This сase is born out of two student loans issued by Defendant HSBC Bank, one to Plaintiff Dewaine Quick and the other to Plaintiff Lynn Davis, as co-signer for her niece. Although the two loans are unrelated, Plaintiffs' stories are much the same. After each loan went into default, Defendant EduCap, represented by Defendant Weinstock, Friedman & Friedman, filed a collection action against each Plaintiff in D.C. Superior Court. In those cases, EduCap sought the balance of the loan, unpaid interest, and attorneys' fees. Quick never appeared, and eventually the D.C. Superior Court entered a default judgment against him. Davis, on the other hand, appeared and agreed to entry of a consent judgment against her.
Approximately two years later, Plaintiffs filed this case as a class action, alleging that EduCap, Weinstock, and HSBC (collectively, "Defendants") violated state and federal law through their joint debt-collection activities. Plaintiffs' suit centers on a single alleged transgression: that EduCap falsely misrepresented in the collection actions that EduCap, as opposed to HSBC, had entered into the loan agreements with Plaintiffs. That falsehood, Plaintiffs maintain, enabled EduCap to foreclose on their defaulted loans when it had no right to do so. EduCap repeated this unfair debt collection practice, according to Plaintiffs, in state courts throughout the country.
This matter is before the court on Defendants' motions to dismiss and Plaintiffs' motion for leave to amend their complaint. Defendants argue that this suit must be dismissed for two primary reasons: (1) the Rooker - Feldman doctrine divests the court of subject-matter jurisdiction; and (2) the doctrine of res judicata precludes Plaintiffs' claims. Additionally, Defendants move to dismiss all causes of action for failure to state a claim and a subset of them for lack of standing. For the reasons that follow, Defendants' motions to dismiss are granted, and Plaintiffs' motion for leave to amend their complaint is denied as futile.
I. BACKGROUND
A. Factual Background
This case arises out of two student loans taken out more than a decade ago.
When Plaintiffs obtained these loans, EduCap, HSBC, and other private lenders were part of a "partnership" created for the purpose of disbursing student loans, which Plaintiffs refer to as the "L2L" partnership. Second Am. Compl. ¶ 59. At the same time, EduCap sponsored a trust entity known as the L2L Education Loan Trust 2006-1 ("the L2L Trust"), which was an asset-backed security that held a pool of direct-to-consumer student loans originated by various private banks. See id. ¶ 60. The L2L Trust operated in the follоwing manner: HSBC sold to EduCap student loans that it had originated, and EduCap in turn conveyed legal title to those loans to the L2L Trust. Id. ¶ 65. The Trust then issued securities that were backed by the future receivables on the underlying student debt. Id. This arrangement allowed the L2L Trust's creators-which included HSBC and EduCap-"to convert future receivables on [student] loans into immediate cash while, at the same time, insulating HSBC and EduCap from potential risk." Id. ¶ 63. Under this arrangement, HSBC would receive money when it sold its student loans to EduCap, EduCap would receive money when it transferred title to the L2L Trust, and the L2L Trust would receive money from investors, whose return was based on the expected future stream of student loan repayment. Id. ¶ 67.
The financial crisis of 2007, however, changed everything. At that point, according to Plaintiffs, "the Defendants' plan began to unravel in a failure of colossal proportions."Id. ¶ 68. Market conditions rendered EduCap "unable" to buy student loans. Id. ¶ 69. To "avoid financial collapse," HSBC bought some of its loans back from EduCap, and it retained, sold, or securitized other loans, "thereby generating millions of dollars to improve its balance sheet and financial performance ratios." See id.
Eventually Quick defaulted on his student loan, leading EduCap to file a debt collection action in D.C. Superior Court. Id. ¶ 21-22. Defendant Weinstock, Friedman & Friedman ("Weinstock"), the law
Davis's story is much the same. After the primary borrower defaulted, Weinstock filed a debt collection action against Davis in D.C. Superior Court on December 4, 2013. Id. ¶ 28-29; see generally Davis Compl. As in the action against Quick, the Davis lawsuit incorrectly listed "EDUCAP Inc." as the plaintiff.
