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Oyola v. Cavalry SPV I, LLC

United States District Court, D. Massachusetts

March 1, 2018



          David H. Hennessy United States Magistrate Judge

         Before me by way of referral, see Docket #29, is the motion of Defendant Cavalry SPV I, LLC (“Cavalry”) to dismiss the complaint in this action for lack of subject-matter jurisdiction, Docket #19. Cavalry argues that Plaintiff Abigail Oyola lacks standing to pursue her claims and also contends this case is moot. See Docket #20. Plaintiff has opposed the motion, see Docket #28, and Cavalry has submitted a reply, see Docket #31. In light of the parties' submissions, and for the reasons that follow, I find that Plaintiff has standing to prosecute this action, find that the case is not moot, and RECOMMEND that the Court DENY Cavalry's motion to dismiss.

         I. BACKGROUND

         Plaintiff accuses Cavalry and five unknown individuals named as John Does 1-5[1] of violating the federal Fair Debt Collection Practices Act (the “FDCPA”), Massachusetts Debt Collection Practices Act, and Massachusetts Consumer Protection Act, as well as committing conversion. See generally Docket #1. Her complaint alleges as follows.[2]

         Plaintiff contends that Cavalry is a “debt collector” as defined in the federal and Massachusetts Debt Collection Practices Acts.[3] Id. ¶ 6. In December 2007, Cavalry purchased a defaulted debt that Plaintiff owed on a personal credit card. Id. ¶¶ 12-13. In April 2009, Cavalry filed a collection action against Plaintiff in Worcester District Court in an effort to collect this debt, id. ¶ 14; but Cavalry was not legally entitled to file that lawsuit because it had failed to register with the Secretary of the Commonwealth, as all limited liability companies foreign to Massachusetts must do to access the Massachusetts courts, id. ¶¶ 15-17 (citing Mass. Gen. Laws ch. 156C §§ 48, 54(a)). Further, Cavalry was not (and still is not) licensed to operate as a debt collector in Massachusetts. Id. ¶ 18.

         According to Plaintiff, Cavalry “purported to serve her” with process of this first debt collection suit at an address from which Plaintiff had been evicted six months earlier. Id. ¶ 21. Plaintiff never received process and thus defaulted in December 2009, resulting in a default judgment of $14, 947.30 in Calvary's favor. Id. ¶ 22. Cavalry later filed a second, post-judgment proceeding in February 2010 in an effort to collect that judgment. Id. ¶ 23. Cavalry again served process at Plaintiff's former address, this time around eighteen months after Plaintiff's eviction. Id. When Plaintiff, who again did not know about Cavalry's legal action, failed to appear, a civil warrant for her arrest issued. Id.

         Finally, in April 2014, Cavalry filed a third action against Plaintiff, this time a post-judgment trustee process action. Id. ¶ 24. Again Cavalry served process on Plaintiff's former address, at this point obsolete by around three years, and again Plaintiff did not receive process and thus did not know about the suit. Id. After Plaintiff failed to appear in this third action, a judge entered an order authorizing Cavalry to garnish Plaintiff's wages. Id. Plaintiff did not learn of Cavalry's three lawsuits until 2017 and retained counsel at that time. Id. ¶ 26.

         Pursuant to the garnishment order, Cavalry garnished Plaintiff's wages from August 2014 through April 2017 in a total amount of $6, 498.21. Id. ¶ 25. Further, Plaintiff's opposition brief accuses Cavalry of continuing to garnish Plaintiff's wages after the instant federal lawsuit was filed in a total additional amount of $1, 064.34. See Docket #26 at 2; see also Docket #1 ¶ 29. Plaintiff's paystubs offered no information about these subtractions aside from a general notation that they effected a “garnishment.” Docket #1 ¶ 26. Plaintiff did not know what the garnishment was for or to whom it was being paid, and she incorrectly assumed that one of around five other creditors who also had obtained judgments against her was responsible for it. Id.

         Plaintiff explicitly alleges that she “has incurred actual damages as a result of Cavalry's actions.” Id. ¶ 27. These actual damages include the default judgment against her and the civil warrant for her arrest, both of which issued without her knowledge, as well as the loss of significant income throughout the multi-year period when Cavalry garnished her wages. Id. The complaint elaborates that Calvary's garnishment rendered Plaintiff too destitute to afford food: “If she was unable to obtain supplies from a local food pantry, then she and her family went hungry.” Id. Plaintiff also often could not afford to pay her bills; her credit score decreased; and creditors repossessed her car, leaving her without transportation. Id. Cavalry's actions also allegedly caused Plaintiff emotional distress including lost sleep and significant stress and anxiety. Id.

