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noting that the plaintiff failed to "allege[] that the Defendant's actions violated any specific subsection of § 1692f"; adding that, to the extent the plaintiff "allege[d] that the Defendant has violated § 1692f by failing to provide the Plaintiff, upon written request, with verification of the validity of the debt, and persisting in attempts to collect the debt . . . the proper vehicle for this type of claim is § 1692g(b), and not § 1692f" and so dismissing the § 1692f claim as "redundant"
Summary of this case from Quigley v. Verizon WirelessOpinion
CV 05-3881 FMC (MANx).
July 29, 2005
ORDER GRANTING AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS
ORDER GRANTING DEFENDANT'S MOTION TO STRIKE
This matter is before the court on Defendant's Motion to Dismiss (Docket No. 4) and Motion to Strike (Docket No. 5), filed June 3, 2005. The Court has read and considered the moving and opposition documents submitted in connection with these motions. For the reasons and in the manner set forth below, the Court hereby GRANTS AND DENIES IN PART the Defendants' Motion to Dismiss and GRANTS the Defendants' Motion to Strike.
I. Background
In early February 2005, the Plaintiff received a collection notice from the Defendant Midland Credit Management, Inc. ("Midland"), on a debt first owed to First USA Bank, in the amount of $6,263.00. Complaint at ¶ 8. The Plaintiff alleges that on or about February 2005, he sent the Defendant a letter disputing the validity of the debt and asking the Defendant to prove that it had authority to collect the debt. Complaint at ¶ 9. The Plaintiff further alleges that the Defendant has not replied to the Plaintiff's letter, and has continued in its efforts to collect the debt, allegedly in violation of the Fair Debt Collection Practices Act ("FDCPA"), and California Unfair Competition Law. Complaint at ¶ 10. On April 19, 2005, the Plaintiff filed an action in state court for violations of (1) 15 U.S.C. § 1692(f); (2) 15 U.S.C. § 1692(g)(b); (3) 15 U.S.C. § 1692(k) and (4) California Business Professions Code § 17200, et. seq. On May 26, 2005, the Defendant removed the action to this court.
II. Standard for Motion to Dismiss
The present Motion to Dismiss requires the Court to determine whether the complaint states any claim upon which relief may be granted. See Fed.R.Civ.P. 12(b)(6). The Court will not dismiss the claims for relief unless the Plaintiff cannot prove any set of facts in support of the claims that would entitle him to relief. See Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1295 (9th Cir. 1998). In limiting its inquiry to the content of the complaint, the Court must take the allegations of material fact as true and construe them in the light most favorable to the plaintiff. See Western Reserve Oil Gas Co. v. New, 765 F.2d 1428, 1430 (9th Cir. 1985). Additionally, the Court "is not required to accept legal conclusions cast in the form of factual allegations if those conclusions cannot be reasonably drawn from the facts alleged." Clegg v. Cult Awareness Network, 18 F.3d 752, 755 (9th Cir. 1994).
III. Discussion
The Defendant moves to dismiss (1) the Plaintiff's 15 U.S.C. § 1692(g) cause of action; (2) the Plaintiff's 15 U.S.C. § 1692(f) cause of action; (3) the Plaintiff's 15 U.S.C. § 1692(k) cause of action; and (4) the Plaintiff's California Business Professions Code § 17200 cause of action.
A. Federal Law Claims
15 U.S.C. § 1692(g)
Section 1692(g)(b) of Title 15 of the U.S.C. provides:
If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) of this section that the debt, or any portion thereof is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of the judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.
The Plaintiff has adequately pleaded that the Defendant violated § 1692(g). In this case, the Plaintiff alleges that he received a collection notice from the Defendant in early February 2005. The Plaintiff alleges that on or about February 2005, he sent the Defendant a letter disputing the validity of the debt and asking the Defendant to verify that it had the authority to collect the debt. The Plaintiff alleges that despite his February 2005 letter to the Defendant disputing the validity of the debt, the Defendant did not mail verification of the validity of the debt to Plaintiff, and the Defendant did not cease in its efforts to collect the debt.
