United States District Court, D. Minnesota
Brayer Schweibert, Esq., DBS LAW LLC, for plaintiffs.
D. Welp, Esq., STEWART, ZLIMEN & JUNGERS, for defendant.
MEMORANDUM OPINION AND ORDER
R. TUNHEIM CHIEF JUDGE
Michael Klein (“Michael”) and Dina Klein
(“Dina”) (collectively the “Kleins”)
instituted these two similar actions against Stewart Zlimen
& Jungers (“Stewart”), a law firm engaged in
debt collection for Allina. Although the two cases are
separate, they present nearly identical facts and legal
issues, and will be examined together. The Kleins brought
these actions alleging that Stewart violated the Fair Debt
Collection Practices Act (“FDCPA”) on multiple
occasions. Stewart moved for judgment on the pleadings as to
all claims alleged by the Kleins. The Court finds that the
Kleins have satisfied their burden of pleading for the
following four claims (1) Stewart bringing a collection
lawsuit in an attempt to collect a debt not authorized by
contract or law in violation of 15 U.S.C. § 1692f(1);
(2) Stewart making a false representation regarding ownership
of an alleged consumer debt in violation of 15 U.S.C. §
1692e; (3) Stewart suing on behalf of a party who lacked
standing in violation of 15 U.S.C. § 1692f(1); and (4)
Stewart suing under an account stated theory in the absence
of a statement of account in violation of 15 U.S.C. §
1693e and 1692f(1) because the Kleins have plead sufficient
facts to show that relief is plausible on its face. Thus, the
Court will deny the motion as to those claims. The Court
will, however, grant the motion for two claims. First, the
Court will grant the motion as to the claim that Stewart
violated the FDCPA by seeking statutory interest in its
conciliation court case against Dina and dismiss the claim
with prejudice. The Eighth Circuit has held that collecting
statutory interest does not violate the Minnesota law, and
thus the FDCPA is not violated. The Kleins do not allege any
harassing, oppressive, or abusive conduct by Stewart in
violation of § 1692d, thus the Court will grant the
motion and dismiss the claim without prejudice. The Kleins
may plead additional facts to support such a claim should
20, 2017 the Kleins each received a letter (“July
Letter”) from Stewart advising them that Stewart was
attempting to collect on debt owed by the Kleins. (Civ. No.
18-658, Docket No. 1, Compl. (“Dina Compl.”)
¶ 6; Civ. No. 18-710, Docket No. 1, Compl.
(“Michael Compl.”) ¶ 6.) The Kleins allege
that Stewart regularly collects or attempts to collect,
directly or indirectly, debts owed or due or asserted to be
owed or due another. (Dina Compl. ¶ 5; Michael Compl.
¶ 5.) The two letters and their attachments addressed to
the Kleins show the account balance, file number, dates for
charges, account numbers, and that Stewart's client is
Allina. (Civ. No. 18-658, Docket No. 6-7, Answer (“Dina
Answer”) ¶ 5, Exhibit A; Civ. No. 18-710, Docket
No. 9-10, Answer (“Michael Answer”) ¶ 5,
Exhibit A.) The letters further state “[t]he account
indicated above has been placed with this office for
collection. A listing of the separate accounts included in
our file is attached showing the breakdown of principal and
interest.” (Id.) Enclosed with these letters
are two pages referenced as “a listing of the separate
accounts” with the heading “Accounts Receivable
Services d/b/a Reliance Recoveries” (“ARS”)
that contain account information and a breakdown of principal
and interest for each account. (Id.) This is
essentially a list of each time the Kleins received services
from Allina, and the charges they incurred for those
services. These enclosures show the date June 7, 2017.
(Id.) The Kleins allege that ARS is a different
legal entity from Allina and that Allina sells debts to ARS.
(Dina Compl. ¶ 13; Michael Compl. ¶ 12.) The Kleins
also allege that Allina sold the Kleins' debt to ARS, or
in the alternative, that Allina did not do so. (Dina Compl.
¶ 14- 15; Michael Compl. ¶ 13-14.) Depending on
which version is true, the Kleins advance different theories
of harm. (Id.)
2005, Allina entered into an agreement (“AG
Agreement”) with the Minnesota Attorney General's
Office to change its patient billing and medical debt
collection practices. (Dina Compl. ¶ 16; Michael Compl.
