Hubbard v. Midland Credit Management Inc et al
Filing
41
ORDER granting 19 Motion to Dismiss. Party Low & Morgan PLLC, M Kip Morgan, Fulton Friedman & Gullace LLP and Johnetta Lang terminated. 19 Motion to Dismiss filed by Fulton Friedman & Gullace LLP, Low & Morgan PLLC, M Kip Morgan, Johnetta Lang terminated. (Ordered by Judge Terry R Means on 11/13/2013) (wrb)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
RICKY JOHN HUBBARD
VS.
MIDLAND CREDIT MANAGEMENT,
et al.
§
§
§
§
§
§
CIVIL ACTION NO. 4:13-CV-112-Y
ORDER GRANTING MOTION TO DISMISS
Before the Court is the motion to dismiss of defendants Fulton
Friedman & Gullace, LLP (“FF&G”); Johnetta Lang; Low & Morgan, PLLC
(“L&M”); and M. Kip Morgan (doc. 19). After review of the motion,
response, and reply, the Court GRANTS the motion.
I.
BACKGROUND
Ricky John Hubbard, proceeding pro se, has sued Defendants for
violations of the Fair Debt Collection Practices Act (“FDCPA”) and
the Texas Debt Collection Practices Act (“TDCPA”).
FF&G is a law firm that was retained by Midland Funding, LLC
(“Midland”), a debt-collection company. Midland is the assignee of
Chase Bank USA, N.A., the owner of the debt Hubbard allegedly owes
under a consumer credit agreement. FF&G filed suit against Hubbard
on behalf of Midland in state court, seeking to collect an outstanding
debt of $5,074.59. Johnetta Lang, an attorney with FF&G, signed the
complaint as attorney of record. As the lawsuit proceeded in state
court, Hubbard claims that various attorneys, other than Lang, appeared
on behalf of Midland.
One of those attorneys was M. Kip Morgan, an
attorney with L&M.1
Hubbard claims that Midland never notified him
of the outstanding debt prior to filing suit against him. Ultimately,
the state-court proceeding was dismissed.
During the pendency of the state-court lawsuit, Hubbard obtained
his credit reports from the major credit bureaus.
According to
Hubbard, each reflected negative entries by Midland. Hubbard notified
the credit bureaus in writing that he disputed the debt.
He also
claims that he sent notification to Midland. According to Hubbard,
Midland responded by instructing the credit bureaus to remove the
negative information they had previously reported.
II.
LEGAL STANDARD
Rule 12(b)(6) authorizes the dismissal of a complaint that fails
“to state a claim upon which relief can be granted.” This rule must
be interpreted in conjunction with Federal Rule of Civil Procedure
8(a), which sets forth the requirements for pleading a claim for relief
in federal court. Rule 8(a) calls for “a short and plain statement
of the claim showing that the pleader is entitled to relief.” Fed.
R. Civ. P. 8(a)(2); see also Swierkiewicz v. Sorema N.A., 534 U.S.
506, 513 (2002) (holding that Rule 8(a)’s simplified pleading standard
1
Hubbard claims that at least four attorneys appeared on
behalf of Midland during the course of the state-court proceedings.
In his original complaint, Hubbard named attorneys Joshua Smith and
“John Doe” as defendants.
However, the Court dismissed these
defendants on July 23, 2013, for failure to file proof of service
as required under Federal Rule of Civil Procedure 4(m) (doc. 23).
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applies to most civil actions).
The Court must accept as true all
well-pleaded, non-conclusory allegations in the complaint and liberally
construe the complaint in favor of the plaintiff.
Kaiser Aluminum
& Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050
(5th Cir. 1982).
The plaintiff must, however, plead specific facts, not mere
conclusory allegations, to avoid dismissal. Guidry v. Bank of LaPlace,
954 F.2d 278, 281 (5th Cir. 1992). Indeed, the plaintiff must plead
“enough facts to state a claim to relief that is plausible on its
face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).” 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).”
(citations omitted).
Id. at 555
The Court need not credit bare conclusory
allegations or “a formulaic recitation of the elements of a cause
of action.”
Id.
Rather, “[a] claim has facial plausibility when
the plaintiff pleads 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).
