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Hatfield v. Portfolio Recovery Associates L.L.C.

United States District Court, E.D. Michigan, Southern Division

January 31, 2017

PORTFOLIO RECOVERY ASSOCIATES, LLC, a foreign limited liability company, and WEBER & OLCESE, P.C., a Michigan Professional Corporation, Defendants.



         This action arises from a complaint filed by Defendant Portfolio Recovery Associates, LLC (“PRA”) and Defendant Weber & Olcese, P.C. (collectively, “Defendants”) against Plaintiff Brenda L. Hatfield alleging defaulted debts in Michigan state court. Shortly after the parties stipulated to a dismissal, Plaintiff filed the complaint initiating this matter. In her complaint filed on December 15, 2015, Plaintiff alleges two counts against PRA: (1) violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., and (2) fraud. Presently before the Court is Defendant PRA's motion for judgment on the pleadings filed pursuant to Federal Rule of Civil Procedure 12(c). The motions have been fully briefed. Finding the facts and legal arguments sufficiently presented in the parties' briefs, the Court is dispensing with oral argument pursuant to Eastern District of Michigan Local Rule 7.1(f). For the reasons that follow, the Court is granting Defendant PRA's motion.

         I. Standard for Motion for Judgment on the Pleadings

         A motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) is subject to the same standards of review as a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted. Grindstaff v. Green, 133 F.3d 416, 421 (6th Cir. 1998). A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of the complaint. RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir. 1996). Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” To survive a motion to dismiss, a complaint need not contain “detailed factual allegations, ” but it must contain more than “labels and conclusions” or “a formulaic recitation of the elements of a cause of action . . ..” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A complaint does not “suffice if it tenders ‘naked assertions' devoid of ‘further factual enhancement.' ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 557).

         As the Supreme Court provided in Iqbal and Twombly, “[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.' ” Id. (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. (citing Twombly, 550 U.S. at 556). The plausibility standard “does not impose a probability requirement at the pleading stage; it simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of illegal [conduct].” Twombly, 550 U.S. at 556.

         In deciding whether the plaintiff has set forth a “plausible” claim, the court must accept the factual allegations in the complaint as true. Erickson v. Pardus, 551 U.S. 89, 94 (2007). This presumption is not applicable to legal conclusions, however. Iqbal, 556 U.S. at 668. Therefore, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555).

         Ordinarily, the court may not consider matters outside the pleadings when deciding a Rule 12(b)(6) motion to dismiss. Weiner v. Klais & Co., Inc., 108 F.3d 86, 88 (6th Cir. 1997) (citing Hammond v. Baldwin, 866 F.2d 172, 175 (6th Cir. 1989)). A court that considers such matters must first convert the motion to dismiss to one for summary judgment. See Fed. R. Civ. P 12(d). However, “[w]hen a court is presented with a Rule 12(b)(6) motion, it may consider the [c]omplaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to [the] defendant's motion to dismiss, so long as they are referred to in the [c]omplaint and are central to the claims contained therein.” Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008). Thus, a court may take judicial notice of “other court proceedings” without converting a motion to dismiss into a motion for summary judgment. Buck v. Thomas M. Cooley Law Sch., 597 F.3d 812, 816 (6th Cir. 2010) (citing Winget v. J.P. Morgan Chase Bank, N.A., 537 F.3d 565, 575 (6th Cir. 2008)).

         II. Factual and Procedural Background

         According to Plaintiff's complaint, Defendants routinely file collection lawsuits against consumers on alleged defaulted debts. (Compl. ¶ 5.) On June 18, 2015, Defendant PRA, through its counsel, filed a complaint against Plaintiff alleging that she was in default on a debt. (Id.) In her answer, Plaintiff replied that Defendant PRA could not bring its claim against her because it was an unlicensed foreign corporation in violation of the Michigan Limited Liability Company Act (“MLLCA”), Mich. Compl. Law § 450.5007, which governs the transaction of business within the state. (ECF No. 1-2 at Pg ID 58.) Shortly thereafter, Plaintiff and Defendant PRA stipulated to dismiss the prior proceeding without prejudice and costs to either party. (ECF No. 1-4.)

         On December 15, 2015, Plaintiff brought this lawsuit as a putative class action on behalf of other Michigan consumers who were sued by Defendants for collection of an alleged debt in Michigan. (Compl. ¶ 20.) In the complaint, Plaintiff alleges three counts: (1) violation of the FDCPA against both Defendants; (2) violation of the Michigan Regulation of Collection Practices Act (“MRCPA”), M.C.L. § 445.251 et seq., against Defendant Weber & Olcese, P.C.; and (3) common law fraud against both Defendants. (ECF No. 1 at Pg ID 6-10.) More specifically, Plaintiff alleges that Defendants were in violation of MLLCA's provision that requires a foreign limited liability company transacting business in Michigan to obtain a certificate of authority. Mich. Comp. Law § 450.5007(1). Without the certificate of authority, Plaintiff contends that Defendants do not have the legal authority to bring actions against Michigan consumers within the state pursuant to the FDCPA and MRCPA. (Compl. ¶¶ 14, 17-18). Because of the alleged unlawful misrepresentation of legal authority, Plaintiff argues that Defendants “create[d] the illusion that PRA is clothed with legal authority to lawfully and legally prosecute lawsuit in Michigan when PRA does not and has the standing to sue in this State when it has not, ” in violation of the MLLCA and FDCPA. (Id. at ¶ 13.)

         On May 31, 2016, Defendant PRA filed a motion for judgment on the pleadings. (ECF No. 21.) Plaintiff responded on June 21, 2016, including a note that Defendant Weber & Olcese, P.C. are no longer parties in this case.[1] (ECF No. 22 at Pg ID 147.) Defendant PRA filed a reply on July 12, 2016. (ECF No 25.)

         III. Applicable Law and Analysis

         A. Michigan Limited Liability Company Act

         Plaintiff argues that Defendants were in violation of the MLLCA by “transacting business” without a certificate of authority in support of their FDCPA claim.[2] Defendant PRA contends that it is not transacting business in Michigan and therefore is not required to have a certificate of authority. (ECF No. 21 at Pg ID 135.) Plaintiff disagrees, noting that Kevin Holst, an employee of Defendant PRA, is physically located in Michigan and therefore Defendant is “transacting ...

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