Smith v. Nationwide Mutual Insurance and Investment

IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF ARKANSAS

FAYETTEVILLE DIVISION

VANESSA CAROL LYNN SMITH PLAINTIFF

V. CASE NO. 5:19-CV-05034

NATIONWIDE MUTUAL INSURANCE

AND INVESTMENT; and THE MCHUGHES

LAW FIRM, LLC DEFENDANTS

OPINION AND ORDER

Vanessa Smith (“Smith”) has filed this lawsuit under the Fair Debt Collections

Practices Act (“FDCPA”). She proceeds pro se and in forma pauperis (“IFP”). Smith

has named as Defendants Nationwide Mutual Insurance and Investment (“Nationwide”)

and The McHughes Law Firm, LLC (“McHughes”). The case is before the Court for

screening pursuant to 28 U.S.C. § 1915(e)(2).

1. BACKGROUND

According to the allegations of the Complaint and attachments thereto, Smith was

involved in a motor vehicle accident on January 20, 2006. Smith was given a traffic

citation because of the accident. Thereafter, on September 12, 2008, Nationwide

obtained a default judgment against Smith in the amount of $2,518.16. Nationwide was

represented by McHughes.

Because the judgment was related to an automobile accident, McHughes provided

the State of Arkansas, Department of Finance and Administration, Driver Services, Safety

Responsibility (“Driver Services”), a copy of the default judgment. A case, UJ 11668,

was opened. On a number of occasions over the next several years, McHughes would

notify Driver Services when Smith failed to make payments on the judgment, and her

license would be suspended. When Driver Services was notified that payment

arrangements had been made, Smith was allowed, for a fee, to get her license reinstated.

This process occurred multiple times.

On August 20, 2012, McHughes notified Driver Services that the judgment had

been paid in full. The only activity that occurred after that date was a letter from

MccHughes dated January 28, 2013, to Driver Services stating that Smith was behind on

her payments. As the judgment had been satisfied, this letter was in error.

ll. DISCUSSION

The Court is obligated to screen an IFP case prior to service of process being

issued. A claim is frivolous when it "lacks an arguable basis either in law or fact."

Neitzke v. Williams, 490 U.S. 319, 325 (1989). A claim fails to state a claim upon which

relief may be granted if it does not allege “enough facts to state a claim to relief that is

plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The Court

bears in mind, however, that when "evaluating whether a pro se plaintiff has asserted

sufficient facts to state a claim, we hold ‘a pro se complaint, however inartfully pleaded,

... to less stringent standards than formal pleadings drafted by lawyers.” Jackson v.

Nixon, 747 F.3d 537, 541 (8th Cir. 2014) (quoting Erickson v. Pardus, 551 U.S. 89, 94

(2007)).

1. The FDCPA

Smith maintains Nationwide and McHughes violated the FDCPA by using deceptive,

coercive, and harassing methods of collection-on an insurance claim by means of a □

default judgment and the repetitive suspension of her driver's license. A plaintiff alleging

a violation of the FDCPA, 15 U.S.C. § 1692 et seqg., must demonstrate: (1) she has been

the object of collection activity arising from a consumer debt; (2) the defendant attempting

to collect the debt qualifies as a debt collector under the Act; and (3) the defendant has

engaged in a prohibited act or has failed to perform a requirement imposed by the Act.

See, e.g., Pace v. Portfolio Recovery Assocs., LLC, 872 F. Supp. 2d 861, 864 (W.D. Mo.

2012).

The first question is whether the collection activity arose from a consumer debt.

The term “consumer” is defined as “any natural person obligated or allegedly obligated to

pay any debt.” 15 U.S.C. § 1692a(3). The term “debt” is defined 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.” 15 U.S.C. § 1692a(5). A civil judgment arising out of an

automobile accident is not a consumer debt within the meaning of the FDCPA. See,

e.g., Antoine v. State Farm Mut. Auto. Ins. Co., 662 F. Supp. 2d 1318, 1326 (M.D. Fla.

