Oei v. N. Star Capital Acquisitions, LLC

486 F.Supp.2d 1089

Paul OEI, an individual; Suzette Oei, an individual, Plaintiffs, v. N STAR CAPITAL ACQUISITIONS, LLC; Law Office of D. Scott Carruthers; and Does 1 through 10 inclusive, Defendants.

No. CV06 3086 MMM (MANX).

United States District Court, C.D. California.

November 13, 2006.

COPYRIGHT MATERIAL OMITTED

Eric F, Fagan, Eric F. Fagan Law Offices, Chula Vista, CA, for Plaintiffs.

David J. Kaminski, Martin Schannong, Carlson Messer and Turner, James Fraser Marshall, Jerid R. Maybaum, Russell W. Clampitt, Jacks and Maybaum, Los Angeles, CA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

MORROW, District Judge.

On May 19, 2006, plaintiffs Paul and Suzette Oei filed this action against N Star Capital Acquisitions LLC ("North Star"), the Law Offices of D. Scott Carruthers, and certain unnamed defendants. The complaint asserts, against all defendants, a claim under the Fair Debt Collection Practices Act ("FDCPA" or the "Act"), 15 U.S.C. §§ 1692-1692o, and a claim under California law for intentional infliction of emotional distress. The complaint also asserts, against North Star and Does 6 through 10, a claim under the Robbins-Rosenthal Fair Debt Collections Practices Act (the "Rosenthal Act"), California Civil Code §§ 1788-1788.33. Plaintiffs seek actual damages, punitive damages, statutory damages, costs, attorney's fees, declaratory relief, and other appropriate relief. On July 21, 2006, defendant North Star filed a motion to dismiss the complaint for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.

I. FACTUAL BACKGROUND

Paul and Suzette Oei (collectively, "the Oeis") have purportedly never possessed or used an Aspire Visa credit card.¹ Nonetheless, on September 8, 2005, North Star sought to collect a debt allegedly owed by the Oeis on an Aspire Visa credit card account by having its attorney, Carruthers, file an action against the Oeis in Los Angeles Superior Court.² North Star and Carruthers regularly engage in the collection of debts from consumers using the mail and telephone.³

On September 16, 2005, an unidentified agent of North Star (Doe 6) contacted Suzette Oei at her place of employment, demanding that she pay the alleged debt.⁴ When she explained that neither she nor Paul Oei had ever had an Aspire Visa credit card account, the caller accused her of being a liar.⁵ Although Suzette Oei demanded that Doe 6 stop calling her at work, he called twenty-three times.⁶

Paul Oei was personally served with the summons and complaint in the state-court action on October 12, 2005; after receiving the documents, he called Carruthers' office and spoke to an unidentified individual (Doe 1).⁷ Although Paul Oei told Doe 1 that neither he nor Suzette Oei had ever had an Aspire Visa account, Doe 1 demanded that Paul Oei make pay the alleged debt in full or set up a payment plan to do so.⁸ After asking to speak with a manager, Paul Oei talked to another unidentified individual (Doe 2), who again demanded that he pay the alleged debt in full, and threatened to garnish the Oeis' wages and record a lien against their home if he did not.⁹ Paul Oei gave Doe 2 the number of his Providian Visa credit card, thinking that it might be the account in question, but Doe 2 told him it was not.¹⁰

Doe 2 told Paul Oei that she would investigate the matter and get back to him, but Paul Oei never heard from her again.¹¹ Instead, a third unidentified agent of Carruthers (Doe 3) allegedly called the Oeis' home every day for two weeks.¹² On one occasion, he spoke with the Oeis' fifteenyear old daughter and coaxed her to provide Paul Oei's cell phone number, saying he was one of her father's "old friend[s]."¹³ Doe 3 purportedly called Paul Oei's cell phone twice a day for the next ten days.¹⁴

On January 18, 2006, Carruthers obtained default judgment against the Oeis.¹⁵ On January 27, 2006, Carruthers served garnishment papers on Suzette Oei's employer; her wages were garnished twice.¹⁶ The Oeis obtained legal counsel, and on March 29, 2006, Carruthers entered into a stipulation with the Oeis' attorney to set aside the default judgment and return Suzette Oei's garnished wages to her.¹⁷ On April 17, 2006, Carruthers requested that the court dismiss the action without prejudice.¹⁸

