(PS) Mehl v. Green ( 2022 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 GAVIN MEHL, et al., Case No. 2:21-cv-01861-TLN-JDP (PS) 12 Plaintiffs, FINDINGS AND RECOMMENDATIONS THAT DEFENDANTS’ MOTION TO 13 v. DISMISS BE GRANTED AND PLAINTIFFS’ MOTION TO STRIKE BE DENIED 14 WARREN GREEN, et al., ECF Nos. 18 & 20 15 Defendants. ORDER DENYING PLAINTIFFS’ MOTION 16 TO FILE DOCUMENTS ELECTRONICALLY AND DENYING DEFENDANTS’ REQUEST 17 FOR JUDICIAL NOTICE 18 ECF Nos. 6 & 18 19 20 Defendants Wilmington Trust, N.A., Snell & Wilmer, L.L.P., and Andrew B. Still move 21 to strike plaintiffs Gavin Mehl and Ron Cupp’s first amended complaint under California’s anti- 22 SLAPP statute or, in the alternative, to dismiss it under Federal Rule of Civil Procedure 12(b)(6). 23 Plaintiffs have moved to strike defendants’ motion and for permission to file documents 24 electronically. I recommend that defendants’ motion to dismiss be granted, the amended 25 complaint be dismissed for failure to state a claim, and plaintiffs’ motion to strike be denied.1 I 26 1 Because the first amended complaint should be dismissed for failure to state a claim, I 27 need not address defendants’ motion to strike all claims under California’s anti-SLAPP statute. However, since I recommend that plaintiffs be granted leave to file an amended complaint, which 28 could result in further motion practice, it is worth noting that California’s anti-SLAPP statute 1 will also deny plaintiffs’ motion to file documents electronically and defendants’ request for 2 judicial notice. 3 Plaintiffs’ Motions 4 Plaintiffs request permission to file documents electronically. ECF No. 6. Under Local 5 Rule 133, parties appearing without counsel are required to file paper documents unless the 6 assigned district judge or magistrate judge grants permission to file electronically. Plaintiffs’ 7 motion does not establish a need to file electronically, and plaintiffs have demonstrated an ability 8 to file documents conventionally. Accordingly, I see no reason to deviate from the general rule, 9 and their motion is denied. 10 Plaintiffs also move to strike certain phrases from defendants’ motion—i.e., defendants’ 11 contentions that plaintiffs are “squatters” who “broke into” and “trespass[ed]” on property owned 12 by defendant Wilmington Trust, N.A. (“Wilmington”)—arguing that these statements are 13 “scandalous” and will prejudice them at trial. ECF No. 20 at 5-6. They also ask the court to 14 strike defendants’ statement that the “FAC fails to state a claim under the TCPA because there are 15 no factual allegations to show that defendant used ATDS to call plaintiff.” Id. at 9. 16 Courts can strike “from a pleading an insufficient defense or any redundant, immaterial, 17 impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). An allegation is scandalous if it 18 “unnecessarily reflects on the moral character of an individual or states anything in repulsive 19 language that detracts from the dignity of the court.” Cobell v. Norton, 224 F.R.D. 1, 5 (D.D.C. 20 2004); see also In re 2TheMart.com Secs. Litig., 114 F. Supp. 2d 955, 965 (C.D. Cal. 2000) 21 (observing that scandalous matters include allegations “that cast a cruelly derogatory light on a 22 party or other person”). Because motions to strike are disfavored, they are typically “denied 23 unless the allegations in the pleading have no possible relation to the controversy, and may cause 24 prejudice to one of the parties.” See Travelers Cas. & Sur. Co. of Am. v. Dunmore, No. 2:07-cv- 25 02493-LKK-DAD, 2010 WL 5200940, at *3 (E.D. Cal. 2010). The statements plaintiffs seek to 26 applies only to state, and not federal, claims. See Bulletin Displays, LLC v. Regency Outdoor 27 Advertising, Inc., 448 F. Supp. 2d 1172, 1182 (C.D. Cal. 2006); see also Hilton v. Hallmark Cards, 599 F.3d 894, 900 n.2 (“[W]e have long held that the anti-SLAPP statute applies to state 28 law claims that federal courts hear pursuant to their diversity jurisdiction.”). 1 strike relate to the controversy at issue. Moreover, plaintiffs have not demonstrated that they will 2 be prejudiced. Accordingly, I recommend that plaintiffs’ motion to strike be denied. 