Nix v. McCabe Trotter & Beverly PC et al
Filing
35
ORDER AND OPINION adopting 26 the Report and Recommendation of Magistrate Judge Bristow Marchant, granting 9 Defendants' Motion to Dismiss, denying 28 Plaintiff's Motion to Consolidate and Amend. AND IT IS SO ORDERED. Signed by Honorable Richard M Gergel on 10/23/2018.(sshe, )
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
Alan G. Nix,
Plaintiff,
v.
McCabe Trotter & Beverly, P.C. and
Todd M. MusheffLLC,
Defendant.
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Civil Action No. 2:18-1352-RMG
ORDER AND OPINION
This matter is before the Court on the Report and Recommendation ("R & R") of the
Magistrate Judge (Dkt. No. 26) recommending that the Court grant Defendants' Motion to Dismiss
(Dkt. No. 9). For the reasons set forth below, the Court adopts the R & Ras the order of the Court.
I.
Background
Plaintiff Alan G. Nix owns a home subject to the Churchill Park Homeowners' Association,
Inc., ("Churchill") a homeowners' association ("HOA") that charges annual assessments pursuant
to the HOA's covenants and restrictions ("CRs"). (Dkt. No. 1-1 at 5, 16, 59.) The HOA employs
Defendant McCabe, Trotter & Beverly, P.C. ("MTB") to represent it in the collection of
assessments. (Id. at 6) As of April 18, 2016, MTB sent a Verification of Debt letter to Plaintiff,
stating that he owed $4,386.20 to the HOA, including $2,561.75 in attorneys' fees and costs. (Dkt.
No. 1-1at61.) On May 4, 2017, Todd. M. Musheff ("Musheff'), whose law firm is named as a
Defendant here, 1 appeared on behalf ofMTB at a hearing in state court. (Id. at 12.) At that hearing,
when asked by the judge, Mr. Musheff remarked that Plaintiff owed "$5,000, in that ballpark,"
1
There are no allegations in the Complaint that Musheff s firm was involved in collecting the
debts allegedly owed to Churchill, and instead the Complaint focuses on Musheff s actions on
behalf of MTB. (See Dkt. No. 1-1 at~~ 11 - 13.)
which included $2,561.75 in attorneys' fees and costs in addition to Plaintiffs allegedly unpaid
assessments. (Id. at 3.)
In relevant part, the Churchill CRs state that
Late Charges: All assessments, shall accrue late charges, interest ... costs, including,
without limitation, reasonable attorneys fees actually incurred. The assessments
and charges shall be a continuing lien upon the Lot against which each assessment
is made, and shall also be the personal obligation of the person who was the Owner
of such Lot at the time the assessment fell due.
(Dkt. No. 9 at 9) (emphasis added). 2 In the event an Owner fails to pay assessments due for ten
days or longer, the CRs go on to state that "a lien shall attach" for "all assessments then due or
which come due until the lien is cancelled of record, and any other amounts provided in this
Declaration or permitted by law." (Id.) (emphasis added). After thirty days, the HOA may
foreclose on the lien. (Id.)
Plaintiff alleges that Defendant violated the Fair Debt Collection Practices Act
("FDCPA"), 15 U.S.C. § 1692, by attempting to collect attorneys ' fees where his account at
Churchill only showed "$2,209.08" owed, and also for stating that he owed "$5,000, in that
ballpark," during a court hearing. (Dkt. No. 1-1 at 6 -7.) The Magistrate Judge recommended
granting the motion to dismiss, and Plaintiff filed objections. (Dkt. Nos. 26, 30.)
2
Defendants in their motion reference the CRs attached to the Complaint. However, the relevant
CRs were attached to the Complaint in the parallel related matter filed by Plaintiff, Nix v. McCabe
Trotter & Beverly PC, et al., 2:18-cv-1360, Dkt. No. 1-1- at 46 - 49. Regardless, a federal court
may take judicial notice of the contents of its own records on a motion to dismiss. See Tellabs, Inc.
v. Makor Issues & Rights, Ltd., 551U.S.308, 322, 127 S. Ct. 2499, 2509, 168 L. Ed. 2d 179 (2007)
(when reviewing a motion to dismiss, courts may take into account "documents incorporated into
the complaint by reference, and matters of which a court may take judicial notice."); Stehney v.
Ferguson, No. CV 6: 16-3955-TMC, 2017 WL 2982114, at* 1 (D.S.C. July 13, 2017) ("the court
may take judicial notice of its own records") citing Aloe Creme Laboratories, Inc. v. Francine Co.,
425 F.2d 1295, 1296 (5th Cir. 1970).
II.
