ORDER
This matter comes now before the court on defendants’ motion to dismiss several counts of plaintiffs’ complaint for failure to state a claim upon which relief can be granted and for improper venue, and to strike portions of the complaint as redundant, immaterial, impertinent, and scandalous [DE # 14], filed August 6, 2004. Plaintiffs have responded to the motion, and defendants have replied. In this posture the matter is ripe for ruling. For the reasons stated below, defendants’ motion to dismiss is granted in part and denied in part.
STATEMENT OF THE CASE
Plaintiffs initiated this action in Cumberland County Superior Court on April 14, 2004, against defendants JBC Legal Group, P.C. (hereinafter “JBC”), Jack Bo-yajian, Marv Brandon, and Ray Barkley, alleging violations of the federal Fair Debt Collection Practices Act (hereinafter “FDCPA”), 15 U.S.C. § 1692, the North Carolina Debt Collection Act (hereinafter “NCDCA”), N.C.G.S. § 58-70, the North Carolina Unfair and Deceptive Trade Practices Act (hereinafter “NCUDTPA”), N.C.G.S. §§ 75-1.1, 75-50 to 56, the federal Racketeer Influenced and Corrupt Organizations Act (hereinafter “RICO”), 18 U.S.C. § 1961
et seq.,
the North Carolina RICO Act (hereinafter “NC RICO”), N.C.G.S. § 75D-1
et seq.,
civil fraud, civil conspiracy, and civil extortion. Defendants filed notice of removal to the U.S. District Court, Eastern District of North Carolina, on June 10, 2004, pursuant to 28 U.S.C. § 1441, alleging that various of
On December 10, 2004, plaintiffs filed a motion for class certification, asserting that various of the claims brought in the complaint were brought on behalf of a nationwide class with respect to the federal claims, and a statewide class with respect to those claims brought under North Carolina law [DE # 33]. On December 30, 2004, defendants filed a consent motion seeking to extend time to respond to the motion for class certification until 20 days after the court’s ruling on the instant motion to dismiss [DE#35]. The case was reassigned to the undersigned on January 6, 2005.
On April 26, 2005, plaintiffs filed a motion to strike defendant Boyajian’s affidavit in support of defendants’ motion to dismiss for lack of personal jurisdiction [DE #40]. By order entered July 12, 2005, the undersigned denied plaintiffs’ motion to strike the affidavit. By order entered July 13, 2005, the undersigned granted in part and denied in part defendants’ motion to dismiss for lack of personal jurisdiction [DE # 16]. The order was granted as to defendants Brandon and Franklin, who were dismissed from the action, and denied as to defendant Boyaji-an.
STATEMENT OF THE FACTS
The undisputed facts in this case are as follows: defendant JBC Legal Group is a professional corporation engaged in the practice of law, including but not limited to debt collection activities. Defendant Jack Boyajian is a licensed attorney and president of defendant JBC. The nine individual plaintiffs are, variously, residents of North Carolina, South Carolina, Indiana, Utah, and Colorado.
Defendant JBC acknowledges that it contacted each of the nine individual plaintiffs, either by letter or by phone, seeking collection on debts, either dishonored checks or, in one case, an allegedly dishonored car loan. Plaintiffs allege that defendants knew that the debts sought for collection had either been paid off in full, were beyond the applicable statutes of limitation for legal action for collection of debt, or simply never existed. Plaintiffs claim that when they sought to verify the alleged debts, defendants simply sent a validation letter, repeating the allegations of the original communications seeking payment but not providing copies of the alleged dishonored checks or other proof of debt. Plaintiffs admit that in one case, that of plaintiff Walker, defendant JBC did send a copy of the dishonored check, but claim that defendants knew or should have known that the check had been paid off in full.
As to the four individual plaintiffs who reside in North Carolina, three allege that they received dunning letters from defendant JBC seeking payment on debts. Plaintiff Strand alleges that she discovered a negative item on her credit report that, upon research, appears to have been caused by a report by defendant JBC. Plaintiffs do not allege in the complaint that defendant Boyajian personally communicated with plaintiffs.
COURT’S DISCUSSION
I. Standard of Review
The purpose of a motion to dismiss, under Federal Rule of Civil Procedure 12(b)(6), is to test the legal sufficiency of the complaint, not to resolve conflicts of fact or to decide the merits of the action.
Edwards v. City of Goldsboro,
In resolving a motion to dismiss for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3), the court must draw all inferences in favor of the plaintiff, and “the facts must be viewed as the plaintiff most strongly can plead them.”
