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Jeanine Causey v. Portfolio Acquisitions

September 7, 2012



This case, in which plaintiffs are proceeding pro se, was referred to the undersigned under Local Rule 302(c)(21), pursuant to 28 U.S.C. § 636(b)(1). Presently pending before the undersigned are nine motions to dismiss filed by various defendants. Dckt. Nos. 73, 74, 75, 85, 88, 90, 92, 94, 103.


Plaintiffs' second amended complaint alleges that on or around March 11, 2003, plaintiffs were the victims of identity theft and that thereafter, someone used their identities to open a new credit card account through Direct Merchants Bank without plaintiffs' permission ("the account"). 2d. Am. Compl., Dckt. No. 66, ¶ 19. Ultimately, the account was sold by Direct Merchants Bank to OSI Collection Services, Inc. ("OSI") for collection. Id. ¶

Plaintiffs allege that on April 4, 2005, they received a letter in the mail from OSI's attorneys demanding payment on the account. Id. ¶ 20. Plaintiff Robert Causey then called the attorneys' offices and disputed the validity of the account; however, the individual Mr. Causey spoke with continued to demand payment in full. Id. ¶¶ 21, 22. Mr. Causey responded that no payment would be forthcoming and that the matter would have to be litigated. Id. ¶ 22.

According to the second amended complaint, sometime after that phone call and before November 2, 2005, the account was either transferred or sold to Portfolio Acquisitions, LLC ("Portfolio"), such that Portfolio now contends that it is the legal owner of the account. Id. ¶ 23. Then, on November 2, 2005, plaintiffs were served with a summons, notifying them that they were being sued by Portfolio over moneys allegedly owed on the account. Id. ¶ 24. Plaintiffs then countersued Portfolio and Direct Merchants Bank for alleged violations of the federal Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. ("FDCPA") and California's Rosenthal Fair Debt Collection Practices Act, Cal. Civ. Code §§ 1788 et seq. ("the RFDCPA" or "Rosenthal Act"), for alleged unfair business practices in violation of California Business and Professions Code section 17200, and for an alleged breach of plaintiff's original card member agreement with Direct Merchants Bank. Id. ¶ 25. Plaintiffs allege that the parties reached a verbal settlement in that case on May 24, 2006, the terms of which were memorialized in a written agreement on May 31, 2006 ("the settlement agreement"), and the case was dismissed with prejudice as a result. Id. ¶¶ 26-28, Exs. 2, 3. Plaintiffs allege that at that point, they believed the matter had been resolved. Id. ¶ 29.

Plaintiffs allege that sometime after the settlement, the name of the original creditor on the account was changed from Direct Merchants Bank to PNC Bank. Id. ¶ 30. According to plaintiffs, on or about August 12, 2012, plaintiffs received a letter in the mail from NCC, a Division of Commonwealth Financial Systems, Inc. ("NCC"), a letter stating that they were collecting on a debt allegedly owed to Portfolio by plaintiffs on the account. Id. ¶ 31, Ex. 1. On or about August 17, 2010, Mr. Causey called NCC's offices and requested contact information for NCC and Portfolio's legal counsel. Id. ¶ 32. The NCC supervisor that Mr. Causey spoke with refused to release any information on Portfolio and then "engaged in a conversation in an attempt to collect on the alleged debt." Id. Mr. Causey responded that the debt was not owed and that plaintiffs had previously entered into a settlement agreement regarding the dispute. Id. According to plaintiffs, "[d]espite the fact that the supervisor was made aware that the debt was not owed, the supervisor proceeded to attempt collection anyway, making such statements as 'the settlement agreement means nothing', 'it's not what I am trying to say sir, it's what I am telling you. You owe the money!', 'you have had the account open for almost 10 years', and '. . . we will contact you every 7 days and you have yourself a good day while you sit there with your papers . . . .'" Id.

Plaintiffs allege that after the August 17, 2010 phone conversation, "the NCC account records were tampered with in an effort to backstop the supervisor's version of events, and to create the appearance of a payment arrangement in an effort to reset the statute of limitations clock." Id. ¶ 33. On or about September 16, 2010, plaintiffs received in the mail a payment reminder letter from NCC, alleging that a payment arrangement had been made on the account and reminding plaintiffs that a payment was due. Id. ¶ 34, Ex. 4. Plaintiffs deny that any such arrangements were made and that any such conversation ever took place. Id.