3 Defendants’ Motion to Dismiss 4 I. Factual Allegations 5 In June 2020, Mehl allegedly leased two housing units on a piece of property located in 6 Sacramento, California. ECF No. 16 at 4. In September 2020, after losing his job and falling 7 behind on the rent, Mehl was served with a notice of failure to pay rent. Id. The following 8 month, Mehl received a notice to vacate the units within three days. Id. at 4, 27. He apparently 9 remained in the units, and on October 28, 2020, Wilmington, the owner of the property, 10 commenced an unlawful detainer action against him. Id. at 4, 29-32. Wilmington, represented by 11 Snell & Wilmer, eventually reached an agreement with Mehl for dismissal of that action. Id. at 5, 12 35-36. 13 In June 2021, Mehl attempted to secure a loan to help him pay his rent. Id. at 5. 14 However, he was allegedly informed that he did not qualify for financial assistance because of the 15 unlawful detainer action. Id. Mehl then served a notice of dispute on Wilmington regarding the 16 unlawful detainer action. Id. According to plaintiffs, “[t]he notice of dispute placed a statutory 17 duty on [Wilmington] to conduct an investigation, report incomplete or inaccurate information 18 within the meaning of FCRA, to stop collecting and validate or verify the alleged rental debt.” Id. 19 at 6. 20 That same month, defendants filed a forcible detainer case against Mehl, Cupp, and other 21 individuals residing in the two units. Id. at 6, 43, 66. In August 2021, Mehl served defendants 22 with a second notice of dispute. Id. at 7, 48. He also obtained a copy of his credit report, which 23 reflected judgments against him in both the earlier unlawful detainer action and the ongoing 24 forcible detainer case. Id. at 7. Plaintiffs appear to claim that Equifax investigated Mehl’s credit 25 and determined that the judgments against him were valid. Id. at 14. Plaintiffs also appear to 26 allege that Equifax investigated Cupp’s credit and determined that the judgment against him for 27 the forcible detainer case was valid. Id. 28 1 Plaintiffs allege that a bank denied Cupp a line of credit because of the forcible detainer 2 action, that “Cupp’s good credit [was] ruined by defendant’s [sic] fraudulent debt collection 3 case,” and that “Cupp served [defendants with a] notice of credit dispute.” Id. at 13-14. 4 In August 2021, Snell & Wilmer allegedly engaged in a series of collection calls to Mehl. 5 Id. at 8. Plaintiffs allege that “the calls were made using a device with the capacity to store a 6 telephone number using a random or sequential generator.” Id. They allege that during each call 7 Mehl spoke with Lyndsey Torp, an attorney employed by Snell & Wilmer, about the underlying 8 action and the rental units. Id. at 9. They claim that Mehl informed Torp that he had not 9 consented to receiving collection calls on his cell phone and asked her to remove his number from 10 the collection list. Id. at 9-12. 11 Based on these allegations, plaintiffs claim that each defendant violated the Fair Debt 12 Collection Practices Act (“FDCPA”), California’s Rosenthal Act (“Rosenthal Act”), and the 13 Federal Fair Credit Reporting Act (“FCRA”), and that Snell & Wilmer violated the Telephone 14 Consumer Protection Act (“TCPA”). Id. at 15-22. 15 II. Rule 12(b)(6) Standards 16 “Dismissal under Rule 12(b)(6) is proper when the complaint either (1) lacks a cognizable 17 legal theory or (2) fails to allege sufficient facts to support a cognizable legal theory.” Somers v. 18 Apple, Inc., 729 F.3d 953, 959 (9th Cir. 2013). Rule 8 of the Federal Rules of Civil Procedure 19 requires that a complaint contain “a short and plain statement of the claim showing that the 20 pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). “To survive a motion to dismiss, a 21 complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is 22 plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. 23 Twombly, 550 U.S. 544, 570 (2007)). A claim has facial plausibility when a plaintiff “pleads 24 factual content that allows the court to draw the reasonable inference that the defendant is liable 25 for the misconduct alleged.” Iqbal, 556 U.S. at 678. 