Graves et al v. Quick Collect, Inc. et al, No. 3:2011cv05155 - Document 11 (W.D. Wash. 2011)

Court Description: ORDER Granting in part and Denying in part 7 Defendants' Motion to Dismiss by Judge Ronald B. Leighton. (JAB)

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Graves et al v. Quick Collect, Inc. et al Doc. 11 HONORABLE RONALD B. LEIGHTON 1 2 3 4 5 6 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA 7 8 9 10 Plaintiffs, 11 12 13 No. CV11-5155RBL STANLEY WARD GRAVES and BERTHA GRAVES, ORDER ON DEFENDANT’S MOTION TO DISMISS [Dkt. #7]. v. QUICK COLLECT, INC., an Oregon Corporation Defendant. 14 15 I. INTRODUCTION 16 17 This matter is before the Court on Defendant Quick Collect’s Motion to Dismiss under 18 FRCP 12(b)(6). [Defendant’s Motion to Dismiss, Dkt. #7, p. 1]. Plaintiffs Stanley and Bertha 19 Graves allege several violations of the Fair Debt Collection Practices Act (FDCPA), the 20 Washington Collection Agency Act, the Washington Consumer Protection Act (CPA), and the 21 22 Oregon Unfair Trade Practice statute. [Plaintiff’s Complaint, Dkt. #1, p. 8-17]. Plaintiffs seek an 23 injunction, actual damages (or in the alternative statutory damages), and attorney’s fees. [Dkt. 24 #1, p. 18]. 25 The Graves are residents of Huntington, Oregon. [Dkt. #1, p. 2,]. Quick Collect is an 26 Oregon corporation headquartered in Vancouver, Washington. [Dkt. #1, p. 2]. Quick Collect is 27 28 registered to conduct business in Oregon and Washington. [Dkt. #1, p. 2]. Quick Collect is a ORDER - 1 Dockets.Justia.com 1 2 3 4 collection agency and regularly collects third-party debts in the state of Washington. [Dkt. #1, p. 2]. Quick Collect sent a letter to either the Graves or the Graves’ attorney, Robert W. Mitchell, telling Stanley Graves the amount owed, that it was the verification he had requested, 5 and that it was from a debt collector for the purpose of collecting a debt. [Decl. of Nielson, Dkt. 6 7 #8, p. 3, Exh. A]. Mr. Mitchell filed suit on behalf of the Graves against Quick Collect based on 8 this communication, claiming it was sent directly to the Graves after Quick Collect knew they 9 had retained an attorney. 10 II. BACKGROUND 11 Plaintiff Stanley Graves received medical services from Oregon Health Sciences 12 13 University Medical Group (“OHSU”). [Dkt. #1, p. 2, Complaint]. Mr. Graves was unable to pay 14 for the services and the debt was assigned to Quick Collect in February 2010. [Dkt. #1, p. 2; Dkt. 15 #7, p. 1]. Quick Collect filed a lawsuit to collect the debt in Multnomah County Circuit Court in 16 March 2010. [Dkt. #1, p. 4; Dkt. #7, p. 1]. Quick Collect served the Graves with a copy of that 17 18 lawsuit on April 22, 2010. [Dkt. #1, p. 4]. On May 10, 2010, the Graves’ attorney, Mr. Mitchell, 19 mailed and faxed Quick Collect’s attorney, Gregory A. Nielson, a “Notice of Appearance” in the 20 collection lawsuit Quick Collect filed in attempt to collect the OSHU account. [Dkt. #1, p. 4; 21 Dkt. #7, p. 2]. The Graves never filed responsive pleadings. [Dkt. #7, p. 2]. On May 13, 2010, 22 Mr. Nielson sent Mr. Mitchell a notice of intent to default the Graves. [Dkt. #1, p. 4]. Judgment 23 24 25 26 was submitted and entered on June 2, 2010. [Dkt. #7, p. 2]. On June 16, 2010, Mr. Mitchell sent Quick Collect a letter of “Notice of Representation, Cease Contact, and Verify Debt.” [Dkt. #1, p. 5; Dkt. #7, p. 2]. The parties disagree about 27 28 ORDER - 2 1 2 whether Mr. Mitchell sent this letter only to the original creditor OSHU or whether he sent it to OSHU, Quick Collect, and Mr. Nielson. [Dkt. #1, p. 5; Dkt. #7, p. 2]. Mr. Mitchell alleges that he never received any validation documents but rather Quick 3 4 Collect sent his clients, the Graves, a collection letter on August 10, 2010.1 [Dkt. #1, p. 5-6]. Mr. 5 Nielson alleges that Mr. Mitchell’s letter of “Notice of Representation, Cease Contact, and 6 7 Verify Debt” was sent only to OSHU who forwarded the letter on to Quick Collect in August 8 2010. [Dkt. #7, p. 2]. Mr. Nielson alleges Quick Collect sent the requested verification to Mr. 9 Mitchell at his Vancouver address on August 10, 2010.2 [Dkt. #7, p. 2]. 10 III. STANDARD 11 12 A. The Court Will Treat This Motion as a Motion to Dismiss Under Rule 12(b)(6) Because the Court Has Not Considered Matters Outside The Pleadings. 