Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_14-cv-04238/USCOURTS-cand-3_14-cv-04238-1/pdf.json

Nature of Suit Code: 480
Nature of Suit: Consumer Credit
Cause of Action: 15:1692 Fair Debt Collection Act

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

HEATHER BARTELL,

Plaintiff,

v.

NATIONAL COLLEGIATE STUDENT 

LOAN TRUST 2005-3, et al.,

Defendants.

Case No. 14-cv-04238-RS 

ORDER DENYING MOTION TO 

DISMISS

I. INTRODUCTION

Plaintiff Heather Bartell brings this action against defendants National Collegiate Student 

Loan Trust 2005-3 (“NCT”), NCO Financial Systems, Inc. (“NCO”), Patenaude & Felix (“P&F”), 

and Michael Kahn for alleged violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 

U.S.C. §§ 1692 et seq., and the Rosenthal Fair Debt Collection Practices Act (“RFDCPA”), 

California Civil Code §§ 1788 et. seq. Bartell’s First Amended Complaint (“FAC”) avers that, in 

attempting to collect on a debt, defendants left her a voicemail message that failed to disclose their 

identity and purpose; alleged false and misleading claims in a state court action brought by NCT;

and attempted to obtain a default judgment against her with the knowledge that she had not been

properly served with the complaint. Defendants NCT and NCO now move to dismiss on the 

grounds that (1) the FAC fails adequately to allege wrongdoing by NCO; (2) California’s litigation 

privilege bars Bartell’s RFDCPA claim; and (3) Bartell makes only spurious allegations that the 

state court complaint is misleading. Favorably construed, however, the FAC offers averments

sufficient to sustain a claim against these challenges. NCO and NCT’s motion must, therefore, be 

denied. 

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ORDER DENYING MOTION TO DISMISS

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II. BACKGROUND

On September 19, 2013, Bartell received a telephone voice message including neither the 

caller’s identity nor a clear indication of the caller’s purpose. Upon tracing the number, she 

discovered the call came from P&F, a professional corporation that brings civil debt collection 

suits. Bartell returned the call the next day and informed P&F that, as a disabled veteran whose 

income consists solely of disability benefits, she should not be subject to debt collection efforts. 

That November, NCT, a statutory trust engaged in debt collection services that acts chiefly 

through its subservicer, NCO, filed a complaint in the Superior Court for San Francisco County 

against Bartell. The complaint, Bartell avers, falsely alleges that she had failed to repay to NCT,

per a written agreement between them, a student loan taken out on August 29, 2005, and seeks

$43,479.05 in damages plus litigation costs.1 The complaint lists Kahn, an attorney in P&F’s 

employ, as NCT’s counsel. It does not identify an original creditor other than NCT, but rather 

refers to NCT as both the party with whom Bartell entered into the loan agreement and as the 

assignee of rights under the agreement. 

While the complaint identifies San Francisco County as the proper forum for suit as it is 

the defendant’s current county of residence, NCT’s sole attempt to provide Bartell with service of 

process took place at her former residence in Berkeley, where she last lived in 2009—not San 

Francisco—and involved no good-faith or systematic effort to find her current address. Service of 

process failed when the current resident of the Berkeley address informed the process server that 

Bartell no longer lived there and refused to accept service on Bartell’s behalf. NCT nevertheless 

filed a proof of service with the superior court.2 Bartell therefore only learned of the action after 

NCT moved for entry of default against her in mid-February 2014. She then successfully moved 

 

1 Bartell filed a copy of the state court complaint as Exhibit 1 to the FAC. Such filings are 

appropriate for review on a motion to dismiss. See Hal Roach Studios. Inc. v. Richard Feiner &

Co., Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1989). 

2 Bartell has commenced a separate action against the process server allegedly complicit in these 

events. Bartell v. Electronic Document Processing, Inc. et al, No. 14-cv-05501-EDL (N.D. Cal. 

Dec. 16, 2014). 

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ORDER DENYING MOTION TO DISMISS

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the superior court to quash NCT’s service of summons. 

