PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

_______________ No. 19

- 3703

______________

TERRY L. KLOTZ, on behalf of herself and those similarly situated
, Appellant

v.

CELENTANO STADTMAUER

AND WALENTOWICZ LLP

_______________ On Appeal from the United States District Court for the District of New Jersey ( D.C. Civil Action No. 2

- 1 9

- cv

- 00248 ) District Judge: Hon orable Susan D. Wigenton

______________ Argued: September 24, 2020

Before: AMBRO
, PORTER , and ROTH
, Circuit Judges

. (Filed: March 16, 2021 )

______________2 Scott C. Borison [ ARGUED ] B ORISON F IRM 30 North Gould Street Sheridan, WY 82801

Yongmoon Kim K IM L AW F IRM 411 Hackensack Avenue Hackensack, NJ 07601

Counsel for Plaintiff

- Appellant Terry L. Klotz

Lawrence J. Bartel [ARGUED] Andrew M. Schwartz G ORDON R EES S CULLY M ANSUKHANI Three Logan Square 1717 Arch Street Philadelphia, PA 19103

Counsel for Defendant

- Appellee Celentano Stadtmauer and Walentowicz LLP

______________
OPINION OF THE COURT

______________ PORTER, Circuit Judge

.
Terry Klotz’s now

- deceased husband received medical services from Hackensack University Medical Center ( the

“ Hospital ”) and incurred a $1,580 debt. Klotz’s husband did not pay the medical debt before he died
, and he left no estate.3 The Hospital retained Celentano, Stadtmauer and Walentowicz, LLP (“CSW”) to collect the debt, and it mailed two collecti on letters to Klotz

.

Klotz claims she is not liable for the debt and asks us to hold that the Equal Credit Opportunity Act (“ECOA”) , 15 U.S.C. § 1691 et seq. , preempts New Jersey’s common

- law doctrine of necessaries (where a spouse is jointly liable for nec

essary expenses incurred by the other spouse)

. Preemption of this doctrine would allow her to pursue a case against CSW for an alleged violation of the Fair Debt Collection Practices Act (“FDCPA”) , 15 U.S.C. § 169 2 et seq

. We hold that the ECOA does not preempt New Jersey’s doctrine of necessaries. Klotz also argues that CSW failed to follow the procedural require

ments of the doctrine of necessaries and that she should be allowed to amend her complaint. We reject these additional arguments and will affirm the District Court ’s judgment

.

I

Klotz believed that she was not liable for the debt, so she sued CSW for violating 15 U.S.C. §§ 1692e and 1692f of the FDCPA because CSW’s collection letters sought payment of a debt that she did not owe. CSW moved to dismiss the com

plaint under Federal Rule of Civil Procedure 12(b)(6), arguing that Klotz owed the debt under New Jersey’s common

- law doctrine of necessaries beca use her deceased husband incurred the debt for medical treatment. The District Court agreed with CSW and dismissed the complaint with prejudice. Klotz moved under Federal Rule of Civil Procedure 59(e) for recon

sideration of the District Court’s order and for leave to file an amended complaint with additional allegations. The District4 Court denied the motion, reasoning that amendment would be futile. Klotz timely appealed.

II

The District Court had subject

- matter jurisdiction under 28 U.S.C. § 1331 and 15 U.S.C. § 1692k (d) . We have appel

late jurisdiction under 28 U.S.C. § 1291.

We review de novo a district court’s grant of a motion to dismiss for failure to state a claim under Rule 12(b)(6). Foglia v. Renal Ventures Mgmt., LLC , 754 F.3d 153, 154 n.1 ( 3d Cir. 2014). To survive a Rule 12(b)(6) motion, a complaint must set forth enough factual allegations to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly
, 550 U.S. 544, 570 (2007). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the mis

conduct alleged. ” Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009). When reviewing a Rule 12(b)(6) mot ion, we accept as true all factual allegations in the complaint and view those facts in the light most favorable to the non

- moving party. Foglia , 754 F.3d at 154 n.1.