Plaintiffs' second amended complaint names nine defendants: Portfolio, NCC, and OSI, along with NCO Group, Inc. ("NCO"), Citigroup, Inc. ("Citigroup"), One Equity Partners, LLC ("OEP"), JP Morgan Chase & Co. ("JP Morgan"), the United States Federal Trade Commission, and the California Department of Consumer Affairs. See generally id. The second amended complaint also includes nine causes of action: (1) violations of the FDCPA by Portfolio and NCC; (2) violations of the Rosenthal Act by Portfolio and NCC; (3) breach of the settlement agreement by Portfolio; (4) negligence by Portfolio and NCC; (5) interference with contract by NCC; (6) falsification of records and evidence tampering by OSI, Portfolio, and NCC; (7) malicious prosecution by all defendants; (8) violation of California Business and Professions Code section 17200 by all defendants; and (9) negligence by the United States Federal Trade Commission, and the California Department of Consumer Affairs. Id.

Each of the defendants now moves to dismiss some or all of plaintiffs' second amended complaint pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6).*fn1 Plaintiffs do not oppose the motions to dismiss filed by defendants State of California Department of Consumer Affairs, Dckt. No. 88, and the United States Federal Trade Commission, Dckt. No. 103, and voluntarily dismiss their claims against those defendants without prejudice. Dckt. Nos. 115, 116. Therefore, those motions, Dckt. Nos. 88 and 103, should be granted and defendants State of California Department of Consumer Affairs and the United States Federal Trade Commission should be dismissed without prejudice.

Additionally, plaintiffs state in their oppositions to Portfolio and NCC's motions to dismiss that they seek to voluntarily dismiss their entire negligence claim (fourth claim for relief) without prejudice. Dckt. No. 108 at 7 (Opp'n to NCC's Mot.); Dckt. No. 109 at 18 (Opp'n to Portfolio's Mot.). Plaintiffs also state in their oppositions to Portfolio, NCC, and OSI's motions to dismiss that they seek to voluntarily dismiss their entire claim for falsification of records/evidence tampering (sixth claim for relief). Dckt. No. 108 at 7; Dckt. No. 109 at 18; Dckt. No. 110 at 9 (Opp'n to OSI's Mot.). They also state that they seek to voluntarily dismiss without prejudice their claim for malicious prosecution (seventh claim for relief) only against defendant NCC. Dckt. No. 108 at 7. Therefore, the motions to dismiss those claims should be granted and those claims should be dismissed without prejudice.


A. Standard of Review

To survive dismissal for failure to state a claim pursuant to Rule 12(b)(6), a complaint must contain more than a "formulaic recitation of the elements of a cause of action"; it must contain factual allegations sufficient to "raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). "The pleading must contain something more . . . than . . . a statement of facts that merely creates a suspicion [of] a legally cognizable right of action." Id. (quoting 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-36 (3d ed. 2004)). "[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, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570). "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. Dismissal is appropriate based either on the lack of cognizable legal theories or the lack of pleading sufficient facts to support cognizable legal theories. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

In considering a motion to dismiss, the court must accept as true the allegations of the complaint in question, Hospital Bldg. Co. v. Rex Hosp. Trs., 425 U.S. 738, 740 (1976), construe the pleading in the light most favorable to the party opposing the motion, and resolve all doubts in the pleader's favor. Jenkins v. McKeithen, 395 U.S. 411, 421, reh'g denied, 396 U.S. 869 (1969). The court will "'presume that general allegations embrace those specific facts that are necessary to support the claim.'" Nat'l Org. for Women, Inc. v. Scheidler, 510 U.S. 249, 256 (1994) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)).

Pro se pleadings are held to a less stringent standard than those drafted by lawyers. Haines v. Kerner, 404 U.S. 519, 520 (1972); Bretz v. Kelman, 773 F.2d 1026, 1027 n.1 (9th Cir. 1985). However, the court's liberal interpretation of a pro se litigant's pleading may not supply essential elements of a claim that are not plead. Pena v. Gardner, 976 F.2d 469, 471 (9th Cir. 1992); Ivey v. Bd. of Regents of Univ. of Alaska, 673 F.2d 266, 268 (9th Cir. 1982). Furthermore, "[t]he court is not required to accept legal conclusions cast in the form of factual allegations if those conclusions cannot reasonably be drawn from the facts alleged." Clegg v. Cult Awareness Network, 18 F.3d 752, 754-55 (9th Cir. 1994). Neither need the court accept unreasonable inferences, or unwarranted deductions of fact. W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981).

The court may consider facts established by exhibits attached to the complaint. Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987). The court may also consider facts which may be judicially noticed, Mullis v. U.S. Bankr. Ct., 828 F.2d at 1388, and matters of public record, including pleadings, orders, and other papers filed with the court. Mack v. South Bay Beer Distribs., 798 F.2d 1279, 1282 (9th Cir. 1986). A pro se litigant is entitled to notice of the deficiencies in the complaint and an opportunity to ...

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