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Miran v. Convergent Outsourcing, Inc.

United States District Court, S.D. California

April 20, 2017

DARA MIRAN, individually and on behalf of others similarly situated, Plaintiff,


          Anthony J, Battaglia United States District Judge

         Presently before the Court is Defendant Convergent Outsourcing, Inc.'s (“Defendant”) motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (“FRCP”). (Doc. No. 26.) Upon review of the parties' arguments in support and opposition of the motion, the Court finds the motion suitable for determination on the papers and without oral argument pursuant to Civil Local Rule 7.1.d.1. As set forth more fully below, Defendant's motion is GRANTED.

         Background [1]

         This dispute centers on Defendant's attempt to collect a debt. In the late 1990's or early 2000's, Plaintiff Dara Miran (“Plaintiff”) entered into an agreement and obtained a credit card with Citibank. (Doc. No. 25 ¶ 18.) Eventually, Plaintiff defaulted on this credit card and ended up owing Citibank approximately $9, 679.23. (Id.) Subsequently, Galaxy Asset Purchasing, LLC (“Galaxy”) purchased Plaintiff's debt and became the new creditor on the Citibank account. (Id. ¶19.)

         Sometime after January 14, 2016, Plaintiff received a collection notice (the “Offer Letter”) from Defendant. (Id. ¶ 20.) The Offer Letter stated that Plaintiff owed a past due balance of $9, 679.23 to Galaxy and offered Plaintiff three different settlement options:

(a) Lump Sum Settlement Offer of 15%;
(b) Settlement Offer of 30% and paid over three months; or
(c) Twelve monthly payments of $806.60 per month.

(Id. ¶¶ 20, 23.) At the bottom of the reverse page, the Offer Letter stated: “The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it and we will not report it to any credit reporting agency.” (Id. ¶ 24.)

         Plaintiff alleges that the Offer Letter failed to inform Plaintiff or any consumer that acceptance of any of the three settlement offers would create a novation i.e. a new agreement with a new statute of limitations. (Id. ¶ 25.) Accordingly, Plaintiff argues that Defendant's statement that it would not sue is misleading as the new agreement would allow Galaxy or any subsequent purchaser of the account to sue on the new obligation. (Id. ¶¶ 25, 31, 33.)

         On January 4, 2017, Plaintiff filed his first amended complaint (“FAC”). (Doc. No. 25.) Plaintiff claims that Defendant violated Sections 1692e, 1692e(2)(a), and 1692e(10) of the Federal Fair Debt Collection Practices Act (“FDCPA”), pursuant to California Code of Civil Procedure Section 360 (“Section 360”). (Id. ¶ 54.) In conjunction with the FDCPA, Plaintiff also claims violations of California Civil Code Section 1788.17, also known as the Rosenthal Act (“Rosenthal Act”). (Id. ¶¶ 53-54, 56.) Plaintiff requests statutory damages, reasonable attorney's fees, and costs of litigation. (Id. at 13-14.)

         Legal Standard

         A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of a plaintiff's complaint. See Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A complaint should not be dismissed for failure to state a claim under FRCP 12(b)(6) “unless it appears beyond doubt that the plaintiff [could] prove no set of facts in support of his claim which would entitle him to relief.” Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987) (citation omitted). In making this determination, a court reviews the contents of the complaint, accepting all factual allegations as true, and drawing all reasonable inferences in favor of the nonmoving party. Cedars-Sinai Med. Ctr. v. Nat'l League of Postmasters of U.S., 497 F.3d 972, 975 (9th Cir. 2007). Moreover, a complaint will survive a motion to dismiss if it contains “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

         However, “[t]he court may dismiss a complaint as a matter of law for ‘(1) lack of a cognizable legal theory or (2) insufficient facts under a cognizable legal claim.'” SmileCare Dental Grp. v. Delta Dental Plan of Cal., Inc., 88 F.3d 780, 783 (9th Cir. 1996) (internal citation omitted). “[C]onclusory allegations of law and unwarranted inferences, ” however, “are insufficient to defeat a motion to dismiss for failure to state a claim.” Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th Cir. 1996). It is also improper for a court to assume “the [plaintiff] can prove facts that [he or she] has not alleged.” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).


          Defendant moves to dismiss all of Plaintiff's causes of action asserted in his FAC. Specifically, Defendant rejects Plaintiff's claims that acceptance of any of the payment plans would result in a novation and that a new agreement would have been created pursuant to Section 360. (Doc. No. 26-1 at 9-13.) As the Court will explain in more detail below, the Court agrees with Defendants.

         A. 15 ...

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