Case Name: Marguerite Ruth Edwards v. Southwestern Investors Group, LLC, et al.

Case No.: 18CV322153

Demurrer to Marguerite Ruth Edwards’ Complaint

Factual and Procedural Background

Plaintiff Marguerite Ruth Edwards (“Edwards”) incurred a financial obligation (“Debt”) in the form of a consumer credit account issued by Lane Bryant. (Complaint, ¶10.) On a date after January 1, 2014, Lane Bryant removed the Debt from its books as an asset and treated the Debt as a loss or expense. (Complaint, ¶11.)

On or about June 15, 2017, the Debt was sold to defendant Southwestern Investors Group, LLC (“SIG”) for collection purposes. (Complaint, ¶12.) Defendant SIG hired, contracted, or otherwise engaged Debt Recovery Solutions, LLC (“DRS”) to collect the Debt from plaintiff Edwards on defendant SIG’s behalf. (Complaint, ¶14.)

On or about June 20, 2017, DRS sent, or caused to be sent, a written communication to plaintiff Edwards at defendant SIG’s request and on defendant SIG’s behalf. (Complaint, ¶16 and Exh. 1.)

On or about July 6, 2017, plaintiff Edwards mailed a letter to DRS disputing the Debt and asking DRS to obtain and to produce verification of the debt (“Validation Request Letter”). (Complaint, ¶18 and Exh. 2.) Defendant SIG received the Validation Request Letter on or about July 20, 2017. (Complaint, ¶20.) After receiving plaintiff Edwards’ Validation Request Letter, defendant SIG continued collection efforts without first obtaining and mailing plaintiff Edwards a validation of the debt being collected and without first providing plaintiff the information and documents required by Civil Code section 1788.52, subdivisions (a) and (c). (Complaint, ¶¶23 – 24.)

Thereafter, defendant SIG hired, contracted, or otherwise engaged Resurrection Corp. (“Resurrection”) to collect the Debt on defendant’s behalf. (Complaint, ¶25.) On or about December 18, 2017, Resurrection sent, or caused to be sent, a written communication to plaintiff Edwards at defendant SIG’s request and on defendant SIG’s behalf. (Complaint, ¶27 and Exh. 4.)

On January 22, 2018, plaintiff Edwards filed a complaint against defendant SIG asserting a single cause of action for violation of the California Rosenthal Fair Debt Buying Practices Act (“CFDBPA”), Civil Code sections 1788.50 – 1788.64.

On March 19, 2018, defendant SIG filed the motion now before the court, a demurrer to plaintiff Edwards’ complaint.

I. Defendant SIG’s demurrer to plaintiff Edwards’ complaint is OVERRULED.

A. Code of Civil Procedure section 430.41.

As a preliminary matter, the court notes that defendant SIG failed to comply with Code of Civil Procedure section 430.41. That section provides that the demurring party must meet and confer with the party who filed the challenged pleading “for the purpose of determining whether an agreement could be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc., §430.41, subd. (a).) During this process, the demurring party must identify all causes of action it believes are subject to demurrer, identify the bases for the demurrer, and provide legal support. (Code Civ. Proc., §430.41, subd. (a)(1).) In turn, the opposing party shall provide legal support for its position that the pleading is legally sufficient or any identified defects may be cured. (Code Civ. Proc., §430.41, subd. (a)(1).) The demurring party shall file and serve with its demurrer a declaration stating that: (1) the means by which the demurring party met and conferred and that the parties did not reach agreement; or (2) that the party who filed the pleading failed to respond or otherwise failed to meet and confer in good faith. (Code Civ. Proc., § 430.41, subd. (a)(3).) If a demurring party fails to file the requisite declaration, the court may continue the hearing and order the parties to meet and confer. (Assem. Com. on Judiciary, Rep. on Sen. Bill No. 383 (2015-2016 Reg. Sess.), p. 2.) A court may not sustain a demurrer based on the insufficiency of the meet and confer process. (Code Civ. Proc., §430.41, subd. (a)(4).)

Defendant SIG failed to file a meet and confer declaration as required by Code of Civil Procedure section 430.41. In furtherance of judicial economy, the court will overlook defendant SIG’s failure to comply with Code of Civil Procedure section 430.41 in this instance but hereby places defendant SIG and its counsel on notice that they are required to comply with the Code of Civil Procedure in the future.

B. Merits.

“A debt buyer shall not make any written statement to a debtor in an attempt to collect a consumer debt unless the debt buyer possesses” certain information. (Civ. Code, §1788.52, subd. (a).) “A debt buyer shall not make any written statement to a debtor in an attempt to collect a consumer debt unless the debt buyer has access to a copy of a contract or other document evidencing the debtor’s agreement to the debt.” (Civ. Code, §1788.52, subd. (b).)

A debt buyer shall provide the information or documents identified in subdivisions (a) and (b) to the debtor without charge within 15 calendar days of receipt of a debtor’s written request for information regarding the debt or proof of the debt. If the debt buyer cannot provide the information or documents within 15 calendar days, the debt buyer shall cease all collection of the debt until the debt buyer provides the debtor the information or documents described in subdivisions (a) and (b). … A debt buyer shall provide all debtors with whom it has contact an active postal address to which these requests can be sent. A debt buyer may also provide an active email address to which these requests can be sent and through which information and documents can be delivered, if the parties agree.

(Civ. Code, § 1788.52, subd. (c).)

In demurring to plaintiff Edwards’ complaint, defendant SIG contends plaintiff Edwards cannot maintain a cause of action premised on a violation of Civil Code section 1788.52, subdivision (c) because that statute states, in relevant part, “A debt buyer shall provide the information or documents identified in subdivisions (a) and (b) to the debtor without charge within 15 calendar days of receipt of a debtor’s written request for information regarding the debt or proof of the debt.” (Emphasis added.)

Defendant SIG contends there is no allegation in the complaint that plaintiff Edwards made a written request to defendant SIG or that defendant SIG actually received such a request. However, the complaint plainly alleges, “Defendants received Plaintiff’s Validation Request letter on or about July 10, 2017.” (Complaint, ¶20.) “A demurrer tests only the legal sufficiency of the pleading. It admits the truth of all material factual allegations in the complaint; the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213 – 214.)

Despite this allegation, defendant SIG argues the allegation cannot be true in view of the earlier allegation by plaintiff that she addressed and mailed her Validation Request Letter to DRS, not SIG. (Complaint, ¶18 and Exh. 2.) Even so, this does not overcome or conflict with plaintiff Edwards’ allegation that DRS “was, and acted as, Defendants’ authorized agent with the actual or ostensible authority to act on Defendants’ behalf.” (Complaint, ¶15.)

Accordingly, defendant SIG’s demurrer to plaintiff Edwards’ complaint on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for violation of the CFDBPA is OVERRULED.