UNITED STATES BANKRUPTCY COURT DISTRICT OF OREGON COMPLAINT

Transcription

1 Michael Fuller, OSB No Special Counsel for Ms. Knight Olsen Daines PC US Bancorp Tower 111 SW 5th Ave., Suite 3150 Portland, Oregon Direct Kelly D. Jones, OSB No Of Attorneys for Ms. Knight 819 SE Morrison St., Suite 255 Portland, Oregon Direct UNITED STATES BANKRUPTCY COURT DISTRICT OF OREGON In re Kielie M. Knight, Debtor. Kielie M. Knight, Plaintiff, Case No dwh13 Adv. Proc. No. COMPLAINT 11 U.S.C. 362(k) 15 U.S.C. 1692k JURY TRIAL REQUESTED v. Global Education Systems Company dba Paul Mitchell The School and JW & JW Inc., Defendants. COMPLAINT Page 1 of 11

2 1. JURISDICTION AND THE PARTIES This Court has jurisdiction of Ms. Knight s 11 U.S.C. 362(k) claim under 28 U.S.C because the claim arises under Title 11. This Court has jurisdiction of Ms. Knight s 15 U.S.C. 1692k claim because the claim arose in and relates to Ms. Knight s bankruptcy case and affects assets available for creditors. 2. Kielie M. Knight filed for bankruptcy protection under Chapter 13 of Title 11 in case number dwh13 in the District of Oregon on September 16, Ms. Knight is a consumer as that term is defined at 15 U.S.C. 1692a(3) because she owes defaulted debt as that term is defined at 15 U.S.C. 1692a(5) for cosmetology school tuition incurred for personal purposes before she filed bankruptcy. 3. Defendant Global Education Systems Company dba Paul Mitchell The School (Paul Mitchell) is a for-profit multi-million-dollar corporation incorporated in Oregon. COMPLAINT Page 2 of 11

3 4. Defendant JW & JW Inc. is a for-profit corporation incorporated in California. JW & JW Inc. is a debt collector as that term is defined at 15 U.S.C. 1692a(6) because it regularly collects and attempts to collect consumer debts owed to, and on behalf of, other creditors, such as Paul Mitchell, using the US mail, and the principal purpose of JW & JW Inc. s business is the collection of defaulted debts owed to original creditors like Paul Mitchell. 5. Paul Mitchell is JW & JW Inc. s principle and JW & JW Inc. is Paul Mitchell s agent. As alleged in this complaint, Paul Mitchell and JW & JW Inc. acted together in a joint venture to collect Paul Mitchell s debt from Ms. Knight. 6. Venue is proper because Paul Mitchell and JW & JW Inc. harassed Ms. Knight with collection activities against her and threatened her will while she was under the protection of the Oregon Bankruptcy Court s automatic stay. COMPLAINT Page 3 of 11

4 7. NATURE OF CLAIMS Ms. Knight s automatic stay claim is a core proceeding and her Fair Debt Collection Practices Act (FDCPA) claim is not a core proceeding under 28 U.S.C. 157(b)(2). Ms. Knight requests trial by jury as to damages on her FDCPA claim and trial by advisory jury as to damages on her automatic stay claim, and otherwise consents to entry of final orders and judgments by the Oregon Bankruptcy Court in this adversary proceeding. Ms. Knight s FDCPA claim arises independent of the Bankruptcy Code and requires no bankruptcy-laden determinations. 8. FACTUAL ALLEGATIONS This complaint s allegations are based on personal knowledge as to Ms. Knight s conduct and made on information and belief as to the acts of others. 9. In 2009, Ms. Knight signed an agreement incurring tuition debt to attend Paul Mitchell School. Ms. Knight completed less than one semester at Paul Mitchell School and received no benefit in exchange for her tuition debt. No funds changed hands between Ms. Knight and Paul Mitchell School. Ms. Knight was ultimately unable to pay Paul Mitchell and defaulted on its debt. COMPLAINT Page 4 of 11

