Shive v. Merriam Investments LLC et al

Filing 30

Memorandum Opinion and Order denying 7 Motion to Dismiss/Lack of Jurisdiction. (Ordered by Judge Karen Gren Scholer on 9/26/2018) (aaa)

United States District Court
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

ALICIA G. SHIVE,

Plaintiff,
v.
MERRIAM INVESTMENTS, LLC, ELTMAN
LAW, P.C., CAITLIN BOYLE, and
MERRIMAN INVESTMENTS, LLC.,

Defendants.

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CASE NO.3: 17-CV-2355-S

MEMORANDUM OPINION AND ORDER

This Order addresses Defendants' Motion to Dismiss Plaintiff's Complaint Pursuant to
Fed. R. Civ. P. 12(b)(l) and 12(b)(6) [ECF No.7]. For the following reasons, the Court denies
the Motion.
I. BACKGROUND

Pursuant to Special Order 3-318, this case was transferred from the docket of Chief Judge
Barbara M.G. Lynn to the docket of this Court on March 8, 2018.
This dispute arises from an attempt to collect post-judgment interest.

The factual

background provided by Plaintiff Alicia G. Shive ("Shive") in her Complaint is limited. Shive
alleges that she "had a credit card, used for personal purposes, for which she was alleged to owe
an outstanding balance of $10,000.00." Compl.

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5.1. According to Shive, "[D]efendants took

Shive's credit card for collection after her account was in default, and then attempted to collect
over a hundred thousand [d]ollars in interest on the approximately ten thousand [d]ollar purported
debt." Jd.

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5.2.

Shive brings a claim against Defendants under the Fair Debt Collection Practices Act
("FDCPA"). Shive alleges that Defendants use unfair and unconscionable means to collect debts
in violation of 15 U.S.C. § 1692f. Compl.

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6.2.1. Shive contends that Defendants charged more

than $100,000.00 in interest on an alleged approximate $10,000.00 debt, which Shive contends "is
a per se, unfair and unconscionable collection practice." !d. Shive further alleges that Defendants
violated 15. U.S.C. 1692e by "using an organization name other than the true name of the debt
collector's business, company or organization."

!d.~

6.3.

Shive also brings a state law claim against Defendants for usury. Shive alleges that the
maximum lawful post-judgment interest rate allowed by law is 18 percent per year, in any
circumstance. Compl.

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7.2. According to Shive, Defendants' attempt to collect more than

$100,000.00 in post-judgment interest is an amount far above the lawful limit.

!d.~

7.3.

Shive requests actual damages, exemplary and statutory damages, injunctive relief,
attorney's fees, interest, costs, and other relief.

!d.~~

9.1-9.5.

Defendants move to dismiss for lack of subject matter jurisdiction pursuant to Rule
12(b)(l), arguing that Shive's claims are barred by the Rooker-Fe/dman doctrine. Mot. 9. In the
alternative, Defendants move to dismiss for failure to state a claim pursuant to Rule 12(b)(6). !d.
at 12. Defendants assert that Shive's claims are barred by (I) res judicata and/or collateral
estoppel, (2) waiver, and (3) the doctrine of laches. See id. at 12-16.
II. LEGAL STANDARD
A. Rule 12(b)(l)

A motion to dismiss under Rule 12(b)(I) challenges a court's subject matter jurisdiction.
"Federal courts are courts of limited jurisdiction. They possess only that power authorized by
Constitution and statute, which is not to be expanded by judicial decree." Kokkonen v. Guardian

Life Ins. Co. ofAm., 511 U.S. 375,377 (1994) (citations omitted). The burden of proof for a Rule

12(b)(l) motion to dismiss is on the party assettingjurisdiction. Ramming v. United States, 281
F.3d 158, 161 (5th Cir. 2001). A court must dismiss the action if it determines that it lacks
jurisdiction over the subject matter. FED. R. CIV. P. 12(h)(3); Stockman v. Fed. Eleclion Comm 'n,
138 F.3d 144, 151 (5th Cir. 1998).
The district comt may dismiss for lack of subject matter jurisdiction based on (1) the
complaint alone; (2) the complaint supplemented by undisputed facts in the record; or (3) the
complaint supplemented by undisputed facts plus the comt's resolution of disputed facts.
Ramming, 281 F.3d at 161. A motion to dismiss based on the complaint alone presents a "facial

attack" that requires the court to decide whether the allegations in the complaint, which are
presumed to be true, sufficiently state a basis for subject matter jurisdiction. See Pa/erson v.
Weinberger, 644 F.2d 521, 523 (5th Cir. 1981 ). If the jurisdictional allegations are sufficient, the

complaint stands. Id. If the defendant suppotts the motion to dismiss with affidavits, testimony,
and other evidentiary materials, the attack is "factual." !d. When a factual attack is asserted, the
plaintiff must come forward with proof and demonstrate by a preponderance of the evidence that
the court has subject matter jurisdiction. !d.
B. Rule 12(b)(6)

