MANDELAS v. DANIEL N. GORDON, P.C. et al

Filing 16

ORDER denying 8 Defendant's Motion to Dismiss or strike by Judge James L. Robart.(MD)

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 v. DANIEL N. GORDON, PC, et al., Defendants. This matter comes before the court on Defendant Daniel N. Gordon, PC's STEVEN MANDELAS, Plaintiff, CASE NO. C10-0594JLR ORDER DENYING DEFENDANT'S MOTION TO DISMISS OR STRIKE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 16 ("Gordon") motion to dismiss or to strike pursuant to Federal Rule of Civil Procedure 17 12(b) and 12(f) (Dkt. # 8). Having considered the submissions of the parties, and 18 deeming oral argument unnecessary, the court DENIES Gordon's motion to dismiss or to 19 strike (Dkt. # 8). 20 21 I. BACKGROUND Mr. Mandelas alleges the following in his amended complaint (Dkt. # 4). In 2001, 22 Defendant CACV of Colorado, Inc. ("CACV") purchased a debt that Mr. Mandelas ORDER- 1 1 allegedly owed to a third-party creditor. (Am. Compl. 12.) On September 18, 2006, 2 Mr. Mandelas received notice of a claim filed by CACV with the National Arbitration 3 Forum ("NAF") in an attempt to collect the debt. (Id. 13.) Mr. Mandelas avers that he 4 tried to contact the NAF to contest CACV's claim, but he received no response. (Id. 5 14.) On December 14, 2006, the NAF entered an arbitration award in favor of CACV. 6 (Id. 15.) 7 On February 27, 2007, Gordon issued a summons in connection with a lawsuit 8 initiated in Washington state court to confirm the December 2006 arbitration award. (Id. 9 16 & Ex. B.) On January 23, 2008, Gordon filed with the state court a copy of the 10 summons; a declaration that service was effected on October 7, 2007; and an application 11 for an order to confirm the arbitration award. (Id. 18 & Ex. C.) Mr. Mandelas 12 contends, however, that he was never actually served in connection with this lawsuit. (Id. 13 17.) On January 23, 2008, the state court entered an order confirming the arbitration 14 award, as well as a judgment against Mr. Mandelas in the amount of $15,052.42, plus 15 12% interest from the date of the arbitration award. (Id. 23 & Exs. D, E.) 16 In September 2009, Defendants began to make efforts to collect the judgment. (Id. 17 24.) Mr. Mandelas informed Gordon that he was unaware of the judgment that had 18 been entered against him and that he had never been served with papers in connection 19 with the judgment. (Id. 25.) On September 28, 2009, Gordon filed a writ of 20 garnishment to collect the January 2008 judgment. (Id. 26.) According to the amended 21 complaint, Gordon did not give Mr. Mandelas notice that it was filing the writ. (Id. 54.) 22 On October 6, 2009, the state court entered the writ of garnishment. (Id. 27 & Ex. F.) ORDER- 2 1 On December 10, 2009, Mr. Mandelas's bank notified him of an order requiring 2 attachment of funds from his bank account; this was the first time he learned that the writ 3 of garnishment had been filed. (Id. 28.) 4 Mr. Mandelas claims that Gordon's and CACV's conduct violated the Fair Debt 5 Collection Practices Act ("FDCPA"), 15 U.S.C. 1692 et seq.; the Washington 6 Collection Agency Act ("CAA"), chapter 19.16 RCW; and the Washington Consumer 7 Protection Act ("CPA"), chapter 19.86 RCW. (See generally id.) 8 9 A. 10 Motion to Dismiss To survive a motion to dismiss pursuant to Federal Rule of Civil Procedure II. ANALYSIS 11 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to `state a 12 claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, __ U.S. __, 129 S. Ct. 13 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). It is 14 not enough for a complaint to "plead[] facts that are `merely consistent with' a 15 defendant's liability." Id. (quoting Twombly, 550 U.S. at 557). Rather, "[a] claim has 16 facial plausibility when the plaintiff pleads factual content that allows the court to draw 17 the reasonable inference that the defendant is liable for the misconduct alleged." Id. 18 "The plausibility standard is not akin to a `probability requirement,' but it asks for more 19 than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 20 550 U.S. at 556). Although a court considering a motion to dismiss must accept all of the 21 factual allegations in the complaint as true, the court is not required to accept as true a 22 legal conclusion presented as a factual allegation. Id. at 1949-50 (citing Twombly, 550 ORDER- 3 1 U.S. at 556). "In ruling on a 12(b)(6) motion, a court may generally consider only 2 allegations contained in the pleadings, exhibits attached to the complaint, and matters 3 properly subject to judicial notice." Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 4 2007). In the event the court finds that dismissal is warranted, the court should grant the 5 plaintiff leave to amend unless amendment would be futile. Lopez v. Smith, 203 F.3d 6 1122, 1127 (9th Cir. 2000). 7 8 1. Preliminary Matters In its reply (Dkt. # 14), Gordon moves to strike Mr. Mandelas's response, which 9 he filed two days after it was due. See Local Rules W.D. Wash. CR 7(d)(3) ("Any 10 opposition papers shall be filed and served not later than the Monday before the noting 11 date.") The court denies Gordon's motion to strike, but admonishes Mr. Mandelas that 12 he must comply with the court's local rules in the future. 13 Gordon also objects to Mr. Mandelas's filing of two exhibits with his response. 14 (See Resp. (Dkt. # 12) Exs. A & B.) Because a court evaluating a Rule 12(b)(6) motion 15 to dismiss is limited to reviewing only the complaint, exhibits attached to the complaint, 16 and any evidence subject to judicial notice, the court declines to consider Mr. Mandelas's 17 submissions in conjunction with this motion to dismiss. See Swartz, 476 F.3d at 763. 18 19 2. FDCPA Claim (Count I) "The purpose of the FDCPA is to protect vulnerable and unsophisticated debtors 20 from abuse, harassment, and deceptive collection practices." Guerrero v. RJM 21 Acquisitions LLC, 499 F.3d 926, 938 (9th Cir. 2007). Section 1692f of the FDCPA 22 prohibits a debt collector from using "unfair or unconscionable means to collect or ORDER- 4 1 attempt to collect any debt." 15 U.S.C. 1692f. In addition to this general ban on unfair 2 or unconscionable means of debt collection, 1692f provides a non-exclusive list of eight 3 prohibited means of debt collection. Id. 1692f(1)-(8). Whether conduct violates 4 1692f requires an objective analysis that takes into account the "the least sophisticated 5 debtor" standard. See Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1030 (9th Cir. 6 2010); Guerrero, 499 F.3d at 934. The FDCPA is a strict liability statute, which "should 7 be construed liberally in favor of the consumer." Clark v. Capital Credit & Collection 8 Serv., Inc., 460 F.3d 1162, 1175-76 (9th Cir. 2006) (quotation omitted). The FDCPA 9 "applies to attorneys who `regularly' engage in consumer-debt-collection activity, even 10 when that activity consists of litigation." Heintz v. Jenkins, 514 U.S. 291, 299 (1995). 11 Mr. Mandelas does not contend that Gordon used any of the unfair or 12 unconscionable means of debt collection enumerated in 1692f. Rather, in Count I, Mr. 13 Mandelas invokes the FDCPA's general prohibition against unfair or unconscionable 14 means of debt collection, and contends that Gordon and CACV violated 1692f by (1) 15 seeking entry of a judgment against Mr. Mandelas without giving him notice (id. 3616 41); (2) purposefully delaying their efforts to collect the debt in order to collect additional 17 interest (id. 42-52); and (3) failing to provide notice of filing the writ of garnishment 18 as required by Washington law (id. 53-54). Gordon counters that it was not unfair or 19 unconscionable to fail to serve the complaint seeking entry of the judgment, to delay 20 efforts to collect the debt, and to fail to provide notice of the writ of garnishment. 21 Gordon relies in part on Mr. Mandelas's allegations that he knew of the NAF action and 22 that he eventually became aware of the garnishment. ORDER- 5 1 The court finds, viewing the amended complaint in light of the "least sophisticated 2 debtor" standard, that Mr. Mandelas has alleged a plausible claim that Gordon used 3 "unfair or unconscionable" means to collect the debt on behalf of CACV when it failed to 4 provide him notice that it was seeking either entry of judgment or a writ of garnishment 5 and intentionally delayed its collection efforts in order to increase the amount of the debt. 6 The court therefore denies Gordon's motion to dismiss Mr. Mandelas's FDCPA claim. 7 8 3. CAA and CPA Claims (Counts II-IV) In Counts II and III, Mr. Mandelas alleges that Defendants' delay in collecting the 9 debt and their failure to provide notice before filing the writ of garnishment violated the 10 CAA. (Am. Compl. 