Becker v. Portfolio Recovery Assocs.

Melissa Becker, Plaintiff, v. Portfolio Recovery Associates, LLC, Defendant.

Case No. 20-cv-00791 (SRN/KMM)

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

September 8, 2020

MEMORANDUM OPINION AND ORDER DENYING DEFENDANT'S MOTION TO DISMISS OR STAY PROCEEDINGS

Darren B. Schwiebert, DBS Law LLC, 301 Fourth Avenue South, Suite 280N, Minneapolis, MN 55415, for Plaintiff.

Benjamin Kinney, Law Offices of Thomas Shiah, 247 Third Avenue South, Minneapolis, MN 55415, for Defendant.

SUSAN RICHARD NELSON, United States District Judge

This matter is before the Court on the Motion to Dismiss or, in the Alternative, Stay Proceedings [Doc. No. 9] filed by Defendant Portfolio Recovery Associates, LLC ("PRA"). PRA sued Melissa Becker in state court to collect a debt. While the state court lawsuit was pending, Becker brought this action against PRA alleging several violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. PRA moves to dismiss, arguing that Becker's FDCPA claims hinge on Becker's future success in the state court collection action, and are therefore unripe. In the alternative, PRA requests that the Court stay this litigation until the collection action concludes. For the reasons set forth below, the Court DENIES PRA's motion.

I. BACKGROUND

Becker alleges several violations of the FDCPA arising out of PRA's attempts to collect a debt allegedly owed on Becker's "Synchrony Bank - Wal-Mart" credit card. PRA, whose principal business is the collection of debts owed to others, filed a complaint against Becker in Minnesota state court to collect the debt. (Compl. [Doc. No. 1] ¶¶ 8, 16, 20.) In PRA's state court complaint, PRA alleged that Becker owed $1563.49 on a "Synchrony Bank - Wal-Mart" credit card, and that PRA had obtained an assignment of that debt. (Id. ¶¶ 20, 22.) According to Becker's federal complaint ("the Complaint"), Becker did not receive any written communications from PRA prior to being served with the state court summons and complaint; Becker did not open a credit card with "Synchrony Bank - Wal-Mart," an entity that Becker alleges does not exist; Becker does not owe the balance on that card; and PRA never received an assignment of the credit card debt. (Id. ¶¶ 23-26.)

Moreover, Becker alleges that PRA's conduct in attempting to collect the Synchrony Bank debt violated restrictions placed on PRA following enforcement actions by federal and state government entities. Specifically, in 2015, PRA and the United States Consumer Financial Protection Bureau ("CFPB") entered a consent order requiring PRA to obtain certain documentation and provide certain information to debtors prior to bringing enforcement actions. (Id. ¶¶ 32-40.) And in 2019, PRA entered an "Assurance of Discontinuance" with the Massachusetts Attorney General, which contained similar restrictions as the CFPB consent order. (Id. ¶¶ 42-43.) Becker alleges that PRA's conduct in the state court collection action violates these restrictions, and therefore violates the FDCPA.

Finally, Becker alleges that Minnesota law requires PRA to obtain a license prior to collecting consumer debts in Minnesota, and that PRA does not have such a license. (Id. ¶¶ 46-51.) She also alleges that PRA's summons caused her confusion by directing her to serve her answer at a North Dakota Post Office Box, in violation of Minnesota's rules for service of process. (Id. ¶¶ 28-30, 56.)

Based on these allegations, Becker alleges eight separate violations of the FDCPA:

1. PRA violated 15 U.S.C. § 1692f(1) by filing a summary judgment motion seeking to collect $120 for service fees in the state court action although PRA's affidavit of service indicates that the cost was only $40.

2. PRA violated § 1692f(1) by serving a complaint on Becker without a valid assignment of the alleged debt.

3. PRA separately violated § 1692f(1) by filing the complaint without a valid assignment.

4. In violation of § 1692e(2), (5), and (10), PRA made false statements regarding the amount or legal status of the debt, including by falsely stating that Becker owed $1563.49 for a "Synchrony Bank - Wal-Mart" account.

5. PRA violated § 1692f(1) by falsely stating that Becker must serve her answer at a North Dakota Post Office Box in violation of Minnesota Rule of Civil Procedure 4.01.

6. PRA's conduct in bringing the lawsuit violates the CFPB consent order, and therefore violates § 1692f(1).

7. PRA's conduct similarly violates the Assurance of Discontinuance, and therefore violates § 1692f(1).

8. By engaging in collection activity without a license to collect debt in Minnesota, PRA violated § 1692f(1).

(Id. ¶¶ 53-60.)

