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Alexander v. Absolute Resolutions Corp.

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

May 1, 2019

JASON ALEXANDER, on behalf of himself and others similarly situated PLAINTIFF



         Currently before the Court are a Motion to Dismiss (Doc. 9) and Brief in Support (Doc. 10) filed by Defendants Absolute Resolutions Corporation ("ARC") and Mark Naiman, a Response in Opposition (Doc. 13) filed by Plaintiff Jason Alexander, and a Reply (Doc. 16) filed by ARC and Mr. Naiman. For the reasons given below, the Motion is DENIED.

         I. BACKGROUND

         In 2013, Mr. Alexander entered into a retail installment contract and security agreement to finance his purchase of jewelry from Harris Jewelry. At some point, this debt was assigned from Harris Jewelry to an entity called Consumer Adjustment Corp., USA, and then to ARC. On February 18, 2018, ARC filed a civil lawsuit against Mr. Alexander in the Circuit Court of Baxter County, Arkansas, alleging that Mr. Alexander had defaulted on his debt, and asking for judgment against him in the amount of $1, 077.67 plus interest. ARC was initially represented in that case by W. Anderson Woodford, an attorney for the law firm of Lloyd & McDaniel, PLC.

         On July 7, 2018, Mr. Alexander filed a motion for summary judgment in the Baxter County lawsuit, arguing that ARC had no authority to file that lawsuit because it had not obtained a license from the State Board of Collection Agencies ("SBCA") to act as a collection agency in the state of Arkansas, as required by Ark. Code Ann. § 17-24-301. Five days later, Mr. Woodford and his co-counsel in that case moved to withdraw from their representation of ARC. That same day, ARC mailed an application for a collection agency license to the SBCA, along with a $10, 000 check for the civil penalty that Ark. Code Ann. § 17-24-103(a)(3)(A)[1] imposes on collection agencies who wish for their prior unlicensed collection activities to be considered retroactively licensed by the SBCA. One week later, ARC was provided a collection agency license, retroactively effective from August 6, 2015 to the present day. A month later, new counsel entered their appearance for ARC in the Baxter County case and filed a response to Mr. Alexander's motion for summary judgment, arguing that the absence of a collection agency license is not a defense under Arkansas law against collection activities, and that in any event, the retroactive nature of ARC'S recently-obtained license mooted the grounds for Mr. Alexander's motion. That summary judgment motion is still awaiting decision as of today.

         Meanwhile, on January 25, 2019, Mr. Alexander filed a class-action Complaint against ARC, Mr. Woodford, Lloyd & McDaniel, and ARC's sole member and CEO, Mark Naiman, here in the United States District Court for the Western District of Arkansas. Mr. Alexander's Complaint brings one count against all of these defendants, alleging that they violated the federal Fair Debt Collection Practices Act ("FDCPA") by causing the Baxter County lawsuit to be filed against him before ARC had acquired a collection agency license from the SBCA. He seeks to represent a class of all persons in Arkansas who, within the year prior to the filing of his class-action Complaint, were served with a debt-collection complaint identifying ARC as the plaintiff and Lloyd & McDaniel or Mr. Woodford as ARC's attorneys. ARC and Mr. Naiman have filed a Motion to Dismiss Mr. Alexander's Complaint under Federal Rule of Civil Procedure 12(b)(6), for failure to state a claim.[2] Mr. Alexander has responded, and ARC and Mr. Naiman have replied. On April 29, 2019, the Court heard oral argument on the Motion, which is now ripe for decision. The Court will explain its decision below, after reciting the legal standard that governs Rule 12(b)(6) motions to dismiss.


         To survive a motion to dismiss for failure to state a claim under Rule 12(b)(6), a complaint must provide "a short and plain statement of the claim that [the plaintiff] is entitled to relief." Fed.R.Civ.P. 8(a)(2). The purpose of this requirement is to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Ehckson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The Court must accept all of a complaint's factual allegations as true, and construe them in the light most favorable to the plaintiff, drawing all reasonable inferences in the plaintiffs favor. See Ashley Cnty., Ark. v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009). In addition to the complaint's allegations, the Court may consider "matters incorporated by reference or integral to the claim, items subject to judicial notice, matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint whose authenticity is unquestioned." Miller v. Redwood Toxicology Lab., Inc., 688 F.3d 928, 931 (8th Cir. 2012) (quoting 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1357 (3d ed. 2004)).

         However, the 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. In other words, while "the pleading standard that Rule 8 announces does not require 'detailed factual allegations,' ... it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation." Id.


         As should be apparent from the discussion in Section I, supra, this case revolves around the interaction between Arkansas and federal law on debt collection. So before diving into any particular points raised by the parties in their briefs, this Opinion will generally discuss these state and federal statutory frameworks.

         The Arkansas Code states that:

         Unless licensed by the [SBCA] under this subchapter it is unlawful to:

(1) Engage in the collection of delinquent accounts, bills, or other forms of indebtedness;
(2) Use a fictitious name or any name other than their own in the collection of their own ...

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