Opinion
Civil 3:22-CV-1044
05-22-2023
PAUL MORGAN, Plaintiff, v. DISCOVER CARD, Defendant.
Mariani, Judge.
REPORT AND RECOMMENDATION
Martin C. Carlson, United States Magistrate Judge.
I. Statement of Facts and of the Case
This case comes before us for consideration of a motion to dismiss filed by the defendant, Discover Card. (Doc. 4). With respect to this motion, the well-pleaded facts set forth in the plaintiff's complaint, which guide our determination of this motion, are as follows:
Paul Morgan's complaint alleges that his deceased spouse, Roxanne Morgan, had a credit card account in her name with the defendant, Discover Card. (Doc. 1-1 ¶ 9). Mrs. Morgan used this card exclusively up to the time of her death in November of 2019. (Id., ¶¶ 9-10). Following the passing of his wife, Paul Morgan received repeated telephone calls from Discover attempting to collect a $20,000 credit card debt allegedly owed by his late wife. During these repeated calls, which took place in 2020, Morgan avers that Discover Card representatives falsely claimed that he was responsible for this debt. (Id., ¶ 11). Ultimately, Mr. Morgan retained counsel who has engaged in discussions with attorneys representing Discover Card aimed at resolving this credit card debt issue beginning in August of 2020. (Id., ¶¶ 12-21). As of the date of the filing of this complaint, June 2022, these discussions had not fully resolved the question of Mr. Morgan's responsibility for this debt. (Id.)
Based upon these averments, Morgan filed a complaint in state court which has been removed to federal court by Discover Card. This complaint alleges that Discover Card's conduct violated the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692a, et seq. (“FDCPA”), Pennsylvania's Fair Credit Extension Uniformity Act, 73 P.S. § 2270.1, et seq. (“FCEUA”), and Pennsylvania's Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 202-1, et seq. (“UTPCPL”) by allegedly attempting to collect a debt that purportedly belongs to his deceased spouse.
Discover Card has now moved to dismiss this complaint, arguing that the complaint fails to state a claim under any of these state and federal statutes upon which relief may be granted. (Doc. 4). This motion is fully briefed and is, therefore, ripe for resolution. For the reasons set forth below, it is recommended that the motion to dismiss be granted.
II. Discussion
A. 12(b)(6) Motion to Dismiss - Standard of Review
A motion to dismiss tests the legal sufficiency of a complaint. It is proper for the court to dismiss a complaint in accordance with Rule 12(b)(6) of the Federal Rules of Civil Procedure only if the complaint fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). With respect to this benchmark standard for the legal sufficiency of a complaint, the United States Court of Appeals for the Third Circuit has aptly noted the evolving standards governing pleading practice in federal court, stating that:
Standards of pleading have been in the forefront of jurisprudence in recent years. Beginning with the Supreme Court's opinion in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), continuing with our opinion in Phillips [v. County of Allegheny, 515 F.3d 224, 230 (3d Cir. 2008)], and culminating recently with the Supreme Court's decision in Ashcroft v. Iqbal, BU.S-, 129 S.Ct. 1937 (2009), pleading standards have seemingly shifted from simple notice pleading to a more heightened form of pleading, requiring a plaintiff to plead more than the possibility of relief to survive a motion to dismiss.Fowler v. UPMC Shadyside, 578 F.3d 203, 209-10 (3d Cir. 2009).
In considering whether a complaint fails to state a claim upon which relief may be granted, the court must accept as true all allegations in the complaint and all reasonable inferences that can be drawn therefrom are to be construed in the light most favorable to the plaintiff. Jordan v. Fox, Rothschild, O'Brien & Frankel, Inc., 20 F.3d 1250, 1261 (3d Cir. 1994). However, a court “need not credit a complaint's bald assertions or legal conclusions when deciding a motion to dismiss.” Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997). Additionally, a court need not “assume that a . . . plaintiff can prove facts that the . . . plaintiff has not alleged.” Associated Gen. Contractors of Cal. v. California State Council of Carpenters, 459 U.S. 519, 526 (1983). As the Supreme Court held in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), in order to state a valid cause of action, a plaintiff must provide some factual grounds for relief which “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of actions will not do.” Id., at 555. “Factual allegations must be enough to raise a right to relief above the speculative level.” Id.
