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Flecha v. Medicredit, Inc.

United States District Court, W.D. Texas, Austin Division

April 10, 2017




         Before the Court are Defendants' Motion for Judgment on the Pleadings (Dkt. No. 16); Plaintiff's Response (Dkt. No. 21); and Defendants' Reply (Dkt. No. 24). On January 23, 2017, the District Court referred the motion and related filings to the undersigned for Report and Recommendation pursuant to 28 U.S.C. § 636(b), Federal Rule of Civil Procedure 72 and Rule 1(d) of Appendix C of the Local Court Rules of the United States District Court for the Western District of Texas.


         On June 27, 2016, Plaintiff Nina Flecha (“Flecha”) filed this lawsuit, on behalf of herself and all others similarly situated, against Medicredit, Inc. (“Medicredit”) a debt collection agency, and Fidelity and Deposit Company of Maryland, the surety company for Medicredit (hereinafter “Defendants”) under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq. After Flecha failed to pay a $5, 166.71 medical bill owed to Seton Medical Center Hays (“Seton”), Seton assigned the alleged debt to Medicredit to collect the debt. On October 2, 2015, Medicredit sent a collection letter to Flecha which Flecha contends falsely threatened to take legal action against her without the intention to do so in violation of 15 U.S.C. § 1692e(5). Flecha alleges that the threat to take legal action was false because Medicredit's client, Seton, does not sue consumers for medical debts. Flecha alleges that Medicredit made the false threat in an attempt to coerce her into paying the balance in full on the alleged debt. Flecha seeks statutory damages in favor of all class members, costs and attorneys' fees.

         On September 23, 2016, Defendants filed the instant Motion for Judgment on the Pleadings pursuant to Federal Rule of Civil Procedure 12(c) contending that Flecha has failed to state a valid claim under the FDCPA because the collection letter sent to Flecha does not constitute a threat of litigation under 15 U.S.C. § 1692e(5).


         A motion under Federal Rule of Civil Procedure 12(c) is “designed to dispose of cases where the material facts are not in dispute and a judgment on the merits can be rendered by looking to the substance of the pleadings and any judicially noticed facts.” Hebert Abstract Co., Inc. v. Touchstone Props., Ltd., 914 F.2d 74, 76 (5th Cir. 1990) (internal citations omitted). Thus, a Rule 12(c) motion should be granted if there is no issue of material fact, and if the pleadings show that the moving party is entitled to judgment as a matter of law. Greenberg v. Gen. Mills Fun Grp., Inc., 478 F.2d 254, 256 (5th Cir. 1973).

         The standard for deciding a Rule 12(c) motion is the same as for a Rule 12(b)(6) motion to dismiss for failure to state a claim. In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007), cert. denied, 552 U.S. 1182 (2008). Thus, “[t]he central issue is whether. . .the complaint states a valid claim for relief.” Great Plains Tr. Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 312 (5th Cir. 2002) (citations omitted). “The district court may dismiss a claim when it is clear that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief.” Id. (internal citations and quotations omitted). In analyzing the complaint, the Court accepts all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff. Id. at 312-13. “The tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions, ” and courts “are not bound to accept as true a legal conclusion couched as a factual allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations and quotations omitted). The plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility 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.

         III. ANALYSIS

         A. The FDCPA

         The FDCPA was enacted “to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.” 15 U.S.C § 1692(e). Section 1692e generally prohibits “false, deceptive, or misleading representation[s] or means in connection with the collection of any debt.” 15 U.S.C. §1692e. The section provides a non-exhaustive list of examples of such conduct, including “[t]he threat to take any action that cannot legally be taken or that is not intended to be taken, ” and “[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.” 15 U.S.C. §1692e(5) and (10). Congress “clearly intended the FDCPA to have a broad remedial scope” and “[t]he FDCPA should therefore be construed liberally in favor of the consumer.” Daugherty v. Convergent Outsourcing, Inc., 836 F.3d 507, 511 (5th Cir. 2016) (quoting Serna v. Law Office of Joseph Onwuteaka, P.C., 732 F.3d 440, 445 n. 11(5th Cir. 2013)).

         To determine whether a collection letter contains false, deceptive, or misleading representations, a court must view the letter from the perspective of an “unsophisticated or least sophisticated consumer.” Daugherty, 836 F.3d at 511 (quoting Goswami v. Am. Collections Enter., 377 F.3d 488, 495 (5th Cir. 2004)). The Court must “assume that the plaintiff-debtor is neither shrewd nor experienced in dealing with creditors, though not “one tied to the very last rung on the [intelligence or] sophistication ladder.” Id. (internal quotations and citations omitted). “In the Fifth Circuit, the issue of whether an unsophisticated consumer would perceive a collection letter as deceptive or unfair is a question of fact that, if well-pleaded, avoids dismissal on a Rule 12(b)(6) motion.” Carter v. First Nat'l Collection Bureau, Inc., 135 F.Supp.3d 565, 569 (S.D. Tex. 2015) (citing Gonzalez v. Kay, 577 F.3d 600, 605-06 (5th Cir. 2009), cert. denied, 559 U.S. 936 (2010)). Because whether a collection letter is a question of fact, ‘[d]ismissal is appropriate only when it is apparent from a reading of the letter that not even a significant fraction of the population would be misled by it.'” Daugherty, 836 F.3d at 512 (quoting McMahon v. LVNV Funding, 744 F.3d 1010, 1020 (7th Cir. 2014)). And “because district judges are not good proxies for the unsophisticated consumer whose interests the FDCPA protects, district courts should be hesitant to dismiss § 1692e and § 1692f claims.” Carter, 135 F.Supp.3d at 569 (quoting Delgado v. Capital Mgmt. Servs. LP, 2013 WL 1194708 at * 3 (C.D. Ill. March 22, 2013)). “Only the rarest FDCPA complaint that alleges a dunning letter is misleading or confusing may be dismissed on the pleadings.” Samuel v. Approved Credit Solutions, 2015 WL 4548745, at *2 (S.D. Ind. July 28, 2015).

         B. Section 1692e(5) and the Letter

         With regard to a threat of legal action, a collection letter violates § 1692e(5) if (1) a debtor would reasonably believe that it threatens legal action; and (2) the debt collector does not intend to take legal action. United States v. Nat'l Fin. Servs., Inc., 98 F.3d 131, 135 (4th Cir. 1996); Taylorv. Pinnacle Credit Services, LLC, 2011 WL 1303430 at * 11 (N.D. Cal. April 4, 2011). Defendants do not dispute, at least for the purposes of their Motion for Judgment on the Pleadings, that Seton does not sue consumers for medical debts and thus Flecha has demonstrated that Seton had no intention of taking legal action against her. Dkt. No. 16 at 3. Therefore, the Court need only determine whether Flecha has alleged sufficient facts to meet the first ...

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