IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 15-10533

KELLY HALL; JOHN CROWDER, JR., 

 Plaintiffs - Appellants

v.

PHENIX INVESTIGATIONS, INCORPORATED; WOOD, THACKER; 

WEATHERLY, P.C.; R. WILLIAM WOOD; C. JANE THACKER; SAMUEL B. 

BURKE, 

 Defendants - Appellees

Appeal from the United States District Court 

for the Northern District of Texas

USDC No. 3:14-CV-665

Before STEWART, Chief Judge, and OWEN and COSTA, Circuit Judges.

PER CURIAM:*

Kelly Hall and John Crowder, Jr. sued Phenix Investigations, Inc. and 

the Law Firm Defendants1 for violations of the Fair Credit Reporting Act

(FCRA) and the Fair Debt Collection Practices Act (FDCPA). The complaint 

 

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

1 The Law Firm Defendants are Wood, Thacker & Weatherly, P.C., and Samuel B. 

Burke, R. William Wood, C. Jane Thacker, who are all attorneys at the firm. 

United States Court of Appeals

Fifth Circuit

FILED

March 29, 2016

Lyle W. Cayce

Clerk

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alleges that the Law Firm Defendants hired Phenix to gather information 

about the Plaintiffs’ financial assets. As part of that process, Phenix allegedly 

contacted two banks and impersonated Plaintiffs in order to obtain information 

about their accounts. The district court dismissed the lawsuit at the pleading 

stage, finding that Plaintiffs had not sufficiently alleged that Phenix’s reports 

were consumer reports under the FCRA and that the FDCPA did not apply 

because any debt the Defendants were trying to collect was commercial rather 

than consumer in nature. For the reasons that follow, we AFFIRM.

I.

This federal suit was a response to two state lawsuits. In the first,

Carroll Family Investments, Ltd, obtained a state court judgment against 

Texas Wing2 corporate entities for $869,950. That case involved a commercial 

lease dispute that arose from the asset sale of multiple Hooter’s restaurants. 

While the first lawsuit was making its way through the appellate process 

(it is now final), Carroll filed a second lawsuit against Hall and Crowder, both 

of whom were Texas Wing investors. Carroll alleged that Hall and Crowder

fraudulently transferred money from Texas Wing to their own personal 

accounts in order to avoid paying the judgment owed from the prior suit. It 

was in connection with this second lawsuit that the Law Firm Defendants 

allegedly hired Phenix Investigations to obtain Hall and Crowder’s financial 

information. The Law Firm Defendants then used this information to obtain 

a temporary restraining order and temporary injunction that prevented Hall 

and Crowder from disposing of any funds held at certain banks and also 

required them to each maintain a minimum balance in their accounts. The 

 

2 For simplicity, this Opinion uses Texas Wing to refer jointly to Texas Wing, Inc. and 

TWI XVIII, Inc., which are related corporate entities. The judgment was issued against both 

companies. 

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parties ultimately settled the transfer lawsuit. 

That brings us to the lawsuit before this court that raises the FCRA and 

FDCPA claims. The Law Firm Defendants and Phenix each filed Rule 12(b)(6) 

motions to dismiss. Before the district court ruled on the motions, the 

Plaintiffs repleaded on their own initiative. The Defendants again filed 

motions to dismiss. The district court dismissed the claims, but granted 

Plaintiffs leave to amend. Another round of motions to dismiss followed

Plaintiffs’ third complaint. The district court found that the pleading defects 

had still not been cured and dismissed the case. 

II.

We review the Rule 12(b)(6) dismissal de novo, viewing well-pleaded 

factual allegations as true and “in the light most favorable to the plaintiff[s],”

making all reasonable inferences in their favor. R2 Invs. LDC v. Phillips, 401 

F.3d 638, 642 (5th Cir. 2005). But that standard does not allow a court to 

accept “conclusory allegations, unwarranted deductions, or legal conclusions.” 

