United States District Court, W.D. Virginia, Roanoke Division
WILLIE HENDERSON, individually and on behalf of all others similarly situated, Plaintiff,
GENERAL REVENUE CORPORATION, et al., Defendants.
REPORT AND RECOMMENDATION
S. BALLOU UNITED STATES MAGISTRATE JUDGE
Willie Henderson (“Henderson”) brings this action
under the Fair Debt Collection Practices Act (the
“FDCPA”), 15 U.S.C. § 1692 et seq.
relating to efforts by Defendants General Revenue Corporation
and Pioneer Credit Recovery, Inc. (collectively, “the
GRC Parties”) to collect delinquent student loans.
Defendants moved under Fed.R.Civ.P. 12(b)(6) to dismiss
Counts I-III and V of the Amended Complaint. Dkt. No. 32. The
GRC Parties argue that Counts I-III and V, which allege that
the GRC Parties did not provide certain disclosures required
under the FDCPA, must fail because all required disclosures
for collection of a student loan debt under 34 C.F.R. §
682.410 were provided in its “Claims Paid
Letter.” I RECOMMEND DENYING the GRC
Parties' motion to dismiss (Dkt. No. 32), and instructing
the parties to schedule a Rule 16 conference to establish a
pre-trial schedule to complete discovery on both the
individual and class claims.
mid-1990s, Henderson took out a federal student loan for $13,
760.00 to attend ECPI University. Am. Compl. ¶ 8, Dkt.
No. 19-1. Henderson initially made payments toward his
student loan debt, but eventually defaulted, resulting in the
guaranty agency, United Student Aid Funds, Inc.
(“USAF”), paying the lender and taking assignment
of the loan. Id. ¶¶ 8, 10-11. USAF then
transferred the debt to defendant General Revenue Corporation
(“GRC”) for collection. Id. ¶ 12.
February 7, 2017, GRC sent Henderson a letter advising that
he had defaulted on his student loan debt and owed $102,
174.81 in principal, $1, 861.86 in interest, and $20, 430.70
in collection costs. Id. ¶¶ 18-19.
Henderson denies that he owes those amounts. Id.
¶ 20. In response to GRC's February 7, 2017 letter,
Henderson sent two letters disputing the validity of the
debt, requesting verification of the debt and information
about the loan, and demanding that GRC cease communications
other than those required to verify the debt. Id.
¶¶ 31, 33. GRC did not provide the requested
verification or information. Id. ¶¶ 32,
this time, GRC or its parent company, Navient Corporation
(“Navient”), transferred Henderson's account
to defendant Pioneer Credit Recovery, Inc.
(“Pioneer”), which is also a Navient subsidiary.
Id. ¶ 35. On September 30, 2017, Henderson
received a collection letter from Pioneer which neither
verified the debt, nor assessed additional collection costs.
Id. ¶ 37. Pioneer also sent Henderson an
undated letter, postmarked November 1, 2017, notifying
Henderson of USAF's intent to institute administrative
wage garnishment proceedings against Henderson. Id.
22, 2017, Henderson, individually and on behalf of a class of
similarly situated plaintiffs, brought this action against
GRC. Henderson amended the complaint to add Pioneer as a
defendant and to include two classes: Class A and Class B.
Id. ¶ 57. Henderson defines Class A to include
“[a]ll natural persons who are residents of Virginia
who are similarly situated to Plaintiff in that, within one
year of the commencement of this action and continuing to the
date that an order is entered certifying this class,
Defendant GRC sent them a letter in a form substantially
similar or materially identical to [the February 7, 2017
letter].” Id. Class B concerns Pioneer's
November 1, 2017 letter. Id.
Amended Complaint sets forth six counts under the FDCPA. The
GRC Parties seek to dismiss Counts I through III, individual
claims relating only to Henderson, and Count V, a class
claim. Count I alleges that GRC and Pioneer
violated § 1692e of the FDCPA by making false,
deceptive, or misleading representations in the February 7,
2017, September 30, 2017, and November 1, 2017 letters.
Id. ¶¶ 70-75. This count appears to allege
that GRC, and later Pioneer, lacked the authority to collect
the identified amounts because they had not provided certain
disclosures required in connection with Henderson's
student loan debt and which are set forth in 34 C.F.R. §
682.410. See id. Count I further alleges that GRC
and Pioneer violated § 1692e(2)(A) because Henderson
denies that he owes the amounts listed in the letters.
Id. ¶ 74. Count II alleges that GRC violated
§ 1692g of the FDCPA by failing to provide verification
of Henderson's debt when requested and by continuing its
collection efforts through Pioneer after Henderson disputed
the debt. Id. ¶¶ 83-84. In Count III,
Henderson claims that GRC and Pioneer violated § 1692c
of the FDCPA by contacting him after he demanded that they
cease such communications. Id. ¶¶ 94-96.
Finally, Count V alleges, on behalf of Class A, that
GRC's February 7, 2017 letter violates § 1692e and
§ 1692f by misrepresenting GRC's authority to assess
collection costs when GRC had not made the disclosures
required under 34 C.F.R. § 682.410 to assess such costs.
Id. ¶ 115(a), (b)(i). Henderson further alleges
that GRC misled him and the proposed class members about
administrative wage garnishment proceedings. Id.
motion to dismiss under Rule 12(b)(6) tests “the
sufficiency of a complaint.” Erickson v.