Legal Standard
A.
Motion to Dismiss
Rule 12(b)(6) of the Federal Rules of Civil Procedure permits dismissal if the complaint
fails "to state a claim upon which relief can be granted." Such a motion tests the legal sufficiency
of the complaint and "does not resolve contests surrounding the facts, the merits of the claim, or
the applicability of defenses .... Our inquiry then is limited to whether the allegations constitute ' a
short and plain statement of the claim showing that the pleader is entitled to relief."' Republican
Party ofNC. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (quotation marks and citation omitted).
In a 12(b)( 6) motion, the Court is obligated to "assume the truth of all facts alleged in the complaint
and the existence of any fact that can be proved, consistent with the complaint's allegations." E.
Shore Mkts., Inc. v. JD. Assocs. Ltd. P 'ship, 213 F.3d 175, 180 (4th Cir. 2000). However, while
the Court must accept the facts in a light most favorable to the non-moving party, it "need not
accept as true unwarranted inferences, unreasonable conclusions, or arguments." Id.
To survive a motion to dismiss, the complaint must state "enough facts to state a claim to
relief that is plausible on its face. " Bell At!. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although
the requirement of plausibility does not impose a probability requirement at this stage, the
complaint must show more than a "sheer possibility that a defendant has acted unlawfully. "
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint has "facial plausibility" where the
pleading "allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged." Id.
B.
Pro Se Pleadings
This Court liberally construes complaints filed by prose litigants to allow the development
of a potentially meritorious case. See Cruz v. Beto, 405 U.S. 319 (1972); Haines v. Kerner, 404
U.S. 519 (1972). The requirement ofliberal construction does not mean that the Court can ignore
a clear failure in the pleadings to allege facts which set forth a viable claim, nor can the Court
assume the existence of a genuine issue of material fact where none exists. See Weller v. Dep 't of
Social Services, 901F.2d387 (4th Cir. 1990).
C.
Report and Recommendation
The Magistrate Judge makes only a recommendation to this Court. The recommendation
has no presumptive weight, and the responsibility for making a final determination remains with
this Court. See Mathews v. Weber, 423 U.S. 261 , 270 - 71 (1976). This Court is charged with
making a de nova determination of those portions of the Report and Recommendation to which
specific objection is made. Additionally, the Court may "accept, reject, or modify, in whole or in
part, the findings or recommendations made by the magistrate judge." 28 U.S.C. § 636(b)(l). In
the absence of any specific objections, "a district court need not conduct a de nova review, but
instead must only satisfy itself that there is no clear error on the face of the record in order to accept
the recommendation." See Diamond v. Colonial Life & Accident Ins. Co., 416 F .3d 310, 315 (4th
Cir. 2005) (internal quotation omitted).
Plaintiff filed objections (Dkt. No. 30), and therefore the R & R is reviewed de nova.
III.
Discussion
To make out a claim under the FDCPA, a plaintiff must prove that:
(1) plaintiff has been the object of collection activity arising from consumer debt;
(2) defendant is a debt collector as defined by the FDCPA, and;
(3) defendant has engaged in an act or omission prohibited by the FDCPA
See Chatman v. GC Servs., LP, 57 F. Supp. 3d 560, 565 (D.S.C. 2014). In relevant part here, the
FDCPA prohibits a debt collector from using "any false, deceptive, or misleading representation
or means in connection with the collection of any debt," or from using "unfair or unconscionable
means to collect or attempt to collect any debt. " 15 U.S .C.A. § 1692(e); §1692(f). Courts must
review whether a communication is misleading through the lens of the least sophisticated
consumer. Russell v. Absolute Collection Servs., Inc., 763 F.3d 385, 394 - 95 (4th Cir. 2014).
Debt collectors are also prohibited from engaging in conduct which would harass or abuse an
individual in connection with collecting a debt. 15 U.S.C.A. § 1692(d).
Here, Defendants made no false, deceptive or misleading representations or used any unfair
or unconscionable means in attempting to collect the unpaid assessments, interest, and attorneys'
fees. As this Court has previously held, a party does not violate the FDCP A by seeking to collect
attorneys' fees and costs permitted by covenants. 3 See Fields v. Wilber Law Firm, P.C., 383 F.3d
562, 565 (7th Cir. 2004) ("when a debtor has contractually agreed to pay attorneys' fees and
collection costs, a debt collector may, without a court's permission, state those fees and costs and
include that amount in the dunning letter."). Therefore, as the Churchill CRs create a lien for
"reasonable attorneys fees actually incurred," Defendants were permitted to seek to recover that
amount as the attorneys' fees and costs were incurred.
