Chism et al v. Continental Collection Agency Ltd. et al
MEMORANDUM OPINION AND ORDER DENYING 15 MOTION to Dismiss 1 Complaint or, in the Alternative, to Stay or Transfer.(Signed by Judge Gray H Miller) Parties notified.(rkonieczny, 4)
United States District Court
Southern District of Texas
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
JASON CHISM, et al.
CONTINENTAL COLLECTION AGENCY,
LTD, et al.
December 06, 2017
David J. Bradley, Clerk
CIVIL ACTION H-16-3343
MEMORANDUM OPINION AND ORDER
Pending before the court is a motion to dismiss, stay, or transfer filed by defendants
Continental Collection Agency, Ltd. and Nathan Twedt (“Defendants”). Dkts. 15, 15-1. After
conducting jurisdictional discovery (Dkt. 23), plaintiffs Jason and Stacy Chism responded. Dkt. 33.
Defendants replied. Dkt. 36. On November 21, 2017, the court heard oral arguments from both
parties. See Dkts. 38, 41. Having considered the motion, response, reply, the parties’ oral
arguments, and applicable law, the court is of the opinion that the motion should be DENIED.
This is a wrongful debt collection case. Dkt. 1. From 2007 to 2011, the Chisms lived in
Colorado where they rented a home from Karla Bennett. Id. at 5. Thereafter, the Chisms returned
to their home in Porter, Texas. Id. at 5, 9. Defendants allege that the Chisms failed to pay Bennett
some rent payments and damages (the “debt”). Id. at 1, 5. In 2011, Bennett assigned that debt to
Continental. Id. at 6, 24. Defendants learned that the Chisms were Texas residents. Dkt. 33 at 8.
For several years, Defendants sent more than a dozen letters to the Chisms’ home in Texas
try to collect that debt. Dkts. 1 at 8; 33 at 7. Defendants called the Chisms’ Texas-based home
phone number at least three times. Dkt. 33 at 8. Defendants stipulated that Continental has “mailed
and or faxed thousands of letters to persons with addresses in the State of Texas and/or phone
numbers with area codes located in Texas as part of its attempts to collect debts.” Dkt. 26 at 9.
Defendants also stipulated that Continental has “attempted to collect debts by placing thousands of
telephone calls to area codes located in Texas.” Id. at 10.
The Chisms allege that Defendants have a policy and practice of serving and filing computergenerated, mass-produced lawsuits against consumers that falsely imply that a licensed attorney
engaged in meaningful review before effectuating service. Dkt. 1 at 11. Defendants stipulated that
“[s]ince 2011, Continental has regularly filed lawsuits against persons with addresses in the State
of Texas . . . .” Dkt. 26 at 9.
Defendants sued the Chisms in a Colorado state court. Dkt. 1 at 9. On October 21, 2016,
Defendants had Stacy Chism served at her home with the summons and complaint by a Texas deputy
constable. Id. The Chisms counterclaimed for violations of the Colorado Fair Debt Collection
Practices Act (CFDCPA), Colo. Rev. Stat. Ann. § 5-6-113 (West 2017). Dkt. 41 at 10. Then, the
Colorado state court entered a default judgment against the Chisms. Id. Thereafter, the court set
aside the default and the Chisms dropped their counterclaims. Id.
The Chisms brought the instant lawsuit against Defendants (and unknown defendants) for
violating their rights (and the rights of unknown class members) under the Fair Debt Collection
Practices Act (FDCPA), 15 U.S.C. § 1692, et seq., and under the Texas Debt Collection Act
(TDCA), Tex. Fin. Code Ann. § 392.301, et seq.1 Dkt. 1 at 1, 5–6, 16–17. Specifically, the Chisms
allege that Defendants’ attempts to collect the debt from them—through letters, phone calls, and
The parties refer to the Texas statute regulating debt collectors as the Texas Debt Collection
Practices Act. See e.g., Dkts. 1 at 1, 15-1 at 7. Because Texas courts refer to the statute as the Texas
Debt Collection Act, the court will as well. See e.g., Genender v. Kirkwood, 506 S.W.3d 508, 515
(Tex. App.—Houston [1st Dist.] 2016, no pet.).
