REGINALD SCOTT, APPELLANT, v. FEDCHOICE FEDERAL CREDIT UNION AND ALEXANDRIA KELLY, APPELLEES.
No. 20-CV-322
DISTRICT OF COLUMBIA COURT OF APPEALS
Decided May 12, 2022
Appeal from the Superior Court of the District of Columbia (CAB-4346-19) (Hon. Robert R. Rigsby, Trial Judge) (Submitted January 19, 2021)
Notice: This opinion is subject to formal revision before publication in the Atlantic and Maryland Reporters. Users are requested to notify the Clerk of the Court of any formal errors so that corrections may be made before the bound volumes go to press.
Dean Gregory for appellant.
John M. Bredehoft for appellee.
Before GLICKMAN and DEAHL, Associate Judges, and FERREN, Senior Judge.
I.
A. The Allegations of Scott‘s Third Amended Complaint
As alleged in his Third Amended Complaint, Mr. Scott is a retiree who resides in the District of Columbia. FedChoice, a federally chartered and federally insured credit union, has its principal place of business in Maryland. At all times relevant to this case, Ms. Kelly was a FedChoice employee handling debt collection on its behalf.
In 2012, Scott opened a consumer credit card account at FedChoice. His credit card agreement with FedChoice states that it is governed by the law of Maryland. In 2018, after suffering health problems, Scott defaulted on his accumulated FedChoice credit card debt. Between February and June 2019, FedChoice and Kelly communicated with Scott in attempting to collect the debt. In doing so, the complaint alleges, they violated the prohibition in
- sending Scott four letters warning that FedChoice might sue him to collect his debt, the last of which said that “unless settlement is made within FIVE DAYS . . . legal proceedings may be instituted against you to recover this claim,” even though (the complaint alleges) “the decision to sue had not been made” at that time;
- requiring Scott to make a partial payment of his credit card debt before allowing him to withdraw “exempt retirement funds” from an account he maintained at FedChoice;3
- repeatedly contacting Scott directly, by letter, telephone, and in person (when he withdrew funds from his account) to demand payment of the credit card debt, despite FedChoice having been informed he was represented by counsel; and
- calling Scott and “repeatedly demanding payment and threatening Scott with legal action knowing he was in the hospital, on medication, and on a dialysis machine.”
We provide additional details of the alleged violations in our discussion below of the legal sufficiency of the complaint.
B. Dismissal of the Complaint for Failure to State a Claim
Appellees moved to dismiss the Third Amended Complaint pursuant to
In April 2020, the Superior Court granted appellees’ motion and dismissed the Third Amended Complaint for failure to state a claim under
- the notices of a potential lawsuit to collect the credit card debt were neither abusive nor harassing, given that the credit card agreement put Scott on notice that his default could trigger such legal action;
- preventing Scott from withdrawing funds from his account at FedChoice was not abusive or harassing, inasmuch as he had contractually agreed (in his credit card agreement) to allow FedChoice to freeze his account and apply any account balance to the credit card debt in the event of a default;
- direct contact with a debtor after being informed that the debtor had retained legal representation is not prohibited by
§ 14-202(6) ; and - contacting Scott when he was in the hospital was not actionable because “[Scott] makes no assertion of continued phone calls after Kelly was made aware of [Scott‘s] hospitalization.”
Additionally, the court ruled that Scott failed to state a claim against Kelly in her individual capacity because she “was working within the scope of her employment” and appellant “ha[d] not alleged that Kelly committed any sort of intentional tort.”
II.
A. Standard of Review
“The only issue on review of a dismissal made pursuant to Rule 12(b)(6) is the legal sufficiency of the complaint.”4 As a motion to dismiss a complaint “presents questions of law, our standard of review . . . is de novo.”5
All that is required for a complaint to be sufficient is “a short and plain statement of the claim showing that the pleader is entitled to relief.”6 We “construe the complaint in the light most favorable to the plaintiff by taking the facts alleged in the complaint as true.”7 The complaint need only “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.‘”8
Generally speaking, “a defendant raising a 12(b)(6) defense cannot assert any facts which do not appear on the face of the complaint itself.”9 If the trial court decides a Rule 12(b)(6) motion by considering factual material outside the complaint, the motion normally should be treated as a motion for summary judgment.10 We have
B. The Maryland Consumer Debt Collection Act
The Maryland Court of Appeals has described the MCDCA as a “remedial consumer protection and licensing statute[],” enacted with “the overarching purpose and intent . . . to protect the public from unfair or deceptive trade practices by creditors engaged in debt collection activities.”12 To that end,
First,
For further guidance as to the use of terms like abuse and harassment in this legal context, we may look to the legal dictionary. Black‘s Law Dictionary defines “abuse” as “[a] departure from legal or reasonable use; misuse,” or “[c]ruel or violent treatment of someone; specif[ically], physical or mental maltreatment, often resulting in mental, emotional, sexual, or physical injury.”16 The same dictionary defines “harassment” as “[w]ords, conduct, or action (usu[ally] repeated or persistent) that, being directed at a specific person, annoys, alarms, or causes substantial emotional distress to that person and serves no legitimate purpose; purposeful vexation.”17 Federal courts construing
The second provision of the MCDCA pertinent to this appeal is
Although the Third Amended Complaint alleges that appellees violated the MCDCA by continuing to communicate directly with Scott after being informed he had counsel, the complaint does not cite
