United States District Court, E.D. Virginia, Alexandria Division
LEONIE M. BRINKEMA UNITED STATES DISTRICT JUDGE
Before the Court is defendant's Motion to Dismiss [Dkt No. 3], which has been fully briefed and argued. For the reasons that follow, the motion will be granted in part and denied in part.
Sara Judith Garcia Galdamez, Jorge Armando Escobar Barillas, and Virginia de Jesus Pena Pozuelos (collectively, "plaintiffs") filed a two-count complaint against IQ. Data International, Inc. ("IQ" or "defendant"), alleging violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. Compl. ¶ 1 [Dkt. No. 1], Dec. 1, 2015. In short, plaintiffs allege that defendant added interest to a purported outstanding balance without any basis in law or contract and in doing so used false, deceptive, and misleading representations about the amount of the alleged debt and engaged in unfair debt collection practices. Id.
The debt relates to a residential lease plaintiffs signed jointly and severally as co-lessees with Fairmont Residential, LLC on May 11, 2012 for an apartment in Fairmont's Annandale, Virginia complex. Id. ¶ 4.The form lease did not provide for interest charges on unpaid balances; rather, the lease provides only for a one-time late fee on unpaid balances. Id. ¶¶ 11, 12. Plaintiffs moved out of their apartment when their lease expired on June 10, 2015. Id. ¶ 8. Shortly after plaintiffs vacated their apartment, the landlord contended that they owed a balance of $3, 276.84 in unpaid rent, unpaid utility bills, and charges for repair of alleged minor damages to the apartment. Id. ¶ 9. This alleged debt is not itemized on the collection letter. Plaintiffs contest that they owe anything to the landlord. Id. ¶ 9 n.l. The landlord never sued plaintiffs for any of the unpaid balances or repairs and accordingly has not obtained a judgment against them; instead, the landlord assigned plaintiffs' account to IQ for collections, and IQ sent each plaintiff a collection letter on July 17, 2015. Id. ¶¶ 10, 13, 14. This collection letter is attached to the complaint and states that $19.93 of interest is due on the debt, and asserts that the "unpaid principal balance will accrue interest at a rate of 006.00 percent per annum." Id. ¶ 15. Plaintiffs assert that the statements about interest were false and that there is no interest due or accruing under Virginia law or according to the terms of the lease. Id. ¶16. The complaint alleges that each individual plaintiff experienced a measurable amount of stress and anxiety at the idea that his or her balance would continue to grow, Id. ¶ 20; and in the alternative, plaintiffs maintain that even if interest were legally allowed to accrue, the collection letter falsely represented the amount of interest owed because it calculated interest starting from a date preceding their alleged breach of the lease contract. Id. ¶ 21.
In Count I, plaintiffs allege that IQ used false, deceptive, or misleading representations in connection with the collection of any debt in violation of §§ 1692e(2)(A), 1692e(10), and 1692f(l). Id. ¶ 44. In Count II, they claim that IQ misrepresented the actual amount alleged to be owed by plaintiffs and created a false sense of urgency that overshadowed the 30-day right to request verification by including an interest provision in the same paragraph in violation of § 1692g and § 1692g(a)(l). Id. ¶¶ 47, 48. Plaintiffs request statutory damages pursuant to § 1692k(a)(2) ($1, 000); actual damages pursuant to § 1692k(a)(l); and costs and reasonable attorney's fees pursuant to § 1692k(a)(3).
In its Motion to Dismiss, defendant argues that the bulk of plaintiffs' claims are based on the incorrect premise that Virginia law does not permit interest on unpaid rent owed pursuant to a residential lease, and that to the extent that plaintiffs' claims rely on that premise, they should be dismissed. In response, plaintiffs argue that Virginia law does not allow a debt collector to automatically impute interest to an unpaid balance of rent-rather, such interest is available only if explicitly contained in the terms of the lease or after the debt has been reduced to a judgment.
A. Standard of Review
To survive a Fed.R.Civ.P. 12(b)(6) motion to dismiss, a complaint must allege facts that "state a plausible claim for relief and "are sufficient to raise a right to relief above the speculative level." Walters v. McMahen. 684 F.3d 435, 439 (4th Cir. 2012) (quoting Ashcroft v. Iqbal. 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly. 550 U.S. 544, 555 (2007)). Although a plaintiff "need not forecast evidence sufficient to prove the elements of the claim, " the complaint must "allege sufficient facts to establish those elements." Id. (quoting Robertson v. Sea Pines Real Estate Cos.. 679 F.3d 278, 291 (4th Cir. 2012)) (internal quotation marks omitted). Thus, "a formulaic recitation of the elements of a cause of action will not do." Twomblv. 550 U.S. at 555.
In evaluating whether a plaintiff has successfully "nudg[ed] [his] claims across the line from conceivable to plausible, " a court must "accept the truthfulness of all factual allegations." Burnette v. Fahev. 687 F.3d 171, 180 (4th Cir. 2012) (quoting Twomblv. 550 U.S. at 555); however, it is not required to "assume the veracity of 'bare legal conclusions.'" Id. (quoting Aziz v. Alcolac. Inc.. 658 F.3d 388, 391 (4th Cir. 2011)).
B. Pre-judgment Interest
Count I is a claim that the allegedly false statement about the accrual of interest violated both § 1692e and § 1692f. To prevail on a claim under § 1692e, plaintiffs must show that IQ, as a debt collector, used a "false, deceptive, or misleading representation or means in connection with the collection of any debt." § 1692e. To prevail under § 1692f, they must show that IQ used "unfair or unconscionable means to collect or attempt to collect any debt." § 1692f. A false representation of the "amount... of any debt" would violate the former, § 1692e(2)(A), whereas § 1692f would be violated by "[t]he collection of any amount (including interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law." § 1692f(l).
IQ argues that Virginia law permits it to collect 6% interest per annum on overdue balances of residential leases. If IQ is correct in its view of Virginia law, its collection letter was neither false nor misleading and did not employ any deceptive means. Def.'s Mem. in Supp. of Its Mot. to Dismiss at 4 [Dkt. No. 4], Feb. 1, 2016 ("Def.'s Mem."). Defendant bases ...