Three M Enterprises, Inc., v. Texas D.A.R. Enterprises, Inc.,
Federal Rule of Civil Procedure 12(f) allows the court, upon motion of the party or upon its own initiative, to “order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” The purpose of the motion to strike “is to avoid the waste of time and money that arises from litigating unnecessary issues.”
Simaan Inc. v. BP Products North America, Inc.,
II. Analysis
A. Count II — plaintiffs’ claims for violation of the NCDCA and NCUDT-PA
Defendants argue that plaintiffs’ claims under the NCDCA and NCUDTPA must fail because of the exception for professional services rendered by members of a learned profession. The North Carolina Court of Appeals has held that a claim under the NCDCA, alleging improper practices in the specific context of debt collection, must also satisfy the requirements of a more general claim under the NCUDTPA.
See Reid v. Ayers,
The
Reid
court held that in order for the learned profession exemption to apply, a two-part test must be satisfied: (1) the person or entity performing the alleged act must be a member of a learned profession; and (2) the conduct in question must be a rendering of professional services.
See Reid,
Defendants JBC and Jack Boyajian argue that under Reid, they are entitled to the learned profession exemption. Defendants argue that as a law firm, JBC Legal Group as an entity is a member of a learned profession. Jack Boyajian, as an attorney, is also a member of a learned profession. Both defendants engaged in the practice of debt collection on behalf of their clients, and therefore were engaged in the rendering of professional services as defined by the Reid court.
Plaintiffs argue that defendants should be required to be licensed to practice law in North Carolina to gain the benefits of this exemption. Plaintiffs further argue that Jack Boyajian should be deemed to have waived this exemption, because he failed to supervise the non-attorney employees of defendant JBC Legal Group in their debt-collection activities. Plaintiffs cite no statute or case-law in support of either argument, and this court can find none. Finally, plaintiffs attempt to distinguish Reid and Sharp by arguing that the defendant attorneys in those cases were engaged in the practice of litigation, not merely in debt-collection.
The court concludes that plaintiffs’ arguments are unpersuasive. The undersigned is reluctant to read into the exemption crafted by the North Carolina legislature an intent to benefit only learned professionals licensed to practice law in North Carolina. Had the legislature intended to make licensure a requirement to access the exemption, it could
B. Count III — plaintiffs’ claim for civil conspiracy
There is, under North Carolina law, no such thing as a civil action for conspiracy. There is, rather, an action for damages caused by acts committed pursuant to a formed conspiracy.
See Reid v. Holden,
Defendants initially raise the argument that plaintiffs have failed to allege any facts to support the existence of an agreement between the defendants or the objective of the alleged conspiracy. Plaintiffs in Count III of their complaint allege “[t]he facts as pleaded above show that two or more of the Defendants agreed between themselves to do unlawful acts or to do lawful acts in an unlawful way that caused damages to the Plaintiffs.” Plaintiffs have not alleged any specific facts to support the existence of an agreement between the defendants. Defendants argue that despite the requirement that this court take the allegations of the complaint in the light most favorable to the plaintiffs, the statements of the plaintiffs in Count III are merely conclusions as to the legal effects of the facts alleged, and this court need not give these conclusions any weight.
See Davis v. Dillard National Bank,
Plaintiffs have failed to respond to this argument. Nonetheless, the court concludes that it cannot agree with defendants that this is sufficient grounds to dismiss the complaint. Defendants are correct that plaintiffs must present sufficient evidence in support of the existence of an agreement before this claim can be submitted to a jury.
See Dickens v. Puryear,
Davis,
as cited by the defendants, is not to the contrary. There, plaintiffs relied upon a legal theory that because they offered or promised to pay a debt owed directly to defendants, and defendants allegedly refused, that the debt was extinguished.
Id.
at *2. The court held that the factual record was devoid of any indication that an actual tender of payment occurred, and that even if such tender had occurred and been refused, this would relieve only the obligations of an indorser or an accep
Defendants next argue that plaintiffs’ claim fails because plaintiffs cannot successfully allege two or more actors capable of conspiring with each other. Defendants first argue that the intra-corporate immunity doctrine, which states that a corporation cannot successfully conspire with its own officers, employees, or agents, prohibits this court from finding that defendant JBC Legal Group conspired with Jack Boyajian.
See ePlus Technology, Inc., v. Aboud,
Plaintiffs argue that defendants fall within an exception to the intra-corporate immunity doctrine. In
Greenville Publishing Co., Inc. v. Daily Reflector, Inc.,
Plaintiffs fail to understand the plain meaning of both “independent” and “exception.” As noted by the Fourth Circuit in
Aboud,
the independent financial stake exception “has been limited, such that it applies only where a co-conspirator possesses a personal stake independent of his relationship to the corporation.”
