White v. Universal Fidelity, LP
3:17-cv-00044
| E.D. Ky. | Feb 16, 2018Background
- Plaintiff Daniel White is married; his wife received medical treatment at Jewish Hospital in August 2014 and incurred charges.
- Jewish Hospital engaged third-party collectors (Universal Fidelity, Link Revenue) who sent collection communications to Daniel, listing him as the "guarantor."
- Kentucky statute KRS 404.040 imposes liability on a husband for "necessaries furnished to [his wife] after marriage;" no analogous statutory liability exists for wives or same-sex spouses.
- White alleges the collectors violated the FDCPA (15 U.S.C. §§ 1692e, 1692f) by attempting to collect a debt he did not owe and seeks a declaration that KRS 404.040 is unconstitutional under the Equal Protection Clause.
- Defendants Universal Fidelity and Link Revenue moved to dismiss under Rule 12(b)(6); White moved for leave to amend his complaint to add factual details denying he ever agreed to guarantee payment to Jewish Hospital.
- Court granted White leave to amend and accepted the First Amended Complaint as to Jewish Hospital, but dismissed the FDCPA claims against Universal Fidelity and Link Revenue for failure to state a claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether White may amend complaint | White seeks to add factual allegations denying he guaranteed payment and detailing collection contacts | Defendants argued amendment is futile | Amendment granted; First Amended Complaint accepted as to Jewish Hospital |
| Whether Universal Fidelity and Link Revenue violated FDCPA §§1692e/1692f by listing White as guarantor | White: collectors misrepresented he owed the debt, relying on unconstitutional KRS 404.040 | Defendants: they acted based on existing state statute and hospital account information; no settled unconstitutionality | Claims dismissed: collection conduct lawful under then-existing state law; no viable FDCPA claim absent a prior judicial invalidation of KRS 404.040 |
| Whether KRS 404.040 is adjudicated unconstitutional (for purposes of this suit) | White urged statute is unconstitutional and reliance on it made collection misleading/unlawful | Defendants: no court has declared the statute unconstitutional; thus reliance on it cannot be false or unlawful | Court declined to rule on constitutionality at this stage; unconstitutionality not established and does not retroactively render collectors’ behavior wrongful |
| Whether Jewish Hospital can be held liable without a contractual guaranty | White alleges he never agreed to guarantee wife’s debt | Jewish Hospital contends otherwise / moves to dismiss | Complaint survives 12(b)(6) as to Jewish Hospital; hospital ordered to file amended answer |
Key Cases Cited
- Duggins v. Steak’n Shake, Inc., 195 F.3d 828 (6th Cir. 1999) (standards for denying leave to amend: undue delay, prejudice, bad faith, futility)
- Foman v. Davis, 371 U.S. 178 (U.S. 1962) (Rule 15 leave-to-amend standard and factors permitting denial)
- DirecTV, Inc. v. Treesh, 487 F.3d 471 (6th Cir. 2007) (pleading construed favorably to plaintiff on 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard for surviving a motion to dismiss)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading must state a claim plausible on its face)
- Amini v. Oberlin College, 259 F.3d 493 (6th Cir. 2001) (court may consider exhibits attached to complaint without converting to summary judgment)
- Bauman v. Bank of America, N.A., 808 F.3d 1097 (6th Cir. 2015) (elements of an FDCPA claim)
- Midland Funding, LLC v. Johnson, 137 S. Ct. 1407 (U.S. 2017) (debt collectors’ rights generally derive from state law)