Mahon v. Anesthesia Business Consultants, LLC ( 2016 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
PAUL A. MAHON, :
:
Plaintiff, :
: Civil Action No.: 15-1227 (RC)
v. :
: Re Document Nos.: 13, 20
ANESTHESIA BUSINESS :
CONSULTANTS, LLC, :
:
Defendant. :
MEMORANDUM OPINION
GRANTING DEFENDANT’S MOTION TO DISMISS;
DENYING PLAINTIFF’S MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT
I. INTRODUCTION
Bringing claims under the federal Fair Debt Collection Practices Act (“FDCPA”) and the
District of Columbia debt collection statute, Plaintiff Paul A. Mahon alleges that Defendant
Anesthesia Business Consultants, LLC (“ABC”) continued to pursue payment of a debt
Mr. Mahon had already paid. ABC moves to dismiss Mr. Mahon’s claims. ABC argues that it is
not a debt collector subject to the FDCPA and that Mr. Mahon’s debt did not arise from a
consumer credit sale, which is a prerequisite for liability under the District of Columbia debt
collection statute. The Court agrees with ABC’s FDCPA assertions and will accordingly dismiss
Mr. Mahon’s federal claims. The Court will dismiss Mr. Mahon’s remaining claims without
prejudice, because those claims present a novel question of local law over which this Court’s
exercise of supplemental jurisdiction would be inappropriate. The Court will also deny
Mr. Mahon’s motion for leave to amend his complaint, because Mr. Mahon’s proposed
amendment would not save his claims from dismissal.
II. BACKGROUND1
According to the complaint, Plaintiff Paul A. Mahon incurred a $1320.00 medical debt on
March 20, 2014, for anesthesia administered to him at Sibley Memorial Hospital in Washington,
D.C., by a company named Certified Anesthesia Services. First Am. Compl. ¶ 21, ECF No. 16;
id. Ex. 1, ECF No. 16-1. “[A]t the time he received the anesthesia services,” Mr. Mahon believes
that he signed an agreement “acknowledging financial responsibility for the debt in its entirety,
authorizing the debt-holder to bill his medical insurance company, and agreeing to pay any
amount of the debt not paid by his medical insurance plan.” Id. ¶ 23.
Afterward, Certified Anesthesia Services “sold, assigned, transferred, or placed” the debt
with Defendant Anesthesia Business Consultants, LLC (“ABC”) “for the purpose of collecting
payment.” Id. ¶ 24. ABC received a partial payment of $1207.94 from Mr. Mahon’s primary
medical insurance provider, Cigna, on April 16, 2014. Id. ¶ 25. ABC then billed Mr. Mahon for
the amount that remained outstanding ($112.06). Id. ¶ 26; id. Ex. 1 (reproducing ABC’s bill).
1
Contemporaneously with his brief opposing ABC’s motion to dismiss, Mr. Mahon filed
a First Amended Complaint. See First Am. Compl., ECF No. 16. See generally Mot. Dismiss
Pursuant to Rule 12(b)(6), ECF No. 13 [hereinafter Def.’s Mot.]; Pl.’s Resp. Opp’n Def. ABC’s
Mot. Dismiss Pursuant to Rule 12(b)(6), ECF No. 17 [hereinafter Pl.’s Opp’n].
Because “[a] party may amend its pleading once as a matter of course within . . . 21 days
after service of a motion under Rule 12(b),” Fed. R. Civ. P. 15(a), the First Amended Complaint
is the operative complaint here. See Def.’s Mot. 2 (indicating that ABC served its Rule 12(b)
motion on October 13, 2015); First Am. Compl. (showing that Mr. Mahon filed his First
Amended Complaint on October 27, 2015, or fourteen days after ABC served its motion to
dismiss). The Court therefore cites principally to the First Amended Complaint in this Part and
presumes that Mr. Mahon’s factual allegations in that complaint are true. See United States v.
Philip Morris, Inc., 116 F. Supp. 2d 131, 135 (D.D.C. 2000) (“At the motion to dismiss stage,
‘the only relevant factual allegations are the plaintiffs’,’ and they must be presumed to be true.”
(quoting Ramirez de Arellano v. Weinberger, 745 F.2d 1500, 1506 (D.C. Cir. 1984))).
Although the First Amended Complaint names Suburban Credit Corporation of Virginia,
Inc. (“SCC”) as an additional defendant, SCC has since settled with Mr. Mahon and is no longer
a defendant in this case. See Stipulation of Dismissal with Prejudice, ECF No. 27. The Court thus
omits discussion of facts and claims relevant to SCC.
2
ABC’s bill asked Mr. Mahon to address his payment check to “Surgical and Anes Assoc.” Id.
Ex. 1. With a check dated May 6, 2014 and made out to “Surgical & Anes Assoc,” Mr. Mahon
paid the $112.06 in full. Id. ¶ 28; id. Ex. 3, ECF No. 16-3 (reproducing Mr. Mahon’s check).
ABC deposited Mr. Mahon’s check on May 12, 2014. Id. ¶ 28; id. Ex. 3.
