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Son v. Barton

Supreme Court of Missouri, En Banc

April 17, 2018

KEITH JACK SON, Appellant,
v.
DENNIS J. BARTON III, Respondent.

          APPEAL FROM THE CIRCUIT COURT OF ST. LOUIS COUNTY The Honorable Richard C. Bresnahan, Judge

          PATRICIA BRECKENRIDGE, JUDGE

         Keith Jackson filed an action against the owners and operators of LifeSmile Dental Care (collectively, "LifeSmile") and attorney Dennis J. Barton III. The petition alleged Mr. Barton's debt collection actions violated the Fair Debt Collection Practices Act (FDCPA). The petition further alleged LifeSmile and Mr. Barton violated the Missouri Merchandising Practices Act (MMPA). The alleged violations arose out of Mr. Barton's attempts to collect payment Mr. Jackson purportedly owed as a result of dental services rendered by LifeSmile. The circuit court dismissed Mr. Jackson's petition, concluding his FDCPA claim was barred by the one-year statute of limitations and his MMPA claim failed to state a claim because Mr. Barton's collection activities were not "in connection with" the sale of LifeSmile's dental services to Mr. Jackson and no lender-borrower relationship existed between Mr. Barton and Mr. Jackson.

         The circuit court erred in concluding Mr. Jackson's FDCPA claim was barred by the one-year statute of limitations. Mr. Jackson identified three actions he alleges amount to an FDCPA violation, all occurring within a year of his filing of the FDCPA action. An FDCPA violation is not time-barred simply because it restates or relates back to assertions made in a debt collection action that is beyond the one-year statute of limitations. That the alleged conduct relates to the collection of a single debt does not preclude such conduct from constituting an independent FDCPA claim.

         Likewise, the circuit court erred in concluding Mr. Jackson failed to state an MMPA claim. A relationship existed between LifeSmile's sale of dental services to Mr. Jackson and Mr. Barton's subsequent collection actions. That Mr. Barton did not become involved in the transaction until after the dental services had been performed is of no consequence. Mr. Barton's efforts to collect payment were an attempt to complete the sale transaction and, therefore, were "in connection with" the sale. The circuit court's judgment is reversed, and the case is remanded.

         Factual and Procedural Background[1]

         In June 2011, Mr. Jackson sought dental services from LifeSmile and informed LifeSmile he could not spend more than $1, 000. LifeSmile told Mr. Jackson the dental work would cost $1, 090 but he would be responsible only for $178 because his insurance would cover the remainder. LifeSmile agreed to extend credit to Mr. Jackson, allowing him to pay the charges over an extended period of time. Mr. Jackson did not enter into a written agreement with LifeSmile regarding the dental services. LifeSmile subsequently completed the dental procedures, and Mr. Jackson paid LifeSmile $178 in cash.

         In April 2012, Mr. Jackson returned twice to LifeSmile for additional dental services. LifeSmile informed him the additional services would cost $495 in total but he would be responsible for only $177.80 after insurance. Mr. Jackson did not sign a written agreement regarding the dental services he received in April. He subsequently paid LifeSmile the $177.80.

         On June 15, 2012, LifeSmile began sending Mr. Jackson collection letters stating he owed LifeSmile $184.20. At that time, it also began assessing a $35 monthly late fee against Mr. Jackson. On September 9, 2013, Mr. Barton filed a collection suit on behalf of LifeSmile against Mr. Jackson. LifeSmile's petition alleged that, on or about June 22, 2011, Mr. Jackson requested LifeSmile extend dental services valued at $485.52, which remained due plus interest. In its prayer for relief, LifeSmile requested a judgment for the $485.52 together with interest, reasonable attorney fees pursuant to contract, and court costs. Mr. Barton set the case for trial on July 10, 2014. Mr. Jackson appeared with his attorney on the scheduled trial date, but Mr. Barton did not appear on behalf of LifeSmile. The circuit court dismissed the action without prejudice for failure to prosecute.

         On July 16, 2014, Mr. Barton sent Mr. Jackson a demand letter for $551.34 and sought prejudgment interest on that amount dating back to June 22, 2011. On the same day, Mr. Barton filed a motion to vacate and set aside the judgment dismissing the collection action for failure to prosecute. On August 7, 2014, the circuit court sustained Mr. Barton's motion and vacated its judgment dismissing the collection action against Mr. Jackson. On October 2, 2014, LifeSmile voluntarily dismissed the collection action against Mr. Jackson.

         On January 29, 2015, Mr. Jackson filed an action against Mr. Barton and LifeSmile[2]alleging Mr. Barton violated the FDCPA by engaging in harassing, abusive, misleading, deceptive, and unconscionable conduct in attempting to collect payment on behalf of LifeSmile. Mr. Jackson further alleged Mr. Barton and LifeSmile violated the MMPA by using false pretenses, false promises, misrepresentations, factual omissions, and unfair business practices in deceiving him about the cost and terms of the dental work.

         In his amended petition, Mr. Jackson alleged LifeSmile fabricated a contract that greatly changed the pricing terms he had agreed to with LifeSmile, including that he would be subjected to monthly late fees on the unpaid balance, and forged his signature on the fabricated contract. The contract purported to pertain to all dental services Mr. Jackson received from LifeSmile. He further claimed Mr. Barton knew or should have known that Mr. Jackson's signature on the fabricated contract was forged, that Mr. Jackson had paid all amounts agreed to with LifeSmile, and that no written agreement, including the forged contract, obligated Mr. Jackson to pay attorney fees.

