Taggatz et al v. Midland Credit Management, Inc. et al

Filing 96

ORDER GRANTING IN PART AND DENYING IN PART 79 Motion for Judgment on the Pleadings. Plaintiffs claim under 15 U.S.C. § 1692d and her claim of unreasonable debt collection are DISMISSED with prejudice. All of Plaintiffs claims against Defendant Encore Capital Group, Inc. are DISMISSED with prejudice. As it relates to Plaintiffs remaining claims, Defendants motion is DENIED. Signed by Judge Xavier Rodriguez. (bc)

Case 5:18-cv-00169-XR Document 96 Filed 08/20/20 Page 1 of 22

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
LIZA M. KRANZ, ON BEHALF OF
THEMSELVES AND ALL OTHERS
SIMILARLY SITUATED;
Plaintiff,

§
§
§
§
§
§
§
§

v.
MIDLAND CREDIT MANAGEMENT,
INC., A KANSAS CORPORATION;
ASSET ACCEPTANCE, LLC, A
DELAWARE LIMITED LIABILITY
COMPANY; ENCORE CAPITAL
GROUP, INC., A DELAWARE
CORPORATION; AND JOHN AND
JANE DOES 1-100,
Defendants.

SA-18-CV-00169-XR

ORDER
On this date, the Court considered Defendants’ motion for judgment on the pleadings.
Docket no. 80. After careful consideration, the Court issues the following Order.
BACKGROUND
In December 2013, Defendants Midland Credit Management, Inc. (“Midland”), Asset
Acceptance, L.L.C. (“Asset”), and Encore Capital Group, Inc. (“Encore”) obtained a judgment on
a consumer debt against Plaintiff Liza M. Kranz (“Plaintiff”). Docket no. 1 ¶ 45. This case arises
out of the actions allegedly taken by the Defendants to collect on that debt. Based on the conduct
described herein, Plaintiff brought suit under the Fair Debt Collection Practices Act (“FDCPA”),
15 U.S.C. § 1692 et seq., and the Texas Debt Collection Practices Act (“TDCA”), TEX. FIN. CODE
§ 392.001 et seq.
On October 12, 2017, Defendants mailed Plaintiff a “Subpoena Letter.” Id. ¶ 47; see docket
no. 1-1 (titled “SUBPOENA FOR ORAL DEPOSITION AS AID TO ENFORCEMENT OF

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EXECUTION”). That Letter purported to be a court record and commanded Plaintiff to appear for
an oral deposition under the power and authority of the State of Texas. Docket no. 1 ¶¶ 56–57. The
Letter warned Plaintiff that if she failed to “obey,” she “may be deemed in contempt” by a Texas
court and “may be punished by fine or confinement or both.” Id. ¶ 58. Plaintiff asserts that these
statements were false because the subpoenas were, in fact, legally unenforceable. Id. ¶ 68. The
Subpoena Letter stated that it was addressed “TO: Any Sheriff or constable of the State of Texas
or other person authorized to serve and execute subpoenas as provided in Texas Rule of Civil
Procedure 176.4 . . . You are commanded to summon [Plaintiff].” Id. ¶ 61. However, Defendants
never requested a sheriff, constable, or any other authorized person to serve the Subpoena Letters
on Plaintiff. Id. ¶ 62. Thus, Plaintiff argues she was never served with the Subpoena Letter in a
manner authorized by Texas law. Id. ¶ 67.
The same Subpoena Letter was sent to Jeffrey Taggatz, another Texas consumer and a
former plaintiff in this action. Id. ¶ 49; see docket no. 1-2. Consequently, Plaintiff alleges that the
Defendants created the Subpoena Letters by merging information specific to a debt with a
template, docket no. 1 ¶¶ 53–54; that the Defendants mailed the Subpoena Letters to her and
hundreds of Texas consumers from Troy, Michigan using the United States Postal Service’s firstclass bulk rate mail, id. ¶ 55; and that the Subpoena Letters were drafted, authorized, prepared, and
sent by non-attorney debt collectors with no meaningful attorney involvement, id. ¶ 70. Plaintiff
argues that the Subpoena Letters are false, deceptive, and misleading to the “least sophisticated
consumer” because they falsely appear to be valid court documents issued by an officer of the
Texas courts. Id. ¶ 69.
About two weeks after Plaintiff and Jeffrey Taggatz received these Subpoena Letters,
Defendants sent another collection letter. Id. ¶ 77–78; see docket nos. 1-3, 1-4 (“Follow-up