“Generally, a court ruling on a motion to dismiss may rely on
only the complaint and its proper attachments. A court is permitted,
however, 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)
3
(citations and internal quotation marks omitted). “A written document
that is attached to a complaint as an exhibit is considered part of
the complaint and may be considered in a 12(b)(6) dismissal
proceeding.”
2007).
Ferrer v. Chevron Corp., 484 F.3d 776, 780 (5th Cir.
In addition, a “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. Leor 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)).
III.
A.
DISCUSSION
Hubbard’s Claims Under the FDCPA
The purposes of the FDCPA are “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.” 15 U.S.C.
§ 1692(e).
Hubbard contends that Defendants’ collection efforts
violated various provisions of the FDCPA.
Specifically, he claims
that Defendants: (1) violated § 1692e(2) by seeking to collect an
alleged debt without validating the debt; (2) violated § 1692e(8)
by failing to inform the credit bureaus that the debt was disputed;
and (3) violated § 1692e(10) by using false representations or
deceptive means to collect the debt.
The FDCPA prohibits a debt collector from using “any false,
4
deceptive, or misleading representation or means in connection with
the collection of any debt.”
15 U.S.C. § 1692e.
Accordingly, it
is a violation of the Act for a debt collector to make a false
representation of “the character, amount, or legal status of any debt”
or “any services rendered or compensation which may be lawfully
received by any debt collector for the collection of a debt.”
U.S.C § 1692e(2)(A)-(B).
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Hubbard has pled no facts in support of
his claim that Defendants violated these sections of the FDCPA. His
only contention is that Defendants sought to collect a debt without
validating it.
1692e(2)(A)-(B).
But debt validation has nothing to do with §
Validation is addressed in 15 U.S.C. 1692g.
Under the latter provision, within five days of its initial
communication with a consumer, a debt collector must provide the
consumer with certain statutory disclosures concerning the consumer’s
right to dispute or request validation of the debt.
1692g(a).
15 U.S.C. §
If the consumer disputes or requests validation of the
debt in writing within thirty days of receiving the debt collector’s
initial communication, the debt collector must cease its collection
activities until it obtains verification or provides the consumer
with the information required under § 1692g(a)(4)-(5). 15 U.S.C. §
1692g(b).
In his response to Defendants’ motion to dismiss, Hubbard attaches
a letter from FF&G, signed by Lang, which appears to be a response
5
to an inquiry from Hubbard for validation of the debt.2 In the letter,
FF&G provides Midland’s name and address and explains that Midland
is the assignee of Chase Bank USA, N.A.
The letter also discloses
the last four digits of the account number and balance due.
FF&G’s letter complies with the requirements of § 1692g(b).
Further, Hubbard does not allege in his pleadings that collection
efforts continued after he requested validation of the debt. Indeed,
the civil docket sheet from the state-court proceeding, which Hubbard
attached to his response, shows no activity on the part of the
defendants in the month prior to the date of FF&G’s letter.
The day after the date of the letter, FF&G served written
discovery on Hubbard. While the Supreme Court has held that litigation
activities must comply with the requirements of the FDCPA, Heintz
v. Jenkins, 514 U.S. 291, 297 (1995), this Court has found no case
holding that service of discovery constitutes a “collection activity.”
Assuming that it does, at the time FF&G served discovery on Hubbard,
it had already provided him with the information required under §
1692g(b) and was no longer prohibited from proceeding with its
collection efforts.
Interpreting Hubbard’s complaint generously as asserting a claim
for violations of § 1692g, the Court concludes that Hubbard has failed
2
The Court may consider attachments to a response to a motion
to dismiss without converting the motion to one for summary
judgment. See Walch v. Adjutant Gen.’s Dep’t of Tex., 533 F.3d
289, 294 (5th Cir. 2008).
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to plead sufficient facts to support a claim under that section.
Hubbard also claims that Defendants violated § 1692e(8) by failing
to inform credit bureaus that the debt was disputed.
However, in
his complaint, all of Hubbard’s factual allegations with respect to
violations of this section involve Midland, not the defendants bringing
this motion. Hubbard has pled no facts in support of his allegation
that these defendants failed to inform credit bureaus that the debt
was disputed.
Finally, Hubbard alleges that Defendants violated § 1692e(10)
by using false representations or deceptive means to collect the debt.
Hubbard has pled no facts in support of Defendants’ alleged violation
of this section.
B.