Plaintiffs allege that these debt collection actions were premised on a lie: that EduCap had power to bring them. To establish EduCap's standing, Weinstock attached to both the Quick and Davis complaints a sworn affidavit from EduCap employee Marcus Maiorca. The Maiorca Affidavit falsely stated that Quick and Davis had "entered into a written promissory note with EduCap ," when in fact HSBC had issued the loans and EduCap did not own the loans at the time. See Second Am. Compl. ¶¶ 35, 40-41; Quick Compl. at 4; Davis Comp. at 4. This affidavit, filed in thousands of other debt collection actions brought by EduCap, was used to "trick courts and consumers across the country into believing that EduCap [was] the actual creditor, or ha[d] authority to sue on behalf of HSBC." Second Am. Compl. ¶ 55. At the time of the actions against Quick and Davis, Weinstock "only represented EduCap"; it had no attorney-client or employment relationship with HSBC. Id. ¶ 38.
Defendants' deceitful conduct continued during the pendency of the collection actions, as Weinstock repeatedly sought to change the named plaintiff. In 2015, Weinstock moved to change the plaintiff in the case against Quick from "EduCap" to "EduCap, Inc. on behalf of HSBC Bank USA, N.A." Id. ¶ 42. The Superior Court entered a default judgment against Quick two weeks later. Id. ¶ 43. But in 2017 Weinstock once again asked permission to change the named plaintiff in Quick's case-this time, to "HSBC Bank, USA, N.A" Id. ¶ 44. As for Davis, she agreed to entry of a consent judgment on July 16, 2015, whereby she promised to pay $5 each month directly to Weinstock. Id. ¶ 45. Davis has paid Weinstock $5 a month ever since. See id. In 2017, Weinstock successfully moved to change the named plaintiff against Davis to "HSBC Bank USA, N.A." Id. ¶ 46.
B. Procedural Background
Some two years later, this federal action followed. Plaintiffs filed a class-action complaint on June 26, 2017, which they amended as of right on July 10, 2017. See Compl., ECF No. 1; Am. Compl., ECF No. 6. The
On November 17, 2017, after briefing on Defendants' motions had concluded, Defendant HSBC sent Plaintiffs a draft Rule 11 sanctions motion, asserting that the "foundational factual predicate" for Plaintiffs' First Amended Complaint "was unequivocally false." Def. HSBC Bank USA, N.A.'s Opp'n to Pls.' Mot. for Leave to File Second Am. Compl., ECF No. 26 [hereinafter HSBC's Opp'n], at 4-5; see Pls.' Mot. for Leave to file Second Am. Compl., at 1, 3;
Thereafter, on December 5, 2017, Plaintiffs moved to amend their complaint a second time, seeking to add "facts and claims arising from recent admissions by HSBC" in its draft Rule 11 memorandum. Pls.' Mot. for Leave at 1. Plaintiffs' motion identifies two such admissions: (1) that HSBC bought back Davis's loan from EduCap in December 2008, and (2) that HSBC has held Quick's loan since it originated.
The court held a hearing on the pending motions on April 18, 2018, and now turns to the merits.
II. DISCUSSION
A. Dismissal Under Rule 12(b)(1)
The court begins with three jurisdictional issues: (1) whether the court lacks subject-matter jurisdiction over Plaintiffs' claims under the Rooker -
For the reasons that follow, the court finds that: (1) it lacks jurisdiction under the Rooker - Feldman doctrine to hear Plaintiffs' RICO, unjust enrichment, and abuse of process claims, but has jurisdiction as to their federal and District of Columbia unfair debt collection statutory claims; (2) Plaintiffs lack standing to pursue claims against HSBC; and (3) Plaintiff Quick has standing to pursue some but not all of his claims against EduCap and Weinstock.
