United States District Court, M.D. North Carolina
LARA BARNHILL, on behalf of herself and all other similarly situated individuals, Plaintiffs,
FIRSTPOINT, INC. d/b/a FIRSTPOINT INFORMATION RESOURCES and FIRSTPOINT COLLECTION RESOURCES, INC., Defendants.
MEMORANDUM OPINION AND ORDER
Loretta C. Biggs, District Judge
Lara Barnhill, initiated this putative class action against
Defendants, FirstPoint, Inc. and FirstPoint Collection
Resources, Inc., alleging violations of federal and state
debt collection laws and seeking injunctive relief. Before
the Court is Defendants' Motion to Dismiss pursuant to
Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil
Procedure. (ECF No. 33.) For the reasons that follow,
Defendants' motion is granted in part and denied in part.
alleges in her Second Amended Complaint
(“Complaint”) that she had a debt that was
discharged on October 8, 2014 through a Chapter 7 Bankruptcy
under 11 U.S.C. § 727. (ECF No. 26 ¶ 24.) Following
the discharge, Plaintiff alleges that Defendants contacted
her on March 23, 2015 in an effort to collect the discharged
debt. (Id. ¶ 28.) On October 21, 2015,
Plaintiff filed this action, alleging three claims against
Defendants: (1) violation of the Fair Debt Collection
Practices Act; (2) violation of the North Carolina Collection
Agency Act; and (3) temporary and permanent injunctive
relief. (Id. at 12-13.) Defendants move to dismiss
Plaintiff's claims pursuant to Federal Rule of Civil
Procedure 12(b)(1) for lack of subject matter jurisdiction
and Rule 12(b)(6) for failure to state a claim. (ECF No. 33.)
Court begins with an overview of the Bankruptcy Code, the
Federal Debt Collection Practices Act, and the North Carolina
Collection Agency Act.
OF THE RELEVANT STATUTES
The Bankruptcy Code
principal purpose of the Bankruptcy Code is to grant debtors
a “fresh start.” In re Dubois, 834 F.3d
522, 526 (4th Cir. 2016) (quoting Marrama v. Citizens
Bank, 549 U.S. 365, 367 (2007)), petition for cert.
filed, 85 U.S.L.W. 3277 (U.S. Nov. 23, 2016) (No.
16-707). The Code “provides a comprehensive federal
system of penalties and protections to govern the orderly
conduct of debtors' affairs and creditors'
rights.” E. Equip. & Servs. Corp. v. Factory
Point Nat'l Bank, 236 F.3d 117, 120 (2d Cir. 2001).
The Bankruptcy Code's automatic stay provision is one of
the fundamental debtor protections in the Code. See
Winters by and through McMahon v. George Mason Bank, 94
F.3d 130, 133 (4th Cir. 1996). It provides that the filing of
a bankruptcy petition automatically stays all collection
efforts during the pendency of the bankruptcy. See
id.; see also 11 U.S.C. § 362. The
permanent bankruptcy discharge in 11 U.S.C. § 524(a)(2)
is another key provision of the Bankruptcy Code, which the
court grants at the end of bankruptcy proceedings. See In
re Cherry, 247 B.R. 176, 182 (Bankr. E.D. Va. 2000). It
“operates as an injunction against the commencement or
continuation of an action, the employment of process, or an
act, to collect, recover or offset any such debt as a
personal liability of the debtor.” 11 U.S.C. §
524(a)(2). A discharge under § 524(a)(2) gives the
debtor her “fresh start.” In re Cherry,
247 B.R. at 182. Bankruptcy courts are authorized to hold
creditors in civil contempt for attempting to collect on a
discharged debt in violation of § 524(a)(2). See In
re Fina, 550 F. App'x 150, 154 (4th Cir. 2014)
(unpublished per curiam decision); In re Tucker, 526
B.R. 616, 621 (Bankr. W.D. Va. 2015).
The Fair Debt Collections Practices Act
enacted the FDCPA to eliminate abusive debt collection
practices . . . .” In re Dubois, 834 F.3d at
526 (citing 15 U.S.C. § 1692(a), (e)). The statute
regulates the conduct of “debt collectors, ”
defined to include “any person who uses any
instrumentality of interstate commerce or the mails in any
business the principal purpose of which is the collection of
any debts, or who regularly collects or attempts to collect,
directly or indirectly, debts owed or due or asserted to be
owed or due another.” § 1692a(6). In connection
with collection of a debt, the FDCPA prohibits, among other
things, the use of “any false, deceptive, or misleading
representation.” § 1692e. The FDCPA provides a
civil cause of action against debt collectors who fail to
comply with its requirement, making them strictly liable for
actual damages, statutory damages of up to $1, 000, and
attorneys' fees and costs. § 1692k(a); Gamble v.
Fradkin & Weber, P.A., 846 F.Supp.2d 377, 381 (D.
The North Carolina Collection Agency Act
to the FDCPA, the NCCAA regulates the activities of
“collection agencies, ” defined to include an
agency that “engages, directly or indirectly, in debt
collection from a consumer.” N.C. Gen. Stat. §
58-70-90. The statute prohibits collection agencies from
engaging in harassing or oppressive conduct and from
collecting or attempting to collect a debt by fraudulent,
deceptive, or misleading representations. §§
58-70-100, 58-70-110. For each violation of these provisions,
a collection agency faces civil liability of at least $500
and no greater than $4, 000. § 58-70-130(b).
