Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Gunther v. Midland Credit Managment, Inc.

United States District Court, D. Utah, Central Division

September 26, 2018

NICOLE K. GUNTHER, on behalf of herself and the proposed Class, Plaintiff,
v.
MIDLAND CREDIT MANAGEMENT, INC. and MIDLAND FUNDING, LLC, Defendants.

          MEMORANDUM DECISION AND ORDER GRANTING IN PART, AND DENYING IN PART, DEFENDANTS' MOTION TO DISMISS COMPLAINT

          CLARK WADDOUPS, United States District Judge.

         INTRODUCTION

         This matter arises under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (FDCPA) and comes before the court through Defendants Midland Credit Management, Inc's (Midland Credit) and Midland Funding, LLC's (Midland Funding) Motion to Dismiss Plaintiff Nicole Gunther's (Ms. Gunther) Complaint.[1] (ECF No. 11.) The court heard oral argument on the motions on February 14, 2018, taking the matter under advisement. After carefully considering the parties' briefs and oral arguments, the court GRANTS in part, and DENIES in part, Midland's Motion to Dismiss.

         RELEVANT FACTS

         “[Ms.] Gunther . . . acquired a Target National Bank account.” (Compl. ¶ 13, ECF No. 2-1 at 3.) “[Ms.] Gunther made purchases on the Target National Bank account, resulting in an outstanding balance.” (Compl. ¶ 14, ECF No. 2-1 at 3.) “At some point after the . . . debt was in default, Target National Bank . . . transferred Gunther's account to Midland Funding.” (Compl. ¶ 17, ECF No. 2-1 at 3.) Midland Funding acquired this debt after the statute of limitations had expired. (See Compl. ¶ 26, ECF No. 2-1 at 4.) “After acquiring [Ms. Gunther's] debt[], Midland Funding then attempt[ed] to collect the purchased [time-barred] debt[] . . . through . . . Midland Credit, ” a collection agency. (See Compl. ¶¶ 19-20, ECF No. 2-1 at 3.) Midland Credit began collection efforts by “sen[ding] Gunther a collection letter.”[2] (Compl. ¶ 21, ECF No. 2-1 at 4.)

         Near the top of the letter, in a black box, are the words “CHOOSE THE OPTION THAT WORKS FOR YOU, ” written in white ink. (Compl. Ex. A ECF No. 2-2) (emphasis in original). Immediately below this box, the letter informs the reader that the correspondence is regarding “Target National Bank.” (ECF No. 2-2.) The letter then addresses Ms. Gunther:

Dear Nichole,
Congratulations! You have been pre-approved for a discount program designed to save you money. Act now to maximize your savings and put this debt behind you by calling (877) 434-3697. Pay online today at www.midlandcreditonline.com.

(ECF No. 2-2) (emphasis in original). The letter then presents three boxes, containing three “options.” (ECF No. 2-2.) Option 1 offers “40% OFF” the advertised balance and contains the words “You Pay Only $195.38;” Option 2 offers “20% OFF” if Ms. Gunther were to elect to make “3 Monthly Payments of Only $86.83;” and Option 3 offers Ms. Gunther to make “Monthly Payments As Low As” “$50 per month, ” and invites Ms. Gunther to call Midland “to discuss [her] options and get more details.” (ECF No. 2-2.) Below these three boxes are the words “[if] these options don't work for you, call one of our Account Managers to help you set up a payment plan that does.” (ECF No. 2-2.) To the right of these three boxes is another box that provides: “Benefits of Paying . . . [s]ave up to $130.25.” (ECF No. 2-2.) Finally, at the bottom of the letter is a disclosure that provides:

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 for it or report payment or non-payment of it to a bureau.

(ECF No. 2-2.)

         Ms. Gunther, in her first claim for relief, alleges that Midland violated the Fair Debt Collection Practices Act (FDCPA) in two different ways. First, she alleges that Midland “engaged in unfair and deceptive acts and practices in violation of” 15 U.S.C. §§ 1692e-f, “by taking assignments of time barred debt for collection in violation of Utah law.”[3] (Compl. ¶ 38, ECF No. 2-1 at 6.) Ms. Gunther's position is that “[u]nder Utah law collectors such as [Midland] may only take assignments of debts for collections if the debt is not time barred. See UT ST § 12-1-8[.]” (Compl. ¶ 26, ECF No. 2-1 at 4.) In support, Ms. Gunther cites the Utah Collection Agencies Act (UCAA).[4] Ms. Gunther alleges that “Defendants took an assignment of Gunther's alleged debt [after] it was time barred.” (Compl. ¶ 26, ECF No. 2-1 at 4.) It appears that Ms. Gunther is arguing that a violation of the UCAA results in a violation of the FDCPA. Second, she alleges that Midland “engaged in unfair and deceptive acts and practices” in violation of 15 U.S.C. §§ 1692e-f by sending letters, which attempt to settle time-barred debts, without sufficiently disclosing that the debts are time-barred and by suggesting that payment on the time-barred debt will save the consumer money. (See Compl. ¶ 38, ECF No. 2-1 at 6); (ECF No. 15 at 17) (“Defendants' dunning letter violates these statutes by . . . misrepresenting to the consumer that payment on a debt that is no longer enforceable will save them money.”))

         Turning to the Complaint's second claim for relief, Ms. Gunther alleges that Midland violated the Utah Consumer Sales Practice Act (UCSPA) by engaging in deceptive practices. (Compl. ¶¶ 43-44, ECF No. 2-1 at 7-8.) Ms. Gunther appears to allege that Midland violated the UCSPA in two different ways. First, she appears to allege that Midland engaged in deceptive practices when Midland demanded payment from Ms. Gunther on “debts not legally assigned to them.” (Compl. ¶ 44, ECF No. 2-1 at 7.) Second, she appears to allege that Midland engaged in deceptive practices by “failing to disclose that a voluntary payment may revive or toll the statute of limitations.” (Compl. ¶ 44, ECF No. 2-1 at 7.)

