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Aurandt v. Brown

United States District Court, W.D. Pennsylvania

March 31, 2017




         I. Introduction

         This action comes before the Court upon a motion to dismiss filed by Defendants. (ECF No. 43.) Defendants move to dismiss with prejudice the entirety of Plaintiff's complaint.[1] (Id.) For the reasons that follow, Defendants motion will be GRANTED IN PART and DENIED IN PART.

         II. Jurisdiction

         The Court has jurisdiction over Plaintiff's federal claims pursuant to 28 U.S.C. § 1331. The Court has supplemental jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367. Venue is proper under 28 U.S.C. § 1391(b) because a substantial portion of the events giving rise to the claims occurred in the Western District of Pennsylvania.

         III. Background

         Plaintiff, Crystal Aurandt, brings this case on behalf of herself and members of a class, alleging that Defendants participated in a scheme to defraud her and others similarly situated through unlawful and usurious loans and unlawful debt collection tactics. (ECF No. 35 ¶ 1.) The following facts are alleged in the Amended Complaint, which the Court will accept as true for the sole purpose of deciding the pending motion.

         Defendant Carey V. Brown owned and/or controlled defendants CPS, MYCASHNOW, CPD, SUPPORT SEVEN, OWLS NEST, DISCOUNT ADV., DISCOUNT ADV., PAYDAYMAX, MILLENIUM and ACH FEDERAL. These companies marketed, underwrote, loaned, serviced, transacted and collected on payday loans. (Id. ¶ 8.) Defendant Ronald Beaver served as the CEO of the corporate defendants and their affiliates. (Id. ¶ 9.)

         The Amended Complaint defines a payday loan as “a short-term (typically a matter of weeks) high fee, closed-end loan, traditionally made to consumers to provide funds in anticipation of an upcoming paycheck.” (Id. ¶ 24.) A borrower obtaining a payday loan must either provide a personal check to the lender or an authorization to electronically debit the borrower's deposit account for the loan amount and associated fee as security for the loan. (Id. ¶ 24.) In order to obtain a payday loan, the borrower is also required to provide the lender with information including: his or her social security number, phone number, income and employment details, and home address. (Id. ¶ 25.) Payday loans involve significant interest rates - which Plaintiff characterizes as “usurious” - and “balloon” repayments shortly after the loan is made. (Id. ¶ 27.) If a borrower is unable to repay the full amount of the loan on the due date, the lender typically gives the borrower the option to “roll over” the loan balance by paying another “fee, ” usually equal to the initial fee at the time of loan funding. The cycle then continues until such time as the borrower is either able to pay off the loan in full or the borrower defaults on the loan. (Id. ¶ 28.)

         Pennsylvania and twelve other states and the District of Columbia have outlawed payday loans. (Id. ¶ 31.) In Pennsylvania, a consumer loan transaction for $50, 000 or less is civilly usurious when it imposes an annual interest rate exceeding 6% per annum and interest charged in excess of this amount is void. 41 Pa. Stat. Ann. §§ 201, 502. The Amended Complaint alleges that Defendants incorporated shell corporations in Anguilla and operate online in order to solicit payday loans to potential borrowers in states that have banned payday loans. (Id. ¶¶ 33-34.)

         In addition to offering these illegal loans, Defendants also attempted to collect on them using methods which allegedly violate the Fair Debt Collection Practices Act (15 U.S.C. § 1692) and the portion of the Telephone Consumer Protection Act designated as the Truth in Caller ID Act (47 U.S.C. § 227(e)). (Id. ¶ 35.) Specifically, these methods include “spoofing” phone numbers in order to make it appear that the call is coming from governmental authorities rather than creditors. (Id. ¶ 36.) Callers even went as far as to impersonate law enforcement officials and threaten to arrest borrowers if they did not repay what they owed. (Id. ¶¶ 37-38.)

         On or about October 9, 2009, Plaintiff applied for and received a payday loan from MyCashNow, Inc. for $190. (Id. ¶ 39.) “Although Plaintiff is of the belief that the loan was repaid several years ago, Plaintiff was contacted by agents or employees of MyCashNow on October 23, 2014 and told to pay a sum of $1, 100.” (Id. ¶ 40.) Individuals working on behalf of Defendants called Plaintiff on her cell phone. The callers used spoofing technology that caused the caller ID on Plaintiff's phone to indicate that the call was coming from the Altoona Police Department. (Id. ¶ 41.) The callers represented that they were law enforcement and told Plaintiff that a warrant was going to be issued for her arrest later that day, unless she called Defendants and made payment arrangements. (Id. ¶¶ 42-43.)