5 10. In 2014, Paul Mitchell, through its agents Michael Kavanaugh (Kavanaugh) and Capital Credit & Collection Service, Inc. (CC&CS, Inc.), filed a lawsuit against Ms. Knight to collect debt its behalf. (Multnomah County Circuit Court case number ). On August 7, 2014, Paul Mitchell obtained a default judgment against Ms. Knight for its tuition debt, plus attorney fees and costs. Then Kavanaugh and CC&CS, Inc. executed on the default judgment by garnishing Ms. Knight s wages. 11. On September 16, 2015, Ms. Knight sought bankruptcy protection primarily if not exclusively, to protect her from Paul Mitchell s collection activities, and the wage garnishment issued by Kavanaugh and CC&CS, Inc. on Paul Mitchell s behalf. Ms. Knight listed Paul Mitchell, Kavanaugh and CC&CS, Inc. in her bankruptcy schedules. Paul Mitchell, Kavanaugh and CC&CS, Inc. all received multiple actual notices of the automatic stay in Ms. Knight s bankruptcy case, including notice from the bankruptcy noticing center. 12. On September 24, 2015, CC&CS, Inc. filed a proof of claim for Paul Mitchell s debt in Ms. Knight s bankruptcy case. Paul Mitchell later canceled its accounts with CC&CS, Inc. When Paul Mitchell pulled COMPLAINT Page 5 of 11

6 Ms. Knight s account from CC&CS, Inc., Ms. Knight s debt was marked as being in bankruptcy. Paul Mitchell then assigned Ms. Knight s account to its agent JW & JW Inc. for collection. 13. Ms. Knight did not use or request Paul Mitchell s services nor incur any debt with Paul Mitchell after the date she filed bankruptcy. Despite receiving notice that Ms. Knight had filed bankruptcy, and that the automatic stay in Ms. Knight s case applied to Ms. Knight s account with Paul Mitchell, and that the automatic stay prohibited Paul Mitchell from continuing to collect pre-petition debt from Ms. Knight, and that Ms. Knight was represented by an attorney, Paul Mitchell intentionally harassed Ms. Knight by assigning her account to its agent JW & JW Inc. in an attempt to collect its debt from her. 14. During the automatic stay, JW & JW Inc. harassed Ms. Knight at Paul Mitchell s instruction by repeatedly calling Ms. Knight s family members, including her mother. JW & JW Inc. also harassed Ms. Knight by demanding payment from her and threatening her. Specifically, JW & JW Inc. threatened that failure to pay Paul Mitchell s debt may result in a legal action against Ms. Knight, and may result in entry of a judgment against her, which would include an additional filing fee and service costs. See, e.g., Exhibit 1. JW & JW Inc. s collection letter COMPLAINT Page 6 of 11

7 attached as Exhibit 1 is a communication and a means to collect Paul Mitchell s debt from Ms. Knight. 15. JW & JW Inc. s threats to Ms. Knight as alleged above constituted false, deceptive, and misleading representations and means to attempt to collect from Ms. Knight and unfair and unconscionable means to attempt to collect from Ms. Knight because Paul Mitchell already had a judgment against Ms. Knight and JW & JW Inc. did not intend to, and could not legally file another action against Ms. Knight and could not recover an additional filing fee or service costs from Ms. Knight if she did not pay Paul Mitchell s debt. JW & JW Inc. s communications with Ms. Knight s relatives, including her mother, when JW & JW Inc. knew or should have known Ms. Knight s location information (Paul Mitchell had this information because it obtained a default judgment against her and had notice of her bankruptcy filing, which included her address) is conduct the natural consequence of which is to harass, oppress, or abuse Ms. Knight and to coerce her into paying the debt, and also constituted false, deceptive, and misleading representations and means to attempt to collect from Ms. Knight and unfair and unconscionable means to attempt to collect from Ms. Knight. COMPLAINT Page 7 of 11

