Source: https://docs.justia.com/cases/federal/district-courts/alabama/alndce/2:2014cv02008/153229/21
Timestamp: 2017-01-21 22:01:19
Document Index: 327380364

Matched Legal Cases: ['§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§\n1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1681', '§\n1681', '§ 1681', '§ 1681', '§ 1681', '§ 1681', '§ 1681', '§ 1681']

MEMORANDUM OPINION that Midland's 6 Motion to Dismiss Certain Counts of Plff's Complaint is due to be granted as to Counts VII, VIII, and IX of the complaint and denied in all other respects for Hamilton v. Midland Funding LLC et al :: Justia Dockets & Filings Log In
MEMORANDUM OPINION that Midland's 6 Motion to Dismiss Certain Counts of Plff's Complaint is due to be granted as to Counts VII, VIII, and IX of the complaint and denied in all other respects. Signed by Judge Abdul K Kallon on 8/27/2015. (YMB)
2015 Aug-27 AM 07:59
THERA HAMILTON,
MIDLAND FUNDING, LLC, and
2:14-cv-02008-AKK
Plaintiff Thera Hamilton brings this action against Midland Funding, LLC,
and Midland Credit Management, Inc. (collectively “Midland”) alleging eight
separate violations of the Fair Debt Control Practices Act (the “FDCPA”), 15
U.S.C. § 1692, et seq., and four Alabama common law torts, which Hamilton
claims Midland committed when it filed a collections suit against Hamilton
regarding a debt she contends she either did not owe or was time-barred and
falsely reported the debt to credit reporting agencies. Doc. 1. Midland moves to
dismiss four of Hamilton’s FDCPA claims, as well as her state law claim for
invasion of privacy, doc. 6, and the motion is fully briefed and ripe for review, id.;
docs. 12 and 15. For the reasons explained below, Midland’s motion is due to be
granted as to Hamilton’s 1692f, 1692f(1) invasion of privacy claim, and due to be
denied as to her § 1692d and § 1692e(5) claims.
The defendants are debt collection firms. Doc. 1 at 3. More specifically,
Midland Funding, LLC, purchases defaulted consumer debt, then assigns all
collection activities for the defaulted debt, including credit reporting, to Midland
Credit Management, Inc. Id. at 4.
The facts giving rise to this case reflect a growing trend in the debt
In ruling on a motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P.
12(b)(6), “[a]ll facts set forth in a plaintiff’s complaint are to be accepted as true.” Snow v.
DirecTV, Inc., 450 F.3d 1314, 1320 (11th Cir. 2006) (citing Oxford Asset Mgmt. Ltd. v. Jaharis,
297 F.3d 1182, 1188 (11th Cir. 2002)).
collection and credit reporting industries.2 Id. After allegedly3 purchasing a
defaulted debt, a debt buyer files a collection action against the debtor. Id.
Typically, the debtor fails to file an answer or otherwise respond to the collection
action, and the debt buyer obtains a default judgment. Id. at 5. Debt buyers count
on this probability because they have no intention of or ability to prove their case
against debtors. Id.
Midland filed a collection action against Hamilton in Jefferson County,
Alabama small claims court on April 10, 2014 to collect a $2,960.10 debt, even
though Midland knew it did not own the debt, knew that Hamilton did not owe the
debt, and knew or should have known that the statute of limitations on an action to
collect the debt had run. Id. at 8–9. Contrary to the Midland’s expectations,
Hamilton filed an answer denying the complaint’s allegations. Id. at 10. At trial,
Hamilton’s contention that collection suits like the one on which she bases her claims
are a growing trend is supported by the fact that this is the fifth occasion within recent months
that this court has ruled upon a motion to dismiss by Midland raising arguments that are virtually
identical to those raised here. See Taylor v. Midland Funding, LLC, 2:14-cv-00854-SGC, doc. 39
(N.D. Ala. Aug. 6, 2015); Ferrell v. Midland Funding, LLC, 2:15-cv-00126-JHE, 2015 WL
2450615 (N.D. Ala. May 22, 2015); Dial v. Midland Funding, LLC, 2:14-cv-00663-WMA, 2015
WL 751690 (N.D. Ala. Feb. 23, 2015); Foster v. Midland Funding, LLC, 2:14-cv-00662-MHH,
doc. 26 (N.D. Ala. Jan. 22, 2015).