But even though Mr. Mahon had paid the outstanding balance, ABC sent Mr. Mahon a
second bill, for the same $112.06, on July 2, 2014. Id. ¶ 29; id. Ex. 4 (reproducing the July 2,
2014 bill). Again, ABC’s bill asked Mr. Mahon to address his payment check to “Surgical and
Anes Assoc.” Id. Ex. 4, ECF No. 16-4. The bill’s sender was likewise labeled as “Surgical and
Anes Assoc.” Id. ¶ 30; id. Ex. 4. In addition to the written bill, ABC also called Mr. Mahon four
times in July and August 2014 and left voice messages about the asserted debt. Id. ¶ 31. Having
paid the $112.06 already, Mr. Mahon twice called ABC in July and August 2014 to dispute the
debt and to ask ABC to produce records demonstrating an unpaid bill. Id. ¶ 32.
ABC never produced any records demonstrating an unpaid bill, and in October 2014 it
instead “sold, assigned, transferred, or placed” Mr. Mahon’s account with another company for
debt collection purposes. Id. ¶ 34. Mr. Mahon asserts that ABC did not tell that company that
Mr. Mahon had disputed the debt. Id. ¶ 35.
Mr. Mahon filed suit in this Court in July 2015. See Compl., ECF No. 1. His complaint
brings claims for violations of the federal Fair Debt Collection Practices Act (“FDCPA”), 15
U.S.C. §§ 1692–1692p, and the District of Columbia debt collection statute, D.C. Code
§ 28-3814. See First Am. Compl. ¶¶ 64–76. ABC moves to dismiss Mr. Mahon’s claims. See
Mot. Dismiss Pursuant to Rule 12(b)(6), ECF No. 13. With respect to Mr. Mahon’s FDCPA
claims, ABC argues that ABC is not a debt collector as defined in the FDCPA, so the Court must
dismiss the FDCPA claims because the FDCPA does not apply to ABC. Statement P. & A. Supp.
3
Mot. Dismiss Pursuant to Rule 12(b)(6), at 3–4 [hereinafter Def.’s Statement]. With respect to
Mr. Mahon’s District of Columbia statutory claims, ABC argues that Mr. Mahon’s debt did not
arise from a consumer credit sale, the presence of which is a requirement for his claims’ success
under the relevant statute, so the Court must also dismiss Mr. Mahon’s District of Columbia
statutory claims. Id. at 4–6.2
Unsurprisingly, Mr. Mahon’s opposition disagrees with ABC’s arguments. See Pl.’s
Resp. Opp’n Def. ABC’s Mot. Dismiss Pursuant to Rule 12(b)(6), at 4–10, ECF No. 17
[hereinafter Pl.’s Opp’n]. But Mr. Mahon also moves to amend his complaint “to more
accurately describe the relationship between Defendant ABC and C[ertified] A[nesthesia]
S[ervices], the party that originated the debt” and “to more fully lay out its claim against
Defendant ABC on that basis.” Pl.’s Mot. Leave Amend Compl. Pursuant to Rule 15(a)(2), at 2,
ECF No. 20 [hereinafter Pl.’s Mot. Leave]. The Court addresses each pending motion in turn.
III. ABC’S MOTION TO DISMISS
A. Legal Standard
The Federal Rules of Civil Procedure require that a complaint contain “a short and plain
statement of the claim” in order to give the defendant fair notice of the claim and the grounds
upon which it rests. Fed. R. Civ. P. 8(a)(2); accord Erickson v. Pardus, 551 U.S. 89, 93 (2007)
(per curiam). A motion to dismiss under Rule 12(b)(6) does not test a plaintiff’s ultimate
2
ABC’s motion to dismiss also argues that the Court must dismiss one of Mr. Mahon’s
FDCPA claims because Mr. Mahon never disputed his debt in writing. See Def.’s Statement 6–7
(arguing for dismissal of Mr. Mahon’s claim under 15 U.S.C. § 1692g). Because Mr. Mahon’s
amended complaint omits that claim, the Court need not discuss the merits of this argument.
Compare Compl. ¶ 68 (charging ABC with a violation of 15 U.S.C. § 1692g(b)), with First Am.
Compl. ¶¶ 64–71 (omitting the § 1692g claim against ABC). In any event, as discussed below,
all of Mr. Mahon’s FDCPA claims must be dismissed because ABC is not a debt collector
subject to the FDCPA. See infra Part III.B.
4
likelihood of success on the merits; rather, it tests whether a plaintiff has properly stated a claim.
See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Brewer v. District of Columbia, 891 F. Supp.
2d 126, 130 (D.D.C. 2012). A court considering such a motion presumes that the complaint’s
factual allegations are true and construes them liberally in the plaintiff’s favor. See, e.g., United
States v. Philip Morris, Inc., 116 F. Supp. 2d 131, 135 (D.D.C. 2000). It is not necessary for the
plaintiff to plead all elements of his prima facie case in the complaint. See Swierkiewicz v.
Sorema N.A., 534 U.S. 506, 511–14 (2002); Bryant v. Pepco, 730 F. Supp. 2d 25, 28–29 (D.D.C.
