Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_18-cv-02781/USCOURTS-casd-3_18-cv-02781-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 15:1692 Fair Debt Collection Act

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18-CV-2781-CAB-AGS

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

RAYMOND PERREAULT and JULIE 

FRISINO,

Plaintiffs,

v.

MODEL FINANCE COMPANY and BIG 

TIME RECOVERY, LLC,

Defendants.

Case No.: 18-CV-2781-CAB-AGS

ORDER ON MOTION TO DISMISS 

CROSSCLAIM

[Doc. No. 13]

BIG TIME RECOVERY, LLC,

Cross-Claimant,

v.

MODEL FINANCE COMPANY,

Cross-Defendant.

Plaintiffs initiated this lawsuit with a complaint asserting claims under the federal 

Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”) and California’s 

Rosenthal Fair Debt Collection Practices Act, Cal. Civ. Code § 1788 et seq. (the “Rosenthal 

Act”), against defendants Model Finance Company (“MFC”) and Big Time Recovery LLC 

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(“Big Time”). [Doc. No. 1.] Big Time then filed a cross-complaint against MFC, asserting 

claims of implied indemnity, contribution, and declaratory relief. [Doc. No. 5-2.] MFC 

now moves to dismiss Big Time’s cross-complaint for failure to state a claim and because 

the claims are not ripe. As discussed below, the Court declines to reach the merits of 

MFC’s motion and instead declines to exercise supplemental jurisdiction over the crosscomplaint.

I. Allegations in the Complaint

In March 2015, Plaintiff Raymond Perreault borrowed money from MFC to 

purchase a motorcycle. [Doc. No. 1 at ¶ 24.] In September 2017, Perreault fell behind on 

his payments on the motorcycle loan. [Id. at ¶ 25.] Shortly thereafter, MFC and Big Time 

allegedly engaged in collection activity, including telephone calls and text messages to 

Perreault and his mother, Plaintiff Julie Frisino, as well as a small claims lawsuit, that 

Plaintiffs claim violated the FDCPA and Rosenthal Act. [Id. at ¶¶ 26-46.] The complaint 

asserts a claim for violation of the FDCPA against Big Time only, and a claim for violation 

of the Rosenthal Act against both MFC and Big Time.

II. Allegations in the Cross-Complaint

In the cross-complaint, Big Time alleges that MFC directed it to perform skip tracing

and asset location as to Plaintiffs. [Doc. No. 5-2 at ¶ 8.] Seemingly based on this solitary 

allegation, Big Time claims that MFC is therefore liable to Big Time for indemnity and 

contribution for any damages for which Big Time is deemed liable to Plaintiffs. The crosscomplaint also asserts a claim for declaratory relief as to MFC’s and Big Time’s respective 

liabilities to each other based on Plaintiffs’ claims. MFC now moves to dismiss the crosscomplaint, arguing that the cross-complaint fails to state a claim because Big Time cannot 

seek indemnity or contribution from MFC for FDCPA and Rosenthal Act claims and that

Big Time’s claims are not ripe.

III. Subject Matter Jurisdiction Over the Cross-Complaint

“For crossclaims to be proper, they must either carry an independent basis for subject 

matter jurisdiction or fall under the Court’s supplemental jurisdiction.” CMFG Life Ins. 

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Co. v. Smith, No. CV 13-261 ABC (CWX), 2014 WL 12585794, at *2 (C.D. Cal. Mar. 3, 

2014). Here, the cross-complaint states that the Court has both supplemental jurisdiction 

and federal question over Big Time’s crossclaims against MFC “because Plaintiffs are 

suing Big Time under the [FDCPA].” [Doc. No. 5-2 at ¶ 6.] The cross-complaint, 

however, does not assert any federal claims. That Plaintiffs assert a federal claim against 

Big Time does not give the Court federal question jurisdiction over Big Time’s claims 

against MFC, all of which are based on state law. There is no independent basis for the 

Court’s jurisdiction over the cross-complaint. Accordingly, the only possible grounds for 

subject matter jurisdiction over the cross-complaint is supplemental jurisdiction.