service of process—violated multiple provisions of both the federal and Texas debt collection
In the instant motion, Defendants move to (1) dismiss for lack of personal jurisdiction or
because exercise of such jurisdiction is constitutionally unreasonable; (2) dismiss or stay under
Colorado River; (3) dismiss for a violation of the dormant Commerce Clause; or (4) transfer to
Colorado. Dkt. 15-1.
II. MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION
A court must dismiss an action when it lacks personal jurisdiction over the defendant. Fed.
R. Civ. P. 12(b)(2). When a non-resident defendant moves to dismiss for lack of personal
jurisdiction, the resident plaintiff has the burden of establishing a prima facie showing that the
defendant is subject to personal jurisdiction. Lewis v. Fresne, 252 F.3d 352, 358 (5th Cir. 2001); see
also Bullion v. Gillespie, 895 F.2d 213, 216–17 (5th Cir. 1990). “Proof by a preponderance of the
evidence is not required.” D.J. Invs., Inc. v. Metzeler Motorcycle Tire Agent Gregg, Inc., 754 F.2d
542, 545–46 (5th Cir. 1985).
In a diversity action, a federal court may exercise personal jurisdiction over a non-resident
defendant if: (1) the long-arm statute of the forum state allows the exercise of personal jurisdiction
over that defendant, and (2) the exercise of personal jurisdiction over that defendant is consistent
with due process under the U.S. Constitution. Clemens v. McNamee, 615 F.3d 374, 378 (5th Cir.
For example, the Chisms allege that Defendants’ letters contained false, deceptive, or
misleading information about the character, amount, or legal status of the alleged debt. Id. at 6. The
Chisms also allege that Defendants used unfair or unconscionable means to collect to try to collect
the debt. Dkt. 1 at 16–17. Further, the Chisms allege that the Defendants tried to collect a debt
without the requisite Texas surety bond. Id. at 17–18.
2010). This two-step personal jurisdiction inquiry collapses into one federal due process analysis
because the Texas long-arm statute extends to the limits of federal due process. Id. (citing
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 413–14, 104 S. Ct. 1868 (1984)).
To satisfy the requirements of due process, the plaintiff must demonstrate: “(1) that the non-resident
purposely availed himself of the benefits and protections of the forum state by establishing
‘minimum contacts’ with the state; and (2) that the exercise of jurisdiction does not offend
‘traditional notions of fair play and substantial justice.’” Johnston v. Multidata Sys. Int’l Corp., 523
F.3d 602, 609 (5th Cir. 2008) (quoting Wilson v. Belin, 20 F.3d 644, 647 (5th Cir.1994)).
Minimum contacts are established through the assertion of either general or specific
jurisdiction. Panda Brandywine Corp. v. Potomac Elec. Power Co, 253 F.3d 865, 867(5th Cir.
2001). The parties only dispute whether specific jurisdiction exists. Dkt. 41 at 2–3, 5–6.
Specific jurisdiction “is confined to adjudication of issues deriving from, or connected with,
the very controversy that establishes jurisdiction.” Goodyear Dunlop Tires Operations, S.A. v.