To defeat a motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6), a
plaintiff must plead "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); Reliable Consultants, Inc. v. Earle, 517 F.3d 738,

742 (5th Cir. 2008). To meet this "facial plausibility" standard, a plaintiff must "plead(] factual
content that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Plausibility does not require

probability, but a plaintiff must establish "more than a sheer possibility that a defendant has acted
unlawfully." !d The court must accept well-pleaded facts as true and view them in the light most
favorable to the plaintiff. Sonnier v. State Farm Mut. Auto. Ins. Co., 509 F.3d 673, 675 (5th Cir.
2007). However, the court does not accept as true "conclusory allegations, unwarranted factual
inferences, or legal conclusions." Ferrer v. Chevron Corp., 484 F. 3d 776, 780 (5th Cir. 2007). A
plaintiff must provide "more than labels and conclusions, and a formulaic recitation of the elements
of a cause of action will not do." Twombly, 550 U.S. at 555 (internal citations omitted). "Factual
allegations must be enough 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)." !d. (internal
citations omitted).
In ruling on a Rule 12(b)(6) motion, the court limits its review to the face of the pleadings.
See Spivey v. Robertson, 197 F. 3d 772, 774 (5th Cir. 1999). The pleadings include the complaint
and any documents attached to it. Collins v. Morgan Stanley Dean Witter, 224 FJd 496, 498-99
(5th Cir. 2000). However, the court may also consider documents outside of the pleadings if they
fall within certain limited categories. First, the "court is permitted ... to rely on 'documents
incorporated into the complaint by reference, and matters of which a court may take judicial
notice."' Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 338 (5th Cir. 2008) (quoting Tellabs,
Inc. v. Makar Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)). Second, the "court may consider
documents attached to a motion to dismiss that 'are referred to in the plaintiff's complaint and are
central to the plaintiff's claim."' Sullivan v. Lear Energy, LLC, 600 F.3d 542,546 (5th Cir. 2010)
(quoting Scanlan v. Tex. A & M Univ., 343 F.3d 533, 536 (5th Cir. 2003)). Third, "[i]n deciding
a 12(b)(6) motion to dismiss, a court may permissibly refer to matters of public record." Cine/ v.
Connick, 15 F.3d 1338, 1343 n.6 (5th Cir. 1994) (internal citations omitted); see also, e.g, Funk

v. Str;,fwr Coi]J., 631 F. 3d 777,783 (5th Cir. 2011) (stating, in upholding district court's dismissal
pursuant to Rule 12(b)( 6), that "the district court took appropriate judicial notice of publiclyavailable documents and transcripts produced by the [Food and Drug Administration], which were
matters of public record directly relevant to the issue at hand." (internal citations omitted)).
The ultimate question is whether the complaint states a valid claim when viewed in the
light most favorable to the plaintiff. Great Plains Tr. Co. v. Morgan Stanley Dean Witter & Co.,
313 FJd 305, 312 (5th Cir. 2002). At the motion to dismiss stage, the court does not evaluate the
plaintiffs likelihood of success. It only determines whether the plaintiff has stated a claim upon
which relief can be granted. Mann v. Adams Realty Co., 556 F.2d 288, 293 (5th Cir. 1977).

III. ANALYSIS
When a Rule 12(b)(l) motion is filed in conjunction with other Rule 12 motions, the Court
must consider the 12(b)(1) jurisdictional attack before addressing any attack on the merits.

Ramming, 281 FJd at 161.
A. Rule 12(b)(l) Motion
Defendants move to dismiss Shive's claims for lack of subject matter jurisdiction, arguing
that Shive's claims are barred by the Rooker-Feldman doctrine. The Rooker-Feldman doctrine
"precludes a United States district court from exercising subject-matter jurisdiction in an action"
where "the losing party in state court filed suit in federal court after the state proceedings ended,
complaining of an injury caused by the state-court judgment and seeking review and rejection of
that judgment." Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 291 (2005). The
Fifth Circuit has described the doctrine as comprising four elements: (1) a state-court loser; (2)
alleging harm caused by a state-court judgment; (3) that was rendered before the district
proceedings began; and (4) the federal suit requests review of the state-court judgment. Burciaga

v. Deutsche Bank Nat'! Tr. Co., 871 F.3d 380, 384 (5th Cir. 2017). Rooker-Feldman prohibits