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Letters”). Plaintiff claims that these Follow-up Letters falsely implied that the original Subpoena
Letters had the legal force of a proper subpoena. Docket no. 1 ¶ 84; see also docket no. 1-4 at 1
(“We recently sent you a subpoena which requires you to appear in-person to provide your sworn
testimony at a deposition . . . .”). As with the initial Subpoena Letters, Plaintiff alleges that the
letters were prepared and sent by non-attorney debt collectors with no meaningful attorney review
or involvement. Docket no. 1 ¶ 82.
Accompanying each Follow-up Letter was a Financial Disclosure Form. Id. ¶ 87. Through
this Form, Defendants sought to obtain personal, financial, and other information from Plaintiff to
aid their efforts to collect her debt. Id. ¶ 88. The Follow-up Letters advised Plaintiff that she could
avoid attending her oral deposition if she instead completed the Financial Disclosure Form. Id. ¶
87. However, Plaintiff argues that this Form is not a permissible form of post-judgment discovery
in Texas. Id. ¶ 89.
Defendants rented office space in San Antonio for the date and location specified in the
Subpoena Letters. Id. ¶ 91. Plaintiff alleges that at each deposition one or more lawyers1 handed
the would-be deponent the same Financial Disclosure Form with instructions to complete it. Id. ¶
95. No court reporter was present, no depositions were taken, and none of the consumers were
permitted to provide sworn testimony. Id. ¶ 93. As a result, many “frightened consumers” entered
into payment agreements with the Defendants. Id. ¶ 96. Plaintiff, however, did not appear; she
alleges that “Defendants took no action to enforce their threat of pursuing ‘contempt’ by a Texas
court or obtaining ‘punish[ment] by fines or confinement’” against her or any other Letter recipient
who failed to appear for their “deposition.” Id. ¶ 98.

1

Six attorneys licensed to practice in the State of Texas were previously defendants in this case. On March 20, 2020,
the parties filed a stipulation of dismissal as to these defendants. Docket no. 74. They will be referred to collectively
as “Lawyer Defendants” in this Order.

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On February 1, 2018, Plaintiff was served an “Application for Appointment of Receiver
After Judgment” which sought turnover relief. Id. ¶ 99; see docket no. 1-5 (“Turnover Motion”).
The Motion explains that Defendants had made a “good faith effort to collect the judgment” but
had been unsuccessful. Specifically, the Motion references post-judgment discovery requests to
discover the nature and extent of Plaintiff’s assets, as well as unsuccessful attempts to contact her.
Id. at 4.2 An attached affidavit explains those efforts, though it does not reference the Subpoena
Letter or the Follow-up Letter. See id. at 6. Instead, it describes Defendants as having “mailed
post-judgment discovery to [Plaintiff] by regular first class mail to determine if [Plaintiff]
possesses any property subject to execution sufficient to satisfy the judgment. [Plaintiff] was
advised to respond to discovery within 30 days of its receipt.” Id. Plaintiff alleges that “Defendants
had no legal basis to obtain the relief sought in their Turnover Motion” and that Defendants have
used the same template “as leverage against Texas consumers to collect debts and successfully
coerce payments from Texas consumers by threatening to obtain relief from Texas courts to which
Defendants are not legally entitled.” Docket no. 1 ¶¶ 103, 105. Further, Plaintiff alleges that the
Motion falsely stated that Defendants had “good faith to believe Kranz owned ‘non-exempt
property rights to present and future property, such as bank accounts or real property.’” Id. ¶ 102.
A hearing was set for the Turnover Motion on February 16, 2018. Id. ¶ 107. Plaintiff alleges
that Defendants neither appeared nor had the intention of appearing for the hearing, which she
attended with counsel. Id. ¶¶ 106–107. At that hearing, the judge denied the Turnover Motion. Id.
¶ 108; see also docket no. 1-6 (“Order Denying Plaintiff’s Application for Appointment of

2

Plaintiff’s Complaint does not allege this separate discovery request; however, attached to the Turnover Motion is a
letter sent by Midland to Plaintiff on August 3, 2016, over a year before Plaintiff alleges that the Subpoena Letter was
sent to her. The letter includes the Financial Disclosure Form and says that if Plaintiff does not provide the requested
form within 30 days, “we may issue a subpoena” that “would require you to make a personal appearance to testify to
the questions outlined in the form.” Docket no. 1-5 at 7.

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Receiver After Judgment”). Plaintiff alleges that the presiding judge similarly denied the same
Turnover Motions filed against other Texas consumers. Docket no. 1 ¶ 109.
In total, Plaintiff brings thirteen claims under the FDCPA (“Count One”), fourteen claims
under the TDCA (“Count Two”), and a tort claim for unreasonable debt collection (“Count
Three”). Id. ¶¶ 120–148. Plaintiff alleges that there are at least 600 members of the class, id. ¶
118.01, defined as:
Each natural person to whom any Defendant mailed a letter or notice
to a Texas address during the Class Period which either: (1)
appeared to compel the addressee’s appearance at a deposition under
threat of contempt for failure to appear including, but not limited to,
letters substantially the same as Exhibits 1, 2, 3, or 4 to the
Complaint [the Subpoena and Follow-up Letters]; or (2) sought an
Application for Appointment of Receiver After Judgment
substantially the same as Exhibit 5 [the Turnover Motion].
Id. ¶ 114.
Plaintiff alleges that she “ha[s] incurred actual damages in the form of unnecessary expense
and time, and [has] suffered emotion [sic] distress and upset” because of Defendants’ Letters. Id.
¶ 112. Plaintiff also alleges she incurred additional damages due to the Turnover Motion, including
the expense of attending the hearing. Id. ¶ 111. Defendants filed the instant Motion for Judgment
on the Pleadings on April 4, 2020. Docket no. 79. Plaintiff filed a response in opposition (docket
no. 93), and Defendants filed a reply (docket no. 95).
DISCUSSION
I.

