Klein v. Stewart, Zlimen & Jungers, Ltd.
- John Tunheim
- 0:18-cv-00658
- U.S. District Court · District of Minnesota
- 18
In Klein v. Stewart, Judge Tunheim partly denied and partly granted Stewart’s pleadings motion, allowing four Fair Debt Collection Practices Act claims to proceed.
Dina Klein and Michael Klein may proceed with four FDCPA claims against Stewart Zlimen & Jungers. Their harassment claim was dismissed without prejudice, and Dina’s statutory-interest claim was dismissed with prejudice.
What happened
In Klein v. Stewart, Dina Klein and Michael Klein sued Stewart Zlimen & Jungers under the Fair Debt Collection Practices Act, a federal law regulating debt collection. The lawsuit concerned collection efforts for medical debts owed to Allina, including collection letters and lawsuits filed in conciliation court.
The Kleins claimed that Stewart sued without following an agreement about charity-care applications and lawsuit information sheets, misrepresented who owned the debts, sued for a party that lacked legal standing, and used an account-stated theory without a statement of account. Dina also challenged Stewart’s request for statutory interest, and both Kleins alleged harassing or abusive collection conduct.
The court denied Stewart’s motion for judgment on the pleadings on the first four claims, allowing them to proceed. It granted the motion on the harassment claim and dismissed it without prejudice, and granted the motion on Dina’s statutory-interest claim and dismissed it with prejudice. Judge John R. Tunheim signed the order.
The detailed version
- Klein v. Stewart, Zlimen & Jungers, Ltd. · No. 0:18-cv-00658
- John Tunheim
- Jan. 2, 2019
Background
Dina Klein and Michael Klein brought two similar lawsuits against Stewart Zlimen & Jungers, a law firm engaged in debt collection for Allina. They alleged violations of the Fair Debt Collection Practices Act (FDCPA), which regulates conduct by debt collectors collecting consumer debts. Stewart moved for judgment on the pleadings, a motion asking the court to decide whether the pleaded facts stated legally sufficient claims.
The Kleins alleged that Stewart sent each of them a July 2017 collection letter. The letter identified Allina as Stewart’s client and included an account listing headed “Accounts Receivable Services d/b/a Reliance Recoveries” (ARS). The Kleins alleged that ARS was a different legal entity from Allina and that the letter was misleading about who owned their debts.
The Kleins also alleged that Stewart filed conciliation-court lawsuits for Allina without first giving them a reasonable opportunity to apply for charity care and without including a lawsuit information sheet required by an agreement between Allina and the Minnesota Attorney General’s Office. Stewart later dismissed those lawsuits without prejudice so the Kleins could apply for charity care. Dina’s lawsuit also sought statutory interest, while Michael’s did not.
Claims the Court Allowed to Proceed
The court denied Stewart’s motion as to four claims because the Kleins had pleaded enough facts to make relief legally plausible:
- Collection not authorized by contract or law: The Kleins alleged that filing the conciliation-court lawsuits violated the agreement’s charity-care and lawsuit-information-sheet requirements. The court held that they could pursue an FDCPA claim based on that alleged violation and could further develop their theory that the agreement had the force of law for purposes of the FDCPA.
- Misrepresentation about debt ownership: The Kleins alleged that including ARS’s name and contact information in the July letter falsely suggested that ARS owned the debts. The court found that whether this was misleading was a factual question and that the alleged misrepresentation was plausibly material.
- Suing for a party without standing: In the alternative, the Kleins alleged that Allina had sold their debts to ARS and therefore lacked standing when Stewart sued on Allina’s behalf. The court agreed that this plausibly alleged an FDCPA violation.
- Account-stated theory without a statement of account: The Kleins alleged that Stewart sued under an account-stated theory without providing a statement of account. The court concluded that they should be allowed to develop whether the omission was materially misleading under the FDCPA.
Claims Dismissed
The court granted Stewart’s motion as to Dina’s claim concerning statutory interest. Relying on Eighth Circuit precedent, the court held that seeking statutory interest under Minnesota Statute § 334.01 did not violate the FDCPA merely because the debtor might have a valid legal defense to the interest request. The court dismissed that claim with prejudice.
The court also granted Stewart’s motion as to the Kleins’ claim that Stewart engaged in harassing, oppressive, or abusive conduct under 15 U.S.C. § 1692d. The court found that the Kleins alleged only the July letter and the two conciliation-court lawsuits, and did not allege facts showing conduct prohibited by that provision. The court dismissed that claim without prejudice, allowing the Kleins to plead additional supporting facts.
Order and Classification
The order denied in part and granted in part Stewart’s motion for judgment on the pleadings. It denied the motion on the four claims involving the Attorney General’s Office agreement, standing, the July letter’s use of ARS’s name, and the account-stated theory. It granted the motion on the harassment claim and dismissed that claim without prejudice, and granted the motion on Dina’s statutory-interest claim and dismissed that claim with prejudice.
This is classified as a procedural order because the court ruled on the sufficiency of the pleadings under the standard used for a motion to dismiss, rather than finally deciding the underlying FDCPA liability. The opinion’s summary refers to granting the motion on a claim under Section 1692e, but the specific order identifies the dismissed claims as the harassment claim and Dina’s statutory-interest claim.
Read the full 18-page opinion on CourtListener, the free public archive maintained by the Free Law Project.