Aboud,
That something more is a financial stake in the outcome of the alleged conspiracy, separate from and independent of the financial stake in the corporation. In
Greenville Publishing,
for example, the president of the defendant corporation was held to be able to conspire with his own corporation, because he had an independent stake in another firm which competed with the plaintiff corporation. Because of this independent stake, he would reap benefits independent of his relationship with the defendant corporation if the plaintiff corporation were eliminated.
See Greenville Publishing,
C. Count IV — Plaintiffs claims for violation of RICO
In count IV of the complaint, plaintiffs allege that defendants violated the federal RICO statute, 18 U.S.C. § 1962.
2
In order to make out such a claim, plaintiffs must allege that each RICO defendant conducted an enterprise through a pattern of racketeering activity, and that plaintiffs were injured in their business or property as a result of such conduct.
Palmetto State Medical Center v. Operation Lifeline, 117
F.3d 142, 148 (4th Cir.1997);
see also Sedima, S.P.R.L. v. Imrex
Co.,
Defendants argue that plaintiffs’ claims must be dismissed because plaintiffs have suffered no injury to business or property, as is required to assert standing for a federal RICO claim. Defendants point out that plaintiffs were sent a collection letter alleging a debt. Plaintiffs disputed the timeliness of the collection effort and ordered defendants to cease all communications and collection efforts. Plaintiffs did not make any payments on the disputed debts, nor have they alleged any damage to their business or property as a result of the defendants’ conduct.
Plaintiffs admit that “the Named Plaintiffs do not have grounds for any relief under the Racketeer Influenced and Corrupt Organizations Act because they suffered no injury to their business or property.” Response at 17. Indeed, plaintiffs argue there is no need to dismiss the RICO claims of the Named Plaintiffs because they asserted none.
Instead, plaintiffs argue that all RICO claims were brought on behalf of the putative class. Plaintiffs have sought certification of this action as a class action pursuant to Federal Rule of Civil Procedure 23.
3
The Fourth Circuit recently ruled on a similar issue in
Anderson v. Westinghouse Savannah River Co.,
This court does not, at present, rule upon plaintiffs’ motion for certification as a class action, because that motion is not yet ripe for decision. However, because plaintiffs have failed in alleging the instant RICO claim to present a party with standing to bring the claim, or even to establish the requisites of a case or controversy as required to invoke the jurisdiction of this court, this court finds that it is appropriate to dismiss Count IV of the complaint, alleging a RICO violation, for failure to state a claim.
D. Count V — plaintiffs’ claims for violation of NCRICO
The North Carolina RICO Act, although different in some respects from its federal counterpart, also requires plaintiff to allege injury to business or property in order to make out a claim.
See
N.C.G.S. § 75D-8(c). In
Kaplan v. Prolife Action League of Greensboro,
Plaintiffs here have again failed to allege any injury upon the part of the named plaintiffs, choosing instead to mistakenly rely upon the claims of the absent class members. This reliance fails as it did for the federal claim, and for the same reasons. Again, the court dismisses the claim for violation of NCRICO for failure to state a claim, without ruling on plaintiffs’ motion for class certification.
E. Count VII—plaintiffs’ claims for fraud
The elements of actual fraud
4
, under North Carolina law, are: (1) false representation or concealment of a material fact, (2) reasonably calculated to deceive, (3) made with intent to deceive, (4) which in fact does deceive, (5) resulting in damage to the injured party.
Terry v. Terry,
Despite this cautionary admonition, the Federal Rules of Civil Procedure (as well as the North Carolina Rules) require that fraud be pled with particularity.
See
Fed.R.Civ.P. 9(b)(“In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.”); N.C.G.S. § 1A-1, Rule 9(b)(identical to federal rule). The “circumstances” required to be pled with particularity are the “time, place and content of the fraudulent representation, identity of the person making the representation and what was obtained as a result of the fraudulent acts or representations.”
See Terry,
Plaintiffs have again mistakenly attempted to use the mechanism of the class action pleading to overcome shortcomings in their claim. Plaintiffs argue to the collection letter sent by JBC Legal Group to plaintiffs contained misrepresentations, in that the letters claim that plaintiffs owed debts that plaintiffs allege had been paid in full, or are out of time, and hence no longer owed in the sense that they are not subject to a suit for collection, or that never existed. Plaintiffs pleaded a time, place, and content of the alleged misrepresentation, and although they cannot show the identity of the particular person making the representation, plaintiffs alleged that it came from defendant JBC Legal Group. Plaintiffs cannot show, as to the named plaintiffs, what was obtained as a result of the fraudulent acts or representations, because nothing was obtained. None of the named plaintiffs relied upon defendants’ representations of the debts owed and sought to make payment. Indeed, the unifying theme of plaintiffs’ claims is that each denies that any debt is owed by plaintiffs at this time.