Brown, 564 U.S. 915, 919, 131 S. Ct. 2846 (2011) (internal citations omitted). Specific jurisdiction
exists when the plaintiff’s claim against the non-resident defendant arises out of or relates to
activities that the defendant purposefully directed at the forum state. Alpine View Co. v. Atlas Copco
AB, 205 F.3d 208, 215 (5th Cir. 2000) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472,
105 S. Ct. 2174 (1985)). “When there is no such connection, specific jurisdiction is lacking
regardless of the extent of the defendant’s unconnected activities in the State.” Bristol-Myers Squibb
Co. v. Super. Ct. of Cal., 137 S.Ct. 1773, 1779 (2017). If the nonresident defendant’s contact are
singular or sporadic, specific jurisdiction is proper “only if the cause of action asserted arises out of
or is related to those contacts.” Int’l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd.,
818 F.3d 193, 212 (5th Cir. 2016).
“A court considers two issues in deciding whether a defendant’s suit-related conduct creates
a sufficient relationship with the forum state.” Havel v. Honda Motor Europe Ltd., Civil Action No.
H-13-1291, 2014 WL 4967229, at *7 (S.D. Tex. Sep. 30, 2014) (Rosenthal, J.) (citing Walden v.
Fiore, 134 S.Ct. 1115, 1121 (2014)). “First, the relationship must arise out of contacts that the
defendant himself creates with the forum State.” Walden, 134 S.Ct. at 1122. “Second, the minimum
contacts analysis looks to the defendant’s contacts with the forum State itself, not the defendant’s
contacts with persons who reside there.” Id. (citations omitted). “[A] defendant’s contacts with the
forum State may be intertwined with his transactions or interactions with the plaintiff or other
parties. But a defendant’s relationship with a plaintiff or third party, standing alone, is an
insufficient basis for jurisdiction.” Id. at 1123.
Once minimum contacts have been established, the defendant has the burden to establish a
compelling case that the presence of some other considerations would render jurisdiction
unreasonable. In re Chinese Manufactured Drywall Products Liab. Litigation, 742 F.3d 576, 592
(5th Cir. 2014); see also Guidry v. United States Tobacco Co., Inc., 188 F.3d 619, 630 (5th Cir.
1999). “[T]he determination of the reasonableness of the exercise of jurisdiction in each case will
depend on an evaluation of several factors.” Asahi Metal Indus. Co. v. Super. Ct. of Cal., 480 U.S.
102, 113, 107 S.Ct. 1026 (1987). “When determining the fundamental fairness issue this court will
normally examine (1) the defendant’s burden; (2) the forum state’s interests; (3) plaintiff’s interest
in convenient and effective relief; (4) the judicial system’s interest in obtaining efficient resolution
of controversies; and (5) the shared interest of the several states in furthering fundamental
substantive social policies. Guidry, 188 F.3d at 630.
Defendants move to dismiss the Chisms’ complaint for lack of personal jurisdiction. Dkt.
15-1 at 15. Defendants challenge specific jurisdiction by arguing: (1) that they lack sufficient
contacts with Texas; and (2) even if the Chisms could establish personal jurisdiction, it would be
constitutionally unreasonable for the court to exercise personal jurisdiction. Id. at 16.
Sufficient contacts with Texas
In Bristol-Myers, the Supreme Court held that California courts could not claim specific
jurisdiction over nonresidents’ claims in a pharmaceutical products liability action when those
nonresidents did not claim to have suffered harm in California. 137 S.Ct. at 1781. Citing Walden,
the Supreme Court criticized California’s Supreme Court for finding specific jurisdiction “without
identifying any adequate link between the State and the nonresidents’ claims.” Id. The Court
explained that “the mere fact that other plaintiffs were prescribed, obtained, and ingested [the drug]
in California–and allegedly sustained the same injuries as did the nonresidents–does not allow the
State to assert specific jurisdiction over the nonresidents’ claims.” Id. (emphasis in original).
Rather, “[w]hat [was] needed–and what [was] missing here–[was] a connection between the forum
and the specific claims at issue.” Id.
In Walden, Nevada plaintiffs sued a nonresident defendant for allegedly unlawfully searching
them while preparing to board a plane in Georgia. 134 S.Ct., at 1123. Walden held that “the Nevada
courts lacked specific jurisdiction even though the plaintiffs were Nevada residents and suffered
foreseeable harm in Nevada [b]ecause the relevant conduct occurred entirely in Georgia.” Id. There,
the Court focused on the “relevant conduct” as occurring entirely in Georgia. Id. It did not matter
that “the conduct affected plaintiffs with connections to the forum state.” Id.