Standard of Review
Under Federal Rule of Civil Procedure 12(c), “[a]fter the pleadings are closed—but early

enough not to delay trial—a party may move for judgment on the pleadings.” FED. R. CIV. P. 12(c).
Judgment on the pleadings is only appropriate when “the material facts are not in dispute and a
judgment on the merits can be rendered by looking to the substance of the pleadings and any
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judicially noticed facts.” Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d
305, 312 (5th Cir. 2009). “The standard for dismissal under Rule 12(c) is the same as that for
dismissal for failure to state a claim under Rule 12(b)(6).” Chauvin v. State Farm Fire & Cas. Co.,
495 F.3d 232, 237 (5th Cir. 2007) (citing Johnson v. Johnson, 385 F.3d 503, 529 (5th Cir. 2004)).
Federal Rule of Civil Procedure 12(b)(6) allows a party to move for the dismissal of a
complaint for “failure to state a claim upon which relief can be granted.” FED. R. CIV. P. 12(b)(6).
To survive a motion to dismiss, a plaintiff’s complaint 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). “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). While the complaint does not need to contain detailed factual
allegations, it must contain enough factual allegations to “raise a right to relief above a speculative
level.” Twombly, 550 U.S. at 555. The plaintiff has an obligation to present more than labels,
conclusions, and formulaic recitations of the elements to avoid dismissal. Id. In considering a Rule
12(b)(6) motion, the court must accept the factual allegations in the complaint and take them in
the light most favorable to the non-moving party. Erickson v. Pardus, 551 U.S. 89, 94 (2007).
However, the court does not accept conclusory allegations or unwarranted deductions of fact as
true. Tuchman v. DSC Commc’ns. Corp., 14 F.3d 1061, 1067 (5th Cir. 1994).
II.

Application
Plaintiff alleges thirteen violations of the FDCPA, fourteen violations of the TDCA, and a

violation of the common law tort of unreasonable debt collection. Defendants argue that this Court
should dismiss Plaintiff’s Complaint as to the FDCPA and TDCA for three reasons: (1) The use
of an improper method of service of a subpoena is not valid grounds for claims of violations of the

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FDCPA and TDCA; (2) the Financial Disclosure Form is a proper post-judgment discovery
mechanism and cannot form the basis of the Plaintiff’s claims; and (3) the Affidavit attached to
the Turnover Motion is not misleading. See Docket no. 79. Defendants also argue that the use of
post-judgment discovery does not constitute unreasonable debt collection, that Plaintiff fails to
state a claim for lack of meaningful attorney involvement, and that Defendants Asset and Encore
are neither directly nor vicariously liable for the conduct described in Plaintiff’s Complaint. See
id.; see also Docket no. 80 at 22–24.
A. Plaintiff’s FDCPA and TDCA Claims are Not Precluded as a Matter of Law.
After carefully examining each of the Defendants’ arguments that Plaintiff’s claims are
precluded as a matter of law, the Court finds that neither state nor federal law categorically
preclude the types of claims that Plaintiff brings.
1. Plaintiff alleges violations of her substantive rights, not merely violations
of state procedural law.
First, Defendants argue that a procedural defect in the manner of service of the Subpoena
Letters does not violate the FDCPA and TDCA. According to Defendants, one cannot “bootstrap
FDCPA and TDCA claims to alleged violations of state procedural requirements.” Docket no. 80
at 12. In support of their argument, Defendants cite Rucker v. Bank of Am., N.A., 806 F.3d 828,
831 (5th Cir. 2015), and Drennan v. First Resolution Inv. Corp, 389 F. App’x 352, 352–53 (5th
Cir. 2010). Docket no. 80 at 6–7. In Rucker, the Court of Appeals held that the defendant did not
violate the TDCA by threatening to foreclose despite not providing the statutorily required notice
of acceleration. 806 F.3d at 831–33. In Drennan, the Court of Appeals held the defendant did not
violate the FDCPA by filing an improper “suit on account.” 389 F. App’x at 352–53. Like the
claims in those cases, Defendants assert “Plaintiff’s FDCPA claims arising from the Subpoena are

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predicated entirely on the alleged non-compliance with the Texas Rules of Civil Procedure.”
Docket no. 80 at 14.
Plaintiff responds that her claims “do not arise from the issuance of a post-judgment
subpoena or from mailing it to her bulk rate from Michigan. Rather, the representations contained
in the subpoena and the follow up letter falsely threatened Ms. Kranz with contempt, a fine, and
jail.” Docket no. 93 at 9. That is, the Subpoena Letters were unenforceable, and therefore the
statements contained therein were false and misleading. Specifically, Plaintiff argues that the
statements that Plaintiff’s “failure ‘to appear and give testimony’ for an ‘oral deposition’ (that
would never occur) would result in ‘fine or confinement or both’—were false and misleading.” Id.
(citing Docket no. 1 ¶¶ 61–62, 68, 129.01). Plaintiff also alleges that the Subpoena Letters contain
the false statement that each is addressed “ “TO: Any Sheriff or constable of the State of Texas or
other person authorized to serve and execute subpoenas” when Defendants never requested that
any such individual execute the Letters. Docket no. 1 ¶¶ 61–62.
Defendants made a similar argument in their Rule 12(b)(1) Motion to Dismiss. See Docket
no. 86. There, the Defendants argued that the Plaintiff’s allegation of a procedural violation did
not result in the type of harm that the debt collection laws were meant to prevent, and thus the
Plaintiff did not have standing to bring suit. See docket no. 87 at 13. Having weighed that argument
in the legal context of a challenge to standing, this Court ruled that Plaintiff had alleged a
substantive claim under the FDCPA that was not based solely on a violation of a state procedural
rule. See Docket 92 at 9–11.
So too here. The Court finds that Plaintiff’s claims, insofar as they relate to the Subpoena
Letters, are not based solely on a violation of state procedural law. Plaintiff alleges not that the
Defendants violated the FDCPA and TDCA by violating state procedural law, but that the

