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finding plaintiffs' FDCPA claim was barred by the statute of limitations where defendants' complaint seeking payment of a debt "repeated the same information" alleged in earlier demand letters
Summary of this case from Pone v. Messerli & Kramer P.A.Opinion
Civil No. 04-1072 (JRT/FLN).
July 29, 2004
William C. Michelson, MARSO MICHELSON HARRIGAN, Minneapolis, MN, for plaintiffs.
Derrick N. Weber and William C. Hicks, MESSERLI KRAMER, Plymouth, MN, for defendant.
ORDER
Plaintiffs brought this action alleging violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692 et seq., after defendant, a Minnesota law firm, attempted to collect a consumer debt. Defendant argues that the claim is barred by the FDCPA's one-year statute of limitations, and moves to dismiss on the pleadings pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(6), and 12(c).
BACKGROUND
The Court assumes the facts as pled for the purposes of this motion.
On or about December 4, 2002, the defendant sent a demand letter to plaintiffs' counsel, requesting payment of the balance owed, plus attorneys' fees. The letter, which was dated December 3, 2002, specifically demanded, "On behalf of our client, we hereby demand that your client remit to our office the sum of no less than $9,789.82, plus accrued interest, late fees, costs and attorneys' fees, payable either by cash or certified check." (Weber Affidavit, Ex. F. at 2). Shortly thereafter, in a letter dated December 13, 2002, defendants sent an additional letter to plaintiffs' counsel in which defendants verified plaintiff's account information and documented the amount owed. ( Id. at Ex. E.) In the December 13, 2002 letter, attorneys fees were demanded in the amount of $2,447.45, and this demanded amount was followed by the phrase "(subject to Court approval)." ( Id.)
On March 11, 2003, defendant filed a complaint in Hennepin County District Court. The complaint was served on plaintiffs on March 16, 2003. The relevant language in the complaint differed only slightly from that in the demand letter. Specifically, the complaint stated, "Defendant(s) [the Fraenkel's] agreed to pay all reasonable costs of collecting including reasonable attorney's fees." (Weber Affidavit at Ex. A.) In addition, the complaint demanded judgment for the principle sum, "plus reasonable attorneys' fees of $2,447.45." ( Id.)
Shortly before the end of 2003, plaintiffs' counsel sent a letter indicating that plaintiffs would initiate litigation against defendant on the basis of defendant's demand for attorneys' fees in the underlying matter. Defendant, in response, took the position that the statute of limitations on any FDCPA had expired, and the parties exchanged letters concerning the statute of limitations, as interpreted by caselaw.
This letter is not part of the record in this matter. Defendant's response to this letter, in the form of a letter dated January 13, 2004, is in the record. The date and content of the purported December 24, 2002 letter is not critical to the resolution of this motion.
Plaintiffs then filed a summons and complaint in this Court on February 27, 2004, which was served on defendant on or about March 16, 2004. Defendant brought this motion on the pleadings.
ANALYSIS
I. STANDARD FOR MOTION TO DISMISS
A Rule 12(b)(6) motion to dismiss is reviewed under the same standard as a Rule 12(c) motion for judgment on the pleadings. EEOC v. Northwest Airlines, Inc., 216 F. Supp. 2d 935, 937 (D. Minn. 2002); Black v. United States, 900 F. Supp. 1129, 1135 (D. Minn. 1994). The Court grants a motion to dismiss on the pleadings "`only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.'" Handeen v. Lemaire, 112 F.3d 1339, 1347 (8th Cir. 1997) (quoting Hishon v. King Spalding, 467 U.S. 69, 73 (1984)). The Court assumes "that well-pleaded factual allegations in the complaint are true `and construe[s] the complaint, and all reasonable inferences arising therefrom, most favorably to the pleader.'" Westcott, 901 F.2d at 1488 (quoting Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986)). In so doing, however, the Court does not "blindly accept the legal conclusions drawn by the pleader from the facts." Id. Where it is clear that plaintiffs can prove no set of facts in support of their claim which would warrant relief, the motion to dismiss must be granted. See H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 249-50 (1989).