We review a d istrict c ourt’s denial of a Rule 59(e) motion to amend the complaint for abuse of discretion, but we review the d istrict c ourt’s underlying legal determinations de

novo and factual determinations for clear error. Burtch v. Milberg Factors, Inc. , 662 F.3d 212, 220 ( 3d Cir. 2011). When a plaintiff moves to amend her complaint under Rule 59(e), we apply the same factors as when a party files a motion to amend a pleading under Federal Rule of Civil Procedure 15(a). See Adams v. Gould Inc. , 739 F.2d 858, 864 (3d Cir. 198 4). Those5 factors include whether the amendment would be futile. Burtch
, 662 F.3d at 23 1 . A proposed amendment to a complaint is futile if the amended complaint would fail to state a claim for relief under Rule 12(b)(6)

. See Alvin v. Suzuki , 227 F.3d 107, 121 (3d Cir. 2000).

III

The FDCPA prohibits debt collectors from using false, misleading, and unfair debt

- collection practices by seeking to collect on a debt that is not authorized by law. See 15 U.S.C. §§ 1692e, 1692f. As noted, Klotz believes that she does not owe her husband’s medical debt

. S he argues that CSW’s debt

- collection letters misrepresent “the character, amount, or legal status of [the] debt” in violation of the FDCPA. 15 U.S.C. § 1692e(2)(A).

In response, CSW argues that Klotz had a legal obliga

tion to pay the debt under New Jersey’s common

- law doctrine of necessaries. In Jersey Shore Medical Center

- Fitkin Hospital

v. Estate of Baum , the Supreme Court of New Jersey held that “b oth spouses are liable for necess ary expenses incurred by either spouse in the course of the marriage. ” 417 A.2d 1003, 1005 (N.J. 1980). Additionally, a non

- debtor is liable for the debts of her spouse only if “the assets of the spouse who incurred the debt are insufficient.” Id. at 1010. CSW’s argu

ments prevailed in the District Court.

Klotz argues the following on appeal : (1) federal law preempts the doctrine of necessaries , and thus CSW’s collec

tion effort violated the FDCPA ; (2) CSW failed to follow the doctrine’s procedural requir ement that CSW seek repayment from her husband before seeking repayment from her ; and (3)6 she should be permitted to amend her complaint. All three arguments fail.

A

First, Klotz argues that the ECOA preempts the doctrine of necessaries

. Federal law 1 can preempt state law in three ways: (1) express preemption; (2) field preemption; or (3) con

flict preemption. Farina v. Nokia Inc. , 625 F.3d 97, 115 (3d Cir. 2010) . Conflict preemption, the only type of preemption relevant here, “exists where compliance with both state and federal law is impossible, or where the state law stands as an obstacle to the accomplishment and execution of the full pur

poses and objectives of Congress.” Oneok, Inc. v. Learjet, Inc.
, 575 U.S. 373, 377 (2015) ( internal quotation m arks omitted) (quoting California v. ARC Am. Corp. , 490 U.S. 93, 100

– 01 (1989))

. Two principles guide a conflict

- preemption analysis. First, “all preemption arguments[] must be grounded in the text and structure of the [federal] statute at issue.” Kansas v. Garcia , 140 S. Ct. 791, 804 (2020) (internal quotation marks omitted) (quoting CSX Transp., Inc. v. Easterwood , 507 U.S. 658, 664 (1993))

. Second, “ there is a strong presumption against preemption in areas of the law that Stat es have tradi

tionally occupied.” Sikkelee v. Precision Airmotive Corp. , 822 F.3d 680, 687 (3d Cir. 2016) (citing Medtronic, Inc. v. Lohr
, 518 U.S. 470, 485 (1996)).

1 Federal regulations can also have preemptive effect. See Fellner v. Tri

- Union Seafoods, L.L.C. , 539 F.3d 237, 243 (3d Cir. 2008).7 The ECOA prohibits “any creditor” from “discrimi

nat[ing] against any applicant, with re spect to any aspect of a credit transaction[] on the basis of

. . . marital status

. ” 15 U.S.C. § 1691 (a)(1)

. As relevant here, one regulation implementing the ECOA provide s that “a creditor shall not require the signature of an applicant’s spouse

. . . on any credit instrument if the applicant qualifies under the creditor’s stand

ards of creditworthiness for the amount and terms of the credit requested.” 12 C.F.R. § 202.7(d) (1) (2021)

. Klotz argues that the doctrine of necessaries conflicts with the spousal

- signature prohibition found at 12 C.F.R. § 202.7(d) (1)

. 2 B y imposing liability for her deceased husband’s debt , Klotz argues
, the doctrine effectively
treats her as a spousal co

- signer on the debt in violation of the spousal

- signature prohibition

. This conflict means the spousal

signature prohibition preempts the doctrine.

