United States District Court, W.D. Missouri, Southern Division
STEPHEN R. BOUGH, UNITED STATES DISTRICT JUDGE.
the Court is Defendant Neale and Newman, L.L.P.'s Motion
to Dismiss Plaintiff's Amended Petition (Doc. #13). For
reasons discussed below the motion is granted.
NN Law filed the present motion to dismiss under Federal Rule
of Civil Procedure 12(b)(6) for failure to state a claim upon
which relief can be granted. Under Rule 12(b)(6), a court may
dismiss a claim for “failure to state a claim upon
which relief can be granted.” “To survive a
motion to dismiss [for failure to state a claim], 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)
(internal citations and quotation marks omitted) (quoting
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007)); Zink v. Lombardi, 783 F.3d 1089, 1098 (8th
Cir. 2015). “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.” Ash v. Anderson
Merchs., LLC, 799 F.3d 957, 960 (8th Cir. 2015)
(internal citation quotation marks omitted) (quoting
Iqbal, 556 U.S. at 678).
Court must accept all facts alleged in the complaint as true
when deciding a motion to dismiss. See Data Mfg., Inc. v.
United Parcel Serv., Inc., 557 F.3d 849, 851 (8th Cir.
2009) (noting “[t]he factual allegations of a complaint
are assumed true and construed in favor of the plaintiff,
even if it strikes a savvy judge that actual proof of those
facts is improbable”). However, allegations that are
“legal conclusions or formulaic recitation of the
elements of a cause of action . . . may properly be set
aside.” Braden v. Wal-Mart Stores, Inc., 588
F.3d 585, 594 (8th Cir. 2009) (internal quotation marks
omitted) (quoting Iqbal, 556 U.S. at 677).
amended complaint alleges the following facts, which the
Court accepts as true for purposes of Defendant NN Law's
motion to dismiss. See Data Mfg., Inc., 557 F.3d at
851. In 2004, Plaintiff borrowed a total of $250, 000 (the
“2004 loan”) from Defendant Wilma Chastain
(“Chastain”) to pay off another loan Plaintiff
had taken out from a bank to purchase real property in
Springfield, Missouri (the “real property”).
(Doc. #10, pp. 2-3). Plaintiff had purchased this real
property on behalf of Iron Horse Properties, Inc.
(“Iron Horse”), “a Missouri corporation
solely owned by [Plaintiff] and to help run a home for
homeless veterans in honor of [Plaintiff's] father A.C.
Smith, which was a personal charity owned and operated by
[Plaintiff], not as a commercial operation." (Doc. #10,
p. 3). On August 20, 2004, Plaintiff signed a promissory note
personally and on behalf of Iron Horse, promising to pay
Defendant Chastain the $250, 000 plus interest within two
years. (Doc. #10, p. 3; Doc. #10-1, p. 1). Plaintiff
personally guaranteed the promissory note. (Doc. #10, p. 3).
On April 15, 2009, Plaintiff personally signed and guaranteed
another promissory note on the same loan. (Doc. #10, p. 3).
Plaintiff alleges that the 2004 loan “arises out of a
personal charitable purpose” and that the “loan
was primarily for personal, family or household
purposes.” (Doc. #10, pp. 11, 13).
loan went unpaid. On February 25, 2010, Defendant Chastain
filed suit against Plaintiff and Iron Horse to recover the
$250, 000 they owed her under the promissory notes. (Doc.
#10, p. 3). On March 14, 2011, the Circuit Court of Greene
County, Missouri, entered a $250, 000 judgment (the
“judgment”) in favor of Defendant Chastain and
against Plaintiff and Iron Horse. (Doc. #10, p. 3; Doc.
#10-1, p. 2). On April 24, 2012, about a year after the
judgment, Defendant Chastain formed an agreement (the
“forbearance agreement”) with Iron Horse to
“renew the notes previously signed between the
parties.” (Doc. # 10, p. 4; Doc. #10-1, pp. 3-4). Under
the forbearance agreement, Defendant Chastain promised to
cancel the foreclosure sale of the real property in exchange
for Iron Horse's promise to execute a new promissory note
in the amount of $272, 500 and a deed of trust conveying a
security interest in the real property for the benefit of
Defendant Chastain. (Doc. #10-1, p. 3). The forbearance
agreement further provided that payment in full according to
the new promissory note would satisfy Defendant
Chastain's judgment. (Doc. #10-1, p. 3).
