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Ferkingstad v. Accounts Receivable Services, LLC

United States District Court, D. Minnesota

April 13, 2017



          JOAN N. ERICKSEN United States District Judge

         Plaintiff Andrea Ferkingstad sued Defendant Accounts Receivable Services, LLC (“ARS”) for violations of the Fair Debt Collection Practices Act (“FDCPA”). She alleges that when ARS sued her in Minnesota Conciliation Court, ARS falsely represented the amount of a debt, falsely represented that Allina Health System (“Allina”) sold and assigned the debt to ARS, and provided Ferkingstad false documents purporting to effect such a sale and assignment. The matter is before the Court on ARS's Motion to Dismiss under Rule 12(b)(6). (See Dkt. No. 12.) The Court decides to grant the Motion in part and deny it in part because although Ferkingstad's false-amount claim is not viable, she plausibly alleges claims relating to the false sale and assignment representations.

         I. BACKGROUND

         ARS filed a debt collection lawsuit against Ferkingstad in Minnesota Conciliation Court on October 19, 2015. (See Amend. Compl. ¶ 8, Dkt. No. 4.) The statement of claim alleged that Ferkingstad was indebted to ARS in the amount of $878.75 on an account stated, which account Allina originally held and assigned to ARS. (Id. ¶¶ 9-10.) It also explained that the $878.75 figure was the sum of a $696.47 medical debt, plus $182.28 in statutory interest. (See Dkt. No. 15-1.)[1] Prior to the suit, Ferkingstad never received a bill from Allina for exactly $878.75. (Amend. Compl. ¶ 33.)

         On January 13, 2016, the Minnesota Conciliation Court held a hearing on ARS's claim. (See Id. ¶ 11.) Ferkingstad appeared with counsel, and ARS appeared through a non-attorney representative. (Id. ¶¶ 12-13.) At the hearing, ARS's representative provided Ferkingstad with two documents: (1) a “Bill of Sale, ” and (2) “Exhibit 1A, ” which was attached to the Bill of Sale. (Id. ¶¶ 17-20.) The Bill of Sale refers to a separate “Purchase of Business Agreement” for the sale of accounts from Allina to ARS and is signed by an Allina representative. (Id. ¶¶ 20, 22.) It purports to transfer Allina's rights in the accounts listed in Exhibit 1A. (See Id. ¶ 23.) That Exhibit references only Ferkingstad's account. (Id. ¶ 24.) ARS dismissed its claim without prejudice at the hearing. (Id. ¶¶ 14-15.)

         After ARS filed the conciliation court suit, Allina made a “Bad Debt Final Referral” on Ferkingstad's account. (Id. ¶ 28.) This referral shows that Allina was still the owner of the debt when ARS sued Ferkingstad; ARS had no right to collect on the debt at that time. (Id. ¶¶ 29-31.)


         During briefing on ARS's Motion to Dismiss, Ferkingstad filed a Motion to Stay the Motion to Dismiss until the Eighth Circuit Court of Appeals rules in Hill v. Accounts Receivable Servs., LLC, No. 16-CV-219 (DWF/BRT), 2016 WL 6462119 (D. Minn. Oct. 31, 2016), appeal docketed, No. 16-4356 (8th Cir. Dec. 2, 2016). (See Dkt. No. 23.) Ferkingstad contends that the Hill case is substantively different, but will resolve a common legal issue: whether FDCPA false representation claims require an element of materiality. (See Plaintiff's Memorandum in Support of Her Motion to Stay (“Pl. Stay Br.”) 2, Dkt. No. 25.) ARS opposes a stay. (See Defendant's Response Memorandum in Opposition to the Motion to Stay (“Def. Stay Br.”), Dkt. No. 27.)

         “[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket . . . .” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). “The District Court has broad discretion to stay proceedings as an incident to its power to control its own docket.” Clinton v. Jones, 520 U.S. 681, 706 (1997) (citing Landis, 299 U.S. at 254). Exercising this broad discretion, the Court denies the Motion to Stay because Ferkingstad has not established the need for a stay pending the Hill appeal. See Id. at 708 (“The proponent of a stay bears the burden of establishing its need.”).


         When considering Rule 12(b)(6) motions, the Court evaluates whether the alleged facts are sufficient to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The Court accepts the alleged facts as true, drawing all reasonable inferences in favor of the non-moving party. See Id. “This tenet does not apply, however, to legal conclusions or ‘formulaic recitation of the elements of a cause of action'; such allegations may properly be set aside.” Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009) (quoting Iqbal, 556 U.S. at 678). After setting aside conclusory allegations, the Court draws on “its judicial experience and common sense” to determine if the factual statements nudge a claim “across the line from conceivable to plausible.” Iqbal, 556 U.S. at 679-80 (quoting Twombly, 550 U.S. at 570).


         The FDCPA makes it unlawful to use false, deceptive, or misleading representations or means in connection with the collection of any debt. 15 U.S.C. § 1692e. It specifically outlaws false representations about the character, amount, or legal status of any debt, § 1692e(2), and the use of false representations or deceptive means to attempt to collect any debt, § 1692e(10).[2]

         In order to be actionable under the FDCPA, a false representation must be such that it would harass, mislead, or deceive an unsophisticated consumer. See Haney v. Portfolio Recovery Assocs., L.L.C., 837 F.3d 918, 924 (8th Cir. 2016); Janson v. Katharyn B. Davis, LLC, 806 F.3d 435, 437 (8th Cir. 2015) (citing O'Rourke v. Palisades Acquisition XVI, LLC, 635 F.3d 938, 945 (7th Cir. 2011) (Tinder, J., concurring)); Hemmingsen v. Messerli & Kramer, P.A., 674 F.3d 814, 819 (8th Cir. 2012) (also citing O'Rourke). This standard asks whether a reasonable consumer of below-average sophistication or intelligence would be misled or deceived by the false representation. See Haney, 837 F.3d at 924; Janson, 806 F.3d at 437; Peters v. Gen. Serv. Bureau, Inc., 277 F.3d 1051, 1055 (8th Cir. 2002). In some circumstances, a statement is clearly misleading or deceptive on its face. See O'Rourke, 635 F.3d at 945. In other circumstances, the plaintiff must provide evidence that unsophisticated consumers would likely be misled by the false representation. See Id. Evidence that the plaintiff was actually misled contributes to this showing. See Janson, 806 F.3d at 437-38; Hemmingsen, 674 F.3d at 819; O'Rourke, 635 F.3d at 945. When an attorney is interposed as an intermediary between the ...

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