Having commenced this action on September 18, 2014, Bartell maintains that she never 

contracted with NCT, and the debt NCT claims she owes is “nonexistent.” FAC ¶¶ 26, 39. She 

believes a creditor whose identity is unknown to her, and is not revealed in the state court 

complaint, at some point transferred the purported loan to NCT. On NCT’s behalf, NCO 

subsequently engaged P&F to collect on the debt. Accordingly, defendants “misrepresented the 

character, amount and legal status” of the “alleged debt,” and employed “unfair or unconscionable 

means,” “misleading representations,” and “unfair and abusive practices” to collect on it, in 

violation of the FDCPA and RFDCPA. FAC ¶¶ 32, 34, 70. In response to an earlier motion to 

dismiss, Bartell filed both a response and the FAC. Defendants were then ordered to direct any 

responsive pleadings to the FAC, resulting in the present motion brought by NCT and NCO. 

III. LEGAL STANDARD

A complaint must contain “a short and plain statement of the claim showing that the 

pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). While “detailed factual allegations are not 

required,” a complaint must have sufficient factual allegations to “state a claim to relief that is 

plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic v. 

Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the pleaded factual 

content allows the court to draw the reasonable inference that the defendant is liable for the 

misconduct alleged.” Id. This standard asks for “more than a sheer possibility that a defendant 

acted unlawfully.” Id. The determination is a context-specific task requiring the court “to draw on 

its judicial experience and common sense.” Id. at 679. 

A motion to dismiss a complaint under Rule 12(b)(6) of the Federal Rules of Civil 

Procedure tests the legal sufficiency of the claims alleged in the complaint. See Parks Sch. of 

Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). Dismissal under Rule 12(b)(6) may 

be based on either the “lack of a cognizable legal theory” or on “the absence of sufficient facts 

alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 

(9th Cir. 1990). When evaluating such a motion, the court must accept all material allegations in 

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the complaint as true, even if doubtful, and construe them in the light most favorable to the nonmoving party. Twombly, 550 U.S. at 570. “[C]onclusory allegations of law and unwarranted 

inferences,” however, “are insufficient to defeat a motion to dismiss for failure to state a claim.” 

Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th Cir. 1996); see also Twombly, 550 U.S. at 

555 (“threadbare recitals of the elements of the claim for relief, supported by mere conclusory 

statements,” are not taken as true).

IV. DISCUSSION

A. Fair Debt Collection Practices Act Claim Against NCO

To state a claim alleging violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 

1692 (“FDCPA”), a plaintiff must show: “(1) that [s]he is a consumer; (2) that the debt arises out 

of a transaction entered into for personal purposes; (3) that the defendant is a debt collector; and 

(4) that the defendant violated one of the provisions of the FDCPA.” Freeman v. ABC Legal 

Services, Inc., 827 F. Supp. 2d 1065, 1071 (N.D. Cal. 2011). NCT and NCO contest only whether 

Bartell has made allegations sufficient to sustain a claim against NCO as to the third and fourth 

elements. 

1. NCO as “Debt Collector” 

NCT and NCO assert in a footnote to their motion that NCO is not a “debt collector” “as it 

relates to Bartell’s account.” Mot. to Dismiss, n. 2. The FDCPA, however, defines a “debt 

collector” as any person whose principal purpose of business is to collect debt, or “who regularly 

collects or attempts to collect, directly or indirectly, debts owed or due.” 15 U.S.C. § 1692a(6). 

The term “debt collector” is not limited to formal debt collection agencies. See, e.g., Heintz v. 

Jenkins, 514 U.S. 291, 292, (1995) (including within the definition of a “debt collector” a lawyer 

who regularly, through litigation, tries to enforce consumer debts). Indeed, Congress intended the 

scope of the FDCPA “to cover all third persons who regularly collect debts for others.” S.Rep. 

No. 95–382, 95th Cong. 1st Sess. 2 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1697–98 

(stating that “[t]he requirement that debt collection be done ‘regularly’ . . . exclude[s] a person 

who collects debt for another in an isolated instance, but . . . include[s] those who collect [debts] 

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for others in the regular course of business.”). Therefore, an entity may qualify as a “debt 

collector” if it regularly performs debt collection services, regardless of what percentage of its 

services relate to debt collection. See S.Rep. No. 95–382, at 3; see also Romine v. Diversified 

Collection Servs., Inc., 155 F.3d 1142, 1146 (9th Cir.1998) (“Had Congress intended to limit the 

Act to licensed or registered collection agencies, it would have confined the statutory language to 

businesses for which debt collection is the ‘principal purpose.’ ”). 

