Judge: Mark E. Windham, Case: 24STLC00251, Date: 2024-10-03 Tentative Ruling
Case Number: 24STLC00251 Hearing Date: October 3, 2024 Dept: 26
DEMURRER
(CCP §§ 430.10, et seq.)
TENTATIVE RULING:
Defendant LendingClub Corporation’s Demurrer to the First
Amended Complaint is SUSTAINED WITHOUT LEAVE TO AMEND. DEFENDANT IS TO FILE A
PROPOSED JUDGMENT WITHIN 20 DAYS OF THIS ORDER.
ANALYSIS:
On January 16, 2024, Plaintiff
Carol Geoulla (“Plaintiff”) filed this action for violations
of the Rosenthal Fair Debt Collection Practices Act (“RFDCPA”) against Defendant LendingClub Corporation (erroneously
sued as “Lending Club Corporation”) (“Defendant”). Defendant filed a Demurrer
to the Complaint, which was taken off calendar when Plaintiff filed the First
Amended Complaint on April 23, 2024.
Defendant filed the instant
Demurrer to the First Amended Complaint on May 24, 2024. Plaintiff filed an
opposition on July 3, 2024 and Defendant replied on July 11, 2024.
Allegations in
the First Amended Complaint
The First Amended Complaint
alleges that Plaintiff is a natural person obligated to pay a consumer debt to
Defendant alleged as due and owing, and is therefore a “debtor,” within the
meaning of RFDCPA. (FAC, ¶9.) As a natural person allegedly obligated to pay
money to Defendant arising from a consumer credit transaction, the money owed
is a “consumer debt” within the meaning of the RFDCPA. (Id. at ¶10.)
Defendant engages in “debt collection” under the RFDCPA. (Id. at ¶12.)
On August 31, 2023, Plaintiff’s attorneys sent Defendant a letter by USPS
First-Class mail, communicating that Plaintiff was represented by counsel with
respect to the consumer debt. (Id. at ¶13.) The letter instructed
Defendant to cease communications about the debt with Plaintiff and to direct
those communications to Plaintiff’s counsel. (Id. at ¶14.) Despite the
letter, Defendant emailed Plaintiff on October 4, 2023 for the purpose of
collecting the Debt. (Id. at ¶.) The communications were made with the
intent to invade Plaintiff’s privacy and caused Plaintiff undue stress,
confusion, and anxiety. (Id. at ¶¶18-19.)
This conduct by Defendant
violated section 1788.14, subdivision (c) and section 1788.17 of the RFDCPA. (Id.,
pp. 3-4 at ¶¶12-18.) By communicating with a debtor who is represented by an
attorney, Defendant also violated section 1692c, subdivision (a)(2) of the
FDCPA. (Id. at ¶27.) By communicating with a consumer who refuses to pay a debt
or wishes the debt collector to cease further communication with the consumer,
Defendant violated section 1692c, subdivision (c) of the FDCPA. (Id. at
¶28.) By using false and deceptive means to collect on such debt by attempting
to collect directly from Plaintiff, Defendant violated section 1692e of the
FDCPA. (Id. at ¶29.) Finally, by using unfair or unconscionable means to
collect on such debt, Defendant violated section 1692f of the FDCPA. (Id.
at ¶30.)
Demurrer to the First Amended Complaint
The Demurrer is accompanied by a meet and confer declaration as required
by Code of Civil Procedure section 430.41. (Demurrer, Narita Decl., ¶¶2-4.)
Defendant demurs to both causes of action of the First Amended Complaint for
lack of standing and failure to allege sufficient facts. (Citing Code Civ.
Proc., § 430.10, subds. (a), (e).)
Lack of Standing
Defendant first demurs the First
Amended Complaint on the grounds that Plaintiff lacks standing. It points to a
case in which the California Court of Appeals held that the plaintiff’s
“informational injury” was insufficient to show standing under the Fair Credit
Reporting Act (“FCRA”) and argues that this is relevant to the case at hand.
Defendant goes on to disparage the case on which Plaintiff relies, a district
court case, as non-binding and unpersuasive.
Limon v. Circle K Stores Inc.
