LaForge v. Richland Holdings, Inc.

STEPHEN LAFORGE and BUNNY LAFORGE, Plaintiffs, v. RICHLAND HOLDINGS, INC. d/b/a ACCOUNT CORP OF SOUTHERN NEVADA;RC WILLEY FINANCIAL SERVICES; RANDALL CORPORATION d/b/a BOWEN LAW SERVICES;and CALEB J. LANGSDALE, ESQ. d/b/a LANGSDALE LAW FIRM, P.C., Defendants.

Case No. 2:17-cv-00782-APG-VCF

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA

January 23, 2018

ORDER GRANTING DEFENDANT RICHLAND HOLDING'S MOTION TO DISMISS; GRANTING LANGSDALE'S MOTION TO DISMISS IN PART AND DENYING LANGSDALE'S MOTION TO STRIKE; AND DENYING SUMMARY JUDGMENT MOTIONS AS MOOT

(ECF Nos. 9, 14, 22, 53, 54)

Plaintiffs Stephen and Bunny Laforge sue defendants Richland Holdings, Inc. d/b/a Account Corp of Southern Nevada (AcctCorp), RC Willey Financial Services, Bowen Law Services, and Langsdale Law Firm, P.C. for alleged actions arising from the collection of a debt. The Laforges claim that all defendants are liable for violations of the Fair Debt Collection Practices Act (FDCPA), the Nevada Deceptive Trade Practices Act (NDTPA), abuse of process, and civil conspiracy.

AcctCorp filed a motion to dismiss the complaint, arguing that the Laforges' claims are time-barred.¹ Alternatively, AcctCorp argues that all of the Laforges' claims are barred by claim preclusion, the court lacks jurisdiction over the claims under the Rooker-Feldman doctrine, and the complaint fail to state claims upon which relief can be granted.² All defendants joined in this motion to dismiss.³ I grant AcctCorp's motion to dismiss, and grant the Laforges leave to amend some of the claims.

Langsdale filed a separate motion to dismiss, arguing that the Laforges failed to state any claims against it.⁴ Langsdale also filed a motion to strike the Laforges' errata (ECF No. 17) because it takes the form of a fully briefed opposition to its motion to dismiss, and was filed late.⁵ I deny the motion to strike and grant Langsdale's motion to dismiss with leave to amend the remaining claims not dismissed with prejudice.

I. BACKGROUND⁶

In 2014, the Laforges entered into a contract with RC Willey for a line of credit to purchase home furnishing and related goods.⁷ By May 2015, the Laforges were delinquent in their payments and had an account balance of $8,562.16.⁸ RC Willey assigned the debt to AcctCorp for collection.⁹ On October 28, 2015, AcctCorp filed a lawsuit in state court to collect the debt.¹⁰ The complaint demanded payment of $12,843.24, which included "contractual collection fees," plus 24% interest accruing from the date of delinquency until fully paid.¹¹ Default judgment was entered for AcctCorp on January 7, 2016, and filed on February 24, 2016.¹²

The Laforges initiated this action on March 17, 2017, alleging the following facts. RC Willey's contract with the Laforges is governed by Utah law. Utah law prohibits contractual collection fees for more than 40% of the principal balance of a debt. The collection fee here is approximately 50% of the principal balance, and thus violates Utah law.¹³ The Laforges thereforecontend that the defendants violated the FDCPA by assessing contractual collection fees that violated Utah law. They further allege that the defendants "unlawfully added additional interests" to the debt, and the default judgment entered against them in state court "included amounts that were improperly calculated and inflated."¹⁴ The defendants also allegedly violated the FDCPA by failing to provide a "validation of debt letter" in compliance with 15 U.S.C. § 1692(g).¹⁵

The Laforges allege that the defendants (1) "commenced and/or prosecuted legal proceedings against [the Laforges] for the ulterior purpose of collecting unlawful rates of interest and unlawful fees in violation of the FDCPA"; (2) "engaged in unfair and deceptive acts or practices in the conduct of its (sic) commerce and trade through its (sic) unfair and deceptive debt collection and litigation activities in violation of NRS Chapter 598"; and (3) engaged in civil conspiracy by undertaking "a concerted action with the intent" to violate the FDCPA.¹⁶