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Defendants’ false statements contained within the Subpoena Letters constituted “false, deceptive,
or misleading representation[s] or means in connection with the collection of [Plaintiff’s] debt.”
15 U.S.C. § 1692e; see also Docket no. 1 ¶¶ 4, 6, 120–140.14. Defendants’ reliance on Rucker is
inapposite because that case did not involve the use of allegedly false, deceptive, or misleading
representations or means. Drennan likewise does not control because the case does not stand for
the proposition that any alleged false statement made in a legal document is not actionable under
the FDCPA.
Defendants’ argument that “violating state law does not create a per se violation of the
FDCPA just because the violation is related to the collection of a debt” fails for the same reason.
See Docket no. 80 at 15. The Court does not dispute the reasonable principle that a violation of a
procedural law does not necessarily constitute a violation of the FDCPA or TDCA. However, the
FDCPA creates substantive rights that, if violated, confer upon consumers a remedy at law. Cf.
Guerrero v. GC Servs. Ltd. P’ship, No. CV 15-7449, 2017 WL 1133358, at *10 (E.D.N.Y. Mar.
23, 2017) (“[T]he majority of post-Spokeo decisions which have analyzed standing within the
context of the FDCPA have determined that, unlike the FCRA section at issue in Spokeo, which
contains only procedural requirements, the FDCPA creates a substantive right, the violation of
which would itself give rise to a concrete injury.”) Plaintiff has alleged violations of her substantive
rights under the FDCPA. A claim that Defendants made false or misleading representations within
the Subpoena Letters is cognizable under that law.
Defendants next argue that Plaintiff’s claims fail because courts can enforce procedurally
defective subpoenas and that Plaintiff chose not to object to defective service of process—in other
words, “[i]f defectively served subpoenas may be enforced, it necessarily follows that a warning
regarding enforcement cannot be false.” Docket no. 80 at 10–12. (emphasis in original). Even if

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this were true, the allegedly false statements within the Subpoena Letters regarding their
enforceability—i.e., that the Plaintiff “may be deemed in contempt” and “may be punished by fine
or confinement or both”—are not the sole bases of Plaintiff’s FDCPA and TDCA claims. See
Docket no. 1-1. Plaintiff also alleges: that the Subpoena Letters commanded her to appear for a
deposition, docket no. 1 ¶ 57; that the Subpoena Letters contained the language required under
Texas law to compel an individual’s attendance at a deposition, id. ¶ 64; that Defendants never
intended to require Plaintiff to provide deposition testimony, id. ¶ 86; that Defendants scheduled
the depositions of “hundreds of other Texas consumers to take place on the same dates, times, and
location set forth in the Subpoena Letters,” id. ¶ 92; that at the location and on the dates of the
depositions, no court reporter was present, no depositions were taken, and none of the targets of
the Subpoena Letters were permitted to provide deposition testimony, id.¶ 93(a)–(d); and that
Defendants never intended to conduct any of the scheduled depositions, id. ¶ 94. In short, Plaintiff
alleges that the Defendants falsely represented in the Subpoena Letters their intention to take
Plaintiff’s oral deposition.
Further, Plaintiff’s claims do not rest solely on the statements contained in the Subpoena
Letters. Plaintiff also alleges that about two weeks after sending the Subpoena Letters, Defendants
mailed the Follow-Up Letter. Id. ¶ 77. She asserts that the Follow-up Letters falsely imply that the
Subpoena Letters are enforceable, id. ¶ 83, and that she is required to provide sworn testimony at
a deposition as set in the Subpoena Letters, id. ¶ 84. These Letters are clearly not subpoenas and
do not contain statements required by Texas law. The Defendants’ affirmative statements
contained within the Follow-up Letters, if proven false as alleged, may constitute “false, deceptive,
or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. §

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1692e. Notably, Defendants do not appear to argue that the statements contained within the
Follow-up Letters are not valid grounds for Plaintiff’s claims.
2. Defendants’ use of the Financial Disclosure Form may constitute a “false
representation or deceptive means” in violation of FDCPA.
Next, Defendants argue that the Financial Disclosure Form that accompanied the Followup Letters is proper post-judgment discovery that cannot be grounds for an FDCPA violation. They
assert that the Financial Disclosure Form is a set of “post-judgment interrogatories” intended to
give Plaintiff the opportunity to provide written information in lieu of a deposition. Docket no. 80
at 20. Plaintiff responds that it is of no import whether the Form constitutes valid post-judgment
interrogatories. Docket no. 93 at 13. Instead, liability arises from “the improper means and purpose
for which Defendants deployed the Form.” Id. That is, she argues that the Form was the object of
Defendants’ efforts to deceive Texas consumers into believing they were compelled by a subpoena
to appear at an oral deposition. Plaintiff’s Complaint alleges that Defendants sent Texas consumers
the Subpoena Letters to compel attendance at a deposition, sent the Follow-up Letters to offer
consumers the opportunity to avoid the deposition by filing out the Financial Disclosure Form, and
ordered those who appeared for the depositions to complete the Form, all with no intention of
taking an oral deposition. Docket no. 1 ¶¶ 47–95. Defendants reply that “nothing in the FDCPA or
TDCA precludes obtaining information from consumers in furtherance of enforcing and collecting
on a judgment.” Docket no. 95 at 10. However, the FDCPA prohibits “[t]he use of any false
representation or deceptive means to collect or attempt to collect any debt or to obtain information
concerning a consumer.” 15 U.S.C. § 1692e(10). Plaintiff alleges a violation of that provision. See
Docket no. 1 ¶ 129.10.