1. Rooker - Feldman
The court begins with Defendants' argument that Plaintiffs' lawsuit is a de facto challenge to final state court judgments-the District of Columbia collection actions-and, as a result, this court lacks subject-matter jurisdiction under the Rooker - Feldman doctrine. HSBC's Mot., Mem. in Supp., ECF No. 15-1 [hereinafter HSBC's Mem.], at 9-13; EduCap & Weinstock's Mot., Mem. in Supp., ECF No. 17-1 [hereinafter EduCap & Weinstock's Mem.], at 10-12; see also EduCap & Weinstock's Opp'n at 10-11; HSBC Opp'n at 7-8. Bеcause Plaintiffs do not expressly seek as relief the undoing of the D.C. Superior Court judgments, Defendants argue that Plaintiffs' current action is "inextricably intertwined" with the D.C. Superior Court judgments because the "core" of their federal claims "is that EduCap did not have standing to pursue the collection actions." HSBC's Mem. at 10-11; see also EduCap & Weinstock's Mem. at 7. They believe the suit is tantamount to a request to undo the D.C. Superior Court judgments because, in order to succeed on their claims, Plaintiffs "must demonstrate that the D.C. Superior Court wrongly entered judgments in favor of EduCap despite EduCap's purported lack of standing." HSBC's Mem. at 10-11; EduCap & Weinstock's Mem. at 7. Plaintiffs counter that Rooker - Feldman does not apply here because their challenge is to Defendants' pre-judgment unfair debt collection practices-namely, the drafting of the false Maiorca affidavit-rather than the D.C. Superior Court judgments themselves. See Pls.' Omnibus Opp'n to Mots. to Dismiss, ECF No. 20, Pls.' Mem. in Supp., ECF No. 20-1 [hereinafter Pls.' Opp'n], at 9-11; Pls.' Omnibus Reply Br., ECF No. 27 [hereinafter Pls.' Reply]. Alternatively, Plaintiffs argue that, because Defendants procured the D.C. Superior Court judgments by fraud or deception, Rooker - Feldman does not divest this court of jurisdiction. See Pls.' Opp'n at 10 n.69.
The Rooker - Feldman doctrine hails from the only two Supreme Court cases in
Since the Rooker and Feldman cases, the Supreme Court has emphasized that the doctrine occupies a "narrow ground." Exxon Mobil Corp. v. Saudi Basic Indus. Corp. ,
Neither party cites a D.C. Circuit case that applies Rooker - Feldman to facts similar to those presented here. In lieu of such precedent, Defendants direct the court primarily to district court cases from this jurisdiction. See HSBC's Mem. at 10-13. None of these cases, however, contain an allegation that the earlier state court judgment was procured by fraud. See
When other circuit courts have been presented with circumstances similar to those at issue here, they have split on the outcome. For instance, in Todd v. Weltman, Weinberg & Reis Co., L.P.A. ,
But the Seventh Circuit came to the opposite conclusion in a case presenting similar circumstances. In Andress v. Daubert Law Firm, LLC ,
In this court's view, while these decisions serve as helpful guideposts, none provide the answer for all claims in this case. Instead, guided by the Supreme Court's admonition that Rooker - Feldman rests on "narrow ground," Exxon Mobil ,
The court's conclusion turns on the showings that Plaintiffs must make to prove each claim and the relief sought. Take Plaintiffs' RICO claims, Counts I and II. They allege that Defendants engaged in a pattern of racketeering activity that includеd "obtaining unlawful judgments" and "receiving, investing and reinvesting income derived from unlawful L2L debt collection lawsuits." Second Am. Compl. ¶¶ 87-88. Plaintiffs also allege that Defendants' unlawful acts, including securing the allegedly unlawful judgments, proximately caused them harm. Id. ¶ 90. They seek "judgment in their favor ... for treble damages suffered by them as a result of the Defendants' predicate acts and violations." Id. ¶ 91. If Plaintiffs' RICO allegations are proven true, it would mean that
A different result obtains as to Plaintiffs' federal and District of Columbia unfair debt collection practices claims, Counts IV and V, respectively. These claims, as pleaded, are "independent" of the Superior Court judgments. See Skinner ,
Having concluded that Rooker - Feldman prohibits review of some of Plaintiffs' claims, the court turns to Plaintiffs' alternative argument that Rooker - Feldman does not apply when, as here, the state court judgment is procured by fraud. See Pls.' Opp'n at 9-10 n.69 (quoting Kafele ,
The same is true here. Plaintiffs offer no reason why the alleged falsehood contained in the Maiorca Affidavit prevented them from challenging EduCap's standing to collect on their debts. As Plaintiffs admit, Quick and Davis both took out loans that originated with HSBC that, per the terms of the loan documents, obligated them to repay HSBC. See Second Am. Compl. ¶¶ 19-20; 25-27. Further, Plaintiffs concede that EduCap's name appeared only "peripherally in the loan documents[,] as entitled to service loans by reviewing and receiving loan applications, processing forbearances, and checking borrower credit and income." Id. ¶ 39. The actual loan documents, copies of which were attached to each of the complaints against Quick and Davis, confirm these allegations. First, the Truth in Lending Disclosure Statement for both Plaintiffs identifies the "LENDER" as HSBC and provides that the borrower "promise[s] to pay HSBC Bank USA, N.A. the loan Amount with interest at a Variable Rate." See Quick Compl. at 21-22; Davis Compl. at 22-23. Second, the "Combined Private Education Loan Education Loan Application and Promissory Note" for both Plaintiffs defines "HSBC Bank USA, National Association" as the counterparty to the loan agreement. See Quick Compl. at 12; Davis Compl. at 10. Finally, Davis's relative's loan disbursement check was issued by "HSBC Bank USA, N.A." Davis Compl. at 26. Thus, even if the Maiorca Affidavit falsely represented that Plaintiffs had entered into written promissory notes with EduCap, the documents attached to the complaints informed them that HSBC was their original lender and provided Plaintiffs ample fodder with which to challenge EduCap's standing to bring suit. Therefore, the fraud alleged in this case is not "extrinsic" and falls outside the bounds of the fraud exception to the Rooker - Feldman doctrine.
