Edwards v. Cavalry Portfolio Services, LLC
3:14-cv-00413
W.D. Ky.Sep 1, 2015Background
- In May 2012 Cavalry Portfolio Services, LLC (CPS) acquired a charged-off GE Capital Retail Bank (GECRB) credit-card debt tied to plaintiff Emily Edwards.
- A March 2014 consumer report listed the balance as $684, $219 more than the $465 CPS paid; Edwards disputes the amount and contends interest was improperly assessed.
- Edwards alleges GECRB waived the right to assess post-charge-off interest, so CPS lacked contractual or statutory authority under Kentucky law to accrue or report interest.
- Edwards claims CPS violated the FDCPA by misrepresenting the debt, furnishing inflated/false amounts, reporting false credit information, and attempting to collect unauthorized interest.
- CPS moved to dismiss; Edwards sought leave to file a second amended complaint in her response. The court denied CPS’s motion and denied Edwards’ conditional request without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CPS illegally assessed/accrued interest and thereby violated FDCPA §§1692e, 1692f | GECRB waived post-charge-off interest; CPS had no contract or statutory right to assess interest, so reporting inflated balance violated FDCPA | Kentucky usury statute (KRS 360.010) inapplicable where contract governs; plaintiff failed to plead waiver or absence of contract | Court: Plausible allegation that CPS assessed interest and lacked legal right survives Rule 12(b)(6); claim allowed to proceed |
| Whether plaintiff’s lack of knowledge about CPS’s right to collect states an FDCPA claim (§1692g) | Plaintiff alleges she has no knowledge CPS has a right to collect the charged-off account | CPS argues lack of knowledge cannot support FDCPA claim; attached letter shows notice was sent | Court: If plaintiff intended a §1692g claim, dismissal premature; mailing creates rebuttable presumption of compliance and plaintiff may rebut later |
| Whether failure to receive a demand for payment supports FDCPA claim | Plaintiff alleges no demand was received before interest accrual | CPS contends absence of demand doesn’t create an FDCPA claim | Court: Statement treated as background; not a standalone basis for relief |
| Whether plaintiff is barred from challenging the debt because she did not timely dispute under §1692g | CPS says plaintiff failed to use statutory validation procedure and is barred | Plaintiff asserts she did not receive the validation notice and learned debt via third-party report | Court: At pleading stage, rebuttable presumption that notice was sent makes dismissal premature; plaintiff not barred yet |
Key Cases Cited
- Gazette v. City of Pontiac, 41 F.3d 1061 (6th Cir. 1994) (complaint must be construed in favor of nonmoving party)
- Westlake v. Lucas, 537 F.2d 857 (6th Cir. 1976) (same standard for pleading facts in nonmovant’s favor)
- Lillard v. Shelby Cnty. Bd. of Educ., 76 F.3d 716 (6th Cir. 1996) (plaintiff must plead more than bare legal conclusions)
- Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478 (6th Cir. 2009) (Twombly plausibility standard governs Rule 12(b)(6))
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility requirement for complaints)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (legal conclusions not entitled to assumption of truth)
- Hageman v. Signal L.P. Gas, Inc., 486 F.2d 479 (6th Cir. 1973) (factors for leave to amend pleadings)
- Mahon v. Credit Bureau of Placer Cty., Inc., 171 F.3d 1197 (9th Cir. 1999) (notice required by §1692g is satisfied by sending, not necessarily receipt)
- Weiner v. Klais & Co., Inc., 108 F.3d 86 (6th Cir. 1997) (court may consider documents referenced in complaint without converting motion to summary judgment)