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Turnbull v. O'Reilly Rancilio, P.C.

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

March 14, 2017




         This matter is before the Court on Defendant O'Reilly Rancilio, P.C.'s Motion to Dismiss Pursuant to Rule 12(b)(6) or Alternatively for Summary Judgment Pursuant to Rule 56(c). (Docket no. 8.) Plaintiff Robert Turnbull filed a Response (docket no. 13), and Defendant filed a Reply (docket no. 14). With consent of the parties, this case has been referred to the undersigned for all proceedings in accordance with 28 U.S.C. § 636(c) and Federal Rule of Civil Procedure 73. (Docket no. 11.) The Court has reviewed the pleadings, dispenses with a hearing pursuant to Eastern District of Michigan Local Rule 7.1(f)(2), and is now ready to rule.

         I. Background

         This case arises from Defendant's efforts to collect on a student loan debt that Plaintiff incurred in Illinois in 1991. (Docket no. 1-1 in Case No. 11-12333, E.D. Mich.) The Fair Debt Collection Practices Act requires, among other things, that “[a]ny debt collector who brings any legal action on a debt against a consumer shall . . . bring such action only in the judicial district . . . (A) in which such consumer signed the contract sued upon; or (B) in which such consumer resides at the commencement of the action.” 15 U.S.C. § 1692i. The Act further prohibits the “use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.” Id. § 1692e(10).

         Defendant was hired by the United States Department of Justice[1] to sue Plaintiff to attempt to collect on the debt, and on March 10, 2011, Defendant received a file with Plaintiff's information from the DOJ. The file contained a “Claims Collection Litigation Report, ” which states that the debtor's name and address are “Robert A. Turnbull, 2802 Plainfield Ave., Flint, MI 48506.” (Docket no. 8-1 at 2.)

         It is worth pointing out that Plaintiff's father is Robert Turnbull, Jr., and Plaintiff is Robert Turnbull, III. Plaintiff's mother and father own the Flint property, and Plaintiff has lived there in the past.

         The DOJ file also contained a Credit Bureau Report, which was generated using Plaintiff's Social Security Number. (Docket no. 8-1 at 9.) The Credit Bureau Report identifies the debtor (Plaintiff) as “Robert A. Turnbull, ” residing at the Flint address.[2] (Id.) Defendant sent a “debt validation letter” to Plaintiff at the Flint address on April 14, 2011, indicating that if Plaintiff did not pay the debt in full, Defendant would “exercise all legal remedies.” (Docket no. 8-2.) Defendant contends that he was not residing at the Flint address at that time, but that he found out about the letter because his father contacted him. Regardless, after learning of Defendant's intent to collect the debt, Plaintiff contacted Defendant's office, but the parties never agreed to any repayment terms or other resolution. Plaintiff also did not indicate that he did not live at the Flint address. Shortly thereafter, on May 26, 2011, Defendant filed suit against Plaintiff in the Eastern District of Michigan, Case No. 11-12333.

         The day after filing suit, on May 27, 2011, Defendant filed a “request for change of address or boxholder information” on “Robert A. Turnbull, ” identifying him as residing at the Flint address. (Docket no. 8-4.) The Post Office indicated that there was no change of address form on file for that individual. (Id.) Defendant therefore hired a process server, Mr. Dustin Miller, and instructed him to serve Plaintiff at the Flint address. According to Defendant, when Mr. Miller appeared at the Flint address, Plaintiff's father informed Mr. Miller that Plaintiff had moved to 10311 Charter Oaks Drive, in nearby Davison, Michigan. (Docket no. 8 at 11.) Mr. Miller filed an affidavit claiming that he was able to personally serve Mr. Miller at the Davison address on June 6, 2011. (Docket no. 8-5.)

