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Todorov v. Easy Loans Corp.

United States District Court, D. Nevada

June 19, 2014

JENNIFER TODOROV, Plaintiff,
v.
EASY LOANS CORP., Defendant.

ORDER (Motion to Dismiss - dkt. no. 6)

MIRANDA M. DU, District Judge.

I. SUMMARY

Before the Court is Defendant Easy Loans Corporation's ("Easy Loans") Motion to Dismiss (dkt. no. 6). The Court has also considered Plaintiff Jennifer Todorov's opposition (dkt. no. 8) and Easy Loans' reply (dkt no. 9). For the reasons that follow, the Motion to Dismiss is denied in part and granted in part.

II. BACKGROUND

This case arises under the Fair Debt Collection Practices Act ("FDCPA" or "Act"). 15 U.S.C. §§ 1692-1692p. Under the FDCPA, Plaintiff Jennifer Todorov ("Todorov") challenges a lawsuit Easy Loans filed against her to collect an allegedly defaulted credit card debt. (Dkt. no. 1 ¶¶ 12-13, 31-40.) These facts are taken from Todorov's complaint.

Before July 2008, Todorov incurred a financial obligation to Washington Mutual Bank ("Creditor") by purchasing family, personal, or household services using a credit card issued by the Creditor. ( Id. ¶¶ 7-8, 13, 15; Dkt. no. 1-3 at 5.) Todorov defaulted on this debt. (Dkt. no. 1 ¶ 15.) Easy Loans later acquired the debt from the Creditor, either because "[t]he [d]ebt was purchased, assigned or transferred to [Easy Loans] for collection, " or because Easy Loans "was employed by the Creditor to collect the [d]ebt." ( Id. ¶ 10.) To collect Todorov's debt, Easy Loans brought a lawsuit on December 18, 2012, in the Las Vegas Township Justice Court in Clark County, Nevada ("Easy Loans' Lawsuit"). ( Id. ¶ 12.) Easy Loans' Lawsuit alleged that Todorov had breached her credit card agreement with the Creditor, and owed an "account stated" to Easy Loans. (Dkt. no. 1-3 at 5-8.) Todorov wrote to Easy Loans on April 21, 2013, to dispute the debt alleged in its lawsuit. (Dkt. no. 1-4 at 2.) Easy Loans never verified the debt. (Dkt. no. 1 ¶¶ 19-21.)

Easy Loans' Lawsuit stated that Todorov had defaulted "[o]n or about July 21, 2008." (Dkt. no. 1-3 at 5.) Todorov, however, defaulted at some point before July 21, 2004. (Dkt. no. 1 ¶ 15.) Because Todorov's default occurred more than six (6) years before Easy Loans filed its lawsuit in December 2012, Easy Loans attempted to collect a time-barred debt. ( Id. ¶¶ 15-18.) As a result of Easy Loans' Lawsuit, Todorov "suffered and continues to suffer from humiliation, anger, anxiety, emotional distress, fear, frustration, and embarrassment." ( Id. ¶ 24.) Todorov has also considered bankruptcy "to stop harassing calls in the future." ( Id. ¶ 25.)

Todorov filed this lawsuit on July 17, 2013, alleging violations of the following FDCPA sections: 15 U.S.C. §§ 1692d, 1692e, 1692e(2), 1692e(5), 1692e(8), 1692e(10), 1692f, 1692f(1), 1692g, 1692g(b). (Dkt. no. 1 ¶¶ 31-40.) Todorov seeks actual and statutory damages under 15 U.S.C. § 1692k(a)(1)-(2). ( Id. at 8.)

III. LEGAL STANDARD

On a 12(b)(6) motion, the court must determine "whether the complaint's factual allegations, together with all reasonable inferences, state a plausible claim for relief." Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., 637 F.3d 1047, 1054 (9th Cir. 2011) ( citing Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009)). "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." Iqbal, 556 U.S. at 678 ( citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).

When determining the sufficiency of a claim, "[w]e accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the non-moving party[; however, this tenet does not apply to]... legal conclusions... cast in the form of factual allegations." Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) (citation and internal quotation marks omitted). "Therefore, conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss." Id. (citation and internal quotation marks omitted); see also Iqbal, 556 U.S. at 678 ("A pleading that offers labels and conclusions' or a formulaic recitation of the elements of a cause of action will not do.'" ( quoting Twombly, 550 U.S. at 555)).

