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Morgan v. Lvnv Funding LLC

United States District Court, S.D. Indiana, Indianapolis Division

September 19, 2014

STEPHEN MORGAN, Plaintiff,
v.
LVNV FUNDING LLC, NELSON WATSON & ASSOCIATES, LLC, NORTHLAND GROUP, INC., RESURGENT CAPITAL SERVICES, LP, Defendants.

ORDER DENYING DEFENDANTS' FIRST MOTION TO DISMISS AS MOOT AND GRANTING DEFENDANTS' MOTION TO DISMISS THE AMENDED COMPLAINT WITHOUT PREJUDICE

SARAH EVANS BARKER, District Judge.

Plaintiff filed his original Complaint on July 12, 2013. [Dkt. No. 1.] On October 3, 2013, Defendants filed a motion to dismiss. [Dkt. No. 22.] That motion was fully briefed on November 19, 2013. [ See Dkt. No. 42.] On May 2, 2014, Plaintiff sought leave of Court to amend his complaint [Dkt. No. 53], which was granted on June 3, 2014 [Dkt. No. 54]. Consequently, Defendants' October 3, 2013 Motion to Dismiss the original complaint at Docket Number 22 is DENIED as moot.

In response to Plaintiff's Amended Complaint, Defendants filed a Motion to Dismiss on June 23, 2014. [Dkt. No. 59.] Because Defendants' original Motion to Dismiss was still pending at the time, Defendants incorporated their arguments contained in that motion and brief. Consequently, the Court will consider the parties' arguments related to both motions to dismiss in deciding Defendants' Motion to Dismiss the Amended Complaint.

Plaintiff Stephen Morgan complains that Defendants LVNV Funding LLC, Nelson Watson & Associates, LLC, Northland Group, Inc., and Resurgent Capital Services, LP violated the Fair Debt Collection Practices Act ("FDCPA") in three ways. First, Plaintiff alleges that Defendants misrepresented the amount owed as evidenced by the discrepancy in the debt amount contained in two letters, Plaintiff's credit report and the Proof of Claim Defendant Resurgent Capital Services filed on behalf of LVNV Funding in Plaintiff's Chapter 13 bankruptcy action. Second, Plaintiff alleges that Defendants do not legally own the debt they attempted to collect. Third, Plaintiff alleges that after he filed for bankruptcy, Defendant Nelson "contacted the Plaintiff directly via telephone call on July 22, 2013, " in violation of the FDCPA. Defendants argue that Plaintiff's Amended Complaint fails to state a claim upon which relief can be granted and move to dismiss. We GRANT Defendants' Motion and dismiss Plaintiff's Amended Complaint without prejudice.

I. Standard of Review.

A motion to dismiss tests the legal sufficiency of the complaint. McReynolds v. Merrill Lynch & Co., 694 F.3d 873, 878 (7th Cir. 2012). 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).

When "[e]valuating the sufficiency of the complaint, we construe it in the light most favorable to the nonmoving party, accept well-[pled] facts as true, and draw all inferences in her favor." "Although for the purposes of a motion to dismiss we must take all of the factual allegations in the complaint as true, we are not bound to accept as true a legal conclusion couched as a factual allegation." The "complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'"

Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939, 946 (7th Cir. 2013) (citations omitted).

"As a general matter, we view the confusing nature of a dunning letter as a question of fact, that, if well-pleaded, avoids dismissal on a Rule 12(b)(6) motion." Zemeckis v. Global Credit & Collection Corp., 679 F.3d 632, 636 (7th Cir. 2012) (citations omitted). Although district courts must "tread carefully before holding that a letter is not confusing as a matter of law when ruling on a rule 12(b)(6) motion... a plaintiff fails to state a claim and dismissal is appropriate as a matter of law when it is apparent from a reading of the letter that not even a significant fraction of the population would be misled by it.'" Id. (citing McMillan v. Collection Prof'ls, Inc., 455 F.3d 754, 759 (7th Cir. 2006); Taylor v. Cavalry Inv., L.L.C., 365 F.3d 572, 574 (7th Cir. 2004)).

II. Plaintiff's FDCPA Amended Complaint Fails To State A Claim Upon Which Relief Can Be Granted.

A. Defendants' Dunning Letters, Credit Reporting and Proof of Claim.

Plaintiff alleges that Defendants' communications with Plaintiff in an attempt to collect a debt violated the FDCPA. Specifically, Plaintiff alleges that on August 2, 2012, Defendant Northland sent a settlement letter to Plaintiff claiming the current balance on his HSBC/Hsbc Card Services account was $971.13 and offering to settle for $242.76. [Dkt. No. 57-6.][1] Two and a half months later, on October 23, 2012, Defendant Nelson, Watson & Associates, LLC allegedly sent a dunning letter indicating that the total balance due on the same HSBC account was $979.72 ($468.00 in principal and $511.72 in interest). [Dkt. No. 57-7.]

Plaintiff alleges that his Experian credit report shows varying monthly reports of the balance on the same account beginning in November 2011 at $946 continuing through December 2012 at $985. [Dkt. 57-8.] The monthly incremental increase in the account balance reported on Plaintiff's credit report varies over time. On June 26, 2013, Defendant Resurgent Capital Services submitted a proof of claim alleging that at the time Plaintiff filed for bankruptcy (March 6, 2013 as per Dkt. No. 57 at ¶ 41), LVNV was owed $468.00 on Plaintiff's HSBC account. [Dkt. No. 57-11.] Plaintiff alleges that because Defendant Resurgent Capital Services did not check the box on the Proof of Claim stating "Check this box if the claim includes interest or other charges in addition to the principal amount of the claim" that "no interest is due on this account." [Dkt. No. 57 at ¶ 52; Dkt. No. 57-11.]

The gravamen of Plaintiff's claim is that Defendants violated the FDCPA by stating different amounts were owed by Plaintiff in multiple communications over time. [ See Dkt. No. 57 at First Claim for Relief: ¶¶ 2-5.] FDCPA claims are evaluated from the perspective of an "unsophisticated consumer or debtor" who is "uniformed, naïve, [and] trusting, " but possesses "rudimentary knowledge about the financial world, is wise enough to read collection notices with added care, possesses reasonable intelligence, ' and is capable of making basic logical deductions and inferences." Williams v. OSI Educ. Servs., Inc., 505 F.3d 675, 678 (7th Cir. 2007) (citing Pettit v. Retrieval Masters Creditor Bureau, Inc., 211 F.3d 1057, 1060 (7th Cir. 2000)). Multiple courts have held that "even the most unsophisticated consumer would understand that credit card debt accrues interest." Weiss v. Zwicker & Assocs., P.C., 664 F.Supp.2d 214, 217 (E.D.N.Y. 2009); see also, e.g., Leffler v. Miller & Steeno, P.C., No. 4:13cv1764 TCM, 2014 WL ...


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