Here, Bartell alleges that NCO regularly performs debt collection activities. Whether NCO 

is party to the state court suit or what other actions it has taken regarding debt collection from 

Bartell specifically is, therefore, of no consequence under the third element mentioned above. For 

the purposes of this disposition, therefore, NCO is a “debt collector” as defined by 15 U.S.C. § 

1692a(6).

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2. Whether NCO Is Sufficiently Alleged to Have Violated FDCPA Provisions

Bartell claims that collectively, defendants’ efforts to collect the purported debt—

specifically the phone call F&P placed on NCT’s behalf, the filing of a false proof of service, and 

the misleading nature of the complaint—violated various provisions of the FDCPA set forth in 15 

U.S.C. §§ 1692d, e, and f. Section 1692d prohibits “any conduct the natural consequence of 

which is to harass, oppress, or abuse any person in connection with the collection of a debt,” 15 

U.S.C. § 1692d, including placement of a phone call without meaningful disclosure of the caller’s 

identity, id. § 1692d(6). 

Section 1692e of the FDCPA broadly prohibits the use of “any false, deceptive, or 

misleading representation or means in connection with the collection of any debt,” and offers a 

non-exhaustive list of sixteen practices that violate this general prohibition. Bartell relies on 

several, including those which proscribe misrepresenting the nature, amount or status of a debt; 

falsely implying or representing involvement of legal counsel; threatening action that cannot 

 

3

It is worth noting, contrary to NCO and NCT’s assertion that the FDCPA claim addresses only 

NCO because it is the only alleged debt collector, that Bartell clearly avers that each defendant, 

including NCT, P&F, and Kahn, is a debt collector within the meaning of the FDCPA. 

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legally be taken; failing to disclose in an initial oral communication that a collector aims to collect 

on a debt; and misrepresenting the legitimacy or source of a communication. See id. § 1692e(2), 

(3), (5), (9), (10), (11). In addition, section 1692f prohibits the use of “unfair or unconscionable 

means to collect or attempt to collect a debt.” 15 U.S.C. § 1692f. The principle governing the 

Ninth Circuit’s evaluation of claims under these provisions is: would the least sophisticated debtor 

“likely be misled” by a communication from a debt collector. Swanson v. Southern Oregon Credit 

Service, Inc., 869 F.2d 1222, 1225 (9th Cir. 1988); Wade v. Regional Credit Association, 87 F.3d

1098, 1099–1100 (9th Cir. 1996). 

According to Bartell, all defendants, including NCO, violated these provisions as each 

other’s agents and joint venturers, such that each is vicariously liable for actions taken by the 

others. As for NCO’s own behavior, Bartell avers that as NCT’s subservicer and custodian of its 

records, NCO enabled and participated in these violations by hiring P&F and providing it with 

information about Bartell to support NCT’s civil suit. Specifically, NCO furnished Bartell’s 

residence address information and produced an affidavit that was filed in the state court action. 

NCT and NCO maintain that because NCO is not a named party to the state court action 

and engaged in no “actual and direct ‘communication’” with Bartell, it cannot be held liable for 

any of the harm Bartell allegedly suffered. See Mot. to Dismiss, p. 7. Under the FDCPA,

however, communication is defined as “the conveying of information regarding a debt directly or 

indirectly to any person through any medium.” 15 U.S.C. 1692a(2). Moreover, many of the 

FDCPA provisions Bartell avers defendants violated do not require “communication” at all; 

section 1692e(10), for example, proscribes merely the “use of any false representation or deceptive 

means” to attempt debt collection. Nowhere is it apparent that direct communication is an element 

of this provision, and NCO and NCT offer no authority showing otherwise. Nor do they 

demonstrate why NCO may not be held vicariously liable for actions taken by P&F. See Fox v. 