Although debt buyers will contend that they have accurate records concerning the debts
they have purchased, this is often not the case, and purchase agreements between the original
creditor and the first debt buyer state that there is no promise or representation as to the accuracy
of the information sold to the first debt buyer. Doc. 1 at 4. Consequently, the first debt buyer
cannot represent greater accuracy to subsequent debt buyers. Id.
Midland failed to present any evidence in its favor, and instructed the small claims
court to enter judgment for Hamilton, which the court did on June 2, 2014.
In addition to commencing the collection action described above, Midland
also attempted to force Hamilton to settle the debt by reporting it to consumer
reporting agencies before, during, and after the collection action, even though
Midland knew she did not owe the debt. Id. at 13.
Midland moves to dismiss Hamilton’s claims brought pursuant to 15 U.S.C.
§§ 1692d, 1692e(5), and 1692f and 1692f(1) as well as Hamilton’s state law
invasion of privacy claim. Doc. 6. The court will address each claim in turn.
A. Hamilton’s § 1692d claim
Midland moves to dismiss Count I of the complaint, which alleges that it
violated 15 U.S.C. § 1692d. Section 1692d provides that “[a] debt collector may
not engage in any conduct the natural consequence of which is to harass, oppress,
or abuse any person in connection with the collection of a debt.” In her complaint,
Hamilton alleges that Midland sued her to collect a debt it knew she did not owe,
it did not own, and was time-barred solely in hopes of obtaining a default
Midland argues that the court should dismiss the 1692d claim primarily
because they simply filed a collections suit, which is not actionable under § 1692d.
Doc. 6 at 2–7. Midland has made this argument before nearly every judge of this
district, including the undersigned, and its position has been unanimously rejected.
See Ferrell v. Midland Funding, LLC, 2:15-cv-00126-JHE, 2015 WL 2450615, at
*3 (N.D. Ala. May 22, 2015); Dial v. Midland Funding, LLC, 2:14-cv-00663WMA, 2015 WL 751690, at *1 (N.D. Ala. Feb. 23, 2015); Foster v. Midland
Funding, LLC, 2:14-cv-00662-MHH, doc. 26 (N.D. Ala. Jan. 22, 2015); Gamble v.
Midland Funding, LLC, No. 2:12-cv-4186-AKK, 2013 WL 979202, at *2 (N.D.
Ala. Mar. 7, 2013); Vinson v. Midland Funding, LLC, No. 2:12-cv-4187-VEH,
2013 WL 625111, at *2 (N.D. Ala. Feb. 20, 2013); Wood v. Midland Funding,
LLC, No. 2:12-cv-2703-KOB, 2013 WL 360146, at *3 (N.D. Ala. Jan. 29, 2013);
Morgan v. Midland Funding, LLC, No. 2:12-cv-3846-RDP, doc. 12 at 2 (N.D.
Ala. Jan. 4, 2013); Millican v. Midland Funding, LLC, No. 4:09-cv-1206-JEO, doc
14 at 7–8 (N.D. Ala. Dec. 2, 2009). The undersigned maintains his previous
position, and finds here that Hamilton has alleged additional conduct besides the
mere filing of a lawsuit—primarily that, for multiple reasons, the defendants knew
the lawsuit they filed against Hamilton was baseless when they filed it. Filing a
baseless lawsuit is qualitatively different than filing a collections suit on a valid
debt, and could reasonably be expected to harass, oppress, or abuse Hamilton.