8 16. By adopting the FDCPA, Congress elevated the right of a consumer such as Ms. Knight to be free from a debt collector s unlawful collection practices. The invasion of that right by JW & JW Inc. is a concrete injury in fact for which this Court may provide relief. JW & JW Inc. s false, deceptive, and misleading demands and threats and its unfair and unconscionable tactics to collect amounts that are not allowed by law presented an actual material risk of harm including that as a result of JW & JW Inc. s violation of the FDCPA as alleged in this complaint, Ms. Knight would pay amounts that JW & JW Inc. was not entitled to collect. 17. Paul Mitchell and JW & JW Inc. s behavior as alleged in this complaint caused Ms. Knight severe ongoing embarrassment, annoyance, frustration, confusion, anxiety and other emotional harm separate from the average stress of the normal bankruptcy process. 18. Paul Mitchell s conduct as alleged above was in pursuit of profit and constituted a wanton, outrageous and oppressive violation of Ms. Knight s right to be free from collection activities during bankruptcy. COMPLAINT Page 8 of 11

9 19. CAUSES OF ACTION Claim 1 against Paul Mitchell 11 U.S.C. 362(k) 11 U.S.C. 362(a) imposed an affirmative duty on Paul Mitchell to terminate all collection activity against Ms. Knight after learning Ms. Knight filed bankruptcy. Paul Mitchell violated 11 U.S.C. 362(a)(6) by assigning Ms. Knight s debt to JW & JW Inc. for collection during the automatic stay. Paul Mitchell also violated 11 U.S.C. 362(a)(6) based on the collections activity of its agent JW & JW Inc. during the automatic stay. Paul Mitchell s violation of the automatic stay as alleged above was willful as that term is defined in the Ninth Circuit because its acts and omissions were intentional, it had prior actual knowledge of the automatic stay, its conduct was unreasonable, and any alleged mistake of law was not a defense. 20. Under 11 U.S.C. 362(k), Ms. Knight is entitled to compensation for actual damages and punitive damages from Paul Mitchell in amounts to be decided by an advisory jury and confirmed by the Court, and reasonable fees and costs from Paul Mitchell incurred prosecuting her automatic stay claim in an amount to be decided by the Court. COMPLAINT Page 9 of 11

10 21. Claim 2 against JW & JW Inc. 15 U.S.C. 1692k JW & JW Inc. s behavior as alleged above violated the strict liability provisions of the FDCPA, including and not limited to 15 U.S.C. 1692c(b), d, e, e(2)(a), e(2)(b), e(4), e(5), e(10), f, and f(1). 22. Under 15 U.S.C. 1692k, Ms. Knight is entitled to compensation for actual and statutory damages in an amount to be decided by a jury from JW & JW Inc., and reasonable fees and costs from JW & JW Inc. incurred prosecuting her FDCPA claim in an amount to be decided by the Court. 23. JURY TRIAL DEMAND Ms. Knight is entitled to and so demands a trial by jury as to damages in her FDCPA claim and requests an advisory jury to determine damages in her automatic stay claim. COMPLAINT Page 10 of 11

11 24. PRAYER FOR RELIEF After a stipulation or determination that Paul Mitchell willfully violated the automatic stay and that JW & JW Inc. violated the FDCPA, Ms. Knight seeks relief as follows: A. Money Judgment in favor of Ms. Knight against Paul Mitchell for actual damages and punitive damages, and for reasonable fees and costs incurred prosecuting her automatic stay claim. B. Money Judgment in favor of Ms. Knight against JW & JW Inc. for actual and statutory damages, and for reasonable fees and costs incurred prosecuting her FDCPA claim. Ms. Knight also seeks any equitable relief this Court may determine is fair. Ms. Knight may intend to amend this complaint to include additional claims and defendants as new information is learned through discovery. September 1, 2017 RESPECTFULLY FILED, /s/ Michael Fuller Michael Fuller, OSB No Special Counsel for Ms. Knight Olsen Daines PC US Bancorp Tower 111 SW 5th Ave., Suite 3150 Portland, Oregon michael@underdoglawyer.com Direct COMPLAINT Page 11 of 11