13 The Graves ask the Court to treat Quick Collect’s Motion to Dismiss as one for Summary 14 Judgment because Quick Collect presented a matter outside the pleadings.3 The Graves contend 15 16 that Mr. Nielson’s declaration is a matter outside the record. [Plaintiffs’ Response, Dkt. #9, p. 2]. If, on a motion under Rule 12(b)(6), matters outside the pleadings are presented to and 17 18 not excluded by the court, the motion must be treated as one for summary judgment. Fed. R. Civ. 19 P. 12(d). A Motion to Dismiss does not automatically convert into a motion for summary 20 21 22 judgment if the district court has not relied on matters outside the pleadings. Swedberg v. Marotzke, 339 F.3d 1139, 1143 (9th Cir. 2003). 23 1 24 25 26 27 28 Mr. Mitchell has not submitted any declarations to support this claim, it is simply alleged in Plaintiffs’ complaint. 2 Mr. Nielson merely states that he instructed Quick Collect to send the letter to Mr. Mitchell’s Vancouver address, there are no other declarations provided to support this statement. 3 The purpose of this request is unclear. Plaintiffs’ burden is far steeper on a Motion for Summary Judgment. In any event, there is no evidence on either side, just competing allegations contained in pleadings. ORDER - 3 1 The Court has not relied on matters outside the Complaint. To the extent that Mr. Nielson 2 presented evidence outside the Complaint, none of those statements were personal statements of 3 having sent the disputed letter. Since the Court has not relied on any matters outside the 4 pleadings, it will treat Quick Collect’s Motion as a Motion to Dismiss under Rule 12(b)(6). 5 6 7 B. Failure to State a Claim Upon Which Relief Can Be Granted Standard (Fed. R. Civ. P. 12(b)(6)) Dismissal under Rule 12(b)(6) may be based on either the lack of a cognizable legal 8 theory or absence of sufficient facts alleged under a cognizable legal theory. Balistreri v. 9 10 Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). A plaintiff’s complaint must allege 11 facts to state a claim for relief that is plausible on its face. See Ashcroft v. Iqbal, 129 S.Ct. 1937, 12 1949 (2009). A claim has “facial plausibility” when the party seeking relief “pleads factual 13 content that allows the court to draw the reasonable inference that the defendant is liable for the 14 misconduct alleged.” Id. Although the Court must accept as true the Complaint’s well-pled facts, 15 16 conclusory allegations of law and unwarranted inferences will not defeat an otherwise proper 17 [Rule 12(b)(6)] motion. Vasquez v. L. A. County, 487 F.3d 1246, 1249 (9th Cir. 2007); Sprewell 18 v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). “[A] plaintiff’s obligation to 19 provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, 20 21 and a formulaic recitation of the elements of a cause of action will not do. Factual allegations 22 must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 23 550 U.S. 544, 555 (2007) (citations and footnote omitted). This requires a plaintiff to plead 24 “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 129 S.Ct. at 25 1949 (citing Twombly). 26 27 28 ORDER - 4 IV. DISCUSSION 1 2 A. Fair Debt Collection Practices Act Violation (Communication with a Represented Debtor) 3 4 The Fair Debt Collection Practices Act (FDCPA) is intended to protect consumers from 5 abusive debt collections practices. 15 U.S.C. §1692(e). By definition of the FDCPA the Graves 6 are debtors, the debt pursued by Quick Collect is a “consumer debt” that arose out of a 7 transaction of services primarily for personal, family, or household purposes, and Quick Collect 8 is a debt collector that attempted to collect a debt owed to OSHU. Under the FDCPA, a debt 9 10 collector may not directly contact a debtor in connection with the collection of any debt if the 11 debt collector knows the debtor is represented by an attorney with respect to such debt. 15 U.S.C. 12 §1692c(a)(2). 