Here, Defendants argue that the Chisms’ move to Texas was a “mere fortuity” and a
“unilateral activity of the [Chisms’] themselves . . . that led Defendants to have the contacts on
which the [Chisms’] rely.” Dkt. 15-1. at 17 (citing Walden, 134 S.Ct. at 1122). In short, Defendants
assert that “[w]hen Plaintiffs vacated their apartment without paying their final months’ rent and
other damages . . . Defendants had no choice but to contact Plaintiffs in Texas.” Dkt. 15-1 at 17; see
also Dkt. 41 at 21 (“The only reason that attempted contacts were made to the Plaintiffs here in
Texas is because they left Colorado and came to Texas.”). Defendants also argue that their debt
collection communications with the Chisms do not count as contacts with Texas. Dkt. 15-1 at 17.
Next, Defendants rely on Monkton Insurance Services, Ltd. v. Ritter, 768 F.3d 429, 433 (5th
Cir. 2014) to challenge specific jurisdiction on the grounds that they do not conduct business in
Texas, that the underlying transaction was entered into in Colorado, and that transaction
contemplated performance in Colorado. Dkt. 15-1 at 17–18. Monkton held that a defendant bank
was not subject to specific jurisdiction when a third-party plaintiff (and not the bank) sent contracts
to Texas, and when wire transfers and communications were initiated by the third-party plaintiff, not
the bank. 768 F.3d at 433 (relying on Walden, 134 S.Ct. at 1122).
Finally, Defendants argue that the Chisms’ location in Texas is “happenstance” and thus not
a basis for personal jurisdiction. Dkt. 15-1 at 18 (citing Searcy v. Parex Res., Inc., 496 S.W.3d 58,
68 (Tex. 2016)). Defendants argue that they have purposefully avoided profiting from Texas’s laws
or jurisdiction in Texas “by building and working for a business that collects exclusively debts
originating in Colorado.” Dkt. 15-1. at 18.
The Chisms respond by pointing out that Defendants contacted them through the mail, over
the phone, and had them served with process in Texas. Dkt. 33 at 20. Further, the Chisms argue that
Defendants do not dispute those contacts. Id. (citing Dkt. 15-1 at 5–6 (“Continental determined that
[the Chisms] were living in Texas and attempted to contact them to collect their debt . . . over the
course of several years and occurred by mail and telephone . . . .”)).
The Chisms also argue that the debt-collection communications Defendants sent into Texas
are sufficient contacts to establish personal jurisdiction. Dkt. 33 at 19–20. In support, the Chisms
cite several cases such as Eades v. Kennedy, PC Law Offices, 799 F.3d 161, 169 (2d. Cir. 2015) and
Fagan v. Lawrence Nathan Associates, Inc., 957 F.Supp.2d 784,792 (E.D. La. 2013).
In Eades, a Pennsylvania defendant had sufficient contacts with New York for purposes of
New York’s test for personal jurisdiction when that defendant mailed one debt collection notice,
made one debt collection phone call, and mailed a summons and complaint in debt collection suit.
799 F.3d at 169. Defendants distinguish Eades as irrelevant because it deals with New York’s
statutory test for personal jurisdiction and because it addresses general jurisdiction. Dkt. 36 at 8.
In Fagan, the plaintiff brought an FDCPA action against a debt collector for the way it tried
to collect a debt in Louisiana when that debt was incurred in Nevada. 957 F.Supp.2d at 792. Fagan
held that the debt-collector “purposefully availed itself of the benefits of the forum state by
attempting to collect a debt from, and ultimately reporting information about, a resident of Louisiana,
which caused injury or damage in this state” when it (1) mailed two debt-collection letters to plaintiff
in Louisiana and (2) reported the alleged debt to two credit bureaus. Id. Defendants distinguish
Fagan as “highly suspect” because it precedes Walden and because it relies “entirely on contacts
between the defendant and the plaintiff with no regard for the existence of any other contacts
between the defendant and the forum state.” Dkt. 36 at 7.
