Foster v. Douglas, Knight & Associates, Inc.

Filing 50

MEMORANDUM. An appropriate Order will be entered. Signed by District Judge Kevin H. Sharp on 5/14/14. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(tmw)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
CHELSEA R. FOSTER,
Plaintiff,
v.
EMILE AMARNEK and DAVID L.
MEKTON,
Defendants.

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No.: 3:13-516
Judge Sharp

MEMORANDUM
Pending before the Court is the fully briefed Motion for Judgment on the Pleadings filed by
Defendants Emile Amarnek and David L. Mekton (Docket No. 43). For the reasons that follow, the
Motion will be granted.
I. BACKGROUND
This litigation began on April 15, 2013, when Plaintiff filed a Complaint against Douglas
Knight & Associates, Inc. (“DKA”) in the General Sessions Court of Davidson County, Tennessee.
Upon removal of the action, DKA filed a Motion to Dismiss, after which Plaintiff took a voluntary
dismissal as to DKA and filed an Amended Complaint naming Defendants Amarnek and Mekton,
respectively the Chief Operating Officer and Chief Executive Officer of DKA.
Plaintiff’s complaint stems from a January 31, 2013 letter from DKA which stated that
Plaintiff “may be legally responsible” for $5,694.63 in damages to Grange Insurance as a result of
a traffic accident she had with Ronald Roark. (Doc. 20, Amended Complaint ¶ 8) . Plaintiff also
alleges that “the letter went on to further state that ‘a violation of financial responsibility occurred
in this matter,’ and that, ‘it is our intention to forward a petition to the Department of Motor
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Vehicles requesting the suspension of your driving privileges.’” (Id. ¶ 9). Plaintiff received a
subsequent letter that simply stated “the balance of the claim . . . has decreased from $5,694.63 to
$5,409.21” and requested that Plaintiff contact Jasmina Arkinson, a “Subrogation Specialist.” (Id.
¶ 10).
Plaintiff admits that she was in a traffic accident with Mr. Roark, but denies that she was
to blame. She also asserts that no court has found her liable, let alone for either of the amounts
requested in the letters.
Plaintiff alleges that as a result of her receipt of the letters, she “became severely depressed,
as she is the primary caregiver for a small child and was without the means or the ability to pay the
$5,694.63 demanded by Defendants.” (Id. ¶ 16). Plaintiff further claims she “feared Defendants
would carry out their threat to report Plaintiff to the Department of Motor Vehicles . . . [and] that
her license would be suspended,” and became so depressed that she sought medical care on March
8, 2013. (Id. ¶ 17).
Based upon the letters, Plaintiff brings federal and state law causes of action. On the federal
side, she claims that Defendants’ actions violated multiple provisions of the Fair Debt Collection
and Practices Act, 15 U.S.C. § 1692, (Count III) and the Racketeer Influenced and Corrupt
Organizations Act, 18 U.S.C. § 1961 et seq. (Counts IV & V). On the state side, she claims that as
a result of Defendants’ action she was subjected to both intentional and negligent infliction of
emotional distress (Counts I & II).
II. STANDARD OF REVIEW
A Motion for Judgment on the Pleadings under Rule 12(c) of the Federal Rules of Civil
Procedure “is appropriately granted ‘when no material issue of fact exists and the party is entitled

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to judgment as a matter of law.’” See Tucker v. Middleburg-Legacy Place, 539 F.3d 545, 549 (6th
Cir. 2008). In making that determination, the Court utilizes the same standards as those used to
determine if the Complaint is subject to dismissal for failure to state a claim under Federal Rule of
Civil Procedure 12(b)(6). Id.
In considering a motion to dismiss for failure to state a claim under Rule 12(b)(6), the court
must take “all well-pleaded material allegations of the pleadings” as true. Fritz v. Charter Township
of Comstock, 592 F.3d 718, 722 (6th Cir. 2010). The factual allegations in the Complaint “need to
be sufficient to give notice to the defendant as to what claims are alleged, and the plaintiff must plead
‘sufficient factual matter’ to render the legal claim plausible, i.e., more than merely possible.” Id.
(quoting Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50 (2009)). “‘A legal conclusion couched as a
factual allegation,’” however, “need not be accepted as true on a motion to dismiss, nor are recitations
of the elements of a cause of action sufficient.” Id. (quoting Hensley Mfg. v. ProPride, Inc., 579 F.3d
603, 609 (6th Cir. 2009) and Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1965 (2007)).

