Stephenson v. Midland Credit Mgmt.

TAMRA STEPHENSON, Plaintiff, v. MIDLAND CREDIT MANAGEMENT AND TIM BOLIN, Defendants.

No. 4:21-cv-00020-DN-PK

United States District Court, D. Utah

August 23, 2021

Paul Kohler, Magistrate Judge

MEMORANDUM DECISION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS; FINDING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT MOOT

David Nuffer, United States District Judge

Defendants Midland Credit Management Inc. (“Midland”) and Tim Bolin (“Bolin”) (collectively “Defendants”) moved for judgment on the pleadings (the “Motion”)^[1] on all the causes of action that Plaintiff Tamra Stephenson (“Plaintiff”) has asserted against them.^[2]Plaintiff responded to the Motion.^[3] Defendants replied in support.^[4] After Defendants filed a proposed memorandum order, Plaintiffs filed a Motion to Alter or Amend Judgment, ^[5] which was construed as an objection to the proposed order.^[6]

As the following Memorandum Decision explains, the Motion is GRANTED in part and DENIED in part, dismissing the First Cause of Action without prejudice for failure to state a claim. The remaining causes of action which are based on state law are dismissed. The dismissal of these causes of action is without prejudice, because pendent jurisdiction will not be exercised over these causes of action.

BACKGROUND

Plaintiff owed delinquent credit card debt to Midland.^[7] Plaintiff claims that Midland sent certain Letters^[8] in violation of § 1692e of the FDCPA because the letters threatened to refer Plaintiff's account to a law firm to be reviewed by an attorney for possible legal options.^[9]

Via correspondence dated December 6, 2019, Midland notified Plaintiff of, in part, the delinquency of the debt and the potential that Midland “may proceed with forwarding this account to an attorney.”^[10]

Midland next sent Plaintiff a letter dated February 21, 2020 (the "February Letter") which was emblazoned with a prominent "FINAL NOTICE" graphic. The February Letter does not (Image Omitted) indicate it is from an attorney. Instead, the letter states, in part, as follows "If you do not reply, we plan on sending your account to an attorney in the state of UT." A white-on-black banner reads "ATTORNEY REVIEW PLANNED. "The letter advised that "FAILURE TO REPLY WILL RESULT IN ATTORNEY REVIEW," and "We intend to have a lawsuit filed against you. Before a lawsuit can be filed, an attorney must review your account." The steps in litigation and possible effects of a judgment were then outlined.

The letter also advised Plaintiff that "We want to help you resolve this matter voluntarily" and included information such as (1) a toll-free telephone No. for Plaintiff to discuss the debt with Midland; (2) Midland's website; and (3) instructions for methods of payment including by phone, online and by mail.^[11] The February Letter is from Midland, signed by Division Manager Bolin. It also provides a phone No. to the Pre-Legal Department for Plaintiff to discuss her delinquency.^[12]

Midland also sent Plaintiff a letter dated June 17, 2020 ("the June Letter"), titled "Final Notice Extension" and "Pre-Legal Notice."^[13] Similar to the February Letter, the June Letter is from Midland, signed by Bolin in his capacity as Division Manager of Midland. The June Letter also provides information to Plaintiff, including options for payment and a toll-free No. to contact Midland.^[14] The June Letter also explains that Plaintiff is being provided additional time to avoid attorney review of the debt due to tough times and provided additional options for Plaintiff to avoid an attorney review.

Plaintiff alleges that these Letters were misleading in violation of the FDCPA, in part because Midland never sent the Plaintiff's account to an attorney for legal review.^[15] As things turned out, Plaintiff's account was indeed sent to the law firm of Johnson Mark LLC on or about December 9, 2020 for legal review.^[16] On December 11, 2020, Johnson Mark LLC sent Plaintiff a letter advising of its representation of Midland in connection with the Plaintiff's Account.^[17] In response to correspondence from Plaintiff, Johnson Mark LLC then sent Plaintiff's counsel a debt verification response letter on February 9, 2021, days before this action was filed.^[18]

