IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TEXAS

AUSTIN DIVISION

MICHAEL C. DEMARQUIS

v.

ALORICA, INC.

 

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 1:20-CV-00634-LY

 

REPORT AND RECOMMENDATION

OF THE UNITED STATES MAGISTRATE JUDGE

TO: THE HONORABLE LEE YEAKEL

UNITED STATES DISTRICT JUDGE

Before the Court are Defendant Alorica, Inc.’s Motion to Dismiss Plaintiff’s Amended

Complaint (Dkt. No. 16), Plaintiff’s Response (Dkt. No. 19), and Defendant’s Reply (Dkt. No. 20). 

The district judge referred the motion to the undersigned for a report and recommendation pursuant

to 28 U.S.C. § 636(b) and Rule 1(c) of Appendix C of the Local Rules. 

I. BACKGROUND

This suit arises out of a debt collection dispute between Plaintiff Michael C. DeMarquis and

Defendant Alorica, Inc. In his Amended Complaint, DeMarquis alleges that Alorica was hired by

Credit One Bank, N.A., to collect on an overdue credit card debt. Dkt. No. 11 at ¶¶ 15-27. 

DeMarquis alleges that beginning on or before September 16, 2019, he began receiving multiple

collection calls from a caller purporting to be Credit One attempting to collect on the debt, and that

despite his requests to stop, the collection calls persisted. Id. at ¶¶ 21-28. On October 28, 2019,

DeMarquis initiated arbitration with Credit One alleging violations of federal and state law in

relation to the collection calls. Id. at ¶ 24. During the arbitration proceedings, Credit One informed

DeMarquis that Alorica placed the complained of calls on its behalf. Id. at ¶ 25. On July 14, 2020,

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the Arbitrator entered final judgment in favor of Credit One, dismissing DeMarquis’s claims with

prejudice. Dkt. No. 16-1. 

On June 18, 2020, DeMarquis filed suit against Alorica for violations of the Fair Debt

Collection Practices Act, 15 U.S.C. § 1692, et seq., (“FDCPA”) and the Texas Debt Collection Act

(“TDCA”) related to the collection calls. Dkt. No. 1. In the instant motion, Alorica seeks to dismiss

the claims against it based on collateral estoppel and failure to state a claim, arguing that: (a) the

Arbitrator’s Order precludes DeMarquis’s TDCA claim, and (b) DeMarquis’s Amended Complaint

fails to plead factual allegations sufficient to support his FDCPA and TDCA claims. Dkt. No. 16.

II. LEGAL STANDARDS

Rule 12(b)(6) allows a party to move to dismiss an action for failure to state a claim upon

which relief can be granted. FED.R.CIV. P. 12(b)(6). In deciding a Rule 12(b)(6) motion to dismiss

for failure to state a claim, “[t]he court accepts all well-pleaded facts as true, viewing them in the

light most favorable to the [nonmovant].” In re Katrina Canal Breaches Litig., 495 F.3d 191, 205

(5th Cir. 2007) (internal quotation marks omitted), cert. denied, 552 U.S. 1182 (2008). While a

complaint attacked by a Rule 12(b)(6) motion does not need detailed factual allegations in order to

avoid dismissal, the plaintiff's factual allegations “must be enough to raise a right to relief above the

speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). The Supreme Court

has explained that a court need not accept as true conclusory allegations or allegations stating a legal

conclusion. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint must contain sufficient facts

“to state a claim to relief that is plausible on its face.” Id. (quoting Twombly, 550 U.S. at 570). “A

claim has facial plausibility when the [nonmovant] pleads factual content that allows the court to

draw the reasonable inference that the [movant] is liable for the misconduct alleged.” Id. When

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considering a motion to dismiss, the court’s review is limited to the complaint, any documents

attached to the complaint, and any documents attached to the motion to dismiss that are central to

the claim and referenced by the complaint. See Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC,