Unlike motions to dismiss and for judgment on the pleadings, matters outside the pleadings may be considered on a motion challenging subject matter jurisdiction under Rule 12(b)(1). Casazza v. Kiser, 313 F.3d 414, 418 n. 3 (8th Cir. 2002); Lockhart v. Cedar Rapids Cmty. Sch. Dist., 963 F. Supp. 805, 811 (N.D. Iowa 1997) (stating that a district court has "broader power to decide its own right to hear the case than it has when the merits of the case are reached") (internal citations and quotations omitted).
Motions to dismiss and for judgment on the pleadings are converted to summary judgment motions where "matters outside the pleading are presented to and not excluded by the court. . . ." Fed.R.Civ.P. 12(b). However, the Court may look to some materials outside the pleadings when considering 12(b) and 12(c) motions. Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999). For example, the Court may consider matters of public record, materials that "do not contradict the complaint, as well as materials that are necessarily embraced by the pleadings." Id. (internal quotations and citations omitted); see also Stahl v. United States Dept. of Ag., 327 F.3d 697, 700-01 (8th Cir. 2003) (approving of district court's use of five of six documentary exhibits including contract documents and public records referenced by the complaint); Hamm v. Rhone-Poulenc Rorer Pharm., Inc., 187 F.3d 941, 948 (8th Cir. 1999) ("Our court has interpreted the phrase `matters outside the pleadings' to include `any written or oral evidence in support of or in opposition to the pleading that provides some substantiation for and does not merely reiterate what is said in the pleadings.'") (citing Gibb v. Scott, 958 F.2d 814, 816 (8th Cir. 1992)). Any "new facts not alleged in the pleadings" are matters outside the pleadings, requiring conversion to a summary judgment motion. Id. (internal citations omitted).
Conversion to summary judgment is not required when "`plaintiffs' claims are based solely on the interpretation of the documents [submitted] and the parties do not dispute the actual contents of the documents.'" EEOC v. Am. Home Prods. Corp., 199 F.R.D. 620, 627 (N.D. Iowa 2001) (quoting Jenisio v. Ozark Airlines, Inc. Ret. Plans, 187 F.3d 970, 972 n. 3 (8th Cir. 1999) (internal citations omitted)). Documents submitted with the pleadings in order to contradict or discredit plaintiffs' allegations, however, require conversion to a summary judgment motion. See BJC Health Sys. v. Columbia Cas. Co., 348 F.3d 685, 687-88 (8th Cir. 2003); Song v. City of Elyria, 985 F.2d 840, 842 (6th Cir. 1993) (stating that documents that did not rebut, challenge, or contradict plaintiffs' complaint were not outside the pleadings) (citing Watters v. Pelican Int'l, Inc., 706 F. Supp. 1452, 1457 n. 1 (D. Colo. 1989)). Thus, "when deciding a motion to dismiss, a court may consider the complaint and documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading." Kushner v. Beverly Enters., 317 F.3d 820, 831 (8th Cir. 2003) (internal quotation omitted)).
The relevant documents the Court has considered for the purpose of resolving this motion include the complaint filed in the instant case, the complaint filed in Hennepin County District Court, the answer filed in this case, and the letters referenced in the answer. Neither party disputes the authenticity or the actual content of the letters referenced in the defendants' answer. Plaintiffs do not dispute that the December 13, 2002, debt validation letter contained a request for attorney's fees that read in part, "Attorneys Fees (subject to Court approval) — $2,447.45." (Pl.'s Opp'n Mem. at 2.) Nor do plaintiffs challenge the authenticity of the December 13, 2002 letter. While plaintiffs do not discuss or mention the December 3, 2002 letter, they do not dispute the content or authenticity of that letter, nor is the letter used to contradict or discredit factual allegations contained in the plaintiffs' complaint. Because the parties do not dispute the content or authenticity of either letter, this Court finds that conversion to summary judgment from defendant's Rule 12(c) motion is not required by the inclusion of those letters in defendants' answer. Given the specific facts of this case, and the discretion afforded district courts in deciding to accept material offered along with defendants' motion to dismiss, the Court finds that judgment on the pleadings pursuant to Rule 12(c) is therefore appropriate.
This Court "`has complete discretion to determine whether or not to accept any material beyond the pleadings that is offered in conjunction with a Rule 12(b)(6) motion.'" Stahl, 327 F.3d at 701 (quoting 5A Charles Alan Wright Arthur R. Miller, Federal Practice and Procedure § 1366, at 491 (2d ed. 1990)); Casazza, 313 F.3d at 417-18 (8th Cir. 2002).
