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Watson v. ARC Management Group, LLC

United States District Court, E.D. Tennessee, Greeneville

December 18, 2017

SANDRA K. WATSON, Plaintiff,



         Currently before the Court are (1) the plaintiff's motion for partial summary judgment, [Doc. 33]; and (2) the defendant's motion for summary judgment, [Doc. 41], in this Fair Debt Collection Practices Act (“FDCPA” or “the Act”), 15 U.S.C. § 1692 et seq., case. The plaintiff's motion seeks judgment in her favor only as to the liability of the defendant, ARC Management Group, LLC, (“ARC”), reserving the determination of damages for a trial by jury. ARC has responded to the plaintiff's motion, [Doc. 36], contending that summary judgment for the plaintiff is not appropriate. ARC argues that it did not violate the FDCPA by reporting a valid debt to a consumer reporting agency, [Doc. 36 at 4-5]. The plaintiff has replied, [Doc. 40], and this motion is ripe for disposition.

         The defendant's motion, [Doc. 41], seeks judgment in its favor on all of plaintiff's claims. The defendant's motion reiterates many of the same arguments raised in its response to the plaintiff's motion, and states that these grounds entitle the defendant to judgment as a matter of law. The plaintiff opposes the motion, [Doc. 43], again stating many of the same grounds raised in her own summary judgment motion. The time for the defendant to file a reply brief has passed, and this motion is also ripe.

         For the reasons that follow, the plaintiff's motion for partial summary judgment will be DENIED, and the defendant's motion for summary judgment will be GRANTED. This action will therefore be DISMISSED in its entirety.

         I. BACKGROUND

         As representative of the class, the plaintiff, Sandra K. Watson, brings this putative class action lawsuit asserting violations of the FDCPA by ARC. The plaintiff is alleged to have incurred a medical debt of $1, 070 to Hamblen Emergency Group, LLC, [Doc. 29 ¶ 10].[1] At some point, the plaintiff allegedly defaulted on the medical debt, and the debt was assigned to ARC for purposes of collection, [Doc. 29 ¶ 11]. ARC admits that it is a collection service as defined by Tennessee state law, and that it reported the plaintiff's medical debt to Equifax. Both parties agree that “Equifax is an entity that regularly engages in the business of assembling, evaluating and disseminating information concerning consumers for the purpose of furnishing credit reports to third parties.” [Doc. 37 at 3]. ARC was not licensed in Tennessee as a collection service agency at the time the debt was reported to Equifax, but since such time ARC has acquired a valid license issued by the Tennessee Collection Service Board. The parties do not dispute that the Plaintiff obtained copies of her Equifax credit report on April 29, 2016, August 15, 2016, and August 18, 2016, and each report indicated that the plaintiff's medical debt was owed. Otherwise, ARC did not make any phone calls or send any letters to the plaintiff to collect on the debt, nor did they file suit against the plaintiff to collect on the debt.

         The plaintiff claims that ARC violated the FDCPA by reporting the debt to Equifax. She further claims that ARC's reporting of the debt to Equifax before they were licensed by the Tennessee Collection Services Board constitutes a violation of the FDCPA.


         Summary judgment under Rule 56 of the Federal Rules of Civil Procedure is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party bears the burden of establishing that no genuine issues of material fact exist. Moore v. Philip Morris Cos., 8 F.3d 335, 339 (6th Cir. 1993). All facts and all inferences to be drawn therefrom must be viewed in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Burchett v. Kiefer, 310 F.3d 937, 942 (6th Cir. 2002). This Court's function at the point of summary judgment is limited to determining whether sufficient evidence has been presented to make the issue of fact a proper question for the factfinder. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). The genuine issue must also be material; that is, it must involve facts that might affect the outcome of the suit under governing law. Id. If this Court concludes that a fair-minded jury could not return a verdict in favor of the non-moving party based on the evidence presented, it may enter a summary judgment. Anderson, 477 U.S. at 251-52; Lansing Dairy, Inc. v. Espy, 39 F.3d 1339, 1347 (6th Cir. 1994).