26 In assessing the sufficiency of the pleadings, “courts must consider the complaint in its 27 entirety, as well as other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions 28 to dismiss, in particular, documents incorporated into the complaint by reference, and matters of 1 which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 2 308, 322 (2007). The court is to “accept all factual allegations in the complaint as true and 3 construe the pleadings in the light most favorable to the nonmoving party.” Outdoor Media Grp., 4 Inc. v. City of Beaumont, 506 F.3d 895, 899-900 (9th Cir. 2007). However, “the tenet that a court 5 must accept as true all of the allegations contained in a complaint is inapplicable to legal 6 conclusions. Threadbare recitals of the elements of a cause of action, supported by mere 7 conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. “While legal conclusions can 8 provide the complaint’s framework, they must be supported by factual allegations.” Id. at 679. 9 Those facts must be sufficient to push the claims “across the line from conceivable to plausible.” 10 Id. at 683. Ultimately, the allegations must “give the defendant fair notice of what the . . . claim 11 is and the grounds upon which it rests.” Twombly, 550 U.S. at 555 (internal quotation marks and 12 citation omitted). 13 III. Analysis 14 Plaintiffs have failed to state a claim under the FDCPA, FCRA, or TCPA. These claims 15 should therefore be dismissed, and the court should decline to exercise supplemental jurisdiction 16 over the remaining state law claim. 17 A. Fair Debt Collection Practices Act 18 Defendants argue that plaintiffs’ complaint fails to state a claim under the FDCPA 19 because plaintiffs cannot “establish that a debt is owed, [that] there was a transaction between the 20 parties, or that Defendants are debt collectors as defined under the FDCPA.”2 ECF No. 18 at 16- 21 17. 22 The FDCPA was enacted “to eliminate abusive debt collection practices by debt 23 collectors, to insure that those debt collectors who refrain from using abusive debt collection 24 practices are not competitively disadvantaged, and to promote consistent State action to protect 25 consumers against debt collection abuses.” 15 U.S.C. § 1692(e). To effectuate this purpose, the 26 2 Defendants ask the court to take judicial notice of state court records and documents 27 related to the underlying action. ECF No 18-1. These documents, which appear to relate primarily to defendants’ motion to strike, need not be considered in resolving their motion to 28 dismiss. Accordingly, defendants’ request for judicial notice is denied as unnecessary. 1 FDCPA prohibits a “debt collector” from making false or misleading representations and from 2 engaging in various abusive and unfair practices. See Schlegel v. Wells Fargo Bank, N.A., 720 3 F.3d 1204, 1207-08 (9th Cir. 2013). 4 “To establish a claim under the FDCPA, a plaintiff must show: (1) she is a consumer 5 within the meaning of 15 U.S.C. § 1692a(3); (2) the debt arises out of a transaction entered into 6 for personal purposes; (3) the defendant is a debt collector within the meaning of 15 U.S.C. 7 § 1692a(6); and (4) the defendant violated one of the provisions of the FDCPA.” Alonso v. 8 Blackstone Fin. Grp. LLC, 962 F. Supp. 2d 1188, 1193-94 (E.D. Cal. 2013) (quoting Laugenour 9 v. Northland Grp. Inc., No. 2:12-cv-02995-GEB-DAD (PS), 2013 WL 3745727, at *2 (E.D. Cal. 10 July 15, 2013)). Under the FDCPA, a debt collector is defined as “any person who uses any 11 instrumentality of interstate commerce or the mails in any business the principal purpose of which 12 is the collection of any debts, or who regularly collects or attempts to collect, directly or 13 indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6). 14 “Because these prohibitions apply only to ‘debt collectors’ as defined by the FDCPA, the 15 complaint must plead ‘factual content that allows the court to draw the reasonable inference’ that 16 [the defendant] is a debt collector.” Schlegel, 720 F.3d at 1208. 17 Plaintiffs allege that defendants are debt collectors under the FDCPA because they 18 attempted to collect the debt associated with the state court case. ECF No. 16 at 15. Defendants 19 attempts to collect a single debt, however, do not make them debt collectors. See Alexander v. 20 Wells Fargo Bank, N.A., No. C15-459RAJ, 2015 WL 5123922, at *5 (W.D. Wash. Sept. 1, 2015) 21 (dismissing the FDCPA claims because the complaint did not allege that defendants’ “principal 22 business is to collect debts or that they regularly do so on behalf of others”); c.f. Smith v. Credit 23 Corp Sols., Inc., No. 3:20-CV-01295-JAH-RBB, 2022 WL 959597, at *4 (S.D. Cal. Mar. 30, 24 2022) (finding that the amended complaint sufficiently alleged a FDCPA claim because it 25 “alleges that Credit Corp is ‘a collection agency which regularly collects consumer debts,’ 26 ‘engages in debt collection,’ and ‘are debt collectors’ as defined by 15 U.S.C. § 1692a(6)”). 