STANDARD OF REVIEW

A motion for judgment on the pleadings under Rule 12(c) of the Federal Rules of Civil Procedure is evaluated by the same standard as a Rule 12(b)(6) motion to dismiss for failure to state a claim.^[19] The factual details supporting a claim must be great enough to make the claim plausible, rather than merely possible; i.e., “enough to raise a right to relief above the speculative level[.]”^[20] It must be reasonable for a court to draw the inference that the defendant is liable, based on the facts stated.^[21] Recitations of elements of a claim and conclusory statements are insufficient to meet the standard of plausibility.^[22] A court may consider exhibits to pleadings without converting a motion for judgment on the pleadings into a motion for summary judgment. ^[23]

DISCUSSION

The Letters Sent by Midland do not Violate 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.”^[24]

For most courts, “the question of whether a communication complies with the FDCPA is determined from the perspective of the ‘least sophisticated consumer.'”^[25] This hypothetical consumer is a “naïve” and “credulous” person.^[26] However, even the least sophisticated consumer is presumed to have a “concept of reasonableness.”^[27] While not possessing “the astuteness of a ‘Philadelphia lawyer' or even the sophistication of the average, everyday, common consumer ”^[28] the least sophisticated consumer “is neither irrational nor a dolt.”^[29]

Whether or not a collection letter violates the FDCPA is a question of law.^[30]

Claims Based on Letters Prior to February 12, 2020, are Time-Barred

The Complaint references communications, including correspondence dated December 6, 2019, which are time barred under the FDCPA.^[31] Lawsuits arising under the FDCPA must be brought “within one year from the date on which the violation occurs.”^[32] The Complaint was on February 12 2021.^[33] Therefore, any claims based on communications prior to February 12, 2020 are time-barred.

The Letters Referenced in the Complaint Do Not Violate § 1692e(5) of the FDCPA

To allege a violation of § 1692e(5) of the FDCPA, a plaintiff must show that defendants (1) threat[ened] to take any action, (2) that cannot legally be taken or that was not intended to be taken.^[34] Plaintiff cannot meet either prong.

The Letters Do Not Threaten Legal Action

To constitute a threat of legal action under the FDCPA, a letter must convey to the least sophisticated consumer that such an action is “authorized, likely, and imminent.”^[35] Letters that “simply state that the debt collector ‘may consider additional remedies' and that the accounts were placed with an attorney for ‘such action as necessary'” are making equivocal statements that “do not threaten legal action.”^[36] Accordingly, “even where communications specifically refer to legal action, a threat does not exist where the references are couched in terms of mere possibility.”^[37]

The February Letter states that “If you do not reply, we plan on sending your account to an attorney in the state of Utah” and that a lawsuit would commence only “if the attorney determines there is cause for a suit.”^[38] Such language indicates that Midland was only “planning” to send the account to its counsel. Counsel could determine there was no cause for suit, and Plaintiff could avoid legal action. The February Letter also suggests that legal action is not imminent by stating that Plaintiff can call “to discuss what options are available” and “we will work to avoid sending your account to an attorney.”^[39] Additionally, the June Letter provides three different options to Plaintiff, including making no immediate payment if Plaintiff contacted Midland prior to July 17, 2020.^[40] When language in a letter gives a plaintiff alternate options besides “either remitting payment or being referred to an attorney, ” such language “further removes the [l]etter from any apparent or immediate or imminent threat of legal action.”^[41] Any consumer reading the letters at issue in this case would realize that contacting Midland was an alternate option besides remitting payment or being referred to an attorney, and thus legal action was not imminent. Contrary to Plaintiff's arguments in her Motion to Alter or Amend Judgment, ^[42] no reasonable jury could conclude otherwise.

The language in the February and June Letters shows that Midland indicated that a lawsuit was a strong possibility, but gave Plaintiff additional remedies to avoid a legal referral and subsequent lawsuit. Even the least sophisticated consumer could not view the Letters as threatening imminent legal action.

There is No. Basis for a Claim that Defendants Could Not Legally Proceed with Legal Action or Did Not Intend to Proceed with Legal Action

Plaintiff claims that Midland never actually intended to proceed with legal action against her and that, as a result, the Letters violated the FDCPA. Specifically, Plaintiff contends that “Midland never sent the alleged debt to an attorney for a review” and that “on information and belief Midland never intended or was never able to sue Plaintiff.”^[43]

A plaintiff has the burden to prove a defendant never intended to proceed with legal...