Osborn v. Ekpsz, LLC

821 F.Supp.2d 859

Russell and June OSBORN, Plaintiff,

v.EKPSZ, LLC, dba Texas Final Judgments, LLC., Defendant.

Civil Action No. H–10–2252.

United States District Court,S.D. Texas,Houston Division.

Sept. 26, 2011.

Noah Daniel Radbil, Weisberg & Meyers, LLC, Houston, TX, for Plaintiffs.

Stephen M. Putonti, Putonti & Escover, PC, Lakeway, TX, John Robert Stratton, Attorney at Law, Austin, TX, for Defendant.

MEMORANDUM AND ORDER

LEE H. ROSENTHAL, District Judge.

This is an action under the Fair Debt Collection Practices Act (FDCPA). ¹ One month after the plaintiffs moved for leave to file a second amended complaint, the defendant moved for judgment on the pleadings under Rule 12(c), (Docket Entry No. 21), and responded to the plaintiffs' motion for leave to amend, (Docket Entry No. 22). The motion for judgment on the pleadings argued that the content of the debt-collection letter refuted the plaintiffs' claims. (Docket Entry No. 21, at 3–8). The response to the plaintiffs' motion for leave to amend argued that the defendant had been unfairly prejudiced by the plaintiffs' changing allegations and that the proposed amendment would be futile because the claims in the second amended complaint fail as a matter of law. (Docket Entry No. 22, at 4–13). The defendant asked for the legal fees it incurred to date if the court grants leave to amend. ( Id., at 12). The plaintiffs have responded to the motion for judgment on the pleadings, (Docket Entry No. 23), and replied to the defendant's response opposing leave to amend, (Docket Entry No. 24).

Based on the pleadings; the motions, responses, and replies; and the relevant law, the plaintiffs' motion for leave to file the second amended complaint (Docket Entry No. 15) is granted as to the deletion of the state-law claims and the FDCPA claims under § 1692e(3) and (5); granted as to the claim under § 1692g(a)(4)-(a)(5); granted as to the class-action allegations with respect to this claim; and denied as to the other FDCPA claims. The defendant's motion for judgment on the pleadings (Docket Entry No. 21) is granted in part and denied in part. The motion for judgment on the pleadings is denied as to the claim under § 1692g(a)(4)-(a)(5), and granted as to the other claims. A status conference is set for October 3, 2011, at 10:30 a.m. in Courtroom 11–B to set a schedule to resolve the remaining claims.

The reasons for these rulings are explained below.

I. Background

In April 2010, the plaintiffs, Russell and June Osborn, received a one-page letter from the defendant, Ekpsz, LLC d/b/a Texas Final Judgments, LLC. The letter sought to collect a $3,639.29 judgment entered against June Osborn in a justice of the peace court in September 2009. The letterhead identified the sender as “TEXAS FINAL JUDGMENTS, LLC,” with an address in Lakeway, Texas. (Docket Entry No. 15–1, at 4). Below this letterhead, aligned to the left, the letter listed the addressee, June Osborn, and gave her address. ( Id.). The subject line stated in bold font: “Cause No. CV31C0044160, Pharia L.L.C. v. JUNE OSBORN, in the Justice Court of HARRIS County, Texas.” ( Id.). The body of the letter stated:

Dear Mr or Ms OSBORN:

On 9/22/2009, a judgment was entered against you personally in the above referenced lawsuit. It is our understanding that you are not represented by an attorney at this time. If you are represented by an attorney, please forward this Notice to your attorney and direct them to contact us at their earliest convenience.

The judgment taken against you has resulted in an outstanding balance due of $3,639.29. Note this balance amount does not include post-judgment interest, which we are entitled to collect. We will exclude post-judgment interest if you contact us immediately to arrange payment.

Do not avoid dealing with this judgment debt as it may be abstracted in any county in which you own property and in the county in which you live. In addition, the judgment will continue to grow with interest and may remain on your financial record until resolved.

