Tillman v. Midland Credit Mgmt., Case No. 4:19-cv-4030

DEVONNA TILLMAN, aka DEVONNA FRICKS, individuallyand on behalf of all others similarly situated PLAINTIFF v. MIDLAND CREDIT MANAGEMENT, INC.; MIDLAND FUNDING LLC;and JOHN DOES 1-25 DEFENDANTS

Case No. 4:19-cv-4030

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF ARKANSAS TEXARKANA DIVISION

December 10, 2019

ORDER

Before the Court is Defendants' Motion for Judgment on the Pleadings. (ECF No. 14). Plaintiff Devonna Tillman has responded. (ECF No. 21). Defendants have replied. (ECF No. 25). The Court finds the matter ripe for consideration.

I. BACKGROUND

On March 20, 2019, Plaintiff filed this putative class action pursuant to the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 (the "FDCPA"). Plaintiff alleges that, sometime prior to June 20, 2018, she incurred a financial obligation to GE Capital Retail Bank.¹ GE Capital Retail Bank then contracted with Defendants to collect the debt. Plaintiff asserts that Defendants violated the FDCPA by sending her a dunning letter² on June 20, 2018, that contained false, deceptive, and misleading statements.

In relevant part, the dunning letter indicated that Plaintiff owed an outstanding balance andlisted various options to pay off the debt. The dunning letter also stated that "[t]he law limits how long you can be sued on the debt. Because of the age of the debt, we will not sue you for it. If you do not pay the debt, we may report it to the credit reporting agencies as unpaid." (ECF No. 1-1, p. 2). Plaintiff asserts that Defendants' dunning letter was misleading, unfair, and in violation of various provisions of the FDCPA, including 15 U.S.C. § 1692e and 15 U.S.C. § 1692f.

On July 5, 2019, Defendants filed the instant motion for judgment on the pleadings, arguing that this case should be dismissed with prejudice. Plaintiff opposes the motion.

II. STANDARD

A party may move for judgment on the pleadings after the pleadings have closed. Fed. R. Civ. P. 12(c). In deciding a Rule 12(c) motion, courts apply the same legal standard used for a motion to dismiss under Rule 12(b)(6). Ashley Cnty., Ark. v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009). A pleading must state "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). To meet this standard and to survive a Rule 12(b)(6) motion, a complaint need only state factual allegations sufficient to raise a right to relief above the speculative level that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Courts deciding a Rule 12(c) motion are required to accept as true the complaint's well-pled allegations and must resolve all inferences in the plaintiff's favor. Wishnatsky v. Rovner, 433 F.3d 608, 610 (8th Cir. 2006). However, this tenet does not apply to legal conclusions, "formulaic recitation of the elements of a cause of action," or naked assertions which are so indeterminate as to require further factual enhancement. Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8thCir. 2009). "Judgment on the pleadings is appropriate only when there is no dispute as to any material facts and the moving party is entitled to judgment as a matter of law." Wishnatsky, 433 F.3d at 610.

When considering a motion for judgment on the pleadings, courts must generally ignore all materials outside the pleadings. Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999). However, courts may consider "some materials that are part of the public record or do not contradict the complaint . . . as well as materials that are necessarily embraced by the pleadings." Id. (internal quotation marks omitted).

III. DISCUSSION

Plaintiff contends that Defendants' dunning letter violated 15 U.S.C. § 1692e and 15 U.S.C. § 1692f by failing to disclose that her debt's statute of limitations could be reset if she made partial payments and, thus, they failed to inform her of the true ramifications of making a payment.³ Plaintiff also asserts that the dunning letter is misleading because it states, "we will not sue you for [the debt]," which implies that Defendants merely have chosen not to sue, rather than stating that they are time-barred from doing so.

Defendants contend that they are entitled to judgment on the pleadings on numerous grounds and ask for dismissal of this case. Specifically, they contend that: (1) their attempt to collect a time-barred debt is not actionable under the FDCPA absent a threat of litigation or the commencement of litigation, neither of which is alleged to have occurred in this case; (2) Plaintiff did not allege that she made a partial payment in response to the dunning letter and Defendants'own policies and procedures preclude the revival of an expired statute of limitations based on partial payment and also prohibit the re-sale of time-barred accounts; (3) Plaintiff failed to state a claim upon which relief may be granted with respect to the allegations that "we will not sue you" language is misleading; (4) Plaintiff's claims are time-barred because they accrued, if at all, on September 27, 2017, when Defendants first sent a collection letter to Plaintiff; and (5) Defendants are entitled to immunity from liability under the FDCPA's safe-harbor provision. Plaintiff argues that none of these arguments warrant judgment on the pleadings and the instant motion should be denied.