The Plaintiff does not specifically allege that he sent his February 2005 letter within 30 days of receipt of the collection notice, but there are only 28 calendar days in February 2005. Thus, in construing the facts in the Complaint in the light most favorable to the Plaintiff, the 30-day requirement is satisfied. Similarly, the Plaintiff does not specifically allege that the February 2005 collection notice was the first collection notice he received that triggered the § 1692(g) 30-day deadline. However, in construing the facts in the Complaint in the light most favorable to the Plaintiff, the Plaintiff has adequately pleaded a claim under § 1692(g) because the February 2005 collection notice could be the notice that triggered the § 1692(g) 30-day deadline. Therefore, the Defendant's Motion to Dismiss Plaintiff's § 1692(g) claim is denied.
15 U.S.C. § 1692(f)Section 1692(f) of Title 15 of the United States Code provides a list of proscribed activities that constitute unfair practices on behalf of a debt collector. The Plaintiff has not alleged that the Defendant's actions violated any specific subsection of § 1692(f). Instead, the Plaintiff alleges that the Defendant has violated § 1692(f) by failing to provide the Plaintiff, upon written request, with verification of the validity of the debt, and persisting in attempts to collect the debt. Although a debt collector's persisting in attempts to collect debt without providing a consumer, upon written request, with information verifying the validity of the debt might be characterized as an "unfair practice", the proper vehicle for this type of claim is § 1692(g)(b), and not § 1692(f). Accordingly, the Plaintiff's 1692(f) claim is redundant. It does not appear that any of Plaintiff's allegations in the Complaint give rise to a cause of action under § 1692(f). Therefore, Defendant's Motion to Dismiss the Plaintiff's § 1692(f) claim is granted with leave to amend.
15 U.S.C. § 1692(k)Section 1692(k) is a damages statute that does not form its own independent basis for a cause of action. The Plaintiff concedes that § 1692(k) does not form the basis for a cause of action. Opp. to Motion to Dismiss at 6. Therefore, the Defendant's Motion to Dismiss the Plaintiff's § 1692(k) claim is granted without leave to amend.
B. State Law Claim
The Court now turns to the Plaintiff's state law unfair competition claim, which is also challenged in Defendant's motion to dismiss. The Defendant did not challenge the substance of Plaintiff's California Business Professions Code § 17200 claim ("§ 17200"), but instead challenged it on the basis that it was a supplemental claim that hinged on federal claims that would be dismissed. Since the 15 U.S.C. § 1692(g) claim has not been dismissed, the court has supplemental jurisdiction over the § 17200 claim. See 28 U.S.C. § 1367. The court now looks at whether or not the Plaintiff has adequately pleaded a claim for which relief can be granted pursuant to § 17200.
Cal. Bus. Prof. Code § 17200California Business and Professions Code § 17200 prohibits acts of unfair competition, including "any [1] unlawful, [2] unfair or [3] fraudulent business practice." Unlawful practices are any activities that are forbidden by law. Samura v. Kaiser Foundation Health Plan, Inc., 17 Cal. App. 4th 1284, 1292 (1992). Unfair acts are those that "offend established public policy" or are "immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers." Podolsky v. First Healthcare Corp., 50 Cal. App. 4th 632 (1996).
The Plaintiff has adequately pleaded that the Defendant engaged in an unlawful practice. "Virtually any state, federal or local law can serve as the predicate for an action under § 17200." Podolsky, 50 Cal. App. 4th at 647. Here, the Plaintiff has properly alleged a violation of the FDCPA. Therefore, the Plaintiff has properly stated a claim for unlawful business practices under § 17200.
The Plaintiff has also pleaded unfair business practices under § 17200. The Plaintiff alleges that the Defendant engaged in unfair business practices by attempting to collect a debt from the Plaintiff without providing the Plaintiff with verification of the validity of the debt or documentation of the Defendant's authority to collect the debt. The Plaintiff alleges that these actions constitute an unfair business practice. The test for "unfair" practices under § 17200 is intentionally broad, see id.; these allegations are sufficient to state a claim for unfair business practices under § 17200.
The Defendant's motion to dismiss the unfair competition claim is therefore denied.