III. ANALYSIS
A. FDCPA Claim
“The Fair Debt Collection Practices Act, codified at 15 U.S.C. § 1692, was passed to
‘eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors
who refrain from using abusive debt collection practices are not competitively disadvantaged, and
to promote consistent State action to protect consumers against debt collection abuses.’” Clark v.
Main Street Acquisition Corp., 2014 WL 274469, at *2 (6th Cir. Jan. 27, 2014) (quoting 15 U.S.C.
§ 1692). “At its core, the Act bars ‘conduct the natural consequence of which is to harass, oppress,
or abuse any person in connection with the collection of a debt.’” Id. (quoting 15 U.S.C. § 1692d).

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“The statutory language imposes two threshold criteria that limit its scope: The FDCPA regulates
only the conduct of ‘debt collectors’ and only communications made ‘in connection with the
collection of any debt.’” Estep v. Manley Deas Kochalski, LLC, 2013 WL 185391, at *2 (6th Cir.
Jan. 16, 2014) (citation omitted).
“As is plain from the statutory text, liability under the FDCPA attaches only to a defendant
that qualifies as a ‘debt collector,’ which is a statutorily defined term.” Bridge v. Ocwen Fed. Bank,
FSM, 681 F.3d 355, 364 (6th Cir. 2012). Specifically, a debt collector is
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. . . . [T]he term includes any creditor who, in the
process of collecting his own debts, uses any name other than his own which would
indicate that a third person is collecting or attempting to collect such debts.
15 U.S.C. § 1692a(6). Also, the FDCPA only applies to a “debt” which is defined as
any obligation or alleged obligation of a consumer to pay money arising out of a
transaction in which the money, property, insurance, or services which are the
subject of the transaction are primarily for personal, family, or household purposes,
whether or not such obligation has been reduced to judgment.

