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Stratton v. Portfolio Recovery Associates, LLC

United States District Court, Sixth Circuit

November 26, 2013



DANNY C. REEVES, District Judge.

This matter is pending for consideration of Defendant Portfolio Recovery Associates, LLC's ("PRA") motion to dismiss. [Record No. 12] PRA seeks to dismiss Plaintiff Dede Stratton's Amended Complaint, arguing that it fails to state a claim upon which relief may be granted. For the reasons set forth below, PRA's motion will be granted.


On June 20, 2012, Defendant PRA filed a complaint in the Scott District Court in an attempt to collect a debt owed by Stratton. The debt arose when, at some point in 2008, Stratton stopped making payments on a credit card from GE, F.S.B./Lowes ("GE"). On December 19, 2008, GE "charged off"[1] the $2, 630.95 debt. [Record No. 10, p. 3 ¶17]

On January 15, 2010, GE sold the account to Defendant PRA, a company that purchases charged-off debts, for around $132.00. [ Id., p. 4 ¶27] At the time GE sold Stratton's debt, the total amount due was $2, 630.95, indicating that GE did not charge Stratton any contractual interest on the account from December 19, 2008, until PRA bought the debt in January 2010.[2] [ Id., p. 3 ¶19; Record No. 12, p. 4] For purposes of this motion, PRA does not dispute that GE waived its right to assess contractual interest at the rate of 21.99% after the account was charged-off. [Record No. 16, p. 3]

The complaint filed in state court sought to recover the full amount of the debt ($2, 630.95), plus statutory prejudgment interest under KRS § 360.010. [Record No. 13, p. 2] The complaint alleges, in its entirety:

1. That the account of DEDE STRATTON, bearing the account number ending in 0265 is in default.
2. Said account is due and payable to Portfolio Recovery Associates, LLC, having acquired the account through sale, assignment or other legal means.
3. The original creditor is GE MONEY BANK, F.S.B.
4. Said obligation is past due, and the Defendant[] owes Plaintiff $2, 630.95, with interest thereon at the rate of 8% per annum from December 19, 2008 until the date of judgment with 12% per annum thereafter until paid, plus court costs. [Record No. 10-1 (emphasis added)] Stratton does not contest the validity of the state court collection action. However, she disputes that she owes 8% statutory interest from the date of charge-off.

On May 26, 2013, Stratton filed the current putative class action against PRA. [Record No. 1] Two months later, an amended complaint was filed. [Record No. 10] Stratton alleges that PRA violated the Fair Debt Collection Practices Act ("FDCPA") by seeking statutory prejudgment interest through the state court action. She maintains that PRA's request for 8% statutory prejudgment interest violates the FDCPA by: (1) falsely representing the character, amount, and/or legal status of Stratton's credit card debt, in violation of 15 U.S.C. § 1692e(2)(A); (2) taking an action that cannot legally be taken in violation of 15 U.S.C. § 1692e(5); and (3) attempting to collect interest on a debt that is neither authorized by agreement nor permitted by law in violation of 15 U.S.C. § 1692f(1). [Record No. 10, pp. 6-7]

PRA argues that Stratton's claims should be dismissed because it had the right under KRS § 360.010 to request 8% statutory prejudgment interest in the collection proceeding. It further argues that, even if it was not entitled to recover statutory interest, the act of requesting such interest does not constitute a violation of the FDCPA.


When evaluating a motion to dismiss under Rule 12(b)(6), the Court must determine whether the complaint alleges "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, 555 (2007)). The plausibility standard is met "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556). Although the complaint need not contain "detailed factual allegations" to survive a motion to dismiss, "a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (internal quotation marks and alteration omitted).

In considering a 12(b)(6) motion, the Court is required to "accept all of plaintiff's factual allegations as true and determine whether any set of facts consistent with the allegations would entitle the plaintiff to relief." G.M. Eng'rs & Assoc., Inc. v. West Bloomfield Twp., 922 F.2d 328, 330 (6th Cir. 1990) (citation omitted). However, the Court need not accept as true legal conclusions cast in the form of factual allegations if those conclusions cannot be plausibly drawn from the facts, as alleged. See Iqbal, 556 U.S. at 678 ("[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions."); see also Papasan v. Allain, 478 U.S. 265, 286 (1986) (noting that in reviewing a motion to dismiss, the district court "must take all the factual allegations in the complaint as true, " but that the court is "not bound to accept as true a legal conclusion couched as a factual allegation."). Thus, Rule 12(b)(6) essentially "allows the Court to dismiss, on the basis of a ...

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