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Ryan v. The Stark Collection Agency, Inc.

United States District Court, W.D. Wisconsin

December 8, 2017




         In this civil lawsuit, pro se plaintiff John Richard Ryan, Jr., is proceeding on a Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. et seq., claim against defendant Stark Collection Agency, Inc. (“Stark”). Now before the court are defendant's motion to dismiss (dkt. #9), plaintiff's motion to amend (dkt. #14), and the parties' joint motion to extend deadlines (dkt. #17). For the following reasons, the court will grant plaintiff's motion to amend, convert defendant's motion to dismiss into a motion for summary judgment, and set further deadlines for the parties to submit proposed findings of fact as provided below. As such, the court will also deny the parties' joint motion as moot.


         Plaintiff Ryan is currently incarcerated at the Juneau County Jail in Mauston, Wisconsin, but from July 15, 2015, until January 22, 2016, he was incarcerated at the Dane County Jail. The following allegations from his amended complaint are accepted as true and viewed in a light most favorable to plaintiff.

         Defendant Stark apparently undertook collection of a “debt” owed by Ryan to an unnamed creditor or creditors, possibly Madison Media Institute (“MMI”), the Madison Trial Office of the State Public Defender (“SPD”), and other debtors. This prompted Stark to send a demand letter to Ryan at the Dane County Jail on December 28, 2015. Before delivering the letter to him, however, employees of the jail opened the letter and reviewed its contents, thereby learning private information about Ryan's debt that he had never consented to Stark disclosing.

         On the same day he received the letter, Ryan advised Stark that: (1) he was contesting the debt with the creditor directly; and (2) Stark should refrain from any further collection attempts. Nevertheless, Stark sent Ryan a “notice of intent to certify debt” on January 8, 2016. This notice was also reviewed by employees of the Dane County Jail before it was delivered to Ryan, after which Ryan notified Stark that all, non-legal mail sent to inmates at the jail was screened and read before delivery, meaning that any attempt to collect a debt from an incarcerated person would cause information about the debt to be revealed to third parties. This lawsuit followed, and the court granted Ryan leave to proceed on an FDCPA claim against Stark.


         I. Motion to Amend (dkt. #14)

         As an initial matter, the court will grant plaintiff's motion to amend, although ultimately it may not save his claim from dismissal. On September 20, 2017, plaintiff filed his motion to amend because the preliminary pretrial conference order explained to plaintiff that he had to obtain leave of court to amend his complaint. (See Prelim. Pretrial Conf. Order (dkt. #16) at 4.) As Federal Rule of Civil Procedure 15(a)(2) encourages courts to grant requests to amend “when justice so requires, ” the court will grant that motion. Normally, because plaintiff is proceeding in forma pauperis, the court would separately screen plaintiff's amended complaint under 28 U.S.C. § 1915(e)(2), but the court will consider plaintiff's amended complaint the operative pleading for purposes of defendant's motion because the issue raised it still ripe.

         II. Motion to Dismiss

         A motion to dismiss under Rule 12(b)(6) is designed to test the complaint's legal sufficiency. See Fed. R. Civ. P. 12(b)(6). Dismissal is only warranted if no recourse could be granted under any set of facts consistent with the allegations. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Defendant seeks dismissal because: (1) plaintiff's allegations are not sufficiently specific to entitle him to relief under the FDCPA; and (2) regardless, plaintiff's alleged “debts” are, in fact, judgments entered against him that do not qualify as debts under the FDCPA.

         First, plaintiff's failure to plead the details of the debt Stark wrote about is troubling, but the court cannot dismiss this lawsuit on that basis alone. Under 15 U.S.C. § 1692a(4), a “debt” is “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 ….” Id. (emphasis added). The court will assume that plaintiff qualifies as a consumer under § 1692a(4), and reading all of his allegations generously, it is not apparent that plaintiff has alleged no facts supporting an inference that he owed a “debt” as defined by the FDCPA.

         Under the FDCPA, to determine whether an obligation to pay constitutes a “debt, ” courts undertake a two-step inquiry: (1) determine whether the obligation arises out of a consensual transaction in which the parties negotiated or contracted for consumer-related goods; and if so, (2) determine whether the debt was owed for a personal, family or household purpose. Berman v. GC Servs., Ltd. P'ship, 146 F.3d 482, 484 (7th Cir. 1998). Plaintiff's amended complaint certainly is lacking in details, but it provides sufficient information to permit an inference that the debt may have been owed for a personal purpose.

         In his complaint and amended complaint, plaintiff alleges that he owed a debt to MMI and “others” and nothing more; he provides no information about how he incurred the debt or debts, nor what he received in exchange for incurring the debt. In fact, neither of his pleadings provide any information about the source of his alleged “debt” that would permit an inference that it is an obligation to pay money arising out of a “transaction in which the money, property, insurance, or services” were for “personal, family, or household purposes.” Certainly, the actual letters plaintiff complains about would have been helpful to review, ...

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