Putting aside questions such as whether CSW is a “cred

itor” and Klo tz an “applicant” under the spousal

- signature pro

hibition, we hold that the ECOA does not preempt the doctrine of necessaries because the debt is “incidental credit” exempt from the prohibition

. The Federal Reserve Board may exempt certain categories of transactions from the scope of the ECOA “after making an express finding that the application of

. . . any

2 We cite to the Federal Reserve Board’s regulations but note for completeness that much of the rulemaking authority under the ECOA was transferred to the Consumer Financial Protection Bureau (“CFPB”) in 2011 . The CFPB restated the Federal Reserve’s regulati ons at 12 C.F.R . pt. 1002, 76 Fed. Reg. 79
, 442 (Dec

. 21, 2011) ; s ee also Tyson v. Sterling Rental, Inc. , 836 F.3d 571, 578 (6th Cir. 2016).8 provision .

. . would not contribute substantially to effecting the purposes of [ the ECOA].” 15 U.S.C. § 1691b(b). The
agency exercised this authority by exempting “incidental credit” from the § 202.7(d) spousal

- signature prohibition. See 12 C.F.R. § 202.3(c)(2)(v) (2021) ; Equal Credit Opportunity, 68 Fed. Reg. 13
, 144, 13
, 145 (March 1 8 , 2003) (to be codified at 12 C.F. R. pt. 202). “Incidental credit refers to extensions of

con sumer credit

. . . (i) [t] hat are not made pursuant to the terms of a credit card account; (ii) [t] hat are not subject to a finance charge

. . . and (iii) [t] hat are not payable by agreement in more than four installments.” Id. § 202.3(c)(1).

Klotz’s medical debt qualifies as incidental credit because it satisfies all three criteria

. She does not dispute that the debt is not related to a credit card account, not subject to a finance charge, and not subject to installment payments. See Equal Credit Opportunity
, 68 Fed. Reg. at 13
, 188 (listing med

ical debt from a hospital or doctor that “allows the client or customer to defer the payment of a bill” as an examp le of inci

dental credit); Mays v. Buckeye Rural Elec. Coop., Inc. , 277 F.3d 873, 877

– 79 (6th Cir. 2002) (holding that money owed to

an electrical utility was incidental credit under 12 C.F.R. § 202.3(c) because the utility “ha[d] no credit card accounts, d[id] not permit installment payments for electrical service, and d[id] not impose finance charges”). B ecause the medical debt CSW sought to collect is incidental credit exempt from the spousal

- signature prohibition, CSW’s attempt to col

lect the debt cannot violate the prohibition

. Given that the spousal

- signature prohibition does not apply, we hold the ECOA and its regulations do not conflict

preempt the doctrine of necessaries. To succeed on a conflict

preemption argumen t, Klotz must demonstrate that the doc

-9 trine of necessaries either (1) makes compliance with the ECOA impossible or (2) “stand[s] as an obstacle to the accom

plishment and execution of the full purposes” of the ECOA. Garcia , 140 S. Ct. at 806 (internal quotation marks omitted). T he identification of the purpose “cannot be based on a free

wheeling judicial inquiry into whether a state statute is in ten

sion with federal objectives.” Id. at 801 (internal quotation marks and citation omitted).

C SW ’s use of the doctrine of necessaries complies with the ECOA because the medical debt is incidental credit exempt from the spousal

- signature prohibition. Further, Klotz’s attempt to invoke the general objectives of the ECOA fails, as the statute was focused on ensuring the availability of credit rather than the allocation of liability between spouses. See Moran Foods, Inc. v. Mid

- Atlantic M k

t

. Dev

. Co., LLC , 476 F.3d 436, 441 ( 7th Cir. 2007) (“[I]t is apparent that what the Act was intended to do wa s to forbid a creditor to deny credit to a [married] woman on the basis of a belief that she would not be a good credit risk.”)