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3. Plaintiff adequately alleges the Affidavit is misleading in violation of FDCPA.
Finally, Defendants argue that the Affidavit attached to the Turnover Motion is not
misleading because “a creditor may form a reasonable belief that a debtor owns non-exempt assets
because ‘virtually everyone has a bank account or other non-exempt asset.’” Docket no. 80 at 21
(citing Airborne Freight Corp. v. Remote Control Hobbies, LLC., 2012 Tex. Cnty. LEXIS 1996
*2 (Harris County Dec. 4, 2012); Tanner v. McCarthy, 274 S.W.3d 311, 321 (Tex.App.—Houston
[1st Dist.] 2008, no pet.)). Defendants are correct in pointing out that “section 31.002 does not
require that a judgment creditor seeking a turnover order identify all, or even any, of the judgment
debtor’s assets that are to be the subject of the turnover order.” Tanner, 274 S.W. 3d at 321. But
Defendant Asset still made an affirmative statement that it had a “good faith reason to believe that
[Plaintiff] owns non-exempt property rights to present and future property, such as bank accounts
or real property.” Docket no. 1-5. Plaintiff alleges that this statement is false and the product of a
mass-produced template. Docket no. 1 ¶¶ 101–102. Plaintiff further alleges that this Affidavit is
used as part of a scheme to coerce the payment of consumer debts “by threatening relief from
Texas courts to which Defendants are not legally entitled.” Id. ¶ 105. Such a claim is cognizable
under the FDCPA. See e.g., 15 U.S.C. §§ 1692e(5), 1692f.
B. Plaintiff Has Properly Alleged Violations of the FDCPA and TDCA.
The Court now turns to whether the Plaintiff has, indeed, properly alleged violations of the
FDCPA and TDCA to survive a motion to dismiss. “To prevail on an FDCPA claim, Plaintiff must
prove (1) she has been the object of collection activity arising from a consumer debt, (2) Defendant
is a debt collector defined by the FDCPA, and (3) Defendant engaged in an act or omission
prohibited by the FDCPA.” Meyer v. Christus Health, Civil Action No. SA–17–CV–213–XR,
2017 WL 4295233, at *3 (W.D. Tex. Sept. 27, 2017). “The conduct prohibited under the TDCA

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is coextensive with that prohibited under the FDCPA, at least insofar as ‘[t]he same actions that
are unlawful under the FDCPA are also unlawful under the TDCA.’” Gomez v. Niemann & Heyer,
L.L.P., 1:16-CV-119 RP, 2016 WL 3562148, at *6 (W.D. Tex. June 24, 2016).
Plaintiff alleges in her Complaint that she has been the object of collection activity arising
from a consumer debt. Docket no. 1 ¶¶ 45, 47, 52, 122–125. Plaintiff further alleges that
Defendants are debt collectors as defined by the FDCPA. Id. ¶¶ 38–43, 121. Defendants do not
dispute either allegation. Thus, the issue to be decided is whether Plaintiff properly alleges that the
Defendants engaged in an act or omission prohibited by the FDCPA.
“The Fair Debt Collection Practices Act prohibits ‘debt collector[s]’ from making false or
misleading representations and from engaging in various abusive and unfair practices.” Heintz v.
Jenkins, 514 U.S. 291, 292 (1995). The Court “must evaluate any potential [violation] . . . under
an unsophisticated or least sophisticated consumer standard.” McMurray v. ProCollect, Inc., 687
F.3d 665, 669 (5th Cir. 2012) (citing Goswami v. Am. Collections Enter., Inc., 377 F.3d 488, 495
(5th Cir. 2004)). “This standard serves the dual purpose of protecting all consumers, including the
inexperienced, the untrained, and the credulous, from deceptive debt collection practices and
protecting debt collectors against liability for bizarre or idiosyncratic consumer interpretations of
collection materials.” Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009) (quoting Taylor v.
Perrin, Landry, deLaunay & Durand, 103 F.3d 1232, 1236 (5th Cir. 1997)).
The primary thrust of Plaintiff’s Complaint is that Defendants violated 15 U.S.C. § 1692e.
A debt collector violates that section of the FDCPA if it “use[s] any false, deceptive, or misleading
representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. Section
1692e also provides a non-exhaustive list of conduct that is specifically prohibited. Plaintiff further
alleges that Defendants violated Section 1692d, which prohibits conduct that has the “natural

