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Middlebrooks v. Interstate Credit Control, Inc.: US District Court : BANKRUPTCY | CREDIT - can't base FDCPA claim on filing proofs of claim in bankruptcy proceedings

1 The caption of the complaint lists plaintiffs last name as
Middleebrooks. This spelling, however, appears to be a
typographical error because paragraph three of the complaint and
plaintiffs opposition memorandum lists his last name as
(continued...)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 08-447(DSD/JJG)
Curtis J. Middleebrooks,
Plaintiff,
v. ORDER
Interstate Credit Control, Inc.,
Defendant.
Mark L. Vavreck, Esq. and Scrimshire, Martineau, Gonko &
Vavreck, 401 North Third Street, Suite 600, Minneapolis,
MN 55401, counsel for plaintiff.
Brian M. Sund, Esq., Eric G. Nasstrom, Esq., Joshua G.
Hauble, Esq. and Morrison, Fenske & sund, 5125 County
Road 101, Suite 102, Minnetonka, MN 55345, counsel for
defendant.
This matter is before the court on defendants motion to
dismiss. After a review of the file, record and proceedings
herein, and for the following reasons, defendants motion is
granted.
BACKGROUND
At an unspecified date before July 2001, plaintiff Curtis
Middlebrooks1 (Middlebrooks) incurred a debt with Carriage Oak
1(...continued)
Middlebrooks. Thus, the court refers to plaintiff as
Middlebrooks.
2 The court considers the petition because it is necessarily
embraced by the pleadings. See Enervations, Inc. v. Minn. Mining
& Mfg. Co., 380 F.3d 1066, 1069 (Though matters outside the
pleading may not be considered in deciding a Rule 12 motion to
dismiss, documents necessarily embraced by the complaint are not
matters outside the pleading. (citations and quotations omitted)).
2
Apartments. That debt was later transferred to defendant
Interstate Credit Control, Inc. (ICC) for collection. Because
Middlebrooks made no payment on the debt after July 31, 2001, the
debt eventually became stale pursuant to the applicable six-year
statute of limitations. See Minn. Stat. 541.05, subdiv. 1.
On October 19, 2007, Middlebrooks filed a Voluntary Petition
for bankruptcy under Chapter 13 of the Bankruptcy Code. (Def. Ex.
A.2) The petition listed ICC as a creditor holding an unsecured
nonpriority claim. As a result, ICC received a notice of
Middlebrookss petition identifying the deadline for filing a proof
of claim. (Def. Ex. B.) On October 29, 2007, ICC submitted a
proof of claim to collect ,371.21 for rent, cleaning, late fee,
etc. (Def. Ex. C.) Middlebrooks filed this action on February
21, 2008, alleging that ICC violated the Fair Debt Collection
Practices Act (FDCPA) by filing a proof of claim on a stale debt.
ICC now moves to dismiss the complaint.
3
DISCUSSION
I. Standard of Review
Pursuant to Federal Rule of Civil Procedure 8(a)(2), a
complaint must contain a short and plain statement of the claim
showing that the pleader is entitled to relief. This statement
does not require detailed factual allegations so long as it
give[s] the defendant fair notice of what the . . . claim is and
the grounds upon which it rests. Conley v. Gibson, 355 U.S. 41,
47 (1957). However, a court will dismiss a complaint pursuant to
Federal Rule of Civil Procedure 12(b)(6) for failing to state a
claim upon which relief can be granted if, after taking all facts
alleged in the complaint as true, those facts fail to raise a
right to relief above the speculative level. Bell Atlantic Corp.
v. Twombly, 127 S.Ct. 1955, 1965 (2007). Dismissal is appropriate
pursuant to Rule 12(b)(6) if the allegations show on the face of
the complaint there is some insuperable bar to relief. Benton v.
Merrill Lynch & Co., 524 F.3d 866, 870 (8th Cir. 2008) (citation
omitted).
II. Fair Debt Collection Practices Act Claim
Congress enacted the FDCPA to eliminate abusive debt
collection practices by debt collectors. 15 U.S.C. 1692(e). To
accomplish this goal, the FDCPA prohibits a debt collectors use of
any false, deceptive, or misleading representation[s] or means in
connection with the collection of any debt. 15 U.S.C. 1692e.
4
This includes falsely representing the character, amount, or legal
status of any debt, or threatening to take any action that cannot
legally be taken or that is not intended to be taken. Id.
1692e(2)(A) and 1692e(5). Absent a threat of litigation or
actual litigation, no violation of the FDCPA has occurred when a
debt collector attempts to collect on a potentially time-barred
debt that is otherwise valid. Freyermuth v. Credit Bureau Servs.,
248 F.3d 767, 771 (8th Cir. 2001). Here, Middlebrooks argues that
the filing of a proof of claim in a bankruptcy proceeding for a
time-barred debt constitutes a threat of litigation or actual
litigation. The court, however, need not reach this issue.
The FDCPA and Bankruptcy Code overlap but generally coexist
peaceably. See Randolph v. IMBS, Inc., 368 F.3d 726 (7th Cir.
2004). However, where the alleged misconduct giving rise to an
FDCPA claim occurred as part of the bankruptcy proceedings,
allowing a bankrupt debtor to assert an FDCPA claim could
potentially undermine the Bankruptcy Codes specific provisions for
administration of the debtors estate. Molloy v. Primus Auto.
Fin. Servs., 247 B.R. 804, 820 (C.D. Cal. 2000). In other words,
permitting an FDCPA action based on a bankruptcy proof of claim
could discourage creditors from filing claims ... and encourage
debtors to ignore the procedural safeguards within the Bankruptcy
Code, such as the right to object to proofs of claim and to seek
sanctions against creditors who violate provisions within the
5
Bankruptcy Code, in favor of the FDCPA. Rice-Etherly v. Bank One
(In re Rice-Etherly), 336 B.R. 308, 312 (Bankr. E.D. Mich. 2006)
(citation and quotation omitted). Thus, an FDCPA claim cannot be
premised on proofs of claim filed during the bankruptcy
proceedings. Gray-Mapp v. Sherman, 100 F. Supp. 2d 810, 814 (N.D.
Ill. 1999) (citation omitted); see also In re Varona, No. 07-71761,
2008 Bankr. LEXIS 1544, at *35-36 (Bankr. E.D. Va. 2008) (gathering
cases); Abramson v. Federman & Phelan, LLP (In re Abramson), 313
B.R. 195, 198 (Bankr. W.D. Pa. 2004) (once debtor in bankruptcy,
challenges to proofs of claim limited to those provided in
Bankruptcy Code). Therefore, the FDCPA provides no remedy to
Middlebrooks for ICCs allegedly wrongful proof of claim.
Accordingly, IT IS HEREBY ORDERED that ICCs motion to dismiss
[Doc. No. 3] is granted.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated: July 9, 2008
s/David S. Doty
David S. Doty, Judge
United States District Court
 

 
 
 

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