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Tanksley v. Bay View Law Group, PC

United States District Court, D. Kansas

May 29, 2014

WESLEY TANKSLEY, et al., Plaintiffs,
BAY VIEW LAW GROUP, P.C., et al., Defendants.


TERESA J. JAMES, Magistrate Judge.

The Court has under consideration the following motions: (1) Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue, or in the Alternative, to Transfer Venue by Mahroze Baloch (ECF No. 36); (2) Motion to Dismiss Plaintiffs' Claims for Failure to State a Claim Upon Which Relief May Be Granted by Mahroze Baloch (ECF No. 39); and (3) Motion to Amend Pleadings (ECF No. 61) filed by Plaintiffs.[1] All motions are opposed and fully briefed. For the following reasons, the Court denies the first and third motions, grants the second motion, and dismisses the claims asserted against Defendant Baloch.

I. Legal Standards

In a pretrial motion to dismiss for lack of jurisdiction, when the matter is decided on the basis of affidavits and written materials, the plaintiff must only make a prima face showing that personal jurisdiction is proper to avoid dismissal.[2] The well-pled facts of the complaint must be taken as true to the extent they are uncontroverted by defendant's affidavits.[3]

A court considers a motion to dismiss for improper venue under Fed. R. Civ P. 12(b)(3).[4] Plaintiff bears the burden of establishing that venue is proper, and the court resolves all factual disputes in plaintiff's favor.[5] In ruling on the motion, the court may consider matters outside the pleadings without converting it to a motion for summary judgment.[6]

In the interest of justice, a district court may transfer a civil action to another district or division where it might have been brought for the convenience of parties and witnesses.[7] A court should decide motions to transfer on an individualized, case-by-case basis.[8] The party moving to transfer a case under Section 1404(a) bears the burden of establishing that the existing forum is inconvenient, but shifting the inconvenience from one side to the other is not a justification for transfer.[9] Unless the balance of interests is strongly in the movant's favor, plaintiff's choice of forum should rarely be disturbed.[10]

In ruling on a motion to dismiss under Fed.R.Civ.P. 12(b)(6), the court assumes as true all well-pleaded factual allegations and determines whether they plausibly give rise to an entitlement of relief.[11] To survive a motion to dismiss, a complaint must contain sufficient factual matter to state a claim which is plausible - and not merely conceivable - on its face.[12] In determining whether a complaint states a plausible claim for relief, the court draws on its judicial experience and common sense.[13]

The court need not accept as true those allegations which state only legal conclusions.[14] Plaintiff bears the burden of framing his complaint with enough factual matter to suggest that he is entitled to relief; it is not enough to make threadbare recitals of a cause of action accompanied by conclusory statements.[15] Plaintiff makes a facially plausible claim when he pleads factual content from which the court can reasonably infer that defendants are liable for the misconduct alleged.[16] Plaintiff must show more than a sheer possibility that defendants have acted unlawfully - it is not enough to plead facts that are "merely consistent with" defendants' liability.[17] A pleading which offers labels and conclusions, a formulaic recitation of the elements of a cause of action, or naked assertions devoid of further factual enhancement will not stand.[18] Similarly, where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but has not "shown" - that the pleader is entitled to relief.[19] The degree of specificity necessary to establish plausibility and fair notice depends on context, because what constitutes fair notice under Fed.R.Civ.P. 8(a)(2) depends on the type of case.[20]

Finally, leave to amend is a matter committed to the sound discretion of the district court.[21] Rule 15(a)(2), Fed. R. Civ. P., provides that leave to amend "should be freely given when justice so requires." A district court should refuse leave to amend only upon a showing of undue delay, undue prejudice to the opposing party, bad faith or dilatory motive, failure to cure deficiencies by amendments previously allowed, or futility of amendment.[22] A proposed amendment is futile if the amended complaint would be subject to dismissal.[23]

II. Factual Background

Plaintiffs Wesley Tanksley and Amy Tanksley commenced this diversity action by filing a Complaint on April 20, 2012, against a California professional corporation, Bay View Law Group, P.C. ("Bay View"), and four California residents, James L. Farley ("Farley"), [24] Mahroze J. Baloch ("Baloch"), Jedediah N. Thurkettle ("Thurkettle"), and Thom Lopez[25] ("Lopez").[26] Farley, Baloch, and Thurkettle are lawyers.[27] The complaint alleges the following facts:

