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Holmes v. Electronic Document Processing, Inc.

United States District Court, N.D. California

August 15, 2013

CHERYL ANATOLE HOLMES, Plaintiff,
v.
ELECTRONIC DOCUMENT PROCESSING, INC. and TANAYA V. SULCER, Defendants

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[Copyrighted Material Omitted]

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For Cheryl Anatole Holmes, Plaintiff: Fred W. Schwinn, Raeon Rodrigo Roulston, LEAD ATTORNEYS, Consumer Law Center, Inc., San Jose, CA.

For Electronic Document Processing, Inc, a California corporation, doing business as EDP Legal Services, Inc, Tanaya V Sulcer, individually, and in her official capacity, Defendants: Steven S. Nimoy, LEAD ATTORNEY, Soltman, Levitt, Flaherty & Wattles LLP, Westlake Village, CA.

OPINION

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ORDER DENYING DEFENDANTS' MOTION TO DISMISS AND MOTION TO STRIKE

LUCY H. KOH, United States District Judge.

Plaintiff Cheryl Anatole Holmes (" Holmes" or " Plaintiff" ) brings this action against Defendants Electronic Document Processing, Inc. (" EDP" ) and Tanaya V. Sulcer (" Sulcer" ) (collectively, " Defendants" ) for alleged violations of the Fair Debt Collection Practices Act, 15 U.S.C. § § 1692 et seq. (" FDCPA" ); the Rosenthal Fair Debt Collection Practices Act, California Civil Code § § 1788 et seq. (" RFDCPA" or " Rosenthal Act" ); and California Business and Professions Code § § 17200 et seq. (" Unfair Competition Law" or " UCL" ). Holmes contends that, in an attempt to collect a debt, Defendants filed a false proof of service in a state court action.

Before the Court is Defendants' Motion to Dismiss Plaintiff's Complaint, ECF No. 13 (" Mot. to Dismiss" ), and Defendants' Motion to Strike Portions of Plaintiff's Complaint, ECF No. 14 (" Mot. to Strike" ). Pursuant to Civil Local Rule 7-1(b), the Court found this matter appropriate for determination without oral argument. Having considered the submissions of the parties, the relevant law, and the record in this case, the Court hereby DENIES Defendants' Motion to Dismiss, and DENIES Defendants' Motion to Strike.

I. BACKGROUND

A. Factual Allegations

Plaintiff Holmes allegedly incurred a consumer credit debt (" the alleged debt" ) at some unknown time for personal, family, or household purposes. See Compl. ¶ 44, ECF No. 1. The debt was consigned and/or otherwise assigned to Lang, Richert & Patch, a debt collection law firm. Compl. ¶ 45.

On June 14, 2012, Lang, Richert & Patch filed a lawsuit against Holmes in the Santa Clara Superior County, Unifund CCR Partners v. Cheryl Anatole Holmes, Santa Clara County Case No. 1-12-CV-226523 (the " State Court Action" ), in an attempt to collect the debt. See Compl. ¶ 46. Thereafter, Lang, Richert & Patch allegedly hired Electronic Document Processing, Inc. (" EDP" )--a California corporation engaged in the business of composing and selling forms, documents, and other media to be used for debt collection--to serve Holmes by delivering to her a copy of the State Court Summons and Complaint. See Compl. ¶ ¶ 10, 47. Tanaya V. Sulcer (" Sulcer" ) is a process server who is or was an employee and/or agent of EDP. See Compl. ¶ ¶ 11, 21(b).

Holmes contends that, on or about July 18, 2012, EDP composed a false Proof of Service of Summons and filed it in the Santa Clara Superior Court in order to obtain a default judgment against her. See Compl. ¶ ¶ 48, 49; id. at Ex. 1. This Proof of Service of Summons represents, under penalty of perjury, that Sulcer personally served Holmes with a copy of the Summons and Complaint for the Superior Court lawsuit. See Compl. ¶ ¶ 48-49. However, Holmes disputes that she was served personally. Rather, on or about July 10, 2012, " Plaintiff returned home from work and found the Summons and Complaint wedged under her front door." Compl. ¶ 54. In addition, the Proof of Service of Summons describes the person served as a female Caucasian, 50-years-old, with brown hair and brown eyes, 5 feet 8 inches tall, and weighing 165 pounds. See Compl. ¶ 54. However, Holmes is 62-years-old, with blond hair and blue eyes, and weighs 125 pounds. See id.

Holmes further alleges that EDP authorized Sulcer to use EDP's address and

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telephone number on process server returns in order to shield Sulcer from service of process if she were sued. See Compl. ¶ 27. Holmes contends that EDP also intentionally withheld its own name and process server registration number from the process server returns in order to misrepresent the true nature of EDP's services and EDP's relationship with Sulcer. See Compl. ¶ 26.

According to Holmes, EDP and Sulcer are engaged in the " practice of 'sewer service' -- i.e., failing to serve a debtor and filing a fraudulent affidavit attesting to service so that when the debtor later fails to appear in court, a default judgment can be entered against her." Compl. ¶ 1. [1] The Proof of Service of Summons in this case indicates that Defendants sold the process server return to Lang, Richert & Patch for $59.00. Compl. ¶ 53. Because EDP will pay Sulcer and other process servers only for service attempts that are reported as completed, and will pay substantially less or nothing for service that is not reported as completed, Holmes alleges that " process servers like Sulcer have a strong financial incentive to falsify process server returns." Compl. ¶ 55. According to Holmes, " EDP knowingly promotes the use of false process server returns through its flat rate or fixed fee compensation." Compl. ¶ 55. Holmes also alleges that " [d]ebt collection law firms and debt buyers plainly benefit from the sewer services provided by unscrupulous process servers like the Defendants in this case" because they are " able to generate hundreds of judgments by default on cases where they could never prevail on the merits." Compl. ¶ 57. " Once default judgments are fraudulently obtained, they are sued to levy consumer's bank accounts, garnish their wages, seize their property, damage their credit reports, and/or pressure them into unaffordable payment plans." Id.

B. Procedural History

Holmes filed her Complaint on December 6, 2012. ECF No. 1. On February 19, 2013, Defendants filed their Motion to Dismiss and Motion to Strike the Complaint. See ECF Nos. 6, 7. The following day, the case was reassigned to the undersigned judge. ECF No. 12. On February 26, 2013, Defendants amended and re-noticed their Motion to Dismiss and Motion to Strike Plaintiff's Complaint. See Mot. to Dismiss, ECF No. 13; Mot. to Strike, ECF No. 14. On April 12, 2013, Holmes filed her Opposition to the Motion to Dismiss, see Opp'n to Mot. to Dismiss, ECF No. 18, and her Opposition to the Motion to Strike, see Opp'n to Mot. to Strike, ECF No. 19. [2] On April 26, 2013, Defendants filed their Reply in support of the Motion to Dismiss, see Reply Supp. Mot. to Dismiss, ECF No. 21, and their Reply in support of the Motion to Strike, see Reply Supp. Mot. to Strike, ECF No. 20.

II. LEGAL STANDARDS

A. Motion to Dismiss Under Rule 12(b)(6)

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a ...


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