The court has specific jurisdiction over the Defendants. See Bristol-Myers, 137 S.Ct. at
1781; see also Walden, 134 S.Ct. at 1123. Bristol-Myers instructs that the exercise of specific
jurisdiction requires “a connection between the forum and the specific claims at issue.” 137 S.Ct.
at 1781. Here, that connection exists.
Defendants’ conduct that gave rise to the Chisms’ claims arose out of contacts that
Defendants created with Texas. See Walden, 134 S.Ct. at 1122. Namely, the Defendants: (1) sent
twelve letters to the Chisms’ home in Texas; (2) called the Chisms at their home in Texas three
times; and (3) hired a Texas deputy constable to serve Stacy Chism at her home in Texas. Dkts. 1
at 8–9, 33 at 7–8. Although Defendants assert that they “had no choice but to contact Plaintiffs in
Texas,” Defendants made that choice. See Dkt. 15-1 at 17. Indeed, they did so by contacting the
Chisms in Texas at least sixteen different times. Dkts. 1 at 8–9 (twelve letters, three phone calls),
33 at 7–8 (service of process).
The Chisms sued Defendants for violating their rights under federal and state debt collection
statutes. Dkt. 1 at 5. Those statutes regulate how debt collectors can communicate with consumers.
See Taylor v. Perrin, Landry, deLaunay & Durand, 103 F.3d 1232, 1234 (5th Cir. 1997) (quoting
15 U.S.C. § 1692(a)) (Congress enacted FDCPA to eliminate abusive debt collection practices by
debt collectors); see also Tex. Fin. Code Ann. §§ 392.301–306 (prohibited debt collection methods).
The Chisms allege that Defendants violated the debt collection statutes by: (1) sending letters to their
home in Texas; (2) calling them at their home in Texas; and (3) having them served with process at
their home in Texas. Dkt. 1 at 5. Thus, the Chisms allege that the claim-triggering violations
occurred in Texas. Those allegations satisfy Bristol-Myers. 137 S.Ct. at 1781. As a result, the court
has specific jurisdiction over the Defendants.
Constitutionally reasonable exercise of personal jurisdiction
Defendants argue that the Asahi factors make the exercise of personal jurisdiction
constitutionally unreasonable.3 Dkt. 15-1 at 19. Defendants’ reply does not respond to the Chisms’
arguments. See Dkt. 36.
Burden on Defendants
Defendants argue that this case would impose a heavy burden on them because: (1) it would
force them to travel to Texas; (2) require them to obtain local counsel in Texas; and (3) prosecute
the lawsuit they filed in Colorado and defend this suit in Texas “where there need be only one.”
Dkt.15-1 at 19. The Chisms argue that the burden placed on Defendants is justified because
Defendants intentionally targeted them in Texas. Dkt. 33 at 24.
Defendants concede that “Texas has an interest in protecting its citizens” but asserts that
“Plaintiffs’ interests are equally protected in Colorado” because the Chisms: (1) asserted numerous
defenses to the Colorado lawsuit and (2) counterclaimed under the CFDCPA. Id. Defendants also
assert that “there is no reason [the Chisms] could not have also counterclaimed pursuant to the
FDCPA or, subject to Defendants’ constitutional defenses, pursuant to Texas law as well.” Id.
Accordingly, “Texas has no interest at stake here” that would make exercise of jurisdiction
appropriate. Id. The Chisms argue that Texas has a strong interest in protecting its citizens and
enforcing its consumer-protection laws like the TDCA. Dkt. 33 at 23.