Pardus, 551 U.S. 89, 93 (2007) (internal quotation marks
and citations omitted). “To survive a motion to
dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is
plausible on its face.'” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
“A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Id. Although “a
complaint attacked by a Rule 12(b)(6) motion to dismiss does
not need detailed factual allegations, ” a pleading
that merely offers “labels and conclusions, ” or
“a formulaic recitation of the elements of a cause of
action will not do.” Twombly, 550 U.S. at 555.
Likewise, “a complaint [will not] suffice if it tenders
‘naked assertion[s]' devoid of ‘further
factual enhancements.'” Iqbal, 556 U.S. at
678 (quoting Twombly, 550 U.S. at 557).
when a defendant moves to dismiss a complaint under Rule
12(b)(6), courts are limited to considering the sufficiency
of the allegations set forth in the complaint and the
documents attached or incorporated into the complaint.”
Zak v. Chelsea Therapeutics Int'l, Ltd., 780
F.3d 597, 606 (4th Cir. 2015) (internal quotation marks
omitted). Courts “may consider a document submitted by
the movant that was not attached to or expressly incorporated
in a complaint, so long as the document was integral to the
complaint and there is no dispute about the document's
authenticity.” Goines v. Valley Cmty. Servs.
Bd., 822 F.3d 159, 166 (4th Cir. 2016). A document is
integral if it “by its very existence, and not the mere
information it contains, gives rise to the legal rights
asserted.” Chesapeake Bay Found., Inc. v. Severstal
Sparrows Point, LLC, 794 F.Supp.2d 602, 611 (D. Md.
2011) (internal quotation marks omitted); see also
Goines, 822 F.3d at 166 (“Goines' claims do
not turn on, nor are they otherwise based on, statements
contained in the Incident Report . . . . Under these
circumstances, the Incident Report arguably is not integral
to the complaint and therefore should not have been
considered by the district court.”). Ultimately, the
Court retains discretion “‘to
“exclude” matters outside the
pleadings.'” Deegan v. Moore, No.
7:16-CV-00260, 2017 WL 1194718, at *3 (W.D. Va. Mar. 30,
2017) (Dillon, J.) (quoting Finley Lines Joint Protective
Bd. Unit 200 v. Norfolk S. Corp., 109 F.3d 993, 996 (4th
instant case, the GRC Parties' motion to dismiss relies
entirely upon a document that Henderson did not attach or
refer to in the Amended Complaint. Specifically, the GRC
Parties assert that a letter sent to Henderson dated November
25, 2016, which the GRC Parties call a “Claims Paid
Letter, ” contains the disclosures required by federal
regulations governing Henderson's student loan and
therefore, Counts I-III and V of the Amended Complaint should
be dismissed. Dkt. No. 33. The GRC Parties argue that the
November 25, 2016 Claims Paid Letter (“Claims Paid
Letter”) is integral to the complaint because it is the
document that contains the disclosures required under 34
C.F.R. § 682.410, rather than the letters upon which
Henderson relies in the Amended Complaint. Id. at p.
2. The GRC Parties assert that they made the disclosures
required by federal regulations governing Henderson's
student loan in the Claims Paid Letter, and therefore, Counts
I-III and V of the Amended Complaint are baseless.
that the Claims Paid Letter is not integral to the Amended
Complaint, and in any event, should not be considered by the
Court at this point as an exercise in discretion. The GRC
Parties do not provide any specific support for their
assertion that the 34 C.F.R. § 682.410 disclosures must
be made in the particular document that they identify as a
Claims Paid Letter, rather than in the letters attached to
the Amended Complaint. Moreover, the Amended Complaint
alleges misrepresentation and other violations under the
FDCPA, which are separate from the underlying right to
disclosures under 34 C.F.R. § 682.410. See Kort v.
Diversified Collection Servs., Inc., 270 F.Supp.2d 1017,
1023 (N.D. Ill. 2003); Arroyo v. Solomon and Solomon,
P.C., No. 99-CV-8302 (ARR), 2001 WL 1590520, at *5
(E.D.N.Y. Nov. 16, 2001). Specifically, Henderson asserts
that the GRC Parties made false, deceptive, or misleading
representations relating to a debt; made false
representations of the character, amount or legal status of a
debt; failed to verify the debt; and violated Henderson's
demands to cease communications. Dkt. No. 19-1, ¶¶
66-99. The Claims Paid Letter may ultimately prove important
to this case and the disclosures required for the collection
of a delinquent student loan debt. However, it is not readily
apparent from the face of the Amended Complaint that the
letter addresses all of the legal rights asserted by the
plaintiff under the FDCPA.
circumstances of this case also support my finding that the
Claims Paid Letter should not be considered at the motion to
dismiss stage. Regardless of whether the Court considers the
Claims Paid Letter, the case will proceed with class
discovery on Count VI and likely Count V of the Amended
Complaint. Further, even if I accepted the GRC Parties'
assertion that the Claims Paid Letter contains the
disclosures required by the applicable regulations, it would
not entirely dispose of Counts I-III and V. Under these
circumstances, I am mindful that the purpose of a Rule
12(b)(6) motion to dismiss is to test the sufficiency of the
allegations in the complaint, not to assess the evidence to
support those allegations. Thus, I find that this case
presents an appropriate occasion for exercising the
discretion accorded to district courts to exclude