Id.; see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Among other elements required to state an FCRA claim, Plaintiffs must 

allege that there was a “consumer report.” 15 U.S.C. § 1681b. The statute 

defines “consumer report” in a way you might expect; it includes information 

by a consumer reporting agency bearing on a consumer’s credit worthiness, 

credit standing, and so forth, for the purpose of determining the consumer’s 

eligibility for credit or insurance. But consumer reports may serve additional 

purposes under the Act, including the purpose Plaintiffs invoke: “collection of 

an account of[] the consumer.” See 15 U.S.C. §§ 1681a, 1681b. 

The live pleading alleges that Phenix’s reports qualify as consumer 

reports because they are related to debt collection. In support, Plaintiffs point 

to Phenix’s website, which states that it provides “litigation support” services, 

including “debt collection.” Their theory is that because Phenix prepared a 

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report for litigation support, which according to its own advertising might 

include debt collection activities, the report qualifies as a consumer report.3 

The problem with this argument is that it assumes that because Phenix’s 

litigation support activities sometimes include potentially qualifying purposes 

under the Act, that it therefore included a qualifying purpose in Plaintiffs’ case. 

Without any factual connection to collection of a consumer account in their 

actual case, the Plaintiffs have only made a conclusory allegation. As the 

district court explained, it is not reasonable to infer that the report was made 

for such a purpose because the Plaintiffs conceded in their complaint that the 

report was commissioned for use in ongoing commercial litigation, which is not 

a qualifying purpose. See Ippolito v. WNS, Inc., 864 F.2d 440 445, 450–54 (7th 

Cir. 1988), abrogated on other grounds by Safeco Ins. Co. of Amer. v. Burr, 551 

U.S. 47 (2007) (recognizing that use of reports in trademark litigation is a 

commercial purpose and therefore cannot constitute “consumer reports” under 

the Act); see also Cavaliere v. Burke, 50 F.3d 1033, at *3–4 (5th Cir. 1995) (per 

curiam) (citing Ippolito favorably and noting that “not every credit report is a 

consumer report” under the FCRA). 

Ippolito held that reports containing an individual’s credit information 

were not consumer reports when used in a trademark litigation dispute, even 

though the preparer thought the reports would be used to evaluate prospective 

franchisees, because both such uses involved commercial, rather than 

consumer purposes. 864 F.2d at 444–45, 451–54. Although the underlying 

lawsuit did not involve a debt, the court’s reasoning focused on the commercial 

purpose of the lawsuit in which the reports were used. Id. at 453–54. As in 

Ippolito, the purpose of the lawsuit here is commercial in nature because it 

 

3 The second amended complaint concedes that other activities listed under litigation 

support are not qualifying purposes under the Act. 

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arose out of a commercial lease dispute. See id. at 452 (stating that “reports 

collected for business, commercial, and professional purposes do not fall under 

the FCRA” (internal quotations and citations omitted)); see also Bacharach v. 

Suntrust Mortg., Inc., 2015 WL 6442493, at *3–4 (E.D. La. Oct. 23, 2015) 

(“[T]he FCRA does not apply where a consumer report is used for

business purposes.”) (citing cases). 

Even assuming that filing a lawsuit to collect on a judgment could 

constitute the collection of a consumer account within the meaning of the 

FCRA, there is no collection of a consumer account here because the judgment 

arose from a commercial transaction. Numerous courts have concluded that 

the FCRA does not cover reports used or expected to be used only in connection 

with commercial business transactions. Bacharach, 2015 WL 6442493, at *3–

4 (surveying cases and concluding that the FCRA does not cover reports 

created for “business purposes”); Grigoryan v. Experian Info. Sols., Inc., 84 F. 