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consequence” of harassing, oppressing, or abusing the debtor, and Section 1692f, which prohibits
the use of unfair or unconscionable means in attempting to collect a debt.
In her Complaint, Plaintiff describes the following scheme: Defendants mass-produced and
mailed to hundreds of Texas consumers unenforceable subpoenas that contain false assertions
regarding the threat of fines and imprisonment. Docket no. 1 ¶¶ 47–76. Defendants also sent
Follow-up Letters, which also contained false assertions regarding the enforceability of the
Subpoena and were accompanied by the Financial Disclosure Form. Id. ¶¶ 77–90. The Follow-up
Letters indicated that Plaintiff could avoid the hassle of an in-person deposition by completing and
returning the Financial Disclosure Form. Id. Defendants scheduled the oral depositions of
hundreds of Texas consumers to take place on the same dates, times, and location set forth in the
Subpoena Letters. Id. ¶ 92. At these locations no court reporter was present, no depositions were
taken, no Texas consumer was permitted to provide oral testimony, and the consumers who
appeared were instructed to complete the same Financial Disclosure Form. Id. ¶¶ 93, 95. Based on
the foregoing, the Defendants never intended to conduct the scheduled depositions. Id. ¶ 94.
Months later, Defendants served Plaintiff with an Application for Appointment of Receiver After
Judgment, which was accompanied by an Affidavit containing an additional false statement. Id. ¶¶
99, 102. Despite having numerous hearings scheduled for the same date and in the same court,
Defendants did not appear and had no intention of appearing for the hearing on that motion or
other similar motions filed against Texas consumers. Id. ¶¶ 106–107, 110.
As discussed above, Defendants argue that the Subpoena Letters at most constitute
violations of state procedural law that do not amount to violations of the FDCA or TDCA, that the
Financial Disclosure Form is proper post-judgment discovery, and that the Affidavit attached to
the Turnover Motion is not misleading. Docket no. 80 at 12–21. But taking the Plaintiff’s

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allegations as true and viewing them in the light most favorable to her, as this Court must, Erickson,
551 U.S. at 94, the Court finds that Plaintiff has properly plead claims for violations of Section
1962f. It is reasonable to conclude that the least sophisticated or unsophisticated consumer would
take the Defendants at their word and believe that they are required to submit to an oral deposition.
Not understanding that the Defendants had no intention to take their deposition, the consumer
would incur the cost of missing work and traveling to the site of the deposition only to be instructed
to complete the Financial Disclosure Form with an agent of Defendants watching their every pen
stroke. If they were later hailed into court to respond to the Defendants’ Turnover Motion, they
would again incur the cost of missing work, and potentially retaining counsel, only to find that the
Defendants had no intention of following through with the motion. Plaintiff has properly plead
that defendants used “unfair or unconscionable means to collect or attempt to collect [a] debt.” 15
U.S.C. § 1962f.
The Court further finds that Plaintiffs properly alleged that Defendants used “false,
deceptive, or misleading representation or means” in furtherance of their debt collection activities.
Id. § 1692e. Plaintiff alleges that the Subpoena Letters falsely state (1) that they were addressed to
a sheriff, constable, or other person authorized to serve subpoenas, and (2) that the recipients were
subject to criminal penalties for failure to appear for the deposition when the subpoena was
unenforceable. Docket no. 1 ¶¶ 59–61. Defendants argue that because courts can enforce
procedurally defective subpoenas, “it necessarily follows that a warning regarding enforcement
cannot be false – meaning that Plaintiff’s claims must fail.” Docket no. 80 at 10–11 (emphasis in
original). But even if these statements are not necessarily false, Plaintiffs have sufficiently alleged
that the Defendants used deceptive means to coerce Texas consumers to appear at a deposition
they never intended to take. See Docket no. 1 ¶¶ 92–95. Further, Plaintiffs allege that the Follow-

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up Letters contain false statements that Texas consumers are required to appear for a deposition
when the Defendants never had any intention of taking their depositions. Id. ¶¶ 83–86, 92–95. “A
single violation of any provision of the Act is sufficient to establish civil liability under the
FDCPA.” Taylor, 103 F.3d at 1238. Accordingly, Plaintiffs’ claim survives even if the statements
contained in the Subpoena Letters are arguably not false.
Finally, the Court finds that Plaintiff has not alleged sufficient facts to support her claim
that Defendants engaged in conduct the “natural consequence of which is to harass, oppress, or
abuse.” 15 U.S.C. § 1692d. Simply put, the alleged conduct is not of a type with the inexhaustive
list provided by that section. The statute specifically prohibits the threat of violence, § 1962d(1),
the use of obscene language, § 1962d(2), the publication of a list of debtors, § 1962d(3), the threat
of sale, § 1962d(4), and harassing telephone calls, §§ 1962d(5)–(6). The conduct Plaintiff alleges
does not rise to the level of harassment, oppression, or abuse contemplated by the statute. See
Beattie v. D.M. Collections, Inc., 754 F. Supp. 383, 394 (D. Del. 1991) (“Subsection 1692d
prohibits only oppressive and outrageous conduct. It is not intended to shield even the least
sophisticated recipients of debt collection activities from the inconvenience and embarrassment
that are natural consequences of debt collection.”) (internal citation omitted).
In sum, the Court holds that Plaintiff has properly alleged violations of 15 U.S.C. §§ 1962e
and 1962f. Plaintiff has not sufficiently alleged facts to constitute a violation of 15 U.S.C. § 1692d,
and that claim is DISMISSED. The Defendants have not argued, and the Court has not found in
its own review, that Plaintiff’s TDCA claims involve allegations of harassing, oppressive, or
abusive conduct. Accordingly, Plaintiff’s TDCA claims survive insofar as they arise out of conduct
that is prohibited by the FDCPA. See Gomez, 2016 WL 3562148, at *6.