Citicorp Credit Services, Inc., 15 F.3d 1507, 1516 (9th Cir. 1994) (attributing the actions of an 

attorney to the client on whose behalf they were taken); Newman v. Checkrite California, Inc., 912 

F. Supp. 1354, 1371 (E.D. Cal. 1995) (imputing vicarious liability for conduct violating the 

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FDCPA according to agency theory). A favorable reading of Bartell’s complaint does not, 

therefore, preclude NCO’s liability on the grounds NCT and NCO advance. 

B. Rosenthal Fair Debt Collection Practices Act and California’s Litigation Privilege

The Rosenthal Fair Debt Collection Practices Act is California’s counterpart to the 

FDCPA, and incorporates sections of that federal statute. Cal. Civ. Code § 1788.17. As under the 

FDCPA, a Rosenthal plaintiff must establish that (1) she is a “debtor” under section 1788.2(h), 

(2) the debt at issue is a “consumer debt” under section 1788.2(f), (3) the defendant is a “debt 

collector” under section 1788.2(c), and (4) the defendant violated one of the liability provisions 

of the RFDCPA. NCO and NCT contend that because Bartell’s claim under the Rosenthal Act

arises only from communications made in furtherance of a judicial proceeding, it is barred by 

California’s litigation privilege. 

Section 47(b) of the California Civil Code indeed provides in relevant part that “[a] 

privileged publication or broadcast is one made . . . [i]n any . . . judicial proceeding . . . .” Cal. 

Civ. Code § 47(b); see Rusheen v. Cohen, 37 Cal. 4th 1048, 1057 (2006) (interpreting the 

privilege to apply to any communication made in a judicial or quasi-judicial proceeding by 

litigants or other authorized participants to achieve the objects of the litigation and that bears

some logical connection to the action). The California Court of Appeal has recognized that the 

privilege cannot be applied to shield violators of the RFDCPA from culpability, for to do so when 

the two conflict “would effectively vitiate the Rosenthal Act and render the protections it affords 

meaningless.” Komarova v. National Credit Acceptance, Inc., 175 Cal. App. 4th 324, 338 

(2009).

4

 

 

4 NCO and NCT rely on a minority line of district court cases concluding otherwise. See e.g., 

Boon v. Professional Collection Consultants, 978 F. Supp. 2d 1157 (S.D. Cal. 2013); Reyes v. 

Kenosian & Miele, LLP, 525 F.Supp.2d 1158 (N.D. Cal. 2007). A significant majority of federal 

district courts have, however, followed Komarova’s logic, especially in light of the fact that the 

RFDCPA is a “remedial statute” that ought to be interpreted broadly “in order to effectuate its 

purpose.” See Holmes v. Electronic Document Processing, Inc., 966 F. Supp. 2d. 925, 937 (N.D. 

Cal. 2013) (aggregating cases); see also Heintz v. Jenkins, 514 U.S. 291, 297 (1995) (holding that 

the FDCPA may apply to attorneys acting to collect debts, even in the litigation context). 

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To bar at the pleading stage Bartell’s allegations that defendants filed a falsified proof of 

service and a misleading complaint in order to collect on a debt would undermine the gravamen

of the RFDCPA, inviting predatory debt collectors to abuse litigation procedures while hiding 

behind a far too expansive shield. In light of Komarova and its progeny, therefore, Bartell’s 

claims are not barred at this juncture. Moreover, P&F’s alleged voicemail message gives rise to 

RFDCPA claims unrelated to the superior court case, and therefore may advance irrespective of 

the litigation privilege. 

C. Superior Court Complaint and The “Least Sophisticated Consumer” Standard

NCO and NCT further advocate for dismissal of Bartell’s allegation that NCT’s superior

court complaint fails the “least sophisticated consumer” standard. According to Bartell, the 

complaint violates the FDCPA and RFDCPA in that it falsely alleges Bartell entered a written 

agreement with NCT, also names NCT as an “assignee,” fails to identify the original creditor, 

“misrepresent[s] the character, amount and legal status of the alleged debt,” and attempts to 

collect a nonexistent debt. FAC ¶¶ 30, 34, 49.

NCO and NCT argue that exhibits appended to their motion—which, they represent,

include a copy of a loan agreement between Bartell and Citizens Bank of Rhode Island and a 

“pool supplement” showing the loan was transferred to NCT—belie Bartell’s claim that NCT’s 

complaint is misleading. See Richard Decl. Exhs. A, B. Essentially, they argue that having 

signed a contract with Citizens Bank of Rhode Island, Bartell could not have later been misled by 

litigation filed to collect damages for its breach. 