Hubbard’s Claims Under the TDCPA
Hubbard claims violations of the TDCPA only with respect to
defendants L&M and Morgan.3
In particular, he claims that Morgan
appeared in state court while on a “fully probated suspension” from
3
In their motion to dismiss, the defendants claim, without
any elaboration, that this Court lacks subject-matter jurisdiction.
The Court assumes that the defendants are challenging subject
matter jurisdiction over Hubbard’s state-law claims under the
TDCPA, given their contention that the Court should dismiss
Hubbard’s federal-law claims under Rule 12(b)(6). See Batiste v.
Island Records Inc., 179 F.3d 217, 227 (5th Cir. 1999) (noting that
in the Fifth Circuit, the general rule calls for dismissal of
state-law claims where all federal claims have been dismissed).
However, Hubbard’s state-law claims are derived from “a common
nucleus of operative fact” with his federal claims, given that they
arise from the same debt-collection activities. See Prophet v.
Myers, 645 F. Supp. 2d 614, 615 (S.D. Tex. 2008). Consequently,
the court will exercise supplemental jurisdiction over Hubbard’s
TDCPA claims.
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the Texas bar association.
The Court takes judicial notice of the
fact that, according to the State Bar of Texas website, under this
form of disciplinary action, an attorney is still permitted to
practice law during the period of suspension.4 State Bar of Texas,
http://www.texasbar.com/Content/NavigationMenu/AboutUs/FortheMedi
a/Grievance_and_Ethics_Information2/MisconductPunishment.htm (last
visited Nov. 1, 2013).
Thus, Morgan’s probated suspension did not
prevent him from appearing at a hearing in conjunction with the statecourt proceedings.
Additionally, Hubbard complains that L&M and Morgan appeared
in the proceeding without filing a surety bond with the Texas
Secretary of State in violation of Texas Finance Code § 392.101.
That section provides:
A third-party debt collector or credit bureau may not
engage in debt collection unless the third-party debt
collector or credit bureau has obtained a surety bond
issued by a surety company authorized to do business in
this state as prescribed by this section. A copy of the
bond must be filed with the secretary of state.
Tex. Fin. Code Ann. § 392.101.
L&M and Morgan contend that they are not “third-party debt
4
Under Federal Rule of Evidence 201, the Court may take
judicial notice of “a fact that is not subject to reasonable
dispute because it can be accurately and readily determined from
sources whose accuracy cannot reasonably be questioned.”
Fed. R.
Evid. 201 (b)(2).
The Court may take such notice following a
request from a party or on its own accord.
Fed. R. Evid. 201(c);
see also Putman v. State Bar of Cal., No. SACV 08-625-DSF (CW),
2010 WL 3070435 (C.D. Cal. June 25, 2010) (relying on information
obtained from a search of the California State Bar’s website and
taking judicial notice of disciplinary proceedings).
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collectors” as defined under the TDCPA.
The TDCPA relies on the
FDCPA’s definition of “debt collector” for its definition of “thirdparty debt collector.” Under the FDCPA a debt collector is defined
as:
[A]ny 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.
15 U.S.C. § 1692a(6). Importantly, the TDCPA expressly excludes from
its definition of third-party debt collector “an attorney collecting
a debt as an attorney on behalf of and in the name of a client.”
Tex. Fin. Code Ann. § 392.001(7). That exemption does not apply where
“the attorney has nonattorney employees who: (A) are regularly engaged
to solicit debts for collection; or (B) regularly make contact with
debtors for the purpose of collection or adjustment of debts.” Id.
L&M was retained to represent Midland in a lawsuit intended to
reduce an outstanding debt to judgment.
There is no evidence that
L&M employed non-attorneys who regularly engaged in debt collection.
Consequently, L&M and its employee Morgan, are excluded from the
definition of third-party debt collectors under the TDCPA and were
not required to obtain a surety bond.
IV.
CONCLUSION
Because Hubbard has failed to plead sufficient facts in support
of any of his claims against these defendants, the Court concludes
that his claims against Fulton Friedman & Gullace, LLP; Johnetta Lang;
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Low & Morgan, PLLC; and M. Kip Morgan should be and hereby are
DISMISSED WITH PREJUDICE.
SIGNED November 13, 2013.
____________________________
TERRY R. MEANS
UNITED STATES DISTRICT JUDGE
TRM/lj
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