Waco Debt Collectin’ Law Firm Called Out for Violatin’ the FDCPA and Texas Debt Collection Act

DeMarquis v. Sheehy, Lovelace & Mayfield, P.C.

(1:22-cv-00067)

District Court, W.D. Texas

JAN 25, 2022 | REPUBLISHED BY LIT: JAN 26, 2022c

COMPLAINT

NOW COMES MICHAEL C. DEMARQUIS (“Plaintiff”), by and through the undersigned attorneys, complaining of the Defendant, SHEEHY, LOVELACE & MAYFIELD, P.C. (“Defendant”) as follows:

NATURE OF THE ACTION

1. Plaintiff brings this action seeking redress for violations of the Fair Debt Collection Practices Act (“FDCPA”) pursuant to 15 U.S.C. §1692 and violations of the Texas Debt Collection Act (“TDCA”) pursuant to Tex. Fin. Code Ann. § 392 et seq.

JURISDICTION AND VENUE

2. Subject matter jurisdiction is conferred upon this Court by the FDCPA and 28 U.S.C. §§1331 and 1337, as the action arises under the laws of the United States. Supplemental jurisdiction exists for the state claim pursuant to 28 U.S.C. § 1367.

3. Venue is proper in this Court pursuant to 28 U.S.C. §1391 as Plaintiff resides in the Western District of Texas, Defendant conducts business in the Western District of Texas, and a substantial portion of the events or omissions giving rise to the claims occurred within the Western District of Texas.

PARTIES

4. Plaintiff is a consumer and natural person over 18-years-of-age who, at all times relevant, resided in the Western District of Texas.

5. Defendant is a debt collection law firm headquartered at 510 N Valley Mills Dr, Waco, Texas 76710.

FACTS SUPPORTING CAUSE OF ACTION

6. Prior to the events giving rise to this action in Feb 2021, Plaintiff’s home sustained damages due to flooding and contacted his home insurance agency USAA to file a claim regarding the water damage.

7. After speaking with USAA, Plaintiff was they would contact Target Solutions to begin the process of repairing the water damage in his home.

8. Specifically, Plaintiff was told by USAA that it partners with Target Solutions and granted Plaintiff’s insurance claim for the repairs needed.

9. Target Solutions assured Plaintiff the cost of the damages would be covered by USAA after completing carpet removal, and suppling two vacuums to extract the flood water.

10. In addition, Plaintiff was also told his damage carpets would be replaced by Target Solutions and paid for by USAA.

11. At some point, Plaintiff spoke with Target Solutions who informed him that USAA paid $1,039.23, but declined to pay for the remaining amount of the insurance claim and requested he pay $2,000.00 owed left on the subject account.

12. Plaintiff replied to Target Solutions explaining that he is disabled and cannot afford the $2,000.00 owed.

13. On December 14, 2021, Plaintiff was mailed a pre-litigation demand by Defendant attempting to collect an outstanding balance for $2,000 owed to Target Solutions (“subject debt”) (“Defendant’s Letter”).

14. Defendant’s Letter stated the following: “As you are aware, you retained the services of Target and memorialized your agreement with Target by signing a Contract for Residential Services and Authorization and Direction to Pay on or about May 24, 2021 (the “Contract”).”

15. Initially, Plaintiff was confused why he was contacted for the remaining balance of the subject debt as USAA was responsible per his previous insurance claim.

16. In addition, Plaintiff states that he never signed a contact with Target Solutions as claimed in Defendant’s Letter.

17. Moreover, Defendant’s Letter continued to state the following:

“If this matter is not settled by the Settlement Deadline, Target shall be entitled to take additional legal action, including, but not limited to the filing of a lawsuit for any and all causes of action Target may have at law, and/or in equity including, but not limited to, claims for breach of contract. In addition, Target shall seek pre- and post-judgment interest on the Claim Amount (and any judgement), costs of suit and reasonable attorneys’ fees. This letter shall also serve as any notice requirement on the debt, including the notice required under Section 38.002 of the Texas Civil Practice and Remedies Code. If a lawsuit is filed, it shall be filed in McLennan County, Texas, pursuant to the terms of the Contract.”

18. Immediately, Plaintiff became fearful that he would be sued for a debt he believed he was not responsible for.

19. On or around late December 2021, Plaintiff replied via email to Defendant’s pre litigation demand disputing and requesting validation toward the alleged subject debt.

