Adkins v. Credit Acceptance Corporation
MEMORANDUM OPINION AND ORDER granting Defendant Credit Acceptance Corporation's 12 PARTIAL MOTION to Dismiss; and Counts II and III of the 11 First Amended Complaint are DISMISSED; Plaintiff may file an amended pleading within 14 days o f the issuance of this opinion clarifying whether the debt "allegedly owed" was primarily for personal, family, or household purposes. Signed by Judge Thomas E. Johnston on 12/28/2016. (cc: counsel of record; any unrepresented party) (taq)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CIVIL ACTION NO. 2:16-cv-03343
CREDIT ACCEPTANCE CORPORATION,
MEMORANDUM OPINION AND ORDER
Before the Court is Defendant Credit Acceptance Corporation’s Partial Motion to Dismiss.
(ECF No. 12.) For the reasons that follow, the motion is GRANTED. Plaintiff may file an
amended pleading rectifying the deficiencies identified herein within fourteen days.
Plaintiff Courtney Adkins alleges that around May 2013, Defendant Credit Acceptance
Corporation (“Credit Acceptance”) began making debt collection calls to her personal cellular
telephone number. (First Am. Compl. ¶ 14.) Plaintiff claims that she did not owe a debt to Credit
Acceptance, nor had she provided her cell phone number “during a transaction that created a debt.”
(Id. ¶ 22.) Nevertheless, Credit Acceptance allegedly used an automatic telephone dialing system
to make hundreds of calls to Plaintiff’s cell phone under the pretense that Plaintiff was obligated
to make payment on a debt owed to it. (Id. ¶ 25.) During the calls, Credit Acceptance would
solicit payment in various ways, at times asking if Plaintiff “wanted to make a payment,” and at
others asking “how much she wanted to pay on the debt.” (Id. ¶ 24.)
Plaintiff brings this civil action on her own behalf and on behalf of a putative class of
individuals who received harassing debt collection calls in similar circumstances. The Court has
jurisdiction under the Class Action Fairness Act. 28 U.S.C. § 1332(d)(2). The three-count First
Amended Complaint alleges violations of the Telephone Consumer Protection Act (“TCPA”),
(Count I), and the West Virginia Consumer Credit and Protection Act (“WVCCPA”), (Counts II
and III). With regard to the WVCCPA claims, Count II alleges misrepresentation of the amount
of a claim in violation of West Virginia Code § 46A-2-127 and is brought as an individual claim
and on behalf of the putative class. Count III, an individual claim only, alleges oppressive and
abusive debt collection in violation of West Virginia Code § 46A-2-125. Credit Acceptance
moves to dismiss both WVCCPA claims.1 The motion, having been fully briefed, is ready for
Under Federal Rule of Civil Procedure 8(a)(2), a complaint must contain “a short and plain
statement of the claim showing that the pleader is entitled to relief.” Allegations “must be simple,
concise, and direct” and “[n]o technical form is required.” Fed. R. Civ. P. 8(d)(1). A motion to
dismiss under Fed. R. Civ. P. 12(b)(6) tests the legal sufficiency of a civil complaint. See Edwards
v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999).
“[I]t does not resolve contests
surrounding the facts, the merits of a claim, or the applicability of defenses.” Republican Party of
N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (citing 5A Charles Alan Wright & Arthur R.
Miller, Federal Practice and Procedure § 1356 (1990)).
The TCPA claim is not implicated by the motion to dismiss.
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, ‘to state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A court decides
whether this standard is met by separating the legal conclusions from the factual allegations,
assuming the truth of only the factual allegations, and then determining whether those allegations
allow the court to reasonably infer that “the defendant is liable for the misconduct alleged.” Id.
While “Iqbal and Twombly do not require a plaintiff to prove [her] case in the complaint,” the
complaint must “allege facts sufficient to state elements of the claim.” SD3, LLC v. Black &
Decker (U.S.) Inc., 801 F.3d 412, 441 (4th Cir. 2015) (quoting Robertson v. Sea Pines Real Estate
Companies, Inc., 679 F.3d 278, 284 (4th Cir. 2012)) (internal quotation marks omitted).
Credit Acceptance moves for the dismissal of Counts II and III for two reasons, both related
to the applicability of the WVCCPA. Credit Acceptance’s initial argument goes to standing.
