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Maxwell v. St. Francis Health Center

United States District Court, D. Kansas

September 13, 2017

STEPHANIE J. MAXWELL, Plaintiff,
v.
ST. FRANCIS HEALTH CENTER, et al., Defendants.

          MEMORANDUM AND ORDER

          Sam A. Crow, U.S. District Senior Judge.

         Plaintiff, Stephanie J. Maxwell, is a military servicemember. She has brought this action against H. Kent Hollins and his law firm, H. Kent Hollins PA (“the Hollins defendants”). Plaintiff is also suing St. Francis Health Center and the City of Topeka who were represented by the Hollins defendants in two debt collection actions against plaintiff which were filed in 2009 when plaintiff's name was Palmisano. Plaintiff alleges defendants violated federal and state law in the debt collection efforts. This case is before the court upon defendants' motions to dismiss pursuant to FED.R.CIV.P. 12(b)(6).

         I. Rule 12(b)(6) standards

         Upon a Rule 12(b)(6) motion, the court accepts plaintiff's well-pleaded factual allegations as true and determines whether plaintiff has provided enough facts to state a claim to relief that is plausible on its face. George v. Urban Settlement Services, 833 F.3d 1242, 1247 (10th Cir. 2016)(interior quotation omitted). “[A] claim is facially plausible if the plaintiff has pled ‘factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'” Id. (quoting Hogan v. Winder, 762 F.3d 1096, 1104 (10th Cir. 2014)). The court may consider: documents incorporated by reference in the complaint; documents referred to in and central to the complaint, when there is no dispute as to authenticity; and matters of which a court may take judicial notice. Gee v. Pacheco, 627 F.3d 1178, 1186 (10th Cir. 2010). The court's function is not to weigh potential evidence that the parties might present at trial. See Proctor & Gamble Co. v. Haugen, 222 F.3d 1262, 1278-79 (10th Cir. 2000).

         II. Allegations in the complaint and documents referenced in the complaint

         The following allegations are taken primarily from the first amended complaint and almost identical affidavits filed by defendant H. Kent Hollins in the state court debt collection cases. The court treats the affidavits as documents central to the complaint as to which there is no dispute as to authenticity.[1]

         Plaintiff alleges that she enlisted in the United States Air Force on April 9, 2009, reported to active duty on April 14, 2009, and has been on active duty continuously from that date through the date this action was filed. On April 24, 2009, St. Francis and the City of Topeka, through the Hollins defendants, each filed a debt collection lawsuit against plaintiff in Shawnee County District Court.

         From December 28, 2009 through April 21, 2015, the Hollins defendants ran several searches on the Defense Manpower Data Center (DMDC) website to determine whether plaintiff was on active military duty. The searches were conducted under the name “Stephanie Palmisano” (plaintiff's maiden name) and her social security number. Through 2011, the searches showed that plaintiff was on active military duty. This caused the Hollins defendants to ask the court to stay the debt collection cases against plaintiff. According to the Hollins affidavits, which are supported by exhibits showing the search results, in 2012 and 2013 some searches showed that plaintiff was on active duty and some showed that plaintiff was not on active duty.[2]

         On July 16, 2014, a DMDC search showed that Stephanie Palmisano was not on active duty. The Hollins defendants then requested and received an alias summons. On January 13, 2015, plaintiff called the Hollins law firm and left a message. A law firm representative returned her call. During the conversation, plaintiff did not indicate that her name had changed. She stated that she was employed by the military.

         The Hollins defendants attempted to serve plaintiff by certified mail on January 15, 2015 at an address in Oklahoma. The return indicated that it was “signed by other” and the green card showed that it was signed by the addressee “Stephanie Maxwell.” The Hollins defendants conducted two other DMDC searches on February 16, 2015 and March 6, 2015. These showed that Stephanie Palmisano was not on active duty. The Hollins defendants did not search under the name Stephanie Maxwell until after default judgment was entered and they received a letter from plaintiff's attorney.

         The Shawnee County District Court entered default judgment against plaintiff on February 24, 2015 in favor of defendant City of Topeka and on March 6, 2015 in favor of defendant St.

         Francis. The applications for default judgment alleged that proper service had been effected and, through an affidavit signed by defendant Hollins, that plaintiff was not on active military duty. The affidavit read in part as follows:

I, H. Kent Hollins, of lawful age, and being first duly sworn, on oath state that I am the plaintiff or petitioner, in the above entitled case, and I make this affidavit pursuant to the provisions of the Service members Civil Relief Act of 2003; that I have caused a careful investigation to be made to ascertain whether or not the above named defendant or respondent is in the active service of the Army of the United States, the United States Navy, the United States Marine Corps, the United States Coast Guard, the United States Air Force, the National Guard or of any Public Health Service detailed by proper authority for duty with the military; and, that as a result of said investigation, I hereby state that the defendant or respondent is not in any of the above-named branches of the military service nor has the defendant or respondent received notice of induction or notice to report for active service.

Doc. No. 27-1, p. 5 and Doc. No. 27-2, p. 5.[3] Plaintiff alleges that it was false to represent in the affidavit that there had been a careful investigation and that it was false to represent that plaintiff was not in active military service.

         The Hollins defendants received a demand letter referencing “Stephanie J. Maxwell (Palmisano)” from plaintiff's counsel in April 2015. The letter asked to set aside the default judgments. The Hollins defendants conducted another DMDC search using the name Stephanie Palmisano and her social security number. This search showed that plaintiff was not on active duty. The same day defendants did a DMDC search for Stephanie Maxwell and her social security number which showed that plaintiff was on active duty.

