Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-cv-02143/USCOURTS-casd-3_09-cv-02143-1/pdf.json

Nature of Suit Code: 430
Nature of Suit: Banks and Banking
Cause of Action: 28:1441 Petition for Removal

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

PATRICIA THOMPSON, et al.,

Plaintiffs,

CASE NO. 09CV2143 DMS (POR)

ORDER GRANTING IN PART

AND DENYING IN PART

DEFENDANT CHASE BANK’S

MOTION TO DISMISS AND

DENYING DEFENDANT’S

MOTION TO STRIKE

[Doc. 8]

vs.

CHASE BANK N.A., et al.,

Defendants.

Pending before the Court is Defendant Chase Bank’s motion to dismiss Plaintiffs’ First

Amended Complaint (“FAC”). For the reasons set forth below, the motion is granted in part and

denied in part.

I.

BACKGROUND

Plaintiffs Patricia Thompson and Gene Robert Thompson allege that Defendants Chase Bank

and IC Systems, Inc. violated the Rosenthal Fair Debt Collection Practices Act (“RFDCPA”), Cal.

Civ. Code § 1788, et seq., and committed other torts when attempting to collect a credit card debt.

Plaintiffs allege Defendants called Plaintiffs 259 times over a period of three months, including

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 Prior to Chase filing its motion to dismiss the original complaint, the Court held an informal 1

conference with the parties, wherein Plaintiff did not agree to amend the complaint. (Doc. 4.) Instead,

Plaintiff amended the complaint after receipt of Defendant’s motion. Defendant now seeks attorneys

fees and costs for “opposing Plaintiffs’ virtually identical complaints.” (Def. Mem. P. & A. at 1.) The

Court declines to reach this issue without a noticed motion.

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holidays, in order to collect the debt. (FAC, ¶¶ 50-56.)

Plaintiffs further allege they sent a cease and desist letter, and that any attempts to collect the

debt after the cease and desist letter violated the RFDCPA. (Id. ¶¶ 23-24.) The letter was addressed

to Washington Mutual/Providian. (Id. at Ex. A.) Defendant Chase Bank purchased certain assets of

Washington Mutual, including Plaintiffs’ credit card account, after Washington Mutual went into

bankruptcy. (Id. at ¶ 24.)

Plaintiffs filed suit in the Superior Court of California, County of San Diego on August 5,

2009. (Doc. 1.) On September 30, 2009, Chase removed the matter to this Court. (Id.) On November

4, 2009, Chase filed a motion to dismiss Plaintiffs’ complaint. (Doc. 5.) Rather than oppose,

Plaintiffs filed a First Amended Complaint. (Doc. 6.) The Court therefore denied Chase’s motion as

moot. (Doc. 7.) Chase filed the instant motion on January 14, 2010. (Doc. 8.) Plaintiffs filed an

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opposition, (Doc. 9), and Defendant filed a reply. (Doc. 13.)

II.

DISCUSSION

Chase moves to dismiss claims 1 through 3 and 6 through 13 of the FAC for failure to state a

claim under Federal Rule of Civil Procedure 12(b)(6). Chase also moves to strike certain allegations

and damages requests.

A. Legal Standard

In two recent opinions, the Supreme Court established a more stringent standard of review for

12(b)(6) motions. See Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937 (2009); Bell Atlantic Corp. v.

Twombly, 550 U.S. 544 (2007). To survive a motion to dismiss under this new standard, “a complaint

must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on

its face.’” Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 570). “A claim has facial plausibility

when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “Determining

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whether a complaint states a plausible claim for relief will ... be a context-specific task that requires

the reviewing court to draw on its judicial experience and common sense.” Id. at 1950 (citing Iqbal

v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007)). In Iqbal, the Court began this task “by identifying the

allegations in the complaint that are not entitled to the assumption of truth.” Id. at 1951. It then

considered “the factual allegations in respondent’s complaint to determine if they plausibly suggest

an entitlement to relief.” Id. at 1951.

B. RFDCPA

Claims 1 through 8 of the FAC allege violations of the RFDCPA, under several provisions of

both the RFDCPA and the federal Fair Debt Collection Practices Act (FDCPA). Defendant moves to

dismiss claims 1 through 3 and 6 through 8.

