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Poltrock v. NJ Automotive Accounts Management Co.

December 17, 2008


The opinion of the court was delivered by: Wolfson, United States District Judge


Presently before the Court are motions by Defendant DCH Auto Group (USA) Inc. ("DCH") to dismiss federal and state claims brought by Plaintiff Daniel Poltrock ("Plaintiff") and an indemnification claim brought by Co-Defendant NJ Automotive Accounts Management Co., Inc. ("AAM"). In addition, DCH moves to sanction Plaintiff's counsel pursuant to Rule 11 of the Federal Rules of Civil Procedure. Plaintiff asserts that DCH is in violation of the Fair Debt Collection Practices Act arising from a debt DCH placed into collection against Plaintiff. Plaintiff also asserts several state law claims, including a claim pursuant to the New Jersey Identity Theft Prevention Act, and common law claims for intrusion upon seclusion, and negligent training and supervision. For the reasons set forth below, the Court grants DCH's motions to dismiss Plaintiff's claims, but denies the motion for sanctions. The Court also dismisses AAM's counterclaims for indemnification and contribution asserted against DCH.


Since DCH moves to dismiss Plaintiff's Complaint pursuant to Fed. R. Civ. P. 12(b)(6), all facts alleged in the complaint are assumed to be true.

DCH sells and services high-end automobiles throughout the United States, including dealerships located throughout New Jersey. Sometime around May 2004, Plaintiff alleges that he applied for employment at a DCH dealership located in Maplewood, New Jersey. Compl. ¶14. On his employment application, Plaintiff listed Alan Sherman and David Hollander as personal references. Id. DCH hired Plaintiff, but soon after terminated his employment "on or about August 2004." Id. 16. In June 2004, Plaintiff purchased an automobile from DCH, which Plaintiff brought to DCH for servicing on or about July 13, 2006. Id. ¶17. DCH billed Plaintiff $173.68 for the maintenance and repairs. Id. On September 25, 2006, Plaintiff again took his automobile to DCH for service and was billed $421.12. Id. ¶18.

Thereafter, DCH placed the outstanding balance of $595.80 into collection sometime after Plaintiff failed to make payments towards either invoice. Plaintiff alleges that DCH increased that amount to $965.92. Id. ¶20. In an effort to collect Plaintiff's past-due account, DCH assigned the debt to AAM. Id. ¶21. On April 3, 2008, AAM sent a collection letter to Plaintiff, demanding he pay DCH $965.92. Id. A day later, AAM followed up on its letter with phone calls to the references Plaintiff had listed on his employment application with DCH, inquiring as to Plaintiff's whereabouts. Id. ¶¶22-23. DCH gave Hollander's and Sherman's numbers to AAM to facilitate the collection process. Both Sherman and Hollander informed Plaintiff's father that AAM had contacted them in an effort to find Plaintiff. Id. ¶¶23-24. On April 7, 2008, Plaintiff's father contacted an AAM representative who informed him that "Plaintiff had an outstanding balance due to DCH and that they needed to immediately reach Plaintiff in order to arrange payment." Id. ¶26. The AAM representative stated that if Plaintiff or his father did not immediately pay DCH, AAM would initiate legal proceedings against Plaintiff. Id. ¶28. Plaintiff alleges that the AAM representative did not inform Plaintiff's father that AAM was a debt collector or that their conversation "was an attempt to collect a debt." Id. ¶30. On April 9, 2008, Plaintiff's attorney notified AAM that Plaintiff disputed the alleged amount owed, to which AAM responded in its April 15th correspondence, stating "that the dollar amount of this claim [was] $544.80." Id. ¶33.

Plaintiff commenced this action in the United States District Court for the District of New Jersey on April 22, 2008. Thereafter, Plaintiff filed an Amended Complaint with this Court on May 5, 2008. AAM filed its answer and crossclaims for indemnification and contribution against DCH on May 8, 2008. On May 30, 2008, DCH filed this Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6). In addition, DCH filed a Motion for Sanctions pursuant to Fed. R. Civ. P. 11 on June 10, 2008.


A. Standard of Review

When reviewing a motion to dismiss on the pleadings, courts "accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (citation and quotations omitted). Recently, in Bell Atlantic Corporation v. Twombly, 127 S.Ct. 1955 (2007), the Supreme Court clarified the 12(b)(6) standard. Specifically, the Court "retired" the language contained in Conley v. Gibson, 355 U.S. 41, 45-46 (1957), that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Id. at 1968 (quoting Conley, 355 U.S. at 45-46). Instead, the factual allegations set forth in a complaint "must be enough to raise a right to relief above the speculative level." Id. at 1965. As the Third Circuit has stated, "[t]he Supreme Court's Twombly formulation of the pleading standard can be summed up thus: 'stating . . . a claim requires a complaint with enough factual matter (taken as true) to suggest' the required element. This 'does not impose a probability requirement at the pleading stage,' but instead 'simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of' the necessary element." Phillips, 515 F.3d at 234 (quoting Twombly, 127 S.Ct. at 1965).

