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Janti v. Encore Capital Group

August 3, 2010

SHIREEN JANTI, INDIVIDUALLY, AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
ENCORE CAPITAL GROUP, INC., MIDLAND FUNDING LLC, MIDLAND CREDIT MANAGEMENT, INC. AND DOES 1 THROUGH 10, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge

ORDER: GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS. (Doc. No. 5)

Presently before the Court is Defendants' Motion to Dismiss. (Doc. No. 5.) Also before the Court is Plaintiff's opposition and Defendants' reply. (Doc. Nos. 9 & 10.) Having fully considered the parties' arguments and the law, Defendants' motion to dismiss is GRANTED IN PART and DENIED IN PART.

BACKGROUND

Plaintiff, a resident of Costa Mesa, California, opened a credit account with FCNB-Spiegal around 1997 or 1998. (Compl. ¶ 13.) After incurring charges on the account through 1999, the account became delinquent. (Id.) Plaintiff made no payments toward the outstanding balance, and there were no charges to or payments towards the account after 2000. (Id.)

Defendant Encore Capital Group, Inc. ("Encore") is the parent company of co-Defendants Midland Funding, LLC ("Midland") and Midland Credit Management, Inc. ("MCM"). (Id. ¶ 3.)

Midland and MCM are Encore's subsidiaries. (Id.) Defendants are located in San Diego, California and engage in debt collection activity against consumers and report the status of delinquent debts to consumer reporting agencies. (Id.)

In November 2008, Plaintiff received a "Pre-Legal Notification" debt collection letter from MCM. (Id. ¶ 14.)The letter indicated that Plaintiff's FCNB-Spiegel account was purchased by Midland and was serviced by MCM. (Id.) Moreover, the letter listed a $3,690.18 balance and demanded a $250 payment. (Id.) "The letter stated if Plaintiff sent MCM $250 she could stop [the] account from going to an attorney." (Id.) Once payment was received, "Plaintiff's credit report [would] be updated with payments made and when all payments were made to settle the account, Plaintiff's credit report [would] be updated as 'Paid in Full.'" (Id.)

On July 27, 2009, Midland filed a lawsuit against Plaintiff, and Plaintiff, proceeding pro se, filed an answer on August 21, 2009. (Id. ¶¶ 16--17.) Midland's lawsuit was supported by a MCM employee's affidavit which contained "no facts as to the date the account was opened, when any charges were made to the account, or when any payments were made to the account." (Id. ¶ 16.) Moreover, the affidavit contained no dates supporting "allegations [that] the lawsuit was filed within the time frame of the applicable statute of limitations for collecting and suing on a debt." (Id.) Plaintiff paid a $50.00 filing fee and asserted the affirmative defense of statute of limitations. (Id.)

Through an attorney, Plaintiff filed the instant action as a class action on September 8, 2009. (Doc. No. 1 ("Complaint).) The Complaint alleges three causes of action: 1) violation of the Fair Debt Collection Practices Act as provided for in Cal. Civ. Code § 1788.17; 2) violation of the Fair Credit Reporting Act -- 15 U.S.C. § 1681s-2(a)(1)(A); and 3) unlawful and unfair business practices in violation of Cal. Bus. & Prof. Code § 17200, et seq. The Complaint also identifies five sub-classes: 1) "[a]ll individuals in the State of California who were sent debt collection letters by Defendants between November 27, 2007 and the present when collection on the debt was barred by the applicable statute of limitations... "; 2) "[a]ll individuals in the United States who were sent debt collection letters by Defendants between November 27, 2007 and the present when collection on the debt was barred by the applicable statute of limitations... "; 3) "[a]ll individuals in the State of California who were sued by Defendants between July 28, 2009 and the present when the lawsuit was barred by the applicable statute of limitations... "; 4) "[a]ll individuals in the United States who were sued by Defendants between July 28, 2009 and the present when the lawsuit was barred by the applicable statute of limitations... "; and 5) [a]ll individuals in the United States who [sic] debts were reported by Defendants to any credit reporting company between November 27, 2002 and the present associated with a debt collected upon by Defendants, when the reporting of the debt was barred by the applicable statute of limitations.... " (Compl. ¶ 10.) On December 23, 2009, Defendants filed the present motion to dismiss. (Doc. No. 5.) Plaintiff filed her opposition on January 28, 2010, and Defendants filed a reply on February 4, 2010. (Doc. Nos. 9 & 10.)

LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) permits a party to raise by motion the defense that the complaint "fail[s] to state a claim upon which relief can be granted," generally referred to as a motion to dismiss. The Court evaluates whether a complaint states a cognizable legal theory and sufficient facts in light of Federal Rule of Civil Procedure 8(a), which requires a "short and plain statement of the claim showing that the pleader is entitled to relief." Although Rule 8 "does not require 'detailed factual allegations,'... it [does] demand[] more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, -- US -, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In other words, "a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). "Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 557).

"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); see also Fed. R. Civ. P. 12(b)(6). A claim is facially plausible when the facts pled "allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556). That is not to say that the claim must be probable, but there must be "more than a sheer possibility that a defendant has acted unlawfully." Id. Facts "'merely consistent with' a defendant's liability" fall short of a plausible entitlement to relief. Id. (quoting Twombly, 550 U.S. at 557). Further, the Court need not accept as true "legal conclusions" contained in the complaint. Id. This review requires context-specific analysis involving the Court's "judicial experience and common sense." Id. at 1950 (citation omitted). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not 'show[n]'-'that the pleader is entitled to relief.'" Id.

Where a motion to dismiss is granted, "leave to amend should be granted 'unless the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency.'" DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)). In other words, where leave to amend would be futile, the Court may deny leave to amend. See Desoto, 957 F.2d at 658; Schreiber, 806 F.2d at 1401.

ANALYSIS

A. Motion to Dismiss Class Action ...


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