Lewis v. EquityExperts.org

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KIMBERLI LEWIS on behalf of herself and others similarly situated, Plaintiff, v. EQUITYEXPERTS.ORG, LLC, Defendant.

No. 5:22-CV-302-FL

United States District Court, E.D. North Carolina, Western Division

May 31, 2023

ORDER

LOUISE W. FLANAGAN UNITED STATES DISTRICT JUDGE

This matter is before the court on defendant's motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). (DE 16). The issues raised are ripe for ruling. For the following reasons, the motion is granted in part and denied in part.

STATEMENT OF THE CASE

Plaintiff commenced this consumer protection action against defendant in Wake County Superior Court, April 14, 2022, asserting putative class action claims on behalf of herself and others similarly situated, based upon allegedly improper debt collection practices by defendant in connection with delinquent homeowners association dues payments.

Plaintiff asserts claims arising under the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”); the North Carolina Collection Agency Act, N.C. Gen. Stat. § 58-70 et seq. (“NCCAA”); the North Carolina Debt Collection Act, N.C. Gen. Stat. § 75-50 et seq. (“NCDCA”); the Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1 et seq. (“UDTPA”); and common law unjust enrichment. Plaintiff seeks certification of this action as a class action; an award of actual, statutory, and trebled damages; and an award of attorneys' fees and costs.

Defendant filed a notice of removal August 4, 2022, on the basis of federal question jurisdiction. Thereafter, defendant filed the instant motion to dismiss, relying upon the following: 1) a notice to plaintiff, dated August 26, 2021 (the “notice”); 2) a statement of plaintiff's account, dated September 20, 2021; 3) articles of incorporation and other documents related to the Abbington Ridge Community Association, Inc. (the “association”);^[1] 4) Wake County property ownership records. Plaintiff responded in opposition and defendant replied. The court stayed the parties' scheduling conference activities pending decision on the instant motion.

STATEMENT OF THE FACTS

The facts alleged in support of plaintiff's claims in the complaint may be summarized as follows. Plaintiff is a citizen and resident of Wake County, North Carolina, who was the owner of a home located at 6012 Herston Road, in Raleigh North Carolina, (the “home”), at all times relevant to plaintiff's claims. The home is “subject to the covenants and restrictions filed in the Wake County Register . . . which places the home under the management of” the association. (Compl. ¶ 34).

The association's covenants authorize it to charge homeowners quarterly assessment fees and “purport to give the [a]ssociation the ability to collect ‘all costs' incurred with the collection of assessment fees, without any limitation or bounds of reasonableness of those costs.” (Id. ¶ 36). Defendant is a Michigan company with an office in Wake County, North Carolina, whose “business consists of contracting with Homeowner's Associations (‘HOAs') to aggressively contact and attempt to collect debt - including [allegedly] arbitrary fees imposed by [d]efendant -from members of HOAs.” (Id. ¶ 2).

In 2019, the association “referred [plaintiff's] account to [d]efendant,” with an originating balance of approximately $314.00. (Id. ¶¶ 37, 50). According to the complaint, a “contract between the [association] and [d]efendant set the rates for [defendant's services.” (Id. ¶ 38). “From March to September 2019, [d]efendant called [p]laintiff repeatedly regarding the amount allegedly owed” to the association. (Id. ¶ 40). Each time defendant called plaintiff, it “added another charge to [plaintiff's] account.” (Id.). On September 16, 2019, defendant added a $395.00 “Lien North Carolina” and $150.00 “Attorney Fee” to plaintiff's account. (Id. ¶ 41). Defendant caused a lien to be placed on plaintiff's home about November 1, 2019, stating that the secured amount owed was $2,810.00. (Id. ¶ 43).

From October 2019 to August 2021, defendant continued to place calls to plaintiff and add charges to her account. During this time, plaintiff “entered into a payment plan and made a total of $782.45 in payments on her account.” (Id. ¶ 49). In January 2020, defendant added a $3,445.00 “Foreclosure Referral” fee to Plaintiff's account. This charge later was removed on August 20, 2021, however it was reinstated six days later, on August 26, 2021.