594 F.3d 383, 387 (5th Cir. 2010).

III. ANALYSIS

A. Collateral Estoppel

Alorica first argues that DeMarquis’s TDCA claim is precluded by collateral estoppel based

on the Arbitrator’s Order and the dismissal of his TDCA claim against Credit One. Dkt. No. 16 at

4-7. The doctrine of collateral estoppel serves two purposes: (1) it protects litigants from having to

litigate an identical issue with the same party or its privy, and (2) it promotes judicial economy by

precluding unnecessary litigations. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 (1979). A

party asserting collateral estoppel has the burden of proving that: “(1) the issue at stake is identical

to the one involved in the earlier action; (2) the issue was actually litigated in the prior action; and

(3) the determination of the issue in the prior action was a necessary part of the judgment in that

action.” Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 572 (5th Cir. 2005). Complete

identity of the parties in the two actions is not required. Robin Singh Educational Services Inc. v.

Excel Test prep Inc., 274 Fed. Appx. 399, 404 (5th Cir. 2008). “Defensive use of collateral estoppel

occurs when a defendant seeks to prevent a plaintiff from relitigating an issue which the plaintiff has

previously litigated unsuccessfully in another action against the same or a different party.” U.S. v.

Mendoza, 464 U.S. 154, 159 n. 4 (1984). A court has broad discretion over whether to give

preclusive effect to an arbitration award pursuant to the doctrine of collateral estoppel. Grimes v.

BNSF Ry. Co., 746 F.3d 184, 188 (5th Cir. 2014). 

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In the instant case, Alorica asserts that defensive collateral estoppel applies to DeMarquis’s

TDCA claim because: (1) DeMarquis alleges the same TDCA claim against Alorica as he asserted

against Credit One during arbitration, (2) the Arbitrator considered the merits of that issue, and (3)

the Arbitrator’s decision on the TDCA claim was a necessary part of the final Arbitration Order. 

Dkt. No. 16 at 6-7. In response, DeMarquis argues that collateral estoppel does not apply because

the Arbitrator only considered the merits of his TDCA claim against Credit One, ultimately

disposing of the issue based on a choice of law provision in the agreement between DeMarquis and

Credit One. Dkt. No. 19 at 3-4. Because Alorica was not a party to that agreement, DeMarquis

asserts that Alorica cannot invoke the choice of law provision and thus the issue at stake is not the

same issue ruled upon by the Arbitrator. Id. The Court agrees. Because Alorica has failed to

establish that the issue at stake is identical to the one previously litigated during the arbitration,

collateral estoppel does not preclude DeMarquis’s TDCA claim. 

B. Failure to State a Claim

Alorica’s motion next asserts that DeMarquis’s Amended Complaint fails to state a claim

against it. DeMarquis’s Amended Complaint alleges claims against Alorica under the FDCPA and

TDCA. See Dkt. No. 11. Alorica argues each of these claims should dismissed because DeMarquis

has failed to plead the facts necessary to establish it is a debt collector subject to either Act. The

Court agrees. 

Under the FDCPA, a “debt collector” refers to “any person who uses any instrumentality of

interstate commerce or the mails in any business the principal purpose of which is the collection of

any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due

or asserted to be owed or due another.” 15 U.S.C. § 1692a(6); see Williams v. Countrywide Home

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Loans, Inc., 504 F. Supp. 2d 176, 190 (S.D. Tex. July 18, 2007). The TDCA defines a “debt

collector” to include any person or entity who directly or indirectly engages in any action, conduct

or practice in collecting, or in soliciting for collection, consumer debts due a creditor. TEX. FIN.

CODE ANN. § 392.001(5)-(6) (Vernon 2006); see McCormick v. 7-11, Inc., 2008 WL 11424230, at

*2 (N.D. Tex. Sept. 29, 2008). 