In the spring or early summer of 2009, Plaintiffs received a postcard from Bay View which advertised and promoted Bay View's debt reduction services.[28] After receiving the postcard, Amy Tanksley called and spoke with an agent of Bay View. In July of 2009, both Plaintiffs spoke with Lopez for approximately an hour to discuss Bay View's services. As Lopez described it, Plaintiffs would make all of their monthly payments to Bay View instead of to their creditors because the program would work only if Plaintiffs were three months past due on their bills. In turn, Bay View would settle Plaintiffs' credit accounts for much less than the outstanding balances. Bay View would take their fees out of the first three monthly payments, and thereafter the payments would accumulate in Plaintiffs' "trust account." Plaintiffs were impressed that attorneys provided the services and that they would be represented if they were sued, although Lopez made it sound unlikely that any creditor would sue Plaintiffs. According to Lopez, Bay View had a great working relationship with creditors.

On or about July 30, 2009, Lopez sent Plaintiffs an attorney-client agreement ("the Agreement") and other documents by email; that same day, Plaintiffs executed the Agreement and returned it to Bay View by fax. Plaintiffs then received by telephone a series of disclaimers regarding the risk associated with debt management.

The Agreement obligated Plaintiffs to pay $8, 400.00 to Bay View (an amount which approximated 15% of the debt that Plaintiffs were seeking to resolve), and between August 21, 2009 and June 22, 2010, Bay View withdrew a total of $8, 004.59 from Plaintiffs' bank account in Sedgwick County, Kansas. Between January and May of 2010, creditors filed two lawsuits against Amy Tanksley and one against Wesley Tanksley. On July 2, 2010, Wesley called Bay View and spoke to a series of people, ending with Baloch.[29] Wesley told Baloch that Plaintiffs had received nothing from Bay View after they signed the Agreement and he expressed his discontent with Bay View's entire operation. Baloch told Wesley that Bay View was addressing Plaintiffs' escrow situation and would be mailing a statement. On July 8, 2010, Bay View employee Robin Russell sent Plaintiffs a new set of agreements by email, including a "Re-Amortization." Plaintiffs signed the document and returned it to Bay View by fax on or about July 18, 2010. Plaintiffs also received a packet of materials welcoming them to Bay View's "debt settlement service." The packet was unsigned but had a signature line for Jedediah N. Thurkettle, Esq.

Shortly thereafter, Plaintiffs learned that Bay View was not authorized to provide credit services in Kansas in spite of a requirement that it obtain such authority. Although Bay View's Facebook page identifies the Bay View Law Group as a law firm with a debt settlement department and attorneys in 45 states, Bay View never referred Plaintiffs to a Kansas attorney. Nor did Bay View ever negotiate with or pay any of Plaintiffs' creditors.

In a letter dated July 19, 2010, Amy Tanksley demanded that Bay View return her money, and Plaintiffs halted their automatic payments to Bay View. Bay View eventually returned approximately $2, 000 to Plaintiffs. During all of their communications with Bay View, Plaintiffs were physically present in Kansas.

Plaintiffs' Complaint asserts the following six claims against defendants: (1) an ongoing violation of the Kansas Credit Services Organization Act ("KCSOA");[30] (2) advertising without proper registration and oral marketing in violation of KCSOA;[31] (3) deceptive and unconscionable acts in violation of the Kansas Consumer Protection Act ("KCPA");[32] (4) civil conspiracy; (5) breach of contract; and (6) declaratory and injunctive relief. Defendant Baloch filed his answer to Plaintiff's complaint on August 31, 2012.[33]

On October 15, 2012, the Court granted the motion to compel arbitration filed by Bay View, Thurkettle, and Baloch.[34] In that same order, the Court stayed all proceedings. The parties proceeded to arbitration and on October 7, 2013, Plaintiffs filed a notice of arbitration order, advising the Court that the arbitrator had ruled the parties' contract illegal and ...

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