Consequently, Hamilton’s allegations are sufficient to sustain a 1692d claim.
Midland’s other contentions regarding the 1692d claim are also unavailing.
First, Midland cherry picks language from Hamilton’s complaint and claims that
Hamilton has failed to allege that Midland knew she did not owe the debt before
filing the collection action. Doc. 15 at 3 (quoting doc. 1 at 6) (“Midland knows
that losing its cases means under Alabama law that the debt is not owed by the
consumer to the debt buyer.”). This plainly ignores Hamilton’s clear contention
that Midland filed suit against her knowing she did not owe the debt. See, e.g.,
doc. 1 at 9 (“Defendant Midland knew Plaintiff did not owe the debt sued on.”).
Nor are Hamilton’s allegations conclusory. They are as specific as can be expected
of a plaintiff who, without benefit of discovery, pleads the defendant’s mental
state. Hamilton will of course later need to prove the allegations, but the court will
impose no further burden on her at this stage.4
Next, Midland argues that Hamilton does not allege sufficient facts to show
that the state-court action was time-barred because she does not allege when the
Somewhat similarly, Midland seems to argue that the small claims court judgment in
Hamilton’s favor is not evidence that she did not owe the debt because the judgment was
predicated simply on Midland’s failure to present evidence of the debt rather than an adjudication
on the merits. Doc. 15 at 3. Without commenting on the merits of Midland’s argument here, it is
sufficient for the court to note that “[i]n deciding a motion to dismiss under Fed. R. Civ. P. 12(b),
a court must consider the legal sufficiency of the complaint, not the weight of evidence which
might be offered at trial.” Sawinski v. Bill Currie Ford, Inc., 866 F. Supp. 1383, 1385 (M.D. Fla.
claim accrued or the applicable statute of limitations. Doc. 15 at 4. Midland adds
also that Hamilton suggests the applicable limitations period is three years in her
response to Midland’s motion, id. at 5 n. 4 (quoting doc. 12 at 14) (“‘As
mentioned by Crawford, the statute of limitations is [three] years. This suit was
brought beyond that time period.”), but that the actual applicable limitations
period is six years, id. Although courts “dismiss[] complaints under Rule 12(b)(6)
on statute of limitations grounds . . . dismissal on such grounds is ‘appropriate
Sec’y of Labor v. Labbe, 319 F. App’x 761, 764 (11th Cir. 2008) (quoting Tello v.
Dean Witter Reynolds, Inc., 410 F.3d 1275, 1288 n. 13). For the very reasons cited
by Midland, that is not the case here, and, even were the court to find that
Hamilton failed to adequately plead that Midland’s claim was time barred, that has
no bearing on her contention that she never owed the debt in question to begin
This leads directly to Midland’s final argument regarding Hamilton’s
§ 1692d claim, which is that Hamilton’s two positions—(1) she did not owe the
debt; and (2) the debt was time-barred—are inconsistent; either Hamilton owed
the debt at some point but Midland’s claim to recover it was time barred, or she
never owed the debt and consequently Midland never had a claim to recover it.
Doc. 15 at 4 n. 3. Midland is correct that these two positions are irreconcilable.
However, at the pleading stage, “[a] party may set out [two] or more statements of
a claim or defense alternatively or hypothetically . . . . If a party makes alternative
statements, the pleading is sufficient if any one of them is sufficient.” Fed. R. Civ.