2010).
Nevertheless, “[t]o survive a motion to dismiss, a 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 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). This means that a plaintiff’s factual allegations “must be enough to raise a right to relief
above the speculative level on the assumption that all the allegations in the complaint are true
(even if doubtful in fact).” Twombly, 550 U.S. at 555–56 (citations and footnote omitted).
“Threadbare recitals of the elements of a cause of action, supported by mere conclusory
statements,” are therefore insufficient to withstand a motion to dismiss. Iqbal, 556 U.S. at 678. A
court need not accept a plaintiff’s legal conclusions as true, see id., nor must a court presume the
veracity of the legal conclusions that are couched as factual allegations, see Twombly, 550 U.S.
at 555.3
3
In deciding a motion to dismiss under Rule 12(b)(6), a court may not rely on matters
outside the pleadings without converting the motion to one for summary judgment, Fed. R. Civ.
P. 12(d), though it may consider documents attached to the complaint as exhibits, documents
incorporated by reference, and matters on which the court may take judicial notice, Abhe &
Svoboda, Inc. v. Chao, 508 F.3d 1052, 1059 (D.C. Cir. 2007).
5
B. Fair Debt Collection Practices Act Claims
The federal Fair Debt Collection Practices Act (“FDCPA”) aims “to eliminate abusive
debt collection practices by debt collectors, to insure that those debt collectors who refrain from
using abusive debt collection practices are not competitively disadvantaged, and to promote
consistent State action to protect consumers against debt collection abuses.” 15 U.S.C. § 1692(e).
See generally Fair Debt Collection Practices Act, Pub. L. No. 95-109, 91 Stat. 874 (1977)
(codified as amended at 15 U.S.C. §§ 1692–1692p). Its provisions govern debt collectors’
acquisition of location information, debt-related communications and representations,
debt-related conduct, and debt validation. See 15 U.S.C. §§ 1692b–1692g. The FDCPA also
makes debt collectors who violate its provisions civilly liable for actual damages, statutory
damages, and attorney’s fees and costs. See id. § 1692k(a).
But the FDCPA’s reach is limited. Its substantive provisions apply only to “debt
collectors,” as defined under the statute. See id. § 1692a(6) (defining “debt collector” for FDCPA
purposes); see, e.g., id. § 1692e (“A debt collector may not use any false, deceptive or
ABC has attached an internet page to its reply in support of its motion. See Reply Mem.
Pl.’s Resp. Opp’n Def.’s Mot. Dismiss Ex. A, ECF No. 18-1; see also Def.’s Statement 1
(referring to ABC’s “Exhibit A,” and asserting that Exhibit A reproduces the homepage of a
private physician practice group called “Surgical Anesthesia Associates, PLLC”); Reply Mem.
Pl.’s Resp. Opp’n Def.’s Mot. Dismiss 4 n.2, ECF No. 18 (explaining that, because ABC
neglected to attach its Exhibit A to its motion to dismiss, ABC attached Exhibit A to its reply).
[hereinafter Def.’s Reply]. Although internet pages may be judicially noticeable, see, e.g., Spy
Optic, Inc. v. Alibaba.Com, Inc., No. 15-0659, 2015 WL 7303763, at *4 (C.D. Cal. Sept. 28,
2015), the Court declines to take judicial notice of ABC’s Exhibit A. Because ABC belatedly
produced Exhibit A in its reply, instead of in its motion to dismiss, Mr. Mahon never received an
opportunity to respond to Exhibit A in his opposition brief. See generally Fed. R. Evid. R. 201(e)
(explaining that, in general, “a party is entitled to be heard on the propriety of taking judicial
notice and the nature of the fact to be noticed”). The Court accordingly will not consider Exhibit
A in its analysis of ABC’s motion to dismiss.
The Court also does not rely on the billing service agreement ABC produced in its
opposition to Mr. Mahon’s motion for leave to file a second amended complaint. See Obj. Pl.’s
Mot. Leave Amend Compl. Pursuant to Rule 15(a)(2), Ex. A, ECF No. 21-1.
6
misleading representation . . . .” (emphasis added)); id. § 1692g(b) “If the consumer notifies the
debt collector in writing . . . that the debt . . . is disputed . . . , the debt collector shall cease
collection of the debt . . . until the debt collector obtains verification of the debt . . . .” (emphasis
added)). To fall within the act’s prescriptions, therefore, an entity must meet the criteria
identified in the FDCPA’s “long and somewhat convoluted definition of the term ‘debt
collector.’” Wadlington v. Credit Acceptance Corp., 76 F.3d 103, 106 (6th Cir. 1996).
The FDCPA initially defines “debt collector” to include “any person who uses . . .
interstate commerce or the mails in . . . the collection of any debts” and “any person . . . who
regularly . . . attempts to collect . . . debts owed or due . . . another.” 15 U.S.C. § 1692a(6).
Working from this presumptive definition, the FDCPA both adds to and subtracts from it.