         Cavalry has responded to Plaintiff's allegations with factual representations of its own. According to a declaration appended to Cavalry's opening brief, [4] the 2009 default judgment against Plaintiff was vacated in April 2017, at which time Cavalry's counsel voluntarily dismissed Cavalry's garnishment action and “promptly issued a refund to Plaintiff on Cavalry's behalf for the full amount that had been garnished.” Docket #20 at 4; see Docket #22-1 ¶¶ 4-6; see also Docket #20-1 at 4-5 (Cavalry's refund check and accompanying paperwork). The declaration further states that Cavalry's attorney contacted Plaintiff's employer and its payroll company to alert them of the garnishment action's voluntary dismissal. Docket #22-1 ¶ 7. Despite this, Plaintiff's wages continued to be garnished-but Cavalry's attorney immediately forwarded to Plaintiff's counsel any garnishment checks from Plaintiff's wages that Cavalry received. Id. ¶ 7. While Cavalry admits to having garnished a total of $7, 532.55 from Plaintiff's wages, it submits that this sum already has been returned to Plaintiff and that Plaintiff therefore already has been made whole. Id. ¶ 8; Docket #20 at 4.

         In response, Plaintiff's opposition brief avers that Cavalry's efforts to fully repay Plaintiff were unsuccessful. On Plaintiff's telling, Cavalry has sent her only $6, 498.21 in depositable funds[5] of the $7, 562.55 it has taken from her wages, leaving an unpaid balance of $1, 064.34. Docket #26 at 2. Checks totaling this amount that were forwarded from Cavalry to Plaintiff's attorney after this lawsuit began allegedly have arrived unendorsed and made payable only to Cavalry's own attorneys. Id. Plaintiff says she therefore has proven unable to negotiate those checks and her bank has instructed that the checks would have to be reissued in her attorney's name in order for her attorney to deposit them into his IOLTA account. Id.; see id. at 16.

         Cavalry offers three legal arguments for dismissing this case for lack of subject-matter jurisdiction. First, it submits that it has fully repaid Plaintiff all the money it garnished from her wages, rendering Plaintiff without standing and mooting this case. Docket #20 at 5. Second, Cavalry casts Plaintiff's allegations of emotional and consequential damages as “threadbare” and thus insufficient to confer standing to maintain this action. Id. And third, Cavalry urges that Plaintiff's federal statutory causes of action also do not confer standing here. Id.[6]

         II. STANDARD

         A. Rule 12(b)(1)

         “A motion to dismiss for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1) is appropriate when the plaintiff lacks standing to bring the claim.” Oum v. Wells Fargo, N.A., 842 F.Supp.2d 407, 411 (D. Mass. 2012), abrogated on other grounds by Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282 (1st Cir. 2013) (quoting Edelkind v. Fairmont Funding, Ltd., 539 F.Supp.2d 449, 453 (D. Mass. 2008)). Courts assess such motions using the familiar standard applicable to motions filed under Federal Rule of Civil Procedure 12(b)(6): a complaint's well-pleaded facts must be credited as true, and all reasonable inferences from the complaint must be drawn in the plaintiff's favor. See, e.g., Kerin v. Titeflex Corp, 770 F.3d 978, 981 (1st Cir. 2014); Katz v. Pershing, LLC, 672 F.3d 64, 70 (1st Cir. 2012) (citing Nisselson v. Lernout, 469 F.3d 143, 150 (1st Cir. 2006)); Igartua v. United States, 86 F.Supp.3d 50, 53 (D.P.R. 2015) (citing Negron-Gaztambide v. Hernandez-Torres, 35 F.3d 25, 27 (1st Cir. 1994)). However, a party's “bald assertions, unsupportable conclusions, periphrastic circumlocutions, and the like” merit no assumption of truth. Centro Medico del Turabo, Inc. v. Feliciano de Melecio, 406 F.3d 1, 5-6 (1st Cir. 2005) (quoting Aulson v. Blanchard, 83 F.3d 1, 3 (1st Cir. 1996)); see Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). Unlike in a Rule 12(b)(6) motion, when determining whether subject-matter jurisdiction lies, the Court may look beyond the pleadings to “whatever evidence has been submitted.” Aversa v. United States, 99 F.3d 1200, 1210 (1st Cir. 1996). “The party seeking to invoke the federal court's jurisdiction-normally, the plaintiff- bears the burden” of establishing it. Osediacz v. City of Cranston, 414 F.3d 136, 139 (1st Cir. 2005) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)).

         B. Article III Standing

         The Constitution constrains the federal courts' jurisdiction to “cases and controversies” only. U.S. Const. Art. III, § 2. Within this limitation lies the concept of standing, which requires a plaintiff to satisfy certain requirements in order for a federal court to hear his or her case. Article III standing includes both constitutional and prudential criteria; but Cavarly's arguments focus only on its constitutional components. See Docket #20 at 5. Those components are: first, the plaintiff must allege an “injury in fact”; second, that injury must be fairly traceable to the defendant; and third, the injury must likely be redressable by a favorable judicial decision. E.g., Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016) (citing Lujan, 504 U.S. at 560-61; Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167, 180-81 (2000)).

