Champion v. Midland Funding Llc et al

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM with Brief In Support

N.D. Ga.May 11, 2017

1 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION AVA KAY CHAMPION, ) ) Plaintiff, ) Civil Action No. ) 1:17-cv-00282-SCJ-JSA v. ) ) MIDLAND FUNDING LLC, ) ENCORE CAPITAL GROUP, INC., ) MIDLAND CREDIT MANAGEMENT, ) INC., and COOLING & WINTER LLC ) ) Defendants. ) ___________________________________ ) MOTION TO DISMISS PLAINTIFF’S COMPLAINT ON BEHALF OF DEFENDANT COOLING & WINTER LLC COMES NOW, Defendant Cooling & Winter, LLC, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, and moves this Court to dismiss Plaintiff’s Complaint against Cooling & Winter LLC for the reasons set forth in the Memorandum of Law, which follows. Respectfully submitted this ____ day of __________ 2017. Prepared by: Cooling & Winter LLC /s/ Salvatore Louis Schiappa III_____ Salvatore Louis Schiappa III Georgia Bar 600189 Case 1:17-cv-00282-SCJ-JSA Document 12 Filed 05/11/17 Page 1 of 13 2 Attorney for Cooling & Winter LLC 1355 Roswell Rd, Suite 240 Marietta GA 30062 770-988-9055 lschiappa@coolingwinter.com Case 1:17-cv-00282-SCJ-JSA Document 12 Filed 05/11/17 Page 2 of 13 3 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION AVA KAY CHAMPION, ) ) Plaintiff, ) Civil Action No. ) 1:17-cv-00282-SCJ-JSA v. ) ) MIDLAND FUNDING LLC, ) ENCORE CAPITAL GROUP, INC., ) MIDLAND CREDIT MANAGEMENT, ) INC., and COOLING & WINTER LLC ) ) Defendants. ) ___________________________________ ) MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PLAINTIFF’S COMPLAINT ON BEHALF OF DEFENDANT COOLING & WINTER LLC COMES NOW, Defendant Cooling & Winter, LLC, and submits the following Memorandum of Law in support of Defendant Cooling & Winter LLC’s (hereinafter, “C&W”) Motion to Dismiss Plaintiff’s Complaint. PLAINTIFF’S ALLEGATIONS Plaintiff Ava Kay Champion’s (hereinafter “Champion”) Complaint alleges that prior to the initiation of this lawsuit, Defendant Midland Funding LLC (hereinafter “Midland”) initiated an action in the State Court of Gwinnett County, GA (hereinafter the “Gwinnett County Action”) to recover $20,053.04, which is Case 1:17-cv-00282-SCJ-JSA Document 12 Filed 05/11/17 Page 3 of 13 4 the unpaid balance of Plaintiff Champion’s Citibank, N.A. credit account. (See Exhibit 1 to Plaintiff’s Complaint). The Gwinnett County Action alleges that all rights, title, and interest in Plaintiff Champion’s Citibank, N.A. account were assigned to Defendant Midland. Defendant Midland is the plaintiff in the Gwinnett County Action, and the Gwinnett County action was filed by the law firm of Frederick J. Hanna & Associates P.C. (hereinafter, “FJH”). FJH is not a party to this action. The specific allegations of Plaintiff’s Complaint can be summarized as follows: Count 1 alleges that the Gwinnett County Action makes various misrepresentations regarding the character, amount, or legal status of the debt; and, Count 2 of Plaintiff’s Complaint alleges that the Gwinnett County Action was filed without sufficient meaningful attorney involvement. Importantly, all allegations of Plaintiff’s Complaint stem from the acts of preparation and filing the Gwinnett County Action, none of which are alleged to have been committed by Defendant C&W. Rather, Plaintiff alleges that C&W is liable for the acts of FJH because C&W is alleged to be the successor in interest to FJH (Plaintiff’s Complaint ¶ 5). All claims asserted against Defendant C&W are not based on its own conduct, but instead based on the conduct of the law firm of FJH, which is not a party to this action. Case 1:17-cv-00282-SCJ-JSA Document 12 Filed 05/11/17 Page 4 of 13 5 Despite Plaintiff’s theory of recovery against Defendant C&W being based on successor in interest liability, Plaintiff’s Complaint fails to allege facts that would support a finding that Defendant C&W actually is the successor in interest to FJH. Specifically, the only facts alleged in Plaintiff’s Complaint that remotely refer to a relationship between Defendant C&W and FJH are, 1) that C&W’s “founders include former partners in the now-defunct law firm of Frederick J. Hanna & Associates, P.C.,” (Plaintiff’s Complaint ¶ 20), and 2) that the attorney who signed the Gwinnett County Action on behalf of FJH is now employed by Defendant C&W (Plaintiff’s Complaint ¶ 21 & 40). For the