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Coyne v. Midland Funding, LLC

United States District Court, D. Minnesota

July 20, 2017

David Coyne, on behalf of himself and all others similarly situated, Plaintiff,
v.
Midland Funding, LLC, Midland Credit Management, and Messerli & Kramer, P.A., Defendants.

          MEMORANDUM AND ORDER

          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.

         BACKGROUND

         Plaintiff David Coyne is an attorney licensed in Minnesota. At some unspecified point in the past, Coyne defaulted on a Citibank credit-card debt. Defendant Midland Funding bought the debt and hired Defendant Messerli & Kramer to collect it. Midland likely purchased Coyne's debt for pennies on the dollar because it was an old debt. (Pl.'s Opp'n Mem. (Docket No. 16) at 2-3.) Midland hoped to convince Coyne to pay something on the debt, although Coyne was no longer legally obligated to do so.

         Messerli sent Coyne a letter about the debt on February 26, 2016. (Am. Compl. (Docket No. 4) ¶¶ 35-42.) This letter does not ask Coyne to take any action, but rather purports to “provide some additional information pertaining to [Coyne's] account.” (Id. Ex. A.) The letter lists the charge-off balance of the debt as $13, 205.30, and the “current balance” as $17, 230.29. (Id.) The letter explains that the account balance “consists of the principal balance of $13, 205.30 and interest of $3, 871.39 at the rate of 6.00% plus incurred costs of $153.60.” (Id.)

         According to Coyne, this letter violated the Fair Debt Collection Practices Act (“FDCPA”) in several ways.[1] First, the letter “did not disclose what the additional ‘incurred costs' related to.” (Id. ¶ 48.) Coyne contends that this failure to explain the incurred costs and to collect them was both an unfair or unconscionable means to collect a debt under § 1692f and a false representation concerning the character, amount, or legal status of a debt under § 1692e(2)(A). Coyne also contends that he did not owe Messerli costs of $153.60, and thus the letter violated several subsections of § 1692e and § 1692f. (Am. Compl. ¶¶ 55-60.) Second, the charge-off balance in the letter allegedly included principal, fees, and contractual interest and, according to Coyne, this violated the FDCPA in multiple ways. (Id. ¶¶ 69-71.) Finally, the letter violated the FDCPA because Messerli “did not disclose the time period from which the interest at 6.00% accrued” (id. ¶ 74), and the interest amount listed constituted compounded statutory interest in violation of Minnesota law. (Id. ¶ 80.)

         Coyne then received a letter from Defendant Midland Credit Management, dated September 28, 2016. (Id. ¶ 102.) (The Amended Complaint does not specify what the relationship is between Midland Funding and Midland Credit Management.) This letter listed the “Charge-Off Balance” as $13, 205.30, an interest rate of 6.00%, the “MCM Interest Balance” as $214.82, and the “Current Balance” as $13, 420.13. (Id. Ex. B at 2.) The letter offered Coyne “Available Payment Options” including paying 30% of the debt to settle the account in full. (Id. at 1.) The letter also told Coyne that, “[b]ecause of the age of your debt, we will not sue you for it. If you do not pay the debt, we may continue to report it to the credit reporting agencies as unpaid.” (Id.) Coyne contends that this letter misrepresented the principal balance because the amount listed included principal, fees, and interest. (Am. Compl. ¶ 111.) Coyne also contends that the amount listed as “MCM interest” violated the FDCPA in multiple ways. (Id. ¶¶ 126-46.)

         On November 10, 2016, Midland Credit Management sent Coyne another letter, substantially the same as the September letter, again offering to settle the debt by paying 30% of the “current balance of $13, 420.13, ” or $4, 026.03. (Id. Ex. C.) Coyne contends that this letter also violated §§ 1692e and 1692f in similar ways to the other letters. (Am Compl. ¶¶ 156-57, 161-62, 171-76, 184-88.) Coyne does not allege that he took any action in response to these letters, or that he was ever contacted by any of the Defendants after these letters.

         Coyne seeks to represent two subclasses of individuals with “addresses within the state of Minnesota” who received a communication similar to those he received from Messerli and the Midland entities. (Id. ¶ 199.)

         The Amended Complaint raises a single claim for violation of the FDCPA against all three Defendants. He alleges that the statutory violations invaded his privacy, caused him emotional distress and embarrassment, and that Defendants intimidated and harassed him. (Id. ¶¶ 195-97.) Coyne seeks both actual damages and statutory damages under § 1692k, and attorney's fees and costs.

         DISCUSSION

         A. Standard of Review

         When evaluating a motion to dismiss under Rule 12(b)(6), the Court assumes the facts in the Complaint to be true and construes all reasonable inferences from those facts in the light most favorable to the non-moving party. Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). However, the Court need not accept as true wholly conclusory allegations, Hanten v. Sch. Dist. of Riverview Gardens, 183 F.3d 799, 805 (8th Cir. 1999), or legal conclusions that the plaintiff draws from the facts pled. Westcott v. City of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990).

         To survive a motion to dismiss, a complaint 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, 545 (2007). Although a complaint need not contain “detailed factual allegations, ” it must contain facts with enough specificity “to raise a right to relief above the speculative level.” Id. at 555. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, ” will not pass muster under Twombly. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at ...


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