II. DISCUSSION

A. Motion to Strike

Langsdale filed its motion to dismiss on April 10, 2017.¹⁷ Plaintiff's counsel, Vernon Nelson, filed an opposition on April 25, 2017 at around 4 a.m.—four hours after it was due.¹⁸ The filed opposition is missing its introduction, the majority of its citations, numerous arguments, and exhibits it had referenced in arguments.¹⁹ On April 28, 2017, two business days before Langsdale's reply was due,²⁰ Nelson filed an "Errata," which contains another opposition with additional arguments, authorities, and citations.²¹

Langsdale moves to strike the errata under Local Rule 7-2(g), contending that it amounts to a supplemental brief filed without leave of court. The spend dispute the reason why Nelson's final opposition was filed four days late. I will not delve into those disputes. Because I have already considered substantially identical arguments by the same counsel in Cox v. Richland Holdings,²² and Langsdale's replies to them,²³ I see no reason to ignore them here. Further, the benefit of a fully briefed opposition, while it improves my analysis, does not prejudice Langsdale because I am dismissing all of the Laforges' claims with leave to amend. That is the same result that would have occurred if I did not consider the additional arguments and authority raised in the errata. So I deny Langsdale's motion to strike.

B. Motion to dismiss standard

A properly pleaded complaint must provide a "short and plain statement of the claim showing that the pleader is entitled to relief."²⁴ While Rule 8 does not require detailed factual allegations, it demands more than "labels and conclusions" or a "formulaic recitation of the elements of a cause of action."²⁵ "Factual allegations must be enough to rise above the speculative level."²⁶ To survive a motion to dismiss, a complaint must "contain[] enough facts to state a claim to relief that is plausible on its face."²⁷

District courts must apply a two-step approach when considering motions to dismiss.²⁸ First, the court must accept as true all well-pleaded factual allegations and draw all reasonable inferences from the complaint in the plaintiff's favor.²⁹ Legal conclusions, however, are notentitled to the same assumption of truth even if cast in the form of factual allegations.³⁰ Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice.³¹ Second, the court must consider whether the factual allegations in the complaint allege a plausible claim for relief.³² A claim is facially plausible when the complaint alleges facts that allow the court to draw a reasonable inference that the defendant is liable for the alleged misconduct.³³ Where the complaint does not permit the court to infer more than the mere possibility of misconduct, the complaint has "alleged—but it has not shown—that the pleader is entitled to relief."³⁴ When the claims have not crossed the line from conceivable to plausible, the complaint must be dismissed.³⁵ "Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the [district] court to draw on its judicial experience and common sense."³⁶ A complaint or individual claim should be dismissed without leave to amend only when "it is clear . . . that the complaint could not be saved by amendment."³⁷

C. Subject matter jurisdiction

The Laforges allege that the defendants committed four distinct "violations": (1) the "collection fee violation"; (2) the "§ 1692(g) violation"; (3) the "interest fees violation"; and (4) the "default judgment violation."³⁸ The defendants rely on the Rooker-Feldman doctrine to assert that this court does not have subject matter jurisdiction over any of the claims stemming from those "violations." They argue that the Laforges' complaint constitutes a de facto appeal of the judgment entered against them in state court.

The Rooker-Feldman doctrine "prohibits a federal district court from exercising subject matter jurisdiction over a suit that is a de facto appeal from a state court judgment."³⁹ "If a plaintiff brings a de facto appeal from a state court judgment, Rooker-Feldman requires that the district court dismiss the suit for lack of subject matter jurisdiction."⁴⁰ It is "confined to cases . . . brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments."⁴¹ "[I]f a federal plaintiff asserts as a legal wrong an allegedly illegal act or omission by an adverse party, Rooker-Feldman does not bar jurisdiction."⁴² "Thus, even if a plaintiff seeks relief from a state court judgment, such a suit is a forbidden de facto appeal only if the plaintiff also alleges a legal error by the state court."⁴³

The majority of the Laforges' claims do not collaterally attack the state court judgment. Rather, they complain of allegedly illegal conduct by the defendants to collect the debt, such as failing to provide a validation of debt letter and assessing unlawful collection and interest fees. This is not a forbidden de facto appeal of the judgment in the state action, and therefore is not barred by Rooker-Feldman.

However, from the pleadings it is unclear if any state law claims stemming from the "default judgment violation" allegations are, in fact, meant to attack the state court judgment. The Laforges allege that "[t]he default judgment obtained against [them] . . . includes amounts that were improperly calculated and inflated."⁴⁴ That assertion could imply that the state court default judgment was erroneous for including those amounts, or that the defendants improperly included those amounts in their application for default judgment. The Laforges represent in theirresponse to the motion to dismiss that none of their factual allegations intend to question the state court judgment, and that they are not asking...