Simply put, Credit Acceptance alleges that Plaintiff is not a “consumer” under the WVCCPA and
the relief afforded under that statute is thus out of reach. Credit Acceptance next argues that even
if Plaintiff has standing on Counts II and III, she fails to allege that any debt she allegedly owed
was incurred primarily for “personal, family, or household purposes,” a necessary element of both
causes of action.
The Court will discuss each argument in the order presented by Credit
Standing under the WVCCPA
The WVCCPA exists “to protect consumers from unfair, illegal, and deceptive acts or
practices” of their creditors. Dunlap v. Friedman’s, Inc., 582 S.E.2d 841, 846 (W. Va. 2003)
(citation and internal quotation marks omitted). Consistent with this policy, “a plaintiff must be
a consumer to bring a private cause of action under the [WVCCPA].” McNeely v. Wells Fargo
Bank, N.A., 115 F. Supp. 3d 779, 784 (S.D. W. Va. 2015) (citing W. Va. Code § 46A-5-101(1)
(2006)). Counts II and III arise under Article 2 of the WVCCPA, which defines “consumer” as
“any natural person obligated or allegedly obligated to pay any debt.” W. Va. Code § 46A-2122(a).
The parties agree that Plaintiff has no debtor-creditor relationship with Credit
Acceptance. Plaintiff thus has standing to bring Counts II and III only if she was “allegedly
obligated” to pay a debt. Id.
The Court does not write on a blank slate in defining this term. “Courts consider a person
‘allegedly obligated’ to pay a debt when the creditor has ‘represented to [her] that [she] is
personally liable on the debt.” McNeely, 115 F. Supp. 3d at 785 (quoting Fabian v. Home Loan
Ctr., Inc., No. 5:14-cv-42, 2014 WL 1648289, at *6 (N.D.W. Va. Apr. 24, 2014)). In this manner,
“[t]he term ‘alleged obligation’ extends the reach of the WVCCPA to certain collection activities
conducted without regard to whether the debt is actually owed.” McGuire v. Jim Walter Homes,
LLC, No. 5:14-CV-14299, 2014 WL 5149725, at *7 (S.D.W. Va. Oct. 14, 2014) (citing Fabian,
2014 WL 1648289 at *6). This Court has repeatedly found that direct solicitations from a creditor
for payment are indicative of an alleged obligation to pay a debt. McNeely, 115 F. Supp. 3d at
785 (noting the absence of such solicitation as one of several factors indicating that the plaintiff,
who had no debtor-creditor relationship with the defendant, lacked standing under the WVCCPA).;
McGuire, 2014 WL 5149725, at *7 (finding genuine issue of material fact existed as to whether
plaintiffs, who were repeatedly solicited by a creditor to make payments on a debt, were “allegedly
obligated” to pay the debt); Croye v. GreenPoint Mortgage Funding, Inc., 740 F. Supp. 2d 788,
798 (S.D. W. Va. 2010) (finding factual issue existed as to whether plaintiff was allegedly
obligated to pay a debt not actually owed, but nevertheless solicited by a creditor).
Both parties rely heavily on the Court’s decision in Croye. In Croye, a husband and wife
refinanced the mortgage on their home, but only the wife signed the promissory notes. 740 F.
Supp. 2d at 790. Some years later, the couple divorced and the wife attempted to re-convey her
interest in the property to her now-estranged husband, who assumed the mortgage payment.2 The
couple later sued the mortgage servicer, contending that the servicer violated the WVCCPA by
contacting both plaintiffs in an attempt to collect on the debt, notwithstanding the plaintiffs’
representation by counsel. The servicer argued that the husband lacked standing to sue under the
WVCCPA—because the husband did not execute the loan refinance, the servicer claimed that he
did not meet the definition of a “consumer.” This Court found otherwise, reasoning that the
servicer’s repeated efforts to collect payment from the husband “suggested the existence of an
alleged obligation . . . to pay the loans.” Id. at 797.
The alleged harassment that Plaintiff experienced in this case would seem to be factually
akin to that endured by the non-debtor husband in Croye. Credit Acceptance, however, attempts
to distinguish Croye by arguing that its holding was based primarily on evidence that the husband
had signed the deed of trust and other loan documents and later assumed payment of the debt. It
stresses that there are no similar allegations making Plaintiff personally liable for the debt in this
case. Credit Acceptance apparently believes that the term “allegedly obligated” applies only
where the facts provide a basis upon which the creditor could justifiably attribute personal liability
to the plaintiff for a debt. Because “[t]here is no allegation . . . that Credit Acceptance represented
It is unclear whether the conveyance of the wife’s property interest to the husband was successful.
