James v. MRC Receivables Corp.

JESSE JAMES v. MRC RECEIVABLES CORP., ET AL.

CIVIL ACTION NO. 16-0448

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF LOUISIANA SHREVEPORT DIVISION

June 28, 2018

JUDGE S. MAURICE HICKS, JR.

MAGISTRATE JUDGE HORNSBY

MEMORANDUM RULING

Before the Court is a Rule 12(b)(6) Motion to Dismiss filed by Defendants, MRC Receivables Corp. ("MRC"), Midland Funding, LLC ("Midland Funding"), Encore Capital Group, Inc. ("Encore"), and Midland Credit Management, Inc. ("MCM") (collectively, "Midland"). See Record Document 8. Midland seeks to dismiss Plaintiff Jesse James' ("James") claims, in whole or in part, for failure to state a claim due to the doctrine of preemption and the applicable statute of limitations. For the reasons contained herein, Midland's Motion is GRANTED IN PART and DENIED IN PART.

FACTUAL AND PROCEDURAL BACKGROUND

Sometime prior to November 26, 2012, Midland filed a lawsuit against James in Louisiana state court to collect an outstanding debt on Account #854702*** (the "Account"). See Record Document 1-1 at 6. James disputed the debt on the Account through legal pleadings filed in the state court lawsuit, which was dismissed "without prejudice." See id. For "unknown reasons and unknown to [P]laintiff," Midland maintained the Account and reported James' credit information to credit reporting agencies ("CRAs"), despite James continuing to dispute the Account. See id. Following dismissal of the state court lawsuit, James, through legal counsel, lodged a formal, written dispute to all national CRAs, as well as Midland, dated November 26, 2012. See id. at 7. Midland allegedly also received an Account dispute from the CRAs (an "E-OSCAR") around this time based on the contents of James' letter. See id. After receiving notice of the dispute, Midland allegedly failed to properly investigate the Account and has continued to inaccurately report the Account information to the CRAs monthly since 2012. See id. at 6-8. James alleges he "was not notified and was unaware" of Midland's acts until "recently." Id. at 6. James claims that Midland's actions were a "substantial factor" in causing damage to his credit rating. See id. at 9.

On March 1, 2016, James commenced the instant action in the First Judicial District Court of Caddo Parish, Louisiana, which was removed to this Court pursuant to 28 U.S.C. § 1331. See Record Document 1. Based on the foregoing, James claims that Midland violated Section 1681s-2(b) of the Fair Credit Reporting Act ("FCRA") as "furnishers of information," as well as unspecified provisions of the Fair Debt Collection Practices Act ("FDCPA") as "debt collectors." See Record Document 1-1 at 12-14. James' state law claims for negligence, defamation, invasion of privacy and negligent or intentional infliction of emotional distress all arise from the same allegations. See id. at 11-12.

Midland filed the instant Motion to Dismiss on April 11, 2016 seeking to dismiss James' claims, in whole or in part, for failure to state a claim due to the doctrine of preemption and the applicable statute of limitations. See Record Document 8. James opposed the Motion on April 27, 2016, arguing his FCRA and FDCPA claims were not time-barred and his state law claims were not preempted by the FCRA. See Record Document 18. Midland filed its reply memorandum on May 6, 2016. See Record Document 24. Thus, this matter is fully briefed and ripe for decision.

LAW AND ANALYSIS

I. Pleading Standards and the Rule 12(b)(6) Standard

Rule 8(a)(2) of the Federal Rules of Civil Procedure governs the requirements for pleadings that state a claim for relief, requiring that a pleading contain "a short and plain statement of the claim showing that the pleader is entitled to relief." The standard for the adequacy of complaints under Rule 8(a)(2) is now a "plausibility" standard found in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955 (2007), and its progeny. Under this standard, "factual allegations must be enough to raise a right to relief above the speculative level ... on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. at 555-556, 127 S.Ct. at 1965. If a pleading only contains "labels and conclusions" and "a formulaic recitation of the elements of a cause of action," the pleading does not meet the standards of Rule 8(a)(2). Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949 (2009) (citation omitted).

Additionally, courts must accept all allegations in a complaint as true. See Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949. However, courts do not have to accept legal conclusions as facts. See id. Courts considering a motion to dismiss under Rule 12(b)(6) are only obligated to allow those complaints that are facially plausible under the Iqbal and Twombly standard to survive such a motion. See id. at 678-679, 129 S.Ct. at 1949. If the complaint does not meet this standard, it can be dismissed for failure to state a claim upon which relief can be granted. See id. Such a dismissal ends the case "at the point of minimum expenditure of time and money by the parties and the court." Twombly, 550 U.S. at 558, 127 S.Ct. at 1966.