First, the FDCPA adds to the set of “debt collectors” covered by declaring that “the term
includes any creditor who, in the process of collecting his own debts, uses any name other than
his own which would indicate that a third person is collecting . . . such debts.” Id. This “so-called
false name exception” is “a departure from the general rule that creditors are not subject to the
FDCPA.” Vincent v. Money Store, 736 F.3d 88, 97 (2d Cir. 2013).
Second, the FDCPA subtracts from its initial “debt collector” definition by excluding six
categories of possible “debt collectors.” See 15 U.S.C. § 1692a(6)(A)–(F). The one relevant
here—the sixth category—declares that “debt collector” does not include, among other persons,
“any person collecting . . . any debt . . . asserted to be owed or due another to the extent such
activity . . . concerns a debt which was not in default at the time it was obtained by such
person . . . .” Id. § 1692a(6)(F)(iii). In other words, if the alleged debt collector “was handling
the [debt] before it went into default, it is not a debt collector” under the FDCPA. Parker v. BAC
Home Loans Servicing LP, 831 F. Supp. 2d 88, 93 (D.D.C. 2011); accord Wadlington, 76 F.3d at
7
107 (holding that the defendant was a creditor, not a debt collector, under the FDCPA, because
“the debts in question . . . were not ‘in default’” when the defendant received them); Perry v.
Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985) (“[A] debt collector does not include the
consumer’s creditors, a mortgage servicing company, or an assignee of a debt, as long as the debt
was not in default at the time it was assigned.”).
Here, ABC falls squarely within the sixth category of possible “debt collectors” excluded
from the “debt collector” definition, because it began handling Mr. Mahon’s medical debt when
it was not in default. “[T]he FDCPA does not define so key a term as ‘default[,]’” Alibrandi v.
Fin. Outsourcing Servs., 333 F.3d 82, 86 (2d Cir. 2003), so courts must typically “look to any
underlying contracts and applicable law governing the debt at issue” to decide whether a debt is
in default, De Dios v. Int’l Realty & Invs., 641 F.3d 1071, 1074 (9th Cir. 2011). Federal
regulations, for instance, “have defined default as commencing anywhere between 30 and 270
days after a debt becomes due.” Alibrandi, 333 F.3d at 87 (noting, for various kinds of debts,
pre-default periods of 30, 90, 180, and 270 days set by federal regulation).
But even without clear guidance about what a debt “in default” is under the FDCPA, it is
clear what a debt “in default” is not: a debt that has just become due. “[C]ourts have repeatedly
distinguished between a debt that is in default and a debt that is merely outstanding, emphasizing
that only after some period of time does an outstanding debt go into default.” Id. at 86 (footnote
omitted) (citing Skerry v. Mass. Higher Educ. Assistance Corp., 73 F. Supp. 2d 47, 51 (D. Mass.
1999); Jones v. Intuition, Inc., 12 F. Supp. 2d 775, 779 (W.D. Tenn. 1998)). The Second Circuit
has expressly rejected “the proposition that default occurs immediately after a debt becomes
due.” Id. at 87. In justifying that rejection, the Second Circuit noted that, if default occurs
immediately after payment becomes due, then payments’ due dates would “immediately expos[e]
8
debtors to the sort of adverse measures, such as acceleration, repossession, increased interest
rates, and negative reports to credit bureaus, from which the Act intended to afford debtors a
measure of protection.” Id.
Thus, if ABC began handling Mr. Mahon’s medical debt before it became due, then ABC
must have obtained the debt when the debt was not in default. The exhibit Mr. Mahon attached to
his complaint shows that this was the case: in the bill Mr. Mahon first received from ABC, ABC
did not include any language stating that Mr. Mahon’s debt was in default; ABC simply stated
that “[b]ills are due and payable when rendered.” See First Am. Compl. ¶ 26; id. Ex. 1, at 2. And
Mr. Mahon’s complaint does not allege that his debt was in default. See id. ¶¶ 21–26. Instead, it
establishes a concise timeline, in which (1) Mr. Mahon received services on March 20, 2014;
(2) the service provider “sold, assigned, transferred, or placed” his account with ABC for
payment collection; (3) ABC billed Mr. Mahon for his debt; (4) Mr. Mahon mailed his payment
to ABC on May 6, 2014; and (5) ABC deposited the check on May 12, 2014. Id. ¶¶ 21–28.
Under this timeline, ABC must have begun handling Mr. Mahon’s debt before the issuance of his
very first bill, which was sometime before May 6, 2014—in other words, before the debt became
due. Because ABC was therefore “collecting . . . a debt which was not in default at the time it
was obtained” by ABC, the FDCPA expressly excludes ABC from the set of “debt collectors”
governed by the FDCPA’s provisions. 15 U.S.C. § 1692a(6)(F).
Mr. Mahon does not attempt to rebut this argument. See Pl.’s Opp’n 4–6. Instead, he
argues that “ABC is a ‘debt collector’ under the FDCPA because it used a false name[,] ‘Surgical
and Anes Assoc,’ in the process of collecting its debts.” Id. at 4. In this manner, Mr. Mahon
implicitly concedes that ABC is a “creditor,” not a “debt collector”—but he argues that ABC is a
creditor subject to the “false name exception,” through which the FDCPA extends the scope of
9
its application to a creditor “who, in the process of collecting [its] own debts, uses any name
other than [its] own which would indicate that a third person is collecting or attempting to collect
such debts.” 15 U.S.C. § 1692a(6); see Pl.’s Opp’n 4–6.