13 The Graves’ sole allegation is that Quick Collect mailed Stanley Graves a collection 14 letter on August 10, 2010, despite knowing that he was represented by an attorney. [Dkt. #1, p. 15 16 9]. The Graves argue that it was a collection letter because it stated “This situation must be 17 resolved as soon as possible to avoid continued collection activity. Information obtained is for 18 the purpose of collecting a debt. This is from a debt collector.” [Dkt. #1, p. 6]. Quick Collect 19 asserts that it was not a collection letter but rather a verification letter. [Dkt. #7, p. 3]. Quick 20 21 22 23 24 Collect’s assertion is supported by the first sentence of the letter, “[e]nclosed you will find the verification requested.” [Dkt. #8, p. 3, Exh. A]. Furthermore, Quick Collect argues that the letter was sent directly to the Graves’ attorney Mr. Mitchell, not to the Graves. Quick Collect asserts that after it received Mr. Mitchell’s Notice 25 of Appearance it removed critical address information from the Graves’ account to ensure that no 26 27 communication by mail could occur. [Dkt. #7, p. 2]. Quick Collect notes that the Graves’ city, 28 ORDER - 5 1 2 3 4 state, and zip code are missing on the letter, so as to prevent a successful mailing of it in a “view envelope” for which it is formatted. [Dkt. #7, p. 2-3]. There is a complete lack of admissible evidence as to the letter’s recipient(s) and purpose. Quick Collect has not produced a declaration by the employee that sent the letter and the Graves 5 have not produced a declaration by Stanley or Bertha Graves that they received the letter. 6 7 Additionally, while Quick Collect points out that there is no city, state, or zip code on the letter, 8 Mr. Mitchell’s address is not on the letter and neither side has produced the addressed envelope 9 in which the letter was sent. 10 This factual dispute will directly affect the outcome of the Graves’ lawsuit because it 11 must be determined whether Quick Collect directly contacted the Graves after it had notice of 12 13 representation. Quick Collection’s Motion to Dismiss the Graves’ claim of violation of the 14 FDCPA by communication with a represented debtor is DENIED. 15 B. Fair Debt Collection Practices Act Violation (“g. Notice” Violation and False Representation) 16 17 18 Under the FDCPA, if a consumer notifies a debt collector in writing that the debt is disputed, the debt collector must cease collection of the debt until the debt collector receives 19 verification of the debt and this verification is mailed to the debtor by the debt collector. 15 20 21 22 23 24 U.S.C. §1692g(b). The Graves assert that their attorney Mr. Mitchell mailed Quick Collect a letter disputing the debt and requesting validation on June 16, 2010. [Dkt. #1, p. 10]. Quick Collect asserts that the letter by Mr. Mitchell was sent to the original creditor OSHU, who forwarded the letter on to 25 Quick Collect in August 2010. [Dkt. #7, p. 2] Quick Collect argues that once the letter was 26 27 received on August 5, 2010, Quick Collect sent the requested verification to Mr. Mitchell at his 28 Vancouver address on August 10, 2010. [Dkt. #7, p. 2]. ORDER - 6 1 The Graves contend that the letter is a notice violation and false representation, yet refer 2 to the section on disputed debts in their complaint. [Dkt. #1, p. 10]. The Graves have not 3 presented any facts to support a claim of false representation. The Graves’ claim of violation of 4 the disputed debt comes back to the factual issue of whether the letter sent by Quick Collect was 5 a verification of the debt, as Quick Collect asserts, or whether it was a collection letter, as the 6 7 8 9 10 Graves assert. [Dkt. #1, p. 9; Dkt. #7, p. 3]. The facts alleged by the Graves over the verification of a disputed debt rise above a speculative level. Quick Collect’s Motion to Dismiss the Graves’ claim of violation of the FDCPA by verification of a disputed debt is DENIED. 11 C. Fair Debt Collection Practices Act Violation (Outrage) 12 13 The Graves contends that Quick Collect should be held liable for Outrage under the 14 FDCPA, regardless of state law requirements for the tort of outrage. [Dkt. #1, p. 11]. The Graves 15 cite Grassley v. Debt Collectors as support, but this case is irrelevant to the matter at hand. No. 16 91-221-MA (D. Or. Apr. 13, 1993). The Graves allege that Quick Collect knew the Graves were 17 18 represented by an attorney, that Stanley had a disability, and that Quick Collect’s letter served no 19 other purpose than to “annoy, harass, intimidate, and intentionally cause severe mental and 20 emotional distress.” [Dkt. #1, p. 11]. Quick Collect has not addressed this specific claim. 