         Plaintiff brings this lawsuit as a class action. She defines the class as follows:

All natural persons within the states of Arizona, Arkansas, Connecticut, Georgia, Maryland, Massachusetts, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Vermont, West Virginia and the District of Columbia who received a payday loan that was illegal under the respective laws of their states from one of the Defendants and were then subsequently targeted by the Defendants' employees, agents or assigns in a telephone debt collection scheme in violation of 15 U.S.C. § 1692. Members of this class can be identified by records maintained by defendants.

(Id. ¶ 46.) And a sub-class as follows:

All Natural persons residing within the Commonwealth of Pennsylvania who received a payday loan from one of the Defendants which violated any Pennsylvania laws including Pennsylvania Usury Laws and the Pennsylvania UTPCPL. Members of this class can be identified by records maintained by defendants.

(Id. ¶ 46.)

         Plaintiff brings six claims against all of the Defendants: (1) violation of 18 U.S.C. § 1962(d) - civil RICO; (2) usury under Pennsylvania law; (3) violation of the Fair Debt Collection Practices Act (15 U.S.C. § 1692); (4) breach of fiduciary duty and breach of implied duty of confidentiality; (5) invasion of privacy; (6) violation of Pennsylvania's Unfair Trade Practices Consumer Protection Law (UTPCPL).

         After Defendants moved to dismiss the original Complaint (ECF Nos. 1, 28-29), Plaintiff filed an Amended Complaint (ECF No. 35). Defendants then filed a motion to dismiss the entirety of Plaintiff's Amended Complaint, along with a supporting brief. (ECF Nos. 43-44.) Plaintiff filed a brief in opposition to Defendants' motion. (ECF No. 53) and Defendants filed a reply brief (ECF No. 58.) The Court also held oral argument on the motion. (ECF No. 67.) Accordingly, this matter is now ripe for disposition.

         IV. Standard of Review

         Defendants move to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). The Federal Rules of Civil Procedure require that a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Rule 12(b)(6) allows a party to seek dismissal of a complaint or any portion of a complaint for failure to state a claim upon which relief can be granted. Although the federal pleading standard has been “in the forefront of jurisprudence in recent years, ” the standard of review for a Rule 12(b)(6) challenge is now well established. Fowler v. UPMC Shadyside, 578 F.3d 203, 209 (3d Cir. 2009).

         In determining the sufficiency of a complaint, a district court must conduct a two-part analysis. First, the court must separate the factual matters averred from the legal conclusions asserted. See Fowler, 578 F.3d at 210. Second, the court must determine whether the factual matters averred are sufficient to show that plaintiff has a “‘plausible claim for relief.'” Id. at 211 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). The complaint, however, need not include “‘detailed factual allegations.'” Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

         Moreover, the court must construe the alleged facts, and draw all inferences gleaned therefrom, in the light most favorable to the non-moving party. See id. at 228 (citing Worldcom, Inc. v. Graphnet, Inc., 343 F.3d 651, 653 (3d Cir. 2003)). However, “legal conclusions” and “[t]hreadbare recitals of the elements of a cause of action . . . do not suffice.” Iqbal, 556 U.S. at 678. Rather, the complaint must present sufficient “‘factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'” Sheridan v. NGK Metals Corp., 609 F.3d 239, 262 n.27 (3d Cir. 2010) (quoting Iqbal, 556 U.S. at 678).

         Ultimately, whether a plaintiff has shown a “plausible claim for relief” is a context-specific inquiry that requires the district court to “draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679. The relevant record under consideration includes the complaint and any “document integral to or explicitly relied upon in the complaint.” U.S. Express Lines, Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir. 2002) (citing In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)). If a complaint is vulnerable to dismissal pursuant to Rule 12(b)(6), the district court must permit a curative amendment, irrespective of whether a plaintiff seeks leave to amend, unless such amendment would be inequitable or futile. Phillips, 515 F.3d at 236; see also Shane v. Fauver, 213 F.3d 113, 115 (3d Cir. 2000).

         V. Discussion

         Defendants move to dismiss the Amended Complaint in its entirety. The Court will discuss the sufficiency of each claim in turn.

         A. ...

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