IV. DISCUSSION

The FDCPA is "generally" a strict liability statute. Clark v. Capital Credit & Coll. Servs., Inc., 460 F.3d 1162, 1176 & n.11 (9th Cir. 2006). To plead a claim under the Act, a plaintiff must show: (1) that she is a "consumer" who (2) incurred a "debt" within the Act's scope, (3) that the defendant is a "debt collector, " and (4) that the defendant violated the Act. Freeman v. ABC Legal Servs., Inc., 827 F.Supp.2d 1065, 1071 (N.D. Cal. 2011); see 15 U.S.C. § 1692a.

Easy Loans argues that Todorov has failed to state a claim for three reasons. (Dkt. no. 6 at 4-12.) First, Easy Loans argues that it is not a debt collector subject to the FDCPA. ( Id. at 12.) Second, Easy Loans contends that its lawsuit was not time-barred under the applicable statute of limitations. ( Id. at 7-8.) Finally, Easy Loans asserts that Todorov's untimely validation request could not trigger the FDCPA's verification requirements. ( Id. at 12.) Notwithstanding these arguments, Todorov has adequately pleaded that Easy Loans violated the FDCPA by filing a time-barred lawsuit.

A. Debt Collector

The FDCPA creates civil liability for "any debt collector who fails to comply with any provision [of the Act]... with respect to any person...." 15 U.S.C. § 1692k(a). The Act defines a debt collector as "any person... in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect... debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6). This definition "would include those who collect for others in the regular course of business.'" Romine v. Diversified Collection Servs., Inc., 155 F.3d 1142, 1146 (9th Cir. 1998) ( quoting S. Rep. No. 95-382 (1977)). The FDCPA does not, however, apply to a "creditor, " who is "any person who offers or extends credit creating a debt or to whom a debt is owed." 15 U.S.C. § 1692a(4). Notably, assignees of debt may be considered creditors only if the "debt was not in default at the time it was assigned.'" Nool v. HomeQ Servicing, 653 F.Supp.2d 1047, 1053 (E.D. Cal. 2009) ( quoting Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985)). Thus, a person who collects a defaulted debt assigned or transferred "solely for the purpose of facilitating collection of such debt for another" is a debt collector, not a creditor. See 15 U.S.C. § 1692a(4).

Todorov has adequately pleaded that Easy Loans is a debt collector. Todorov alleges that her defaulted debt "was purchased, assigned or transferred to [Easy Loans] for collection, " or, alternatively, that Easy Loans "was employed by the Creditor to collect the [defaulted] [d]ebt." (Dkt. no. 1 ¶ 10.) Taken as true, these allegations place Easy Loans within the definition of debt collectors - not creditors - because Easy Loans "receive[d] an assignment or transfer of debt solely" to collect it for another. 15 U.S.C. § 1692a(4); see Fayer, 649 F.3d at 1064. These allegations also indicate that Easy Loans is an entity that "collect[s] for others in the regular course of business." Romine, 155 F.3d at 1146. Todorov's allegations give rise to a plausible inference that Easy Loans is a debt collector under the FDCPA. See Iqbal, 556 U.S. at 678.

Easy Loans nevertheless insists that it is a creditor - not a debt collector - because Easy Loans' Lawsuit against Todorov was "not a matter to collect debts due to others, but for a debt due to Easy Loans." (Dkt. no. 6 at 12.) This assertion is unavailing for two reasons. First, Easy Loans' self-identification as a creditor in its lawsuit is not afforded the presumption of truth given to Todorov's allegations. See Fayer, 649 F.3d at 1064. Second, Easy Loans posits that the "FDCPA's definition of debt collector does not include... any assignee of the debt.'" (Dkt. no. 9 at 15 ( quoting Lal v. Am. Home Servicing, Inc., 680 F.Supp.2d 1218, 1224 (E.D. Cal. 2010)). Easy Loans takes the Lal Court's language out of context. The Lal Court quoted language from a Fifth Circuit opinion, but excluded a portion of the quotation clarifying that assignees of defaulted debts can be "debt collectors." See Perry, 756 F.2d at 1208. Notably, in Nool v. HomeQ Servicing , another court in the Eastern District of California quotes the same passage, but includes the clarification about assignees of defaulted debts. 653 F.Supp.2d at 1052-53. Here, Todorov alleges that Easy Loans acquired her already-defaulted debt from the Creditor. ( See Dkt. no. 1 ¶¶ 10, 13, 15.) Therefore, she has pleaded that Easy Loans is a debt collector under the Act.