P. 8(d)(2).
Before moving on, the court notes that in a recent opinion, the Eleventh
Circuit discussed the boundaries of a § 1692(d) claim. See Miljkovic v. Shafritz
and Dinkin, P.A., 791 F.3d 1291 (11th Cir. 2015). In Miljkovic, the court reiterated
that a “debt collector’s conduct must manifest ‘a tone of intimidation,’” to be
actionable under § 1692(d). Id. at 1305 (citing Jeter v. Credit Bureau, 760 F.2d
1168, 1179 (11th Cir. 1985)). It then concluded that an affidavit filed by a
collector’s attorneys, prior to discovery, disputing the debtor’s claim that he was
exempt from garnishment failed to exhibit the requisite tone. Id. at 1305–06. Here,
however, absent further guidance, the court cannot say that, viewed from the
perspective of the least sophisticated consumer, see id. at 1305, forcing a
layperson to defend himself against a purportedly baseless lawsuit lacks the
element of intimidation necessary to sustain a claim pursuant to § 1692(d).
In sum, because Hamilton has adequately pleaded her §1692d claim,
Midland’s motion to dismiss Count I of her complaint is denied.
B. Hamilton’s § 1692e(5) claim
Next, Midland moves to dismiss Count IV of the complaint, which alleges
that Midland violated 15 U.S.C. § 1692e(5). Doc. 6 at 7–9. Section 1692e(5)
prohibits debt collectors from using “any false, deceptive, or misleading
representation or means in connection with the collection of any debt,” including
“[t]he threat to take any action that cannot legally be taken or that is not intended
to be taken.” There is a sharp split among courts as to whether § 1692e(5) protects
consumers against debt collectors who actually undertake illegal action as well as
against debt collectors who merely threaten such action. Courts that have found
§ 1692e(5) to apply to both threats and completed acts have noted the “futility of a
statutory scheme that would provide more protection to debt collectors who
violate the law than those who merely threaten or pretend to do so,” Sprinkle v. SB
& C Ltd., 472 F. Supp. 2d 1235, 1247 (W.D. Wash. 2006), and concluded that “[i]t
simply strains credulity to believe that the FDCPA, a law that safeguards
consumers from abusive and deceptive debt collection practices by debt collectors,
would prohibit threats of illegal action but not the illegal actions themselves . . . .
To find otherwise would undermine the consumer protection goals of the
FDCPA,” Bradshaw v. Hilco Receivables, LLC, 765 F. Supp. 2d 719, 730 (D. Md.
2011); see also Poirier v. Alco Collections, Inc., 107 F.3d 347, 350–51 (5th
Cir.1997); Collins v. Erin Capital Mgmt., LLC, 991 F. Supp. 2d 1195, 1211–12
(S.D. Fla. 2013). Other courts have adhered to § 1692e(5)’s plain language and
have found that the section’s reach is limited to threats of illegal action, and does
not apply to actual illegal acts. See, e.g., Cox v. Hilco Receivables, LLC, 726 F.
Supp. 2d 659, 666 (N.D. Tex. 2010); Okyere v. Palisades Collection, LLC, 961 F.
Supp. 2d 508, 519–20 (S.D.N.Y. 2013). This second group of courts have noted
the deference the canons of accepted statutory interpretation afford statutes’ plain
meaning, that Congress could have had several potential justifications for failing
to extend § 1692e(5)’s coverage to actual legal violations, such as victims’
recourse to state tort law or a view of “threats as posing a distinct type of harm and
requiring a specific prohibition,” and that because “[e]lsewhere in the FDCPA,
Congress was explicit when it intended to prohibit both threats to act and actually
acting,” “the language of § 1692e(5) did not result from a simple drafting error.”
Dial, 2015 WL 751690, at *3 (internal quotation marks and citations omitted).