IV. Standard for Motion to Strike
Fed.R.Civ.P. 12(f) provides, "the court may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." The motion is disfavored because it "proposes a drastic remedy." 2 Moore's Federal Practice § 12.37[1] (3d ed. 2004). To prevail on a motion to strike, the moving party must show "that the challenged matter `has no bearing on the subject matter of the litigation and that its inclusion will prejudice the defendants.'" Id. at § 12.37[3]. The absence of allegations supporting a particular theory of recovery should not provide grounds for striking a claim. Id. However, requests to strike certain types of relief, such as punitive damages, may be granted if "such relief is not recoverable under the applicable law." Id.; Bureerong v. Uvawas, 922 F. Supp. 1450, 1479 n. 34 (C.D. Cal. 1996).
V. Discussion
The Defendant moves to strike (1) Paragraphs 16, 21, and 26, in their entirety, and portions of the Complaint praying for punitive damages under the FDCPA cause of action; (2) the Plaintiff's prayer for injunctive relief under the FDCPA cause of action; and (3) Paragraphs 29 and 30, in their entirety, and portions of the Complaint praying for compensatory, incidental and punitive damages under the § 17200 cause of action.
Requests for Punitive Damages under the FDCPA
The Defendant moves to strike Paragraphs 16, 21, and 26, and the Plaintiff's prayer for punitive damages on the grounds that they constitute "redundant, immaterial, impertinent or scandalous matter" because, as a matter of law, punitive damages are not available under the FDCPA. Paragraph 16 is contained in the dismissed 1692(f) cause of action and paragraph 26 is contained in the dismissed 1692(k) cause of action. It is therefore unnecessary for the Court to rule on a motion to strike paragraphs 16 and 26. Paragraph 21 and the Plaintiff's prayer for punitive damages are contained in the remaining FDCPA cause of action. Paragraph 21 contains the following language:
Furthermore, Defendant's conduct, as alleged above, was intentional, malicious, fraudulent and oppressive as defined in [California] Civil Code § 3294, and was intended to cause damage and injury to the Plaintiffs [sic], who is therefore entitled to an award of exemplary and punitive damages in an amount to be determined by the trier of fact.
The Court now examines whether punitive damages are recoverable under the FDCPA. The FDCPA allows for the recovery of actual damages plus a separate statutory award of "such additional damages as the court may allow," up to $1,000. 15 U.S.C. § 1692k (a)(2)(A). Any award of additional damages is limited to $1,000 per action, and not $1,000 per violation. Wright v. Finance Service of Norwalk, Inc., 22 F. 3d 647 (6th Cir. 1994). In setting the amount of statutory damages, the Court considers "the frequency and persistence of the noncompliance by the debt collector, the nature of such noncompliance, and the extent to which noncompliance was intentional." 15 U.S.C. § 1692(b)(1). The Plaintiff is entitled to statutory damages even if the Plaintiff has not suffered any actual damage. Baker v. GC Services Corp., 677 F. 2d 775 (9th Cir. 1982).
The Plaintiff cites Thomas v. Pierce, Hamilton, and Stern, Inc., 967 F. Supp. 507, 509 (N.D. Ga., 1997), for the proposition that punitive damages are recoverable under the FDCPA. The Thomas court held "The only reasonable reading of `additional,' considering the ordinary meaning of the term, is that `additional damages' includes punitive damages and that the discretionary statutory award is meant to preclude a separate award of punitive damages." Id. The Thomas court goes on to say "inferring that Congress intended to allow punitive damages under the FDCPA would create an absurd and anomalous result." Id. at 512. The holding of Thomas cuts against the Plaintiff's argument that punitive damages are available under the FDCPA. Several other cases have also held that punitive damages are not available under the FDCPA. See Gervais v. O'Connell, Harris Associates, Inc., 297 F. Supp. 2d 435, 440 (D. Conn. 2003); Boyce v. Attorney's Dispatch Service, C-39-94-397, WL 33495605, at 2 (S.D. Ohio April 27, 1999); Aronson v. Creditrust Corp, 7 F. Supp. 2d 589, 594 (W.D. Pa. 1998).
In Aronson, the court held "punitive damages are not recoverable under the FDCPA and therefore, Defendant's Motion to Strike Plaintiff's request for punitive damages in relationship to his FDCPA claims is granted and said request ordered stricken from the Complaint." Id.
