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Elder v. D Capital Management, Inc.

United States District Court, W.D. Kentucky, Louisville

February 21, 2014

PAUL ELDER, Plaintiff,
v.
DH CAPITAL MANAGEMENT, INC., Defendant.

MEMORANDUM OPINION

CHARLES R. SIMPSON, III, Senior District Judge.

This matter is before the Court on a motion to dismiss (DN 4) filed by Defendant DH Capital Management, Inc. ("Defendant"), and a motion for leave to file an amended complaint (DN 10) filed by Plaintiff Paul Elder ("Plaintiff"). For the reasons set forth below, the Court will grant the motion for leave to file an amended complaint and deny as moot the motion to dismiss.

BACKGROUND

Unless otherwise noted, the following facts are undisputed. On May 5, 2010, Defendant filed an action against Plaintiff in Spencer County District Court seeking to collect the balance of a credit card account which had been assigned to Defendant by Chase Bank. On June 8, 2010, Defendant filed a motion for default judgment, which was granted on August 9, 2010. On September 15, 2010, Defendant filed a Notice of Judgment Lien ("Lien") in the Spencer County Clerk's Office upon real property owned by Plaintiff.

On June 8, 2012, Plaintiff filed a motion to vacate the default judgment, arguing improper service of process. On July 3, 2012, the court entered an order vacating the default judgment. However, Defendant's Lien was not released until June 26, 2013.

Plaintiff filed the present action alleging that Defendant violated Sections 1692e and 1692f of the Fair Debt Collections Practices Act ("FDCPA"). Specifically, Plaintiff's Complaint alleged that Defendant violated the FDCPA by: 1) failing to release the judgment lien on Plaintiff's property after the default judgment was vacated; and 2) permitting the judgment lien to thereafter remain in place, thereby causing negative information to be reported on Plaintiff's credit reports. (Complaint, DN 1, at ¶ 36).

On July 11, 2013, Defendant filed a motion to dismiss for failure to state a claim upon which relief can be granted. (DN 4). In his response, Plaintiff referenced several alleged violations of the FDCPA which were not clearly set forth in his Complaint.[1] (DN 5). In its reply brief, Defendant challenged Plaintiff's reliance on allegations not set forth in his Complaint, arguing that such allegations could not be used to defeat its motion to dismiss. (DN 7).

On August 6, 2013, Plaintiff filed a motion for leave to file an amended complaint, arguing that an amendment was necessary in order "to address Defendant's concerns" regarding the allegations upon which he relied in his response brief. (DN 10). In addition to those set forth in his original complaint, Plaintiff's proposed amended complaint incorporates the following factual allegations:

1) that Defendant's Lien attempted to collect principal, interest, attorney's fees, court costs, and postjudgment interest to which, after the default judgment was set aside, DHC has no legal right;
2) that Defendant's state-court complaint against Plaintiff demands costs, attorney's fees, contractual interest, and postjudgment interest to which Defendant is not entitled.

(Proposed Amended Complaint, DN 10-1, at ¶¶ 25-34). Like his original complaint, Plaintiff's proposed amended complaint relies exclusively on of 15 U.S.C. § 1692e and 15 U.S.C. § 1692f. However, it expands on the original complaint by alleging that Defendant violated the following specific subsections thereof:

1) Section 1692e(2)(A) to the extent Defendant's Lien falsely represents character and legal status of debt and falsely represents amount of debt by including court costs and postjudgment interest to which DHC is not entitled;
2) Section 1692e(4) to the extent Defendant's Lien creates false impression that Defendant would enforce its judicial lien through attachment and sale of Plaintiff's property;
3) Section 1692e(5) to the extent Defendant's Lien constitutes threat to take action (attachment and forced sale) ...

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