Mr. Mahon has not, however, alleged facts that show that ABC satisfies each statutory
element required for the false name exception to apply. “The text of the exception . . . sets forth
three elements that must be satisfied before deeming a creditor a debt collector pursuant to the
false name exception: (1) the creditor is collecting its own debts; (2) the creditor ‘uses’ a name
other than its own; and (3) the creditor’s use of that name falsely indicates that a third person is
‘collecting or attempting to collect’ the debts that the creditor is collecting.” Vincent v. Money
Store, 736 F.3d 88, 98 (2d Cir. 2013); see 15 U.S.C. § 1692a(6). Although, as characterized in
Mr. Mahon’s complaint, ABC satisfies the first two elements, the third statutory element is
missing here. The Court addresses each element in turn.
With respect to the first element, ABC is indeed a creditor collecting its own debts. As
discussed above, ABC is not a “debt collector” under the FDCPA. ABC is therefore a creditor
under the FDCPA. See Bridge v. Ocwen Fed. Bank, FSB, 681 F.3d 355, 359 (6th Cir. 2012)
(explaining that “an entity that did not originate the debt in question but acquired it and attempts
to collect on it . . . is either a creditor or a debt collector depending on the default status of the
debt at the time it was acquired”).
Although ABC contends that the “either a creditor, or else a debt collector” dichotomy
for companies like itself is a “false syllogism,” Reply Mem. Pl.’s Resp. Opp’n Def.’s Mot.
Dismiss 2, ECF No. 18 [hereinafter Def.’s Reply], an entity that acquires a debt and seeks to
collect it cannot be neither a creditor nor a debt collector. Bridge, 681 F.3d at 359. “To allow
such an entity to define itself out of either category would mean that the intended protection of
10
the FDCPA is unavailable.” Id. Thus, for instance, “a loan servicer . . . can either stand in the
shoes of a creditor or become a debt collector, depending on whether the debt was assigned for
servicing before the default or alleged default occurred.” Id. (citing Wadlington v. Credit
Acceptance Corp., 76 F.3d 103, 106–08 (6th Cir. 1996); Perry v. Stewart Title Co., 756 F.2d
1197, 1208 (5th Cir. 1985)). Put another way,
[i]f the one who acquired the debt continues to service it, it is acting much like the
original creditor that created the debt. On the other hand, if it simply acquires the
debt for collection, it is acting more like a debt collector. To distinguish between
these two possibilities, the Act uses the status of the debt at the time of the
assignment[.] . . . [T]he Act treats assignees as debt collectors if the debt sought to
be collected was in default when acquired by the assignee, and as creditors if it
was not.
Schlosser v. Fairbanks Capital Corp., 323 F.3d 534, 536 (7th Cir. 2003); accord FTC v. Check
Inv’rs, Inc., 502 F.3d 159, 173 (3d Cir. 2007).
The dichotomy between debt collectors and creditors delineates who qualifies as an
FDCPA “creditor” in general, as well as who qualifies as a “creditor” under the false name
exception to the FDCPA’s “debt collector” definition:
The same [principle] is true of a creditor who uses any name other than his own
which would indicate that a third person is attempting to collect the debt. No such
creditor may escape liability by alleging that it is neither a creditor nor a debt
collector and thus not subject to the FDCPA.
Bridge, 681 F.3d at 360 (citation omitted).
Here, as discussed above, ABC cannot be a “debt collector” under the FDCPA because it
obtained Mr. Mahon’s medical debt when that debt was not in default. Instead, ABC was “acting
much like the original creditor that created the debt,” Schlosser, 323 F.3d at 536.4 Under the false
4
Hence, ABC incorrectly argues that it was “not a creditor collecting its own debts
because it is actually a billing service company that issued an invoice for a non-defaulted debt.”
Def.’s Reply 2.
11
name exception, therefore, if ABC used a name other than its own “which would indicate that a
third person [was] . . . attempting to collect the debt,” then ABC could still be subject to the
FDCPA, even though it was not acting as a “debt collector.” See 15 U.S.C. § 1692a(6).
Having decided that ABC is a “creditor collecting its own debts” and thus satisfies the
first element required to invoke the FDCPA’s false name exception, the Court now turns to the
second and third elements: (2) whether “the creditor ‘uses’ a name other than its own,” and
(3) whether “the creditor’s use of that name falsely indicates that a third person is ‘collecting or
attempting to collect’ the debts that the creditor is collecting.” Vincent v. Money Store, 736 F.3d
88, 98 (2d Cir. 2013).