In sum, the court lacks subject-matter jurisdiction under the Rooker - Feldman doctrine to hear Plaintiffs' RICO, unjust enrichment, and abuse-of-process claims. Accordingly, those claims are dismissed. Jurisdiction as to Plaintiffs' federal and District of Columbia statutory unfair debt collection practices claims is not, however, barred by Rooker - Feldman .
2. Article III Standing
The court now arrives at the two standing questions: (1) whether Plaintiffs have standing to allege claims against HSBC, and (2) whether Quick has standing to assert his claims at all. The plaintiff bears the burden of establishing the three elements of constitutional standing: (1) that the plaintiff "suffered an injury in fact"; (2) that there exists a "causal connection between the injury and the conduct complained of"; and (3) that it is "likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision."
a. Plaintiffs' Standing to Assert Claims Against HSBC
HSBC argues that Plaintiffs have not made out a plausible claim of standing against it, because the complaint fails to allege injury that is "fairly traceable" to HSBC's alleged misconduct. HSBC's Mem. at 13-14. The causal connection element of standing asks whether the complained-of injury is "fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court." Lujan ,
Having carefully scrutinized Plaintiffs' pleading, the court agrees with HSBC that Plaintiffs have not "clearly ... allege[d] facts demonstrating" that Plaintiffs' claimed injuries are "fairly traceable" to actions by HSBC as to any claim. See Spokeo ,
The only factual allegations concerning HSBC relate to its participation in the investment arrangement operated by the L2L Pаrtnership. Beyond that, the complaint is silent as to any conduct by HSBC. Plaintiffs maintain that, in mid-2007, the L2L Partnership essentially collapsed due to market conditions, as EduCap was unable to continue to purchasing student loans. Second Am. Compl. ¶ 69. To improve its balance sheet, HSBC undertook various loan transactions that resulted in HSBC "hav[ing] no legal right, title or interest in the loans." See
Plaintiffs defend their pleading as to HSBC's standing primarily by pointing to the fact that, in Quick's and Davis's debt collection cases, Weinstock moved more than once to substitute HSBC as the plaintiff. See Pls.' Opp'n at 17 & n.125. These allegations, Plaintiffs insist, establish that HSBC's actions are "directly related" to Plaintiffs' injuries, as HSBC gavе "tacit approval of approval of Weinstock and EduCap['s] unlawful conduct on behalf of HSBC," as evidenced by "Defendants ... carpet-bombing thousands of L2L borrowers in HSBC's name for more than a decade without renunciation." Pls.' Opp'n at 17-18. Plaintiffs, however, fail to include any "tacit approval" theory in their Second Amended Complaint, either as a factual matter or as a basis for liability, which is fatal. See Middlebrooks v. Godwin Corp. ,
b. Quick's Standing
Next, the court addresses whether Quick has standing to bring his claims, although neither party has briefed the issue. See Arbaugh v. Y & H Corp. ,
Quick lacks standing to advance RICO claims. "A RICO plaintiff only has standing if, and can only recover to the extent that, he has been injured in his business or property by reason of the conduct constituting the violation.' " Holmes v. Sec. Inv'r Prot. Corp. ,
The same is true for the unjust enrichment claim. By failing to allege that he has paid or otherwise conferred a benefit on any Defendant, Quick has failed to allege an injury-in-fact as to that claim. See Bregman v. Perles ,
Quick, however, has alleged a sufficient injury with respect to his statutory unfair debt collection practice claims and abuse of process claim. For purposes of the FDCPA, a plaintiff is not required to show actual damages; an attempt to collect money in violation of the FDCPA will suffice. See Molina v. FDIC ,
B. Dismissal Under Rule 12(b)(6)
Defendants also argue that dismissal of all claims is warranted under Rule 12(b)(6) for multiple reasons: (1) the doctrine of res judicata precludes Plaintiffs from bringing these claims; (2) Plaintiffs have failed to allege any facts to support their claims against HSBC; (3) Plaintiffs have failed to allege facts sufficiеnt to make out each of their claims; and (4) the FDCPA claim is barred by the statute of limitations. For the reasons that follow, the court grants Defendants' motions to dismiss for failure to state a claim.
