DISPOSITION:  [*1]  Defendant's motion to dismiss GRANTED, and action DISMISSED with prejudice. Judgment entered in favor of Defendant.

 

CASE SUMMARY:

 

 

PROCEDURAL POSTURE: Defendant creditor filed a motion to dismiss plaintiff debtor's amended complaint. Plaintiff filed this lawsuit pursuant to the Fair Debt Collection Practices Act (Act), 15 U.S.C.S. § §  1692-1692o, and sought to represent a class of individuals who had unpaid debt.

 

OVERVIEW: The creditor purchased the debt from the original creditor and attempted to collect. The debtor alleged that the debt was over 10 years old and that the original creditor had treated the debt as in default for more than 7 years. According to the debtor, the creditor reported the fact that the debt had been incurred and not paid to a credit reporting agency, and that, as a result, the debt appeared on his credit report as unpaid. The complaint alleged that the creditor violated the act by misrepresenting the character of the debt (i.e., that it was time-barred from collection) when it reported the debt to the credit reporting agency. The creditor argued that the debtor failed to state a claim because the Act only prohibited conduct undertaken in connection with the collection of any debt.  15 U.S.C.S. §  1692e. The court ruled that the creditor did not violate the Act simply by attempting to collect a debt in which the statute of limitations could be raised as a defense, where no lawsuit was threatened or filed.

 

OUTCOME: The court granted the creditor's motion to dismiss and dismissed the action filed by the debtor.

 

LexisNexis(R) Headnotes

 

 

Civil Procedure > Pleading & Practice > Defenses, Objections & Demurrers > Motions to Dismiss

[HN1] A motion to dismiss is properly granted only if it appears beyond doubt that a plaintiff is unable to prove any set of facts which would entitle him or her to relief.

 

Banking Law > Bank Activities > Consumer Protection > Fair Debt Collection Practices

[HN2] Unless a lawsuit is threatened or filed, the Fair Debt Collection Practices Act, 15 U.S.C.S. § §  1692-1692o, is not violated when the debt collector attempts to collect a debt on which the statute of limitations could be raised as a defense.

 

COUNSEL: For RICK GRIFFITH, plaintiff: Daniel A. Edelman, Cathleen M. Combs, Edelman, Combs et al., Cook County, Chicago, IL.

 

For RICK GRIFFITH, plaintiff: Kurt C. Hoener, Bertram Cooper, St. Louis, MO.

 

For CAPITAL ONE BANK, defendant: Clark H. Cole, Patrick J. Kenny, Armstrong Teasdale LLP, St. Louis County, St. Louis, MO.

 

For CAPITAL ONE BANK, defendant: Gregory P. Dresser, Amy B. Lovell, James F. McCabe, Morrison & Foerster, San Francisco, CA.

 

JUDGES: G. PATRICK MURPHY, Chief United States District Judge.

 

OPINIONBY: G. PATRICK MURPHY

 

OPINION:

MEMORANDUM AND ORDER

 

MURPHY, Chief District Judge:

This matter came before the Court on July 23, 2001, for a hearing on Defendant's motion to dismiss the amended complaint (Doc. 57). For the reasons set forth on the record and below, the motion is granted.

At the conclusion of a hearing on February 5, 2001, the Court dismissed the complaint but granted Plaintiff leave to amend within 30 days. The amended complaint (Doc. 54) was filed on April 6, 2001, n1 and Defendant [*2]  filed a timely motion to dismiss.

 

n1 By Order dated March 19, 2001, Plaintiff was granted an extension of time, up to and including April 6, 2001, to file the amended complaint. (See Doc. 51). The Court notes that the most recent amended complaint (filed on April 6, 2001) is in fact the second amended complaint; an amended complaint was also filed on September 6, 2000 (Doc. 10). Nonetheless, the Court refers to the April 6, 2001, complaint as the amended complaint.