With respect to the second element, the complaint alleges that ABC used a name other
than its own—“Surgical and Anes Assoc”—in the process of collecting the balance of
Mr. Mahon’s medical debt. See First Am. Compl. ¶¶ 26, 29–30; id. Exs. 1, 4, ECF Nos. 16-1,
16-4. ABC does not dispute that its use of that name satisfies the second element of the
false-name-exception analysis. See Def.’s Reply 2–6.
With respect to the third element, however, even though ABC was a creditor collecting
its own debts and using a name other than its own, the facts in Mr. Mahon’s complaint do not
show that ABC was using an alternative name that “would indicate that a third person is
collecting or attempting to collect such debts.” 15 U.S.C. § 1692a(6). This missing element is
fatal to Mr. Mahon’s FDCPA claims.
To avoid FDCPA coverage under the false name exception, a creditor “should use ‘the
name under which it usually transacts business, or a commonly-used acronym,’ or any name that
it has used from the inception of the credit relation.” Maguire v. Citicorp Retail Servs., Inc., 147
F.3d 232, 235 (2d Cir. 1998) (citations omitted) (quoting Federal Trade Commission Staff
12
Commentary on the FDCPA, 53 Fed. Reg. 50,097, 50,107 (Dec. 13, 1988)). The creditor “need
not use its full business name or its name of incorporation.” Id.; accord Gutierrez v. AT&T
Broadband, LLC, 382 F.3d 725, 739 (7th Cir. 2004); Rollo v. Chase Home Fin. LLC,
No. 12-2914, 2013 WL 1390676, at *4 (S.D. Tex. Apr. 4, 2013); Dickenson v. Townside T.V. &
Appliance, 770 F. Supp. 1122, 1128 (S.D. W. Va. 1990). Because the purpose of the false name
exception is “to keep the debtor from being deceived into believing some third party other than
the creditor with whom [he] has been dealing has been enlisted to collect the debt,” Leggett v.
Louis Capra & Assocs., LLC, No. 13-5847, 2015 WL 1608662, at *10 (N.D. Ill. Apr. 10, 2015),
“[d]efendants may use assumed names for debt collection, so long as defendants are consistent in
using the assumed name to avoid consumer confusion,” Everst v. Credit Prot. Ass’n, L.P.,
No. 01-7025, 2003 WL 22048719, at *4 (N.D. Ill. Aug. 25, 2003). Accord Leasure v. Willmark
Cmtys., Inc., No. 11-0443, 2013 WL 6097944, at *3 (S.D. Cal. Mar. 14, 2013); Wolfe v. Bank
One Corp., 433 F. Supp. 2d 845, 847–48 (N.D. Ohio 2005). To determine whether a debtor
would be deceived, the Court must evaluate “whether the ‘least sophisticated consumer’ would
be deceived by the collection practice.” Maguire, 147 F.3d at 236; accord Nrivnak v. NCO
Portfolio Mgmt., 994 F. Supp. 2d 889, 900 (N.D. Ohio 2014).
Here, when ABC began its credit relationship with Mr. Mahon, it used the name
“Surgical and Anes Assoc” to bill him for the $112.06 debt. See First Am. Compl. ¶ 26; id. Ex. 1
(directing Mr. Mahon to address his payment to “Surgical and Anes Assoc”). When ABC sent
Mr. Mahon a second bill, ABC continued to use the name “Surgical and Anes Assoc.” Id.
¶¶ 29–30; id. Ex. 4 (also designating “Surgical and Anes Assoc” as the payee). And in the later
telephone calls between ABC and Mr. Mahon, Mr. Mahon does not allege that ABC
inconsistently used its assumed name. See id. ¶¶ 31–32.
13
Indeed, “Anesthesia Business Associates, LLC” never appears on the complaint’s
reproductions of ABC’s bills. See id. Exs. 1, 4. Nor does Mr. Mahon allege that he was ever
confused by ABC’s use of the name “Surgical and Anes Assoc.” See id. ¶¶ 25–33; Pl.’s Opp’n
4–6. See generally Franceschi v. Mautner–Glick Corp., 22 F. Supp. 2d 250, 255 (S.D.N.Y.
1998) (noting that the plaintiff did not “even allege that he suffered confusion” about the
relationship between the alleged debt collector and the creditor, and finding the false name
exception inapplicable). On these facts, ABC consistently used the name “Surgical and Anes
Assoc” throughout its dealings with Mr. Mahon.
“Surgical and Anes Assoc” was thus “the only party of whom [Mr. Mahon] was aware
and was the entity to which he believed he owed the debt.” Gutierrez, 382 F.3d at 739 (holding,
in a case with similar facts, that the defendant did not fall under the false name exception’s
ambit). Even the “least sophisticated consumer” would not think that “some third party” other
than the creditor (which, to Mr. Mahon, had always been “Surgical and Anes Assoc”) was
enlisted to collect the debt. Leggett, 2015 WL 1608662, at *10. In fact, it “would have created
more confusion” if ABC “started listing itself . . . as [Mr. Mahon’s] creditor instead of the name
in which all other business had been transacted.” Gutierrez, 382 F.3d at 739.5
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ABC’s bills also lack any reference to “Certified Anesthesia Associates,” which,
according to Mr. Mahon’s complaint, originated his medical debt. See First Am. Compl. ¶ 21; id.