         Plaintiff never responded to the complaint, and a default judgment was entered on June 30, 2011. (Case No. 11-12333, docket no. 8.) On July 21, 2011, Defendant requested, and received, a Writ of Continuing Garnishment as to Plaintiff and garnishee Michigan Department of Treasury. (Id., docket no. 12.) Defendant mailed copies of the garnishment documents to Plaintiff at the Davison address, but did not receive a response. Three years later, after performing “skip trace searches and TLO searches, ” Defendant claims that it discovered a “potential new address in Arizona and employment for Sears Roebuck and Co.” (Docket no. 8 at 11.) Defendant therefore requested, and received, a second writ of garnishment in Case No. 11-12333, on October 10, 2014. Defendant attempted to serve Plaintiff with that garnishment at the Arizona address, but the garnishment was sent back marked “return to sender.” (Docket no. 8 at 11.) And, the garnishment itself apparently failed because Plaintiff no longer worked at Sears. (Case No. 11-12333, docket no. 16.)

         Defendant claims it ran another “skip trace search” in June 2015, and discovered that Plaintiff was employed by TruGreen Limited Partnership. (Docket no. 8 at 11-12.) Therefore, on June 9, 2015, Defendant requested and received a garnishment in Case No. 11-12333 as to Plaintiff and garnishee TruGreen Limited Partnership. (Case No. 11-12333, docket no. 18.) Defendant “served” this garnishment on Plaintiff by mailing it to him at the Flint address on June 29. (Id., docket no. 19.) Plaintiff claims his father received the garnishment paperwork in the mail and contacted Plaintiff, who in turn contacted Defendant and informed Defendant that he had been a resident of Wisconsin since 2009, and had never been served in the lawsuit which led to the garnishment. On August 25, 2015, after counsel for Plaintiff sent Defendant a letter threatening a lawsuit, Defendant agreed to release the garnishment. (Id., docket no. 20.)

         On June 1, 2016, Plaintiff filed suit against Defendant, alleging violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692i, 1692e(10), and the Michigan Regulation of Collection Practices Act (MRCPA), M.C.L. § 445.251(a), (e), and (f)(ii). (Docket no. 1.) Shortly thereafter, the parties agreed to set aside the default judgment in Case No. 11-12333 and transfer that case to the Eastern District of Wisconsin. (Case No. 11-12333, docket nos. 22, 25.) The parties have since settled that case, with Plaintiff agreeing to pay $1, 453.95 in principal and $2, 249.38 in interest on the student loan. (United States v. Turnbull, Case No. 16-00829, docket no. 43 (E.D. Wis. Jan. 10, 2017).)

         In its Motion, Defendant argues that Plaintiff's claims under the FDCPA and the MRCPA should be dismissed based on the statute of limitations or because Defendant's decision to file the 2011 collection suit against Plaintiff in Michigan was the result of a bona fide error. Plaintiff argues that the statute of limitations did not begin to run until he found out about the collection lawsuit, which, he claims, did not occur until 2015, when his father contacted him about the garnishment. Plaintiff also argues that Defendant failed to follow proper procedures to investigate Plaintiff's true address before filing suit, and therefore cannot rely on the bona fide error defense. Finally, Plaintiff argues that, in requesting and receiving the garnishments, Defendant misrepresented that it had served Plaintiff in the collection suit.

         II. Governing Law

         1. Motion to Dismiss Standard

         When deciding a motion under Rule 12(b)(6), the court must “construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff.” Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007); Inge v. Rock Fin. Corp., 281 F.3d 613, 619 (6th Cir. 2002). The plaintiff must provide “‘a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47 (1957) (quoting Fed.R.Civ.P. 8(a)(2)). But this statement “must be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). The plaintiff cannot rely on “legal conclusions” or “[t]hreadbare recitals of the elements of a cause of action;” instead, the plaintiff must plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). This “facial plausibility” is required to “unlock the doors of discovery.” Id. To make this determination, the Iqbal Court set out the following two-step analysis:

[A] court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.

Id. at 679.

         “When a court is presented with a Rule 12(b)(6) motion, it may consider the Complaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to defendant's motion to dismiss so long as they are referred to in the Complaint and are central to the claims contained therein.” Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008) (citation omitted).

         2. Summary ...

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