reasons that follow, the aforementioned allegations are insufficient to support a successor in interest theory of recovery against Defendant C&W, therefore Plaintiff’s claims against Defendant C&W must be dismissed. LEGAL STANDARD “When evaluating a motion to dismiss under Rule 12(b)(6), the Court cannot consider matters outside of the pleadings, and must accept the allegations of the non-movant's pleadings as true, but 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. Moreover, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and Case 1:17-cv-00282-SCJ-JSA Document 12 Filed 05/11/17 Page 5 of 13 6 a formulaic recitation of the elements of a cause of action will not do." Underhill v. Bank of Am., N.A., 2014 U.S. Dist. LEXIS 19366 at 22 (N.D. Ga. Jan. 15, 2014) (internal citations and punctuation omitted). “[W]hile a court must accept all factual allegations in a complaint as true, it need not accept as true legal conclusions recited in a complaint. Repeating that “only a complaint that states a plausible claim for relief survives a motion to dismiss” the Supreme Court advised that "[d]etermining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not 'shown'—'that the pleader is entitled to relief.'” Id. at 22-23. “[A] court ordinarily cannot consider matters outside the pleadings when evaluating a motion to dismiss under Rule 12(b)(6), but when a plaintiff has referred to documents in the complaint and such documents are central to the plaintiff's claims, a court may consider those documents as part of the pleadings in the case and may consider them in resolving a Motion to Dismiss.” Id. at 24. “Moreover, the Eleventh Circuit has made it clear that when a plaintiff attaches Case 1:17-cv-00282-SCJ-JSA Document 12 Filed 05/11/17 Page 6 of 13 7 exhibits to a complaint and the exhibits contradict the allegations of the complaint, the exhibits control.” Id. at 25. Argument 1) Plaintiff Fails To Allege Wrongful Acts Of Cooling And Winter, LLC Plaintiff’s Complaint does not allege that C&W engaged in any direct wrongful activity. According to Plaintiff’s Complaint, liability against C&W is derivative under a successor in interest theory. (Plaintiff’s Complaint ¶ 5). Plaintiff makes no allegation that Defendant C&W had any direct participation in the preparation and filing of the Gwinnett County Action, which serves as the sole factual basis for Plaintiff’s claims. The face of the Gwinnett County Action, which was attached to Plaintiff’s complaint as an exhibit, shows that it was submitted by the law firm of FJH, not by Defendant C&W. The only nexus alleged to connect Defendant C&W with the transaction or occurrence in this case is the Complaint’s conclusory statement that C&W is a successor in interest to FJH. 2) Plaintiffs Do Not Properly Allege Successor In Interest Liability Successor in interest liability is a legal conclusion reached after an analysis of whether required factors are present. As cited above, “[W]hile a court must accept all factual allegations in a complaint as true, it need not accept as true legal Case 1:17-cv-00282-SCJ-JSA Document 12 Filed 05/11/17 Page 7 of 13 8 conclusions recited in a complaint.”1 The factual allegations of Plaintiff’s Complaint in this case are insufficient to reach a legal conclusion finding successor in interest liability for Defendant C&W. The 11th Circuit has held that “one of the fundamental requirements for consideration of the imposition of successor liability is a merger or transfer of assets between the predecessor and successor companies.” Coffman v. Chugach Support Services, Inc., 411 F.3d 1231 (11th Cir. 2005). Generally, a corporation that purchases or acquires the assets of another corporation does not assume the debts and liabilities of the acquired corporation. Bud Antle, Inc. v. Eastern Foods, Inc., 758 F.2d 1451 (11th Cir. 1985), citing Kemos, Inc. v. Bader, 545 F.2d 913, 915 (5th Cir.1977). The court in Bud Antle goes on to describe four exceptions to the general rule against assumption of liability, none of which are applicable in this case because Plaintiff Complaint fails to allege facts sufficient to overcome the threshold question of whether a merger or transfer of assets between the law firms of FJH and Defendant C&W occurred. The only allegations of Plaintiff’s complaint in this case that discuss successor liability against