Exs. 1, 4. Thus, as with ABC and “Surgical and Anes Assoc,” the least sophisticated consumer
would not have suffered confusion about the relationship between Certified Anesthesia
Associates and ABC (or “Surgical and Anes Assoc,” the name by which ABC was known to
Mr. Mahon). When a complaint “alleges that [the plaintiff] simply didn’t know the entity to
which he incurred the debt, because its name was undisclosed . . . , and then a bill was later
received from, and harassing calls were made by, [the defendant],” the plaintiff fails to state a
claim under the FDCPA. A.W. v. Preferred Platinum Plan, Inc., 923 F. Supp. 2d 1168, 1172 (D.
Minn. 2013).
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Because ABC always corresponded with Mr. Mahon using the “name that it has used
from the inception of the credit relation,” the false name exception does not apply to ABC.
Maguire v. Citicorp Retail Servs., 147 F.3d 232, 235 (2d Cir. 1998). ABC thus is not a “debt
collector” under the FDCPA for two reasons: (1) it obtained Mr. Mahon’s debt when it was not
in default, and (2) it is not a creditor “who, in the process of collecting his own debts, uses any
name other than his own which would indicate that a third person is collecting or attempting to
collect such debts.” 15 U.S.C. § 1692a(6). Because Mr. Mahon’s FDCPA claims against ABC
can only proceed against a “debt collector,” they must be dismissed. See id. § 1692e (“A debt
collector may not use any false, deceptive, or misleading representation or means in connection
with the collection of any debt.” (emphasis added)); First Am. Compl. ¶¶ 66, 67, 69 (asserting
FDCPA claims against ABC under § 1692e).
C. Claims Under the District of Columbia Debt Collection Statute
The Court now turns to Mr. Mahon’s claims under the District of Columbia debt
collection statute, D.C. Code § 28-3814. Mr. Mahon asserts that this Court has jurisdiction over
these claims under the federal supplemental jurisdiction statute, 28 U.S.C. § 1367. First Am.
Compl. ¶ 3. Mr. Mahon does not assert that this Court has diversity jurisdiction over these claims
under 28 U.S.C. § 1332. First Am. Compl. ¶¶ 3–6. Nor does it appear that the amount these
claims put in controversy exceeds $75,000, the amount in controversy which § 1332 requires to
establish diversity jurisdiction. See 28 U.S.C. § 1332(a); First Am. Compl. 11 (asserting, under
District of Columbia statutes, statutory damages in the amount of $100.00, as well as actual
damages, punitive damages, and reasonable attorney’s fees, but without specifying whether the
amount in controversy exceeds $75,000). Supplemental jurisdiction under § 1367 thus provides
the sole source of federal jurisdiction over Mr. Mahon’s District of Columbia statutory claims.
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The Court has discretion to decline to exercise that jurisdiction. See 28 U.S.C. § 1367(c) (“The
district courts may decline to exercise supplemental jurisdiction . . . if . . . the claim raises a
novel or complex issue of State law, . . . [or] the district court has dismissed all claims over
which it has original jurisdiction . . . .”).
Having determined that Mr. Mahon’s federal claims must be dismissed, the Court
declines to exercise supplemental jurisdiction over the remaining District of Columbia statutory
claims. See Shekoyan v. Sibley Int’l, 409 F.3d 414, 424 (D.C. Cir. 2005) (“[I]n the usual case in
which all federal-law claims are dismissed before trial, the balance of factors to be considered
under the pendent jurisdiction doctrine—judicial economy, convenience, fairness, and comity—
will point toward declining to exercise jurisdiction over the remaining state-law claims.”
(alteration in original) (internal quotation marks omitted)). And supplemental jurisdiction is
doubly inappropriate here, given how few cases interpret the term “payable in installments” in
D.C. Code § 28-3802(2), an issue on which the parties focus their briefing. See Def.’s Statement
5–6 (arguing that Mr. Mahon’s medical debt cannot be a “consumer credit sale” covered by D.C.
Code § 28-3814 because it was not “payable in installments”); Pl.’s Opp’n 6–9 & n.3; Def.’s
Reply 6–7. The Court is aware of just two opinions from the District of Columbia Court of
Appeals bearing on this issue, and even those opinions reach the issue only in dicta. See Wetzel v.
Capital City Real Estate, LLC, 73 A.3d 1000, 1003 n.3 (D.C. 2013); Sterling Mirror of Md., Inc.
v. Gordon, 619 A.2d 64, 67 (D.C. 1993). Because Mr. Mahon’s District of Columbia statutory
claims present a novel question of local law, the Court declines to exercise supplemental
jurisdiction over these claims and will dismiss them without prejudice so that Mr. Mahon, if he
chooses, can bring them before a District of Columbia court for adjudication on the merits. See
generally 28 U.S.C. § 1367(c)(1); Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 (1988)
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(“When . . . the federal-law claims have dropped out of the lawsuit in its early stages and only
state-law claims remain, the federal court should decline the exercise of jurisdiction by
dismissing the case without prejudice.” (footnote omitted)).