Such evidence is, however, inappropriate for review at this juncture. When resolving a 

motion to dismiss for failure to state a claim, review is generally limited to the four corners of the 

complaint. Allarcom Pay Television. Ltd. v. Gen. Instrument Corp., 69 F.3d 381, 385 (9th Cir. 

1995). The court may, however, look to attached exhibits, see Hal Roach Studios. Inc. v. Richard 

Feiner & Co., Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1989), and documents incorporated by 

reference into the complaint. See Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 980 

(9th Cir. 2002). Documents upon whose contents the complaint necessarily relies—even if the 

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complaint does not explicitly allege their contents—and whose authenticity and relevance are 

uncontested, are considered incorporated by reference. See Coto Settlement v. Eisenberg, 593 

F.3d 1031, 1038 (9th Cir. 2010); Knievel v. ESPN, 393 F.3d 1068, 1076-77 (9th Cir. 2005). The 

court may, in addition, take into account material that is properly the subject of judicial notice. 

Lee v. City of Los Angeles, 250 F.3d 668, 688–89 (9th Cir. 2001). Judicial notice may be taken of 

a fact not subject to reasonable dispute because it either is generally known within the trial 

court’s territorial jurisdiction, or can be readily determined from sources whose accuracy cannot 

reasonably be questioned. Fed. R. Evid. 201(b).

NCO and NCT’s exhibits are neither appropriate subjects of judicial notice nor are they 

incorporated by reference into the complaint. Bartell disputes that she entered any loan agreement 

at all, exclusively referring in the FAC to the debt as “alleged” and “nonexistent”—let alone one 

with Citizens Bank of Rhode Island. The validity of these documents is, therefore, hardly 

uncontested. While NCT and NCO may file a motion for summary judgment if the facts they attempt

to demonstrate here prove undisputed, these exhibits are not appropriate for consideration at this 

juncture.

Moreover, whether or not the superior court complaint fails the “least sophisticated consumer” 

standard in all the respects Bartell identifies, the Ninth Circuit has held as a matter of law that failure 

to identify the original creditor in a complaint seeking damages for defaulting on a debt may give rise 

to a claim under the FDCPA. See Tourgeman v. Collins Financial Services, Inc., 755 F.3d 1109, 

1120-23 (9th Cir. 2014) (finding that misidentification of the original creditor in letters and a state 

court complaint constituted FDCPA violations). Under the “least sophisticated consumer” standard, 

the question determinative of FDCPA liability is whether the defendant offered up “genuinely 

misleading statements that may frustrate a consumer’s ability to intelligently choose his or her 

response.” Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1034 (9th Cir. 2010). As Tourgeman 

reasoned, failure to furnish the original creditor’s identity is a “critical” omission which “could easily 

cause the least sophisticated debtor to suffer a disadvantage in charting a course of action in response 

to the collection effort”—by, for example, hampering the debtor from apprising legal counsel of 

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relevant circumstances or inciting confusion as to whether responding will resolve the debt with the 

original creditor. 755 F.3d at 1123. The stakes of losing opportunities to settle a debt are even higher 

when the consumer faces a possibility of default judgment, as did Bartell, rather than the mere 

continuation of collection attempts. See id. 

The copy of the superior court complaint appended to the FAC, the authenticity of which NCO 

and NCT do not contest, includes no information about the original creditor. It alleges an agreement

struck directly between Bartell and NCT, while also referring to NCT as an assignee. According to 

NCT and NCO’s own assertions, NCT was the assignee of the purported agreement. As such, it was 

obligated to identify the original creditor in collection efforts against Bartell. The state court 

complaint therefore fails to meet the least sophisticated consumer standard, and supports Bartell’s 

claims under the FDCPA and RFDCPA. 

V. CONCLUSION

For the aforementioned reasons, NCO and NCT’s motion to dismiss is denied. 

IT IS SO ORDERED.

Dated: April 27, 2015

______________________________________

RICHARD SEEBORG

United States District Judge

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