1. Claims 1 through 3

Claims 1 through 3 of the FAC allege that Chase violated the RFDCPA by attempting to

contact Plaintiffs after Plaintiffs notified Chase that they were represented by an attorney and that they

disputed the amount of the debt. Cal. Civ. Code §§ 1788.14, 1788.17; 15 U.S.C. §§1692c(a)(2),

1692c(c). It is undisputed that the cease and desist letter sent by Plaintiffs was addressed to

Washington Mutual, not Chase. (FAC, Ex. A.) Thus, the issue is whether Chase had notice of the

contents of the letter.

On September 25, 2008, Chase entered into a Purchase and Assumption Agreement (“P&A

Agreement”) with Washington Mutual, which was then under a receivership with the Federal Deposit

Insurance Corporation (“FDIC”). (Cho Decl., Ex. B.) Under the P&A Agreement, Chase assumed

“all duties and obligations with respect to [Washington Mutual’s] debit and credit card business,” and

received all records pertaining to the credit card business. (P&A Agreement, §§ 4.2, 6.1.) Five

months later, on February 19, 2009, Plaintiffs’ counsel sent a letter to Washington Mutual ordering

it to cease and desist all communications with Plaintiffs and informing it that the debt was disputed.

Plaintiffs contend their counsel’s letter to Washington Mutual provided notice to Chase

because Chase acquired Plaintiffs’ credit card account and Plaintiffs’ certified mail receipt was signed.

Chase, however, already had acquired Plaintiffs’ credit card account at the time Plaintiffs sent the letter

and thus, there was no reason to provide notice to Washington Mutual. Although the mail receipt was

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 Plaintiffs also contend that if the address was incorrect it was due to Chase’s error because

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the letter was sent to an address listed on Plaintiffs’ credit report and Chase had a duty to provide

accurate contact information to the credit bureaus. The credit report provided by Plaintiffs, however,

is incomplete and does not provide pertinent account information, such as dates and account status.

The Court denies Plaintiffs’ request for judicial notice of the document.

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signed, it is unclear what entity was located at that address at that time. Chase had acquired certain

assets of Washington Mutual, but Washington Mutual itself was under a receivership operated by the

FDIC. The certified mail receipt does not show that Chase received the letter.

Plaintiffs next contend that Chase had notice of the letter because the P&A Agreement

transferred records to Chase. However, that transfer of records would have occurred in September

2008, when Chase entered into the P&A Agreement, not five months after the fact when Washington

Mutual no longer existed. Similarly, Plaintiffs’ argument that notice is imputed to Chase as the

successor to Plaintiffs’ account fails. The cases cited by Plaintiffs do not advance their cause because

those cases involve situations where the information was known prior to transfer of ownership. See

In re Crown Vantage, Inc., 2004 U.S. Dist. LEXIS 13810, *23-24 (N.D. Cal. 2004) (holding that

corporation, after a transfer of ownership, was bound by knowledge it acquired before transfer);

Ojavan Investors Inc., v. California Coastal Comm’n, 26 Cal. App. 4th 516, 527 (1994) (successorsin-interest to land bound by restrictions previously agreed to by predecessors-in-interest). Plaintiffs

do not provide any authority for the proposition that Chase is imputed with knowledge of information

provided to Washington Mutual after Chase had acquired ownership of Washington Mutual’s assets.

Likewise, Plaintiffs’ argument that Chase’s billing statement did not provide an address for credit

notices is unavailing because the billing statements gave Plaintiffs notice that the cease and desist

letter should go to Chase, not Washington Mutual.2

Finally, Plaintiffs allege they gave verbal notice to Chase in addition to written notice. The

complaint alleges that “sometime during March through May Plaintiff Patricia Thompson did give

verbal notice to Defendants to stop calling.” (FAC ¶ 28.) This conclusory allegation does not

establish Chase received notice that Plaintiffs were represented by counsel or that the account was

disputed.

Because Plaintiffs failed to give notice to Chase, Plaintiffs’ claims 1 through 3 fail.

Accordingly, Defendant’s motion as to these claims is granted without prejudice.

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2. Claim 6

Plaintiffs’ sixth claim is for violation of the RFDCPA through violation of 15 U.S.C. §

1692c(a)(1), which provides that a debt collector may not contact a consumer:

at any unusual time or place or a time or place known or which should be

known to be inconvenient to the consumer. In the absence of knowledge of

circumstances to the contrary, a debt collector shall assume that the convenient

time for communicating with a consumer is after 8 o'clock antimeridian and

before 9 o'clock postmeridian, local time at the consumer's location

Plaintiffs allege Defendants violated the statute by calling Plaintiffs on Easter Sunday,

Mother’s Day, and Memorial Day. (FAC ¶ 120.)