Following the filing of Becker's federal Complaint, PRA filed a motion to dismiss or stay Becker's FDCPA claims. (Def.'s Rule 12(b)(6) Mot. Dismiss or Stay Proceedings [Doc. No. 9].) Meanwhile, the state court denied PRA's motion for summary judgment in the collection action, and that case is proceeding toward trial. (Letter to District Judge [Doc. No. 19].)

II. DISCUSSION

A. Standard of Review

Although styled as a Federal Rule of Civil Procedure 12(b)(6) motion, PRA's motion—which argues that Becker's Complaint is unripe—is at heart a Rule 12(b)(1) motion. See Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010) ("Because standing and ripeness pertain to federal courts' subject matter jurisdiction, they are properly raised in a Rule 12(b)(1) motion to dismiss."). Where the defendant argues that the facts alleged in the complaint fail to establish subject-matter jurisdiction—as PRA does here—the plaintiff is afforded similar safeguards as in a Rule 12(b)(6) motion. Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990). Namely, the court must "accept as true all factual allegations in the complaint, giving no effect to conclusory allegations of law," and determine whether the plaintiff's alleged facts "affirmatively and plausibly suggest" that jurisdiction exists. Stalley v. Catholic Health Initiatives, 509 F.3d 517, 521 (8th Cir. 2007). The court's review is limited to the face of the pleadings. Branson Label, Inc. v. City of Branson, 793 F.3d 910, 914 (8th Cir. 2015).

B. PRA's Motion to Dismiss

PRA argues that Becker's FDCPA claim should be dismissed because it is unripe. Whether a claim is ripe depends on "the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration." Pub. Water Supply Dist. No. 10 of Cass Cty. v. City of Peculiar, 345 F.3d 570, 572-73 (8th Cir. 2003) (quoting Abbott Labs. v. Gardner, 387 U.S. 136, 149 (1967)). A plaintiff must satisfy both elements "at least to a minimal degree." Id. (citing Nebraska Pub. Power Dist. v. MidAmerican EnergyCo., 234 F.3d 1032, 1039 (8th Cir. 2000)). Under the "fitness for judicial decision" prong of the analysis, whether a case is fit "depends on whether it would benefit from further factual development." Id. at 573. A case "is more likely to be ripe if it poses a purely legal question and is not contingent on future possibilities." Id. Under the hardship prong, the complaint must allege that the plaintiff "has sustained or is immediately in danger of sustaining some direct injury as the result of the challenged" conduct. Id. (quoting O'Shea v. Littleton, 414 U.S. 488, 494 (1974)).

Here, PRA argues that Becker's FDCPA claims are unfit for judicial decision because they mirror the defenses Becker raised in the state court collection action, and the merits of Becker's FDCPA claims therefore hinge on the future resolution of the state court case. For example, Becker's second and third claims allege that PRA violated the FDCPA by serving and filing a complaint without obtaining a valid assignment of Becker's alleged debt. (Compl. ¶ 54.) These claims, PRA argues, depend on a future state court ruling finding no valid assignment. Moreover, PRA argued at the time it filed its memoranda that withholding court consideration of Becker's FDCPA claims would not cause any hardship because the state court had scheduled a hearing on a dispositive motion in the collection case.

PRA's ripeness argument is unpersuasive. For each of Becker's eight claimed FDCPA violations, the conduct allegedly violating the FDCPA is not a speculative, future possibility; it has already occurred. Taking claims two and three as representative examples again, PRA has already served and filed its complaint (allegedly) without a valid assignment. Although the state court's ruling in the collection action could affect the meritsof Becker's FDCPA claims under preclusion principles, Becker's claims do not depend on the resolution of the state court case. That is, Becker does not need to obtain a state court ruling that PRA lacked a valid assignment prior to pursuing her second and third FDCPA claims. The same reasoning applies to the rest of Becker's eight claims. While the merits of Becker's FDCPA claims overlap with some of Becker's defenses in the state court litigation (e.g., the validity of PRA's assignment), that overlap does not render Becker's FDCPA claims unfit for judicial decision.

Becker satisfies the hardship prong as well. The hardship prong requires a plaintiff to allege that she has suffered harm, or imminently will suffer harm, as a result of the defendant's conduct. See Pub. Water Supply Dist. No. 10 of Cass Cty., 345 F.3d at 573. Because Becker alleges that PRA's conduct in the state court collection action has already violated her federally protected rights, Becker satisfies the hardship prong. Moreover, withholding this Court's consideration of Becker's FDCPA claims until resolution of the state court litigation could significantly delay the litigation of her federal claims. PRA's argument to the contrary rested on the fact that, at the time of briefing, a dispositive motion was scheduled in the state court litigation. That motion has since been denied, and the state court litigation is still ongoing.

In short, while the overlap between Becker's...