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Ham v. Midland Funding, LLC

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

April 4, 2018

TIFFANY HAM, PLAINTIFF
v.
MIDLAND FUNDING, LLC, DEFENDANT

          MEMORANDUM OPINION

          Thomas B. Russell, Senior Judge United States District Court

         This matter is before the Court on Defendant Midland Funding, LLC's motion to dismiss for failure to state a claim, [DN 7.] Plaintiff Tiffany Ham responded, [DN 10], and Midland replied, [DN 11.] Fully briefed, this matter is now ripe for decision. For the reasons stated herein, Defendant's motion is GRANTED.

         BACKGROUND

         The material facts of this case are not in dispute. This case arises out of the credit card debt of Plaintiff, Tiffany Ham, which Defendant Midland Funding, LLC (“Midland”) purchased from Synchrony Bank, the issuer of Ham's credit card. [DN 1 at 2 (Complaint).] Midland filed suit against Ham in McCracken County, Kentucky Circuit Court seeking to collect Ham's charged-off credit card debt. [Id.] Midland obtained a Default Judgment against Ham on August 26, 2016. [DN 1-2 at 2 (Default Judgment).] Therein, the state court wrote:

IT IS HEREBY ORDERED AND ADJUDGED that the Plaintiff is granted Judgment against the Defendant, TIFFANY HAM, for the sum of $5, 146.31, plus court costs as of the date of judgment in the amount of $228.00, and costs for the filing of any executions, including judgment liens and garnishments, which may issue hereafter and until this Judgment is satisfied.
There being no just reason for delay, this Judgment is final and appealable.

[Id.] On September 16, 2016, Midland filed a bill of costs itemizing $228.00 worth of costs it incurred during the state court lawsuit. [Id.] Next, on September 28, 2016, Midland's counsel filed and served an Affidavit For Order Of Wage Garnishment (“Garnishment Affidavit”) on Ham's employer, Hayes Brothers Trucking. [Id.; DN 7 at 3; DN 7-2; DN 7-3.] In the Garnishment Affidavit, Midland sought $5, 375.31, which represents the $5, 146.31 plus the court costs of $228.00, in addition to “Probable Court Costs” of $20.00. [DN 1 at 3; DN 7-2 at 2.]

         Ham brought the instant suit on September 25, 2017 alleging that Midland violated the Fair Debt Collection Practices Act (“FDCPA”) by including in the Garnishment Affidavit the “Probable Court Costs” amount of $20.00. [Id.] According to Ham, Midland had no legal right to collect the $20.00 amount, and therefore attempting to do so was a misrepresentation in connection with the collection of a debt in violation of the FDCPA. [Id.] Thereafter, Midland made the instant motion to dismiss Ham's claim pursuant to Federal Rule of Civil Procedure 12(b)(6). [DN 7 (Motion to Dismiss).]

         STANDARD

         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 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)). When considering a Rule 12(b)(6) motion to dismiss, the court must presume all of the factual allegations in the complaint are true and draw all reasonable inferences in favor of the non-moving party. Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008) (citing Great Lakes Steel v. Deggendorf, 716 F.2d 1101, 1105 (6th Cir. 1983)). “The court need not, however, accept unwarranted factual inferences.” Id. (citing Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987)). Should the well-pleaded facts support no “more than the mere possibility of misconduct, ” then dismissal is warranted. Iqbal, 556 U.S 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 Fed.Appx.. 369, 371 (6th Cir. 2014) (citing Iqbal, 556 U.S. at 677-79).

         DISCUSSION

         A. The Fair Debt Collection Practices Act (“FDCPA”)

         The FDCPA is an “extraordinarily broad” statute passed by Congress “to address the widespread and serious national problem of debt collection abuse.” Currier v. First Resolution Inv. Corp., 762 F.3d 529, 533 (6th Cir. 2014) (quoting Barany-Snyder v. Weiner, 539 F.3d 327, 333 (6th Cir. 2008)). “The FDCPA is a strict-liability statute: A plaintiff does not need to prove knowledge or intent, and does not have to have suffered actual damages.” Stratton v. Portfolio Recovery Assocs., LLC, 770 F.3d 443, 448-49 (6th Cir. 2014) (internal citations omitted). Rather, to prevail on an FDCPA claim, a plaintiff must establish four elements: (1) the plaintiff must be a “consumer” as defined by the FDCPA; (2) “the debt must arise out of transactions that are primarily for personal, family or household purposes”; (3) the defendant must be a “debt collector” as defined by the FDCPA; and (4) the “defendant must have violated one of the specific statutory provisions regarding debt collection communication and/or activity.” Wallace v. Manley Deas Kochalski LLC, Civil Action No. 3:13-CV-00031-H, 2013 WL 3338687, at *2 (W.D. Ky. Jul. 2, 2013) (citing Wallace v. Wash. Mut. Bank, 683 F.3d 323, 326 (6th Cir. 2012)) (internal quotation marks omitted). If the plaintiff establishes these elements, 15 U.S.C. § 1692k permits her to recover statutory or actual damages, along with costs and attorney's fees.

         Here, Ham specifically asserts that Midland violated 15 U.S.C. § 1692e and 15 U.S.C. § 1692f. [DN 1 at 3.] Section 1692e states that “[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” It then provides a nonexclusive list of actions that may violate FDCPA, including: “[t]he false representation of ... the character, amount, or legal status of any debt[, ] or any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt, ” 15 U.S.C. § 1692e(2) (internal subdivisions omitted); “[t]he threat to take any action that cannot be legally taken or that is not intended to be taken, ” id. § 1692e(5); or “[t]he use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer, ” id. § 1692e(10). Similarly, § 1692f provides that “[a] debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt, ” including “[t]he collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law, ” id. § 1692f(1).

         Though Ham brings her “FDCPA claims under both the false-or-misleading-representations section, § 1692e, and the unfair-practices section, § 1692f . . . both sets of claims reflect the same basic allegation.” Wise v. Zwicker & Assocs., P.C., 780 F.3d 710, 713 (6th Cir. 2015). Ham's core allegation is that Midland violated the FDCPA by attempting to collect the $20.00 in garnishment costs, an amount it was not legally entitled to recover.

         In its motion to dismiss Ham's complaint, Midland does not dispute that Ham has plausibly alleged the first three elements of a FDCPA claim. Rather, Midland's arguments focus on the fourth element; specifically, Midland argues that it did not violate any provisions of the FDCPA because it was fully entitled to recover the $20.00 amount of garnishment expenses from Ham pursuant to both the state court Default Judgment and Kentucky law. [See DN 7 at 1.]

         B. The McCracken County Default Judgment

         As the Court explained above, Midland obtained a default judgment against Ham in McCracken County Circuit Court on August 26, 2016. [DN 1-2 at 2.] The Default Judgment stated:

IT IS HEREBY ORDERED AND ADJUDGED that the Plaintiff is granted Judgment against the Defendant, TIFFANY HAM, for the sum of $5, 146.31, plus court costs as of the date of judgment in the amount of $228.00, and costs for the filing of any executions, including judgment liens and garnishments, which may issue hereafter and until this Judgment is ...

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