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Alston v. Midland Credit Management Inc.

United States District Court, D. South Carolina, Anderson/Greenwood Division

July 3, 2018

Jonathan Alston and Darius Reid, individually on behalf of themselves and all others similarly situated, Plaintiffs,
v.
Midland Credit Management, Inc., Defendant.

          OPINION AND ORDER

          A. MARVIN QUATTLEBAUM, JR. UNITED STATES DISTRICT JUDGE

         This matter comes before the Court on the Motion to Dismiss filed by Defendant Midland Credit Management, Inc. (“Defendant”). (ECF No. 8.) Defendant seeks to dismiss the Complaint of Plaintiffs Jonathan Alston and Darius Reid (collectively, “Plaintiffs”) in accordance with Federal Rule of Civil Procedure 12(b)(6). Id. The matter has been fully briefed, and the Court heard argument from counsel on May 7, 2018. For the reasons set forth below, Defendant's Motion is hereby granted in part and denied in part.

         BACKGROUND

         Plaintiffs filed this action for damages arising from Defendant's alleged violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. (“FDCPA” or “Act”). (ECF No. 1.) Generally, Plaintiffs allege that certain collection letters sent to Plaintiffs by Defendant were misleading and deceptive because the letters did not advise Plaintiffs that making a partial payment on their debt could restart the statute of limitations clock in South Carolina and expose Plaintiffs to civil liability on the full amount of their debt. Id. At issue are two collections letters, the letter to Plaintiff Alston and the letter to Plaintiff Reid. Id.

         Defendant sent a collection letter to Plaintiff Alston (the “Alston Letter”) dated October 30, 2017, in an attempt to collect a debt. Id. The letter stated that “mistakes can happen to anyone” and that Defendant “believes that everyone deserves a second chance.” (ECF No. 13-1 at 1.)[1] The letter offered three options for payment of the debt: Option 1, a one-time payment of an amount constituting “40% OFF” the current balance on the loan; Option 2, six (6) monthly payments constituting “20% OFF” the current balance on the loan; or Option 3, monthly payments as low “$50 per month.” Id. The letter also contained disclosure language stating as follows: “The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it. If you do not pay the debt, we may continue to report it to the credit reporting agencies as unpaid.” Id. The letter did not state that making a partial payment under any of the payment options could re-start the statute of limitations on the debt under applicable South Carolina law.[2] Id.

         Similarly, Defendant sent a collection letter to Plaintiff Reid (the “Reid Letter”) dated October 11, 2017 in an attempt to collect a debt. (ECF No. 1.) The letter congratulated Plaintiff Reid for being pre-approved for a discount program designed to save him money. Id. Similar to the Alston Letter, the Reid Letter offered three options for payment of the debt: Option 1, a onetime payment of an amount constituting “40% OFF” the current balance on the loan; Option 2, twelve (12) monthly payments constituting “20% OFF” the current balance on the loan; or Option 3, monthly payments as low “$50 per month.” (ECF No. 13-2 at 1.) The letter also contained disclosure language stating as follows: “The law limits how long you can be sued on a debt and how long a debt can appear on your credit report. Due to the age of this debt, we will not sue you for it or report payment or non-payment of it to a credit bureau.” Id. The letter did not state that making a partial payment under any of the payment options could re-start the statute of limitations on the debt under applicable South Carolina law. Id.

         Based on the Alston Letter and the Reid Letter, Plaintiffs assert claims under 15 U.S.C. §§ 1692e, 1692e(2)(A), 1692e(10) (Count I) and § 1692f (Count II). (ECF No. 1.) Defendant moved to dismiss the complaint for failure to state a claim. (ECF No. 8.) Plaintiffs then filed their brief in opposition (ECF No. 13), in which they stipulated to dismissal of their claims under 15 U.S.C. § 1692f (Count II). (ECF No. 13 at 2 n.1.) Thereafter, Defendant filed a reply brief in support of its motion to dismiss Count I of Plaintiffs' complaint. (ECF No. 18.)

         LEGAL STANDARD

         A plaintiff's complaint should set forth “a short and plain statement . . . showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Rule 8 “does not require ‘detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Id. (quoting Twombly, 550 U.S. at 570)). “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.” Id. (quoting Twombly, 550 U.S. at 556)). In considering a motion to dismiss under Rule 12(b)(6), a court “accepts all well-pled facts as true and construes these facts in the light most favorable to the plaintiff. . . .” Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009). A court should grant a Rule 12(b)(6) motion if, “after accepting all well-pleaded allegations in the plaintiff's complaint as true and drawing all reasonable factual inferences from those facts in the plaintiff's favor, it appears certain that the plaintiff cannot prove any set of facts in support of his claim entitling him to relief.” Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999).

         ANALYSIS

         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). Among other things, the purpose of the act is “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 . . . .” Id. §1692(e). Section 1692e of the Act forbids the use of “any false, deceptive, or misleading representation or means” to collect a debt and provides a non-exhaustive list setting forth examples of prohibited conduct. Id. §1692e. These examples include making a false representation of “the character, amount or legal status of any debt, ” id. § 1692e(2)(A), and using “any false representation or deceptive means to collect or attempt to collect any debt, ” id. § 1692e(10). The Act also prohibits a debt collector from using “unfair or unconscionable means to collect or attempt to collect any debt.” Id. § 1692f.

         “Whether a communication is false, misleading or deceptive in violation of § 1692e is determined from the vantage of ‘the least sophisticated consumer.'” Russell v. Absolute Collection Servs., Inc., 763 F.3d 385, 394 (4th Cir. 2014) (quoting United States v. Nat'l Fin. Servs., Inc., 98 F.3d 131, 136 (4th Cir. 1996)). The least sophisticated consumer test is an objective test that evaluates § 1692e claims based upon how the hypothetical “least sophisticated consumer” would interpret the alleged offensive language. Russell, 763 F.3d at 394-95. The Court, therefore, views Plaintiffs' claims in light of this standard.

         I. Plaintiffs' Claims under 15 U.S.C. § 1692e

         In Count I of their complaint, Plaintiffs allege that Defendant violated 15 U.S.C. § 1692e, 15 U.S.C. § 1692e(2)(A) and 15 U.S.C. § 1692e(10) by failing to advise Plaintiffs that a partial payment of the debt subject to collection could re-start the statute of limitations clock in accordance S.C. Code Ann. § 15-3-120, thus exposing Plaintiffs to a potential lawsuit on the debt. Defendant makes three arguments articulating why the Court should dismiss Plaintiffs' claims under 15 U.S.C. 1692e. First, Defendant argues that Plaintiffs fail to state a claim under the Act because Defendant's collection letters did not contain an explicit threat of litigation. Second, Defendant argues that it is entitled to dismissal because the Act does not require Defendant to advise Plaintiffs about the ...


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