¶ 15.) The AG Agreement was renewed in 2007, 2012, and
2017. (Id.) On June 22, 2012, the AG Agreement was
inserted in an order executed by the Ramsey County District
Court. (Dina Compl. ¶ 17; Michael Compl. ¶ 16.) The
AG Agreement prohibits Allina from commencing legal action
against a patient unless “the patient has been given a
reasonable opportunity to submit an application for Charity
Care, if the facts and circumstances suggest that the patient
may be eligible for Charity Care . . . .” (Dina Compl.
¶ 19; Michael Compl. ¶ 18.) The AG Agreement
further requires that Allina serve with any summons and
complaint a lawsuit information sheet approved by the
Attorney General's Office. (Dina Compl. ¶ 20;
Michael Compl. ¶ 19.)
November 15, 2017, Stewart commenced lawsuits on behalf of
Allina against each of the Kleins in Washington County
Conciliation Court. (Dina Compl. ¶ 21; Michael Compl.
¶ 20.) The summons and complaints were served on the
Kleins. (Dina Compl. ¶ 22; Michael Compl. ¶ 21.)
The summons and complaints were not accompanied by a lawsuit
information sheet. (Dina Compl. ¶ 24; Michael Compl.
¶ 23.) Stewart's complaint against Dina alleged that
she owed $287.92 of interest as allowed by Minn. Stat. §
334.01, in addition to other charges totaling $8, 123.18.
(Dina Compl. ¶ 27.) Stewart did not seek pre-judgment
interest against Michael. A hearing on these cases was set
for March 1, 2018. (Dina Answer ¶ 14, Exhibit F; Michael
Answer ¶ 13, Exhibit G.) The Kleins each secured a day
off work to attend the hearing. (Dina Compl. ¶ 31;
Michael Compl. ¶ 26.) The Kleins each incurred
out-of-pocket costs in connection with attending the hearing,
including lost wages. (Dina Compl. ¶ 36; Michael Compl.
¶ 31.) Before the hearing began, Stewart agreed to
dismiss the lawsuit without prejudice to provide the Kleins
an opportunity to apply for charity care. (Dina Compl. ¶
32; Michael Compl. ¶ 27.) In the case of Dina, Stewart
also indicated that it would no longer be seeking statutory
interest. (Dina Compl. ¶ 32.) The Kleins then brought
the instant actions on March 9, 2018, in the case of Dina,
and on March 14, 2018, in the case of Michael. (Dina Compl.;
Michael Compl.) Stewart then moved for judgment on the
pleadings-the motions currently before the Court-in both
cases. (Civ. No. 18-658, Mot. for J. on Pleadings, June 13,
2018, Docket No. 11; Civ. No. 18-710, Mot. for J. on
Pleadings, June 13, 2018, Docket No. 15.)
STANDARD OF REVIEW
reviewing a motion for judgment on the pleadings pursuant to
Rule 12(c) of the Federal Rules of Civil Procedure, the Court
applies the same standard of review applied to a motion to
dismiss pursuant to Rule 12(b)(6). Clemons v.
Crawford, 585 F.3d 1119, 1124 (8th Cir.
2009). That is, the Court considers all facts alleged in the
complaint as true to determine if the complaint states a
claim for “relief that is plausible on its face.”
Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594
(8th Cir. 2009) (quoting Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009)). The Court is required
to “‘accept as true all factual allegations set
out in the complaint' and to ‘construe the
complaint in the light most favorable to the plaintiff ,
drawing all inferences in [the plaintiff's]
favor.'” Ashley Cty. v. Pfizer, Inc., 552
F.3d 659, 665 (8th Cir. 2009) (quoting
Wishnatsky v. Rovner, 433 F.3d 608, 610
survive a motion to dismiss, however, a complaint must
provide more than “‘labels and conclusions'
or ‘a formulaic recitation of the elements of a cause
of action.'” Iqbal, 556 U.S. at 678
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007)). Although the Court accepts the complaint's
factual allegations as true, it is “not bound to accept
as true a legal conclusion couched as a factual
allegation.” Twombly, 550 U.S. at 555 (quoting
Papasan v. Allain, 478 U.S. 265, 286 (1986)).
“A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678.
