Hadsell v. Mandarich Law Group, LLP et al, No. 3:2012cv00235 - Document 51 (S.D. Cal. 2013)
Court Description: ORDER granting 28 Defendants' Motion to Dismiss with Prejudice Plaintiff's claims relating to the "Account Stated Activity". Signed by Judge M. James Lorenz on 4/3/2013. (sjt)
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Hadsell v. Mandarich Law Group, LLP et al Doc. 51 1 2 3 4 5 6 7 8 9 10 UNITED STATES DISTRICT COURT 11 SOUTHERN DISTRICT OF CALIFORNIA 12 13 RICHARD A. HADSELL, 14 Plaintiff, 15 v. 16 MANDARICH LAW GROUP, LLP, et al., 17 Defendants. 18 19 20 ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 12-cv-235-L(RBB) ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS [DOC. 28] On January 30, 2012, Plaintiff Richard Hadsell commenced this action against 21 Defendants CACH, LLC and Mandarich Law Group, LLP alleging various violations of the 22 federal Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. On October 15, 23 2012, Plaintiff filed a Second Amended Complaint (“SAC”). Defendants now move to dismiss 24 Plaintiff’s claim relating to the “Account Stated Activity.” Plaintiff opposes. 25 The Court found this motion suitable for determination on the papers submitted and 26 without oral argument. See Civ. L.R. 7.1(d.1). (Doc. 31.) For the following reasons, the Court 27 GRANTS Defendants’ motion to dismiss. 28 // 12cv235 Dockets.Justia.com 1 I. BACKGROUND 2 Sometime before December 2011, Plaintiff is alleged to have incurred “certain financial 3 obligations” to MBNA, a nationwide credit provider. (SAC ¶ 16.) Sometime thereafter, but 4 before December 2011, Plaintiff allegedly fell behind in payments on the debt. (Id. at ¶ 18.) 5 Bank of America acquired MBNA and later sold the debt to FIA Card Services, Inc., who then 6 allegedly sold the debt to CACH, LLP. (Id. at ¶¶ 16–19.) Mandarich Law Group is a law firm 7 retained by CACH to help collect debts. (Id. at ¶ 20.) 8 On December 30, 2011, Defendants commenced an action to collect the debt in the San 9 Diego Superior Court (“State Action”) alleging a cause of action for breach of contract and a 10 common count for account stated. (SAC at ¶ 28.) According to Defendants’ State Action 11 complaint (or “SA Complaint”), MBNA provided Plaintiff with a credit card subject to written 12 terms and conditions. (SA Compl. ¶ 5 [Doc. 28-3].) Plaintiff used the credit card to make 13 purchases or cash transfers, but he failed to make payments as agreed and neglected monthly 14 statements itemizing the amounts due. (Id. at ¶¶ 8–10.) As of March 8, 2011, Plaintiff owed 15 $5,606.24 with interest thereon. (Id. at ¶ 11.) Defendants alleged that Plaintiff breached the 16 terms and conditions of the account by failing to pay the amounts due and alleged a common 17 claim for account stated for the amount due. (Id. at ¶ 16.) 18 Plaintiff now alleges that Defendants violated various provisions of the FDCPA when 19 they alleged an accounts-stated cause of action against him in the State Action. (SAC ¶¶ 38–39, 20 49, 52.) Specifically, Plaintiff states that Defendants fabricated the accounts-stated cause of 21 action with no evidentiary support in order to deliberately deceive and mislead Plaintiff and the 22 state judge, and to deny Plaintiff of his contractual rights to engage in arbitration or recover 23 attorney’s fees. (Id. at ¶¶ 31, 35.) Plaintiff further alleges that such “false, deceptive, and 24 misleading behavior” denied him of his ability to engage an attorney, conduct discovery, retain 25 experts, and properly defend himself without fear of incurring considerable expenses in such 26 activities. (Id. at ¶ 48.) He additionally alleges that Defendants’ account-stated claim has no 27 merit or evidentiary support. (Id. at ¶ 49.) 28 // 2 12cv235 1 On January 30, 2012, Plaintiff commenced this action against Defendants, alleging 2 various violations of the FDCPA. Plaintiff amended his complaint twice, the most recent 3 amendment occurring on October 15, 2012 when he filed his SAC. Defendants now move to 4 dismiss Plaintiff’s claim relating to the “Account Stated Activity.” Plaintiff opposes. 5 6 II. LEGAL STANDARD 7 The court must dismiss a cause of action for failure to state a claim upon which relief can 8 be granted. Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the legal 9 sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The court 10 must accept all allegations of material fact as true and construe them in light most favorable to 11 the nonmoving party. Cedars-Sanai Med. Ctr. v. Nat’l League of Postmasters of U.S., 497 F.3d 12 972, 975 (9th Cir. 2007). Material allegations, even if doubtful in fact, are assumed to be true. 13 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). However, the court need not “necessarily 14 assume the truth of legal conclusions merely because they are cast in the form of factual 15 allegations.” Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003) 16 (internal quotation marks omitted). In fact, the court does not need to accept any legal 17 conclusions as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 18 “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed 19 factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’ 20 requires more than labels and conclusions, and a formulaic recitation of the elements of a cause 21 of action will not do.” Twombly, 550 U.S. at 555 (internal citations omitted). Instead, the 22 allegations in the complaint “must be enough to raise a right to relief above the speculative 23 level.” Id. Thus, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual 24 matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 129 S. Ct. 25 at 1949 (citing Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff 26 pleads factual content that allows the court to draw the reasonable inference that the defendant is 27 liable for the misconduct alleged.” Id. “The plausibility standard is not akin to a ‘probability 28 requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” 3 12cv235 1 Id. A complaint may be dismissed as a matter of law either for lack of a cognizable legal theory 2 or for insufficient facts under a cognizable theory. Robertson v. Dean Witter Reynolds, Inc., 749 3 F.2d 530, 534 (9th Cir. 1984). 4 Generally, courts may not consider material outside the complaint when ruling on a 5 motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 6 (9th Cir. 1990). However, documents specifically identified in the complaint whose authenticity 7 is not questioned by parties may also be considered. Fecht v. Price Co., 70 F.3d 1078, 1080 n.1 8 (9th Cir. 1995) (superceded by statutes on other grounds). Moreover, the court may consider the 9 full text of those documents, even when the complaint quotes only selected portions. Id. It may 10 also consider material properly subject to judicial notice without converting the motion into one 11 for summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994). Defendants 12 request judicial notice of their state-court complaint and summons relating to the underlying 13 State Action. (Docs. 28-2, 28-3.) Plaintiff has not opposed. Accordingly, the Court GRANTS 14 Defendants’ request. See Burbank-Glendale-Pasadena Airport Auth. v. City of Burbank, 136 15 F.3d 1360, 1364 (9th Cir. 1998) (granting request to take judicial notice of pleadings filed in a 16 related state court matter). 17 18 III. DISCUSSION 19 “The FDCPA prohibits debt collectors ‘from making false or misleading representations 20 and from engaging in various abusive and unfair practices.’” Donohue v. Quick Collect, Inc., 21 592 F.3d 1027, 1030 (9th Cir. 2010) (quoting Heintz v. Jenkins, 514 U.S. 291, 292 (1995)). 22 Section 1692e prohibits a debt collector from using “any false, deceptive, or misleading 23 representation in connection with the collection of any debt.” 15 U.S.C. § 1692e. More 24 specifically, section 1692e(10) prohibits “the use of any false representation or deceptive means 25 to collect or attempt to collect any debt or to obtain information concerning a consumer.” 15 26 U.S.C. § 1692e(10). Section 1692f prohibits the collection or attempted collection of debt 27 through any “unfair or unconscionable means,” and “the collection of any amount . . . unless 28 such an amount is expressly authorized by the agreement creating the debt or permitted by law” 4 12cv235 1 is a violation of § 1692f(1). 15 U.S.C. §§ 1692f, f(1). “Whether conduct violates §§ 1692e or 2 1692f requires an objective analysis that takes into account whether the least sophisticated 3 debtor would likely be misled by a communication.” Donohue, 592 F.3d at 1030 (internal 4 quotation marks omitted). 5 6 A. 7 “The essential elements of an account stated are: (1) previous transactions between the Sections 1692e and 1692e(10) 8 parties establishing the relationship of debtor and creditor; (2) an agreement between the parties, 9 express or implied, on the amount due from the debtor to the creditor; (3) a promise by the 10 debtor, express or implied, to pay the amount due. Zinn v. Fred R. Bright Co., Inc., 271 Cal. 11 App. 2d 597, 600 (1969). “The agreement of the parties necessary to establish an account stated 12 need not be express and frequently is implied from the circumstances,” including in situations 13 where the debtor fails to object to a statement of the account within reasonable time. Id. 14 California law permits the use of common counts as a means to collect unpaid credit card debt. 15 See, e.g., HSBC Bank Nev., N.A. v. Aguilar, 205 Cal. App. 4th Supp. 6 (2012). Federal courts in 16 California “have rejected the notion that an action for unpaid credit card debt must be for a 17 breach of an original credit card agreement rather than for an account stated.” Odish v. CACH, 18 LLC, No. 12cv1710, 2012 WL 5382260, at *5 (S.D. Cal. Nov. 1, 2012) (Battaglia, J.) (internal 19 quotation marks omitted). 