On that same date, defendant sent plaintiff the notice that is subject of plaintiff's claims in the instant case. The notice states that the “Creditor” is the association and that the “Property” is plaintiff's home. The notice is on defendant's letterhead, which provides a Michigan address and represents that it is an “association collection specialist[,]” with a North Carolina License No. 113246. (DE 17-1).^[2] The text of the notice states the following:

Equity Experts represents the above referenced Creditor and is writing to provide you with Notice of the Creditor's intent to foreclose on outstanding liens for assessments against the above referenced property. The lien(s) upon which the Creditor is foreclosing are as follows:

1. Date of Lien: 11/01/2019

Instrument No: 19-M-5050

Amount Secured: $2810.00

Total Owed to Creditor: $6339.00

To satisfy the lien(s) you must pay all amounts due to the Creditor by 09/25/2021. You may have outstanding balances on your account not reflected in the above referenced liens. To obtain the current payoff or to make payment arrangements, please contact the Creditor's agent. Equity Experts, at (855) 321-3973. Failure to satisfy the debt secured by the lien(s) on or before the date stated herein may result in the sale of the Property.

You have the right to bring a court action in the circuit court of the county or city where the Property is located to assert the nonexistence of the debt or any other defense you may have to the sale. This office does not accept cash payments.

This is an attempt to collect a debt and any information obtained may be used for that purpose. (DE 17-1).

According to the complaint, “[t]he ending balance reflected on [p]laintiff's account is $6,349.00, meaning only $314.00 of the statement balance is the debt originating” from the association, and the “remaining $6,035.00 are fees from [d]efendant for [its] debt collection services.” (Compl. ¶ 50). In addition, the notice “included fees and/or costs that were incurred within 30 days” of the notice. (Id. ¶ 53).

Defendant did not seek “recoupment of unpaid fees” from the association. (Id. ¶ 54). Defendant also “did not send [plaintiff] a detailed accounting of what assessments and fees were included in the alleged amount due for foreclosure,” nor an “itemization of fees and charges to [plaintiff]” in the notice. (Id. ¶¶ 57, 59). Defendant also did not include any other notice of “intent to seek recovery of attorneys' fees and costs.” (Id. ¶ 58). The notice “caused [p]laintiff to believe that she would lose her home if all assessments and fees were not paid within thirty days.” (Id. ¶ 56).

The court addresses plaintiff's class action allegations in the analysis herein.

COURT'S DISCUSSION

A. Standard of Review

“To survive a motion to dismiss” under Rule 12(b)(6) “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Factual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. In evaluating whether a claim is stated, “[the] court accepts all well-pled facts as true and construes these facts in the light most favorable to the plaintiff,” but does not consider “legal conclusions, elements of a cause of action, . . . bare assertions devoid of further factual enhancement[,] . . . unwarranted inferences, unreasonable conclusions, or arguments.” Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009).^[3]B. Analysis

1. FDCPA

Defendant argues that plaintiff fails to allege sufficient facts to support her claim under the FDCPA. The court disagrees.

The FDCPA prohibits a “debt collector” from using “any false, deceptive, or misleading representation or means in connection with the collection of any debt” as well as the use of “unfair or unconscionable means” of collection. 15 U.S.C. §§ 1692e, 1692f. “[W]hether a person qualifies as a debt collector . . . is ordinarily based on whether a person collects debt on behalf of others or for its own account.” Henson v. Santander Consumer USA, Inc., 817 F.3d 131, 135 (4th Cir. 2016). “Whether a communication is false, misleading, or deceptive in violation of § 1692e is determined from the vantage of the least sophisticated consumer.” Russell v. Absolute Collection Servs., Inc., 763 F.3d 385, 394 (4th Cir. 2014). “To violate the statute, a representation must be material, which is to say, it must be important in the sense that it could objectively affect the least sophisticated consumer's decisionmaking.” Elyazidi v. Sun Trust Bank, 780 F.3d 227, 234 (4th Cir. 2015).

Here plaintiff has alleged sufficient facts to state an FDCPA claim based on the contents of the notice. First, plaintiff alleges defendant is a debt collector, because the notice states defendant is “attempt[ing] to collect a debt” on behalf of the association, which is expressly designated as the “creditor” in the notice. (DE 17-1). Second, plaintiff has alleged facts giving rise to an inference of a “false, deceptive, or misleading representation” under § 1692e, on the basis of the...