21 This claim by the Graves is flawed because it fails to cite to any relevant law. The Graves 22 assert that the letter sent by Quick Collect was “extreme, outrageous, unconscionable, 23 24 intentional, willful, and wanton…” [Dkt. #1, p. 11]. The elements of the tort of outrage are: (1) 25 extreme and outrageous conduct (2) intentional or reckless infliction of emotional distress, and 26 (3) actual result to the plaintiff of severe emotional distress. Dicomes v. State, 113 Wash.2d 612, 27 630 (Wash. 1989). The conduct must be “so outrageous in character, and so extreme in degree, 28 ORDER - 7 1 as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly 2 intolerable in a civilized community.” Id. (quoting Grimsby v. Samson, 85 Wash.2d 52, 59 3 (Wash. 1975)). The Graves have provided no factual claims or declarations that attest to the 4 alleged “undue stress, anxiety, frustration, and humiliation” Mr. Graves suffered immediately 5 after receiving the letter. [Dkt. #1, p. 11]. 6 7 This claim by the Graves has both an absence of sufficient facts and a lack of a 8 cognizable legal theory. Quick Collect’s Motion to Dismiss the Graves’ claim of violation of the 9 FDCPA by outrage is GRANTED. 10 D. Washington Collection Agency Act Violation 11 The facts relative to this claim of communication with a represented debtor are the same 12 13 as those above for violation of the FDCPA by contact with a debtor. The Graves assert that 14 Quick Collect’s letter was threatening and served only “to harass, intimidate, threaten, or 15 embarrass” the Graves because of Quick Collect’s awareness of Stanley Graves inability to pay 16 the debt due to disability. [Dkt. #1, p. 12]. Quick Collect does not dispute that Mr. Mitchell had 17 18 sent a letter to Mr. Nielson notifying Quick Collect of Stanley Graves’ disability. Notably, 19 neither party has asserted whether Washington or Oregon is the applicable law. Logically, it 20 would be Oregon law since the Graves are residents of Oregon and Quick Collect is an Oregon 21 corporation. 22 The Washington State Collection Agency Act prohibits collection agencies from 23 24 communicating “with a debtor after notification in writing from an attorney representing such 25 debtor that all further communications relative to a claim should be addressed to the attorney.” 26 RCW 19.16.250(11). Additionally, it prohibits collection agencies from communicating with 27 debtors in a manner intended to “harass, intimidate, threaten, or embarrass a debtor.” RCW 28 ORDER - 8 1 19.16.250(12). Harassment may be found if (1) there is communication with a debtor or spouse 2 more than three times in one week, (2) communication with a debtor at his or her place of 3 employment more than once in a week, or (3) communication is made with the debtor or spouse 4 at his or her place of residence between the hours of 9 p.m. and 7:30 a.m. RCW 19.16.250(12)(a- 5 c). 6 7 The Graves have not presented any facts to support their assertion that the letter fits the 8 enumerated descriptions of harassment or that the contents of the letter were intended to 9 intimidate, threaten, or embarrass Mr. Graves. Quick Collect’s Motion to Dismiss the claim of 10 violation of the Washington Collection Agency Act by communicating in a manner intending to 11 harass, intimidate, threaten, or embarrass the Graves is GRANTED. Quick Collect’s Motion to 12 13 Dismiss the Graves’ claim of violation of the Washington Collection Agency Act by 14 communication with a represented debtor is DENIED. 15 E. Per Se Washington Consumer Protection Act Violation 16 If a collection agency engages in one of the prohibited acts enumerated in the 17 18 Washington Collection Agency Act, then it is per se an unfair act or practice in the conduct of 19 trade or commerce for the purpose of the application of the Washington Consumer Protection 20 Act (“CPA”). RCW 19.16.440. 21 The factual issue of who received the letter must first be determined in order to evaluate 22 the Graves’ claim of violation of the Washington Collection Agency Act and thus to evaluate 23 24 their claim of a per se violation of the Washington CPA. Quick Collect’s Motion to Dismiss the 25 Graves’ claim of per se violation of the Washington CPA is DENIED. 