Defendants did not discuss the fifth factor (the shared interest of the several states in
furthering fundamental substantive social policies). See Guidry, 188 F.3d at 630; see also Dkt. 15-1
The Chisms’ interest in obtaining relief
Defendants argue that the exact same relief is available to the Chisms in both Texas and
Colorado. Dkt. 15-1 at 19 (“[T]here is no difference in the relief available in Colorado versus
Texas.”). Defendants also argue that their twenty thousand dollar bond in Colorado “actually
provides greater protection for [the Chisms’] interest . . . than a lesser Texas bond would have
provided.” Id. The Chisms argue that Texas provides them and their putative class members “the
ability to participate in the litigation at a greater level.” Dkt. 33 at 24.
Judicial system’s interest in obtaining the most efficient resolution of controversies
Defendants argue that Colorado is the most efficient place to resolve this controversy
because: (1) the instant case duplicates the Chisms’ defenses and counterclaims in the Colorado
lawsuit and (2) nearly all relevant evidence is located in Colorado. Dkt. 15-1 at 24. The Chisms
disagree, especially as it comes to unnamed class members. Dkt. 33 at 24.
Considering these factors collectively, Defendants failed to establish a compelling case for
why other considerations would render this court’s exercise of jurisdiction unreasonable. See In re
Chinese Manufactured Drywall, 742 F.3d at 592. The Fifth Circuit has explained that “it is rare to
say that the assertion of jurisdiction is unfair after minimum contacts have been shown.” McFadin
v. Gerber, 587 F.3d 750, 753 (5th Cir. 2009).
A recent unpublished Fifth Circuit case illustrates one of those rare instances. See Bustos v.
Lennon, 538 Fed.Appx. 565, 568 (5th Cir. 2013) (per curiam). Bustos denied jurisdiction because
“the facts . . .[we]re overwhelming.” Id. at 568. That case involved a decade-long receivership in
an Oregon federal district court. Id. at 566. After the Oregon-based litigation had been going on for
some time, the plaintiff sued the court-appointed receiver, in the Western District of Texas, for torts
that allegedly arose in connection with the receivership. Id. The court noted that “‘it appears that,
dissatisfied with the direction and/or speed at which the Oregon wheels of justice were turning,
plaintiffs filed suit in this Court in an effort to redirect their claims towards a more favorable
outcome and possibly accelerate resolution of these claims.’” Id. at 568.
Unlike Bustos, these facts are not overwhelming. See id. at 568. And, unlike in Bustos, no
facts indicate that the Chisms filed this suit here to seek a more favorable outcome than in the
Colorado suit. Compare id. with Dkt. 41 at 11 (“[N]o matter what happens in . . .this court, the
outcome in the Colorado court will be unaffected.”). Accordingly, the Defendants have failed to
show why the court’s exercise of personal jurisdiction would be unfair. See McFadin, 587 F.3d at
753. Therefore, the court finds that its exercise of jurisdiction is not constitutionally unreasonable.
Thus, Defendants motion to dismiss for lack of personal jurisdiction is also DENIED on this ground.
III. MOTION TO DISMISS OR STAY UNDER COLORADO RIVER
“Colorado River abstention is a narrow exception to a federal court’s virtually unflagging
duty to adjudicate a controversy that is properly before it.” African Methodist Episcopal Church v.
Lucien, 756 F.3d 788, 797 (5th Cir. 2014) (discussing Colorado River Water Conservation Dist. v.
United States, 424 U.S. 800, 817, 96 S.Ct. 1236 (1976)). Under Colorado River, “a federal court
may abstain only under exceptional circumstances.” Id. (internal citation omitted). The Fifth Circuit
instructs that a decision to abstain “must be based on considerations of wise judicial administration,
giving regard to conservation of judicial resources and comprehensive disposition of litigation.” Id.
Before applying the Colorado River factors, the court must determine whether a state
proceeding and a federal action are sufficiently parallel to make consideration of abstention proper.