15 U.S.C. § 1692a(5).
Although apparently not addressed by the Sixth Circuit, several circuits have held that
collection practices “involv[ing] conventional tort claims in which the liability arises from tortious
activity [and] not from a consensual transaction” are not covered by the FDCPA. Rawlson v. Law
Office of William M. Rudow, LLC, 460 F. App’x 254, 257 (4th Cir. 2012) (citing Fleming v.
Pickard, 581 F.3d 922 (9th Cir. 2009) (tortious conversion); Turner v. Cook, 362 F.3d 1219 (9th Cir.
2004) (business interference torts); Hawthorne v. Mac Adjustment, Inc., 140 F.3d 1367 (11th Cir.
1998) (car accident)). This is in keeping with the notion that, “at a minimum, a ‘transaction’ under
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the FDCPA must involve some kind of business dealing or other consensual obligation.”
Oppenheim v. I.C. Sys., Inc., 627 F.3d 833, 838 (11th Cir. 2010) (citation omitted); see also Fleming
v. Pickard, 581 F.3d 922, 926 (9th Cir. 2009).
The Fourth Circuit’s decision in Hawthorne is particularly instructive. There, plaintiff was
involved in an automobile accident allegedly resulting from her negligence. After Liberty Mutual
(the other driver’s insurer) paid its insured’s claim, Liberty Mutual provided Mac Adjustment with
subrogation rights to the $2,020.18 it claimed Plaintiff owed. Thereafter, Mac Adjustment sent
plaintiff one letter, asking that she provide the name of her insurance company or arrange to make
payments.
For two primary reasons, the Fourth Circuit affirmed the district court’s grant of a motion
for judgment on the pleadings. First, the court held that the alleged obligation to pay was not a
“debt,” writing:
By the plain terms of the statute, not all obligations to pay are considered “debts”
subject to the FDCPA . . . . Rather, the FDCPA may be triggered only when an
obligation to pay arises out of a specified “transaction.” Although the statute does
not define the term “transaction,” we do not find it ambiguous. A fundamental canon
of statutory construction directs us to interpret words according to their ordinary
meaning. . . . The ordinary meaning of “transaction” necessarily implies some type
of business dealing between parties . . . . In other words, when we speak of
“transactions,” we refer to consensual or contractual arrangements, not damage
obligations thrust upon one as a result of no more than her own negligence. . . .
Because [plaintiff’s] alleged obligation to pay Mac Adjustment for damages arising
out of an accident does not arise out of any consensual or business dealing, plainly
it does not constitute a “transaction” under the FDCPA. Moreover, the fact that Mac
Adjustment may have entered into a contract with the insurer for subrogation rights
does not change the fact that no contract, business, or consensual arrangement
between [Plaintiff] and the damaged party, its insurer, or Mac Adjustment exists.
Consequently, the FDCPA does not apply because this is not a transaction.
Hawthorne, 140 F.3d at 1372-73 (internal citations omitted). Second, the court held that the alleged
obligation to pay was not a debt arising from a consumer transaction, writing:
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[T]he statutory language further limits application of the FDCPA to debts arising
from consumer transactions . . . . Quite simply, [plaintiff’s] alleged obligation to
Mac Adjustment does not arise out of a consumer transaction; it arises from a tort.
In conducting herself in an allegedly negligent manner that precipitated an accident,
Hawthorne engaged in no consumer transaction. She neither purchased nor used
goods or services. Rather, [plaintiff] finds herself indebted to Mac Adjustment
because she allegedly failed to conduct herself with the reasonable care that society
demands of all of us, and she cannot somehow transform this payment obligation
arising out of an accident into a consumer transaction.
Id. at 1373 (internal citations omitted).
Hawthorne, of course, is not controlling, but it is persuasive and focuses on the clear
language of the statute. Plaintiff does not argue otherwise. Instead, she argues this case is
distinguishable based upon the language of the letters. The letters read:
DKA LETTER
This office has been retained by GRANGE INSURANCE, who
insured RONALD ROARK on the above described date of
loss. An investigation into this loss reveals that you may be
legally responsible for the damage claim amount of $5,694.63.

HAWTHORNE LETTER
The above captioned subrogation claim resulting from your
negligence has been referred to us to bring to a conclusion. If
you had liability insurance to cover this accident, kindly note
the name of your Insurance Company and policy number on
the bottom of this letter and return it to us. If you did not have
insurance and wish to resolve this matter voluntarily, send your
check for the full amount of the claims by return mail.

According to our documentation, a violation of financial
responsibility occurred in this matter as the vehicle being
operated was not covered by a valid liability policy. If
permissible, it is our intention to forward a petition to the
Department of Motor Vehicles requesting the suspension
of your driving privileges.

In the event that you are without insurance and you cannot
remit payment immediately, please call our office AS SOON
AS POSSIBLE to make arrangements to get this matter
resolved.

Contacting the undersigned upon receipt of this notice and
making valid payment arrangements may avoid the above
listed action.
Please forward your valid insurance information for the above
date of loss to our office immediately, if applicable.