On appeal, Scott contends the Third Amended Complaint adequately alleged that FedChoice and Kelly violated the MCDCA (1) by sending him dunning letters warning of the possible initiation of legal proceedings against him, the last of which suggested suit might be imminent if he did not promptly settle his debt; (2) by communicating with him directly after being informed that he was represented by counsel; and (3) by calling him and demanding payment while he was ill and receiving medical treatment.22
We agree with the trial court that, by themselves, Scott‘s allegations regarding the contents of the dunning letters he received do not state a plausible claim that appellees communicated with him in a manner reasonably expected to abuse or harass him, as prohibited by
reasonable attorney‘s fees, and other collection costs incurred by FedChoice as a result of his default, to the extent allowed by law.23 Citing these provisions, the trial court held that the “notices of potential suit were not abusive or harassing, but rather intended to collect, settle, and notify the breach[ing] party of possible future legal action for failure to pay.” We add that the letters FedChoice and Kelly sent Scott were not false or misleading; they said only that FedChoice “may” institute legal proceedings, not that it already had done so or decided to do so. Moreover, only the fourth and final letter implied that a lawsuit might be imminent; Scott was not subjected to a continuous barrage of letters threatening impending litigation. The letters did not threaten other consequences, their tone was not nasty or abusive, and they were not otherwise abusive or harassing as those words are normally understood in this context. As the Fourth Circuit has explained, “there is a line between truthful or future threats of appropriate legal action, which [do] not give rise to liability, and false representations that legal action has already been taken against a debtor . . . .”24 We agree that a creditor or debt collector does not harass or abuse a debtor within the meaning of
We view differently the allegations that FedChoice and Kelly continued
The Third Amended Complaint alleges four further communications from Kelly directly to Scott in June 2019. First, on May 13, 2019, Kelly called Scott and was informed “right away” that he was on a dialysis machine and could start bleeding if he continued the call. Next, on June 4, 2019, Kelly sent Scott the second “Notice Before Suit” letter. This was the letter containing the statement that “unless settlement is made within FIVE DAYS . . . legal proceedings may be instituted against you to recover” the claimed debt. Kelly then called Scott on June 20 and “was informed that he goes to the doctor at least two times per week.” Lastly, the complaint alleges that a week later on June 27, “Kelly called Scott and was informed he was in the hospital.” Kelly allegedly noted that Scott “sounded like he was on some type of medication,” but nonetheless “demanded [that] Scott make a payment.”
We think these allegations state a claim that appellees violated the MCDCA with sufficient plausibility to survive a motion to dismiss under Rule 12(b)(6). As discussed above,
That Kelly allegedly called Scott when he was on dialysis and (at least thereafter) knowing he had some health issues does not, in itself, amount to harassment or abuse in our view, though it may be taken as aggravating the violation of communicating with him knowing he was represented by counsel. But the allegation that Kelly demanded payment from Scott in a phone call after learning he was then in the hospital and “sounded like he was on some type of medication” plausibly could state a claim of abuse or harassment in
The final issue we must address is the trial court‘s dismissal of Kelly from the litigation. The court concluded that Scott had not stated a claim against Kelly in her individual capacity since Kelly concededly was working within the scope of her employment as the agent of FedChoice when she communicated with Scott, and Scott had “not alleged that Kelly committed any sort of intentional tort[.]” Under agency law “[i]t is well established,” the court noted, “that when an agent is acting on behalf of a disclosed princip[al] and . . . the act conducted is within the scope of the agent‘s authority, then the agent is not liable for the acts committed absent some clear promise from the agent that they will be liable.”
We conclude that the court erred in dismissing Kelly. The principles of agency law on which the court relied are applicable where an agent enters into a contract on behalf of a principal — the agent can be personally liable on the contract if the principal was not disclosed, but would not be liable if the principal is disclosed.28 But this is not a contract case; the issue here is whether an agent can be held personally liable for violating a statute on behalf of a principal. In addition, the trial court‘s assumption that there was no allegation Kelly had committed an intentional tort is incorrect. Violation of the MCDCA is a tort.29 Under agency principles in both Maryland and the District of Columbia, “[t]he general rule is that the corporate officers or agents are personally liable for those torts which they personally commit, or which they inspire or participate in, even though performed in the name of an artificial body.”30 Thus, courts applying Maryland law have held that “when a corporation violates a statute, individuals who ‘voluntarily and intentionally caused the corporation to act’ in violation of the statute can be personally liable for those statutory violations[.]”31 In accordance with this principle, the U.S. District Court for the District of Maryland has imposed personal liability on employees of a debt collector for violating
The plain language of the MCDCA supports the imposition of liability on the employees of a creditor or debt collector for
Accordingly, we conclude that the trial court erred in dismissing Kelly from appellant‘s action for violation of the MCDCA. She is amenable to suit in her individual capacity under the MCDCA‘s broad definition of “collector.”
III.
For the foregoing reasons, we reverse the dismissal of the Third Amended Complaint for failure to state a claim on which relief may be granted. We also reverse the dismissal of Ms. Kelly from the litigation. We remand the case for further proceedings consistent with this opinion.
So ordered.