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Dakowa v. MSW Capital, LLC

United States District Court, D. Minnesota

February 17, 2017

Mahmoud Dakowa, Plaintiff,
MSW Capital, LLC and Messerli & Kramer, P.A., Defendants.

          Darren B. Schwiebert, Esq., DBS Law LLC, Minneapolis, MN, on behalf of Plaintiff.

          Derrick N. Weber, Esq., Messerli & Kramer, P.A., Plymouth, MN, on behalf of Defendants.




         On December 21, 2016, the undersigned United States District Judge heard oral argument on Defendants MSW Capital, LLC (“MSW”) and Messerli & Kramer, P.A.'s (“M&K”) (collectively, “Defendants”) Motion to Dismiss [Docket No. 8]. Plaintiff Mahmoud Dakowa (“Dakowa”) opposes the motion. For the reasons set forth below, the Motion is granted in part and denied in part.

         II. BACKGROUND[1]

         This lawsuit concerns credit card debt incurred by Dakowa that Defendants were engaged to collect. Dakowa's debt arose from his credit card contract with Credit One Bank. Compl. [Docket No. 1] ¶ 7. On October 9, 2011, Credit One Bank charged off the $649.25 balance Dakowa owed. Id. ¶¶ 8-9. Following the charge-off, Dakowa no longer received periodic statements reflecting the accumulation of interest on the debt. Id. ¶ 10.

         On March 16, 2015, MSW, represented by M&K, served Dakowa with a state court summons and complaint. Weber Decl. [Docket No. 10] Ex. A.[2] The state court complaint alleges that MSW now owns the account, and that Dakowa owes the principal balance of $649.25 as well as $511.85 in interest from November 21, 2011 through March 10, 2015, plus continuing interest on the balance at the rate of 23.90% per annum. Id. The complaint also includes a “Cardholder Agreement” that Dakowa avers Defendants impliedly represents to be the agreement governing his account Id.; Compl. ¶ 24.

         Dakowa answered the state court complaint on March 30, 2015. He denied the allegations but agreed that Credit One Bank issued him credit. See id. Ex. C. On April 20, 2015, MSW served Dakowa with Rule 26 disclosures. Id. Ex. D. Like the complaint, the disclosures claim that Dakowa owes principal and interest. Id. The same Cardholder Agreement that was attached to the complaint was also included in the Rule 26 disclosures. Id. Three affidavits generally describing Credit One Bank's procedures for selling accounts in default were also attached. Id.

         On August 25, 2015, MSW served upon Dakowa “Plaintiff's First Set of Interlocking Discovery.” Compl. ¶ 13; Weber Decl. Ex. E. In its request for admissions, MSW asks Dakowa to admit that an attached Cardholder Agreement is a copy of the terms and conditions governing his account. Weber Decl. Ex. E. The attached Cardholder Agreement is the same Cardholder Agreement included with the complaint and Rule 26 disclosures. MSW also asked Dakowa to admit that an attached Bill of Sale and Assignment transferred his account from Capital One Bank to MSW. Id. The Bill of Sale and Assignment refers to the same three affidavits that were included with the Rule 26 disclosures. Id.

         Dakowa did not timely answer the requests for admission. Compl. ¶ 32. On January 11, 2016, Defendants filed the collections action in Anoka County, Minnesota district court.[3] Id. ¶ 22; Weber Decl. Ex. F. The complaint filed is identical to the complaint served on Dakowa on March 16, 2015, and included the same Cardholder Agreement. Id.

         In February 2016, Dakowa made a $400 payment on the account. Id. ¶ 30. On June 30, 2016, Defendants moved for summary judgment in state court. Id. ¶ 31; Weber Decl. Ex. G. In its summary judgment memorandum, Defendants state that “there remains an outstanding principal balance due and owing of $649.25, plus accrued interest” and that “Credit One Bank, N.A. assigned the Account to Plaintiff.” Compl. ¶¶ 33-34. The proposed findings Defendants submitted provide for an award of interest at 23.90% per annum dating back to November 2011. Id. ¶ 35.

         On October 27, 2016, Judge Jonathan N. Jasper denied Defendants' motion for summary judgment. Schwiebert Aff. [Docket No. 15] Ex. A. In denying the motion, Judge Jasper identified five questions of material fact precluding summary judgment. Id. at 7. Judge Jasper also concluded that Dakowa's failure to timely respond to Defendants' requests for admission was not in bad faith but was a mistake by an unsophisticated party. Id. at 6.

         On August 16, 2016, Dakowa filed this federal action alleging five violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. Dakowa's five claims are based on the August 25, 2015 “Interlocking Discovery, ” the January 11, 2016 complaint filed in Anoka County District Court, and the June 30, 2016 motion for summary judgment. Two of the five alleged violations relate to the “Interlocking Discovery:” 1) the instructions and definitions were deceptive, misleading, oppressive, unfair, and unconscionable, and 2) were designed to mislead by seeking admissions to things that Dakowa either could not possibly know or were false. Compl. ¶¶ 14, 19-21. Two other violations relate to the state court complaint: 3) Defendants misrepresented the authenticity of the terms and conditions of Dakowa's account, and 4) improperly sought an interest award that had been waived. Id. ¶¶ 23-29. Finally, in its summary judgment memorandum, Dakowa alleges that Defendants 5) misstated the outstanding principal balance due. Id. ¶ 33.

         Defendants have moved to dismiss the Complaint in its entirety. Defendants argue that Dakowa's claims are subject to the FDCPA's one-year statute of limitations. Defendants also argue that Dakowa's claims relating to litigation do not state a plausible claim that entitles him to relief.


         A. Motion to Dismiss Standard

         Under Rule 8(a) of the Federal Rules of Civil Procedure, pleadings “shall contain a short and plain statement of the claim showing that the pleader is entitled to relief.” A pleading must contain “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). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw a reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Determining whether a complaint states a plausible claim for relief is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679. “But where the well-pleaded facts do not permit ...

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