Plaintiff argues that the letter in Hawthorne was “relatively innocuous,” whereas the letter
she received presented an altogether different message because, “as interpreted by Plaintiff, . . . a
formal investigation had occurred, Plaintiff had committed a violation of ‘financial responsibility,’”

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and that “unless Plaintiff paid the very specific amount of $5,694.63 Defendants would contact the
Department of Motor Vehicles and have her driver’s license suspended.” (Docket No. 46 at 5).
That may be so, and Defendants may well be advised to change the tone and eliminate threats, veiled
or otherwise, in the letters they send. But that is beside the point; either the letter relates to a
consumer debt and consumer transaction covered by the FDCPA, or it does not.
Plaintiff also argues that the result in Hawthorne may have been decided differently if it had
the “components of scienter and misconduct” alleged in this case. In support of that argument
Plaintiff relies upon Broadnax v. Greene Credit. Serv., 1997 WL 14777 (6th Cir. Jan. 15, 1997).
Broadnax, an unpublished decision, is inapposite. The case involved a collection agency’s
efforts (including taking out a criminal complaint) to collect on a check cashed at a supermarket that
was returned for insufficient funds. At issue was whether “the subject debt which the defendants
had attempted to collect from plaintiff constituted a commercial obligation (rather than a consumer
debt) which escaped the reaches of the FDCPA.” Id. at *2. After quoting the definitions for a
“debt” and “consumer,” the Sixth Circuit held that “by attempting to collect a debt evidenced by a
personal check which had been cashed by an individual at a supermarket, the defendants sought to
satisfy a purported consumer obligation.” Id. at *3.
Key to the decision was that the “debt” arose from a consumer transaction. In fact, the court
began its substantive discussion by observing that, “[u]nder the FDCPA, certain abusive collection
practices are actionable, but only where the underlying debt is a consumer debt. 15 U.S.C. §§
1692(a), 1692a(3) & (5).” Id. (emphasis in original). Even the passage from Broadnax which
Plaintiff in this case quotes and highlights bears out the fact that the Sixth Circuit’s concern was
with whether the collection at issue related to a consumer debt: “For a consumer debt collector to

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intentionally and falsely accuse the collection target of fraudulently negotiating a bad check in a
consumer transaction at a grocery store, and to initiate a criminal complaint against that person
substantiated by such false accusation, in an attempt to exert pressure upon the target, would, if
proved, unquestionably constitute a species of behavior by a consumer debt collection agent which
Congress intended to deter, and expose to punishment, by enactment of the FDCPA.” Id. (emphasis
added).
This case simply does not involve a consumer debt arising from a consumer transaction. It
arises from an alleged tort, not a consensual or business transaction entered into by a consumer.
Judgment on the pleadings is therefore appropriate with respect to Plaintiff’s FDCPA claim.
B. RICO Claims
In Count IV, Plaintiff alleges that Defendants committed mail fraud in violation of 18 U.S.C.,
§ 1862(c), and, in Count V, that they conspired to commit mail fraud, in violation of 18 U.S.C. §§
1962 (c) & (d). Section 1962 make it “unlawful for any person employed by or associated with any
enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct
or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of
racketeering activity or collection of unlawful debt .” 18 U.S.C. § 1962(c). Thus, in order “[t]o state
a RICO claim, a plaintiff must plead the following elements: ‘(1) conduct (2) of an enterprise (3)
through a pattern (4) of racketeering activity.’” Ouwinga v. Benistar 419 Plan Serv., Inc., 694 F.3d
783, 793 (6th Cir. 2012) (quoting Moon v. Harrison Piping Supply, 465 F.3d 719, 723 (6th Cir.
2006)). Further, “[t]o plausibly state a claim for a violation of 18 U.S.C. § 1962(d), plaintiffs must
successfully allege all the elements of a RICO violation, as well as alleging ‘the existence of an
illicit agreement to violate the substantive RICO provision.’” Heinrich v. Waiting Angels Adoption

