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Velazquez v. Arrow Financial Services LLC

August 31, 2009


The opinion of the court was delivered by: Marilyn L. Huff, District Judge United States District Court


On June 4, 2009, Defendant Arrow Financial Services filed a motion to dismiss Plaintiff's First Amended Complaint. (Doc. No. 14.) On June 22, 2009, Plaintiff filed her response in opposition to Defendant's motion to dismiss. (Doc. No. 15.) On June 29, 2009, Defendant filed a reply in support of its motion to dismiss. (Doc. No. 16.) On July 6, 2009, the Court heard oral argument on Defendant's motion to dismiss. Robert Hyde appeared on behalf of Plaintiff. Sondra Levine appeared on behalf of Defendant. For the following reasons, the Court grants in part Defendant's motion and dismisses without prejudice Plaintiff's FAC. Plaintiff may file an amended complaint curing the noted deficiencies no later than October 1, 2009.


On October 17, 2008, Plaintiff filed a Complaint against Defendant alleging violations of the federal Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. and the California Rosenthal Act, California Civil Code § 1788 et seq. (Doc. No. 1.)

Plaintiff alleges that she is obligated or allegedly obligated to pay a debt incurred sometime before May 20, 2008. (FAC ¶¶ 12, 20.) Plaintiff's Complaint "takes no position as to the validity of this alleged debt." (FAC ¶ 23.) After incurring the debt, but before May 20, 2008, Plaintiff allegedly fell behind in repaying the debt. (Id.) Plaintiff states that the alleged debt was subsequently assigned or otherwise transferred to Defendant for collection. (FAC ¶ 24.)

Plaintiff alleges that, on May 20, 2008, Defendant filed a state court action against Plaintiff in an attempt to collect the debt. (FAC ¶ 25.) The Complaint states that Defendant failed to provide certain notifications to Plaintiff along with the state court complaint. (FAC ¶¶ 29, 30.) Plaintiff further alleges that Defendant's lawsuit was initiated "without any reasonable inquiry into the facts or merits of the allegations," that the state court complaint made false representations, and that Defendant knew it would be unable to prove its case in state court. (FAC. ¶¶ 31, 36.) Plaintiff alleges that Defendant's conduct in connection with the state law suit violated several provisions of the FDCPA and the Rosenthal Act. Defendant moves to dismiss Plaintiff's entire complaint for failure to state a claim.


I. Motion to Dismiss -- Legal Standard

Federal Rule of Civil Procedure 8 requires a plaintiff to "plead a short and plain statement of the elements of his or her claim, identifying the transaction or occurrence giving rise to the claim and the elements of the prima facie case." Bautista v. Los Angeles County, 216 F.3d 837, 840 (9th Cir. 2000). This statement must be sufficient to "give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957). Rule 12(b)(6) provides that a complaint may be dismissed for "failure to state a claim upon which relief may be granted." Fed. R. Civ. P. 12(b)(6). A complaint may be dismissed as a matter of law if it lacks a cognizable legal theory or states insufficient facts under a cognizable legal theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984).

The Supreme Court has stated that the factual allegations of a complaint must be "enough to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007). A plaintiff must plead more than conclusory allegations to show "plausible liability" and avoid dismissal. Id. at 1966 n.5. The Supreme Court has recently reiterated this principle, stating that the pleading standard of Rule 8 "demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation" and a complaint does not suffice "if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 127 S.Ct. at 1966). The Court applies this standard to Plaintiff's challenged allegations.

II. Plaintiff's Claims Under the Federal FDCPA

The federal Fair Debt Collection Practices Act "prohibits debt collectors from making false or misleading representations and from engaging in various abusive and unfair practices." Heintz v. Jenkins, 514 U.S. 291, 292 (1995) (quotation omitted). The FDCPA prohibits the false representation of the character, amount, or legal status of any debt. 15 U.S.C. § 1692e(2). This is consistent with the more general provision that collectors may not use any false representation or deceptive means to collect a debt. 15 U.S.C. § 1692e(10). Additionally, collectors may not threaten "to take any action that cannot legally be taken or that is not intended to be taken." 15 U.S.C. § 1692e(5).

In this case, Plaintiff's FAC alleges that Defendant has violated these prohibitions by commencing a debt collection lawsuit against Plaintiff without a reasonable inquiry into the merits of the allegations, alleging a debt amount that was not owed by Plaintiff, and dismissing the suit soon after Plaintiff filed an answer and served discovery requests. (FAC ¶¶ 31-38.)

Reading the FDCPA as a whole, the Ninth Circuit has held that a plaintiff need not show that a debt collector's violation of Section 1692e was intentional in order to establish liability. Clark v. Capital Credit & Collection Svcs., Inc., 460 F.3d 1162, 1175-76 (9th Cir. 2006).*fn1 However, in this ...

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