Plaintiffs argue that the required element of damages obtained as a result of
Plaintiffs have failed to plead the required elements of fraud with particularity, and so this count of the complaint is dismissed as to the named plaintiffs.
F. Count VII — plaintiffs’ claims for civil extortion
In their complaint, plaintiffs attempt to make out a claim for civil extortion, alleging that one or more defendants attempted to obtain property from plaintiffs by threat of economic harm and loss of reputation. Aside from the ongoing flaw that the named plaintiffs can show no injury, defendants argue that this claim suffers from an even more basic flaw: there is no such cause of action under North Carolina law.
Defendants point to
Delk v. ArvinMeritor,
where the court clearly stated “[d]e-fendants correctly point out that no North Carolina court has ever recognized the tort of extortion... The Court finds that no cause of action for extortion exists under North Carolina law.”
Delk,
In Hightower, the North Carolina Supreme Court did hold that there was a cause of action, when defendant, a bail bondsman, used the threat of arrest and imprisonment to cause plaintiff to pay him a sum greater than the amount plaintiff actually owed on his bond. See id. at 765. The court noted that the bondsman had the power to arrest plaintiff without process in order to ensure his appearance. Id. The court held, however, the fact that defendant obtained a capias, a writ authorizing detention, when he had the power of arrest without process, suggested that he did so for an improper purpose. Id. The court further held that in showing that defendant had obtained the writ and threatened him with arrest in order to obtain money, plaintiff made out a claim sufficient to withstand demurrer. Id. The court did not label the claim one of extortion.
Similarly, the only other case plaintiff points to in support,
Harris v. NCNB National Bank of North Carolina,
This court agrees with the District Court for the Western District of North Carolina that a survey of the applicable North Carolina authority indicates that no civil cause of action exists for the tort of extortion. Accordingly, plaintiffs’ claims under count VII of the complaint are dismissed with prejudice.
G. Defendants’ motion to dismiss for improper venue
Defendants move to dismiss the claims of plaintiffs Walker, Frost, Lambe, Caldwell and Nisley for improper venue. Defendants argue that pursuant to the general venue statute, 28 U.S.C. § 1391, venue would be proper in the Eastern District of North Carolina only if “a substantial portion of the events giving rise to the claim occurred” here. See 28 U.S.C. § 1391(b)(2). These plaintiffs do not reside in the Eastern District of North Carolina. Plaintiffs Walker and Lambe are both domiciled in South Carolina. Plaintiff Frost is domiciled in Utah. Plaintiff Caldwell is domiciled in Indiana. Plaintiff Nis-ley is domiciled in Colorado. At all times relevant to this suit, plaintiffs were residents of these respective states, and all activity giving rise to these causes of action occurred in these respective states. No defendants reside in North Carolina, and no collection activity directed at these non-North Carolina resident plaintiffs originated from or was directed to North Carolina. Therefore, defendants argue, pursuant to § 1391, venue is proper in the Eastern District of North Carolina only as to the claims of plaintiffs Godfredson, McNeil, Juliano, and Strand, who are residents of North Carolina and whose claims arose in the Eastern District of North Carolina.
Although defendants’ reasoning is unassailable, their argument nonetheless suffers from a fatal flaw: 28 U.S.C. § 1391 does not apply when, as here, defendants remove a case to federal court from state court.
See Polizzi,
The
Hollis
court noted that a defendant in a removed action, if it believes that the case can be better litigated or tried in another court, has the option of seeking transfer pursuant to 28 U.S.C. § 1404(a).
See Hollis,
H. Defendants’ motion to strike portions of the complaint
Defendants move the undersigned to strike paragraphs 12-66 and 90-97 of the complaint, pursuant to Fed.R.Civ.P. 12(f), which gives the court the discretion to strike from the pleadings any “redundant, immaterial, impertinent, or scandalous matter.” Defendants further note that Fed.R.Civ.P. 8(a) requires plaintiffs to set forth a “short and plain” statement of their claims, and that Rule 8(c) further requires that “[e]ach averment of a pleading shall be simple, concise, and direct.” The undersigned agrees that this complaint thoroughly and completely fails to meet the requirements set forth in Rule 8. The undersigned further agrees that much, if not all, of the material complained of falls within the categories set forth in Rule 12(f).