Federal courts have the discretion to exercise supplemental jurisdiction over all 

claims that are “so related to claims in the action within such original jurisdiction that they 

form part of the same case or controversy under Article III of the United States 

Constitution.” 28 U.S.C. § 1367(a). Even if supplemental jurisdiction exists, district courts 

may decline to exercise supplemental jurisdiction over a claim if: (1) it raises a novel or 

complex issue of state law; (2) it substantially predominates over the claim(s) over which 

the court has original jurisdiction; (3) the court has dismissed all claims over which it has 

original jurisdiction; or (4) there are other compelling reasons for declining jurisdiction. 28 

U.S.C. § 1367(c). The Supreme Court has identified additional factors that district courts 

should consider when deciding whether to exercise supplemental jurisdiction, “including 

the circumstances of the particular case, the nature of the state law claims, the character of 

the governing state law, and the relationship between the state and federal claims.” City of 

Chicago v. Int’l Coll. of Surgeons, 522 U.S. 156, 173 (1997).

“While discretion to decline to exercise supplemental jurisdiction over state law 

claims is triggered by the presence of one of the conditions in § 1367(c), it is informed by 

the Gibbs1 values ‘of economy, convenience, fairness, and comity.’” Acri v. Varian 

 

1 United Mine Workers of Am. v. Gibbs, 383 U.S. 715 (1966).

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Assocs., Inc., 114 F.3d 999, 1001 (9th Cir. 1997) (en banc) (citations omitted). A district 

court need not “articulate why the circumstances of [the] case are exceptional” to dismiss 

state-law claims pursuant to 28 U.S.C. section 1367(c)(1)-(3). San Pedro Hotel Co., Inc. v. 

City of L.A., 159 F.3d 470, 478–79 (9th Cir. 1998) (citation omitted).

Here, it is questionable whether Big Time’s cross-claims arise out of the same case 

or controversy as Plaintiffs’ claims against Big Time and MFC. There is little overlap 

between the facts relevant to the question of whether Big Time violated the FDCPA or 

Rosenthal Act and the facts relevant to the question of whether MFC is liable for indemnity 

or contribution for Big Time’s liability to Plaintiffs. The first question concerns Big Time’s 

conduct towards Plaintiffs, whereas the second question concerns MFC’s relationship with 

Big Time as well as the legal issues raised in MFC’s motion to dismiss. Accordingly, the 

Court is not convinced in the first instance whether it even has discretion to exercise 

supplemental jurisdiction over the cross-complaint.

Regardless, even if the Court has discretion to exercise supplemental jurisdiction 

exists over Big Time’s cross-complaint, it declines to do so. First, considering MFC’s 

motion to dismiss, Big Time’s cross-complaint would require the Court to determine 

whether a creditor can be subject to indemnity or contribution for a Rosenthal Act claim 

against a debt collector who was collecting the creditor’s debt. That neither party could 

cite any binding authority or even any state appellate authority governing this question in 

their briefs on MFC’s motion to dismiss suggests that this is a novel state law issue. 

Second, issues concerning the relationship between MFC and Big Time threaten to 

predominate over what would otherwise be relatively straightforward FDCPA and 

Rosenthal Act claims by Plaintiffs against Big Time and MFC. Finally, as MFC points out 

in its motion, Big Time’s indemnity and contribution claims are not ripe insofar as a 

judgment in favor of Big Time and against Plaintiffs would render Big Time’s cross-claims 

moot. Moreover, even if Plaintiffs succeed in their claims against Big Time, the only 

federal claim in the case (Plaintiffs’ FDCPA claim) will have been resolved at that point, 

implicating § 1367(c)(3). Cf. Acri, 114 F.3d at 1001(“The Supreme Court has stated, and 

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we have often repeated, that ‘in the usual case in which all federal-law claims are 

eliminated before trial, the balance of factors . . . will point toward declining to exercise 

jurisdiction over the remaining state-law claims.’”) (quoting Carnegie-Mellon v. Cohill, 

484 U.S. 343, 350 n.7 (1988)). 

IV. Conclusion

The cross-complaint raises novel issues of state law that may not even need to be 

answered if Plaintiffs fail to prove their claims against Defendants. It also involves a host 

of factual issues that have no bearing on Plaintiffs’ FDCPA claim. Accordingly, assuming 

supplemental jurisdiction even exists, the Court declines to exercise it pursuant to 28 

U.S.C. §§ 1367(c)(1), (2) and (3). The cross-complaint is therefore DISMISSED, and 

MFC’s motion to dismiss for failure to state a claim is DENIED AS MOOT.

It is SO ORDERED.

Dated: April 4, 2019

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