1. Res Judicata
The question here is whether Plaintiffs are precluded from bringing claims that they have not asserted previously. The operative legal construct therefore is claim preclusion. See Allen v. McCurry ,
The parties here dispute only the first and third elements. As to the third element-the existence of a valid, final judgment-Plaintiffs contend that "[c]onsent and default judgments ... do not constitute res judicata." Pls.' Opp'n at 15. This is wrong. Under District of Columbia law, "[c]onsent decrees generally are treated as final judgments on the merits and accorded res judicata effect." Williams v. Gerstenfeld ,
That leaves the first element, the "so-called identity element," which concerns the relatedness of the actions. See Capitol Hill Grp. v. Pillsbury, Winthrop, Shaw, Pittman, LLC ,
Defendants have the better argument. The core matter to which Plaintiffs now object-that EduCap fraudulently established its standing in the debt collection actions through filing of the false Maiorca Affidavit-could have been litigated before the D.C. Superior Court. Standing is an essential element of any claim, and the lack of standing is hardly an obscure defense. As detailed above, Plaintiffs had ample opportunity and information to make that challenge against EduCap in the collection actions. Plaintiffs themselves knew that HSBC had issued the student loans, as thеir loan documents make clear. And, even if they had forgotten that fact at the time of the litigation, the loan documents attached to the debt-collection complaints put Plaintiffs on notice that they had not, as Maiorca attested, "entered into a written promissory note with EduCap," see Quick Compl. at 4; Davis Compl. at 4, but rather had with HSBC. Thus, Plaintiffs could have contested EduCap's standing to bring the actions simply by pointing to the records attached to the complaints, which identified HSBC as the loans' issuer. Thus, the cases recited by Plaintiff that stand for the principle that an unlawful debt collection practice and the debt itself do not share a common nucleus of facts, see Pls.' Opp'n at 14 n.102, have no bearing here. Because this case and the collection actions involve the "same nucleus of facts," res judicata precludes Plaintiffs from bringing their claims. Cf. Gerstenfeld ,
Plaintiffs offer additional arguments for why res judicata does not apply, but none are persuasive. Plaintiffs assert that res judicata cannot apply here because, as courts have consistently held, FDCPA lawsuits are not compulsory counterclaims. See Pls.' Opp'n at 15. There are two problems with this line of argument. First, as noted previously, the focus of claim preclusion is not on a particular legal theory or claim, but rather on facts of the transaction or occurrence at issue. Thus, the fact that an FDCPA claim may not be a compulsory counterclaim is not dispositive. Second, under District of Columbia law, claim preclusion reaches more than compulsory counterclaims. See Capitol Hill Grp. ,
Additionally, Plaintiffs insist that the "fraudulent concealment" exception to res judicata applies here. See Pls.' Opp'n at 15. It does not. Fraudulent concealment is a recognized exception to res judicata, see Pierce v. SEC ,
2. Failure to State Any Claim Against HSBC
For the same reasons Plaintiffs have failed to allege that their claimed injuries are "fairly traceable" to HSBC, they have failed to allege sufficient factual matter to support a plausible claim against HSBC. Once more, the Second Amended Complaint contains no facts connecting HSBC to the alleged scheme to defraud defaulted borrowers by misrepresenting EduCap's standing to bring collection actions. Accordingly, the court also dismisses all claims against HSBC for failure to state a claim.