Where "a successful affirmative defense appears clearly on the face of the pleadings," the complaint fails to state a viable claim for relief. See Clark v. Amoco Prod. Co., 794 F.2d 967, 970 (5th Cir. 1986). Thus, if a plaintiff's state law claims are preempted by federal law, or where a plaintiff fails to plead his claims under Iqbal and Twombly, dismissal is required. See Billups v. Retail Merchs. Ass'n, 620 Fed.Appx. 211, 213 (5th Cir. 2015) (affirming dismissal of state law claims that were preempted by FCRA and couched as "conclusory statements"). Furthermore, a Rule 12(b)(6) motion to dismiss for failure to state a claim is the proper procedural device to raise a statute of limitations defense. See Bowers v. Nicholson, 271 Fed.Appx. 446, 449 (5th Cir. 2008). A "motion to dismiss may be granted on the basis of prescription if the untimeliness appears from the face of the complaint." Potier v. JBS Liberty Sec., Inc., 2014 U.S. Dist. LEXIS 151271, *6 (W.D. La. 2014).

II. Analysis

A. Fair Credit Reporting Act Claims

A claim under the FCRA must be brought within the earlier of: (i) two (2) years after the date of discovery by the plaintiff of the violation; or (ii) five (5) years after the date on which the violation that is the basis for such liability occurs. See 15 U.S.C. § 1681p. The facts alleged in the Complaint invoke the two (2) year limitations period. This period "begins to run when a claimant discovers the facts that give rise to a claim and not when a claimant discovers that those facts constitute a legal violation." Mack v. Equable Ascent Fin., L.L.C., 748 F.3d 663, 665-666 (5th Cir. 2014). Stated differently, the general federal discovery rule applies to the FCRA's two (2) year period, see id., which "commences when the aggrieved party has either knowledge of the violation or notice of facts which,in the exercise of reasonable diligence, would have led to actual knowledge thereof." McCune v. United States DOJ, 592 Fed.Appx. 287, 291 (5th Cir. 2014), quoting Jensen v. Snellings, 841 F.2d 600, 606 (5th Cir. 1988). "[A] claimant may be charged with constructive notice of the relevant facts if, in the exercise of due diligence, he should have acquired actual knowledge of the latter (notice of facts)." McCune, 592 Fed.Appx. at 291.

Midland contends that the two-year statute of limitations began to run in November 2012, when James knew of Midland's alleged false reports to the CRAs and retained counsel to draft a dispute letter. See Record Document 8-1 at 15. James alleges that he "was not notified and was unaware nor could he have known" of his potential FCRA claims against Midland "until recently." Record Document 1-1 at 6 and 8. The Court finds James' argument unavailing. James stated in his petition:

Prior to November 26, 2012, Midland filed a lawsuit against Plaintiff ... Following the dismissal of the Midland lawsuit, Plaintiff, through counsel, lodged a formal, written dispute to all of the national [CRAs] and to Midland as well. That letter was dated November 26, 2012. The November 26, 2012 [letter] explained to the [CRAs] and Midland ... that Plaintiff did not owe Midland anything and that the [Account] was not Plaintiff's account and that Midland was wrongly pursuing Plaintiff in credit reportings.

Record Document 1-1 at 6-7.

James was aware of the lawsuit filed prior to 2012 to collect on the Account that is the subject of his FCRA claims. He retained counsel to draft a dispute letter regarding the Account on November 26, 2012. The letter acknowledged that James was aware that Midland was reporting the Account to the CRAs and it was appearing on his credit report. Accordingly, James had constructive knowledge, if not actual knowledge, of "the facts that [gave] rise to a claim" under the FCRA by at least November 26, 2012. See Mack, 748 F.3d at 665-666.

A recent district court case within the Fifth Circuit dealt with almost identical facts as the instant matter and found the plaintiff had constructive notice. In Handawy v. Bank of Am., N.A., 2018 WL 453912, *4 (E.D. Tex. 2018), the court granted a bank's motion to dismiss finding plaintiff's FCRA claims were time-barred because two years had passed since plaintiff discovered the violations. See id. Although the plaintiff contended he was not aware of the alleged FCRA violations until a later time, the court looked to the plaintiff's complaint which stated:

Plaintiff therefore retained First Stone Credit Counseling ("FSCC") in August 2012 to clear up his credit by requesting Bank of America to report the true condition of Bank of America debt, that Plaintiff had recognized the debt as a secured debt and was during and after bankruptcy making payments currently as required. On October 20, 2013, FSCC sent requests to the three (3) credit reporting agencies to dispute the Bank of America report

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