20 Plaintiff contends that Defendants violated Sections 1692e and1692e(10) by filing a 21 deliberately untrue and deceptive cause of action in the State Action. However, Defendants 22 properly stated an accounts-stated claim in the State Action. In the State Action, Defendants 23 alleged that they issued a credit card to Plaintiff, which he used to make purchases, take cash 24 advances, and/or make balance transfers. (SA Compl. ¶ 8.) Defendants also alleged that they 25 sent monthly statements to Plaintiff itemizing payments made and charges due, which totaled 26 $5,606.24; however, despite making such a demand, he refused to pay the amount. (Id. ¶¶ 9, 27 11.) Such allegations may form the basis of an account stated—the transactions between the 28 parties establish the relationship of a debtor and creditor, Defendants made a demand upon 5 12cv235 1 Plaintiff after he fell behind on payments, and Plaintiff may be found to have implicitly agreed to 2 the terms of the account stated. See Odish, 2012 WL 5382260, at *5 (citing California cases 3 Maggio Inc. v. Neal, 196 Cal. App. 3d 745, 753 (1987), and Crofts & Anderson v. Johnson, 101 4 Cal. App. 2d 418, 421 (1950), to show that an account stated may be formed when a statement of 5 the amount owed is sent to a debtor and the debtor fails to respond in a reasonable time. thereby 6 implying agreement to the amount owed). Plaintiff fails provide any factual allegations 7 contradicting the facts upon which Defendants based their account-stated claim. Instead, 8 Plaintiff asserts only conclusory allegations that the account-stated claim was a “false, deceptive, 9 and misleading” allegation because at no time did the parties agree to an account stated. 10 Additionally, Plaintiff does not show how the State Action allegations could mislead an 11 unsophisticated debtor. He alleges only that Defendants made an account-stated claim to deny 12 Plaintiff his contractual remedies under the credit card contract and diminish the legal standard 13 required in the case. (SAC ¶¶ 35–36.) However, as stated above, creditors may allege account14 stated actions in the alternative to a breach-of-contract action to collect unpaid credit card debts. 15 Plaintiff fails to provide factual allegations challenging the veracity of the State Action 16 allegations or showing that Defendants falsely seek to collect a debt not actually owed. 17 Accordingly, the Court dismisses Plaintiff’s claims for violations of §§ 1692e and 18 1692e(10) based on the “Accounted Stated Activity.” See Odish, 2012 WL 5382260, at *5. 19 20 B. 21 Similarly, Plaintiff’s alleged violations of Sections 1692f and 1692f(1) rest solely on Sections 1692f and 1692f(1) 22 conclusory allegations, which do not establish a plausible claim for relief. See Iqbal, 556 U.S. at 23 678. Plaintiff alleges only that the account-stated cause of action had no merit or evidentiary 24 support. A non-frivolous lawsuit is one of the most fair means to collect a debt and is neither 25 unfair nor unconscionable. Hashimi v. CACH, LLP, No. 12cv1010-MMA, 2012 WL 3637383, 26 at *5 (S.D. Cal. Aug. 22, 2012) (Anello, J.) As stated above, Defendants alleged elements of an 27 accounts-stated claim in the State Action complaint and Plaintiff does not challenge the veracity 28 of those specific allegations. Additionally, Defendants seek to collect the amount due as 6 12cv235 1 authorized through either a breach of contract or as authorized by the account-stated activities. 2 Therefore, without factual allegations attacking Defendants’ underlying basis for these claims, 3 the Court dismisses Plaintiff’s claims for violation of § 1692f(1) based on the “Accounted Stated 4 Activity.” See id. 5 6 IV. CONCLUSION & ORDER 7 Based on the foregoing, the Court GRANTS Defendants’ motion to dismiss and 8 DISMISSES WITHOUT PREJUDICE Plaintiff’s claims relating to the “Account Stated 9 Activity.” 10 IT IS SO ORDERED. 11 12 DATED: April 3, 2013 13 14 M. James Lorenz United States District Court Judge 15 COPY TO: 16 HON. RUBEN B. BROOKS UNITED STATES MAGISTRATE JUDGE 17 ALL PARTIES/COUNSEL 18 19 20 21 22 23 24 25 26 27 28 7 12cv235
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