Evensen, Kevin et al v. Heights Finance Corporation et alBrief in Support of 9 Motion to DismissW.D. Wis.January 5, 2017IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WISCONSIN KEVIN EVENSEN et al, ) ) Plaintiffs, ) ) vs. ) Case No. 3:16-cv-00784 ) HEIGHTS FINANCE CORPORATION, ) ) Defendant, ) and ) GREG’S TOWING AND REPAIR, ) ) Defendant. ) DEFENDANT GREG’S TOWING AND REPAIR’S MEMORANDUM IN SUPPORT OF THEIR MOTION TO DISMISS PURSUANT TO 12(b)(6) and 12(b)(1) Greg’s Towing and Repair is being sued under two statutes - the federal Fair Debt Collection Practices act, and the state Wisconsin Consumer Act. However, Greg’s Towing is not a debt collector pursuant to the FDCPA. The claims against Greg’s Towing under the FDCPA thus fail to state a claim upon which relief can be granted. Without the FDCPA claims granting subject matter jurisdiction, this court should decline supplemental jurisdiction for the WCA claims against Greg’s Towing. Therefore, the claims against Greg’s Towing should be dismissed. Background The plaintiffs are a Mr. and Mrs. Evensen, purchasers of a 2007 Chrysler automobile, using a motorhome they owned as collateral. Compl., ¶¶17-18. They fell behind on their payments, causing Heights Finance Corporation to hire Greg’s Towing to repossess both the automobile and the motorhome. Compl., ¶¶ 20-22. The plaintiffs allege that Greg’s Towing breached the peace in repossessing the vehicles, in violation of the FDCPA and the WCA. Compl., ¶¶ 23-41. Case: 3:16-cv-00784-slc Document #: 10 Filed: 01/05/17 Page 1 of 5 The complaint broadly alleges that Greg’s Towing and Repair “regularly attempts to collect debts owed to others and is a ‘debt collector’ as defined by 15. U.S.C. §1692(a)(6).” Compl., ¶ 14. Standard of Review “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)). Furthermore, a complaint’s “factual content” must permit “the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678. In reviewing a motion to dismiss, a district court should treat non- conclusory, factual allegations as true and disregard “mere conclusions, [because such conclusory allegations] are not entitled to the assumption of truth.” Id. at 664. Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. Courts are not bound to accept legal conclusions “couched as a factual allegation”. Id. Legal conclusions in a complaint “must be supported by factual allegations”. Id. at 679. Argument I. Plaintiff’s have failed to factually allege that Greg’s Towing is a debt collector The FDCPA defines debt collectors in 15 U.S.C. § 1692a(6) as people who use instrumentalities of interstate commerce “in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect … debts owed.” However, only for the purposes of § 1692f(6)’s prohibition of non-judicial actions, the term also includes people who use the instrumentalities of interstate Case: 3:16-cv-00784-slc Document #: 10 Filed: 01/05/17 Page 2 of 5 commerce “in any business the principal purpose of which is the enforcement of security interests.” § 1692a(6). Courts normally distinguish between debt collection and the enforcement of security interests “because the latter is not regulated by the FDCPA.” Dallman v. Felt & Lukes, 2013 WL 6628996 (W.D. Wis., 2013) Repossession companies are not considered to be debt collectors - they are only subject to the FDCPA when they run afoul of § 1692f(6). Under the FDCPA, ‘Debt Collectors’ is “a term that is defined as excluding repossessors and other enforcers of security interests” except for the purposes of § 1692f(6). Nadalin v. Automobile Recovery Bureau, Inc., 169 F.3d 1084 (7th. Cir. 1999)(emphasis added). It is widely accepted that repossession companies are not debt collectors outside the § 1692f(6) exception. See Eley v. Evans, 476 F.Supp.2d 531 (E.D. Va., 2007) (“Repossession agents and agencies, whose only role in the debt collection process are the enforcement of security interests, generally fall outside of the ambit of the FDCPA, except for the provisions of § 1692f(6)”); Purkett v. Key Bank USA, N.A., no. 01-c-162, 2001 WL 503050 (N.D.Ill. May 10, 2001); Fleming-Dudley, no. 05-c- 4648, 2007 WL 952026 (N.D.Ill. March 22, 2007); Pflueger v. Auto Finance Group, Inc., No. cv-97-9499, 1999 WL 33740813 (C.D.Cal. April 26, 1999); Alexander v. Blackhawk Recovery and Investigation, LLC., 731 F.Supp.2d 674 (E.D. Mich., 2010). Plaintiffs are clearly complaining of Greg’s Towing’s actions in the repossession of their car - not in collecting a debt. Greg’s Towing was enforcing a security interest. Plaintiff’s legal conclusion that Greg’s Towing “regularly attempts to collect debts owed to others” (Compl., ¶ 14) is unsupported by a single factual allegation of any attempt by Greg’s Towing to collect any debts, and as such cannot survive Iqbal. Plaintiffs did not allege that Greg’s Towing was an enforcer of security interests, or that Greg’s Towing was a “business the principal purpose of which is the enforcement of security interests.” § 1692a(6). Case: 3:16-cv-00784-slc Document #: 10 Filed: 01/05/17 Page 3 of 5 It is true that Plaintiff’s complaint does contain factual allegations of Greg’s Towing enforcing security interests against the two vehicles. Such actions would fall under the FDCPA, when done by a “business the principal purpose of which is the enforcement of security interests”. § 1692a(6). There are no allegations in this complaint that Greg’s Towing is such a business. Absent allegations that Greg’s Towing is such a business, Greg’s Towing cannot be subject to the FDCPA as an enforcer of security interests. As the complaint contains no allegations that Greg’s Towing is a debt collector, other than an unsupported legal conclusion that Greg’s Towing is a debt collector, it fails to state a claim upon which relief can be granted under the FDCPA. Greg’s Towing was not collecting on a debt, but enforcing a security interest. Therefore, this Court should dismiss the FDCPA claim against Greg’s Towing pursuant to Fed. R. Civ. P. 12(b)(6). II. Absent the FDCPA claim, this Court should decline supplemental jurisdiction over the WCA claims. The supplemental-jurisdiction statute provides that the district court “may decline to exercise supplemental jurisdiction” over state-law claims if the court “has dismissed all claims over which it has original jurisdiction.” 28 U.S.C. § 1367(c)(3). Although the decision is discretionary, “[w]hen all federal claims in a suit in federal court are dismissed before trial, the presumption is that the court will relinquish federal jurisdiction over any supplemental state-law claims.” Al's Serv. Ctr. v. BP Prods. N. Am., Inc., 599 F.3d 720, 727 (7th Cir.2010). The Seventh Circuit has identified circumstances which may displace that presumption: (1) The statute of limitations has run on the pendent claim, precluding the filing of a separate suit in state court; (2) Substantial judicial resources have already been committed, so that sending the case to another court will cause a substantial duplication of effort; or (3) when it is absolutely clear how the pendent claims can be decided. Case: 3:16-cv-00784-slc Document #: 10 Filed: 01/05/17 Page 4 of 5 Sharp Elecs. Corp. v. Metro. Life Ins. Co., 578 F.3d 505, 514-15 (7th Cir.2009) (internal quotation marks omitted). None of these circumstances are found here. The WCA claim is not outside the statute of limitations, no judicial resources have been committed, and at this stage it is not clear how the pendent claims could be decided. Therefore this Court should refuse to exercise supplemental jurisdiction over the WCA claims against Greg’s Towing. CONCLUSION Plaintiffs have failed to allege that Greg’s Towing is a debt collector under the FDCPA. Therefore, the FDCPA claims against Greg’s Towing should be dismissed for failure to state a claim upon which relief should be granted. Absent those FDCPA claims, this Court should refuse to exercise supplemental jurisdiction over the remaining state WCA claims. Therefore, Defendant Greg’s Towing and Repair respectfully requests that the Court enter an Order dismissing Plaintiff’s claims against Greg’s Towing and Repair, and granting any further relief the Court deems just and proper. Respectfully Submitted, By: /s/ Douglas Alan Muskett___ Douglas Alan Muskett #1101550 McKenzie & Talaska, PC 108 S. Moore St Bessemer, MI 49911 (906) 663-4771 (telephone) (906) 663-4784 (fax) doug@westuplaw.com Case: 3:16-cv-00784-slc Document #: 10 Filed: 01/05/17 Page 5 of 5