“Where a complaint pleads facts that are ‘merely
consistent with' a defendant's liability, it
‘stops short of the line between possibility and
plausibility, '” and therefore must be dismissed.
Id. (quoting Twombly, 550 U.S. at 557).
addition to the pleadings, the Court may properly consider
materials that are necessarily embraced by the pleadings.
Enervations, Inc. v. Minn. Mining & Mfg. Co.,
380 F.3d 1066, 1069 (8th Cir. 2004).
“Documents necessarily embraced by the pleadings
include ‘documents whose contents are alleged in a
complaint and whose authenticity no party questions, but
which are not physically attached to the
pleading.'” Ashanti v. City of Golden
Valley, 666 F.3d 1148, 1151 (8th Cir. 2012)
(quoting Kushner v. Beverly Enters., Inc., 317 F.3d
820, 831 (8th Cir. 2003)).
THE FAIR DEBT COLLECTION PRACTICES ACT
the Eighth Circuit has not recognized specific elements to a
violation of the FDCPA, the Court finds that an FDCPA claim
must meet three elements: (1) the plaintiff has been the
object of collection activity arising from a consumer debt;
(2) the defendant is a debt collector as defined by the
FDCPA; (3) the defendant has engaged in an act or omission
prohibited by the FDCPA.
doing so the Court construes the language in 15 U.S.C.
§§ 1692d, 1692e, and 1692f that prohibits debt
collectors from engaging in activities prohibited by any
section of the FDCPA while collecting a debt. The FDCPA
defines debt as “any obligation or alleged obligation
of a consumer to pay money arising out of a transaction in
which the money, property, insurance, or services which are
subject of the transaction are primarily for personal,
family, or household purposes . . . .” 15 U.S.C. §
1692a(5). The elements for proving a prima facie case of
violation of the FDCPA adopted by this Court thus
incorporates into the first element the definition of debt,
and its corresponding requirements that the plaintiff be a
consumer. The second element incorporates the requirement
that the collector in question is a debt collector, as
required by all three sections of the FDCPA analyzed here.
The third element requires that the defendant's actions
violate sections 1692d, 1692e, or 1692f by engaging in
activities prohibited by those sections. Other courts have
recognized similar elements in proving a prima facie FDCPA
violations case. See Helman v. Bank of America, 685
Fed.Appx. 723, 726 (11th Cir. 2017); Weast v.
Rockport Financial, LLC, 115 F.Supp.3d 1018, 1021 (E.D.
Mo. 2015); Reynolds v. Credit Management Services,
Inc., Civ. No. 8:14CV391, 2016 WL 756469 at *2 (D. Neb.
Feb. 25, 2016).
first two elements are not at issue in this case. The third
element-whether the defendant has engaged in an act or
omission prohibited by the FDCPA-requires a violation of
specific sections of the FDCPA.
FDCPA was passed ‘to eliminate abusive debt collection
practices.'” Janson v. Katharyn B. Davis,
LLC, 806 F.3d 435, 437 (8th Cir. 2015) (quoting
Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich
LPA, 559 U.S. 573, 577 (2010)). It “prohibits a
debt collector from making a ‘false, deceptive or
misleading representation or means in connection with the
collection of any debt, '” id. (quoting 15
U.S.C. § 1692e), and “from using ‘unfair or
unconscionable means to collect or attempt to collect any
debt, '” id. (quoting 15 U.S.C. §
1692f). “When evaluating whether a communication is
false, deceptive, or misleading, we consider the perspective
of an ‘unsophisticated consumer.'”
Id. (quoting Peters v. Gen. Serv. Bureau,
Inc., 277 F.3d 1051, 1055 (8th Cir. 2002)). This
standard is “designed to protect consumers of below
average sophistication or intelligence without having the
standard tied to ‘the very last rung on the
sophistication ladder.'” Strand v. Diversified
Collection Serv., Inc., 380 F.3d 316, 317 (8th Cir.
2004) (quoting Duffy v. Landberg, 215 F.3d 871, 874
(8th Cir. 2000)). “Th[e] standard protects the
uninformed or naive consumer, yet also contains an objective
element of reasonableness to protect debt collectors from
liability for peculiar interpretations of collection
letters.” Id. at 317-18.
alleges six violations of the FDCPA, and Michael alleges five
violations of the FDCPA ...