In keeping with the principles of Twombly, the Supreme Court has underscored that a trial court must assess whether a complaint states facts upon which relief can be granted when ruling on a motion to dismiss. In Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Supreme Court held that, when considering a motion to dismiss, a court should “begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.” Id., at 679. According to the Supreme Court, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id., at 678. Rather, in conducting a review of the adequacy of a complaint, the Supreme Court has advised trial courts that they must:
[B]egin by identifying pleadings that because they are no more than conclusions are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.Id., at 679.
Thus, following Twombly and Iqbal, a well-pleaded complaint must contain more than mere legal labels and conclusions; it must recite factual allegations sufficient to raise the plaintiff's claimed right to relief beyond the level of mere speculation. As the United States Court of Appeals for the Third Circuit has stated:
[A]fter Iqbal, when presented with a motion to dismiss for failure to state a claim, district courts should conduct a two-part analysis. First, the factual and legal elements of a claim should be separated. The District Court must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions. Second, a District Court must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a “plausible claim for relief.” In other words, a complaint must do more than allege the plaintiff's entitlement to relief. A complaint has to “show” such an entitlement with its facts.Fowler, 578 F.3d at 210-11.
As the Court of Appeals has observed:
The Supreme Court in Twombly set forth the “plausibility” standard for overcoming a motion to dismiss and refined this approach in Iqbal. The plausibility standard requires the complaint to allege “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570, 127 S.Ct. 1955. A complaint satisfies the plausibility standard when the factual pleadings “allow[ ] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal,
129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). This standard requires showing “more than a sheer possibility that a defendant has acted unlawfully.” Id. A complaint which pleads facts “merely consistent with” a defendant's liability, [ ] “stops short of the line between possibility and plausibility of ‘entitlement of relief.' ”Burtch v. Milberg Factors, Inc., 662 F.3d 212, 220-21 (3d Cir. 2011), cert. denied, 132 S.Ct. 1861 (2012).
In practice, consideration of the legal sufficiency of a complaint entails a three-step analysis:
First, the court must “tak[e] note of the elements a plaintiff must plead to state a claim.” Iqbal, 129 S.Ct. at 1947. Second, the court should identify allegations that, “because they are no more than conclusions, are not entitled to the assumption of truth.” Id., at 1950. Finally, “where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief.”Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010) (quoting Iqbal, 129 S.Ct. at 1950).
In considering a motion to dismiss, the court generally relies on the complaint, attached exhibits, and matters of public record. Sands v. McCormick, 502 F.3d 263, 268 (3d Cir. 2007). The court may also consider “undisputedly authentic document[s] that a defendant attached as an exhibit to a motion to dismiss if the plaintiff's claims are based on the [attached] documents.” Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993). Moreover, “documents whose contents are alleged in the complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered.” Pryor v. Nat'l Collegiate Athletic Ass'n, 288 F.3d 548, 560 (3d Cir. 2002); see also U.S. Express Lines, Ltd. v. Higgins, 281 F.3d 382, 388 (3d Cir. 2002) (holding that “[a]lthough a district court may not consider matters extraneous to the pleadings, a document integral to or explicitly relied upon in the complaint may be considered without converting the motion to dismiss in one for summary judgment”). However, the court may not rely on other parts of the record in determining a motion to dismiss, or when determining whether a proposed amended complaint is futile because it fails to state a claim upon which relief may be granted. Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994).
B. The Defendant's Motion to Dismiss Should be Granted.
1. Morgan's Federal Claim Fails.
At the outset, in his complaint Morgan appears to assert a federal claim under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692a, et seq. This claim relates to Discover Card's efforts to recover the debt owed to it from Mr. Morgan, efforts that allegedly took place between November 2019 and August 2020. However, to the extent that Morgan is advancing such a claim, these FDCPA allegations fail for at least two reasons.