27 Accordingly, plaintiff’s FDCPA claim should be dismissed with leave to amend. See In re Daou 28 1 Systems, Inc., 411 F.3d 1006, 1013 (9th Cir. 2005) (“Dismissal without leave to amend is 2 improper unless it is clear . . . that the complaint could not be saved by any amendment.”). 3 B. Fair Credit Reporting Act 4 Defendants argue that the amended complaint does not state an FCRA claim because it 5 does not contain factual allegations establishing that defendants are “furnishers” of credit 6 information or that a credit reporting agency (“CRA”) provided defendants with notice of a 7 consumer dispute. ECF No. 18 at 19-20. 8 The FCRA was enacted “to ensure fair and accurate credit reporting, promote efficiency 9 in the banking system, and protect consumer privacy.” Gorman v. Wolpoff & Abramson, LLP, 10 584 F.3d 1147, 1153 (9th Cir. 2009). To ensure the accuracy of consumer credit reports, the 11 FCRA imposes certain duties on sources, known as “furnishers,” that provide information to 12 credit reporting agencies. Id. Under 15 U.S.C. § 1681s-2(b), a furnisher of information must, 13 after receiving notice from a CRA of a dispute regarding furnished information, conduct an 14 investigation; review all relevant information provided by the CRA; and report its findings of the 15 investigation to the CRA. The FCRA provides a private right of action against furnishers that fail 16 to comply with the duties described in 15 U.S.C. § 1681a-2(b). Although the FCRA does not 17 define the term “furnisher,” courts have defined it as an entity that “transmits information 18 concerning a particular debt owed by a particular consumer” to a CRA. See Heras v. Nelnet, Inc., 19 2017 WL 4586334, at *5 (C.D. Cal. Apr. 28, 2017). 20 Plaintiffs allege that defendants were aware that Mehl’s credit report inaccurately showed 21 that the unlawful detainer and forcible detainer actions resulted in judgments against him. ECF 22 No. 16 at 6-7. Plaintiffs also appear to allege that Cupp notified defendants that he disputed the 23 entry of judgment from the forcible detainer action. Id. at 13-14. Plaintiffs, however, do not 24 allege that a CRA provided defendants with a notice of a dispute, which is required to trigger the 25 statutory duties under § 1681s-2(b). See Gorman, 584 F.3d at 1154 (stating “duties [under 26 § 1681s-2(b)] arise only after the furnisher receives notice of dispute from a [credit reporting 27 agency]; notice of a dispute received directly from the consumer does not trigger the furnishers’ 28 duties under subsection (b)”). Because the complaint only alleges that plaintiffs provided notices 1 of a dispute directly to defendants, they have not stated a FCRA claim.3 Accordingly, this claim 2 should be dismissed with leave to amend. See In re Daou Systems, Inc., 411 F.3d at 1013. 3 C. Telephone Consumer Protection Act 4 Plaintiffs alleges that defendant Snell & Wilmer violated the TCPA when one of its 5 attorneys, Lyndsey Torp, called Mehl four times. ECF No. 16 at 8-12. Defendants argue that the 6 TCPA claims are insufficient because the complaint failed to allege that Snell & Wilmer either 7 made telemarketing calls or used an automatic telephone dialing system. ECF No. 18 at 22-24. 8 The TCPA prohibits making calls with an automatic telephone dialing system or an 9 artificial prerecorded voice to any telephone number assigned to a cellular telephone service 10 unless the call is made for emergency purposes or with the prior express consent of the called 11 party. 47 U.S.C. § 227(b)(1)(A). The TCPA defines “automatic telephone dialing system” as 12 “equipment which has the capacity—(A) to store or produce telephone numbers to be called, 13 using a random or sequential number generator; and (B) to dial such numbers.” Id. § 227(a)(1). 