In the absence of any definitive guidance, the court will allow Hamilton’s
§ 1692e(5) claim to proceed for now. Consequently, as to that claim, Midland’s
C. Hamilton’s § 1692f and § 1692f(1) claims
Lastly, at least as to Hamilton’s FDCPA claims, Midland moves to dismiss
Counts VII and VIII of the complaint, which allege that Midland violated 15
U.S.C. § 1692f and § 1692f(1). Doc. 6 at 10–11. Section 1692f provides that “[a]
debt collector may not use unfair or unconscionable means to collect or attempt to
collect any debt.” It contains a nonexhaustive list of conduct that violates this
dictate, including “[t]he collection of any amount (including any interest, fee,
charge, or expense incidental to the principal obligation) unless such amount is
expressly authorized by the agreement creating the debt or permitted by law.” §
1692f(1). Midland contends that Hamilton’s § 1692f and § 1692f(1) claims are
due to be dismissed because they are based on the same conduct, i.e. Midland
initiating a collections suit against Hamilton that was either time-barred or that
sought to recover a debt that Hamilton did not owe and Midland did not own, as
Hamilton’s other FDCPA claims. Doc. 6 at 11. Although several members of this
court have relied on language in the Eleventh Circuit’s Crawford v. LVNV
Funding, LLC decision as a basis for findings that the same conduct may violate
both § 1692f and another FDCPA provision, see Ferrell, 2015 WL 2450615, at *5
(citing 758 F.3d 1254, 1259 (11th Cir. 2014)); Dial, 2015 WL 751690, at *4
(same), in Miljkovic, the Eleventh Circuit explicitly ruled to the contrary, see
Miljkovic, 791 F.3d at 1308 (upholding the dismissal of the plaintiff’s § 1692f
claims because he “fail[ed] to allege any conduct beyond that which he assert[ed]
violate[d] the other provisions of the FDCPA, and, in doing so, . . . fail[ed] to
specifically identify how [the defendants’] conduct here was either unfair or
unconscionable in addition to being abusive, deceptive, or misleading”) (citing
LeBlanc v. Unifund CCR Partners, 601 F.3d 1185, 1200 & n. 31 (11th Cir. 2010)).
Consequently, Midland’s motion to dismiss Counts VII and VIII is granted.
D. Hamilton’s invasion of privacy claim
Finally, Midland moves to dismiss Count IX of the complaint, doc. 6 at 12,
which alleges that Midland is liable for the state law tort of invasion of privacy
because it knowingly filed a meritless lawsuit against Hamilton and because it
reported that Hamilton owed the debt to credit reporting agencies, even though it
knew that was not the case, doc. 1 at 26. Midland contends that Hamilton’s
invasion of privacy claim is due to be dismissed because it is barred by Alabama’s
litigation privilege and preempted by the Fair Credit Reporting Act (the “FCRA”).
Doc. 6 at 16–19. The court will examine each contention in turn.
1. Alabama’s litigation privilege
Under Alabama law, pertinent statements made in a judicial proceeding are
absolutely privileged and cannot give rise to liability, either civil or criminal.
O’Barr v. Feist, 296 So. 2d 152, 157 (Ala. 1974). The privilege protects even
“‘slanderous statements made by parties, counsel, or witnesses in the course of
judicial proceedings, and . . . libelous charges in pleadings, affidavits, or other
papers used in the course of the prosecution or defense of an action.’” Id. at 157
(quoting Moore v. Mfr. Nat’l Bank, 25 N.E. 1048, 1049 (N.Y. 1890)). “‘However
malicious the intent, or however false the charge may have been, the law, from
considerations of public policy, and to secure the unembarrassed and efficient
administration of justice, denies to the defamed party any remedy through an
action for libel or slander.’” Id. (quoting Moore, 25 N.E. at 1049). The privilege
applies to claims of invasion of privacy. Drees v. Turner, 45 So. 3d 350, 358 (Ala.
Civ. App. 2010).
Hamilton attempts to save her claim by contending that it is based on
Midland’s filing of the meritless lawsuit, and that consequently, her claim is based
on conduct, not a statement. Doc. 12 at 15–16. The court will not accept
Hamilton’s characterization; Midland’s filing of the lawsuit is only actionable
because of the statements in the complaint, which O’Barr explicitly protects. See
O’Barr, 296 So. 2d at 157 (protecting “libelous pleadings”). Allowing Hamilton to
assert a claim based on the conduct of filing an unlawful complaint—which must
be determined by looking to the statements contained in the complaint—would
effectively vitiate the privilege. Consequently, the court finds that Hamilton’s
allegations concerning Midland’s filing of the state-court suit are protected by the
litigation privilege and cannot support her invasion of privacy claim.