3. Failure to State Cognizable Claims
Defendants also argue that all of Plaintiffs' claims must be dismissed for failure to state cognizable claims. The court agrees that Plaintiffs' pleading of their RICO and FDCPA claims is fatally deficient. And, because the court dismisses Plaintiffs' federal claims, the court declines to exercise supplemental jurisdiction over Plaintiffs' remaining state law claims and dismisses them for that reason. See
a. Substantive civil RICO claims
Plaintiffs' RICO claims fail because Plaintiffs do not plead two essential elements: (1) a pattern of "racketeering activity," which is demonstrated by the commission of at least two predicate offenses, and (2) an "enterprise." See
In an attempt to avoid this well-accepted barrier, Plaintiffs argue that the mailing of the affidavit is not "litigation activity" because it was created and mailed prior to the filing of the litigation in D.C. Superior Court. See Hr'g Tr. at 18-20. This distinction is nonsensical. The mailed Maiorca Affidavit, even if assumed to be false, was created solely for the purpose of initiating litigation. It was of no legal consequence until filed in the collection actions; the mere mailing of the falsified document would not constitute mail fraud. See
Plaintiffs also fail to allege the existence of a RICO "enterprise." A RICO enterprise is defined as "any ... partnership ... association ... [or] group of individuals associated in fact although not a legal еntity."
The Second Amended Complaint asserts that "Defendants" violated the statute through their association with "the L2L enterprise." See Second Am. Compl. ¶¶ 87-88. But if by that Plaintiffs mean the original securitization vehicle, the L2L Trust-and it appears that they do, see Pls.' Opp'n at 32-34-then their own complaint pleads away the possibility that this entity could serve as a RICO enterprise. By Plaintiffs' own allegations, the L2L Trust "began to unravel in a failure of colossal proportions" following the recession in 2007, as EduCap was "unable to continue purchasing L2L loans as agreed," which, in turn, necessitated that HSBC take other financial measures to improve its balance sheet. See Second Am. Compl. ¶¶ 68-69. This "failure of colossal proportions" occurrеd five years before EduCap filed suit against Quick. See id. ¶ 22. As the L2L Trust ended, so too did any association among Defendants that might have satisfied the statute's definition of an enterprise. Moreover, Plaintiffs' allegations belie interconnectedness among all Defendants. Weinstock is not alleged to have any role in the L2L Trust. Only EduCap and Weinstock are implicated in filing the collection actions. Id. ¶¶ 34-36, And Weinstock was neither employed, retained nor compensated by HSBC for those purposes. Id. ¶ 38. Thus, as alleged,
b. Civil RICO conspiracy claim
In addition, Plaintiffs allege that the trio of defendants conspired to commit violations of the RICO statute. Second Am. Compl. ¶ 89; see
4. Fair Debt Collection Practices Act
Plaintiffs' FDCPA claim is against EduCap and Weinstock only, and those defendants seek dismissal of the claim on two grounds: (1) it is time-barred under the FDCPA's one-year statute of limitations; and (2) it fails to allege that EduCap and Weinstock handled Plaintiffs' loans only after they defaulted, as is required to be subject to the FDCPA, see Parker v. BAC Home Loans Servicing LP ,
The FDCPA requires actions to enforce liability under the Act be brought "within one year from the date on which the violation occurs." 15 U.S.C. § 1692k(d). In cases such as this one, where the FDCPA claim is premised on the wrongful filing of a debt collection action, federal appellate courts generally have held that the claim accrues when the debtor is served with the complaint, as that is the date when the debtor receives notice of the action. See, e.g., Lyons v. Michael & Assocs. ,
Still, Plaintiffs argue that the statute of limitations should be tolled because Defendants fraudulently concealed their actions, thus preventing Plaintiffs from learning of the violation. See Pls.' Opp'n at 35-37. They contend that the statute of limitations began to run only when the final caption change to the debt-collection actions occurred. See id. at 35-37. For Quick, that would be May 16, 2017; for Davis, on April 24, 2017. Id. at 37. Fraudulent concealment is an "equitable doctrine [that] is read into every federal statute of limitations," which equitably tolls the statute of limitations. Holmberg v. Armbrecht ,