Alorica is correct that DeMarquis has not adequately alleged facts that could show that

Alorica is a debt collector for the purposes of the FDCPA or TDCA. DeMarquis’s Amended

Complaint contains only conclusory allegations that “Defendant is a ‘debt collector’ as defined by

15 U.S.C. 1692a(6),” that “Defendant uses instrumentalities of interstate commerce and the mail in

its business – the principal purpose of which is the collection of debt owed or due or asserted to be

owed or due another,” and that “Defendant is a ‘debt collector’ as defined by Tex. Fin. Code Ann.

§ 392.001(6) as it directly or indirectly engages in debt collection.” Dkt. No. 11 at ¶¶ 10-12. As

discussed above, to withstand a Rule 12(b)(6) motion, a “complaint must allege ‘more than labels

and conclusions,’” and “a formulaic recitation of the elements of a cause of action will not do.” 

Norris v. Hearst Tr., 500 F.3d 454, 464 (5th Cir. 2007) (quoting Twombly, 550 U.S. at 555). 

“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements

do not suffice.” Iqbal, 556 U.S. at 678. DeMarquis’s unsupported allegations that Alorica qualifies

as a debt collector under the FDCPA and TDCA are conclusoryand insufficient under Rule 12(b)(6).

See Busby v. Vacation Resorts Int’l, 2019 WL669641 (S.D. Tex. Feb. 19, 2019) (dismissing FDCPA

and TDCA claim where plaintiff only made conclusory allegation that defendant was a debt

collector, with no supporting factual allegations). As such, the Court recommends Alorica’s motion

to dismiss be granted. 

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C. Leave to Amend 

When a plaintiff’s complaint fails to state a claim, the courtshould generallygive the plaintiff

at least one chance to amend the complaint before dismissing the claim with prejudice. See Great

Plains Trust Co. v. Morgan Stanley Dean Witter &Co., 313 F.3d 305, 329 (5th Cir.2002). Granting

leave is not required when “it is clear that the defects are incurable or the plaintiffs advise the court

that they are unwilling or unable to amend in a manner that will avoid dismissal.” Id. The Fifth

Circuit has indicated that “[l]eave to amend should be freelygiven, and outright refusal to grant leave

to amend without a justification . . . is considered an abuse of discretion.” United States ex rel.

Adrian v. Regents of the Univ. of Cal., 363 F.3d 398, 403 (5th Cir. 2004). Accordingly, while the

undersigned recommends that Alorica’s motion to dismiss should be granted, the undersigned further

recommends that dismissal be without prejudice to DeMarquis repleading his claims. 

IV. RECOMMENDATION

For the reasons set forth above, the undersigned RECOMMENDS that the Court GRANT

Defendant’s Motion to Dismiss (Dkt. No. 16) and DISMISS DeMarquis’s lawsuit, but that the

dismissal be without prejudice to DeMarquis filing by a deadline set by the Court an amended

complaint to cure the deficiencies in his allegations regarding Alorica’s status as a “debit collector”

under the FDCPA or TDCA. 

The Clerk is directed to remove this case from the Magistrate Judge’s docket and return it

to the docket of the Honorable Lee Yeakel.

V. WARNINGS

The parties may file objections to this Report and Recommendation. A party filing

objections must specifically identify those findings or recommendations to which objections are

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being made. The District Court need not consider frivolous, conclusive, or general objections. 

Battles v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987). A party’s failure to file

written objections to the proposed findings and recommendations contained in this Report within

fourteen (14) days after the party is served with a copy of the Report shall bar that party from de

novo review by the district court of the proposed findings and recommendations in the Report and,

except upon grounds of plain error, shall bar the party from appellate review of unobjected-to

proposed factual findings and legal conclusions accepted by the district court. See 28 U.S.C.

§ 636(b)(1)(c) (2006); Thomas v. Arn, 474 U.S. 140, 150-153 (1985); Lisson v. O’Hare, 326 F.

App’x 259, 260 (5th Cir. 2009).

SIGNED this 12th day of May, 2021. 

_____________________________________

ANDREW W. AUSTIN

UNITED STATES MAGISTRATE JUDGE

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