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Serv. Inc., 668 F.3d 393, 411 (6th Cir. 2012) (quoting United States v. Sinito, 723 F.2d 1250, 1260
(6th Cir. 1983)). “‘An agreement can be shown if the defendant objectively manifested an
agreement to participate directly or indirectly in the affairs of an enterprise through the commission
of two or more predicate crimes.’” Id.
Plaintiff bases her RICO claims on the allegations that Defendants are the CEO and COO
of DKA, that they “provide various services through their enterprise, DKA, including a service they
term as ‘subrogation collections.’” Plaintiff continues:
19. Defendants committed acts of racketeering within the meaning of 18 U.S.C. §
1961 by transmitting their letters to Plaintiff dated January 31, 2013 and February
6, 2013 via the United States Postal Service in violation of 18 U.S.C. § 1341.
20. Upon reason and belief, Defendants have committed further acts of racketeering
by transmitting such form letters to individuals in various other states.
21. The racketeering acts committed by Defendants constitute a pattern of
racketeering activity within the meeting of 18 U.S.C. § 1961(5) in that they are
related to one another and continuous. The racketeering activities seem integrated
into Defendants’ business practices, and appear that they will continue into the
future, possibly for years.
22. As a direct and proximate result of Defendants’ violation of 18 U.S.C. § 1962(c),
Plaintiff has suffered injury to her property, including current and future medical
expenses, legal fees, and court costs.
(Docket No. 19, Amended Complaint ¶¶ 3, 4, 7 & 19-22). Even assuming these allegations are
more than mere “labels and conclusions” or “a formulaic recitation of the elements of a cause of
action,” for purposes of the pleading requirement under Rule 8(a) of the Federal Rules of Civil
Procedure, Twombly, 550 U.S. at 555, they do not meet the heightened pleading requirements
necessary for a RICO claim.
“When pleading predicate acts of mail or wire fraud, in order to satisfy the heightened
pleading requirements of Rule 9(b), a plaintiff must ‘(1) specify the statements that the plaintiff
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contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were
made, and (4) explain why the statements were fraudulent.’” Heinrich, 668 F.3d at 405 (citing Frank
v. Dana Corp., 547 F.3d 564, 570 (6th Cir.2008)). “Generalized and conclusory allegations that the
Defendants’ conduct was fraudulent do not satisfy Rule 9(b).” Bovee v. Coopers & Lybrand C.P.A.,
272 F.3d 356, 361 (6th Cir. 2001). “‘The courts have uniformly held inadequate a complaint's
general averment of the defendant’s knowledge of material falsity, unless the complaint also sets
forth specific facts that make it reasonable to believe that defendant knew that a statement was
materially false or misleading.’” Heinrich, 668 F.3d at 406 (quoting Greenstone v. Cambex Corp.,
975 F.2d 22, 25 (1st Cir. 1992)).
Plaintiff’s RICO allegations are conclusory and speculative at best, and lack particularity.
She does not detail the predicate acts or adequately identify what constitutes the pattern of activity,
nor does she allege scienter or the basis for an agreement. Instead, her RICO claims are grounded
upon “reason and belief” with the anchoring premise being that D&K “seems” to be in the business
of committing “racketeering activities.” The Court finds the allegations insufficient as a matter of
law to establish RICO claims under 18 U.S.C. § 1862. See Goldstein v. Bank of Am., N.A., 2010
WL 1252641, at *6 (W.D. N.C. 2010) (“Speculation of wrongdoing by [defendants] is an
insufficient basis for asserting a civil RICO” claim); Quade v. Rodriguez, 2009 WL 2170146, at *6
(E.D. Tenn. July 29, 2009)(RICO plaintiffs must “‘set out a reasonable and principled to basis of
recovery’ that is ‘not based on mere speculation and surmise’”) (citation omitted).
Further, “while two [predicate] acts are necessary, they may not be sufficient,” to state a
RICO claim. H.J. Inc. v. Northwestern Bell Tele. Co., 492 U.S. 229, 237 (1989). Assuming that
the two letters Plaintiff received in this case are proper predicate acts, they are insufficient to suggest