Applying those principlеs here, Plaintiffs have failed to adequately plead fraudulent
Plaintiffs also seek to avoid the limitations by arguing that the "continuing violations" doctrine applies. Here, Plaintiffs insist that Defendants' continued deceitful acts during the litigation reach back to the events outside the one-year limitations period thаt precede the filing of their FDCPA claim. Pls.' Opp'n at 37. Under Plaintiffs' proffered application of this doctrine, a misrepresentation by Defendants during the statute of limitations period for Quick's and Davis's FDCPA claims-here, the simple maintenance of the debt-collection action-would save the claims from being time-barred. However, the federal appellate courts uniformly have held that the continuing violation doctrine does not apply to the FDCPA. See Slorp v. Lerner, Sampson & Rothfuss ,
5. State Law Claims
Having dismissed Plaintiffs' federal law claims, the cоurt declines to exercise jurisdiction over the remaining state law claims. See
C. Motion for Leave to Amend
In light of the court's rulings, allowing Plaintiffs to amend their complaint would be futile. See Foman v. Davis ,
III. CONCLUSION
For the reasons stated, Defendants' motions to dismiss, ECF Nos. 15, 17, are granted. The court also denies Plaintiffs' Motion for Leave to File Second Amended Complaint, ECF No. 24, and therefore dismisses Plaintiffs' First Amended Complaint with prejudice. See Firestone ,
Notes
The recited facts are based on the allegations set forth in Plaintiffs' proposed Second Amended Complaint, ECF No. 24-1.
Although not filed as exhibits to Plaintiffs' complaint, the D.C. Superior Court records in Davis's and Quick's respective collection actions are attached as exhibits to Plaintiffs' Motion for Class Certification, ECF No. 12. The court can consider these records in resolving the motions to dismiss because they are incorporated into the complaint and are subject to judicial notice. See Hurd v. District of Columbia ,
This allegation is incorrect. As the actual Davis Complaint shows, the plaintiff was identified as "EDUCAP, INC. on behalf of HSBC Bank USA, National Association." See Davis Compl. at 2 (page number automatically generated by CM/ECF). This error, however, is immaterial to the court's decision.
The proposed Second Amended Complaint makes contradictory allegations about the loans' ownership at the time EduCap initiated the D.C. Superior Court actions. On the one hand, Plaintiffs claim that HSBC owned the loans when the suits were filed. See Second Am. Compl. ¶ 53 (alleging the HSBC owned Davis's loan when the collection action was filed); id. ¶ 54 (alleging that HSBC owned Quick's loan when the collection action was filed). Yet, at the same time, Plaintiffs have retained the allegation from their earlier complaints that L2L Trust was the true owner of the loans and only the L2L Trust could have filed suit. Id. ¶ 73. In the end, Plaintiffs appear to hedge their bets, alleging that HSBC "owned, sold, or securitized the loans." See, e.g., id. ¶¶ 105, 108, 120 (emphasis added). These muddled allegations do not ultimately affect the court's rulings.
Interestingly, a later panel of the Sixth Circuit, without citing to Todd , came to the opposite conclusion in an unpublished decision. In Kafele v. Lerner, Sampson & Rothfuss, L.P.A.,
As noted earlier, supra n. 4, other allegations are to the contrary, claiming that HSBC actually owned the loans at the time of the collection actions. See id. ¶¶ 53-54; see also ¶ 69 (noting that HSBC "repurchased certain loans from EduCap").
Elsewhere, Plaintiffs claim that EduCap and HSBC are all jointly liable for "the acts and practices" of which Plaintiffs complain because all were "agents of the L2L partnership." See Second Am. Compl. ¶ 17. But that is no more than a legal conclusion, which is not entitled to a presumption of truth. Papasan v. Allain ,
This same analysis applies equally to Plaintiffs' contention that they were deceived by Defendants' inclusion of a contingency-based attorney's fee, when the loan agreement contained no such provision. Plaintiffs had the agreement before them to contest the legitimacy of the attorney's fee demand.
Given the court's resolution of this claim, it does not address Defendants' alternative argument: That Plaintiffs have failed to meet the heightened pleading requirements for fraud claims, as required by Rule 9(b) of the Federal Rules of Civil Procedure. See HSBC's Mem. at 27-28; EduCap & Weinstock's Mem. at 16-18.