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Leonardo v. MSW Capital, LLC

United States District Court, D. Minnesota

May 12, 2017

Frank Leonardo, Plaintiff,
MSW Capital, LLC, and Messerli & Kramer, P.A., Defendants.


          Paul A. Magnuson United States District Court Judge

         This matter is before the Court on Defendants' Motion to Dismiss. For the following reasons, the Motion is granted.


         Plaintiff Frank Leonardo obtained a credit card through Credit One Bank, N.A. and over time incurred a debt in the amount of $1, 283.74. (Weber 2d Decl. Ex. F (Docket No. 22-1) at 1.) Eventually, Credit One Bank “charged off” Leonardo's debt and Defendant MSW Capital, LLC became the successor in interest to the account. (Id. at 2.) Following the charge-off, neither Credit One Bank nor MSW Capital sent Leonardo any periodic billing statements detailing the interest accumulating on the account. (Am. Compl. (Docket No. 13) ¶ 12, 14.)

         On October 13, 2015, Defendant Messerli & Kramer, P.A., on behalf of its client MSW Capital, served Leonardo with a summons and complaint seeking to collect the debt. (Weber Aff. (Docket No. 17) Exs. A & B.) Defendants eventually filed the complaint in Minnesota state court on August 11, 2016. (Id. Ex. D.) In the complaint, Defendants alleged that Leonardo owed MSW Capital the $1, 283.74 balance, and an additional $1, 291.09 in interest based on a 23.90% interest rate, plus continuing interest and attorney's fees. (Id.) Defendants also attached a “true and correct copy” of the “Credit Agreement” that purportedly governed Leonardo's credit card account. (Id.) The fees outlined in the attached agreement, however, did not match the fees Leonardo paid. (Am Compl. ¶ 46, 47.)

         On November 7, 2016, Leonardo filed this lawsuit alleging that Defendants' state-court lawsuit violated the Fair Debt Collection Practices Act (“FDCPA”). Defendants initially filed a motion to dismiss on January 13, 2017, but Leonardo subsequently filed an Amended Complaint within the 21 days allowed under Rule 15 to amend as a matter of course. In his Amended Complaint, Leonardo claims that Defendants violated the FDCPA by making four misrepresentations in the state-court complaint. Leonardo alleges that Defendants misrepresented (1) the amount of debt he owed by including interest that MSW Capital had allegedly waived when it failed to send Leonardo periodic billing statements that calculated the accrued interest (id. ¶¶ 27-31); (2) the amount of debt he owed by improperly calculating interest-on-interest in violation of the agreement and Minnesota law (id. ¶¶ 32-39); (3) that the agreement attached to the state court complaint was a true and correct copy of the agreement between Leonardo and Credit One Bank (id. ¶¶ 40-52); and (4) that Defendants were entitled to attorney's fees under the agreement (id. ¶¶ 53-57).

         On February 16, 2017, Defendants filed this Motion to Dismiss.[1]


         A. Standard of Review

         To survive a motion to dismiss for failure to state a claim, 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, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Fed.R.Civ.P. 12(b)(6). A claim bears facial plausibility when it allows the Court “to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. When evaluating a motion to dismiss, the Court must accept factual allegations as true, Gomez v. Wells Fargo Bank, N.A., 676 F.3d 655, 660 (8th Cir. 2012), but it need not give effect to those that simply assert legal conclusions, McAdams v. McCord, 584 F.3d 1111, 1113 (8th Cir. 2009). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, ” are insufficient to support a claim. Iqbal, 556 U.S. at 678.

         B. Materials Outside of the Pleadings

         Leonardo insists that the Court must convert Defendants' Motion to Dismiss into a motion for summary judgment and allow him to conduct discovery because Defendants submitted additional affidavits and exhibits outside of the pleadings. Leonardo is wrong.

         Generally, a court “may not consider materials outside of the pleadings when deciding a motion to dismiss for failure to state a claim.” Greenman v. Jessen, 787 F.3d 882, 887 (8th Cir. 2015) (citation omitted). But a court may “consider some materials that are part of the public record or do not contradict the complaint, as well as materials that are necessarily embraced by the pleadings.” Id. (quotations and citations omitted.) A court is not required to convert a motion to dismiss into a summary judgment motion “simply because one party submits additional matters in support of or opposition to the motion.” Levy v. Ohl, 477 F.3d 988, 991 (8th Cir. 2007) (quotations and citation omitted).

         Along with their Motion, Defendants submitted an affidavit with several accompanying exhibits. Leonardo argues that many of these exhibits are not matters of public record. But all of the exhibits are documents that have been filed in the underlying state-court action and are therefore clearly matters of public record. Moreover, although Leonardo claims that his Amended Complaint does not reference these documents, it in fact repeatedly references the state-court action and Defendants' state-court complaint. (See, e.g., Am. Compl. ¶¶ 22, 27, 41.) Defendants' exhibits are a quintessential example of materials that are “necessarily embraced by ...

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