Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Ensminger v. Credit Law Center, LLC

United States District Court, D. Kansas

September 12, 2019




         This matter comes before the Court on defendants' motion to dismiss plaintiff's claims (Doc. # 18) and plaintiff's motion for leave to amend his complaint (Doc. # 39). The Court grants plaintiff leave to amend, and plaintiff shall file his proposed amended complaint forthwith. As set forth below, the motion to dismiss is granted in part and denied in part. The motion is granted with respect to Counts II, III, and IV of the amended complaint, and those claims are hereby dismissed. The motion is denied with respect to Count I.

         I. Background

         As alleged in the complaint, on February 27, 2015, plaintiff retained defendants to provide credit repair services. In electronic form, defendants sent an agreement and other forms and disclosures to plaintiff. Pursuant to the parties' agreement, plaintiffs paid a “retainer” of $300 to defendants within seven days, before defendants had completed the services promised in the agreement.

         Individually and on behalf of a putative class, plaintiff asserts four claims against defendants, including three claims for violations of the federal Credit Repair Organizations Act (CROA), 15 U.S.C. §§ 1679-1679j.[1] In Count I, plaintiff alleges that defendants violated Section 1679b(b) of the CROA by charging or receiving money before the services for plaintiff were fully performed. In Count II, plaintiff alleges that defendants violated Section 1679c(b) by failing to provide a particular disclosure to plaintiff in a separate document. In Count III, plaintiff alleges that defendants violated Section 1679d(b)(4) by failing to include in the disclosures to plaintiff certain language concerning a cancellation right in a certain format. In Count IV, plaintiff asserts a claim for breach of fiduciary duty under state law. Defendants have moved to dismiss all claims under Fed.R.Civ.P. 12(b)(1) for lack of standing and under Fed.R.Civ.P. 12(b)(6) for failure to state a claim.

         II. Motion for Leave to Amend

         On August 2, 2019, after the parties submitted additional briefing requested by the Court concerning issues relating to standing, plaintiff moved for leave to amend his complaint. Plaintiff seeks to add allegations concerning his alleged injuries in support of his arguments on standing.

         Leave to amend a complaint should be “freely” given “when justice so requires.” See Fed. R. Civ. P. 15(a)(2). “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.” See Wilkerson v. Shinseki, 606 F.3d 1256, 1267 (10th Cir. 2010) (internal quotations omitted).

         The Court rejects defendants' argument that leave should be denied on the basis of undue delay. The case is still at an early stage, and the scheduling order's deadline for amendments has not passed. Most importantly, defendants have not identified any undue prejudice that they would suffer from an amendment at this time. Indeed, the Court routinely allows a party to amend in an attempt to cure pleading deficiencies, and it would be more efficient in this case to allow such an amendment before the Court rules on the pending motion to dismiss.

         Defendants also argue that plaintiff's proposed amendment would not cure plaintiff's lack of standing and thus would be futile. The Court deems it more efficient to address any such arguments on the merits of the standing issue in the context of ruling on defendants' motion to dismiss. All parties have now had the opportunity to brief the effect of the proposed amendments on plaintiff's standing. Accordingly, the Court will allow the amendment and then consider the arguments in defendants' motion to dismiss as asserted against the allegations in the amended complaint. Plaintiff is directed to file the proposed amended complaint forthwith.

         III. Motion to Dismiss for Lack of Standing

          Defendants move to dismiss plaintiff's claims for lack of standing. A plaintiff invoking federal jurisdiction bears the burden of establishing the following elements of standing: “The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” See Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016). “To establish injury in fact, a plaintiff must show that he or she suffered an invasion of a legally protected interest that is “concrete and particularized” and “actual or imminent, ” not conjectural or hypothetical. See Id. at 1548 (internal quotations and citation omitted). In this case, defendants argue only that plaintiff did not suffer an injury in fact.

         Plaintiff argues that he has alleged a financial injury, specifically having to pay money before he should have been required to. Plaintiff notes that any contract subject to the CROA that does not comply with the statute's requirements shall be treated as void. See 15 U.S.C. § 1679f(c). Plaintiff further alleges and argues that he lost the time value of the money that he paid before the services were rendered. Plaintiff also argues that he suffered an intangible injury because he did not receive the benefits of the statutory provisions that defendants violated.