Id. Parallel actions are those “involving the same parties and the same issues.” Id. The court should
look to the named parties and to the substance of the claims asserted in the two proceedings. Id.
If the court determines the two proceedings are parallel, then the court must balance six
factors on a case-by-case basis to determine whether exception circumstances warrant abstention.
Id. at 798. Those factors are: (1) assumption by either court of jurisdiction over a res; (2) relative
inconvenience of the forums; (3) avoidance of piecemeal litigation; (4) the order in which
jurisdiction was obtained by the concurrent forums; (5) to what extent federal law provides the rules
of decision on the merits; and (6) the adequacy of the state proceedings in protecting the rights of
the party invoking federal jurisdiction. Id. Courts balance those factors carefully with “the balance
heavily weighted in favor of exercise of jurisdiction.” Id.
In Lucien, the Fifth Circuit found that a state court case and a federal action were parallel.
756 F.3d at 790. There, a local congregation filed suit against its national church in a city court to
evict several of the latter’s officeholders who had changed the former’s locks. Id. Then, the national
church filed suit against the local congregation in a federal district court seeking a declaratory
judgment as to the property rights. Id. Lucien determined that although the named parties in both
suits differed slightly, “the interests of all of the named parties in either action align[ed]
undisputedly, either with [the local congregation’s] interest or with [the national church’s].” Id. at
798. Lucien further found that the “eviction proceeding will necessarily dispose of all claims
asserted by [the national church] in the federal action” because the eviction proceeding would require
the local congregation to prove title and occupancy—the only issues before the federal court. Id.
Defendants argue that Colorado River compels this court to defer to an earlier filed statecourt action by dismissing or staying the instant case. Dkt. 15-1 at 20. Defendants argue that the
Colorado lawsuit and the instant case are parallel. Id. at 21. Specifically, Defendants assert that “the
parties are nearly identical” except that Twedt is Continental’s attorney in the Colorado suit instead
of a named party. Id.
Defendants also argue that the substance of the claims in both suits “are also essentially the
same” because the Chisms assert a CFDCPA counterclaim in the Colorado lawsuit. Id. “That means
both cases relate to the same underlying debt and Defendants’ efforts to collect that debt.” Id.
Defendants’ reply asserts that the Chisms “counterclaimed in [the Colorado suit] with the same
unfair debt collection allegations, then voluntarily dismissed those claims after Defendants filed their
Motion in [the instant case].” Dkt. 36 at 8.
The Chisms argue that the two cases are not parallel and thus Colorado River abstention is
inapplicable. Dkts. 33 at 25; 41 at 9–12. Specifically, the Chisms argue that the Colorado litigation
will not dispose of all the claims in the instant case. Id. Instead, the Chisms argue, the two cases
are distinct because the Colorado case is a dispute over unpaid rent, dealing only with liability under
a purported lease. Dkts. 33 at 25, 41 at 10–11. On the other hand, the Chisms argue, the instant case
addresses the Defendants’ conduct while attempting to collect a debt alleged to arise from that lease.
Dkt. 33 at 25.
Here, no parallelism exists between the Colorado case and the instant lawsuit. See Lucien,
756 F.3d at 797. First, this case involves an additional defendant: Twedt. Dkt. 15-1 at 21. Second,
the two cases do not involve the same issue because the substance of the claims asserted differs. See
Lucien, 756 F.3d at 797. In the Colorado case, Defendants claim the Chisms are liable for contract
damages for unpaid rent. Dkt. 15-1 at 21. Here, the Chisms claim that Defendants are liable for
statutory damages arising from their conduct in trying to collect that debt. Dkts. 33 at 25; 41 at 9–12.
Unlike in Lucien, even if the Defendants win the Colorado case, the Chisms will still be able to
pursue the claims they assert in this federal action. Compare 756 F.3d at 798, with Dkt. 41 at 11–12.