         The party asserting standing, here the plaintiff, bears the burden of establishing it. E.g., id. (citing FW/PBS, Inc. v. Dallas, 493 U.S. 215, 231 (1990)). And when, as here, a standing challenge arises at the pleading stage, “the plaintiff must ‘clearly . . . allege facts demonstrating'” each of standing's elements. Id. (quoting Warth v. Seldin, 422 U.S. 490, 518 (1975)). This means “[t]he facts necessary to support standing must clearly appear in the record and ‘cannot be inferred argumentatively from averments in the pleadings.'” United States v. AVX Corp., 962 F.2d 108, 115 (1st Cir. 1992) (quoting FW/PBS, 493 U.S. at 231) (noting that “where standing is at issue, heightened specificity is obligatory at the pleading stage”). That said, standing typically poses a low bar and is “readily found” when challenged. 13A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3531.4 (3d ed. 1998) (Apr. 2017 Supp.) (collecting cases).

         Cavalry's Article III standing arguments implicate the first two constitutional requirements, namely, injury in fact and causation. The first prong-injury in fact-requires “‘an invasion of a legally protected interest' that is ‘concrete and particularized' and ‘actual or imminent, not conjectural or hypothetical.'” Spokeo, 136 S.Ct. at 1548 (quoting Lujan, 504 U.S. at 560). More precisely, to demonstrate standing, “a plaintiff need only show that she has ‘a colorable claim'” of such an invasion-anything more goes to the merits of the plaintiff's claim, not the plaintiff's standing to raise the claim in the first place. Merrimon v. Unum Life Ins. Co., 758 F.3d 46, 52-53 (1st Cir. 2014) (quoting Aurora Loan Servs., Inc. v. Craddieth, 442 F.3d 1018, 1024 (7th Cir. 2006)). The U.S. Supreme Court has described a sufficiently “particularized” injury using labels including “personal, ” “distinct, ” and “not ‘undifferentiated.'” Spokeo, 136 S.Ct. at 1548 (first quoting Lujan, 504 U.S. at 560 n.1, and DiamlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 (2006); then quoting Whitmore v. Arkansas, 495 U.S. 149, 155 (1990); and then quoting United States v. Richardson, 418 U.S. 166, 177 (1974)). And a “concrete” injury is one that is “de facto, ” meaning that it “actually exist[s]” and is thus “‘real, ' and not ‘abstract.'” Id. (quoting Webster's Third New International Dictionary 472 (1971)) (citing Black's Law Dictionary 479 (9th ed. 2009)). A plaintiff's injury must be both particularized and concrete in order for the injury in fact requirement to be satisfied. E.g., id. at 1548.

         Notably, economic injury is a paradigmatic injury in fact typically sufficient to establish Article III standing. See Czyzewski v. Jevic Holding Corp., 137 S.Ct. 973, 983 (2017) (citing McGowan v. Maryland, 366 U.S. 420, 430-31 (1961)) (“For standing purposes, a loss of even a small amount of money is ordinarily an ‘injury.'”); Danvers Motor Co. v. Ford Motor Co., 432 F.3d 286, 291 (3d Cir. 2005) (Alito, J.) (quoted by 13A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3531.4 (3d ed.) (Apr. 2017 Supp.)) (“While it is difficult to reduce injury-in-fact to a simple formula, economic injury is one of its paradigmatic forms.”); San Diego Cty. Gun Rights Comm. v. Reno, 98 F.3d 1121, 1130 (9th Cir. 1996) (“Economic injury is clearly a sufficient basis for standing.”); Katz, 672 F.3d at 76 (quoting Adams v. Watson, 10 F.3d 915, 924 (1st Cir. 1993)) (“It is a bedrock proposition that ‘a relatively small economic loss-even an ‘identifiable trifle'-is enough [to be an injury in fact] . . . .”). Additionally, “emotional upset is a relevant consideration” when assessing standing “in a damages action.” City of Los Angeles v. Lyons, 461 U.S. 95, 107 n.8 (1983).

         Second, a plaintiff's injury also must be “fairly traceable to the defendant” in order to establish standing. E.g., Spokeo, 136 S.Ct. at 1547 (citations omitted). In general terms, this means a plaintiff must “show a sufficiently direct causal connection, which ‘cannot be overly attenuated, ' between the challenged action and the identified harm.” Williams v. Puerto Rico, 910 F.Supp.2d 386, 390 (D.P.R. 2012) (quoting Donahue v. City of Boston,304 F.3d 110, 115 (1st Cir. 2002)). The causal chain on which a plaintiff's allegations rest must amount to “something more than an ingenious academic exercise in the conceivable.” Adams, 10 F.3d at 922 (quoting United States v. Students Challenging Regulatory Agency Procedures, 412 U.S. 669, 689 ...

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