B. Applicable Statute of Limitations

The parties disagree about which statute of limitations applies to Easy Loans' Lawsuit. (Dkt. no. 6 at 7-8; dkt. no. 8 at 7-8; dkt. no. 9 at 4-8.) Easy Loans argues that its lawsuit is covered by a six-year statute of limitations because the debt was "founded upon an instrument in writing." (Dkt. no. 6 at 7-8); see NRS § 11.190(1)(b).) Todorov, conversely, contends that a four-year statute of limitations should apply because the debt "resulted from open account for goods, wares and merchandise sold and delivered' and/or article[s] charged on an account in a store.'" (Dkt. no. 1 ¶ 17 ( quoting NRS § 11.190(2)(a)-(b)).)

Both statutes of limitations "date from the last transaction or the last item charged or last credit given, " or from the "time the last payment was made" on "an existing contract, whether it be a bill of exchange, promissory note, or other evidence of indebtedness..." NRS § 11.200. Todorov alleges that she defaulted on the alleged debt "more than four years before July 21, 2008." (Dkt. no. 1 ¶ 15.) Easy Loans has not offered facts to rebut this allegation, which the Court must accept as true. See Fayer, 649 F.3d 1061, 1064.[1] If Todorov made no further payments after this alleged default, then the statute of limitations for a claim based on her default began to run at some point before July 21, 2004. See NRS § 11.200; (dkt. no. 1 ¶ 15). Regardless of the applicable statute of limitations, Todorov has adequately alleged that Easy Loans' December 2012 lawsuit - filed at least eight (8) years after Plaintiff's alleged default - was time-barred under Nevada's four- and six-year statutes of limitations. ( See dkt. no. 1 ¶ 15; dkt. no. 1-3 at 4.) These allegations enable Todorov to state claims for violations of §§ 1692e, 1692f, and 1692d of the FDCPA.

C. Alleged Violations of the FDCPA

A time-barred debt collection lawsuit can give rise to a claim under the FDCPA. McCollough v. Johnson, Rodenberg & Lauinger, 587 F.Supp.2d 1170 (D. Mont. 2008), aff'd sub nom. McCollough v. Johnson, Rodenberg & Lauinger, LLC, 637 F.3d 939 (9th Cir. 2011) [hereinafter McCollough I ]. Additionally, "one action can give rise to multiple violations of the Act." Clark, 460 F.3d at 1177. Here, by alleging that Easy Loans filed a time-barred lawsuit to collect her debt, Todorov has adequately pleaded several violations of the FDCPA. ( See Dkt. no. 1 ¶¶ 15-18.)

1. Sections 1692e and 1692f

Section 1692e prohibits debt collectors from using "any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692e. Section 1692f similarly forecloses debt collectors from using "unfair or unconscionable means to collect or attempt to collect any debt." 15 U.S.C. § 1692f. Both sections include "non-exhaustive list[s] of examples of proscribed conduct, " Fox v. Citicorp Credit Servs., Inc., 15 F.3d 1507, 1516 (9th Cir. 1994), and the "[v]iolation of a single provision is sufficient to establish liability." Gonzales v. Arrow Fin. Servs., LLC, 660 F.3d 1055, 1064 n.6 (9th Cir. 2011) (discussing § 1692e). "[U]sing the courts to attempt to collect a time-barred debt" may violate both sections. McCollough I, 587 F.Supp.2d at 1176; see Kimber v. Fed. Finan. Corp., 668 F.Supp. 1480, 1487-89 (M.D. Ala. 1987) (threatening a time-barred suit violated § 1692e; filing the suit violated § 1692f).

In McCollough, the Ninth Circuit affirmed a grant of partial summary judgment against a law firm that had violated the FDCPA by filing and prosecuting a lawsuit to collect a time-barred debt. 637 F.3d at 947. The law firm had sued the plaintiff to collect credit card debt seven years after his last payment. McCollough I, 587 F.Supp.2d at 1173. Although the lawsuit was time-barred under Montana's five-year statute of limitations, the law firm continued to prosecute the plaintiff, including by serving him with requests for admission. McCollough v. Johnson, Rodenberg & Lauinger, 610 F.Supp.2d 1247, 1254-56 (D. Mont. 2009) [hereinafter McCollough II ]. Together, these actions violated §§ 1692e and 1692f. See id. at 1255.