         In response, Mr. Barton filed a motion to dismiss asserting Mr. Jackson's FDCPA claim was barred by the one-year statute of limitation because Mr. Jackson failed to file the FDCPA claim within one of year of Mr. Barton filing the collection action on behalf of LifeSmile. Mr. Barton further asserted Mr. Jackson failed to state a claim for any MMPA violation because Mr. Barton's collection actions were not "in connection with" the sale of LifeSmile's dental services to Mr. Jackson.

         The circuit court sustained Mr. Barton's motion to dismiss, concluding the FDCPA claim was time-barred and the MMPA claim failed because Mr. Barton had no connection with the sale of dental services and there was no lender-borrower relationship between Mr. Barton and Mr. Jackson. Mr. Jackson then voluntarily dismissed his claim against LifeSmile and appealed. After an opinion by the court of appeals, the case was transferred to this Court. Mo. Const. art. V, sec. 10.

         Standard of Review

         This Court reviews the grant of a motion to dismiss de novo. Hanson v. Carroll, 527 S.W.3d 849, 852 (Mo. banc 2017). "A motion to dismiss for failure to state a claim is solely a test of the adequacy of a plaintiff's petition." Smith v. Humane Soc'y of U.S., 519 S.W.3d 789, 797 (Mo. banc 2017) (internal quotation omitted). This Court, therefore, assumes all facts alleged in the petition are true and construes all reasonable inferences in favor of the plaintiff. Id. at 798.

         The FDCPA Claim

         In his first point, Mr. Jackson asserts the circuit court erred in dismissing his FDCPA claim against Mr. Barton as time-barred because he alleged Mr. Barton committed multiple discrete acts within one year of filing his FDCPA claim.[3] A cause of action under the FDCPA must be brought "within one year from the date on which the violation occurs." 15 U.S.C. § 1692k(d). By section 1692k(d)'s plain language, the statute of limitations begins to run from the date of the violation. Therefore, the "applicability of § 1692k(d) turns on when the alleged 'violation' occurred." Demarais v. Gurstel Chargo, P.A., 869 F.3d 685, 693 (8th Cir. 2017).[4]

         Here, Mr. Jackson alleges three instances of specific conduct by Mr. Barton amounting to an FDCPA violation: (1) Mr. Barton's purposeful failure to appear for the July 10, 2014 trial date; (2) Mr. Barton's sending of the July 16, 2014 demand letter with the grossly false amount; and (3) Mr. Barton's actions obtaining the August 7, 2014 order setting aside of the dismissal of the collection action for amounts Mr. Jackson did not owe. Mr. Jackson filed his FDCPA action January 29, 2015. These alleged instances all occurred within a year of Mr. Jackson filing his FDCPA action.

         Mr. Barton asserts Mr. Jackson's FDCPA claim is, nevertheless, untimely because the alleged conduct all relates back to the filing of the collection action. Mr. Barton contends the statute of limitations begins to run for FDCPA claims regarding collection actions on the date the consumer is served; therefore, he asserts the one-year statute of limitations period on Mr. Jackson's FDCPA claim began accruing October 7, 2013, when Mr. Jackson was served with the collection action.

         Mr. Barton is correct that an FDCPA claim arising from the instigation of a debt collection suit occurs when the consumer is served. See Johnson v. Riddle, 305 F.3d 1107, 1113 (10th Cir. 2002). But Mr. Jackson is not alleging the collection action, in and of itself, constituted an FDCPA violation. Rather, he is alleging specific conduct by Mr. Barton occurring after the filing of the collection action amounts to an FDCPA violation. In a case with analogous facts, the Eighth Circuit concluded a consumer's FDCPA claim was not barred by the one-year statute of limitations just because the violation related back to the complaint made in a debt collection action. See Demarais, 869 F.3d at 693.

         In Demarais, the consumer alleged a law firm representing a creditor violated the FDCPA because, "[w]hen alleged debtors do not file answers, [the law firm] often allows the cases to be set for trial rather than moving for default judgments" and then, on the date of trial, appears without any client representatives, witnesses, or other evidence and asks for a continuance if the debtor appears. Id. at 689. The consumer alleged the practice was used to avoid a Minnesota statute regarding default judgments on consumer debts and was an attempt to collect post-charge-off interest. Id. at 689-90. The district court found the FDCPA claim was barred by the one-year statute of limitations. Id. at 690. In doing so, it reasoned "communications during the course of litigation that merely restate or relate back to assertions made in the complaint do not restart the limitations period." Id. at 694 (internal quotation omitted).

         The Eighth Circuit rejected the district court's reasoning and found it was of no consequence "that the debt collector's violation restates earlier assertions - if the plaintiff sues within one year of the violation, it is not barred by § 1692k(d)." Id. It emphasized each violation must be evaluated individually in determining "whether any portion of the claim is not barred by the statute of limitations." Id. (internal quotation omitted). Otherwise, debt collectors would be immunized from later wrongdoing. Id. The Eighth Circuit concluded the district court should have ...


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