Horse did not pay Defendant Chastain the full amount
specified under the new promissory note that was part of the
forbearance agreement. Beginning in July 2016, Defendant
Neale and Newman, L.L.P, (“NN Law”), a law firm
hired by Defendant Chastain, filed several garnishments in
attempt to collect the amount Plaintiff allegedly still owed
Defendant Chastain. (Doc. #10, pp. 5-9). Defendant NN Law
directed the garnishments to Ken Davis, who is the trustee of
the Revocable Trust of A.C. Smith and Olie Allene Smith (the
“trust”). (Doc. #10, pp. 5-9; Doc. #10-1, pp.
15-20). Plaintiff has “rights in assets of the A.C.
Smith Trust, ” to which Plaintiff refers as “her
father's Trust.” (Doc. #10, p. 15). Plaintiff's
rights in the trust assets “include cash and the rights
to [Plaintiff's] portion of 5 acres of commercial
property in Nixa, Missouri.” (Doc. #10, p. 10).
brought this action, alleging that Defendants' collection
activities are unlawful. In Count I of Plaintiff's
amended complaint, Plaintiff alleges that Defendant NN Law
violated the Fair Debt Collection Practices Act
(“FDCPA”), 15 U.S.C. § 1692 et
seq., by filing the garnishments. (Doc. #10, pp. 11-12).
In Count II, Plaintiff alleges that Defendants Chastain and
NN Law violated the Missouri Merchandising Practices Act
(“MMPA”), Mo. Rev. Stat. § 407.010 et
seq., through their collection efforts, including the
garnishments. (Doc. #10, pp. 12- 13). In Count III, Plaintiff
alleges that Defendants Chastain and NN Law violated the
garnishment procedures set forth in Missouri Supreme Court
Rule 90 and Mo. Rev. Stat. § 525.010, et seq.
(Doc. #10, pp. 14-15). Defendant NN Law now moves to dismiss
Count I: Violation of FDCPA
FDCPA allows “consumers who have been subjected to
unfair practices by third-party debt collectors to recover
damages, attorney fees, and costs.” Duffy v.
Landberg, 133 F.3d 1120, 1122 (8th Cir. 1998) (citing 15
U.S.C. § 1692k(a)). The FDCPA applies only to collection
activity arising from a “debt, ” which the
statute defines as “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, whether or not such obligation has been
reduced to judgment.” § 1692a(5) (emphasis added);
Duffy, 133 F.3d at 1123 (citing § 1692a(5))
(holding that the FDCPA “broadly defines debt as
‘any obligation' to pay arising out of a consumer
transaction”). “The FDCPA ‘characterizes
debts in terms of end uses.'” Micks v. Gurstel
Law Firm, P.C., No. 17-CV-4659 (ECT/ECW), 2019 WL
418850, at *7 (D. Minn. Feb. 1, 2019) (quoting Bloom v.
I.C. Sys., Inc., 972 F.2d 1067, 1068 (9th Cir. 1992)).
Under the FDCPA, “[t]he relevant time for determining
the nature of the debt is when the debt first arises.”
Zwicky v. Carlson & Assocs., Ltd., No. CIV.
11-1413 DSD/TNL, 2011 WL 6203058, at *1 (D. Minn. Dec. 13,
2011) (internal quotation marks omitted) (quoting Miller
v. McCalla, Raymer, Padrick, Cobb, Nichols, & Clark,
L.L.C., 214 F.3d 872, 874 (7th Cir.2000)).
parties dispute whether the 2004 loan Plaintiff borrowed from
Defendant Chastain was “primarily for personal, family,
or household purposes” and is thus a “debt”
within the FDCPA's scope. Defendant NN Law argues that
Plaintiff has failed to sufficiently plead that the 2004 loan
is a “debt” within the meaning of the FDCPA
because “[t]he purpose of the loan from Ms. Chastain to
Ms. Noe was to fund a charity and purchase real property
owned by a business, not for personal purposes, and thus the
debt is not consumer debt subject to the FDCPA.” (Doc.
#14, p. 7). Plaintiff argues the loan in question is a debt
she incurred “primarily for personal, family, or
household purposes” under the FDCPA because “it
is clear that Plaintiff Regina Noe personally guaranteed this
debt and was personally liable for the judgment and that she
used the debt for her personal purpose which included
residing in the real property.” (Doc. #15, p. 5).
Defendant NN Law replies that Plaintiff's use of the word
“personal” in her amended complaint “does
not change the fact that the loan was used” to purchase
the real property for a Missouri corporation; that
Plaintiff's allegation that she personally guaranteed the
2004 loan “does not make the ...