The Court will begin with Defendants' first argument and, if necessary, will proceed to the other arguments.

A. FDCPA Claim in the Absence of the Threat of or Commencement of Litigation

Defendants argue that this case should be dismissed because the Eighth Circuit has held that, absent a threat of litigation or commencement of litigation, actions to collect a time-barred debt are not actionable under the FDCPA. Plaintiff disagrees.

Congress enacted the FDCPA to curtail "the use of abusive, deceptive, and unfair debt collection practices" by debt collectors. 15 U.S.C. § 1692(a). To further this purpose, the FDCPA grants a private right of action to consumers who receive communications that violate the Act. 15 U.S.C. § 1692k. Among other things, the FDCPA seeks "to eliminate abusive debt collection practices by debt collectors [and] to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged." 15 U.S.C. § 1692(e). Thus, the FDCPA makes it unlawful for debt collectors to use "any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692e. The FDCPA also prohibits debt collectors from using "unfair or unconscionable means to collect orattempt to collect any debt." 15 U.S.C. § 1692f. In addition, it is a violation of the FPDCA to threaten to take "any action that cannot legally be taken." 15 U.S.C. § 1692e(5).

Defendants point out that Plaintiff has not alleged that Defendants either threatened to commence or commenced litigation against her in relation to the debt. Thus, Defendants argue that, pursuant to binding Eighth Circuit authority, their attempt to collect the time-barred debt—sending the dunning letter—is not actionable under the FDCPA. Plaintiff responds that a dunning letter may nonetheless contain deceptive, misleading, unfair, or unconscionable language in violation of the FDCPA, even if the letter does not threaten litigation and litigation is not subsequently commenced.

Defendants' arguments on this point rely heavily on Freyermuth v. Credit Bureau Services, Inc., in which the Eighth Circuit, inter alia, addressed a plaintiff's claim that the defendant committed a FDCPA violation by attempting to collect a debt that it knew was likely time-barred. 248 F.3d 767, 770 (8th Cir. 2001). The Eighth Circuit answered that question in the negative, holding that "in the absence of a threat of litigation or actual litigation, no violation of the FDCPA has occurred when a debt collector attempts to collect on a potentially time-barred debt that is otherwise valid." Id. at 771. Plaintiff, however, argues that Freyermuth is not determinative, pointing to several federal circuit opinions from other jurisdictions, decided after Freyermuth, which held under different factual circumstances that even in the absence of a threat of litigation or commencement of litigation, a debt collector's letter may nonetheless violate the FDCPA if the letter contains abusive, deceptive, or unfair language. See, e.g., Daugherty v. Convergent Outsourcing, Inc., 836 F.3d 507, 513 (5th Cir. 2016) (discussing the potential pitfalls for consumers in the absence of a statute-of-limitations revival disclosure but holding that dismissal of an FDCPA claim should be reversed because the debt collector's letter offering a "settlement"of a time-barred debt without disclosing that the debt was time-barred could mislead a consumer to believe that the debt is legally enforceable); Buchanan v. Northland Grp., Inc., 776 F.3d 393, 399 (6th Cir. 2015) (same).

However, Plaintiff has cited to no binding Eighth Circuit authority, and the Court is unaware of any, finding a plausible FDCPA violation in the absence of a threat of litigation or actual litigation. Multiple courts have applied Freyermuth's rationale in dismissing claims like Plaintiff's—that a debt collector violated the FDCPA by failing to advise that a debt was potentially time barred or by otherwise failing to disclose the status of the debt—in the absence of a threat of litigation or actual litigation. See, e.g., Haynes v. Allied Interstate, LLC, No. 4:14-cv-3130-RGK, 2015 WL 429800, at *4 (D. Neb. Feb. 2, 2015) (granting a Rule 12(b)(6) motion to dismiss FDCPA claims brought under 15 U.S.C. §§ 1692e and 1692f because there was no threat of litigation or actual litigation); Price...