(2022) 84 Cal. App. 5th 671, upon which Defendant relies, concerned standing
under the FCRA, not the RFDCPA. While Plaintiff’s second cause of action is
premised on violations of the FRCA, under Civil Code section 1788.17, the Limon
action was brought based on the plaintiff’s contention that the defendant did
not “provide him with proper FCRA disclosures when it sought and received his
authorization to obtain a consumer report . . . .” (Limon v. Circle K Stores
Inc. (2022) 84 Cal. App. 5th 671, 680.) The Court of Appeals undertook a
substantial analysis of the statute and the plaintiff’s allegations in relation
to the FCRA. (Id. at 704-706.) It also discussed whether the plaintiff’s
informational injury—where required information is provided in the wrong format
but causes no adverse effects— was sufficient to confer standing, which is not
at issue here. (Id. at 707.) Therefore, the Court does not find Limon’s
holding relevant to determining whether Plaintiff’s allegations are sufficient
to confer standing in this action. The Court of Appeals, however, did lay the
groundwork for a broader consideration of standing in California, as follows:
[T]o assess a plaintiff’s standing to
pursue claims in California courts, one must consider whether the plaintiff
suffered an injury— i.e. an “ ‘invasion of [his or her] legally protected
interests’ ” and whether it is “ ‘sufficient to afford them an interest in
pursuing their action vigorously.’ ” (Angelucci supra, 41 Cal.4th at p. 175, 59
Cal.Rptr.3d 142, 158 P.3d 718.) The latter consideration is met where the
injury is “ ‘ “(a) concrete and particularized, and (b) actual or imminent, not
conjectural or hypothetical.” ’ ” (Associated Builders supra, 21 Cal.4th at pp.
361–362, 87 Cal.Rptr.2d 654, 981 P.2d 499; Luna Crest supra, 245 Cal.App.4th at
p. 883, 200 Cal.Rptr.3d 128.)
(Limon v. Circle K Stores Inc.
(2022) 84 Cal.App.5th 671, 704.)
Defendant goes on to argue that
the Court should consider certain federal cases on which it relies. In Pennell
v. Global Trust Management, LLC (7th Cir. 2021) 990 F.3d 1041, the
plaintiff sent her creditor a letter refusing to pay her debt and requesting
that all future debt communications cease. (Pennell v. Global Trust
Management, LLC (7th Cir. 2021) 990 F.3d 1041, 1043.) When the debt was
soon thereafter sold to the defendant, a debt collector, it had no actual
knowledge that the plaintiff refused to pay her debt and that she was
represented by counsel and sent her a collections letter. (Ibid.) The
plaintiff then informed the defendant that all future debt communications
should stop and refused to pay the debt, to which the defendant agreed. (Ibid.)
The plaintiff then sued the debt collector under the FDCPA, alleging that her
injuries were “stress and confusion.” (Ibid.) The 7th Circuit Court of
Appeals ruled that this was not sufficient for standing because “ ‘the state of
confusion is not itself an injury. [citations omitted].’ Nor does stress by
itself with no physical manifestations and no qualified medical diagnosis
amount to a concrete harm.” (Id. at 1045.)
Plaintiff argues that Pennell
is distinguishable because the plaintiff there had not notified the debt
collector that she refused to pay the debt and should not be contacted
regarding the debt. While those facts are different from the allegations in
this case, the difference has no bearing on the issue of what type of injury is
sufficient to allege standing. Pennell holds that purely psychological
harm does not suffice to confer standing. (Id. at 1045.)
Also in opposition, Plaintiff
cites to a federal district court case, Medicredit v. Lupia (D. Colo.
2020) 445 F.Supp.3d 1271, to argue that intangible harms that have a close
relationship to “a harm that has traditionally been regarded as providing a
basis for a lawsuit” such as “intrusion upon seclusion” are sufficient to
confer standing for violations of the FDCPA. Although Defendants argue in reply
that Medicredit is distinguishable, they offer no analysis of how the
facts of Medicredit are distinct from this action. They also go on to
argue that Medicredit is contradicted by other district court rulings.
In Medicredit, the district court granted summary judgment in favor of
the plaintiff with respect to a violation of the FDCPA that arose from a phone
call made to the plaintiff by the defendant debt collector after the plaintiff
informed the defendant that the debt was disputed and demanded all telephone
communications to cease. (Medicredit v. Lupia (D. Colo. 2020) 445 F.
Supp. 3d 1271, 1278.) The facts of Medicredit, therefore, are quite
analogous to those in the action here. The district court ruled that the
plaintiff’s claims “plainly are akin to a common law claim for invasion of
privacy, most particularly that branch of the tort that protects individuals
from unreasonable intrusion on their seclusion.” (Id. at 1280.) The
problem with Medicredit, however, is that it relies on case law that has since
been cast into doubt by a United States Supreme Court ruling, as the Court will
discuss below.
Although Medicredit is
analogous to this action because it concerned a violation of both subdivisions
(a)(2) and (c) of section 1692 of the FDCPA, its holding is that standing can
be based on a risk of future harm, as opposed to actual harm. The Mericredit
court took the idea of standing based on a risk of future harm from Spokeo,
Inc. v. Robins (2016) 578 U.S. 330. (Medicredit, supra, 445
F.Supp.3d at 1279.) In Spokeo, the United States Supreme Court
speculated that the risk of real harm can satisfy the requirement of
concreteness for standing. (Spokeo, Inc. v. Robins (2016) 578 U.S. 330,
341.) This was later answered in the negative by a future Supreme Court case, TransUnion
LLC v. Ramirez (2021) 594 U.S. 413, 436-438.)