20. Specifically, Plaintiff requested Defendant provide the contract it claims was signed.

21. In addition, Plaintiff also informed Defendant their lack of jurisdictional claims as the dispute in question occurred in Bell County, Texas and not in McLennan County, Texas as depicted by Defendant.

22. Should Defendant file a legal action in McLennan County, Texas the Plaintiff would be subject to a lawsuit in an inconvenient jurisdiction far from his residence and of which he has not availed himself to.

23. This caused Plaintiff a great deal of anxiety and fear.

24. Frustrated over Defendants’ conduct, Plaintiff spoke with an attorney regarding his rights, resulting in expenses.

25. Defendant’s harassing and unfair collection conduct has severely disrupted Plaintiff’s daily life and general well-being.

26. Plaintiff has expended time consulting with his attorneys as a result of Defendant’s false, deceptive, harassing, and misleading collection efforts.

27. Defendant’s illegal collection activities have caused Plaintiff actual harm, including but not limited to, invasion of privacy, nuisance, intrusion upon and occupation of Plaintiff’s cellular telephone capacity, wasting Plaintiff’s time, emotional distress, aggravation that accompanies unsolicited debt collection efforts, harassment, emotional distress, anxiety, and loss of concentration.

28. Concerned about the violations of his rights and invasion of his privacy, Plaintiff sought the assistance of counsel to permanently cease Defendant’s collection efforts.

COUNT I – VIOLATIONS OF THE FAIR DEBT COLLECTION PRACTICES ACT

29. Plaintiff restates and realleges paragraphs 1 through 28 as though fully set forth herein.

30. Plaintiff is a “consumer” as defined by FDCPA §1692a(3).

31. The subject debt is a “debt” as defined by FDCPA §1692a(5) as it arises out of a transaction due or asserted to be owed or due to another for personal, family, or household purposes.

32. Defendant is a “debt collector” as defined by §1692a(6) because it’s a business, the principal purpose of which, is the collection of debts and uses the mail and/or the telephones to collect delinquent accounts allegedly owed to a third party.

33. Moreover, Defendant is a “debt collector” because it acquired rights to the subject debt after it was in default. 15 U.S.C. §1692a(6).

34. Defendant used the phone to attempt to collect the subject debt and, as such, engaged in “communications” as defined in FDCPA §1692a(2).

35. Defendant’s communications to Plaintiff were made in connection with the collection of the subject debt.

36. Defendant violated 15 U.S.C. §§1692e, e(5), f, and i(a)(2) through its unlawful debt collection practices.

a. Violations of FDCPA § 1692e

37. Defendant violated § 1692e(5) by threatening to take an action that was not intended to be taken. Defendant violated 15 U.S.C. §1692e(5) when it mailed a letter to Plaintiff threatening to sue in an inconvenient county to Plaintiff. Due to jurisdictional conflicts, Defendant knew or should have known it would be unable to pursue legal action against Plaintiff. Clearly, the threat was a thinly veiled attempt to coerce Plaintiff into making immediate payment.

b. Violations of FDCPA § 1692f

38. Defendant violated §1692f by using unfair and unconscionable means to collect the subject debt from Plaintiff. It was unfair and unconscionable for Defendant to threat legal action against Plaintiff when it knew or should have known no legal action could be taken within the jurisdiction provided in the December letter.
39. Upon information and belief, Defendant uses unfair, harassing, misleading, and deceptive practices in order to aggressively collect debts in default to increase its profitability at the consumers’ expense.

c. Violations of FDCPA § 1692i

39. The FDCPA, pursuant to 15 U.S.C. §1692i(a)(2), mandates that “[a]ny debt collector who brings any legal action on a debt against any consumer shall bring such action only in the judicial district or similar legal entity in which such consumer signed the contract sued upon; or in which such consumer resides at the commencement of the action.”

40. Defendant violated 15 U.S.C. §1692i(a)(2) when it mailed a pre litigation demand stating it would initiated a lawsuit against Plaintiff in McLennan County, Texas. Plaintiff has never resided in McLennan County, Texas and Plaintiff did not sign any contract with Target Solutions in McLennan County, Texas. Consequently, Defendant threatened to initiated a collection lawsuit in a venue inherently inconvenient to Plaintiff and in violation of the FDCPA.