14 Plaintiffs allege that Torp called Mehl on four different occasions, and that each call was 15 “made using a device with the capacity to store a telephone number using a random or sequential 16 generator.” ECF No. 16 at 9. Aside from the conclusory nature of this allegation, their 17 contention that Torp used an automatic dialer system is implausible in light of the complaint’s 18 factual allegations. Plaintiffs allege that each of the calls concerned either specific problems 19 occurring at the subject property or the state court cases, id. at 9-12, thereby dispelling any notion 20 that the calls were made randomly. See Hufnus v. DoNotPay, Inc., No. 20-CV-08701-VC, 2021 21 WL 2585488, at *1 (N.D. Cal. June 24, 2021) (finding that numbers specifically provided by the 22 consumer did not meet the TCPA’s “random or sequential number generator” to qualify under 23 TCPA). Several courts have held that when a plaintiff provides their number—which is the only 24 logical explanation in this case—a TCPA claim does not lie—even if the plaintiff claims that the 25 defendant used an autodialer. See Brickman v. Facebook, Inc., No. 16-CV-00751-WHO, 2021 26 WL 4198512, at *2 (N.D. Cal. Sept. 15, 2021); Franco v. Alorica Inc., No. 2:20-CV-05035- 27 3 Given that dismissal is appropriate on this ground, I decline to address defendants’ 28 argument that the complaint fails to allege sufficiently that they are furnishers under the FCRA. 1 DOC-KESX, 2021 WL 3812872, at *3 (C.D. Cal. July 27, 2021) (“When a defendant randomly 2 makes calls from a curated list, it is not randomly or sequentially generating phone numbers.”). 3 Plaintiffs’ TCPA claims should also be dismissed with leave to amend. See In re Daou Systems, 4 Inc., 411 F.3d at 1013. 5 D. State Law Claim 6 Plaintiffs remaining claim is for violation of California’s Rosenthal Fair Debt Collection 7 Practices Act. ECF No. 16 at 16-18. The complaint does not establish diversity of the parties 8 and, as discussed above, plaintiffs have yet to allege a cognizable federal claim. See 28 U.S.C. 9 §§ 1331, 1332; see also Bautista v. Pan Am. World Airlines, Inc., 828 F.2d 546, 552 (9th Cir. 10 1987) (holding that the complaint must specifically allege diverse citizenship of all parties to 11 invoke diversity jurisdiction). Consequently, there is no basis for exercising supplemental 12 jurisdiction over plaintiffs’ state law claim, and it too should be dismissed. See Carnegie-Mellon 13 Univ. v. Cohill, 484 U.S. 343, 350 n.7. (1988) (“[I]n the usual case in which all federal-law claims 14 are eliminated before trial, the balance of factors to be considered under the pendent jurisdiction 15 doctrine—judicial economy, convenience, fairness, and comity—will point toward declining to 16 exercise jurisdiction over the remaining state-law claims.”); United Mine Workers of Am. v. 17 Gibbs, 383 U.S. 715, 726 (1966) (“Needless decisions of state law should be avoided both as a 18 matter of comity and to promote justice between the parties, by procuring for them a surer-footed 19 reading of the applicable law.”). Accordingly, plaintiffs’ state law claim should also be 20 dismissed. 21 Accordingly, it is hereby ORDERED that: 22 1. Plaintiffs’ motion for permission to file documents electronically, ECF No. 6, is 23 denied. 24 2. Defendants’ request for judicial notice, ECF No. 18, construed as a motion, is denied 25 as unnecessary. 26 Further, it is RECOMMENDED that: 27 1. Defendants’ motion to dismiss, ECF No. 18, be granted. 28 2. Plaintiffs’ FDCPA, FCRA, and TCPA claims be dismissed with leave to amend. 1 3. The court decline to exercise supplemental jurisdiction over plaintiffs’ Rosenthal Act 2 | claim. 3 4. Plaintiffs’ motion to strike, ECF No. 20, be denied. 4 I submit these findings and recommendations to the district judge under 28 U.S.C. 5 | § 636(b)(1)(B) and Rule 304 of the Local Rules of Practice for the United States District Court, 6 | Eastern District of California. The parties may, within 14 days of the service of the findings and 7 || recommendations, file written objections to the findings and recommendations with the court. 8 | Such objections should be captioned “Objections to Magistrate Judge’s Findings and 9 | Recommendations.” The district judge will review the findings and recommendations under 28 10 | U.S.C. § 636(b)(1)(C). 11 IT IS SO ORDERED. 13 ( 1 Ow — Dated: _ September 1, 2022 Q_——. 14 JEREMY D. PETERSON 15 UNITED STATES MAGISTRATE JUDGE 16 17 18 19 20 21 22 23 24 25 26 27 28 10