Destro v. Tsarouhis Law Group, LLC, 3:18-cv-02374

In 2016 Destro borrowed $1,953.95 from Mariner Finance and later defaulted; Mariner retained Tsarouhis Law Group (Tsarouhis) to collect.
Law Group sued Destro in Lackawanna County Ct. of Common Pleas (Dec. 13, 2017) for breach of contract (ad damnum $2,395.83 including $750 attorney’s fees) and alternatively unjust enrichment ($1,645.83).
Destro’s counsel notified Tsarouhis (Mar–Mar 2018) that the loan agreement required arbitration and demanded withdrawal/refiling in arbitration; defendants did not respond.
Destro filed a petition to compel arbitration; no representative from Mariner or Law Group appeared at the hearing and the state court granted the petition and dismissed the collection action (Oct. 2018).
Destro then sued Tsarouhis and Tsarouhis Law Group in federal court under the FDCPA, alleging (1) unfairly prolonging litigation/refusal to arbitrate and (2) improper demand for a $750 liquidated attorney’s fee.
Defendants moved to dismiss under Rule 12(b)(6); the district court denied the motion as to both claims.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether failing to respond and forcing Destro to move to compel arbitration violated FDCPA § 1692f (unfair/unconscionable means)	Tsarouhis ignored multiple notices electing arbitration, forced Destro to file motion and attend an unnecessary hearing	Defendants contend they did not refuse arbitration and did not engage in conduct violating the FDCPA; they effectively did not oppose the petition	Denied dismissal: allegations that defendants in bad faith prolonged litigation and forced unnecessary court appearance sufficiently state a § 1692f claim at pleading stage
Whether demanding $750.00 in attorney’s fees in the state-court ad damnum violated the FDCPA	The contract only obligated Destro to pay attorney’s fees actually incurred; demanding a $750 liquidated sum (allegedly neither charged to creditor nor incurred) is deceptive and violates the FDCPA	Defendants argue the contract language permits recovery of attorney’s fees and does not limit recovery to fees already incurred; therefore no FDCPA violation	Denied dismissal: plausible allegation that the $750 demand misrepresented fees and could mislead the least sophisticated debtor sufficient to state a claim

Colburn v. Upper Darby Twp., 838 F.2d 663 (3d Cir.) (standard for accepting factual allegations on Rule 12(b)(6) review)
Estate of Bailey by Oare v. Cnty. of York, 768 F.2d 503 (3d Cir.) (Rule 12(b)(6) pleading standard principles)
Phillips v. Cnty. of Allegheny, 515 F.3d 224 (3d Cir.) (plausibility standard and reasonable expectation of discovery)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S.) (pleading must raise a claim above speculative level)
Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380 (3d Cir.) (court may consider public records and exhibits on motion to dismiss)
Curay–Cramer v. Ursuline Acad., 450 F.3d 130 (3d Cir.) (court need not accept legal conclusions on a motion to dismiss)
McTernan v. N.Y.C., 564 F.3d 636 (3d Cir.) (Rule 8 requires a showing of entitlement to relief)
Arias v. Gutman, Mintz, Baker & Sonnenfeldt LLP, 875 F.3d 128 (2d Cir.) (holding that bad-faith prolongation of litigation or forcing unnecessary hearings violates § 1692f)
McLaughlin v. Phelan Hallinan & Schmig, LLP, 756 F.3d 240 (3d Cir.) (use "least sophisticated debtor" standard in FDCPA communications cases)
Rosenau v. Unifund Corp., 539 F.3d 218 (3d Cir.) (same least-sophisticated-debtor framework)