41. As previously stated, Plaintiff has been harmed and suffered damages as a result of Defendant’s illegal actions.

WHEREFORE, Plaintiff MICHAEL C. DEMARQUIS respectfully requests that this Honorable Court:

a. Declaring that the practices complained of herein are unlawful and violate the aforementioned bodies of law;

b. Awarding Plaintiff statutory damages of $1,000.00 as provided under 15 U.S.C.
§1692k(a)(2)(A);

c. Awarding Plaintiff actual damages, in an amount to be determined at trial, as provided under 15 U.S.C. §1692k(a)(1);

d. Awarding Plaintiff costs and reasonable attorney fees as provided under 15 U.S.C.
§1692k(a)(3); and

e. Awarding any other relief as this Honorable Court deems just and appropriate.

COUNT II – DEFENDANT’S VIOLATIONS OF THE TEXAS DEBT COLLECTION ACT

41. Plaintiff restates and realleges paragraphs 1 through 40 as though fully set forth

herein.

42. Plaintiff is a “consumer” as defined by Tex. Fin. Code Ann. § 392.001(1).

43. The alleged debt is a “debt” and a “consumer debt” as defined by Tex. Fin. Code Ann. § 392.001(2) as it is an obligation, or alleged obligation, arising from a transaction for personal, family, or household purposes.

44. Defendant is a “debt collector” as defined by Tex. Fin. Code Ann. § 392.001(6) and (7).

a. Violations of TDCA § 392.304

45. The TDCA, pursuant to Tex. Fin. Code Ann. § 392.304(19), states that a debt collector may not use “any other false representation or deceptive means to collect a debt or obtain information concerning a consumer.”

46. Defendant violated the TDCA when it falsely and deceptively threatened to sue Plaintiff in a jurisdiction it could not legally file suit in. Defendant’s misleading statements were made in an attempt to confuse and coerce Plaintiff into making a payment that he could not afford.

WHEREFORE, Plaintiff MICHAEL C. DEMARQUIS requests that this Honorable Court:

a. Declare that the practices complained of herein are unlawful and violate the aforementioned statute;
b. Entitling Plaintiff to injunctive relief pursuant to Tex. Fin. Code Ann. § 392.403(a)(1);
c. Award Plaintiff actual damages, pursuant to Tex. Fin. Code Ann. § 392.403(a)(2);
d. Award Plaintiff punitive damages, in an amount to be determined at trial, for the underlying violations;
e. Award Plaintiff costs and reasonable attorney fees as provided under Tex. Fin. Code Ann. § 392.403(b) ; and
f. Award any other relief as the Honorable Court deems just and proper.

Plaintiff demands trial by jury.

Dated: January 25, 2022

Respectfully Submitted,

s/ Victor T. Metroff

Victor T. Metroff, Esq.

Mohammed O. Badwan, Esq.
Marwan Daher, Esq.
Counsel for Plaintiff
Sulaiman Law Group, Ltd
2500 S Highland Ave, Suite 200
Lombard, IL 60148
Telephone: (630) 575-8181
vmetroff@sulaimanlaw.com
mbadwan@sulaimanlaw.com
mdaher@sulaimanlaw.com

DeMarquis v. Alorica Inc.

(1:20-cv-00634)

District Court, W.D. Texas

JUN 18, 2020 | REPUBLISHED BY LIT: JAN 26, 2022c

REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

TO: THE HONORABLE LEE YEAKEL UNITED STATES DISTRICT JUDGE

Before the Court are Defendant Alorica, Inc.’s Motion to Dismiss Plaintiff’s Amended Complaint (Dkt. No. 16), Plaintiff’s Response (Dkt. No. 19), and Defendant’s Reply (Dkt. No. 20). The district judge referred the motion to the undersigned for a report and recommendation pursuant to 28 U.S.C. § 636(b) and Rule 1(c) of Appendix C of the Local Rules.

I. BACKGROUND

This suit arises out of a debt collection dispute between Plaintiff Michael C. DeMarquis and Defendant Alorica, Inc.

In his Amended Complaint, DeMarquis alleges that Alorica was hired by Credit One Bank, N.A., to collect on an overdue credit card debt. Dkt. No. 11 at ¶¶ 15-27.

DeMarquis alleges that beginning on or before September 16, 2019, he began receiving multiple collection calls from a caller purporting to be Credit One attempting to collect on the debt, and that despite his requests to stop, the collection calls persisted. Id. at ¶¶ 21-28.

On October 28, 2019, DeMarquis initiated arbitration with Credit One alleging violations of federal and state law in relation to the collection calls. Id. at ¶ 24. During the arbitration proceedings, Credit One informed DeMarquis that Alorica placed the complained of calls on its behalf. Id. at ¶ 25.