The Oeis allege that, as a result of defendants' actions, they have suffered severe mental anguish and their marital relationship has deteriorated.¹⁹ Suzette Oei was forced to take medication to counter an increase in her blood pressure, alleviate headaches, and counter anxiety attacks.²⁰ Paul Oei was forced to change his cell phone number to avoid defendants' purportedly incessant harassment.²¹

II. DISCUSSION

A. Legal Standard Governing Motions To Dismiss Under Rule 12(b)(6)

A Rule 12(b)(6) motion tests the legal sufficiency of the claims asserted in the complaint. A court may not dismiss a complaint for failure to state a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); see also, e.g., Johnson v. Knowles, 113 F.3d 1114, 1117 (9th Cir.1997). Thus, a Rule 12(b)(6) dismissal is proper only where plaintiff "lack[s] ... a cognizable legal theory" or fails to allege "sufficient facts [to support] ... a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.1988).

In deciding a Rule 12(b)(6) motion to dismiss, the court generally looks only to the face of the complaint and documents attached thereto. Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir.2002); Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n. 19 (9th Cir.1990). The court must accept plaintiffs factual allegations as true, and construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996); Mier v. Owens, 57 F.3d 747, 750 (9th Cir.1995). It need not accept as true conclusory allegations or legal characterizations cast in the form of factual allegations. W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir.1981).

B. Whether the Complaint States a Claim Under the FDCPA

The FDCPA was enacted "to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." 15 U.S.C. § 1692(e). To effectuate this purpose, the Act prohibits a "debt collector" from making false or misleading representations and from engaging in various abusive and unfair practices. The Act states, for example, that a "debt collector" may not use violence, obscenity, or, made repeated annoying phone calls, id. § 1692d; that it may not falsely represent "the character, amount, or legal status of any debt." id. § 1692e(2)(A); and that it may not use "unfair or unconscionable means to collect or attempt to collect" a consumer debt, id. § 1692f. Among other things, the Act establishes rules that a debt collector must follow in "acquiring location information" about the debtor, id. § 1692b; communicating about the debtor (and the debt) with third parties, id. § 1692c(b); and bringing "[l]egal actions," id. § 1692i. "Debt collectors" who violate the provisions of the Act can be held civilly liable to those whom they harass, mislead, or treat unfairly. Id. § 1692k.

North Star argues that the Oeis' complaint fails to state a claim under the FDCPA because it relies exclusively on a theory of vicarious liability, attempting to hold North Star liable for the actions of its attorney, Carruthers. This renders the claim fatally defective, North Star asserts, because it cannot be held vicariously liable for the actions of an independent contractor, and attorneys are independent contractors as a matter of law.²² North Star also contends that it is exempt from liability under § 1692a(6)(A) of the Act.²³ It asserts that, if it had directly attempted to collect the Aspire Visa debt from the Oeis, it would have done so in its own name and come within the exemption set forth in that section. Because it could not be held directly liable for debt collection activities, North Star contends, it would be anomalous to hold it vicariously liable for the collection actions of its attorney.²⁴ Finally, North Star argues that it cannot be held vicariously liable under the FDCPA because its attorney's purported violations of the Act were privileged under California Civil Code § 47(b)(2), California's "litigation privilege."²⁵

1 Whether North Star Can Be Held Vicariously Liable for the Acts of its Attorney Under the FDCPA

North Star first argues that it cannot be held vicariously liable for Carruthers' actions because he was an independent contractor.²⁶ Given controlling Ninth Circuit precedent, the court cannot agree.

The Ninth Circuit recently held that "general principles of agency ... form the basis of vicarious liability under the FDCPA." Clark v. Capital Credit & Collection Servs., Inc., 460 F.3d 1162, 1173 (9th Cir.2006) (citing Newman v. Checkrite California, 912 F.Supp. 1354, 1370 (E.D.Cal.1995)). To ascertain "general principles of agency," courts consult the Restatement (Second) of Agency. See id. (applying § 1 of the Restatement to determine whether an attorney could be held vicariously liable for the acts of a debt collector under the FDCPA and concluding that he could not because he did not exercise adequate control over the debt collector's conduct); Newman, 912 F.Supp. at 1370 n. 19 (noting that both federal and California courts rely on the Restatement to ascertain common-law principles of agency). Under the Restatement, attorneys are, as a matter of law, both independent contractors and ...