First, the FDCPA only applies to “debt collectors,” a term which is defined by statute to mean “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a (6) (emphasis added). Thus, by its terms the FDCPA only applies to third party entities who are engaged in collecting debts owed to some creditor by a debtor. This statute does not apply to creditors who are directly engaged in attempting to collect moneys owed to them. As the Third Circuit has observed:
The FDCPA's provisions generally apply only to “debt collectors.” Pettit v. Retrieval Masters Creditors Bureau, Inc., 211 F.3d 1057, 1059 (7th Cir.2000). Creditors-as opposed to “debt collectors”-generally are not subject to the FDCPA. See Aubert v. American Gen. Fin., Inc., 137 F.3d 976, 978 (7th Cir.1998) (“Creditors who collect in their own name and whose principal business is not debt collection ... are not subject to the Act.... Because creditors are generally presumed to restrain their abusive collection practices out of a desire to protect their corporate goodwill, their debt collection activities are not subject to the Act unless they collect under a name other than their own.”); Staub, 626 F.2d at 277 (“The [FDCPA] does not apply to persons or businesses collecting debts on their own behalf.”); Hon. D. Duff McKee, Liability of Debt Collector to Debtor under the Federal Fair Debt Collection Practices Act, 41 Am.Jur. Proof of Facts 3d 159, at§ 3 (1997) [hereinafter McKee] (“[I]nterestingly, the term ‘debt collector' does not include the creditor collecting its own debt.”).Pollice v. Nat'l Tax Funding, L.P., 225 F.3d 379, 403 (3d Cir. 2000). Thus, it is well settled that “[c]reditors-as opposed to ‘debt collectors'-generally are not subject to the [Act].” Tepper v. Amos Fin., LLC, 898 F.3d 364, 366 (3d Cir. 2018).
There is a narrow exception to this rule that applies to any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. § 1692a(6). Tepper 898 F.3d at 366. However, Morgan has not alleged any well-pleaded facts that would bring Discover Card's conduct within this statutory exception to the general rule that the FDCPA does not apply to creditors, but only I extends to debt collectors.. Quite the contrary, the complaint clearly asserts that Discover, acting in its own name, was attempting to collect this debt.
In the instant case, Morgan's complaint clearly asserts that his deceased spouse had a credit card in her name with Discover, and Discover Card was attempting to collect this debt when it contacted the plaintiff. Since Morgan alleges that Discover Card was attempting to collect its own debt in its own name in this case, it was acting as a creditor and not as a debt collector, as that term is defined by the FDCPA. Therefore, the provisions of the FDCPA do not apply here and this federal claim fails as a matter of law.
In addition, we note that the conduct allegedly engaged in by Discover Card appears from the complaint to have transpired between the death of Mrs. Morgan in November of 2019 and August 5, 2020, when Mr. Morgan's counsel first wrote to Discover Card. With these factual averments framed in this manner, it appears that these FDCPA claims, which were first filed in state court in June of 2022, may be time-barred. On this score, it is clear that “Civil actions alleging violations of the Fair Debt Collection Practices Act must be filed within one year from the date of the violation.” Rotkiske v. Klemm, 890 F.3d 422, 429 (3d Cir. 2018), affd, 205 L.Ed.2d 291, 140 S.Ct. 355 (2019). Here, the chronology set forth in Morgan's complaint describes a course of conduct that spanned between November 2019 and August 2020, but it is clear that Morgan first filed this action in state court more than a year after these events. Accordingly, it is evident that more than one year elapsed between the defendant's actions and the initiation of this lawsuit. Therefore, any FDCPA claims involving this conduct by Discover Card between November 2019 and August 2020 are also time-barred and should be dismissed.