Croye, 740 F. Supp. 2d at 792 n. 5.
to Plaintiff that she owed a debt,” Credit Acceptance concludes that there can be no alleged
obligation to pay. (Reply at 2, ECF No. 19 (emphasis in original).)
Credit Acceptance suffers from a myopic view of both Croye and the facts alleged in the
First Amended Complaint.
Croye’s reasoning was not, as Credit Acceptance argues, tied
exclusively to the husband’s participation in the loan refinance. Rather, it was the mortgage
servicer’s treatment of the husband, manifested through repeated collection attempts, that was
central to the Court’s finding on the “alleged obligation” question. Croye, 740 F. Supp. 2d at 797.
Croye cited Diaz v. K.L. Recovery Corp., 486 F. Supp. 2d 474 (E.D. Pa. 2007), a case addressing
the issue of standing in the context of a Fair Debt Collection Practice Act (“FDCPA”) claim.3 In
Diaz, “the plaintiff received phone calls demanding payment for outstanding summonses against
the father of her children,” whereby the defendants “threatened to repossess all of her household
belongings and her car if she didn’t pay.” Croye, 740 F. Supp. 2d at 798–99 (citing Diaz, 486 F.
Supp. 2d at 475).
Though the plaintiff did not owe the debt in question, the defendants’ attempts
to hold her personally liable meant that she could sue as a consumer “allegedly obligated’ to pay
a debt. Diaz, 486 F. Supp. 2d at 477. Together, these cases establish that a creditor’s actions
alone are sufficient to give rise to an “alleged obligation” to pay a debt, so long is there is evidence
of an attempt to hold the plaintiff personally liable.
Turning to the First Amended Complaint, the Court finds sufficient allegations that Credit
Acceptance represented to Plaintiff that she was personally liable on a debt. During some of the
alleged phone calls, Credit Acceptance demanded to know “whether she planned to make a
payment during the call” or if “she wanted to make a payment.” (First Am. Compl. ¶ 24 (emphasis
Like the WVCCPA, the FDCPA defines a consumer as “any natural person obligated or allegedly
obligated to pay any debt.” 15 U.S.C. § 1692(a)(3).
added).) Other times, Credit Acceptance called to ask Plaintiff “how much she wanted to pay on
the debt.” (Id. (emphasis added)). As alleged, Plaintiff had every reason to think that Credit
Acceptance believed that she was indebted to it. While the facts surrounding these claims are left
murky, the Court has no trouble finding at this stage that Plaintiff has plausibly pled the existence
of an alleged obligation to pay a debt. Plaintiff would, then, qualify as a consumer with standing
to sue under the WVCCPA.
Failure to Plead Existence of a “Claim”
Having found that Plaintiff has standing to sue under the WVCCPA, the Court turns to
Credit Acceptance’s alternative argument. Credit Acceptance moves to dismiss Counts II and III
because it asserts that Plaintiff fails to alleged Credit Acceptance attempted to collect upon a
“claim” as defined in the WVCCPA. This argument, unlike the first, is successful.
Counts II and III of the First Amended Complaint are brought under West Virginia Code
§§ 46A-2-127 and 125, respectively. Section 46A-2-127 states that “[n]o debt collector shall use
any fraudulent, deceptive or misleading representation or means to collect or attempt to collect
claims or to obtain information concerning consumers,” while § 46A-2-125 mandates that “[n]o
debt collector shall unreasonably oppress or abuse any person in connection with the collection of
or attempt to collect any claim alleged to be due and owing by that person or another.” An
essential element of a cause of action under either provision is the collection or attempted
collection of a “claim.” The WVCCPA defines a “claim” as “any obligation or alleged obligation
of a consumer to pay money arising out of a transaction in which the money, property, insurance
or service which is the subject of the transaction is primarily for personal, family or household
purposes, whether or not such obligation has been reduced to judgment.” W. Va. Code § 46A-2122(b).
Credit Acceptance argues that Counts II and III must be dismissed because Plaintiff fails
to allege that the debt at issue was incurred “primarily for personal, family or household purposes.”