2009) (concluding a judgment obtained by an insurer as the result of an automobile

accident was not a consumer debt and applying the same analysis to the Florida

;

Consumer Collection Practices Act and the FDCPA). Clearly, the debt at issue was not

a debt incurred by a consumer for primarily personal, family, or household purposes.

Next, none of the facts alleged in the Complaint and attachments describe deceptive

debt collection practices that are prohibited under the law. While threatening legal action

when no such action will be filed can amount to a violation of the FDCPA, the use of legal

action does not violate the FDCPA. Duffy v. Landberg, 215 F.3d 871, 873 (8th Cir. 2000)

(“[I]t is a violation of the FDCPA to threaten to ‘take any action that cannot legally be

taken.’ 15 U.S.C. 1692f(1).”).

In any event, any claims under the FDCPA are barred by the one-year statute of

limitations. 15 U.S.C. § 1692k(d) (“[A]n action .. . may be brought . . . within one year

from the date on which the violation occurs”). In Mattson v. U.S. West Communications,

Inc., 997 F.2d 259, 261 (8th Cir. 1992), the Eighth Circuit treated the one-year statute of

limitations as jurisdictional in nature. In Hageman v. Barton, 817 F.3d 611, 616 (8th Cir.

2016), the Eighth Circuit was presented with the argument that equitable tolling applied

to the FDCPA statute of limitations. The Eighth Circuit noted that “[it is well established,

asa general matter in the Eighth Circuit, that jurisdictional limitations periods are not

subject to equitable tolling.” fd. The court concluded that it was required to follow the

earlier ruling set forth in Mattson despite the court's failure to explain its conclusion that

the limitation period was jurisdictional. /d. at 617. Here, the last act identified by the

Smith was the letter sent by McHughes on January 28, 2013. Clearly, Smith’s claims

under the FDCPA are time-barred.

2. Arkansas Deceptive Trade Practices Act (“ADTPA”)

Although Smith does not mention the ADTPA, the Court will assume she is

asserting a supplemental state law claim. The ADTPA, Ark. Code Ann. § 4-88-101 ef

seq., makes it unlawful to engage in any “unconscionable, false, or deceptive act or

practice in business, commerce or trade.” Ark. Code Ann. § 4-88-107(a)(10). The

ADTPA provides “a private right of action to ‘any person’ who suffers actual damage or

injury as a result of a violation of the Act.” Crutchfield v. Tyson Foods, Inc., 514 S.W.3d

499, 503 (Ark. Ct. App. 2017); Ark. Code Ann. § 4-88-113(f).

Claims are subject to a five-year statute of limitations. Ark. Code Ann. § 4-88-

115. The statute of limitations commences on the “date of the occurrence of the violation

or the date upon which the cause of action arises.” Although fraud can toll or suspend the

statute of limitations, “the suspension remains in effect only until the party having the

cause of action discovers the fraud or should have discovered it by the exercise of

reasonable diligence.” Bank of America, N.A. v. JB Hanna, LLC, 766 F.3d 841, 855 (8th

Cir. 2014) (applying Arkansas law).

Clearly, absent the suspension of the statute of limitations, any ADTPA claim

would also be time-barred. This case was not filed until February 15, 2019. Smith

discovered or should have discovered the last “fraudulent act” taken by Nationwide or

McHughes on or about January 28, 2013, the date of McHughes'’s letter to Driver Services

- that erroneously claimed Smith was behind on her payments. Smith’s claims under the

ADTPA are subject to dismissal.

lll. CONCLUSION

For the reasons stated, the claims asserted in the Complaint are subject to

dismissal on the grounds they are frivolous, fail to state claims upon which relief may be

granted, or are barred by the statute of limitations. Therefore, this case is DISMISSED

WITH PREJUDICE. □□

IT IS SO ORDERED on this \5 day of March, 2019.

LA YAO BROOKS

* UNIGED-STATES DISTRICT JUDGE