D. Statute of Limitations
The Court will next turn to the statute of limitations defense. As mentioned above, the Defendants argue that the state law claims asserted by the Plaintiff should be dismissed because this action was not timely commenced. Specifically, because the summons and complaint were not served within the limitations period, the Defendants argue the claims must be dismissed.
Defendants admit that Plaintiff did file this action on December 13, 2017, within the statute of limitations. However, the initial attempt to serve was initiated on December 26, 2017, eleven days after the statute of limitations ran. Moreover, due to
In the case of Gibson v. EPI Corp. , a plaintiff brought a premises liability action against a building owner and provider of security services.
Judge McKinley dealt with a similar issue in the case of CPC Livestock, LLC v. Fifth Third Bank, Inc. ,
Judge McKinley denied the defendant's request for dismissal holding as follows:
CR 3.01 states that a "civil action is commenced by the filing of a complaint with the court and the issuance of a summons or warning order thereon in good faith." CR 3.01. "The rule seems to be that if, when the summons was issued, the plaintiff had a bona fide, unequivocal intention of having it served presently or in due course or without abandonment, the summons was issued in good faith." Roehrig v. Merchs. & Businessmen's Mut. Ins. Co. ,, 371 (Ky.1965). Good faith "can be, and usually is, something less than perfection or complete accuracy," and above all, "it means not to take advantage of, not to deceive, not to be underhanded." 391 S.W.2d 369 Id. at 370 . In this case, Plaintiffs' counsel accepted the issued summonses and retained them. According to counsel, this was done because Plaintiffs contemplated that an amended complaint would be filed and counsel wanted to avoid spending time and resources serving two complaints in a short period of time. The Court finds that these facts fail to show that the summonses were not issued in good faith.
CPC Livestock, LLC v. Fifth Third Bank, Inc. ,
Judge McKinley easily distinguished his case from the Gibson case. He found the plaintiffs in his case possessed the requisite intent to serve the summonses in due course. The court could not find that the plaintiffs ever intended to abandon service. CPC Livestock at 344. Unlike the plaintiff in Gibson , who held the summons so as to not disrupt settlement negotiations, the plaintiffs in the CPC Livestock case were not trying to take advantage of the defendants but were instead trying to save costs. Under those facts, the court could not find a lack of good faith.
A similar result was reached in the case of Ramirez v. Com. ex rel. Brooks ,
In this case, the Court cannot find that the Plaintiff acted in bad faith. The initial summons was served just six days after the seven day window to serve expired. Moreover, the window ran during the holiday season and expired on December 23, 2017. At the evidentiary hearing, the Plaintiff explained that during this period he was also taking final examinations in law school and that he was also dealing with a family medical matter.
The Defendants argue that the service was not properly accomplished until January 30, 2017. While this is true, the initial summons was served just 13 days after its issuance, and had the Defendants not sought to quash the summons for being three days stale, commencement of the action would have been effectuated much closer to the December 13, 2017 filing date and within the statute of limitations.
At the evidentiary hearing, the Defendants tried to argue that the Plaintiff acted in bad faith by delaying service of the summons. The Defendants alleged that the delay was intended to put them at a disadvantage. The Court finds this argument unpersuasive. The only possible gain that could be accomplished by serving a stale summons would be to reduce the amount of time the Defendants would have to answer the complaint. However, if this de minimis reduced amount of time was at all problematic for the Defendants, a simple motion to extend time to answer would have alleviated any prejudice. Like the plaintiffs in the CPC Livestock case, the Ramirez case, and the Justice case, the facts in this case fail to show a lack of good faith.
The Defendants try to distinguish these cases by stating that the original summons in this case was quashed. The Defendants, however, neither show how this point changes the analysis nor cite any authority to support this argument. This Court cannot equate a quashed summons due to staleness with a bad faith failure to serve. As stated above, CR 3.01 requires that the plaintiff have a bona fide, unequivocal intention of having a summons served presently or in due course or without abandonment. Here, this Court has no trouble finding that the Plaintiff had a bona fide, unequivocal intention of having the summons served in due course. There is absolutely nothing in the record to show an intent to abandon the case by the Plaintiff.
The Defendants also make the argument that these cases did not involve bankruptcy adversary proceedings, where the service
E. FDCPA
The Court now turns to the final argument raised in the Motion. With this argument, the Defendants seek to dismiss the FDCPA claim because the debts in question here were not consumer-related debts.
In 1977, Congress enacted the FDCPA,
any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.
15 U.S.C. § 1692a(5).
In "order to prevail on a[ ] FDCPA claim, a plaintiff must prove that (1) he was the object of collection activity arising from consumer debt, (2) the defendant is a debt collector within the meaning of the statute, and (3) the defendant engaged in a prohibited act or omission under the FDCPA." Poulin v. The Thomas Agency ,
In the case before this Court, the Plaintiff cannot meet the first prong of the test because he cannot prove that he was the object of collection activity arising from a consumer debt. The FDCPA is inapplicable to the collection of commercial debts. S.Rep. No. 382, 95th Cong., 1st Sess. at 3 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1697. See Staub v. Harris ,
Determining whether an obligation is a consumer or business debt for FDCPA purposes requires an examination of the nature of the transaction from which the debt arose. See Slenk v. Transworld Sys., Inc. ,
Here, the evidence presented at the evidentiary hearing overwhelmingly supports the conclusion that the debts in question here were commercial debts rather than consumer debts. The intended use for these loan proceeds were for business purposes rather than personal use. The real estate transactions all included a Residency Certification that the collateral involved was not the Plaintiff's primary residence. The equipment transaction listed equipment necessary to operate a commercial
The Plaintiff's only response to this argument was that the Defendants had sued him personally in state court, and consequently the debts were somehow turned into consumer debts rather than commercial debts. This argument is not well taken. As stated above, a debt is personal or commercial based upon the intent of the borrower at the time the debt was incurred. Here, the evidence clearly indicates the Plaintiff incurred these debts with the intent to engage in commercial activity. As such, these debts are not consumer debts, and the Plaintiff cannot meet the first prong of the FDCPA test. The Defendants choice to pursue only the Plaintiff individually, rather than his corporate identities, in state court has no bearing on this determination. The Defendants' Motion to Dismiss as to the FDCPA claim will be granted.
III. CONCLUSION
In summary, the Court finds that the Motion based upon the standing argument was abandoned by the Defendants prior to and at the evidentiary hearing held on December 4, 2018. The Court further finds the Plaintiff attempted to serve the summons in good faith, and that the claims are not barred by the statute of limitations. Finally, the Court finds that the debts in question here were not consumer debts, and such the count of the Plaintiff's complaint alleging a violation of the FDCPA will be dismissed. The Court will enter an order consistent with this Memorandum.
ORDER
Pursuant to the Court's Memorandum entered this same date and incorporated herein by reference, and the court being otherwise sufficiently advised,
IT IS ORDERED that the Motion to Dismiss filed by Defendants is partially granted. Count 1 of the complaint alleging a violation of the FDCPA is dismissed. The remaining counts will proceed.
IT IS FURTHER ORDERED that the Defendants file their answer within 30 days of the entry of this order.
IT IS FURTHER ORDERED a new pre-trial conference will be scheduled by separate notice to discuss further proceedings in this matter.
Notes
At the evidentiary hearing, the Defendants acknowledged that this argument did not apply to the slander of title claim, which has a longer limitations period.
The parties spend some time and effort arguing over whether the discovery rule should apply to extend the statute of limitations. However, because the Court's determination is based upon the shorter period of time, the Court need not address whether the discovery rule applied to extend the limitations period.