         PROCEDURAL HISTORY

         Ms. Gunther commenced this action on May 24, 2017 by filing a proposed Class Action Complaint in state court. (ECF No. 2-1 at 11.) Midland then filed notice of removal on June 28, 2017, based on federal question jurisdiction. (ECF No. 2.) The case was assigned to this court on that date.

         In her Complaint, Ms. Gunther alleges under the FDCPA that she is a “consumer, ”[5] that both Midland Funding and Midland credit are “debt collectors, ”[6] that Defendants were engaged in the collection of debt, and that Midland used deceptive representations in connection with those collection efforts. Ms. Gunther seeks statutory and actual damages under the FDCPA, attorney's fees, litigation expenses, cost of suit, Certification of “the FDCPA Class, ” and her appointment as the class representative. (Compl. ¶60, ECF No. 2-1 at 10-11.) Ms. Gunther also seeks Certification of “the Utah Class, ” her appointment as the Utah Class's representative, and “declaratory and injunctive relief against Defendants to stop Defendants from harming consumers and providing them with an unfair advantage over its competitors by engaging in collection efforts for debt not legally owed to it; including a preliminary and permanent injunction.” (Compl. ¶60, ECF No. 2-1 at 10-11.)

         On July 31, 2017, Midland filed the Motion to Dismiss Plaintiff's Complaint. (ECF No. 11.) On September 5, 2017, Ms. Gunther filed an opposition, (ECF No. 15) and on October 3, 2017, Midland filed a reply. (ECF No. 19.) The court heard oral argument on the motions on February 14, 2018. (ECF No. 27.)

         ANALYSIS

         I. Legal Standard

         Rule 12(b)(6) of the Federal Rules of Civil Procedure governs motions to dismiss for failure to state a claim for which relief can be granted. “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.'” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (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.” Id. In reviewing a 12(b)(6) motion, the court “accept[s] as true all well-pleaded factual allegations in a complaint and view[s] these allegations in the light most favorable to the plaintiff.” Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009). Ultimately, the issue “is not whether the plaintiff will prevail, but whether the plaintiff is entitled to offer evidence to support [the plaintiff's] claims.” Beedle v. Wilson, 422 F.3d 1059, 1063 (10th Cir. 2005) (citations omitted) (internal quotation marks omitted).

         II. FDCPA

         Congress enacted the FDCPA in 1977 due to “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices.” 15 U.S.C. § 1692(a). The purpose of the FDCPA was “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.” 15 U.S.C. § 1692(e). Because the FDCPA is considered to be a remedial statute, “it should be construed liberally in favor of the consumer.” Johnson v. Riddle, 305 F.3d 1107, 1117 (10th Cir. 2002).

         Relevant here, the Act prohibits using “any false, deceptive, or misleading representations or means” in connection with the collection of a debt, 15 U.S.C. § 1692e, and any “unfair or unconscionable means” to collect or attempt to collect a debt. 15 U.S.C. § 1692f. Each of these provisions provides a non-exhaustive list of potential violations. Misleading representations under section 1692e include: “[t]he false representation of the character, amount, or legal status of any debt, ” 15 U.S.C. § 1692e(2)(A); “[t]he threat to take any action that cannot legally be taken or that is not intended to be taken, ” 15 U.S.C. § 1692e(5); and “[t]he use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.” 15 U.S.C. § 1692e(10).

         When analyzing a claim under the FDCPA, the “overwhelming majority of Courts of Appeals” have applied some form of the “least sophisticated consumer.” See Jensen v. Pressler & Pressler, 791 F.3d 413, 419 n.3 (3d Cir. 2015). “The Tenth Circuit appears to have never explicitly embraced-but certainly never disclaimed-the standard.” Id. In an unpublished decision, the Tenth Circuit recognized that other circuits apply an objective standard when analyzing FDCPA claims, “measured by how the ‘least sophisticated consumer' would interpret the notice from the debt collector.”Ferree v. Marianos, No. 97-6061, 1997 WL 687693, at *1 (10th Cir. Nov. 3, 1997) (citation omitted); see also Fouts v. Express Recovery Servs., Inc., 602 Fed.Appx. 417, 421 (10th Cir. 2015) (applying the “least sophisticated consumer” standard). Based on this guidance from the Tenth Circuit, the court applies the least sophisticated consumer standard to Ms. Gunther's claims. The inquiry under the standard is “how the least sophisticated consumer-one not having the astuteness of a [lawyer] or even the sophistication of the average, everyday, common consumer-understands the notice . . . she receives.” Ferree, 129 F.3d at *1 (quoting Russell v. Equifax A.R.S., 74 F.3d 30, 34 (2d Cir.1996)). “The basic purpose of the least-sophisticated-consumer standard is to ensure that the FDCPA protects all consumers, the gullible as well as the shrewd.” Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir. 1993).

         A. Collection of Time-Barred Debts Under the FDCPA (First Claim)

         As noted above, Ms. Gunther, in her first claim for relief, alleges that Midland violated the FDCPA in two different ways-(1) by taking assignments of time-barred debt for collection in violation of Utah law and (2) by sending dunning letters that attempt to settle time-barred debs without sufficiently disclosing that the debts are time barred, and by suggesting that payment on the time-barred debt will save the letter's recipient money.

         1. A Violation of the UCAA Does Not Provide a Basis ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.