Furthermore, Musheff's response at a court hearing that Plaintiff owed "$5,000, in that
ballpark" did not violate the FDCPA. To begin with, Plaintiff had already received an itemized
Verification of Debt letter explaining in detail the breakdown of the $4,386.20 allegedly owed.
(Dkt. No. 1-1 at 61.) Furthermore, Musheff made it clear that this was an estimate, stating that it
was "$5,000, in that ballpark." (Id. at 14) (emphasis added). Such a statement, where the debt
collector clearly explained that the cited total is an estimate, does not violate the FDCP A. See
Elyazidi v. SunTrust Bank, 780 F.3d 227, 234 (4th Cir. 2015) ("where the debt collector sought no
more than applicable law allowed and explained via affidavit that the figure was merely an estimate
3
This issue was discussed at length in the Court's order in Allison v. McCabe Trotter & Beverly,
P.C., No. 2:17-CV-1727-RMG, 2018 WL 3826674, at *3 (D.S.C. Aug. 10, 2018).
of an amount counsel expected to earn in the course of the litigation, the representations cannot be
considered misleading under [the FDCPA]"). Cf McLaughlin v. Phelan Hallinan & Schmieg,
LLP, 756 F.3d 240, 246 (3d Cir. 2014) (finding FDCPA violation for letters that contained
"estimates of the amount owed" because "[i]f [the defendant] wanted to convey that the amounts
in the Letter were estimates, then it could have said so."). The statement further did not harass or
abuse Plaintiff, and instead was in response to a judge's question regarding the amount of debt at
issue. Therefore, Musheff's statement that Plaintiff owed "$5,000, in that ballpark" did not violate
the FDCPA. 4
Plaintiff also filed a motion to consolidate cases 5 and amend his complaint on September
7, 2018, after the Magistrate Judge already issued the R & R. (Dkt. No. 28.) The Plaintiff failed
to include a proposed amended complaint or explain which new claims or new defendants he
sought to add. Furthermore, Plaintiff waited until after the Magistrate already issued the R & R to
file his motion to amend. While Rule 15 states that leave to amend should be "freely given when
justice so requires," a district court may deny the leave for reasons "such as undue delay, bad faith
or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments
previously allowed, undue prejudice to the opposing party by virtue of the allowance of the
amendment, futility of amendment, etc." Glaser v. Enzo Biochem, Inc., 464 F.3d 474, 480 (4th
Cir. 2006). Here, where Plaintiff waited till after the Magistrate Judge ruled on the motion to
4
Plaintiff also makes extensive objections to abbreviations and other uncontroverted statements
used in the R & R. The Magistrate used the phrase "Churchill Park" as an abbreviation for the
HOA, the Churchill Park Homeowners' Association, Inc. Furthermore, Plaintiff seems to ignore
the distinction between the HOA, which pursued the foreclosure action, and the name of the
neighborhood the development in which he lives. Finally, Plaintiff objects repeatedly that there is
no evidence that Churchill is a homeowners' association. However, Plaintiff admits as such in his
Complaint. (Dkt. No. 1-1- at ~18.)
5
Plaintiff sought to consolidate this case with the parallel and related pending action, Nix v.
McCabe Trotter & Beverly PC, et al., 2:18-cv-1360.
dismiss, and Plaintiff seemingly seeks an amendment to relitigate issues already raised and
disposed of in state court, Plaintiffs motion to consolidate and amend is denied.
Finally, the Magistrate Judge correctly held that any attempt by the Plaintiff to relitigate or
"appeal" his state foreclosure action in this Court is barred by res judicata, collateral estoppel and
the Rooker-Feldman doctrine. (Dkt. No. 26 at 8 - 12.) To the extent the state action is still
pending, the Court must abstain from interfering with its ongoing proceedings. (Id. at 12 - 13.)
IV.
Conclusion
For the foregoing reasons, the R & R of the Magistrate Judge (Dkt. No. 26) is ADOPTED
as the order of the Court the Court GRANTS Defendant's Motion to Dismiss (Dkt. No. 9), and
DENIES Plaintiffs Motion to Consolidate and Amend (Dkt. No. 28).
AND IT IS SO ORDERED.
Richard Mark rgel
United States District Court Judge
October ":ti, 2018
Charleston, South Carolina
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