. Because C SW ’s use of the doctrine of necessaries compl ies with the ECOA and does not frustrate the purpose of the ECOA, we hold the ECOA has not preempted the doctrine. Garcia , 140 S. Ct. at 804.

B

Klotz next argues that CSW failed to comply with the requirements of the doctrine of necessaries. But she did not plead adequate facts to support her argument
, and her husband10 does not have an estate that could pay the debt, so the argument fails.

Before resorting to the doctrine of necessaries, a credi

tor must “first seek satisfaction from the income and other property of the spouse who incurred the debt

. ” Jersey Shore
, 417 A.2d at 1005. This step ensure s that the doctrine applies “only where the financi al resources of the spouse who incurred the necessary expense are insufficient.” Id. at 1010. Klotz’s complaint does not allege that CSW flouted the doctrine’s requirement that it first seek satisfaction from her deceased husband. Nor does the complaint al lege that her husband’s estate possessed funds to cover the debt. Public records

— which we may consider when reviewing the grant of a Rule 12(b)(6) motion, see Mayer v. Belichick , 605 F.3d 223, 230 (3d Cir. 2010)

— explain this omission: they show that Klotz’ s hus

band does not have an estate.

Klotz argues that CSW should have sought administra

tion of her husband’s estate under N.J. Rev. Stat. § 3B:10

- 2 (explaining who can seek administration of an estate )

. Jersey Shore forecloses this argument. There , the “defendant’s late husband[] died at the hospital after a long illness which exhausted his m edicaid benefits and left a balance due the hos

pital of $25,709.50.” Jersey Shore , 417 A.2d at 1004. “[The husband’s] estate wa s insolvent, and no one [had] sought let

ters of administration.” Id. Yet the Supreme Court of New Jersey permitted the creditor hospital to assert a doctrine

- of

necessaries argument against the surviving wife. See id. at 1006

– 07. Klotz fails to explain wh at other action CSW should have taken to satisfy the requirements of Jersey Shore

.11 C

Third, Klotz argues that the District Court abused its discretion by denying her motion for leave to file an amended complaint. The District Court denied Klotz’s motion because the amendment would be futile. We agree.

A proposed amendment to a complaint is futile if the complaint, as amended, would fail to state a claim upon which relief could be granted. See Suzuki , 227 F.3d at 121. Klotz argues that her proposed amended complaint would not be futile because it would plead that CSW’s letters sought to col

lect an amount beyond what the doctrine of necessaries per

mits. CSW ’s letters sought to collect a debt of $1,580. Klotz pleads that her husband was a Medicare b eneficiary with a Medicare deductible of $1,316 , thus implying that some amount of the debt in the collection letter was not covered by Medicare . She also plead s that the collection amount “included copayments, expenses, fees, costs and/or other charges in curred on additional dates beyond the ‘Date of Service’ spec

ified in the [collection letters].” App. at 123.

Even if the debt included a small amount of ancillary charges beyond the Medicare deductible of Klotz’s husband
, these allegations do not change whether the debt resulted from the provision of a necessary service

. Indeed, necessaries can be costs that “directly or indirectly are designed to preserve the assets of [a] marriage or to permit [a debtor spouse] to continu e his normal life, including the ability to make income and sup

port the family either through employment or providing ser

vices or emotional well

- being in the household.” See DuBois

v. DeLarm , 578 A.2d 1250, 1255 (N.J. Super. Ct. App. Div. 1990) (emphasis added)

. None of Klotz’s proposed allegations12 challenge whether the debt incurred falls outside the definition of a necessary under New Jersey law. Her “complaint pleads facts that are ‘merely consistent with’ [CSW]’s liability” but “stops short of the lin e between possibility and plausibility of entitlement to relief.” Iqbal , 556 U.S. at 678 (internal quotation marks omitted)

. The District Court did not abuse its discretion when it denied Klotz’s request for leave to amend for futility.

* * *

The ECOA does not preempt N ew Jersey’s doctrine of necessaries, so the doctrine permitted CSW to send its collec

tion letters to Klotz without violating the FDCPA. Addition

ally, CSW followed the procedural requirements of the doc

trine, and Klotz’s filing an amended complaint would be futile. So we will affirm the District Court’s judgment dismiss ing Klotz’s complaint.