         The party opposing a Rule 56 motion may not simply rest on the mere allegations or denials contained in the party's pleadings. Anderson, 477 U.S. at 256. Instead, an opposing party must affirmatively present competent evidence sufficient to establish a genuine issue of material fact necessitating the trial of that issue. Id. Merely alleging that a factual dispute exists cannot defeat a properly supported motion for summary judgment. Id. A genuine issue for trial is not established by evidence that is merely colorable, or by factual disputes that are irrelevant or unnecessary. Id. at 248-52.


         Congress enacted the FDCPA in order “to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collections practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.” 15 U.S.C. § 1692(e). In determining whether a debt collector's practice violates the FDCPA, the Court is required to use the objective “least sophisticated consumer” test. Lewis v. ACB Bus. Servs., Inc., 135 F.3d 389, 400 (6th Cir. 1998); see also Kistner v. Law Offices of Michael P. Margelefsky, LLC, 518 F.3d 433, 428 (6th Cir. 2008); Barany-Snyder v. Weiner, 539 F.3d 327, 333 (6th Cir. 2008).

         15 U.S.C. § 1692e generally bars debt collectors from using false, deceptive or misleading representations or means in order to collect a debt, while § 1692f prohibits debt collectors from using unfair or unconscionable means to collect a debt.

         The Sixth Circuit has noted that the Act is “extraordinarily broad” and must be enforced as written, even when eminently sensible exceptions are proposed in the face of an innocent and/or de minimis violation. See Frey v. Gangwish, 970 F.2d 1516, 1521 (6th Cir. 1992). While § 1692e lists a number of examples of false or misleading representations, the text of the statute itself indicates that the examples are not meant to limit its prohibition on the use of false, deceptive or misleading representations in connection with the collection of a debt. 15 U.S.C. § 1692e. Likewise, § 1692f contains the same language, making clear that the examples set forth therein do not “limit[ ] the general application” of its prohibition on the use of unfair or unconscionable means to collect or attempt to collect any debt. 15 U.S.C. § 1692f. The Seventh Circuit observed that the phrase “unfair or unconscionable” used in § 1692f “is as vague as they come.” Beler v. Blatt, Hasenmiller, Leibsker & Moore, 480 F.3d 470, 474 (7th Cir. 2007).

         A. Plaintiff's Motion for Partial Summary Judgment

         Plaintiff filed a motion for partial summary judgment on her claims only as to ARC's liability for violations of the FDCPA. The plaintiff argues that (1) ARC was not a licensed debt collector at the time it reported the debt to Equifax, and (2) ARC illegally reported the debt to Equifax in an attempt to collect the debt from the plaintiff. The plaintiff argues that ARC's report to Equifax violated specific provisions of the FDCPA including 15 U.S.C. §§ 1692e, 1692e(2)(A), 1692e(5), 1692e(9), 1692e(10), and 1692f.

         1. Licensing Requirements

         After the plaintiff defaulted on her debt to Hamblen County Emergency Group, LLC, ARC was assigned the debt for purposes of collection. ARC does not dispute that it was not a licensed collection service in Tennessee when it reported the plaintiff's debt to Equifax. The FDCPA itself does not require collection services to be licensed. However, the Sixth Circuit has previously held that

Congress did not turn every violation of state law into a violation of the FDCPA. But that does not mean that a violation of state law can never also be a violation of the FDCPA. The proper question in the context of an FDCPA claim is whether the plaintiff alleged an action that falls within the broad range of conduct prohibited by the Act. The legality of the action taken under state law may be relevant….

Currier v. First Resolution Inv. Corp., 762 F.3d 529, 537 (6th Cir. 2014) (emphasis in original). The Tennessee Collection Service Act (“TCSA”), Tennessee Code Annotated § 62-20-101 et seq., requires “all persons who commence, conduct or operate any collection services business” to obtain a license from the Tennessee Collection Service Board. Tenn. Code Ann. § 62-20-105. The TCSA specifically exempts from these license requirements “any person that holds or acquires accounts, bills or other forms of indebtedness through purchase, assignment, or otherwise; and only engages in collection ...

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