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Hawksley v. Weltman, Weinberg & Reis Co., P.S.C.

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

January 4, 2017



          Thomas B. Russell, Senior Judge

         This case is before the Court upon Defendant Weltman, Weinberg & Reis Co., P.S.C.'s (WWR) motion to dismiss pursuant to Federal Rule of Procedure 12(b)(6). [DN 8.] Plaintiff Christopher Hawksley has responded, [DN 10], and WWR has replied, [DN 13]. Additionally, Hawksley filed a sur-reply and supplemental authority, [DN 16; DN 20; DN 22], to which WWR responded and objected, respectively, [DN 19; DN 21; DN 23]. Fully briefed, this matter is ripe for adjudication.

         WWR's motion requires the Court to answer two narrow, related questions. First, can a debt collector violate the Fair Debt Collection Practices Act (FDCPA) by failing to follow the proper state procedure to recover its costs before filing a judgment lien, when a state court judgment previously awarded the debt collector its costs? Second, can a debt collector violate the FDCPA by including in its costs a lien recording fee that was not recoverable under state law, when state law was unclear as to whether the fee was recoverable at the time the lien was filed? As explained below, at least at this stage of the case, the answer to both questions is yes. Therefore, WWR's motion to dismiss [DN 8] must be DENIED.

         I. Facts and Procedural History

         The salient facts of this case, taken from Hawksley's complaint and the relevant state court documents, are not seriously disputed by the parties. In late 2014, Capital One Bank, represented by WWR, filed suit against Christopher Hawksley in Bullitt County, Kentucky District Court to collect a debt. [DN 1 at 1.] WWR moved for and obtained summary judgment against Hawksley “for the principal balance of $3, 235.77, plus its court costs incurred herein” on September 17, 2015. [DN 1-1 at 2.] Shortly thereafter, on October 13, WWR filed a “Notice of Judgment Lien on Real Estate” in Bullitt District Court. [DN 1-2 at 2.] WWR's judgment lien listed the following amounts owed:

Total judgment amount as of October 07, 2015: $3362.27
Principal amount: $3235.77
Accrued interest: $0.00
Interest rate: 0.000%
Costs: $126.50
Attorney fees: $0.00

[Id.] Hawksley objected, claiming that WWR's “costs” included a $13.00 lien recording fee that was not recoverable by statute or rule. The Bullitt District Court agreed, and in a November 5 order, held that “[t]he allowable costs pursuant to the bill of costs filed by Plaintiff are $73.50 for the filing fee and $40.00 for fees incident to service of process, with the total costs to be paid by Defendant being $113.50.” [DN 1-3 at 2.] The court directed WWR to either release the judgment lien or filed an amended lien consistent with the court's order. [Id.]

         Instead, on November 12, WWR filed a motion to alter, amend, or vacate the district court's November 5 order. [DN 8-2 at 1.] WWR claimed that despite the court's earlier ruling, the $13.00 lien recording fee was in fact properly taxable as a cost under Kentucky law. See generally [id.] After briefing, the Bullitt District Court denied WWR's motion on January 25, 2016. [DN 8-5 at 1.] Accordingly, on February 3, WWR mailed a release of judgment lien to the district court clerk, and then filed a new lien that did not include the $13.00 recording fee. [DN 8-6 at 1; DN 8-7 at 1.]

         Hawksley filed the instant suit, alleging that WWR's actions violated the Fair Debt Collection Practices Act. Particularly, Hawksley claims that “[t]he Lien filed by [WWR] on Capital One's behalf was improper and in violation of the FDCPA because a lien filing fee is not a recoverable cost under Kentucky [law], ” and that “[e]ven if lien filing fees were recoverable . . . [WWR] did not file the bill of costs as required by CR 54.04.” [DN 1 at 2.] According to Hawksley, these two actions violate seven separate provisions of the FDCPA. [Id. at 9-10.] He seeks statutory and actual damages under 15 U.S.C. § 1692(k) and asserts his claims on behalf of all similarly-situated Kentucky consumers. [Id. at 10; id. at 6-9.]

         WWR moved to dismiss Hawksley's complaint, arguing that under Federal Rule of Civil Procedure 12(b)(6), the allegations in his complaint fail to establish any violations of the FDCPA as a matter of law. See [DN 8.] Following several rounds of briefing, WWR's motion is now ripe for adjudication.

         II. Standard of Review

         A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). In order to survive a motion to dismiss under Civil Rule 12(b)(6), a party must “plead enough factual matter to raise a ‘plausible' inference of wrongdoing.” 16630 Southfield Ltd. P'ship v. Flagstar Bank, F.S.B., 727 F.3d 502, 504 (6th Cir. 2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). A claim becomes plausible “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 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)). Should the well-pleaded facts support no “more than the mere possibility of misconduct, ” then dismissal is warranted. Id. at 679. The Court may grant a motion to dismiss “only if, after drawing all reasonable inferences from the allegations in the complaint in favor of the plaintiff, the complaint still fails to allege a plausible theory of relief.” Garceau v. City of Flint, 572 F. App'x 369, 371 (6th Cir. 2014) (citing Iqbal, 556 U.S. at 677-79).

         III. Discussion

         Hawksley advances two theories of FDCPA liability against WWR, both of which may eventually entitle him to relief in this case. Although WWR never lost its ultimate entitlement to collect its costs from Hawksley, WWR did not follow the proper state procedure laid out in Kentucky Rule of Civil Procedure 54.04(2). Similarly, WWR included a potentially unrecoverable lien recording fee in its judgment lien. Taking as true Hawksley's ...

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