II. THE FDCPA
The FDCPA provides that "[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692e. Specifically, the FDCPA prevents "[t]he false representation of . . . the character, amount, or legal status of any debt", and "[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." Id.
The FDCPA also prevents the use of "unfair or unconscionable means to collect or attempt to collect any debt." 15 U.S.C. § 1692f. In this case, plaintiffs specifically allege a violation of § 1692f(1), which prohibits, "[t]he collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law."
The FDCPA imposes civil liability upon debt collectors who violate its provisions. 15 U.S.C. § 1692k. A one-year statute of limitations applies to actions brought pursuant to the FDCPA: "An action to enforce any liability created by this title may be brought . . . within one year from the date on which the violation occurs." 15 U.S.C. § 1692k(d). Therefore to resolve this motion, the Court, assuming facts as presented by the plaintiffs, must determine when the FDCPA violation accrued. See, e.g., Calka v. Kucker, Kraus Bruh, LLP, 1998 WL 437151, *3 (S.D.N.Y. Aug. 3, 1998).
The act that allegedly violates the FDCPA here is defendant's demand for attorney's fees, which plaintiffs claim is not authorized by the credit agreement/Cardmember agreement. Defendant argues that the violation accrued on or about December 3, 2002, when defendant sent the initial demand letter. Plaintiffs' position is that the violation accrued later, on March 13, 2003, when defendant filed the complaint in Hennepin County District Court. Plaintiffs argue that the initial demand letter was not really a "demand" because the letter included the qualifying language, "subject to court approval." According to plaintiffs, it was not until the complaint was filed, in March of 2003, that the demand for fees was unequivocally made.
The Court is not persuaded by plaintiffs' suggestion that a demand letter does not constitute a demand In fact, the December 3, 2002 letter contained the specific language, "we hereby demand that your client remit . . . costs and attorney's fee." (Weber aff'd, Ex. F) (emphasis added). While it is true that the December 13, 2002 letter included the language, "subject to court approval", the December 3, 2002 letter did not. Further, there seems no dispute that demand letters are covered by the FDCPA. See, e.g., Newman v. Checkrite California, Inc., 912 F. Supp. 1354 (E.D. Cal. 1995) (discussing FDCPA violation via "so-called `legal notice' fee" that attorney sought to recover in a demand letter); Dorsey v. Morgan, 760 F. Supp. 509 (D. Md. 1991) (discussing demand letter). Finally, plaintiffs have cited no case law indicating that language such as "subject to Court approval" cleanses what would otherwise be a violation of the FDCPA.
Indeed, a contrary result would undermine the purposes of the FDCPA by forcing would-be plaintiffs (debtors) to wait until the lender instigated a lawsuit to pursue a civil action for violations of the FDCPA. This result would be less effective in deterring abusive debt collection practices. See generally 15 U.S.C. § 1692 (stating that the purpose is to "to eliminate abusive debt collection practices . . ., to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.").
The service of the complaint repeated the same information alleged on December 3 and 13, 2002. "New communications . . . concerning an old claim . . . [do] not start a new period of limitations." Campos v. Brooksbank, 120 F. Supp. 2d 1271, 1274 (D.N.M. 2000) (citing Sierra v. Foster Garbus, 48 F. Supp.2d 393 (S.D.N.Y. 1999)). The alleged violation accrued on or before December 13, 2002. The one-year statute of limitations ran before the instant lawsuit was filed. The lawsuit is therefore dismissed.
III. FEES
Section 1692k(a)(3) allows a defendant to collect reasonable attorney's fees "[o]n a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment." Defendant's request for attorney's fees is denied. The parties took differing interpretations of relevant caselaw. Though plaintiffs' position is unavailing, it is not so frivolous as to amount to bad faith, which is the applicable standard in an action brought pursuant to the FDCPA. See Horkey v. J.V.D.B. Assocs., Inc., 333 F.3d 769, 774-75 (7th Cir. 2003); Crawford v. Credit Collection Servs., 898 F. Supp. 699, 703 (D.S.D. 1995).