Midland contends that the remainder of Hamilton’s invasion of privacy
claim is preempted by the FCRA. FCRA preemption of state law torts is an area of
little agreement among this district’s judges.5 However, as applied to the present
matter, the undersigned finds the resolution of the matter to be relatively
straightforward. The FCRA contains two potentially applicable preemption
provisions, 15 U.S.C. §§ 1681h(e) and 1681t(b)(1)(F). Hamilton contends that §
1681h(e) applies in the instant case. Section 1681h(e) provides:
whole or in part on the report except as to false information furnished
with malice or willful intent to injure such consumer.
Because Hamilton has pleaded that Midland acted with the requisite culpability,
she contends that § 1681h(e)’s exception prevents the FCRA from preempting her
For thorough overviews of the various positions adopted by members of this court, see
Taylor, 2:14-cv-00854-SGC, doc. 37 at 17–21; Dial, 2015 WL 751690, at *6–7.
invasion of privacy claim. Doc. 12 at 17–19. By its plain language, Section
1681h(e) applies to claims for invasion of privacy brought against furnishers of
credit information like Midland, but only as to “information disclosed pursuant to
section 1681g, 1681h, or 1681m” or to “information disclosed by a user of a
consumer report.” As Judge Blackburn and Judge Acker have noted, “‘[t]he three
sections covered by § 1681h(e) — 1681g, 1681h, and 1681m — regulate
disclosures to consumers and duties of users of information. These sections do
not concern a furnisher’s duties of reporting and investigation.’” Dial, 2015 WL
751690, at *7 (alterations and emphasis in Dial) (quoting Schlueter v. BellSouth
Tellecoms., 770 F. Supp. 2d 1204, 1209 (N.D. Ala. 2010)). Here, Hamilton only
alleges that Midland furnished the information to consumer reporting agencies;
she does not allege that Midland disclosed the information to consumers or
otherwise used it. Consequently, in the present context § 1681h(e), by its plain
language, does not apply to Midland.6
Turning to the FCRA’s other potentially applicable preemption provision,
§ 1681t(b)(1)(F) provides: “No requirement or prohibition may be imposed under
The undersigned recognizes that this position is at odds with Gamble v. Midland
Funding, LLC, in which, at the pleading stage, when presented with similar facts, the
undersigned found § 1681h(e) excluded the plaintiff’s invasion of privacy claim from FCRA
preemption. See No. 2:12-cv-04186-AKK, 2013 WL 979202, at *2 (N.D. Ala. Mar. 7, 2013).
the laws of any State with respect to any subject matter regulated under section
1681s-2 of this title, relating to the responsibilities of persons who furnish
information to consumer reporting agencies . . . .” Section 1681s-2, which is
entitled “Responsibilities of furnishers of information to consumer reporting
agencies,” provides, in relevant part that “[a] person shall not furnish any
information relating to a consumer to any consumer reporting agency if the person
knows or has reasonable cause to believe that the information is inaccurate.” In
other words, it directly covers the conduct for which Hamilton seeks to hold
Midland liable: false credit reporting. Consequently, § 1681t(b)(1)(F) bars
Hamilton’s invasion of privacy claim as it relates to Midland’s credit reporting.
In sum, because Hamilton’s invasion of privacy claim is barred by
Alabama’s litigation privilege doctrine and preempted by the FCRA, Midland’s
motion to dismiss Count IX of the complaint is granted.
For the reasons explained fully above, Midland’s motion to dismiss is
granted as to Counts VII, VIII, and IX of the complaint and denied in all other
respects. The court will enter a contemporaneous order consistent with this