Plaintiff does not respond to this particular argument. And Credit Acceptance is correct—there
is no allegation in the First Amended Complaint indicating whether the debt at issue was a “claim”
within the WVCCPA’s ambit. Although Plaintiff alleges that she did not owe a debt to Credit
Acceptance, presumably someone did, and there is no way of telling whether that debt was incurred
“primarily for personal, family, or household purposes,” and thus covered by the statute, or
primarily for commercial purposes, which would not be covered. Morris v. Marshall, 305 S.E.2d
581, 584 (W. Va. 1983) (“[B]ecause the loans were made for commercial purposes, the financing
of an automobile dealership, they are not ‘consumer loans’ within the purview of the
[WVCCPA].”). Plaintiff’s failure to allege facts sufficient to state this element is fatal. See SD3,
LLC, 801 F.3d at 441 (citation omitted).
On this point, case law interpreting the FDCPA is instructive. The FDCPA also requires
that an obligation giving rise to challenged collection efforts be “primarily for personal, family, or
household purposes.” 15 U.S.C. § 1692a(5). In that setting, courts typically require consumers
to plead the nature of the debt in his or her pleading. Scarola Malone v. Zubatov LLP v.
McCarthyu, Burgess & Wolff, 638 Fed. App’x 100, 103 (2d Cir. 2016) (“Scarola did not include
any factual allegations in his Complaint to support the inference that the amount in dispute arose
from a consumer transaction, and, accordingly, he failed to state a claim upon which relief could
be granted.”); Cederstrand v. Landberg, 933 F. Supp. 804, 806 (D. Minn. 1996) (“[Plaintiff] does
not allege in his complaint that any transaction involving an offer or extension of credit was
undertaken “primarily for personal, family, or household purposes” . . . Plaintiff has therefore
failed to state a claim upon which relief may be granted.”). The Supreme Court of Appeals of
West Virginia has looked to federal interpretation of the FDCPA for guidance in construing the
WVCCPA, see Fleet v. Webber Springs Owners Assoc., Inc., 772 S.E.2d 369, 379 (W. Va. 2015),
and the Court will do the same here. Accordingly, the Court finds that in bringing claims under
§§ 46A-2-125 and 127, the consumer must allege facts sufficient to give rise to an inference that
the debt at issue comes within the purview of the statute.
There is no factual material in the First Amended Complaint from which the Court can
draw such an inference.
Plaintiff has failed to plead the threshold requirement that Credit
Acceptance attempted to collect a “claim” as defined by the WVCCPA, and Counts II and III are
subject to dismissal. The next question is whether the claims should be dismissed with prejudice,
as Credit Acceptance requests. Under Federal Rule of Civil Procedure 41(b), dismissal for failure
to state a claim operates as an adjudication on the merits unless the court determines otherwise.
Fed. R. Civ. P. 41(b) (“Unless the dismissal order states otherwise, a dismissal under this
subdivision (b) and any dismissal not under this rule—except one for lack of jurisdiction, improper
venue, or failure to join a party under Rule 19—operates as an adjudication on the merits.”). The
district court maintains the discretion to determine whether dismissal under Rule 12(b)(6) is with
or without prejudice. Payne ex rel. Estate of Calzada v. Brake, 439 F.3d 198, 204 (4th Cir. 2006).
Rule 15, which requires that a court give leave to amend a pleading “when justice so requires,”
guides the determination. Fed. R. Civ. P. 15(a)(2).
Here, the Court suspects that Plaintiff can readily amend her pleading to clarify that Credit
Acceptance attempted to collect upon a “claim” as defined by the WVCCPA. The Court also
finds that because discovery proceedings in this action are temporarily stayed at Credit
Acceptance’s request, any prejudice caused by an amendment will be minimal. The Court
therefore grants Plaintiff leave to amend her pleading.
For these reasons, the Partial Motion to Dismiss, (ECF No. 12), is GRANTED, and Counts
II and III of the First Amended Complaint are hereby DISMISSED. Plaintiff may file an
amended pleading within fourteen days of the issuance of this opinion clarifying whether the debt
“allegedly owed” was primarily for personal, family, or household purposes.
IT IS SO ORDERED.
The Court DIRECTS the Clerk to send a copy of this Order to counsel of record and any
December 28, 2016
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