On July 14, 2020, the Arbitrator entered final judgment in favor of Credit One, dismissing DeMarquis’s claims with prejudice. Dkt. No. 16-1.

On June 18, 2020, DeMarquis filed suit against Alorica for violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq., (“FDCPA”) and the Texas Debt Collection Act (“TDCA”) related to the collection calls. Dkt. No. 1.

In the instant motion, Alorica seeks to dismiss the claims against it based on collateral estoppel and failure to state a claim, arguing that:

(a) the Arbitrator’s Order precludes DeMarquis’s TDCA claim,

and

(b) DeMarquis’s Amended Complaint fails to plead factual allegations sufficient to support his FDCPA and TDCA claims. Dkt. No. 16.

II. LEGAL STANDARDS

Rule 12(b)(6) allows a party to move to dismiss an action for failure to state a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6).

In deciding a Rule 12(b)(6) motion to dismiss for failure to state a claim, “[t]he court accepts all well-pleaded facts as true, viewing them in the light most favorable to the [nonmovant].”

In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (internal quotation marks omitted), cert. denied, 552 U.S. 1182 (2008). While a complaint attacked by a Rule 12(b)(6) motion does not need detailed factual allegations in order to avoid dismissal, the plaintiff’s factual allegations “must be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).

The Supreme Court has explained that a court need not accept as true conclusory allegations or allegations stating a legal conclusion. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

A complaint must contain sufficient facts “to state a claim to relief that is plausible on its face.” Id. (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the [nonmovant] pleads factual content that allows the court to draw the reasonable inference that the [movant] is liable for the misconduct alleged.” Id.

When considering a motion to dismiss, the court’s review is limited to the complaint, any documents attached to the complaint, and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint.

See Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010).

III. ANALYSIS

A. Collateral Estoppel

Alorica first argues that DeMarquis’s TDCA claim is precluded by collateral estoppel based on the Arbitrator’s Order and the dismissal of his TDCA claim against Credit One. Dkt. No. 16 at 4-7.

The doctrine of collateral estoppel serves two purposes:

(1) it protects litigants from having to litigate an identical issue with the same party or its privy,

and

(2) it promotes judicial economy by precluding unnecessary litigations. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 (1979).

A party asserting collateral estoppel has the burden of proving that:

“(1) the issue at stake is identical to the one involved in the earlier action;

(2) the issue was actually litigated in the prior action;

and

(3) the determination of the issue in the prior action was a necessary part of the judgment in that action.”

Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 572 (5th Cir. 2005).

Complete identity of the parties in the two actions is not required. Robin Singh Educational Services Inc. v. Excel Test prep Inc., 274 Fed. Appx. 399, 404 (5th Cir. 2008).

“Defensive use of collateral estoppel occurs when a defendant seeks to prevent a plaintiff from relitigating an issue which the plaintiff has previously litigated unsuccessfully in another action against the same or a different party.”

U.S. v. Mendoza, 464 U.S. 154, 159 n. 4 (1984).

A court has broad discretion over whether to give preclusive effect to an arbitration award pursuant to the doctrine of collateral estoppel.

Grimes v. BNSF Ry. Co., 746 F.3d 184, 188 (5th Cir. 2014).

In the instant case, Alorica asserts that defensive collateral estoppel applies to DeMarquis’s TDCA claim because:

(1) DeMarquis alleges the same TDCA claim against Alorica as he asserted against Credit One during arbitration,

(2) the Arbitrator considered the merits of that issue,

and

(3) the Arbitrator’s decision on the TDCA claim was a necessary part of the final Arbitration Order. Dkt. No. 16 at 6-7.

In response, DeMarquis argues that collateral estoppel does not apply because the Arbitrator only considered the merits of his TDCA claim against Credit One, ultimately disposing of the issue based on a choice of law provision in the agreement between DeMarquis and Credit One. Dkt. No. 19 at 3-4.

Because Alorica was not a party to that agreement, DeMarquis asserts that Alorica cannot invoke the choice of law provision and thus the issue at stake is not the same issue ruled upon by the Arbitrator. Id.

The Court agrees.

Because Alorica has failed to establish that the issue at stake is identical to the one previously litigated during the arbitration, collateral estoppel does not preclude DeMarquis’s TDCA claim.

B. Failure to State a Claim

Alorica’s motion next asserts that DeMarquis’s Amended Complaint fails to state a claim against it.

DeMarquis’s Amended Complaint alleges claims against Alorica under the FDCPA and TDCA. See Dkt. No. 11.

