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Smith v. Cavalry Spv I, LLC

United States District Court, W.D. Arkansas, Harrison Division

September 11, 2017




         On September 6, 2017, the Court held a hearing on Defendants' Motion to Dismiss (Doc. 18), followed by an initial case management conference. The parties presented oral argument, and the Court granted the Motion from the bench. The following Order memorializes the Court's decision. To the extent anything in this Order differs from what was stated from the bench, this Order will control.

         I. BACKGROUND

         This case was filed in this Court on May 1, 2017. (Doc. 1). Plaintiff Kandis Smith filed an Amended Complaint shortly thereafter, on May 25, 2017. (Doc. 10). Defendants then filed a collective Answer on June 29, 2017 (Doc. 14), and an Amended Answer on June 30, 2017 (Doc. 17). Also on June 30, 2017, Defendants filed a Motion to Dismiss for Failure to State a Claim (Doc. 18). Although the Motion to Dismiss is styled as a Rule 12(b)(6) motion, it was technically filed after the Answer, so the Court has considered it as a motion for judgment on the pleadings pursuant to Rule 12(c). In any event, when ruling on a 12(c) motion, the Court uses the "same standard used to address a motion to dismiss for failure to state a claim under Rule 12(b)(6)" Ashley Cnty., Ark. v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009).

         The Amended Complaint reveals that Ms. Smith, an Arkansas citizen, obtained a credit card sometime in 2008 and later incurred a debt on the account. The last payment she made on the credit card was in mid-2008. She defaulted on the debt, and the account was "charged off." The Amended Complaint does not state exactly when the account was "charged off, " see Doc. 10, p. 4, but it does reference the fact that on July 7, 2016, Defendant Cavalry SPV I ("Cavalry") commenced a debt-collection action against Ms. Smith in Carroll County Circuit Court. That state-court complaint was filed on behalf of Cavalry by Defendant Rachel Kuperman, who at the time worked for Defendant Lloyd & McDaniel, PLC, a law firm.

         The state-court debt collection action was discussed in the Amended Complaint and is a matter of public record. One of the documents attached to the state-court complaint was an "Affidavit of Claim, " executed on September 25, 2015, by an employee of Defendant Cavalry Portfolio Services, LLC ("CPS"). See Doc. 10, p. 4. The Affidavit of Claim notes that Ms. Smith's credit card account was "charged off' by G.E. MoneyBank/Dillards on December 16, 2008. The creditor then sold the debt to Cavalry, which is a licensed debt collection agency. Cavalry, in turn, hired CPS to perform the day-to-day debt collection service on the account.

         According to the Amended Complaint in the case at bar, Ms. Smith never acknowledged the existence of the debt in writing after she defaulted in 2008, nor did she make payments on the debt after she defaulted. More than seven years after the debt was charged off, Ms. Smith was sued by Cavalry in state court. After she received the state-court summons and complaint, she called the phone number listed on the paperwork, which was associated with Lloyd & McDaniel, PLC. She spoke with attorney Kuperman, and Ms. Smith alleges that during their conversation, Ms. Kuperman demanded that she begin paying monthly on the debt, and also asked for Ms. Smith's social security number and checking account information. It does not appear that Ms. Smith provided any of this information to Ms. Kuperman. Instead, she hired a lawyer, and on August 8, 2016, her lawyer filed a motion to dismiss the state-court debt-collection action, arguing that the suit was barred by Arkansas' five-year statute of limitations on debt collection. In short order, Cavalry moved to dismiss the case, and the state court dismissed it on August 19, 2016.

         In the case at bar, Ms. Smith asserts violations of the Fair Debt Collection Practices Act ("FDCPA") (Count 1), the Arkansas Fair Debt Collection Practices Act ("AFDCPA") (Count 2), abuse of process (Count 3), and malicious prosecution (Count 4)-all of which purportedly arise from Cavalry's attempt to collect the time-barred debt in state court. Defendants' Motion to Dismiss, however, only contemplates the dismissal of the abuse of process and malicious prosecution claims. Defendants argue that these two claims were not pleaded with sufficient detail to state plausible claims for relief. Defendants Kuperman and Lloyd & McDaniel, PLC, separately argue that they are completely immune from civil liability for these torts pursuant to the Arkansas attorney-immunity statute, codified at Ark. Code Ann. § 16-22-310.

         Ms. Smith believes that the Amended Complaint contains enough facts to state plausible claims for abuse of process and malicious prosecution, and further, that the attorney-immunity statute does not apply here because Kuperman and her law firm committed material omissions and misrepresentations that constitute fraud or some other intentional tort. Below, the Court considers the merits of these arguments.


         As an initial matter, the distinction between a motion for judgment on the pleadings brought under Fed.R.Civ.P. 12(c) and a motion to dismiss brought under Fed.R.Civ.P. 12(b)(6) "is purely formal, because we review [a] 12(c) motion under the standard that governs 12(b)(6) motions." Westcott v. City of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). To survive the Motion, the Amended Complaint must present "a short and plain statement of the claim that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). The intention of this is to "give the defendant fair notice of what the... claim is and the grounds upon which it rests." Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In evaluating the sufficiency of the Amended Complaint, the Court assumes that "all factual allegations in the pleadings are true and interprets] them in the light most favorable to the nonmoving party." Bell v. Pfizer, Inc., 716 F.3d 1087, 1091 (8th Cir. 2013) (internal quotation omitted).

         Even so, the Amended Complaint "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). "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." Id. "A pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.' Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Id. (quoting Twombly, 550 U.S. at 555). In short, "the pleading standard that Rule 8 announces does not require 'detailed factual allegations, ' but it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation." Id. (quoting Twombly, 550 U.S. at 555).


         A. ...

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