federal court review of claims that are "inextricably intertwined" with a state court decision. !d.
(citing D.C. Court ofAppeals v. Feldman, 460 U.S. 462,486-87 (1983)). The Supreme Court has
cautioned that in light of the "narrow ground" Rooker-Feldman occupies, it does not prohibit a
plaintiff from "present[ing] some independent claim, albeit one that denies a legal conclusion that
a state court has reached in a case to which he was a party." Exxon Mobil Corp., 544 U.S. at 284,
293 (quoting GASH Assocs. v. Rosemont, 995 F.2d 726,728 (7th Cir. 1993)).
Defendants argue,
Shive's claims fall squarely within Rooker-Feldman. The thrust of Shive's claims
throughout her Complaint is that the post-judgment interest was unlawful, and that
the Defendants then wrongfully charged and attempted to collect that allegedly
usurious post-judgment interest from her through a writ of execution. Further, as
one of the remedies she is seeking in this lawsuit, Shive not only asks that she be
awarded "all of the unauthorized interest and charges" and "twice the amount of
the interest charged," but she also specifically asks this Court to enter an injunction
against Defendants that enjoins them from attempting to collect the post-judgment
interest debt from her. Thus, Plaintiff seeks in this federal court proceeding to undo
a final state court judgment.
Mot. 9-1 0 (internal citations omitted). According to Defendants, Shive's claims, requests for
damages, and request for injunctive relief are "inextricably intertwined" with the state court's
Agreed Final Judgment awarding the post-judgment interest and authorizing the use of all writ of
execution powers and other process necessary to enforce the judgment. !d. at 10.
Although not mentioned by Shive in her Complaint, Defendants asseti that the postjudgment interest rate upon which Shive's claims are based is actually a rate that was awarded by
the state court in an Agreed Final Judgment. !d. at 2; see also Defs.' App. Ex. A. According to
Defendants, in 2005, CACV of Colorado, LLC ("CACV") filed a suit in state comi against Shive
to confirm an arbitration award that issued against her. Mot. 3. Defendants assert that Shive and
CACV settled the case and, on October 31,2006, the Presiding Judge of County Court at Law No.

3 of Tarrant County, Texas entered an Agreed Final Judgment in the case. !d. According to
Defendants, the Agreed Final Judgment, which was signed by Shive as part of the settlement,
confirmed the arbitration award, granted judgment against Shive in the amount of $11,785.33,
awarded prejudgment interest at the contractual rate of24.98 percent, and awarded post-judgment
interest at the contractual rate of 24.98 percent per annum compounded annually. !d. at 3-4; see

also Defs.' App. Ex. A. In addition, Defendants assert that the Agreed Final Judgment ordered:
"Plaintiff shall have all writ of execution powers and other process necessary to enforce this
judgment." Mot. 4; see also Defs.' App. Ex. A.
According to Defendants, CACV assigned all title, right, and interest in the Agreed Final
Judgment to Defendant Merriman Investments, LLC, and an Assignment of Judgment signed by
Defendant Caitlin Boyle was filed with the Tarrant County Clerk. Mot. 4; see also Defs.' App.
Ex. B. Defendants assert that thereafter, they secured a writ of execution, which was mailed to
Shive, to collect more than $100,000.000 in post-judgment interest. Mot. 4; see also Defs.' App.
Ex. C. The writ of execution named "Merriam Investments, LLC" as the assignee of the state
court judgment. See Defs.' App. Ex. C. Defendants argue that this is a "typographical error
resulting in the misnomer of the assignee's name" made by the Tarrant County Clerk. Reply 3.
In response, Shive argues that Defendants "attempted to execute upon a fictitious, nonexistent judgment in the name of a fictitious entity." Resp. 8. Shive challenges the entry of the
Agreed Final Judgment as well as the assignment of the Agreed Final Judgment to Defendants.

See id. at 8-11. Shive's argument on this point appears to be problematic given the copies of the
Agreed Final Judgment, Assignment of Judgment, and Writ of Execution filed as exhibits by
Defendants.

See Defs.' App. Exs. A-C.

Futthermore, a public case records search of the

underlying state cou1t action in the Tarrant County Court at Law No. 3 supports Defendants'

position.

See

Register

of

Actions,

Case

No.

2005-037315-S,

https://odyssey. tarrantcounty.com/PublicAccess/CaseDetail.aspx?CaseiD=44413 08 (last visited
Sept. 24, 20 18).
Whether or not the Agreed Final Judgment and Assignment of Judgment are fictitious does
not need to be resolved to continue with the analysis. The Rooker-Feldman doctrine "is confined
to cases ... brought by state-court losers complaining of injuries caused by state-court judgments."

Exxon Mobil Corp, 544 U.S. at 284. Shive is "not seeking review and rejection of [a losing state

!d. at 291.

court] judgment."