2. Morgan's State Law Claims also Fail as Currently Pleaded.
Morgan's complaint also brings two state law claims under Pennsylvania's Fair Credit Extension Uniformity Act, 73 P.S. § 2270.1, et seq. (“FCEUA”), and Pennsylvania's Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 2021, et seq. (“UTPCPL”). In considering these claims, it is important to recognize the interplay between these two state statutes. As the Pennsylvania Superior Court has recently observed:
[T]he FCEUA does not have its own private cause of action. Instead, pursuant to the enforcement and penalties provision of Section 2270.5 of the FCEUA, “If a debt collector or creditor engages in an unfair or deceptive debt collection act or practice under this act, it shall constitute a violation of the [UTPCPL].” 73 P.S. § 2270.5(a) (emphases added).Matteo v. EOS USA, Inc., 2023 WL 2699561 at *8, 2023 PA Super 51 (Mar. 30, 2023). Therefore, the FCEUA does not give rise to a freestanding legal claim on Morgan's behalf. Rather, liability exists under state law only to the extent that the facts alleged by the plaintiff separately violate Pennsylvania's UTPCPL.
In this regard:
[I]n order ‘[t]o establish liability under the catch-all provision of the UTPCPL, “a plaintiff must present evidence showing: (1) a deceptive act that is likely to deceive a consumer acting reasonably under similar circumstances; (2) justifiable reliance; and (3) that the plaintiffs justifiable reliance caused ascertainable loss.”Angino v. Santander Bank, N.A., No. 1:15-CV-1145, 2015 WL 13738828, at *10 (M.D. Pa. Dec. 15, 2015), report and recommendation adopted as modified, No. 1:15-CV-1145, 2016 WL 386377 (M.D. Pa. Feb. 2, 2016) (collecting cases). In the instant case, even if we assume that Discover Card's representations to Morgan were misleading and deceptive-which Discover Card denies-this complaint would still run afoul of insurmountable legal obstacles in terms of any alleged reliance upon those representations and any ascertainable loss to the plaintiff.
Initially, this complaint fails because, as pleaded, Morgan does not allege that he relied upon any of Discover cards assertions. Such allegations of justifiable reliance are an essential element to a claim under Pennsylvania's UTPCPL since, as the Third Circuit has noted:
Given the Pennsylvania courts' repeated holdings that “[t]o bring a private cause of action under the [Consumer Protection Law], a plaintiff must show that he justifiably relied on the defendant's wrongful conduct or representation and that he suffered harm as a result of that reliance,” Yocca, 854 A.2d at 438 . . ., we conclude that private plaintiffs alleging deceptive conduct. . . must allege justifiable reliance.Hunt v. U.S. Tobacco Co., 538 F.3d 217, 224 (3d Cir. 2008).
In the instant case, the complaint does not allege that Morgan relied upon any representation made by Discover Card concerning his liability for his late wife's debts. Quite the contrary, far from showing justifiable reliance by the plaintiff on these representations, the complaint affirmatively indicates that Mr. Morgan has consistently from the outset denied and disputed Discover Card's claims. Thus, the complaint simply does not allege facts indicating any degree of reliance upon the defendant's alleged statements by Mr. Morgan.
More fundamentally, the complaint does not assert well-pleaded facts showing that Mr. Morgan suffered an ascertainable loss as a result of his contacts with Discover Card. In order to satisfy this element of a UTPCPL claim, “courts require that the loss asserted be ‘an actual, non-speculative, loss of money or property.' ” Hall v. Equifax Info. Servs. LLC, 204 F.Supp.3d 807, 812 (E.D. Pa. 2016). Thus:
While the Pennsylvania Supreme Court mandates a liberal construction of the UTPCPL, lower court cases and the plain language of the statute indicate an actual loss of money or property must have occurred to state a cognizable UTPCPL claim. See, e.g., Brock v. Thomas, 782 F.Supp.2d 133, 137 (E.D.Pa.2011) (Plaintiff alleged loss of title to his Philadelphia residence because of Defendant's fraudulent conduct); Baynes v. George E. Mason Funeral Home, Inc., No. 09-153, 2011 WL 2181469, at *5 (W.D.Pa. June 2, 2011) (Plaintiff had proven loss of money when he purchased defective steel casket instead of solid bronze one that was advertised). A plaintiff must be able to point to money or property that he would have had but for the defendant's fraudulent actions. See Rubenstein v. Dovenmuehle Mortg., Inc., No. 09-721, 2009 WL 3467769, at *6 (E.D.Pa. Oct. 28, 2009) (dismissing UTPCPL claim against mortgage company because plaintiffs could not show an
ascertainable loss from mortgage company's failure to immediately disclose that they did not have plaintiffs' complete mortgage payment history); Solarchick ex rel. Solarchick v. Metro. Life Ins. Co., 430 F.Supp.2d 511, 516 (W.D.Pa.2006) (“A party cannot lose what she does not or will not have, and cannot be compensated for a loss not suffered.”).Benner v. Bank of Am., N.A., 917 F.Supp.2d 338, 360 (E.D. Pa. 2013).