 

The facts of this case are simple and, for purposes of this motion, the facts alleged in the amended complaint are taken as true. Plaintiff, Rick Griffith, seeks to represent a class of individuals who have unpaid personal debt. Defendant, Capital One Bank, purchased this debt from the creditors and sought to collect it. Plaintiff's debt, it is alleged, was more than ten years old and had been treated as in default by the creditor, in his case Citibank, for more than 7 years. Nonetheless, Plaintiff alleged that Capital One reported the fact that [*3]  the debt had been incurred and not paid to a credit reporting agency, Experian, and, as a result, the debt appeared on his credit report as unpaid. Plaintiff filed this lawsuit pursuant to the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § §  1692 to 1692o (2001), alleging that Defendant violated the Act by misrepresenting the character of the debt (i.e., that it was time-barred from collection) when it reported the debt to the credit reporting agency.

[HN1] A motion to dismiss is properly granted only if it appears beyond doubt that a plaintiff is unable to prove any set of facts which would entitle him or her to relief.  Benson v. Cady, 761 F.2d 335, 338 (7th Cir. 1985) (citing Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957)). Defendant argues that Plaintiff has failed to state a claim because the FDCPA only prohibits conduct undertaken "in connection with the collection of any debt." See 15 U.S.C. §  1692e. According to Capital One, it was not attempting to collect Plaintiff's debt when it reported its existence to Experian. Moreover, Defendant argues that the FDCPA [*4]  is not violated when a debt collector Fails to disclose that a debt is time-barred when it attempts to collect it, as long as the debt collector does not threaten litigation, citing the recent Eighth Circuit decision in Freyermuth v. Credit Bureau Servs., Inc., 248 F.3d 767 (8th Cir. 2001).

As an initial matter, the Court finds that Plaintiff has failed to plead facts sufficient to show that Defendant was attempting to collect the debt when it reported it to the credit reporting agency. The amended complaint only makes the conclusory allegation that "the communicating of adverse information about a debtor to a credit bureau is an action in connection with an attempt to collect a debt." (See Doc. 54, at para. 14). Plaintiff has not pleaded specific facts to show how he could prove that the reporting of this information to the credit reporting agency was an attempt to collect the debt.

Even assuming that Plaintiff could prove such facts, however, the Court finds that Plaintiff has still failed to state a claim because the FDCPA is not violated under these facts where litigation is neither brought nor threatened. In Freyermuth, the Eighth Circuit held that "in [*5]  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). Freyermuth is the only Circuit Court of Appeals decision to address this issue, and the Court finds its reasoning persuasive. Numerous district courts have analyzed this situation, and, although recognizing that these decisions carry no precedential value, see, e.g.,  Howard v. Wal-Mart Stores, Inc., 160 F.3d 358 (7th Cir. 1998), the majority of district courts have held accordingly. See, e.g., Walker v. Cash Flow Consultants, Inc., 200 F.R.D. 613, 2001 WL 717474 (N.D. Ill. 2001) (and cases cited therein). The Court agrees that [HN2] unless a lawsuit is threatened or filed, the FDCPA is not violated when the debt collector attempts to collect a debt on which the statute of limitations could be raised as a defense.

For these reasons and for those more thoroughly expressed on the record at the July 23, 2001, hearing. Defendant's motion to dismiss (Doc. 57) is GRANTED, and this action is DISMISSED with prejudice [*6]  . The parties shall bear their own costs, and the Clerk is DIRECTED to enter judgment accordingly.

IT IS SO ORDERED.

DATED this 23rd day of July, 2001.

G. PATRICK MURPHY

Chief United States District Judge

JUDGMENT IN A CIVIL CASE

DECISION BY COURT. This action came before the Court on Defendant's motion to dismiss. Doc. 57.

IT IS ORDERED AND ADJUDGED that pursuant to the Court's July 23, 2001, Memorandum and Order, Judgment is entered in favor of Defendant, Capital One Bank, and against Plaintiff, and the parties shall bear their own costs.

IT IS FURTHER ORDERED AND ADJUDGED that this action is DISMISSED with prejudice.

DATED: July 23, 2001

 

APPROVED:

G. PATRICK MURPHY

CHIEF U.S. DISTRICT JUDGE