We are willing to work with you and would like to end this matter amicably. However, if we do not hear from you within the next thirty (30) days, we will direct our attorneys to send a Notice of Deposition with Subpoena Duces Tecum or Request for Production of Documents and Interrogatories. You will be required to appear at a deposition for the taking of your sworn testimony and bring certain documents disclosing your finances or you will be required to produce said documents and answer interrogatories at our attorney's office. To avoid the sworn deposition and or production of documents, please contact our office at the following number:

( Id.). The defendant's phone number followed, centered on the page and in larger font. ( Id.). The letter was signed by “Texas Final Judgments, LLC.” Below the signature line, the letter included a notice—in bold letters and in the same font size as the body of the letter—that stated, in relevant part:

IMPORTANT NOTICE. Federal law gives you 30 days after you receive this letter to dispute the validity of the debt or any part of it. Unless you dispute this debt, or any portion of it, within 30 days from receipt of this notice, we will assume the debt to be valid. If you notify us within 30 days after receipt of this notice that you dispute the debt, or any portion of it, we will obtain verification of the debt or copy of the judgment against you and provide you a copy. If you make a request within 30 days of receipt of this notice, we will provide you with the name and address of the original creditor, if the original creditor is different from the current creditor.

( Id.). A bar code was beneath this paragraph. ( Id.).

The plaintiffs filed a three-count complaint against Ekpsz, alleging that by sending the letter, the defendant violated the FDCPA, the Texas Debt Collection Practices Act,² and the Texas Deceptive Trade Practices Act.³ (Docket Entry No. 1). Ekpsz filed a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c). (Docket Entry No. 8). The plaintiffs responded by filing a motion for leave to file a first amended complaint. (Docket Entry No. 9). This court granted the plaintiffs' motion and dismissed the defendant's motion to dismiss as moot. The first amended complaint alleged violations of the same federal and state acts.

Before the defendant responded to the first amended complaint, the plaintiffs filed a motion for leave to file a second amended complaint. (Docket Entry No. 15). The proposed second amended complaint drops the state-law causes of actions and the FDCPA causes of action under §§ 1692e(3) and (5), re-alleges the remaining FDCPA violations and adds new ones, and adds allegations seeking class certification for those violations under Rule 23(b)(3). The proposed second amended complaint alleges violations of the following FDCPA provisions:

(1) 15 U.S.C. § 1692g(a)(4)-(a)(5), because the statutorily-required validation notice did not inform the plaintiffs that if they wanted to request verification of the alleged debt or information about the original creditor, their request had to be in writing;

(2) § 1692e(9), because the debt collection letter falsely implied that it was authorized or approved by a Texas court;

(3) § 1692e(10), because the use of the name “Texas Final Judgments, LLC” would mislead consumers into believing the defendant was associated with a Texas court;

(4) § 1692f, because the defendant used fair and unconscionable means to collect the alleged debt by sending a letter that mimicked documents a Texas court would issue;

(5) § 1692g(b), because other language in the letter overshadowed or contradicted the debt validation notice; and

(6) § 1692e(10), because the letter misrepresented that a judgment has been entered against Russell Osborn, not just June Osborn. (Docket Entry No. 15–1).

II. The Legal StandardsA. Leave to Amend

When there is no need to adjust a scheduling order to allow a pleading amendment, a motion for leave to amend “is evaluated under [Rule 15], which provides that the court ‘should freely give leave when justice so requires.’ ” Cole v. Sandel Med. Indus., L.L.C., 413 Fed.Appx. 683, 688 (5th Cir.2011) (quoting Fed. R. Civ. P. 15(a)(2)). “[T]he language of this rule ‘evinces a bias in favor of granting leave to amend’ ” and the court “must have a ‘substantial reason’ to deny a request for leave to amend.” Lyn–Lea Travel Corp. v. Am. Airlines, Inc., 283 F.3d 282, 286 (5th Cir.2002) (citations omitted). In deciding whether to grant leave to file an amended pleading under Rule 15(a), a district court may consider factors such as undue delay; bad faith or dilatory motive on the part of the movant; repeated failure to cure deficiencies by amendments previously allowed; undue prejudice to the opposing party; and futility of amendment. Wimm v. Jack Eckerd Corp., 3 F.3d 137, 139 (5th Cir.1993). Amendment is futile if “the amended complaint would fail to state a claim upon which relief could be granted.” Stripling v. Jordan Prod. Co., 234 F.3d 863, 873 (5th Cir.2000). In determining futility, the court applies “the same standard of legal sufficiency as applies under Rule 12(b)(6).” Id.

B. Rule 12(c)

“A motion brought pursuant to Fed.R.Civ.P. 12(c) is designed to dispose of cases where the material facts are not in dispute and a judgment on the merits can be rendered by looking to the substance of the pleadings and any judicially noticed facts.” Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 312 (5th Cir.2002) (citation omitted). The standard of review under Rule 12(c) is the same as that under Rule 12(b)(6). Gentilello v. Rege, 627 F.3d 540, 543–44 (5th Cir.2010).

Rule 12(b)(6) allows dismissal if a plaintiff fails “to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). In Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929, (2007), and Ashcroft v....