55-59, 60-61.) He further alleges, in Count IV, that Defendants 11 violated the CPA by operating an unlicensed collection agency or by committing an act 12 or practice prohibited by the CAA. (Id. 63-64.) 13 Gordon contends that the court must dismiss Mr. Mandelas's CAA and CPA 14 claims because the CAA does not apply to law firms. Gordon relies primarily on RCW 15 19.16.100(3)(c), which excludes from the definition of "collection agency" "any person 16 whose collection activities are carried on in his, her, or its true name and are confined and 17 are directly related to the operations of a business other than that of a collection 18 agency . . . such as . . . lawyers." Gordon seizes upon the word "lawyers" in this 19 exclusion, and argues that because it is a law firm, it has immunity from CAA claims. 20 Taking the allegations in the complaint as true, however, the court finds that Mr. 21 Mandelas has properly alleged that Gordon was acting as a collection agency for CACV. 22 The CAA defines "collection agency" as meaning and including "[a]ny person directly or ORDER- 6 1 indirectly engaged in soliciting claims for collection, or collecting or attempting to collect 2 claims owed or due or asserted to be owed or due another person." RCW 3 19.16.100(2)(a). Gordon satisfies this definition because it was directly engaged in 4 collecting or attempting to collect claims owed to a third party, CACV. By contrast, 5 Gordon does not satisfy the requirements for the RCW 19.16.100(3)(c) exclusion, as it 6 was not engaged in collection activities on its own behalf, such as collecting debts owed 7 to it by a client for legal services. See LeClair v. Suttell & Associates, P.S., No. C098 1047-JCC, 2010 WL 417418, at *6 (W.D. Wash. Jan. 29, 2010); Semper v. JBC Legal 9 Group, C04-2240-RSL, 2005 WL 2172377, at *3 (W.D. Wash. Sept. 6, 2005). Thus, 10 because the amended complaint plausibly alleges that Gordon satisfies the definition of 11 "collection agency" under the CAA, the court denies Gordon's motion to dismiss Mr. 12 Mandelas's CAA claims as alleged in counts II and III. In addition, because Gordon 13 challenges Mr. Mandelas's CPA claim only on the basis that it is not subject to the CAA, 14 the court also denies Gordon's motion to dismiss Count IV. 15 Gordon also argues that law firms cannot be collection agencies because RCW 16 19.16.250(5) prohibits any "licensee or employee of a licensee" from "[p]erform[ing] any 17 act or acts, either directly or indirectly, constituting the practice of law." Gordon 18 contends that the Semper court overlooked this provision when it held otherwise. The 19 court notes that the CAA also provides that it constitutes "unprofessional conduct" for 20 certain employees of licensees to have "had his or her license to practice law suspended 21 or revoked and two years have not elapsed since the date of such suspension or 22 revocation, unless he or she has been relicensed to practice law in this state." RCW ORDER- 7 1 19.16.120(4)(c). This provision appears to contemplate that certain employees of 2 licensees will, in fact, practice law. The parties can explore these provisions of the CAA 3 in more detail at summary judgment. For purposes of this Rule 12(b)(6) motion to 4 dismiss, however, the court finds that Mr. Mandelas has sufficiently alleged that 5 Gordon's actions in this case satisfy the definition of "collection agency" as provided by 6 RCW 19.16.100(2) and (3). 7 B. 8 Motion to Strike In the alternative, Gordon moves the court to strike 10 paragraphs of Mr. 9 Mandelas's amended complaint pursuant to Rule 12(f), which provides that a "court may 10 strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, 11 or scandalous matter." The challenged paragraphs appear to set forth Mr. Mandelas's 12 understanding of the law governing FDCPA claims. (See Am. Compl. 1, 2, 10, 11, 2913 31, 33-35.) As the court does not take legal conclusions in a complaint as true in 14 evaluating a motion to dismiss, it finds no harm in Mr. Mandelas setting forth his 15 understanding of the law in his complaint. The court denies Gordon's motion to strike. 16 17 III. CONCLUSION For the foregoing reasons, the court DENIES Gordon's motion to dismiss or to 18 strike (Dkt. # 8). 19 20 21 22 ORDER- 8 Dated this 28th day of June, 2010. A____ JAMES L. ROBART United States District Judge

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