This Court agrees that punitive damages are not available under the FDCPA. The "additional damages" award of the FDCPA is meant to preclude a separate award of punitive damages. The legislature has already provided a statutory damage remedy that is punitive in nature. Allowing an additional separate award of punitive damages would be contrary to legislative intent and would render the limited statutory remedy of "additional damages" unnecessary. Because this Court concludes that punitive damages are not available under the FDCPA, the Defendant's motion to strike paragraph 21 and the Plaintiff's prayer for punitive damages under the FDCPA is granted. Therefore, paragraph 21 is stricken from the Complaint in its entirety; the item in Plaintiff's prayer "D. for punitive and exemplary damages," is stricken from the Complaint under the FDCPA cause of action.
Prayer for Injunctive Relief under the FDCPA
The Defendant moves to strike portions of the Plaintiff's complaint praying for injunctive relief under the FDCPA on the grounds that injunctive relief is not an available remedy under the FDCPA. In the Plaintiff's opposition to the Defendant's motion to strike, the Plaintiff argues that "California Plaintiffs may seek both injunctive relief and restitution and disgorgement under California UCL by proving that a defendant's FDCPA violations constitute an unfair business practice." Opp. to Mot. to Strike at 3. The key phrase in the Plaintiff's argument is "under California UCL" because injunctive relief is not an available form of relief to private plaintiff's under the FDCPA. Weiss v. Regal Collections, 385 F. 3d 337, 341-42 (3d Cir. 2004); Newman v. Checkrite Cal., Inc., CIV-S-93 1557 LKK PAN, 1994 WL 896637, at 2 (E.D. Cal. Feb. 18, 1994). Because injunctive relief is not available to private Plaintiff's under the FDCPA, the Court grants the Defendant's motion to strike the Plaintiff's prayer for injunctive relief. Therefore, the item in the Plaintiff's prayer "C. for injunctive relief," is stricken from the Complaint under the FDCPA cause of action.
Requests for Damages under § 17200
The Defendant moves to strike paragraphs 29 and 30, and those portions of the Complaint seeking compensatory, incidental and punitive damages under the § 17200 cause of action on the grounds that damages are not available under § 17200. In the Plaintiff's opposition to the Defendant's motion to strike, the Plaintiff argues that: damages are an available form of relief for common law unfair competition; the only relief that is barred under § 17200 is "nonrestitutionary disgorgement;" and punitive and compensatory damages are recoverable under § 17200 premised on a 15 U.S.C. § 1692 claim. Opp. to Motion to Strike at 5. Although damages may be an available form of remedy for common law unfair competition, neither nonrestitutionary nor punitive damages are an available form of remedy under California Business and Professions Code § 17200. See Korea Supply Co. V. Lockheed Martin Corp., 29 Cal. 4th 1134, 1148 (2003); Bank of The West v. Superior Court, 2 Cal. 4th 1254, 1266 (1992); Alch v. Superior Court, 122 Cal App. 4th 339, 404 (2004).
Because damages are not an available form of remedy for violations of § 17200, the Defendant's motion to strike paragraphs 29 and 30, and the Plaintiff's prayers for compensatory, incidental and punitive damages from the Complaint is granted. Therefore, paragraphs 29 and 30 are stricken from the Complaint in their entirety. The following items in the Plaintiff's prayer for relief: "A. For compensatory damages according to proof;" "B. for incidental damages according to proof;" and "D. for punitive and exemplary damages;" are stricken from the Complaint under the § 17200 cause of action.
VI. Conclusion
For the reasons stated above, the Defendant's Motion to Dismiss is hereby GRANTED IN PART and DENIED IN PART. The motion to dismiss the 1692(g) claim is DENIED. The motion to dismiss the 1692(f) claim is GRANTED WITH LEAVE TO AMEND. The motion to dismiss the 1692(k) claim is GRANTED WITHOUT LEAVE TO AMEND. The motion to dismiss the California Business Professions Code § 17200 claim is DENIED. The Motion to Strike is GRANTED. Paragraph 21 is stricken from the complaint in its entirety. The prayer for punitive damages under the FDCPA cause of action is stricken from the complaint. The prayer for injunctive relief under the FDCPA cause of action is stricken from the complaint. Paragraphs 29 and 30 are stricken from the complaint in their entirety. The prayers for compensatory damages, incidental damages, and punitive damages under the § 17200 cause of action are stricken from the Complaint.
An amended Complaint is to be filed within 15 days from the date of this order. If the Complaint is not amended, the Defendant's answer is to be filed within 20 days after the deadline to amend.