         First, the Court concludes that the loss of the time value of money that was paid before it should have been does constitute a concrete injury for purposes of standing. Defendants do not dispute that such an injury may satisfy the requirement of standing (they argue only that such an injury has not been properly alleged here). Multiple federal courts of appeal have indicated that the loss of time value represents a tangible injury, although they have done so in different contexts. For instance, in Habitat Education Center v. United States Forest Service, 607 F.3d 453 (7th Cir. 2010) (Posner, J.), the Seventh Circuit concluded a party had standing to challenge a bond order on appeal even though the bond had been returned, on the basis that the party had lost the time value of the amount of the bond; the party had suffered a loss, the Court held, because “[e]very day that a sum of money is wrongfully withheld, its rightful owner loses the time value of the money - a loss of the use of the [bond amount].” See Id. at 457. Subsequently, in Dieffenbach v. Barnes & Noble, Inc., 887 F.3d 826 (7th Cir. 2018), the Seventh Circuit confirmed that the loss of the time value of money, even for three days, constituted an economic injury that satisfied a particular statutory requirement of “lost money or property.” See Id. at 829. Recently, the D.C. Circuit held that the forgone time value of money (because of a delay in receiving tax refunds) “is an actual, tangible pecuniary injury” and thus satisfies a statute that requires “actual damages” to have been suffered. See In re U.S. Office of Personnel Mgmt. Data Sec. Breach Litig., 928 F.3d 42, 66 (D.C. Cir. 2019). District courts have cited such cases in concluding that the loss of time value of money satisfies the constitutional requirement of standing. See, e.g., Porsch v. LLR, Inc., 380 F.Supp.3d 418, 424-25 (S.D.N.Y. 2019) (quoting Habitat, 607 F.3d at 457; citing Dieffenbach, 887 F.3d at 828); Santangelo v. Comcast Corp., 2015 WL 3421156, at *3 (N.D. Ill. May 28, 2015) (citing Habitat, 607 F.3d at 457).

         The Court agrees with these courts that the loss of the time value of money - even a small amount - constitutes a tangible financial injury that satisfies the requirement of an injury in fact for purposes of standing. The fact of such injury from the loss of the use of money is an accepted economic reality, and the Supreme Court has confirmed that “an identifiable trifle” is enough of an injury to create standing. See United States v. Students Challenging Regulatory Agency Procs. (SCRAP), 412 U.S. 669, 689 n.14 (1973); see also American Humanist Ass'n, Inc. v. Douglas County Sch. Dist. RE-1, 859 F.3d 1243, 1248 (10th Cir. 2017) (quoting SCRAP in rejecting argument that the injury for standing must meet some threshold level of pervasiveness).

         In the order by which it requested additional briefing on this issue, the Court noted the decision in Taylor v. Federal Aviation Admin., 351 F.Supp.3d 97 (D.D.C. 2018), in which the court rejected a standing argument based on the loss of the time value of money. See Id. at 102-03. In that case, the court declined to decide whether such an injury could satisfy the requirement of an injury in fact for purposes of standing, in light of its conclusion that such an injury had not been properly alleged in that case. See Id. In stating that the recognition of such an injury for standing purposes is “far from well established, ” the court cited two cases; but in those cases the courts did not consider the economic principle of the lost time value of money, and merely held that a speculative claim for interest on a refund that fully discharged a debt prior to the lawsuit did not create standing. See Holaway v. Protective Life Ins. Co., 2007 WL 2904162, at *2 (M.D. Ga. Oct. 3, 2007); Amirhamzeh v. Chase Bank USA, N.A., 2013 WL 7219270, at *4 (C.D. Cal. Oct. 7, 2013) (citing Holaway). Neither did those courts consider the Supreme Court's rejection of any de minimis standard for standing in SCRAP. The Court is persuaded that the loss of time value of money represents a tangible economic injury and that such an “identifiable trifle” is sufficient to confer standing.[2]

         In Taylor, the court ultimately rejected the plaintiff's standing argument because he had not alleged any facts to suggest that if he had not paid the money at issue he would have invested it to increase its value. See Taylor, 351 F.Supp.3d at 103. Defendants here similarly argue that plaintiff has not established standing because he has not alleged that he would have invested the $300 that he allegedly had to pay prematurely. The Court rejects this argument. First, the cases cited in Taylor in support of this holding are not actually helpful here. See Id. (citing cases). In Kawa Orthodontics, LLP v. Secretary, United States Department of the Treasury, 773 F.3d 243 (11th Cir. 2014), the plaintiff did not rely on the economic principle of the lost time value of money that it paid to the defendant; rather, the plaintiff cited the lost value of time and resources that it expended because of the defendant's action, and the court concluded that such an injury was too abstract. See Id. at 246. In Barber v. Lincoln National Life Insurance Co., 260 F.Supp.3d 855 (W.D. Ky. 2017), aff'd, 722 Fed.Appx. 470 (6th Cir. 2018), the plaintiff did not allege that he was injured because he lost the time value of money. See Id. at 862.

         In this case, plaintiff has specifically alleged (in his amended complaint) that he suffered an injury in the form of the lost time value of money. Nothing in the complaint makes such an allegation implausible. Moreover, as the court in Porsch noted, “[it] is a basic [principle] of economics and accounting that a dollar today is worth more than a dollar tomorrow, ” see Porsch, 380 F.Supp.3d at 424-25 (citation and internal quotation omitted), and thus plaintiff suffered a concrete financial injury if he was deprived the use of his money. Accordingly, the Court concludes that plaintiff has standing to pursue the claim asserted in Count I of his complaint. Moreover, that same ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.