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Zachary v. Midland Funding LLC

United States District Court, E.D. Pennsylvania

July 18, 2018

MIDLAND FUNDING, LLC, et al. Defendants




         On July 27, 2017, Plaintiff Brenda Zachary (“Plaintiff”) filed this civil action against Defendants Midland Funding LLC, Midland Credit Management, Inc., and Encore Capital Group, Inc. (collectively, “Defendants”) in the Court of Common Pleas of Philadelphia County, Pennsylvania, alleging violations of, inter alia, the Fair Debt Collection Practices Act (the “FDCPA”), 15 U.S.C. § 1692 et seq., Pennsylvania's Fair Credit Extension Uniformity Act (the “FCEUA”), 73 Pa. Cons. Stat. § 2270.1 et seq., and Pennsylvania's Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), 73 Pa. Cons. Stat. § 201-1 et seq. [ECF 1].[1] Before this Court is a motion to dismiss filed by Defendants pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6) in which Defendants seek the partial dismissal of Counts I, II, and III of Plaintiff's complaint, and the dismissal of Counts IV, V, and VI of the complaint in their entirety. [ECF 5]. Plaintiff has filed a response opposing the motion. [ECF 6].[2] The issues in the motion to dismiss have been fully briefed by the parties and are ripe for disposition. For the reasons set forth, Defendants' motion to dismiss is granted.


         In the complaint, Plaintiff asserts claims for violations of the FDCPA (Count I), violations of the FCEUA (Count II), violations of the UTPCPL (Count III), defamation (Count IV), abuse of process (Count V), and violations of the Fair Credit Reporting Act (the “FCRA”) (Count VI). These claims are premised upon Defendants' efforts to collect certain consumer debts owed by Plaintiff, including, inter alia, the filing of a debt collection lawsuit in Philadelphia Municipal Court. As noted, Defendants moved to dismiss these claims in part. When ruling on a motion to dismiss, this Court must accept as true all factual allegations in the Complaint and construe these facts in the light most favorable to Plaintiff. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009) (citing Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009)). The following is a summary of the relevant allegations in Plaintiff's complaint; to wit:

Defendants are engaged in the business of purchasing and collecting unpaid consumer debts. (Compl. at ¶ 7). On September 20, 2016, Defendants filed a lawsuit against Plaintiff in Philadelphia Municipal Court (the “Debt Collection Lawsuit”), in which they sought damages in the amount of $1, 156.21, which included, inter alia, damages that had accumulated as a result of Plaintiff's alleged default on a Citibank, N.A./Sears MasterCard credit account (the “Citibank Account”). (Id. at ¶ 12). Plaintiff retained counsel and contested Defendants' claim in the Debt Collection Lawsuit. When the case was scheduled for trial, (id. at ¶ 13), Defendants failed to produce credible, competent and/or sufficient evidence of the alleged debt, and judgment was entered in favor of Plaintiff. (Id.). Defendants did not appeal this judgment, which became final on March 5, 2017. (Id. at ¶ 14).
Plaintiff alleges that Defendants failed to notify credit reporting agencies that the alleged debt was in dispute, (id. at ¶ 15), and that, despite the entry of judgment in Plaintiff's favor in the Debt Collection Lawsuit, Defendants continue to make false reports to credit reporting agencies in which they characterize Plaintiff's account as past due. (Id. ¶ 16). Plaintiff avers that Defendants have failed to prove they are the assignees and/or successors-in-interest to Plaintiff's original creditor, Citibank, N.A., (id. at ¶ 21), and that even if they are the assignees and/or successors-in-interest, they have used unfair and/or unconscionable means to collect the debt. (Id. at ¶ 23). Plaintiff further alleges that Defendants have made harassing phone calls to her residential and/or cellular telephones after being advised to cease and desist making such calls. (Id. at ¶ 24).

         Defendants removed the case to this court on September 5, 2017. [ECF 1]. Thereafter, Defendants filed the instant motion to dismiss pursuant to Rule 12(b)(6). [ECF 5]. As noted, Plaintiff filed a response in opposition. [ECF 6].


         When considering a Rule 12(b)(6) motion to dismiss for failure to state a claim, the court “must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions.” Fowler, 578 F.3d at 210-11 (citing Iqbal, 556 U.S. at 677). The court must determine whether the plaintiff has pled facts sufficient to show a plausible entitlement to relief. Id. at 211. If the pled facts only allow the court to infer the mere possibility of misconduct, then the complaint has only alleged, and not shown, that the plaintiff is entitled to relief. Iqbal, 556 U.S. at 679 (citing Fed.R.Civ.P. 8(a)) (emphasis added). Thus, the plaintiff “must allege facts sufficient to ‘nudge [his or her] claims across the line from conceivable to plausible.'” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Mere “labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. After construing the complaint in the light most favorable to the plaintiff, if the court finds that the plaintiff could not be entitled to relief, it can dismiss the claim. Fowler, 578 F.3d at 210.