B. Plaintiff's FDCPA Claims

Plaintiff asserts that DCH is in violation of the Fair Debt Collection Practices Act ("FDCPA"). Specifically, Plaintiff alleges that DCH, through AAM, made demands for an amount greater than Plaintiff owed, threatened to take legal action that it did not intend to take, employed deceptive and misleading means to collect the alleged debt, failed to disclose to Plaintiff's father, Sherman, or Hollander the reason for the phone calls, and unlawfully disclosed to Plaintiff's father that Plaintiff owed a debt. Nonetheless, DCH contends that Plaintiff fails to state a cause of action because it does not adequately allege that DCH is a debt collector under the FDCPA.

The FDCPA provides "a remedy for consumers who have been subjected to abusive, deceptive, or unfair debt collection practices by debt collectors." Pollice v. National Tax Funding, L.P., 225 F.3d 379, 400 (3d Cir. 2000) (citing Zimmerman v. HBO Affiliate Group, 834 F.2d 1163, 1167 (3d Cir. 1987)). As a threshold requirement, a plaintiff seeking relief under the FDCPA must assert that the defendant is a "debt collector." See Id. at 403; F.T.C. v. Check Investors, Inc., 502 F.3d 159, 171 (3d Cir. 2007). The Act defines "debt collector" as "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another" or "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 or attempting to collect such debts." 15 U.S.C. § 1692(a)(6). By contrast, a creditor is a person or business who "offers or extends to offer credit creating a debt or to whom a debt is owed." Id. As noted by the Third Circuit, absent from the definition of "debt collector" is a creditor seeking to collect its own debt. See Pollice, 225 F.3d at 403 (citation omitted). In Aubert v. American General Financial, Inc., the Seventh Circuit elaborated on why creditors are excluded from the FDCPA's enforcement provisions:

Creditors who collect in their own name and whose principal business is not debt collection. . .are not subject to the Act. . . .Because creditors are generally presumed to restrain their abusive collection practices out of a desire to protect their corporate goodwill, their debt collection activities are not subject to the Act unless they collect under a name other than their own.

137 F.3d 976, 978 (7th Cir. 1998). In turn, courts have declined to extend FDCPA liability to those creditors who place debts in collection with a collection agency. Challenger v. Experian Information Solutions, Inc., No. 06-5263, 2007 WL 895774, at *2 (D.N.J. March 22, 2007) (finding that a defendant " may 'place [its]...debts in collection[],' as [Plaintiff's] complaint alleges, without becoming a debt collector") (citation omitted); Jones v. Select Portfolio Servicing, Inc., No. 08-972, 2008 WL 1820935, at *7 (E.D.Pa. April 22, 2008).

In the instant matter, Plaintiff alleges that DCH is a debt collector under the FDCPA. Alternatively, Plaintiff attempts to impose vicarious liability upon DCH for the alleged actions of its debt collector, AAM. However, Plaintiff argument fails on both grounds. First, Plaintiff's bald assertion that DCH is a "debt collector" is insufficient to confer liability under the FDCPA. See Experian, 2007 WL 895774 at *2 (finding a court "need not credit either 'bald assertions' or legal conclusions' in a complaint when deciding a motion to dismiss" in a case arising from a plaintiff asserting an FDCPA claim against a creditor) (citation omitted). Second, although Plaintiff states that "Defendants violated. . . the FDCPA," he fails to allege that DCH conducted itself in a way that would transform its status to a creditor who could be found liable under the FDCPA. See 15 U.S.C. § 1962a(6) (extending liability to a creditor who uses any name other than its own in collecting its own debts). In sum, Plaintiff's argument seeks to extend the bounds of the FDCPA beyond Congress' intent and well-settled case law:

We do not think it would accord with the intent of Congress, as manifested in the terms of [the FDCPA], for a company that is not a debt collector to be held vicariously liable for a collection suit filing that violates the Act only because the filing attorney is a "debt collector." Section 1682k imposes liability only on a "debt collector who fails to comply with [a] provision of this subchapter...."The plaintiffs would have us impose liability on non-debt collectors too. This we decline to do.

Pollice, 225 F.3d at 404 (quoting Wadlington v. Credit Acceptance Corp., 76 F.3d 103, 108 (6th Cir. 1996) (emphasis in original).

Nonetheless, Plaintiff correctly asserts that a "creditor [who] does something improper" may be found liable under the FDCPA. See 15 U.S.C. ยง 1962a(6). However, this extremely narrow exception applies in instances where a creditor attempts to use another name to collect its debts or mislead the debtor to believe a communication is coming from a third-party debt collector when in fact it is actually from the creditor. Id.; Wadlington, 76 F.3d at 107-08. In the case at bar, AAM, on its own letterheads and through its own agents, contacted Plaintiff, his father, and acquaintances. The allegations set forth in Plaintiff's Complaint do not allege that DCH contacted Plaintiff or his father under the guise of a collection agency or ...

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