IV. MR. MAHON’S MOTION FOR LEAVE TO AMEND
Under Federal Rule of Civil Procedure 15(a)(1), a party may amend his pleading once as
matter of course within twenty-one days after serving it, or twenty-one days after service of a
responsive pleading under Rule 12(b), (e) or (f). See Fed. R. Civ. P. 15(a)(1). Mr. Mahon has
already exercised this right. See First Am. Compl. After a party has already amended his
pleading once as a matter of course, he “may amend [his] pleading only with the opposing
party’s written consent or the court’s leave.” Fed. R. Civ. P. 15(a)(2). Hoping to amend his
complaint once more, and not having obtained ABC’s written consent, Mr. Mahon now seeks the
Court’s leave to do so. See Pl.’s Mot. Leave.
Typically, leave to amend a complaint should be freely given “when justice so requires.”
Fed R. Civ. P. 15(a)(2). In deciding whether to allow a party to amend a complaint, however,
courts may consider “undue delay, bad faith or dilatory motive on the part of the movant,
repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the
opposing party by virtue of allowance of the amendment, futility of amendment, etc.” Harris v.
Sec’y, U.S. Dep’t of Veterans Affairs, 126 F.3d 339, 344 (D.C. Cir. 1997) (quoting Foman v.
Davis, 371 U.S. 178, 182 (1962)). “An amendment would be futile if it merely restates the same
facts as the original complaint in different terms, reasserts a claim on which the court previously
ruled, fails to state a legal theory, or could not withstand a motion to dismiss.” Robinson v.
Detroit News, Inc., 211 F. Supp. 2d 101, 114 (D.D.C. 2002).
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Here, Mr. Mahon’s proposed second amended complaint falls into the last category of
futile amendments: it cannot withstand a motion to dismiss, for the same reasons as those
dooming his first amended complaint. As discussed above, the FDCPA claims in Mr. Mahon’s
first amended complaint must be dismissed because ABC is not a “debt collector” under the
FDCPA. See supra Part III.B. The Court’s conclusion relied on two key facts: (1) ABC obtained
Mr. Mahon’s debt when it was not in default, which means ABC is a creditor under the FDCPA,
and (2) ABC consistently used the name “Surgical and Anes Assoc” to correspond with
Mr. Mahon, which means ABC does not fall within the false name exception in the FDCPA
definition of “debt collector.” See id. Because Mr. Mahon’s proposed second amended complaint
does not alter either of these facts, it, just like the first amended complaint, does not state a claim
under the FDCPA. See Pl.’s Mot. Leave Ex. 1, ¶¶ 22–30, ECF No. 20-1 (showing Mr. Mahon’s
proposed second amended complaint, which again indicates that ABC obtained Mr. Mahon’s
debt before Mr. Mahon had ever received a bill for that debt); id. ¶¶ 28–33 (indicating that ABC
consistently used the name “Surgical and Anes Assoc” throughout its communications with
Mr. Mahon). Faced with ABC’s motion to dismiss, Mr. Mahon’s amended FDCPA claims, just
like his current FDCPA claims, would be dismissed.
For the same reasons, Mr. Mahon’s proposed second amended complaint cannot save
Mr. Mahon’s District of Columbia statutory claims from dismissal either. The proposed
complaint does not change Mr. Mahon’s legal theory under District of Columbia law—namely,
that ABC’s efforts to collect Mr. Mahon’s medical debt are actionable under the debt collection
statute, D.C. Code § 28-3814, because the debt arose from a “consumer credit sale” that was
“payable in installments.” See Pl.’s Mot. Leave 3–4 (alleging no change in Mr. Mahon’s theory
of his case); id. Ex. 1, ¶¶ 22–30 (same). As discussed before, this argument presents a novel
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question of local law, which means that supplemental jurisdiction would be inappropriate if the
Court has already dismissed accompanying federal law claims. See supra Part III.C (discussing
supplemental jurisdiction). Faced with ABC’s motion to dismiss, the proposed second amended
complaint’s claims under the District of Columbia debt collection statute, just like the first
amended complaint’s claims under that statute, would be dismissed without prejudice. See id.
Neither the FDCPA nor the District of Columbia statutory claims in Mr. Mahon’s
proposed second amended complaint could withstand ABC’s motion to dismiss. Because his
amended complaint would be futile, the Court will deny Mr. Mahon’s motion for leave to file it.
See Harris, 126 F.3d at 344 (noting the futility of a proposed amended pleading as a reason to
deny leave to amend it); Robinson, 211 F. Supp. 2d at 114 (“An amendment would be futile if
it . . . could not withstand a motion to dismiss.”).
V. CONCLUSION
For the reasons set forth above, ABC’s motion to dismiss (ECF No. 13) is GRANTED,
and Mr. Mahon’s motion for leave to file a second amended complaint (ECF No. 20) is
DENIED. An order consistent with this Memorandum Opinion is separately and
contemporaneously issued.
Dated: April 13, 2016 RUDOLPH CONTRERAS
United States District Judge
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