Here, just as in McCollough, Todorov has alleged that Nevada's statute of limitations barred Easy Loans' Lawsuit, which renders the lawsuit a "false, deceptive, or misleading representation or means" to collect Todorov's debt in violation of § 1692e. 15 U.S.C. § 1692e; (Dkt. no. 1 ¶¶ 12-18, 32-36); see McCollough I, 587 F.Supp.2d at 1176. Todorov additionally alleges violations of §§ 1692e(2), 1692e(5), 1692e(8), and 1692e(10). (Dkt. no. 1 ¶¶ 33-36.) Because Todorov has adequately alleged that Easy Loans' Lawsuit was time-barred, Todorov has stated a claim under § 1692e(2) for Easy Loans' implicit misrepresentation of the legal status of her debt, and under § 1692e(10) for Easy Loans' use of a "deceptive means" - a time-barred lawsuit - to collect her debt. 15 U.S.C. §§ 1692e(2), (10); (dkt. no. 1 ¶¶ 12-18, 33, 36; dkt. no. 8 at 9-10). Todorov has likewise stated a claim under § 1692e(5) by alleging that Easy Loans filed a debt collection action "that cannot legally be taken" because it is time-barred. 15 U.S.C. § 1692e(5); (dkt. no. 1 ¶ 12-18, 34). Finally, Todorov has stated a claim that Easy Loans violated § 1692e(8) because it "communicat[ed] or threaten[ed] to communicate to any person credit information which is known or which should be known to be false." 15 U.S.C. § 1692e(8). Because Easy Loans' Complaint falls within the Act's definition of "communication, " 15 U.S.C. § 1692a(2), and because Todorov has alleged that Easy Loans' Lawsuit was time-barred, Todorov has stated a claim that Easy Loans communicated false credit information by filing a time-barred lawsuit. (Dkt. no. 1 ¶¶ 12-18, 35); see Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1031-32 (9th Cir. 2010) ("[A] complaint served directly on a consumer to facilitate debt-collection efforts is a communication subject to the requirements of §§ 1692e and 1692f.").

Additionally, by alleging that Easy Loans' Lawsuit was time-barred, Todorov has adequately pleaded that the lawsuit "is an unfair and unconscionable means to collect... the debt, " and has stated a claim under § 1692f. 15 U.S.C. § 1692f; ( see dkt. no. 1 ¶¶ 12-18, 37-38). Todorov also alleges that Easy Loans violated § 1692f(1), which proscribes "[t]he collection of any amount... unless such amount is... permitted by law." 15 U.S.C. § 1692f(1); (dkt. no. 1 ¶ 38.) Todorov has stated a claim that the amount sought was not "permitted by law" because its collection was time-barred. (Dkt. no. 1 ¶¶ 12-18, 38); see McCollough I, 587 F.Supp.2d at 1178 (requesting attorneys' fees not permitted by law violated § 1692f(1)).

Easy Loans raises two arguments against Todorov's §§ 1692e and 1692f claims. These arguments are tenuous. First, Easy Loans argues that Todorov failed to allege factual details to support her §§ 1692e and 1692f claims. (Dkt. no. 6 at 6-11.) Contrary to Easy Loans' arguments, Todorov has alleged sufficient facts to claim that Easy Loans' Lawsuit was time-barred: "Plaintiff actually defaulted on the alleged Debt more than four years before July 2008, " (dkt. no. 1 ¶ 15), but Easy Loans filed its lawsuit "[o]n December 18, 2012, " ( id. ¶ 12), such that the lawsuit "was time barred on its face." ( Id. ¶ 16.) These facts adequately support Todorov's §§ 1692e and 1692f allegations. ( See id. ¶¶ 31-38.) Second, Easy Loans contends that Todorov's Complaint fails to provide the date and time of the alleged §§ 1692e and 1692f violations. (Dkt. no. 6 at 6-9.) However, Todorov pleaded that the alleged violations occurred when Easy Loans filed its time-barred lawsuit on December 18, 2012. (Dkt. no. 1 ¶¶ 12, 18.) Accordingly, Todorov has stated claims for Easy Loans' violations of §§ 1692e and 1692f.