Chase argues that the exhibit provided byPlaintiffs detailing the alleged phone calls shows that

Chase called Plaintiffs on Memorial Day, but that Defendant IC Systems called Plaintiffs on Easter

Sunday and Mother’s Day. Defendant contends it is not liable for phone calls made by IC Systems

because creditors are not vicariously liable for the actions of debt collectors. The cases cited by

Defendant rely on the FDCPA. These cases hold that “a creditor that is not itself a debt collector is

not vicariously liable for the actions of a debt collector it has engaged to collect a debt.” Doherty v.

Citibank, 375 F. Supp. 2d 158, 162 (E.D.N.Y. 2005) (citations omitted). Under the FDCPA, creditors

generally are not considered “debt collectors.” Id. at 161-62. The RFDCPA, on the other hand,

contains a broader definition of the term, which can include creditors. See, e.g., Offril v. J.C. Penny

Co., 2009 U.S. Dist. LEXIS 1169 at *7 n.1 (“[U]nlike the FDCPA, which creates a private right of

action only against debt collectors, and not original creditors (with limited exceptions), the [RFDCPA]

creates a private right of action against both debt collectors and original creditors.”). Defendant does

not address the issue of vicarious liability under the RFDCPA. 

Defendant further argues that the claim fails because the statute does not prohibit debt

collectors from calling consumers on holidays. While that is true, debt collection calls on holidays still

may be “inconvenient” or “unusual” under the statute. Accordingly, Chase’s motion to dismiss this

claim is denied.

3. Claims 7 and 8

Plaintiffs’ seventh and eighth claims for relief allege Chase violated the RFDCPA by not

informing credit agencies that the debt was disputed. Both claims rely on the fact that Chase received

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notice of the cease and desist letter. (FAC ¶¶ 128, 137.) Accordingly, the claims fail for the same

reasons as Claims 1 through 3.

C. Invasion of Privacy

Plaintiffs allege that the 259 phone calls to their home constituted an invasion of privacy by

intrusion upon seclusion. A claim for intrusion upon seclusion contains two elements: 1) intrusion into

a private place, conversation or matter, and 2) in a manner highly offensive to a reasonable person.

Shulman v. Group W Productions, 18 Cal. 4th 200, 232 (1998). To show intrusion, a plaintiff must

have “an objectively reasonable expectation of seclusion orsolitude in the place, conversation or data

source,” and the defendant must have “penetrated some zone of physical or sensory privacy

surrounding, or obtained unwanted access to data about, the plaintiff.” Id.

Defendant, citing Castellanos v. JP Morgan Chase, 2009 U.S. Dist. LEXIS 53067 (S.D. Cal.

2009), contends Plaintiffs’ allegations that Chase called them “too often” does not state a claim for

intrusion upon seclusion. In that case, the court found the invasion of privacy claim speculative where

the defendant called the plaintiff over 13 times and sent at least two letters seeking payment for the

debt. Id. at *27-29. Here, Plaintiffs allege they were contacted 259 times in a three month period,

including on many occasions 10 to 12 times in a single day. This is sufficient to state a claim for

invasion of privacy. See Fausto v. Credigy Servs. Corp., 598 F. Supp. 2d 1049, 1056 (N.D. Cal. 2009)

(“Courts have held that ‘repeated and continuous calls in an attempt to collect a debt give rise to a

claim for intrusion upon seclusion.’”). Accordingly, Defendant’s motion to dismiss this claim is

denied.

D. Negligence

Defendant argues that Plaintiffs’ negligence claim fails because, among other things, Plaintiffs

cannot establish that Chase caused Plaintiffs’ injuries. The elements of negligence are “(1) a legal duty

to use reasonable care, (2) breach of that duty, and (3) proximate cause between the breach and (4) the

plaintiff's injury.” Mendoza v. City of Los Angeles, 66 Cal. App. 4th 1333, 1339 (1998). Here,

Plaintiffs allege Defendants “negligently inflicted emotional distress” by communicating with

Plaintiffs after receiving the cease and desist letter. Since Defendant did not receive notice of the cease

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 Plaintiffs style their tenth claim for relief as a “negligence” claim, but also allege Defendant’s 3

“negligently inflicted emotional distress” by communicating with Plaintiffs after receiving their cease

and desist letter. Negligence and negligent infliction of emotional distress are separate and distinct

claims. Plaintiffs may clarify this discrepancy and attempt to state a claim with their amended

complaint.

