing Twombly, 550
U.S. at 555, 127 S.Ct. 1955 (citation omitted); Iqbal, 129 S.Ct. at
1950).
III. Discussion
A.
Subject Matter Jurisdiction
In its motion to dismiss, RJBA asserts that this Court lacks
subject matter jurisdiction over this case because the Complaint
was filed one day too late. Specifically, RJAB argues that the
statute of limitations set forth in the FDCPA required McDonald to
bring the Complaint no later than April 18, 2013, “within one year”
of
RJBA’s
letter
to
McDonald.
RJAB
also
contends
that
this
requirement is jurisdictional. Def.’s Mot. Dismiss 1 (Docket # 5).
In its conclusion, RJAB relies primarily on the case of Mattson v.
U.S. West, Inc., 967 F.2d 259 (8th Cir.1992), in which the Eighth
Circuit
Court
of
Appeals
affirmed
the
dismissal
of
a
debt
collection case on the ground that the statute of limitations in
FDCPA cases expires one day before the anniversary date of the
alleged violation. Mattson v. U.S. West, Inc., 967 F.2d at 262.
In response, McDonald points out that a majority of courts
that have considered the issue have rejected Mattson and that the
case on which Mattson relied for its conclusion, Rust v. Quality
6
Car Corral, Inc., 614 F.2d 1118 (6th Cir.1980), was subsequently
overruled. See Bartlik v. United States Dept. of Labor, 62 F.3d
163,
166
statutes
(6th
of
Cir.1995)(overturning
limitations
were
prior
determination
“jurisdictional”
in
nature
that
and
therefore could not be “enlarged” or “extended” by court procedural
rules).
Section 1692k(d) provides
- under the heading “Jurisdiction”
- that “[a]n action to enforce any liability created by this
subchapter may be brought in any appropriate United States district
court without regard to the amount in controversy, or in any other
court of competent jurisdiction, within one year from the date on
which the violation occurs.” 15 U.S.C. § 1692k(d). The statute is
silent, however, on the precise method of computing that time
period.
Pursuant to Rule 6 of the Federal Rules of Civil Procedure,
“a suit filed on the one-year anniversary of accrual of the claim
is filed ‘within’ one year.” Johnson v. Riddle, 305 F.3d 1107, 1114
(10th Cir.2002). Rule 6(a), which is applicable “in computing any
time period ... in any statute that does not specify a method of
computing time,” provides that “[w]hen the period is stated in days
or a longer unit of time... exclude the day of the event that
triggers the period;...” Fed. R. Civ. P. 6(a). See Maloy v.
Phillips, 64 F.3d 607, 608 (11th Cir. 1995) (excluding mailing date
as triggering date of alleged FDCPA violation in accordance with
7
Rule 6(a)).
The parties appear to be in agreement that the April 19, 2012
letter to McDonald serves as the triggering date for his FDCPA
claim. Even assuming, without deciding, that the FDCPA one-year
statute of limitations is jurisdictional, in the absence of a
computation method in Section 1692k(d), the day of the triggering
event is excluded under Rule 6(a). Therefore, McDonald’s filing on
April 19, 2013 is timely.
B.
Claims under the FDCPA
RJBA’s challenge of the Complaint pursuant to Rule 12(b)(6) is
based on the assertion that the Complaint cites statutes and
regulations which do not, and were never intended to, apply to debt
collectors like RJBA. In addition, RJBA states that the Complaint
lacks the specificity required by Rule 9(c).
Def.’s Mot. Dismiss
at Page 2 of 3. With respect to the first argument, RJBA contends
that the Complaint fails to express explicitly that RBS “waived
future interest by failing to send periodic statements postchargeoff.” Def.’s Mem. at Page 5 of 9. Regarding the lack of
specificity of the Complaint, RJBA asserts that McDonald “fails to
provide any remote factual basis for the statement that RBS waived
interest, the method by which RBS came to waive the interest and
the manner in which [McDonald] acquired knowledge of the waiver.”
Def.’s Mem. at Page 7 of 9.
In its opposition to RJBA’s motion to dismiss, McDonald
8
reiterates the allegations of his Complaint: that RBS charged off
McDonald’s credit card debt on March 28, 2012; that RBS reported
the debt as $6,447; and that the April 19, 2012 debt collection
letter indicated a debt of $7,166.43, with the possibility of a
higher amount “[b]ecause of interest accruing.” April 19, 2012
letter (Docket # 1-1). Based on those allegations, McDonald asserts
that RJBA is attempting to collect a debt by “threatening to add an
unauthorized amount of money ‘because of interest accruing’” and
also adding such an additional amount. Pltf.’s Mem 7-8, Complaint
¶ 45. According to McDonald, RBS’ failure to deliver periodic
statements after the charge-off evidences RBS’s waiver5 of its
right to charge interest. Pltf.’s Mem. at 8. McDonald further
asserts that, under Regulation Z of the Truth in Lending Act
(“TILA”), RBS was required to deliver periodic statements on all
accounts unless it had charged off the account and did not intend
to charge any additional fees or interest. Complaint at ¶¶ 18-19
(citing 12 C.F.R. § 226.5(b)(2)(i))6.
5
McDonald states that the lack of periodic statements evidences
RBS’s express waiver of its right to charge interest, Pltf.’s Mem.
at 8; however, from the arguments in the memorandum and the cases
cited in support, it appears that McDonald is referring to an
implied waiver, instead.
6
12 C.F.R.§ 226.5(b)(2)(i) provides:
Statement required. The creditor shall mail or deliver a periodic
statement as required by § 226.7 for each billing cycle at the end
of which an account has a debit or credit balance of more than $1
or on which a finance charge has been imposed. A periodic statement
9
McDonald alleges, in some detail, that RBS charged off the
debt he owed to RBS and that he received no further periodic
statements from RBS after that. McDonald also alleges that, at the
time the debt was charged off, the amount was reported by RBS to
Equifax as $6,447. Because a creditor is required to deliver such
statements unless it will charge no additional fees or interest,
Mcdonald
asserts
that
the
discontinuance
of
such
statements
signifies RBS’s waiver to charge further interest on McDonald’s
debt. However, according to the letter McDonald received from RJBA,
the debt amount was subsequently increased to $7,166.43 and was
subject to further increase for additional interest. McDonald’s
success in this case ultimately depends on his ability to show that
RBS did, in fact, waive imposition of future interest on McDonald’s
credit card debt following the charge-off. Accepting, however, as
the Court must in the context of a motion to dismiss, all wellpleaded facts in the Complaint as true and drawing all inferences
therefrom in McDonald’s favor, the Court finds that the allegations
in the Complaint are sufficient to withstand RJBA’s motion to
dismiss the Complaint.
need not be sent for an account if the creditor deems it
uncollectible, if delinquency collection proceedings have been
instituted, if the creditor has charged off the account in
accordance with loan-loss provisions and will not charge any
additional fees or interest on the account, or if furnishing the
statement would violate federal law.
10
Conclusion
For the reasons stated herein, RJBA’s motion to dismiss the
Complaint is DENIED.
SO ORDERED.
/s/ Mary M. Lisi
Mary M. Lisi
Chief United States District Judge
July 10, 2013
11
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