Rather, Shive asserts an independent claim "to address the

[D]efendants' efforts to collect on a credit card debt through a fictitious entity. Shive does not
challenge or seek review of any state court ruling or judgment."

Resp. 19.

Courts have

consistently held that when a plaintiff is not challenging the validity of the debt, but rather the debt
collection practices of the creditor, the claim is independent from the state court action and the

Rooker-Feldman doctrine does not apply. See Naranjo v. Universal Sur. of Am., 679 F. Supp. 2d
787,794-95 (S.D. Tex. 2010) (collecting cases). Moreover, the relief requested by Shive does not
include setting aside the Agreed Final Judgment in its entirety-Shive requests damages and
injunctive relief from "[D]efendants' unlawful collection efforts" and "attempts to collect usurious
interest." Compl.

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9.3.1.

Given the narrow scope of the Rooker-Feldman doctrine, and considering that "granting
the requested relief does not actually require appellate-type review or invalidation of the [state
court] judgment," the Court finds that Shive's claims are not barred by Rooker-Feldman. Weaver

v. Tex. Capital Bank, N.A., 660 F.3d 900, 904 (5th Cir. 2011); see also Naranjo, 679 F. Supp. at
795 (holding that Rooker-Feldman does not deprive the court of subject matter jurisdiction where
plaintiff "is not asking this Court to review or reject the state default judgment itself," but rather

"is complaining about Defendants' alleged practices of ... committing numerous violations under
the [FDCPA] and state law."); cf Morris v. Am. Home Mortg. Servicing, Inc., 443 Fed. Appx. 22,
24 (5th Cir. 2011) (holding that plaintiff's unlawful debt collection practices claims were barred
by Rooker-Feldman because, "crucially, the only relief he sought was the setting aside of the state
foreclosure judgment and staying of the execution of the writ of possession.").
The Court denies Defendants' 12(b)(l) motion to dismiss.
B. Rule 12(b)(6) Motion

In the alternative, Defendants move to dismiss Shive's claims for failure to state a claim
upon which relief may be granted pursuant to Rule 12(b)(6). Defendants argue that Shive's claims
are barred by (I) res judicata and/or collateral estoppel, (2) waiver, and (3) the doctrine of laches.
Each of Defendants' grounds for dismissal for failure to state a claim presume the existence and
entry of a valid Agreed Final Judgment in state court. See, e.g., id. at 13 ("[Shive] is contesting
eleven years after-the-fact the state court's award of the 24.98% post-judgment interest rate in its
Agreed Final Judgment that she, herself, signed."). Shive, however, makes no mention of an
Agreed Final Judgment in her Complaint, asserting only that Defendants "attempted to unlawfully
collect over $100,000.000 in interest on an alleged debt of approximately $10,000.00." Compl. ,]
2.1. Furthermore, Shive challenges the entry of the Agreed Final Judgment and the assignment of
the judgment to Defendants. See Resp. 4-5.
A Rule 12(b)(6) motion is not the proper vehicle for the resolution offactual disputes. In
deciding a Rule 12(b)(6) motion to dismiss, the Court limits its review to the face of the pleadings.
See Spivey, 197 F.3d at 774. While the "[C]ourt may consider documents attached to a motion to

dismiss," they must be "referred to in the plaintiff's complaint" and "central to the plaintiff's
claim.'' Sullivan, 600 F.3d at 546 (internal quotation and citation omitted). Given that Shive's

Complaint does not make mention of the Agreed Final Judgment, Assignment of Judgment, or
Writ of Execution, the Court declines to consider the documents attached as exhibits to
Defendants' motion. The Court also declines to sua sponte convert Defendants' motion to dismiss
under Rule 12(b)96) to a motion for summary judgment under Rule 56. See FED. R. CIV. P. 12(d)

("'f, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and
not excluded by the court, the motion must be treated as one for summary judgment under Rule
56."); see also 5C CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND
PROCEDURE § 1366 (3d ed. 20 18).
Defendants do not challenge the sufficiency of Shive's Complaint under 12(b)(6). See
Mot. 12-16. Therefore, the Court will not evaluate if Shive has alleged sufficient facts to "state a
claim to relief that is plausible on its face." Twombly, 550 U.S. at 570.
The Court denies Defendants' 12(b)(6) motion to dismiss. Whether or not Shive has
sufficient evidence to support her FDCPA and usury claims may be determined at either the
summary judgment stage or at trial.

IV. CONCLUSION
For the foregoing reasons, the Court denies Defendants' Motion to Dismiss Plaintiffs
Complaint Pursuant to Fed. R. Civ. P. 12(b)(l) and 12(b)(6).

SO ORDERED.
SIGNED September 26,2018.

KAREN GREN SCHOLER
UNITED STATES DISTRICT JUDGE