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C. Plaintiff Has Not Properly Alleged a Claim for Unreasonable Debt Collection.
Defendants argue that Plaintiff has not properly alleged a violation of the Texas common
law tort of unreasonable debt collection. “Unreasonable collection is an intentional tort. But the
elements are not clearly defined and the conduct deemed to constitute an unreasonable collection
effort varies from case to case.” EMC Mortg. Corp. v. Jones, 252 S.W.3d 857, 869 (Tex.App.—
Dallas 2008, no pet.) (internal citations omitted).
According to Defendants, this tort requires “a course of harassment that was willful,
wanton, malicious, and intended to inflict mental anguish and bodily harm.” Docket no. 80 at 21
(citing EMC Mortg. Corp, 252 S.W.3d at 869). In her Complaint, Plaintiff asserts that
unreasonable debt collection can occur where a party “engages in conduct ‘that exceeds the bounds
of reason or moderation.’” Docket no. 1 ¶ 143 (citing EMC Mortg. Corp, 252 S.W.3d at 869). But
the Court in EMC Mortg. Corp. only applied the standard Plaintiff advocates for because the
parties in that case failed to object when the trial court used that standard in the jury instructions.
EMC Mortg. Corp, 252 S.W.3d at 869. The court was prohibited from applying the “more precise
legal description[]” that Defendants cite. Id. Later courts have found that this tort “is intended to
deter outrageous collection techniques, particularly those involving harassment or physical
intimidation.” Thomas v. EMC Mortg. Corp., 499 Fed. Appx. 337, 343 (5th Cir. 2012). Thus, to
state a claim for unreasonable debt collection one must allege conduct that is more than simply
unreasonable, as Plaintiff’s preferred standard would suggest.
The question, then, is whether Plaintiff alleges conduct that can be described as
“outrageous.” Plaintiff alleges that the Defendants authorized the Lawyer Defendants to make
written threats to imprison consumers for failure to obey the Subpoena Letters. Docket no. 1 ¶ 144.
Each of Plaintiff’s allegations of unreasonable debt collection relate to the threats of imprisonment