         While complaints and submissions filed by pro se litigants are subject to liberal interpretation and are held “‘to less stringent standards than formal pleadings drafted by lawyers, '” Fantone v. Latini, 780 F.3d 184, 193 (3d Cir. 2015) (citing Haines v. Kerner, 404 U.S. 519, 520-21 (1972)), the court still must ensure that a pro se complaint contains “‘sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'” Id. at 193 (citing Iqbal, 556 U.S. at 678).


         As noted, the Complaint asserts six causes of action, each premised upon Defendants' attempts to collect certain debts allegedly owed by Plaintiff. Defendants move to partially dismiss Counts I through III, and dismiss Counts IV through IV in their entirety. This Court will address each cause of action and the relevant arguments concerning the dismissal of each claim in turn.

         Plaintiff's FDCPA Claims (Count I)

         At Count I of the complaint, Plaintiff alleges that Defendants violated §§ 1692e, 1692e(2), 1692e(10), and 1692f(1) of the FDCPA by, inter alia, failing to “produce credible, competent and/or sufficient evidence of the alleged debt” during the Municipal Court litigation and failing “to prosecute its claim” at trial. (See Compl. at ¶¶ 2, 26). Defendants move to dismiss Plaintiff's FDCPA claim, in part, arguing that, as a matter of law, the commencement of a lawsuit without supporting evidence does not constitute the type of harassing, abusive, or dishonest conduct proscribed by the FDCPA. This Court agrees.

         The FDCPA protects consumers from “abusive, deceptive or unfair debt collection practices by debt collectors.” Piper v. Portnoff Law Assocs., Ltd., 396 F.3d 227, 232 (3d Cir. 2005). The FDCPA prohibits three general categories of conduct by debt collectors: (1) harassment, oppression, or abuse; (2) false, deceptive, or misleading representations; and (3) unfair or unconscionable practices. See 15 U.S.C. §§ 1692d, 1692e, 1692f.

         Plaintiff alleges that Defendant violated §§ 1692e and 1692f by filing the Debt Collection Lawsuit without sufficient evidence to support its claims against Plaintiff. Section 1692e prohibits the use of “any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. The section also includes a non-exhaustive list of conduct that violates this general prohibition. Id. In her claim, Plaintiff specifically relies on § 1692e(2), which prohibits “[t]he false representation of the character, amount, or legal status of any debt, ” and § 1692e(10), which prohibits, inter alia, “[t]he use of any false representation or deceptive means to collect or attempt to collect any debt . . . .” Id. §§ 1692e(2), 1692e(10). Section 1692f prohibits “unfair or unconscionable means to collect or attempt to collect any debt” and provides a non-exhaustive list of examples of prohibited conduct. Id. § 1692(f).

         From a careful review of the allegations of the complaint, it is apparent that Plaintiff's FDCPA claim and her contention that Defendants violated §§ 1692e, 1692e(2), 1692e(10), and 1692f(1), rest primarily on Defendant's alleged act of filing and pursuing the Debt Collection Lawsuit against Plaintiff in state court. Nowhere in the complaint has Plaintiff alleged that Defendants' claims in the Debt Collection Lawsuit were frivolous or baseless, or that Defendants lacked a good faith basis to file that lawsuit. Without more, the allegation that Defendant filed and pursued the underlying lawsuit without sufficient evidence fails to state a claim that the lawsuit was a false, deceptive, or misleading representation or means to collect a debt, as prohibited by §§ 1692e, e(2), e(10), or that it constituted an unconscionable and unfair practice as proscribed by § 1692f(1). See Eades v. Kennedy, PC Law Offices, 799 F.3d 161, 172 (2d Cir. 2015) (dismissing FDCPA claim predicated on the initiation of a debt collection lawsuit on the grounds that the complaint did not allege facts tending to show the lawsuit was frivolous or baseless); Harvey v. Great Seneca Fin. Corp., 453 F.3d 324, 325 (6th Cir. 2006) (rejecting argument that “a lawsuit filed without the immediate means of proving the existence, amount, or true owner of the debt” violates § 1692(e)). Accordingly, Plaintiff's FDCPA is dismissed to the extent it is predicated on the commencement and prosecution of the Debt Collection Lawsuit.[3]

         Plaintiff's UTPCPL and FCEUA ...

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