Whatley, III v. AHF Financial Services, LLC et al

Filing 44

ORDER ADOPTING REPORT AND RECOMMENDATIONS for 27 Motion to Dismiss filed by Thomas E. Whatley, III, 35 Report and Recommendations,. Plaintiff Thomas Whatleys Motion to Dismiss X-Ray Associates of New Mexico, P.Cs Counterclaims [Dkt. #27] is GRANTED, and the counterclaims are DISMISSED without prejudice. Signed by Judge Ron Clark on 9/14/12. (cm, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
THOMAS E. WHATLEY, III,
Plaintiff,

V.
AHF FINANCIAL SERVICES, LLC,
ALPHINE H. FREEMAN III, and
X-RAY ASSOCIATES OF NEW
MEXICO, P.C.,
Defendants.

§
§
§
§
§
§
§
§
§
§
§
§
§

CASE NO. 4:11-CV-488
Judge Clark/Judge Mazzant

ORDER ADOPTING REPORT AND
RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
Came on for consideration the report of the United States Magistrate Judge in this action, this
matter having been heretofore referred to the United States Magistrate Judge pursuant to 28 U.S.C.
§ 636. On August 16, 2012, the report of the Magistrate Judge was entered containing proposed
findings of fact and recommendations that Plaintiff Thomas Whatley’s Motion to Dismiss X-Ray
Associates of New Mexico, P.C’s Counterclaims [Dkt. #27] be granted. On August 30, 2012,
Defendant X-Ray Associates of New Mexico, P.C. (“X-Ray”), filed objections. X-Ray only objects
to the recommendation of granting X-Ray’s breach of contract counterclaim. X-Ray asserts that it
should be able to bring its counterclaim on the underlying debt against Plaintiff. X-Ray asserts that
in order for Plaintiff to recover on his claims, he must prove standing under the Fair Debt Collection
Practices Act, 15 U.S.C. § 1692 (“FDCPA”), the Texas Debt Collection Act, Chapter 392
(“TDCA”), and the Texas Business and Commerce Code, Subchapter E, Chapter 17 (“DTPA”).
The Magistrate Judge found that X-Ray’s status as an original creditor does not change the
1

logical relationship analysis, because the breach of contract claim has no bearing or impact on
Plaintiff’s claims. The court agrees. The only basis for liability against X-Ray asserted by Plaintiff
is based upon the agreement between X-Ray and its alleged agent Defendant, AHF Financial
Services, LLC (“AHF”). Whether a consumer is liable for the underlying debt that a debt collector
is attempting to collect is irrelevant to whether the debt collector is liable for conduct that violates
the FDCPA or the TDCA. Plaintiff’s only claims against X-Ray are based upon his theory that XRay can be liable for conduct of AHF. X-Ray does not cite the court to any authority that supports
its position. Although the court in Hurtado v. TAM Fin. Corp., No. EP-07-CA-065-FM, 2007 WL
1746884 (W.D. Tex. June 5, 2007) noted that the Fifth Circuit has not addressed this issue of
whether the counterclaim for the underlying debt would be a compulsory counterclaim, the court
noted that every court that has addressed the issue concluded that the debt counterclaim is distinct
from and not logically related to the FDCPA claim based upon improper debt collection practices.
See Hurtado, 2007 WL 1746884, at *2 n.14. The Magistrate Judge agreed with the reasoning in
Hurtado. The court finds no error, and adopts the reasoning of the Magistrate Judge. Although XRay, at the end of its objections, asserts that if the counterclaim is permissible the court should
exercise its supplemental jurisdiction, X-Ray fails to object to the Magistrate Judge’s
recommendation that the court decline exercising its supplemental jurisdiction. The court agrees and
declines to exercise supplemental jurisdiction over the counterclaim for the underlying debt.
Having received the report of the United States Magistrate Judge, and considering the
objections thereto filed by defendant [Doc. #41], this court is of the opinion that the findings and
conclusions of the Magistrate Judge are correct and adopts the Magistrate Judge’s report as the
findings and conclusions of the court.

2

It is, therefore, ORDERED that Plaintiff Thomas Whatley’s Motion to Dismiss X-Ray
Associates of New Mexico, P.C’s Counterclaims [Dkt. #27] is GRANTED, and the counterclaims
are DISMISSED without prejudice.

So ORDERED and SIGNED this 14 day of September, 2012.

___________________________________
Ron Clark, United States District Judge

3