Harper v. Weltman, Weinberg & Reis Co., L.P.A.
2019 Ohio 3093
Ohio Ct. App.2019Background
- In 2011 Trustar Funding obtained a cognovit judgment against Charles Harper (and others) on a promissory note secured by commercial property; that judgment was later affirmed on appeal.
- In 2017 defendants (Weltman, Weinberg & Reis and an attorney) filed a fraudulent-conveyance/creditor’s-bill complaint on behalf of Trustar seeking to collect the cognovit judgment; that complaint was voluntarily dismissed in January 2018.
- In March 2018 Charles and Bernadette Harper sued the defendants, alleging violations of the federal FDCPA and the Ohio Consumer Sales Practices Act (OCSPA) based on defendants’ filing of the fraudulent-conveyance complaint.
- Plaintiffs alleged defendants misrepresented Trustar’s standing/ownership of the judgment and thus attempted to collect a consumer debt they did not own; the complaint incorporated the underlying pleadings and attached the cognovit note.
- Defendants moved to dismiss under Civ.R. 12(B)(6), arguing the underlying obligation was commercial (not a consumer debt) so FDCPA/OCSPA do not apply; the trial court granted the motion and this appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether complaint states a viable FDCPA/OCSPA claim | Harper alleged defendants are debt collectors and the debt was a "consumer debt"; defendants misrepresented Trustar’s ownership/standing | Under FDCPA/OCSPA the underlying obligation must arise from a consumer transaction; this loan was commercial, so claims fail as matter of law | Dismissal affirmed: complaint lacked factual allegations showing the debt arose from a consumer transaction |
| Whether plaintiff pleaded sufficient facts under notice pleading | Harper: general allegations that they are consumers and debt is consumer-type suffice for notice pleading | Defendants: complaint contains only legal conclusions without supporting facts about the loan’s purpose | Court: recitation of statutory definitions is bare legal conclusion and insufficient to survive 12(B)(6) |
| Whether court should examine underlying loan’s purpose at dismissal stage | Harper: trial court should consider substance/purpose of the cognovit transaction to determine consumer status | Defendants: the complaint must itself plead consumer nature; factual disputes about loan purpose are not resolved on dismissal | Court: not required to resolve disputed factual issues at 12(B)(6); dismissal appropriate for pleading insufficiency |
| Whether non-party debtor (Bernadette) need show consumer-nature if she was not in original loan | Harper cited Davis for proposition that a target of collection efforts can invoke FDCPA even if unaware of debt nature | Defendants: Davis is distinguishable; here Bernadette was not mistakenly sued for another’s obligation—the claim against her was for alleged concealment unrelated to loan identity | Court: Davis factually distinguishable; Bernadette must still be covered by FDCPA/OCSPA via adequately pled consumer-debt allegations; she did not meet that threshold |
Key Cases Cited
- Currier v. First Resolution Invest. Corp., 762 F.3d 529 (6th Cir.) (least-sophisticated-consumer standard for FDCPA claims)
- Bloom v. I.C. Sys., Inc., 972 F.2d 1067 (9th Cir.) (FDCPA applies only to consumer debts)
- Oppenheim v. I.C. Sys., Inc., 627 F.3d 833 (11th Cir.) (plaintiff must show money being collected qualifies as a debt under FDCPA)
- Whittiker v. Deutsche Bank Natl. Trust Co., 605 F. Supp. 2d 914 (N.D. Ohio) (elements required for a prima facie FDCPA claim)
- Davis v. Midland Funding, L.L.C., 41 F. Supp. 3d 919 (E.D. Cal.) (collection attempt against wrong person can still implicate FDCPA protections)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S.) (pleadings must contain more than legal conclusions to survive dismissal)