The undersigned also notes, however, that motions to strike pursuant to Rule 12(f) are disfavored in this circuit as being a drastic remedy.
See Waste Management,
This court finds that the showing of actual prejudice to the defendants has not been made. Although the material in the complaint is largely immaterial, imper
This court notes that very recently, in another case involving these same defendants, the undersigned granted the same motion to strike in part, as it pertained to accusations that the defendants had engaged in criminal activity.
See Culver v. JBC Legal Group,
5:04-CV-389, Order of June 28, 2005 (DE # 39). However, in that case, the implied criminal activity concerned fraud, extortion, and racketeering. Despite these allegations, plaintiffs did not, in
Culver,
bring claims for civil fraud, civil extortion, RICO or NCRICO. Therefore, the allegations of criminal behavior had utterly no relevance to the causes of action at issue, and the undersigned found it appropriate to strike portions of the complained-of material.
See Anheuser-Busch, Inc., v. Cohen,
Here, plaintiffs have brought the claims that were not raised in Culver. Although the court has determined that those claims cannot be sustained by the named plaintiffs, the complained-of material in this complaint still has the minimal relevance that was lacking in Culver. Therefore, taking into consideration the disfavored nature of motions to strike pursuant to Rule 12(f), and the minimal prejudice to defendants of retaining the material, this court denies defendants’ motion to strike.
CONCLUSION
Given the number of claims affected by this motion, the alternate bases for dismissal, and the motion to dismiss for lack of personal jurisdiction, the court deems it appropriate to summarize the status of the case at this point.
As held by this court’s order on the motion to dismiss for lack of personal jurisdiction, defendants Marv Brandon and Wayne Franklin have been dismissed from this action.
As to Count I of the complaint, alleging violation of FDCPA, no motion to dismiss has been made and the claim continues against defendants JBC Legal Group and Jack Boyajian.
As to Count II of the complaint, alleging violation of NCUDTPA and NCDCA, the motion to dismiss is GRANTED, and this claim is DISMISSED WITH PREJUDICE against defendants JBC Legal Group and Jack Boyajian.
As to Count III of the complaint, alleging civil conspiracy, the motion to dismiss is GRANTED and the claim is DISMISSED WITH PREJUDICE as to defendants JBC Legal Group and Jack Boya-jian.
As to Count TV, V, and VI of the complaint, alleging violation of RICO, NCRI-CO, and civil fraud, the motion to dismiss is GRANTED and the claims are DISMISSED WITHOUT PREJUDICE as to defendants JBC Legal Group and Jack Boyajian.
As to count VII of the complaint, alleging civil extortion, the motion to dismiss is GRANTED and the claim is DISMISSED WITH PREJUDICE as to defendants JBC Legal Group and Jack Boyajian.
Defendant’s motion to strike paragraphs 21-77 and 183-190 of the complaint is DENIED.
This motion to dismiss now having been resolved, defendants are DIRECTED to file their response to plaintiffs’ motion for class certification as to counts I, IV, V, and VI of the complaint. Defendants are given 20 days from the date of this order to submit their response. Plaintiffs will then be given 10 days to submit a reply. After resolution of the motion for class certification, the court will issue a case management order setting any remaining claims on the calendar for discovery and trial.
Notes
. As noted in defendants' response to that motion, although the complaint named "Ray Barkley” as a defendant, "Ray Barkley” is a pseudonym used by Wayne Franklin, an employee of defendant JBC Legal Group.
. Plaintiffs also requested injunctive relief in this Count. In their response to the motion to dismiss, plaintiffs contend that this request was in error and stipulate that the claim for injunctive relief should be, and hereby is, dismissed with prejudice.
. The court does not rule on the motion for class certification here, because it is not yet ripe for decision. Defendants sought an extension of time to respond to the motion for certification until the instant motion to dismiss and other pending motions were resolved. Although defendants’ consent motion was not granted prior to this action being reassigned to the undersigned, this court recognizes that all parties agreed to the motion and defendants would be prejudiced if the court failed to allow the extension at this point.
. As opposed to constructive fraud, which arises in circumstances where a confidential relationship exists between the parties. Although a claim of constructive fraud requires less adherence to the formal elements than actual fraud, no such confidential relationship exists here between the plaintiffs and defendants. Hence, this count necessarily alleges actual fraud. See Terry, 273 S.E.2d at 677.
. Although the Fourth Circuit affirmed the decision of the
Delk
court dismissing all claims as to one defendant and granting summary judgment on all claims to the other defendants, the Fourth Circuit did so without opinion or argument.
See Delk v. Arvinmeritor. Inc.,