United States District Court, W.D. Pennsylvania
For DONNA WALTON, Plaintiff: Clayton S. Morrow, LEAD ATTORNEY, Morrow & Artim, PC, Pittsburgh, PA; Jeffrey L. Suher, LEAD ATTORNEY, Monroeville, PA.
For JORGE M. PEREIRA, THE LAW OF BUSINESS, PC, and, PRECISION RECOVERY ANALYTICS, INC., Defendants: Douglas M. Marinos, LEAD ATTORNEY, PRO HAC VICE, Allentown, PA.
Mark R. Hornak, United States District Judge.
This case involves alleged improper debt collection practices. Plaintiff, Donna Walton (" Ms. Walton" ), alleges that Defendants assessed unauthorized attorney's fees and made misleading statements about the amount or method of determining attorney's fees, in violation of both the Fair Debt Collection Practices Act, 15 U.S.C. § § 1692, et. seq., and the Dragonetti Act, 42 Pa. Cons. Stat. Ann. § § 8351-8355. Pending before the Court is Defendants Jorge M. Pereira (" Mr. Pereira" ) and The
Law of Business, PC (" Law of Business" )'s Motion to Dismiss, ECF No. 6. The Court has considered Plaintiff's Complaint, ECF No. 1, Defendants' Motion to Dismiss, Defendants' Memorandum in Support, ECF No. 7, and Plaintiffs Response in Opposition, ECF No. 10. The matter is ripe for disposition, and for the reasons that follow, Defendants' Motion to Dismiss is denied.
When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court must accept the factual allegations in the Complaint as true and draw all reasonable inferences in Plaintiff's favor. See Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011). Therefore, for the purpose of the disposition of Defendants' Motion, the essential facts are as follows.
On or about August 6, 2012, Defendants sent a dunning letter (" Collection Letter" ) to Plaintiff Ms. Walton. Pl.'s Compl. ¶ 8. The Collection Letter contains the signature of Defendant Mr. Pereira and represents that both Cavalry and Precision Recovery Analytics, Inc. (" Precision Recovery" ) are owed a debt of $6,110.11. Id. at ¶ ¶ 8,15; Ex. A. The Collection Letter also sets forth, in relevant part, that
Unless you [Ms. Walton] notify me [Mr. Pereira] within 30 days after the receipt of this letter that this debt, or any portion of it, is dispute, we will assume that the debt is valid. If you notify us of a dispute, we will obtain verification of the debt and mail it to you.
Id. at ¶ 9; Ex. A. Ms. Walton alleges that Defendants utilized a method for assessing attorney's fees against her that was not authorized by contract, and that Defendants failed to disclose, or made misleading statements about, the amount or method of determining attorney's fees. Id. at ¶ 17. On or about November 15, 2012, Defendants filed a Civil Complaint (" Collection Complaint" ) at Docket Number CV-372-2012 in Magisterial District Number 05-2-07, in Allegheny County, Pennsylvania. Id. at ¶ 18. In the Collection Complaint, Defendants sought the sum of $7,249.79 from Ms. Walton. Id. That sum not only included the principal, but also attorney's fees. Id. at ¶ 19; Ex. B. Defendants' sole theory of recovery was an account-stated cause of action. Id. Mr. Pereira signed the Collection Complaint on behalf of Precision Recovery, Law of Business, and himself. Id. at ¶ 20; Ex. B.
Ms. Walton avers that Mr. Pereira did not review the Collection Complaint or her file prior to filing the Collection Complaint. Id. Moreover, at the time the Collection Complaint was filed, Defendants were not in possession of (1) account statements starting with a zero balance up through the date of the alleged default; (2) a signed loan application by Ms. Walton; (3) account statements reflecting that Ms. Walton owed the amount alleged in the Collection Complaint; (4) documentation substantiating Precision Recovery's request for attorney fees; and (5) proof that Ms. Walton's account was assigned from the original creditor to Precision Recovery. Id. at ¶ 23. She further claims that Defendants had no personal knowledge of the accuracy of the information allegedly provided by the original creditor, id. at ¶ 25, and initiated the Collection Complaint after failing to conduct an adequate investigation, id. at ¶ 26. On January 17, 2013, Magistrate District Judge Jeffrey L. Herbst entered judgment for Ms. Walton on the Collection Complaint, id. at ¶ 32, and Defendants did not appeal the judgment, id. at ¶ 33.
Ms. Walton alleges that she did not owe $7,249.79 to Precision Recovery, id. at ¶ 34, and never agreed to pay that sum to Precision Recovery, id. at ¶ 35. Defendants' Collection Complaint was based on
an account-stated theory, and Defendants represented that account statements were sent to Ms. Walton; yet, she alleges that Defendants never sent her any account statements. Id. at ¶ ¶ 38-40. Ms. Walton further contends that an account-stated theory does not permit the collection of attorney's fees, but in the Collection Complaint the Defendants liquidated their demand for attorney's fees and included that amount within the total sum sought. Id. at ¶ 42. Ms. Walton avers that the demand for attorney's fees in the Collection Complaint is false and misleading because it states that she was and would be incurring attorney's fees as calculated on a percentage of the debt or for a liquidated amount. Id. at ¶ 45. Indeed, when Defendants sued Ms. Walton in Magistrate's Court, she alleges that she was led to believe that she would be responsible for attorney's fees for the collection attorney, which influenced her decision on whether or not to pay or to compromise the claim. Id. at ¶ 56.
On May 24, 2013, Ms. Walton filed suit in this Court against Defendants, alleging in Count I, " Violation of § § 1692f and 1692f(1) of the Fair Debt Collection Practices Act Against Defendants' Use of Unfair or Unconscionable Means to Collect," in Count II, " Violation of § § 1692e, 1692e(2)(A),(B), and 1692e(10) of the Fair Debt Collection Practices Act [for] Making False, Deceptive or Misleading Representations and § 1692g," and in Count III, " Violation of the Dragonetti Act 42 Pa.C.S.A. § § 8351-8355."
a. Standard of Review
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must allege " enough facts to state a claim for relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); see also Fed.R.Civ.P. 10(c) (" a copy of a written instrument that is an exhibit to a pleading is part of the pleading for all purposes" ). " The District Court must accept the complaint's well-pleaded facts as true, but may disregard any legal conclusions." Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (citing Ashcroft v. Iqbal, 556 U.S. 662, 663, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). " Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678. In short, a motion to dismiss should be granted if a party does not allege facts that could, if established at trial, entitle him to relief. See Fowler, 578 F.3d at 211.
b. Defendants' Motion to Dismiss Count I of Plaintiff's Complaint
Count I of Plaintiff's Complaint alleges violations of § 1692f and § 1692f(1) of the Fair Debt Collection Practices Act (" FDCPA" ). The FDCPA was enacted " to eliminate abusive debt collection practices by debt collectors, 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." 15 U.S.C. § 1692(e). Because the FDCPA was designed to protect consumers, FDCPA claims are " analyzed from the perspective of the least sophisticated debtor." Brown v. Card Serv. Ctr., 464 F.3d 450, 453-54 (3d Cir. 2006). Defendants contend that Ms. Walton " has failed to allege that she has suffered any actual damages in her Complaint as a result of the inclusion of alleged unauthorized attorney's fees and ...