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Fulk v. LVNV Funding LLC

United States District Court, E.D. Kentucky, Central Division

October 21, 2014

KYLE FULK, Plaintiff,
v.
LVNV FUNDING LLC, Defendant

For Kyle Fulk, Plaintiff: James Hays Lawson, LEAD ATTORNEY, Lawson at Law, PLLC, Louisville, KY.

For LVNV Funding, LLC, Defendant: Charlie William Gordon, Greene & Cooper, Louisville, KY.

Page 968

MEMORANDUM OPINION AND ORDER

Danny C. Reeves, United States District Judge.

This matter is pending for consideration of Defendant LVNV Funding LLC's (" LVNV" ) motion to dismiss. [Record No. 6] The defendant seeks to dismiss Plaintiff Kyle Fulk's Complaint, arguing that it fails to state a claim upon which relief may be granted under Rule 12(b)(6) of the Federal Rules of Civil Procedure.

Page 969

For the reasons outlined below, the defendant's motion will be granted in part and denied in part.

I.

On July 22, 2013, LVNV filed a Complaint in the Fayette District Court in an attempt to collect an alleged debt (" Yamaha Account" ) owed by Fulk. [Record No. 8-1, p. 2] The debt arose when, on November 18, 2008, Fulk stopped making payments on a credit card issued by HSBC Bank Nevada, N.A./Yamaha-RBP (" HSBC" ).[1] [Record No. 1, p. 4 ¶ 28; Record No. 8, p. 2] Upon his failure to pay the amount due, on June 30, 2009, HSBC " charged-off" [2] the $3,487.67 debt.[3] [Record No. 1, p. 4 ¶ 28; Record No. 8, p. 2]

On July 14, 2009, HSBC sold the Yamaha Account to the defendant, a company that purchases charged-off debts, for around $173.00. [Record No. 1, p. 5 ¶ 37; Record No. 11, p. 13] At the time the debt was sold, the total amount due remained $3,487.67, indicating that HSBC did not charge any interest on the account from the June 30, 2009 charge-off date, until LVNV bought the debt. On July 22, 2013, LVNV filed a Complaint in the Fayette District Court, seeking to recover the full debt ($3,487.67), plus statutory prejudgment interest under KRS § 360.010. [Record No. 8-1, p. 2] The state court Complaint alleges, in its entirety:

1. The Defendant(s) is indebted to the Plaintiff under an agreement or account.
2. LVNV Funding LLC purchased this account. The original credit grantor is HSBC Bank Nevada, N.A./Yamaha-RBP.
3. Defendant(s) has failed to pay the Plaintiff the remaining balance of its account in the sum of $3,487.67, plus accrued interest in the amount of $.00, together with interest at the annual rate of 8% from June 30, 2009, until the date of Judgment, then at 12% per annum on the Judgment until satisfied.
WHEREFORE, Plaintiff respectfully demands Judgment against the Defendant(s) for the sums, plus interest as set forth above, court costs and any other relief to which it may appear entitled.

[ Id.] On March 3, 2014, Fulk received a consumer credit report issued by Creditexpert, Inc., in conjunction with an application for a home loan or loan modification. [Record No. 1, p. 3 ¶ 12] The report stated that $4,771.00 was the amount due and owing on the Yamaha Account as of February 2014: an increase of $1,283.33. [ Id., p. 5 ¶ 38]

On March 28, 2014, Fulk filed the current action against LVNV. [Record No. 1] He alleges that LVNV's state court action is barred by the applicable statute of limitations. [ Id., p. 4 ¶ 31] Further, he contends that LVNV violated the Fair Debt Collection Practices Act (" FDCPA" ) by seeking statutory prejudgment interest in the state court action and by including prejudgment interest in the March 3, 2014 credit report. [ Id., p. 4 ¶ 32, 33] Specifically,

Page 970

Fulk maintains that LVNV violated the FDCPA by: (i) falsely representing the character, amount, or legal status of Fulk's debt, in violation of 15 U.S.C. § 1692e(2)(A); (ii) threatening to take an " action that cannot legally be taken," in violation of 15 U.S.C. § 1692e(5); (iii) communicating or threatening to communicate personal credit information which is known or which should be known to be false, in violation of 15 U.S.C. § 1692e(8); (iv) using false representation or deceptive means to collect or attempt to collect a debt, in violation of 15 U.S.C. § 1692e(10); (v) 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); and (vi) filing suit to collect a debt barred by the applicable statute of limitations, in violation of 15 U.S.C. § § 1692e and 1692f. [Record No. 1, pp. 6-7]

LVNV argues that Fulk's claims should be dismissed because the four-year statute of limitations set out in KRS § 355.2-724 does not apply to an account or agreement for the extension of credit. [Record No. 8, pp. 4-12] Additionally, it contends that Fulk's allegations regarding interest do not rise to a violation of the FDCPA and that state court actions under an agreement or account are liquidated and allow for prejudgment interest. [ Id., pp. 12-14; Record No. 14, pp. 2-7] Fulk responds that his Complaint states actionable violations of the FDCPA and that the motion to dismiss should be denied. [Record No. 11]

II.

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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (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 ...


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