Defendant C&W are as follows: 1 Underhill at 22. Case 1:17-cv-00282-SCJ-JSA Document 12 Filed 05/11/17 Page 8 of 13 9 a) “Defendant Cooling & Winter LLC is . . . upon information and belief, the successor-in-interest to the now-defunct law firm of Frederick J. Hanna & Associates, P.C.” (Plaintiff’s Complaint ¶ 5). b) C&W’s “founders include former partners in the now-defunct law firm of Frederick J. Hanna & Associates, P.C.,” (Plaintiff’s Complaint ¶ 20). c) The attorney who signed the Gwinnett County Action on behalf of FJH is now employed by Defendant C&W (Plaintiff’s Complaint ¶ 21 & 40). None of the factual allegations described above establish successor liability against Defendant C&W. Statement (a) from ¶ 5 of Plaintiff’s Complaint is merely a legal conclusion without any supporting factual allegations, which is insufficient under Underhill (a court need not accept as true legal conclusions recited in a complaint). Statements (b) and (c) from ¶¶ 20, 21, and 40 of Plaintiff’s Complaint allege facts that are not relevant to the threshold analysis for successor liability in Coffman and Bud Antle – neither statement alleges that FJH merged into C&W or that a transfer of assets occurred between FJH and C&W. To be clear, the three quotations from Plaintiff’s Complaint above, a), b), and c), are the only references to successor liability in Plaintiff’s entire Complaint. Accordingly, Plaintiff has failed to allege that Defendant C&W is liable in this case under a successor in interest theory. Case 1:17-cv-00282-SCJ-JSA Document 12 Filed 05/11/17 Page 9 of 13 10 CONCLUSION Because Plaintiff’s Complaint is void of factual allegations sufficient to reach a legal conclusion of successor liability against Defendant C&W, Plaintiff’s claims against Defendant C&W should be dismissed. WHEREFORE, Defendant C&W respectfully requests that all claims against C&W be dismissed. Respectfully submitted this 11 day of May 2017. Cooling & Winter LLC /s/ Salvatore Louis Schiappa III_____ Salvatore Louis Schiappa III Georgia Bar 600189 Attorney for Cooling & Winter LLC 1355 Roswell Rd, Suite 240 Marietta GA 30062 770-988-9055 lschiappa@coolingwinter.com Case 1:17-cv-00282-SCJ-JSA Document 12 Filed 05/11/17 Page 10 of 13 11 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION AVA KAY CHAMPION, ) ) Plaintiff, ) Civil Action No. ) 1:17-cv-00282-SCJ-JSA v. ) ) MIDLAND FUNDING LLC, ) ENCORE CAPITAL GROUP, INC., ) MIDLAND CREDIT MANAGEMENT, ) INC., and COOLING & WINTER LLC ) ) Defendants. ) ___________________________________ ) CERTIFICATE OF SERVICE I hereby certify that on this date, I electronically filed the foregoing MOTION TO DISMISS COMPLAINT ON BEHALF OF DEFENDANT COOLING & WINTER LLC and MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PLAINTIFF’S COMPLAINT ON BEHALF OF DEFENDANT COOLING & WINTER LLC using the CM/ECF system which will automatically send e-mail notification of such filing to the following attorney of record: Case 1:17-cv-00282-SCJ-JSA Document 12 Filed 05/11/17 Page 11 of 13 12 E. Talley Gray Law Offices of E. Talley Gray 3449-E Lawrenceville Suwanee Road Suwanee, GA 30024 678-428-4868 Fax: 800-878-0429 Email: talleygray@yahoo.com Robert Franklin Springfield Burr & Forman, LLP-ATL 171 17th Street, NW Suite 1100 Atlanta, GA 30363 404-815-3000 Fax: 404-817-3244 Email: fspringf@burr.com Rachel Ross Friedman Burr & Forman, LLP-ATL 171 17th Street, NW Suite 1100 Atlanta, GA 30363 404-815-3000 Fax: 404-817-3244 Email: rfriedman@burr.com This 11 day of May, 2017. Respectfully submitted, Cooling & Winter LLC /s/ Salvatore Louis Schiappa III_____ Salvatore Louis Schiappa III Georgia Bar 600189 Attorney for Cooling & Winter LLC 1355 Roswell Rd, Suite 240 Marietta GA 30062 Case 1:17-cv-00282-SCJ-JSA Document 12 Filed 05/11/17 Page 12 of 13 13 770-988-9055 lschiappa@coolingwinter.com CERTIFICATE OF COMPLIANCE WITH LOCAL RULE 7.1D Pursuant to Local Rule 7.1D, the undersigned counsel certifies that this document has been prepared using Times New Roman 14 point font. This 11 day of May, 2017. Respectfully submitted, Cooling & Winter LLC /s/ Salvatore Louis Schiappa III_____ Salvatore Louis Schiappa III Georgia Bar 600189 Attorney for Cooling & Winter LLC 1355 Roswell Rd, Suite 240 Marietta GA 30062 770-988-9055 lschiappa@coolingwinter.com Case 1:17-cv-00282-SCJ-JSA Document 12 Filed 05/11/17 Page 13 of 13