         On July 9, 2015, plaintiff moved to set aside the default judgments. On May 10, 2016, the Shawnee County District Court granted the motion to set aside the default judgments on the grounds that defendants had not obtained proper service on plaintiff.

         Plaintiff does not allege that the Hollins defendants were the employees of defendants St. Francis or the City of Topeka. Plaintiff does allege that the Hollins defendants were the agents of St. Francis and the City of Topeka.

         III. The Hollins defendants' motion to dismiss shall be granted in part and denied in part.

         A. Count One - the Servicemembers Civil Relief Act (“SCRA”), 50 U.S.C. § 3901 et seq.

         Plaintiff alleges that defendants are liable for damages under that part of the SCRA which penalizes the filing of a false affidavit regarding whether a defendant is in active military service prior to entering judgment. The SCRA at 50 U.S.C. § 3931(a)&(b) requires that in any civil action or proceeding in which the defendant does not make an appearance, the court, before entering judgment for the plaintiff shall require the plaintiff to file with the court an affidavit:

(A) stating whether or not the defendant is in military service and showing necessary facts to support the affidavit; or (B) if the plaintiff is unable to determine whether or not the defendant is in military service, stating that the plaintiff is unable to determine whether or not the defendant is in military service.

         Subsection (c) further provides a possible criminal penalty for making or using an affidavit “knowing it to be false.” (emphasis added). A civil cause of action is authorized under 50 U.S.C. § 4042 for appropriate relief, including monetary damages, to any person aggrieved by a violation the SCRA.

         Defendants assert that plaintiff has not alleged facts describing a plausible claim that the Hollins defendants filed affidavits which were knowingly false. The SCRA does not define “knowing.” The court is guided by its ordinary meaning. See U.S. v. Dobbs, 629 F.3d 1199, 1203-04 (10th Cir. 2011). So, the court asks here whether plaintiff's allegations state a plausible claim that defendants submitted an affidavit in possession of knowledge, intelligence or understanding that it was, or may be, false. See Oxford English Dictionary (online ed. 2017). In addition, the court follows the approach other courts have taken in construing a comparable statute, 18 U.S.C. § 1001.[4] Courts have determined that reckless disregard of the truth is sufficient to sustain a criminal conviction for the violation of § 1001. U.S. v. London, 66 F.3d 1227, 1241-42 (1stCir. 1995); U.S. v. Puente, 982 F.2d 156, 159 (5th Cir. 1993); U.S. v. Gottlieb, 493 F.2d 987, 994 (2nd Cir. 1974)(person may be convicted for recklessly stating he was in the National Guard, when he didn't know whether or not he was in the National Guard); see also, U.S. v. Strandlof, 667 F.3d 1146, 1165 (10thCir. 2012)(one can be prosecuted under § 1001 without intentionally lying) abrograted on other grounds, U.S. v. Alvarez, 567 U.S. 709 (2012).

         According to the complaint and other documents referenced in the complaint, the Hollins defendants had knowledge that Stephanie Palmisano was on active military duty for about three years starting in April 2009. There were indications that the DMDC searches may be producing inconsistent results. The Hollins defendants also knew that she telephoned in January 2015 and told them she was employed by the military. A couple of days later a “Stephanie Maxwell” signed for a piece of certified mail sent to Stephanie Palmisano. This did not cause defendants to do a DMDC search for the name Stephanie Maxwell. The Hollins defendants were also aware that the DMDC website cautioned that further steps should be taken to check on the military status of persons if they had evidence that the person was on active duty for the active duty status date.[5] Given these alleged facts the court believes plaintiff has stated a plausible claim that the Hollins defendants submitted a knowing false affidavit stating that plaintiff was not on active duty and that they had conducted a careful investigation as to her active duty status.[6]

         B. Count Two - the Kansas Consumer Protection Act (“KCPA”), K.S.A. 50-623 et seq.

         In Count Two of the first amended complaint, plaintiff alleges that defendants violated the KCPA because they committed deceptive or unconscionable acts. There is no dispute that the KCPA applies to debt collection activities engaged in by a creditor or his agent, including independent debt collection agencies. See State ex rel. Miller v. Midwest Service Bureau of Topeka, Inc., 623 P.2d 1343, 1345 (Kan. 1981). The court's analysis here is guided in part by the KCPA provision stating that it is to be construed liberally in order to protect consumers from suppliers who commit deceptive and unconscionable practices. K.S.A. 60-623.

         1. Deceptive acts

         Plaintiff's KCPA claims are not clearly stated in the first amended complaint.[7] The court relies upon the argumentation made in regard to the motions to dismiss to help delineate the claims. It appears to the court that plaintiff intends to claim that defendants violated K.S.A. 50-626(b)(2) and (3) which prohibit defendants from the following practices “in connection with a consumer transaction: . . . (2) the willful use, in any oral or written representation, of exaggeration, falsehood, innuendo or ambiguity as to a material fact; [and] (3) the willful failure to state a material fact, or the willful concealment, suppression or omission of a material fact.” Although, in ¶ 108 of the first amended complaint, plaintiff asserts that defendants also filed inadequate service returns and engaged in “sewer serving” individual consumers, it appears that plaintiff is relying upon the alleged filing of false affidavits as the actual basis of her KCPA claim.[8]

         In the Hollins defendants' motion to dismiss, they claim that the first amended complaint does not allege any deceptive acts or practices that violate those sections of the KCPA in spite of the obligation to plead the claim with particularity. Defendants also claim that plaintiff alleges no facts showing that the Hollins ...


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