DISMISSAL FOR LACK OF SUBJECT MATTER JURISDICTION UNDER RULE
argue that Plaintiff's FDCPA and NCCAA claims should be
dismissed for lack of subject matter jurisdiction.
Specifically, they contend that (1) the bankruptcy code
preempts Plaintiff's claims under the FDCPA and the
NCCAA, and (2) Plaintiff lacks standing. (ECF No. 34 at 5,
motion for lack of subject matter jurisdiction under Rule
12(b)(1) raises the question of “whether [the
plaintiff] has a right to be in the district court at all and
whether the court has the power to hear and dispose of [the]
claim.” Holloway v. Pagan River Dockside Seafood,
Inc., 669 F.3d 448, 452 (4th Cir. 2012). This
Court's subject matter jurisdiction is limited in that
the Court “possess[es] only the jurisdiction authorized
. . . by the United States Constitution and by federal
statute.” United States ex rel. Vuyyuru v.
Jadhav, 555 F.3d 337, 347 (4th Cir. 2009). The burden of
proving subject matter jurisdiction rests with the plaintiff,
the party asserting that jurisdiction exists. Adams v.
Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). If the
plaintiff fails to prove subject matter jurisdiction, the
Court must dismiss the action. Vuyyuru, 555 F.3d at
Whether the Bankruptcy Code Preempts Plaintiff's
Court rejects Defendants' argument that Plaintiff's
FDCPA claim is preempted by the Bankruptcy Code because
“[o]ne federal statute does not preempt another.”
Randolph v. IMBS, Inc., 368 F.3d 726, 730 (7th Cir.
2004). “When two federal statutes address the same
subject in different ways, the right question is whether one
implicitly repeals the other . . . .” Id.
“Repeal by implication is disfavored.”
Garfield v. Ocwen Loan Servicing, LLC, 811 F.3d 86,
89 (2d Cir. 2016). “In the absence of some affirmative
showing of an intention to repeal, the only permissible
justification for a repeal by implication is when the earlier
and later statutes are irreconcilable.” Id.
(quoting Morton v. Mancari, 417 U.S. 535, 550
(1974)). In this case, it is undisputed that the Bankruptcy
Code, which is the later enacted statute, does not contain
any express or affirmative congressional intention of
repealing the FDCPA. See Kline v. Mortg. Elec. Sec.
Sys., 659 F.Supp.2d 940, 950 (S.D. Ohio 2009). Rather,
the issue is whether the two statutes are irreconcilable.
the Fourth Circuit has not addressed this issue, the Second
Circuit on facts similar to this case recently considered
whether the Bankruptcy Code precluded FDCPA claims based on
attempts to collect on a debt discharged in bankruptcy. In
Garfield, the Second Circuit held that the
Bankruptcy Code does not preclude FDCPA claims based on
attempts to collect on post-discharge debts. 811 F.3d at 91,
93. In reaching its holding, the court drew a distinction
between FDCPA claims brought during a bankruptcy and those
brought following a bankruptcy discharge. Id. at 90.
Unlike in the pre-discharge context, where the debtor is
still under the protection of the bankruptcy court, after
discharge, the court stated the plaintiff-debtor lacked the
protection of the bankruptcy court. See Id. at 91.
In particular, the court pointed out that the discharge
injunction provision of the Bankruptcy Code does not create a
cause of action for its violation, whereas the automatic stay
provision during bankruptcy provides such a remedy for
violations. Id. at 91-92. After concluding that the
Bankruptcy Code does not impliedly repeal all FDCPA
provisions to remedy conduct that violates the discharge
injunction, the Second Circuit then considered whether
specific provisions of the Bankruptcy Code might impliedly
repeal certain provisions of the FDCPA on post-discharge
claims. Id. at 92. As in this case, the plaintiff
asserted claims under subsections 1692e, e(2), and e(10).
Id. at 89, 93. In concluding that the Bankruptcy
Code's discharge injunction did not conflict with these
FDCPA provisions, the court stated that the defendant
“can avoid violating both the cited provisions and the
Bankruptcy Code simply by not attempting to collect the
discharged debt. And once [the defendant] tries to collect
the discharged debt, it risks violation of both the cited
provisions and the Bankruptcy Code.” Id.;
see Randolph, 368 F.3d at 730 (concluding that
“[i]t is easy to enforce both statutes, and any debt
collector can comply with both simultaneously”).
district courts, like the Second Circuit in
Garfield, have concluded that the Bankruptcy Code
does not preclude FDCPA claims based on attempts to collect
post-discharged debts at the pleadings stage. The Court finds
these cases persuasive. “[T]here is no reason to
believe that [the plaintiff] should be allowed only to
recover under the Bankruptcy Code and not under the
FDCPA” when “[t]he conduct at issue occurred
after the discharge of [the plaintiff's] debt.”
Gamble, 846 F.Supp.2d at 382. While Defendants point
to a number of cases to support their argument of
irreconcilable conflict between the Bankruptcy Code and the
FDCPA, these cases have been limited by ...