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and desist letter, Plaintiffs’ claim is dismissed with leave to amend.3

E. Intentional Infliction of Emotional Distress

The elements of an intentional infliction of emotional distress claim are: “(1) extreme and

outrageous conduct by the defendant with the intention of causing, or reckless disregard of the

probability of causing, emotional distress; (2) the plaintiff's suffering severe or extreme emotional

distress; and (3) actual and proximate causation of the emotional distress by the defendant's outrageous

conduct.” Christensen v. Superior Court, 54 Cal. 3d 868, 903 (1991) (citations omitted). Extreme and

outrageous conduct must be such that it “exceed[s] all bounds of that usually tolerated in a civilized

community.” Id.

Defendant contends that making “too many phone calls” to Plaintiffs is insufficient to

constitute outrageous conduct. Plaintiffs, however, allege more than just a high number of calls. They

allege they were called 259 times in a three month period, including holidays; they further allege that

they received up to 10 to 12 calls a day, and that they were called at least 98 times in only 26 days.

(FAC ¶¶ 120, 157.) While these allegations sufficiently allege outrageous conduct, the claim

nonetheless fails.

Plaintiffs attempt to allege intentional conduct based upon Defendant making phone calls after

receipt of the cease and desist letter. (Id. at ¶ 158.) Because the present allegations fail to establish

Chase received notice of the letter, Plaintiffs’ allegations of intentional conduct that rest upon such

notice also fail. Further, Plaintiffs never allege Defendant acted with intent to cause, or with reckless

disregard of the probability of causing, emotional distress. See Christensen, 54 Cal. 3d at 903 (“The

defendant must have engaged in ‘conduct intended to inflict injury or engaged in with the realization

that injury will result.’”). Accordingly, this claim is dismissed with leave to amend.

F. Tort In Se

Plaintiffs’ tort in se claim is based on Defendant’s alleged violations of the RFDCPA,

California Civil Code § 43, and 15 U.S.C. § 1666(b). None of the claims for relief in the FAC allege

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violations of California Civil Code § 43 or 15 U.S.C. § 1666(b), and thus, these claims cannot serve

as the basis for a tort in se claim. Plaintiffs do, however, properly allege several RFDCPA violations.

Nonetheless, Defendant contends that violations of the RFDCPA cannot serve as the basis for

tort in se claims. District courts have split on this issue. See Castellanos v. JP Morgan Chase, 2009

U.S. Dist. LEXIS 53067 (S.D. Cal. 2009)(“TheRosenthal Act already provides a specific private civil

remedy and there is nothing to indicate that California intended to allow separate negligence tort

claims based upon the duties created by the Rosenthal Act.”); Joseph v. J.J. Mac Intyre Cos., 238 F.

Supp. 2d 1158, 1170 (N.D. Cal. 2002) (holding that the plaintiffs stated a claim for tort in se based on

triable questions of fact of Rosenthal Act violations). The Court agrees with the reasoning in

Castellanos, and declines to recognize a tort in se claim based solely on RFDCPA violations for which

Plaintiffs have a private civil remedy. Defendant’s motion to dismiss this claim is granted with

prejudice.

G. Libel

Plaintiffs’ libel claim is based on the allegation that Chase willfully reported to the three credit

bureaus that the account was not disputed. Because Chase never received notice that the account was

disputed, the claim fails. The Court declines to reach Chase’s preemption argument at this time.

H. Motion to Strike

Defendant moves to strike several of Plaintiffs’ requests for statutory damages. Although

Defendant is correct that under 15 U.S.C. § 1692k statutory damages are limited to $1,000 per action,

not per violation, the motion does not address the interplay between remedies available under the

FDCPA and RFDCPA. The motion is therefore denied. Defendant’s motion to strike allegations

regarding Chase’s knowledge of the cease and desist letter is denied as moot in light of the discussion

above.

III.

CONCLUSION

For the reasons stated above, Defendant’s motion to dismiss is granted in denied in part.

Defendant’s motion to strike is denied. Plaintiffs may file a second amended complaint consistent

with this Order within twenty (20) days of entry of this Order on the Court’s docket.

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IT IS SO ORDERED.

DATED: March 30, 2010

HON. DANA M. SABRAW

United States District Judge

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