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that there exists acts that “amount to or pose a threat of continued criminal activity,” id. at 239, as
required to plead a RICO claim.
C. Intentional and Negligent Infliction of Emotional Distress
Plaintiff’s intentional and negligent infliction of emotional distress claims are subject to
dismissal as well. To plead the former a plaintiff must allege (1) the conduct of the defendants has
been so outrageous in character, and so extreme in degree, as to be beyond the pale of decency, and
to be regarded as atrocious and utterly intolerable in a civilized society; and (2) the conduct results
in serious mental injury. Rogers v. Louisville Land Co., 367 S.W.3d 196, 201 (Tenn. 2012). To
prove the latter, a plaintiff must “establish the elements of a general negligence claim: (1) duty, (2)
breach of duty, (3) injury or loss, (4) causation in fact, and (5) proximate causation,” as well as “the
existence of a serious or severe emotional injury that is supported by expert medical or scientific
evidence.” Lourcey v. Estate of Scarlett, 146 S.W.3d 48, 52 (Tenn. 2004).
Both causes of action contain a “‘severe mental injury’ element,” which “occurs ‘where a
reasonable person, normally constituted, would be unable to adequately cope with the mental stress
engendered by the circumstances of the case.’” Rogers, 367 S.W.3d at 210. “‘[T]oo much trivial
or modest emotional disturbance occurs in modern life for the law to attempt to provide universal
peace of mind,’” and the severe mental injury component helps “to avoid the judicial system being
flooded with potentially fraudulent, manufactured, or overstated claims arising from the ‘transient
and trivial’ emotional distress of daily life[.]” Id. (citations omitted).
Plaintiff does not come close to adequately pleading an intentional emotional distress claim,
i.e. that Defendant’s conduct in sending the letters was outrageous. “This is an exacting standard,”
which, as noted, requires that a defendant’s conduct be outrageous and beyond all bounds of

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decency. Miller v. Willbanks, 8 S.W.3d 607, 614 (Tenn. 1999).
Nor do Plaintiff’s allegations establish a viable negligent infliction of emotional distress
claim. Plaintiff argues that she “is a single mother of limited means who was unable to comply with
Defendants’ demand for payment,” that she “feared that Defendants would carry out their threat to
report [her] to the Department of Motor Vehicles,” and that a defendant “must accept the person as
he finds him.” (Docket No. 46 at 11). However, as the Tennessee Court of Appeals pointed out in
Brown v. Mapco Express, Inc., “in the elements that must be established for a claim of negligent
infliction of emotional distress, the requirement that the stimulus conduct be extreme and outrageous
is interwoven with the ‘reasonable person’ component of the element of serious or severe emotional
injury.” 393 S.W.3d 696, 706 (Tenn. Ct. App. 2012). “In effect, the plaintiff must prove that the
conduct giving rise to his claim was so extreme and outrageous that it would have caused a
reasonable person to suffer serious or severe emotional injury.” Id.
Brown involved a case where a customer sued Mapco after a clerk at one of its gas stations
accused Plaintiff of a “money switch” and threatened to call the police. Noting that plaintiff had
alleged that he consulted medical professionals because of his “severe emotional injury” as a result
of the incident, the court nevertheless held that the “‘reasonable person’ component of the
emotional injury element of the tort has not been met[.]” Id. at 706. “[T]he conduct by the Mapco
employees of which Brown complains does not rise to the level of ‘outrageous’ but is more
appropriately categorized as ‘mere insults, indignities, threats, annoyances, petty oppression or other
trivialities.’” Id. (quoting Bain v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997)). The court also
“conclude[d], as a matter of law, that the Mapco employees’ conduct would not cause a reasonable
person to suffer serious or severe mental injury; a reasonable person in Brown’s circumstance would

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shrug off the incident as an ‘annoyance’ or ‘petty oppression’ and go about his business.” Id.
Likewise in this case, the Court concludes as a matter of law that a reasonable person,
normally constituted, would be able to adequately cope with the mental stress engendered by receipt
of the letters from DKA. As such, judgment on the pleadings will be granted on Plaintiff’s
emotional distress claims.
IV. CONCLUSION
On the basis of the foregoing, the Court will grant Defendants’ Motion for Judgment on the
pleadings.
An appropriate Order will be entered.

____________________________________
KEVIN H. SHARP
UNITED STATES DISTRICT JUDGE

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