Supp. 3d 1044, 1081–82 (C.D. Cal. 2014) (the same); see also Ippolito, 864 F.2d 

at 452 (holding that reports used or expected to be used for commercial 

purposes do not qualify under the FCRA); Matthews v. Worthen Bank & Trust 

Co., 741 F.2d 217, 219 (8th Cir. 1984) (holding that report’s “use[] solely for a 

commercial transaction” was not a qualifying purpose); Johnson v. Wells Fargo 

Home Mortg., Inc., 558 F. Supp. 2d 1114, 1121–27 (D. Nev. 2008) (explaining 

that information in report collected solely for commercial purposes in 

connection with plaintiff’s business did not qualify as a consumer report); 

Lucchesi v. Experian Info. Sols., Inc., 226 F.R.D. 172, 173–74 (S.D.N.Y. 2005)

(holding that FCRA does not apply to report, even one containing consumer 

information, where the report was created for use in connection with the 

plaintiff’s business transaction). 

Aside from its commercial nature, there is an additional reason why the

debt arising out of the first lawsuit was not “an account of[] the consumer,” 15 

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U.S.C. § 1681b (emphasis added): it was imposed against corporate entities. 

As the nature of the state court litigation rejects any conclusory allegation that 

Phenix was creating a “credit report” for the purpose of collecting on a 

consumer account, the FCRA claim fails. 

The commercial nature of the underlying dispute also dooms Plaintiffs’ 

FDCPA claims even though the two federal statutes have different frameworks 

and terms. To state an FDCPA claim, Plaintiffs must first allege that they 

have been the object of collection activity arising from “debt.” See, e.g., Douglas 

v. Select Portfolio Servicing, Inc., 2015 WL 1064623, at *4 (S.D. Tex. Mar. 11, 

2015) (setting forth the elements of a FDCPA claim); Sibley v. Firstcollect, Inc., 

913 F. Supp. 469, 471 (M.D. La. 1995) (the same). The FDCPA defines “debt” 

as:

“[A]ny obligation or alleged obligation of a consumer to pay money 

arising out of a transaction in which the money, property, insurance, or 

services which are the subject of the transaction are primarily for 

personal, family, or household purposes, whether or not such obligation 

has been reduced to judgment.”

15 U.S.C. § 1692a(5) (emphasis added).

Plaintiffs argue that the judgment debt arose from “personal 

investments made for personal purposes” in Texas Wing, so it qualifies as a

“debt” under the Act. Yet any disputed debt that the second state lawsuit 

sought to collect arose out of the first suit involving the Hooter’s lease, which 

Plaintiffs rightly admit was “commercial in nature.” See First Gibraltar Bank,

FSB v. Smith, 62 F.3d 133, 134–36 (5th Cir. 1995) (collection efforts related to 

personal guaranty of business debt are not “debts” within the meaning of the 

FDCPA because they are not for personal purposes); Scarola Malone & 

Zubatov LLP v. McCarthy, Burgess & Wolff, 2016 WL 536864, at *1–2 (2d Cir. 

Feb. 11, 2016) (holding that debt, even if not actually owed, “stem[ming] from 

telecommunication services provided by Verizon to [law firm] . . . ar[ose] out of 

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a commercial transaction and [was] not covered by the FDCPA”); Goldman v. 

Cohen, 445 F.3d 152, 154 n.1 (2d Cir. 2006) (“[A]ctions arising out of 

commercial debts are not covered by the protective provisions of the FDCPA.”); 

Garza v. Bancorp Grp., Inc., 955 F. Supp. 68, 71–72 (S.D. Tex. 1996) (holding 

that debt from equipment installed at two commercial establishments, even 

though used to provide security to family members working at the stores, “d[id] 

not transform the purpose into a noncommercial one” and was therefore not 

qualifying “debt” under the FDCPA). Once again the commercial nature of the 

debt rebuts any conclusory allegation that there was a consumer debt subject 

to the FDCPA. And additional support for this conclusion is again found in the 

fact that the judgment in the first lawsuit was entered against Texas Wing 

corporate entities. That means there was no “obligation of a consumer” (15 

U.S.C. § 1692a(5)) being collected in the second lawsuit. The second lawsuit 

essentially sought to hold the individuals liable for that corporate obligation; 

it was not seeking to collect a preexisting personal debt. 

AFFIRMED. 

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