Alorica argues each of these claims should dismissed because DeMarquis has failed to plead the facts necessary to establish it is a debt collector subject to either Act.

The Court agrees.

Under the FDCPA, a “debt collector” refers to “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);

See Williams v. Countrywide Home Loans, Inc., 504 F. Supp. 2d 176, 190 (S.D. Tex. July 18, 2007).

The TDCA defines a “debt collector” to include any person or entity who directly or indirectly engages in any action, conduct or practice in collecting, or in soliciting for collection, consumer debts due a creditor.

TEX. FIN. CODE ANN. § 392.001(5)-(6) (Vernon 2006);

see McCormick v. 7-11, Inc., 2008 WL 11424230, at *2 (N.D. Tex. Sept. 29, 2008).

Alorica is correct that DeMarquis has not adequately alleged facts that could show that Alorica is a debt collector for the purposes of the FDCPA or TDCA.

DeMarquis’s Amended Complaint contains only conclusory allegations that “Defendant is a ‘debt collector’ as defined by 15 U.S.C. 1692a(6),” that “Defendant uses instrumentalities of interstate commerce and the mail in its business – the principal purpose of which is the collection of debt owed or due or asserted to be owed or due another,” and that “Defendant is a ‘debt collector’ as defined by Tex. Fin. Code Ann. § 392.001(6) as it directly or indirectly engages in debt collection.” Dkt. No. 11 at ¶¶ 10-12.

As discussed above, to withstand a Rule 12(b)(6) motion, a “complaint must allege ‘more than labels and conclusions,’” and “a formulaic recitation of the elements of a cause of action will not do.” Norris v. Hearst Tr., 500 F.3d 454, 464 (5th Cir. 2007) (quoting Twombly, 550 U.S. at 555).

“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements do not suffice.” Iqbal, 556 U.S. at 678. DeMarquis’s unsupported allegations that Alorica qualifies as a debt collector under the FDCPA and TDCA are conclusory and insufficient under Rule 12(b)(6). See Busby v. Vacation Resorts Int’l, 2019 WL 669641 (S.D. Tex. Feb. 19, 2019) (dismissing FDCPA and TDCA claim where plaintiff only made conclusory allegation that defendant was a debt collector, with no supporting factual allegations).

As such, the Court recommends Alorica’s motion to dismiss be granted.

C. Leave to Amend

When a plaintiff’s complaint fails to state a claim, the court should generally give the plaintiff at least one chance to amend the complaint before dismissing the claim with prejudice.

See Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 329 (5th Cir.2002).

Granting leave is not required when “it is clear that the defects are incurable or the plaintiffs advise the court that they are unwilling or unable to amend in a manner that will avoid dismissal.” Id.

The Fifth Circuit has indicated that “[l]eave to amend should be freely given, and outright refusal to grant leave to amend without a justification . . . is considered an abuse of discretion.”

United States ex rel. Adrian v. Regents of the Univ. of Cal., 363 F.3d 398, 403 (5th Cir. 2004).

Accordingly, while the undersigned recommends that Alorica’s motion to dismiss should be granted, the undersigned further recommends that dismissal be without prejudice to DeMarquis repleading his claims.

IV. RECOMMENDATION

For the reasons set forth above, the undersigned RECOMMENDS that the Court GRANT Defendant’s Motion to Dismiss (Dkt. No. 16) and DISMISS DeMarquis’s lawsuit, but that the dismissal be without prejudice to DeMarquis filing by a deadline set by the Court an amended complaint to cure the deficiencies in his allegations regarding Alorica’s status as a “debit collector” under the FDCPA or TDCA.

The Clerk is directed to remove this case from the Magistrate Judge’s docket and return it to the docket of the Honorable Lee Yeakel.

V. WARNINGS

The parties may file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections arebeing made.

The District Court need not consider frivolous, conclusive, or general objections. Battles v. United States Parole Comm’n, 834 F.2d 419, 421 (5th Cir. 1987).

A party’s failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen (14) days after the party is served with a copy of the Report shall bar that party from de novo review by the district court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the district court.

See 28 U.S.C. § 636(b)(1)(c) (2006); Thomas v. Arn, 474 U.S. 140, 150-153 (1985); Lisson v. O’Hare, 326 F. App’x 259, 260 (5th Cir. 2009).

SIGNED this 12th day of May, 2021.

ANDREW W. AUSTIN
UNITED STATES MAGISTRATE JUDGE