26 F. Washington Consumer Protection Act Violation- “In the Alternative” 27 28 ORDER - 9 The Graves assert that the disputed letter was a violation of the Washington Consumer 1 2 Protection Act in light of various federal statutes’ definitions of what constitutes an unfair act or 3 practice. [Dkt. #1, p. 14]. The Graves urge the Court to deem Quick Collect’s actions a violation 4 of the Washington CPA by virtue of violation of the FDCPA’s prohibition on contacting a debtor 5 who is known to be represented by an attorney or to communicate with a debtor after receiving 6 7 notice of a dispute and not first validating the debt. [Dkt. #1, p. 16]. The relevant facts are the same as those discussed above in relation to contact with a 8 9 debtor and verification of a debt under the FDCPA. 10 The Washington State CPA states that it is intended to complement the existing body of 11 federal law governing unfair or deceptive acts. RCW 19.86.920. Though it is intended to 12 13 complement the FDCPA, a violation under the Washington CPA still requires (1) unfair or 14 deceptive act or practice (2) occurring in trade or commerce (3) public interest impact (4) injury 15 to plaintiff in his or her business or property (5) causation. Hangman Ridge v. Safeco Title, 105 16 Wn.2d 778, 719 P.2d 531 (1986). 17 The Graves fail to allege sufficient facts or a cognizable legal theory on this claim. Quick 18 19 Collect’s Motion to Dismiss the Graves’ claim of violation of the Washington CPA in light of 20 federal law is GRANTED. 21 G. Oregon Unfair Trade Practices Act Violation- “In the Alternative” 22 The Graves assert that Quick Collect violated the Oregon Unfair Trade Practices Act by 23 24 mailing collection communications to debtor with a disability who Quick Collect knew was 25 represented by an attorney for the purpose of attempting to collect a disputed debt. [Dkt. #1, p. 26 17]. 27 28 ORDER - 10 1 2 3 4 The relevant facts are the same as those discussed above in claims of violation of FDCPA for contact with a debtor with representation over a disputed debt. The Graves’ assertion does not fit any of the enumerated definitions of unlawful business practices. Rather they claim it is “unfair or deceptive conduct in business.” ORS 646.608(1)(u). 5 The Graves are unable to assert that Quick Collect’s letter was a violation of the Oregon 6 7 8 9 10 Unlawful Collection Practices Act it is not one of the sixteen enumerated prohibited practices. ORS 646.639. The Graves’ claim of violation of the Oregon Unfair Trade Practices Act is flawed because it fails to show what Oregon law deems “any other unfair act or deceptive conduct in 11 business” and relies on the Court to rule that the disputed letter fits this unstated definition. ORS 12 13 646.608(1)(u). The Graves claim does not rise above mere speculation of unfair or deceptive 14 conduct by Quick Collect. Quick Collect’s Motion to Dismiss the Graves’ claim of violation of 15 Oregon Unfair Trade Practices Act is hereby GRANTED. 16 V. CONCLUSION 17 18 Quick Collect’s Motion to Dismiss the Graves’ claim of violation of the FDCPA by 19 communication with a represented debtor is DENIED. Quick Collect’s Motion to Dismiss the 20 Graves’ claim of violation of the FDCPA by verification of a disputed debt is DENIED. Quick 21 Collect’s Motion to Dismiss the Graves’ claim of violation of the FDCPA by outrage is 22 GRANTED. Quick Collect’s Motion to Dismiss the claim of violation of the Washington 23 24 Collection Agency Act by communicating in a manner intending to harass, intimidate, threaten, 25 or embarrass the Graves is GRANTED. Quick Collect’s Motion to Dismiss the Graves’ claim of 26 violation of the Washington Collection Agency Act by communication with a represented debtor 27 is DENIED. Quick Collect’s Motion to Dismiss the Graves’ claim per se violation of the 28 ORDER - 11 1 Washington CPA is DENIED. Quick Collect’s Motion to Dismiss the Graves’ claim of violation 2 of the Washington CPA in light of federal law is GRANTED. Quick Collect’s Motion to Dismiss 3 the Graves’ claim of violation of the Oregon Unfair Trade Practices Act is GRANTED. [Dkt. 4 #7]. 5 IT IS SO ORDERED. 6 7 8 9 10 DATED this 20th day of June 2011. A RONALD B. LEIGHTON UNITED STATES DISTRICT JUDGE 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ORDER - 12

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