Thus, because the Colorado case will not dispose of all the issues in this case, the cases are not
sufficiently parallel. Accordingly, the court need not analyze the Colorado River factors. Therefore,
Defendants’ motion to dismiss or stay the case under Colorado River is DENIED.
IV. MOTION TO DISMISS UNDER THE DORMANT COMMERCE CLAUSE
Defendants argue that the Chisms’ TDCA claim violates the Federal Constitution’s dormant
Commerce Clause as applied to them. Dkt. 15-1 at 12. A violation of that Clause can occur when
one state tries to extraterritorially regulate another state’s commercial entities. See BMW of N. Am,
Inc. v. Gore, 517 U.S. 559, 572, 116 S.Ct. 1589 (1996). “A state’s regulation of the entities
conducting commerce within its borders, even where those entities are located out-of-state, however,
generally complies with the federal Constitution’s limitations.” Bentson v. Chyma, Civil Action No.
4:15-CV-523, 2017 WL 3431501, *1, *3 (E.D. Tex. Aug. 10, 2017) (rejecting argument that TDCA
violated dormant Commerce Clause because defendant debt collector targeted Texas consumer by
sending letters to Texas to collect debt from Texas resident). Generally, a court will uphold a state
statute unless that statute imposes a burden on interstate commerce that clearly exceeds the putative
local benefits of the law. See Nat’l Solid Wast Mgmt. Ass’n v. Pine Belt Reg’l Solid Waste Mgmt.
Auth., 389 F.3d 491, 501 (5th Cir. 2004) (applying the Pike balancing test from Pike v. Bruce
Church, Inc., 397 U.S. 137, 90 S.Ct. 844) (1970)).
Defendants argue that the TDCA burdens interstate commerce by requiring them to “post a
surety bond and comply with Texas’s regulations regarding debt collection.” Dkt. 15-1 at 13.
Defendants assert that such a burden is unfair because “Defendants are not engaged in commerce in
Texas” and “the only reason Defendants had contact with a Texas resident is because those Texas
residents moved to Texas upon abandoning their debt.” Id. Finally, Defendants argue that “if every
state enacted a similar statute, entities like Continental would have to post bonds totaling half a
million dollars . . .[and] track regulatory licensing regimes of all fifty states, a dramatic burden for
a small business that intentionally engages in commerce only in one state.” Id. However, the record
contradicts Defendants’ assertions. See Dkt. 26 at 10–11. And, Defendants do not adequately brief
this issue. Therefore, Defendants provide an insufficient basis to grant a dismissal on this ground
and thus the motion is DENIED.
V. MOTION TO TRANSFER
Defendants moved to transfer the case to Colorado. Dkt. 15-1 at 23. “For the convenience
of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any
other district or division where it might have been brought or to any district or division to which all
parties have consented.” 28 U.S.C. § 1404. “The district court has broad discretion in deciding
whether to order a transfer.” Caldwell v. Palmetto State Sav. Bank of S.C., 811 F.2d 916, 919 (5th
Cir. 1987). Furthermore, the moving party bears the burden of showing why the forum should be
changed. Time, Inc. v. Manning, 366 F.2d 690, 698 (5th Cir. 1966). In evaluating a § 1404(a)
motion to transfer, the court examines (1) whether the action “might have been brought” in the
transferee forum, and (2) whether there is “good cause” for transferring the action. In re Volkswagen
of Am., Inc., 545 F.3d 304, 312, 315 (5th Cir. 2008). Defendants did not meet that burden and
appear to concede as much. Dkt. 41 at 27. Accordingly, their motion to transfer is DENIED.
Defendants’ motion to dismiss for lack of personal jurisdiction is DENIED. Dkt. 15-1.
Further, Defendants’ motion to dismiss or stay under Colorado River is DENIED. Id. Defendants’
motion to dismiss under the dormant Commerce Clause is also DENIED. Finally, Defendants’
motion to transfer to Colorado is DENIED.
Signed at Houston, Texas on December 6, 2017.
Gray H. Miller
United States District Judge
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