2. Section 1692d

Section 1692d forbids debt collectors from "engag[ing] in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt." 15 U.S.C. § 1692d. The section includes a "non-exhaustive list of examples of proscribed conduct." Fox, 15 F.3d at 1516. Time-barred debt collection lawsuits can violate § 1692d. See Riley v. Giguiere, No. Civ. S-06-2126 LKK/JKM, 2008 WL 436943, at *6 (E.D. Cal. Feb. 14, 2008) (holding that summary judgment was inappropriate for plaintiff's § 1692d claim and other FDCPA claims where a defendant attorney "had reason to know that the [plaintiff's] debt may not have been lawful, " rendering her legal actions to collect it "deceptive").

Todorov alleges that Easy Loans "knew or should have known that the Debt was time barred" when it filed its lawsuit in December 2012. (Dkt. no. 1 ¶ 18); see Riley, 2008 WL 436943, at *6. Coupled with Todorov's allegation that she defaulted "more than four years before July 21, 2008, " Todorov's complaint offers facts showing that Easy Loans may have violated § 1692d. (Dkt. no. 1 ¶ 15.) Moreover, Todorov has alleged that Easy Loans' Lawsuit caused her to suffer "humiliation, anger, anxiety, emotional distress, fear, frustration and embarrassment, " and to consider bankruptcy. (Dkt. no. 1 ¶¶ 24-25). These allegations suggest that the "natural consequence" of Easy Loans' Lawsuit was to "harass, oppress, or abuse" Todorov. See 15 U.S.C. § 1692d.

Easy Loans contends that Todorov's § 1692d claim is "meritless" because Easy Loans did not engage in the proscribed behaviors enumerated in § 1692d, and because "the filing of a debt collection lawsuit does not violate 15 U.S.C. § 1692d." (Dkt. no. 6 at 4-5 ( citing Harvey v. Great Seneca Fin. Corp., 453 F.3d 324 (6th Cir. 2006).) Both arguments fall short. First, the list of proscribed behaviors in § 1692d is "non-exhaustive." Fox, 15 F.3d at 1516. As such, Todorov may state a claim under § 1692d based on behaviors similar to, but not enumerated in, the section. See Riley, 2008 WL 436943, at *6. Second, the Sixth Circuit opinion on which Easy Loans relies is not controlling, and it did not involve a time-barred lawsuit. See Harvey, 453 F.3d at 331, 332 (noting that plaintiff alleged the lawsuit in question lacked "the immediate means of proving the debt"). Todorov has thus adequately stated a § 1692d claim.

3. Section 1692g

Finally, Todorov has not adequately pleaded that Easy Loans violated §§ 1692g and 1692g(b). Section 1692g requires debt collectors to verify disputed debts. 15 U.S.C. § 1692g. This provision covers only those debts that are disputed in writing within a thirty-day period following an "initial communication, " or a communication within five days of an initial communication, between a debt collector and a consumer. 15 U.S.C. § 1692g(a)-(b). Initial communications, however, may not be "in the form of a formal pleading in a civil action." § 1692g(d).

Here, Todorov alleges that she received notice of Easy Loans' intent to collect her debt through Easy Loans' Complaint, filed in December 2012. (Dkt. no. 1 ¶¶ 12, 19.) This Complaint, however, does not qualify as an "initial communication" under § 1692g(d), and it does not trigger the validation requirements outlined in § 1692g(a)-(b). 15 U.S.C. § 1692g(a)-(b), (d); see Hill v. Javitch, Block & Rathbone, LLP, 574 F.Supp.2d 819, 823 (S.D. Ohio 2008) (noting that "a summons and complaint are not considered initial communications'" for § 1692g(a)-(b) purposes). Thus, Todorov has not stated a claim that Easy Loans violated §§ 1692g and 1692g(b).[2]

V. CONCLUSION

The Court notes that the parties made several arguments and cited to several cases not discussed above. The Court has reviewed these arguments and cases and determines that they do not warrant discussion or reconsideration as they do not affect the outcome of the Motion.

It is ordered that Defendant's Motion to Dismiss (dkt. no. 6) is denied with respect to Plaintiff's claims arising under §§ 1692d, 1692e, and 1692f.

It is further ordered that Defendant's Motion to Dismiss (dkt. no. 6) is granted with respect to Plaintiff's § 1692g claims.


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