On this score, it has been held that a dispute regarding “an outstanding liability,. . . does not constitute a ‘loss of money or property' ” for purposes of the UTPCPL. Id. Thus, an “unpaid fee, while an outstanding liability, did not constitute a ‘loss of money or property' necessary to state a [UTPCPL] claim.” Conway v. U.S. Bank, Nat'l Ass'n, No. CV 18-4916, 2019 WL 2320872, at *8 (E.D. Pa. May 29, 2019), affd sub nom. Conway v. U.S. Bank Nat'l Ass'n as trustee for structured asset securities corporation, structured asset investment loan trust, mortgage pass-through certificates, series 2005-2, 804 Fed.Appx. 120 (3d Cir. 2020). Likewise, the cost of retaining an attorney to dispute some matter, standing alone, does not represent an ascertainable loss for purposes of the UTPCPL Grimes v. Enter. Leasing Co. of Philadelphia, LLC, 629 Pa. 457, 467, 105 A.3d 1188, 1194 (2014).
Given this interpretation of the UTPCPL's “ascertainable loss” requirement, Morgan's complaint fails to state a claim under this state statute since it is clear that Morgan has not pointed to any money or property that he would have had but for the defendant's fraudulent actions. Rather, Morgan has merely cited to the fact that Discover Card alleged that he had not paid an outstanding liability of his deceased spouse. Yet, such outstanding liabilities do not constitute ascertainable losses under the UTPCPL. Nor can Morgan save this legally deficient claim by arguing, as he attempts to do, that he was required to incur the expense of retaining counsel to dispute this claim. Such a loss argument fails under the UTPCPL given the Pennsylvania Supreme Court's pronouncement that “the mere acquisition of counsel would not suffice to satisfy the ‘ascertainable loss' requirement.” Grimes 105 A.3d at 1193.
Simply put, as currently pleaded Morgan's UTPCPL claim fails to satisfy the statute's justifiable reliance and ascertainable loss elements. Therefore, these state law claims are also subject to dismissal.
IV. Recommendation
For the foregoing reasons, IT IS RECOMMENDED THAT the defendant's motion to dismiss (Doc. 4) be GRANTED, and the plaintiff's complaint should be dismissed.
The parties are further placed on notice that pursuant to Local Rule 72.3:
Any party may object to a magistrate judge's proposed findings, recommendations or report addressing a motion or matter described in 28 U.S.C. § 636 (b)(1)(B) or making a recommendation for the disposition of a prisoner case or a habeas corpus petition within fourteen (14) days after being served with a copy thereof. Such party shall file with the clerk of court, and serve on the magistrate judge and all parties, written objections which shall specifically identify the portions of the proposed findings, recommendations or report to which objection is made and the basis for such objections. The briefing requirements set forth in Local Rule 72.2 shall apply. A judge shall
make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made and may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. The judge, however, need conduct a new hearing only in his or her discretion or where required by law, and may consider the record developed before the magistrate judge, making his or her own determination on the basis of that record. The judge may also receive further evidence, recall witnesses or recommit the matter to the magistrate judge with instructions.