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for noncompliance with false Subpoena Letters. Id. ¶¶ 144–148. Defendants argue that these
statements contained in the Subpoena Letters cannot amount to “willful, wanton, or malicious”
conduct because they are required by Texas law. Docket no. 80 at 21 (citing TEX. R. CIV. P. 176.1
and 176.8). Although the conduct complained of perhaps skirts the FDCPA, the conduct of which
Plaintiff complains does not rise to the level of “outrageous collection techniques” that this tort is
intended to deter. The conduct does not constitute “a course of harassment that was willful,
wanton, malicious, and intended to inflict mental anguish and bodily harm.” Accordingly, Count
Three of Plaintiff’s Complaint is DISMISSED.
D. Plaintiff’s Has Alleged Facts to Support her Claim for Lack of Meaningful Attorney
Involvement in Violation of the FDCPA.
Defendants next argue that Plaintiff has failed to state a claim for lack of meaningful
attorney involvement. Docket no. 80 at 22–24. They assert that Plaintiff’s use of “conclusory legal
labels” is insufficient to state a valid claim, and that her claim fails as a matter of law because the
Defendants were merely issuing post-judgment discovery. Id. at 22. Plaintiff responds that she has
alleged sufficient facts to state a claim. She asserts “[i]n totality, Plaintiff's Complaint alleges that
MCM, Asset, and Encore, as debt collectors, acted in concert by using mass-produced collection
letters—in the form of the Subpoena Letter, Follow-Up Letter, Turnover Motion, and
Accompanying Affidavit—under the guise of lawyers who were not actually participating in the
collection process in violation of 15 U.SC. § 1692e(3).” Docket no. 93 at 18.
Plaintiff’s claim may survive if the “least sophisticated consumer” would be deceived into
believing that an attorney was involved in the collection of the consumer’s debt. Gonzalez, 577
F.3d at 607. Stated another way, a violation of 15 U.S.C. § 1692e(3) exists if the Defendants’
correspondence can reasonably be read to have come from an attorney, even though no attorney
was involved. Rosenau v. Unifund Corp., 539 F.3d 218, 223 (3d Cir. 2008). A consumer can
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reasonably assume that correspondence is from an attorney where the correspondence is printed
on an attorney’s letterhead and contains an attorney’s signature. See e.g., Clomon v. Jackson, 988
F.2d 1314, 1320–21 (2d. Cir. 1993). Here, the Subpoena Letter and the Turnover Motion each bear
a signature line that lists six attorneys. Docket nos. 1-1, 1-2, 1-5. The Follow-up Letter purports to
be from “Kristy Gabrielova, Esq., Managing Attorney, TX.” Docket nos. 1-3, 1-4. The Court finds
that the least sophisticated consumer could reasonably read these documents as having been sent
by an attorney.
The question then becomes whether Plaintiff has alleged facts sufficient to support her
claim for lack of meaningful attorney involvement. The Fifth Circuit has held that “a debt collector,
who uses a mass-produced collection letter using the letterhead and facsimile signature of a lawyer
who is not actually participating in the collection process, violates § 1692e(3).” Taylor, 103 F.3d
at 1238. Plaintiff asserts that each of the Subpoena Letter, the Follow-up Letter, the Turnover
Motion, and the Accompanying Affidavit were mass-produced from templates and mailed bulkrate to Texas consumers. Docket no. 1 ¶¶ 53–55, 77, 80, 92, 101, 104, 107. Plaintiff bases her
allegation, in part, on her own experience of twice responding in court to the Turnover Motion
only for Defendants to fail to appear. Id. ¶¶ 106–107. On the same day, Plaintiff alleges,
Defendants also failed to appear for hearings involving the same or similar Turnover Motion
against approximately twelve other Texas consumers. Id. ¶¶ 106–109. Accepting this allegation as
true, the Court finds that Plaintiff has alleged sufficient facts to support her claim for lack of
meaningful attorney involvement.
E. Plaintiff Has Sufficiently Alleged Her Claims Against Defendant Asset, But Not Against
Defendant Encore.
Finally, Defendants argue that Plaintiff’s claim against Defendants Encore and Asset must
fail because Plaintiff does not allege that either company undertook any of the alleged wrongful
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actions, and because Plaintiff does not allege sufficient facts to support a finding that either
company should be held vicariously liable for the actions of Defendant Midland. Docket no. 80 at
24. Plaintiff responds that Encore and Asset are directly liable for the wrongs alleged. Docket no.
93 at 21. Plaintiff also argues that even passive debt buyers can be vicariously liable for unlawful
collection practices taken on their behalf. Id. (citing Hordge v. First Nat’l Collection Bureau, Inc.,
Civil Action No. 4:15-CV-1695, 2018 WL 3741979, at *4–*5 (S.D. Tex. Aug. 7, 2018)).
The Court agrees with the Defendants that Plaintiff has failed to properly allege direct
liability against Encore. Plaintiff alleges that Encore directly controlled and created the policies
and procedures used by the other Defendants to collect debts from Texas consumers. Id. ¶¶ 72–73.
The only direct allegation of wrongdoing against Encore is that it authorized the Lawyer
Defendants to make written threats to consumers who did not obey legally unenforceable
subpoenas. Id. ¶ 144. Plaintiff alleges no other wrongful conduct directly taken by Encore and
asserts no facts to support the allegations it does make. The conclusory allegations in Plaintiff’s
Complaint that Encore “directly created . . . violative policies and procedures used by the other
named Defendants that are the subject of this Complaint,” id. ¶ 72, are not enough to “raise a right
to relief above a speculative level.” Twombly, 550 U.S. at 555.
The question becomes whether Plaintiff has sufficiently plead that Encore is vicariously
liable for the conduct described in her Complaint. In order to be held vicariously liable for debt
collection practices, a passive debt buyer must meet the definition of a debt collector. See Hordge,
2018 WL 3741979 at *5; McWilliams v. Advanced Recovery Sys., Inc., 174 F. Supp. 3d 936, 942
(S.D. Miss. 2016). The FDCPA contains two distinct definitions of a debt collector. A debt
collector is (1) “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 (2) any person “who

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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). As discussed above, Plaintiff does not allege that
Encore itself used an instrumentality of interstate commerce or the mails to collect Plaintiff’s debt.
Further, the Supreme Court has held that debt purchasers seeking to collect debts they own but did
not create do not fall within the second definition of a ‘debt collector’ in the FDCPA. Henson v.
Santander Consumer USA, Inc., 137 S. Ct. 1718, 1721–22 (2017). Accordingly, on the facts
alleged, Encore fits neither statutory definition and Plaintiff’s claim for vicarious liability fails.
However, Plaintiff has sufficiently alleged that Defendant Asset was directly involved in
the conduct underlying Plaintiff’s Complaint. Plaintiff asserts that “[e]ach Defendant is a ‘debt
collector’ within the meaning of 15 U.S.C. § 1692a(6).” Docket no. 1 ¶ 121. In particular, she
asserts that “[t]he principal purpose of Asset and Encore is the collection of debts.” Id. ¶ 40. The
Subpoena Letters accompanying Plaintiff’s Complaint state that the subpoenas were sent “at the
request of . . . ASSET ACCEPTANCE, LLC.” Docket no.1-1. The Court takes Defendant Asset
at its word. The text of Subpoena Letters, when considered in tandem with the facts alleged in
Plaintiff’s Complaint, raise Plaintiff’s claims of direct liability beyond the speculative level.
CONCLUSION
For the reasons stated herein, Defendants’ motion for judgment on the pleadings is
GRANTED IN PART and DENIED IN PART. Plaintiff’s claim under 15 U.S.C. § 1692d and
her claim of unreasonable debt collection are DISMISSED with prejudice. All of Plaintiff’s claims
against Defendant Encore Capital Group, Inc. are DISMISSED with prejudice. As it relates to
Plaintiff’s remaining claims, Defendants’ motion is DENIED.

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It is so ORDERED.
SIGNED this 20th day of August, 2020.

XAVIER RODRIGUEZ
UNITED STATES DISTRICT JUDGE

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