Defendants also seek to discredit
Mericredit by pointing to Simpson v. Revco Solutions, Inc. (S.D.
Ill. 2022) 2022 WL 17582742, which concerned, in part, whether the plaintiff’s receipt
of the defendant debt collector’s letter, after it was notified that the
plaintiff was represented by an attorney, is analogous to an intrusion upon
seclusion for standing. (Simpson v. Revco Solutions, Inc. (S.D. Ill.
2022) 2022 WL 17582742, *4.) The federal district court ruled that “mere
receipt of letter could not be highly offensive to a reasonable person” in a
manner sufficient to confer standing. (Id. at *5.) However, Simpson
is distinguishable from this action in an important respect: it concerned a
letter as opposed to phone calls. Simpson specifically referred that
that distinction in its jurisprudence.
The Court finds that the cases within
this circuit indicate a letter after advisement of lawyer representation does
not point to an intrusion upon seclusion. In fact, other cases point to types
of communication that are particularly intrusive into an individual's private
life. See Gadelhak, 950 F.3d at 462 n. 1 (“This is different in kind than
unwanted text messages or phone calls. The undesired buzzing of a cell phone
from a text message, like the unwanted ringing of a phone from a call, is an
intrusion into peace and quiet in a realm that is private and personal.”); Gunn
v. Thrasher, Buschmann & Voelkel, P.C., 982 F.3d 1069, 1071 (7th Cir. 2020)
(“Pestiferous text messages, spam phone calls, and unwelcome faxes can cause
cognizable injury, for the reasons we gave in Gadelhak when explaining how the
common law treats noises and other aggravating intrusions.”).
(Ibid.) Ultimately, none
of the cases above are both factually analogous to this action and legally
sound enough to follow entirely. Instead, the Court considers the principles
elucidated in these federal cases involving the FDCPA and is persuaded of the
following. Actual harm to a common law analogue, such as intrusion upon
seclusion, is sufficient to confer standing under the RFDCPA. Allegations of
emotional effects, such as stress, anxiety and confusion, however, are not
sufficient for standing.
Both parties agree on the law
regarding what facts must be alleged to sufficiently state a cause of action.
Specifically, that a complaint must state “ultimate facts,” which are the facts
upon which liability depends. (Doe v. City of Los Angeles (2007) 42 Cal.
4th 531, 550.) “A complaint must allege the ultimate facts necessary to the
statement of an actionable claim. It is both improper and insufficient for a
plaintiff to simply plead the evidence by which he hopes to prove such ultimate
facts.” (Careau & Co. v. Security Pac. Bus. Credit, Inc. (1990) 222
Cal. App. 3d 1371, 1390.)
The First Amended Complaint does
not allege ultimate facts to demonstrate that Plaintiff has standing to assert
a claim under the standard above. Plaintiff alleges “Defendant’s repeated
communications after being notified of Plaintiff’s representation and wish to
have all communications about the debt directed to his attorneys, were made
with the intent to invade Plaintiff’s right of privacy. Defendant’s actions, directly
and proximately, caused Plaintiff undue stress, confusion, and anxiety; thereby
damaging Plaintiff.” (FAC, ¶¶18-19.) The opposition incorrectly characterizes
the First Amended Complaint as alleging that Defendant’s conduct amounted to an
invasion of Plaintiff’s privacy. No such allegations are included in the
operative pleading. Plaintiff only allegedly intended to invade Defendant’s
privacy. The First Amended Complaint also states that this action arises out of
“the State of California’s tort of Infliction of Emotional Distress and
Invasion of Privacy” but includes no facts to support such a cause of action. (Id.
at ¶¶1, 5.) Finally, the First Amended Complaint fails to include allegations
of physical symptoms suffered by Plaintiff. Therefore, the demurrer to the
First Amended Complaint is sustained.
Leave to Amend
Leave to amend must be allowed
where there is a reasonable possibility of successful amendment. (Goodman v.
Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the complainant to
show the Court that a pleading can be amended successfully. (Id.) Plaintiff has not shown that an
amendment to the First Amended Complaint is possible to correct her lack of
standing. Leave to amend is denied.
Conclusion
Defendant LendingClub Corporation’s Demurrer to the First
Amended Complaint is SUSTAINED WITHOUT LEAVE TO AMEND. DEFENDANT IS TO FILE A
PROPOSED JUDGMENT WITHIN 20 DAYS OF THIS ORDER.
Moving party to give notice.