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Alston v. Eberwein Group, LLC

United States District Court, D. Maryland

February 5, 2019

EBERWEIN GROUP, LLC, trading as Merlin Auto Club, and JOHN LUND KELLER, Defendants.



         Plaintiff Tracy Arthur Alston has filed suit against Defendants Eberwein Group, LLC ("Eberwein") and John Lund Keller in connection with a used vehicle he purchased from, and financed through, Eberwein in 2015. The vehicle failed soon after the purchase, leaving Alston owing money on a car he could no longer use. Alston has filed suit against Eberwein alleging certain material misrepresentations about the quality of the vehicle. He has also alleged that, in attempting to collect on Alstons's outstanding loan balance, Defendants engaged in predatory practices in violation of federal and state consumer protection statutes. Pending before the Court is Defendants' Motion to Dismiss Plaintiffs First Amended Complaint, which is ripe for disposition. Having reviewed the submitted materials, the Court finds no hearing necessary. See D. Md. Local R. 105.6. For the reasons set forth below, Defendants' Motion to Dismiss is GRANTED IN PART and DENIED IN PART.


         In April 2015, Alston purchased a 2000 Dodge Caravan from Eberwein for $6, 288.73, with financing from Eberwein. About 20 days later, while the Caravan was still under warranty, the fuel pump and suspension failed, prompting Alston to return the vehicle to Eberwein. At that point, Alston had, by his calculation, paid approximately $1, 300 towards the Caravan. Alstons's insurance company, State Farm, paid out $2, 647.21 to Eberwein. In Alstons's estimation, that insurance payment fully settled his outstanding financing debt to Eberwein.

         However, two years later, Alston received a May 30, 2017 letter from Keller ("the Keller Letter"), an attorney acting on behalf of Eberwein, with the subject heading: "Re: Eberwein Group, LLC t/a Merlin Auto Club v. Tracy Arthur Alston, in the District Court of Maryland for Prince Georges's County, No. (Unassigned)." Keller Letter at 1, Mot. Dismiss Ex. 3, ECF No. 30-5. In the letter, Keller stated that he had been retained by Eberwein "for the purpose of filing suit against you for the sum of $4, 252.79," Alstons's alleged outstanding balance on the Caravan. Id. Keller further stated that "[b]efore filing suit, it is my policy to give a prospective Defendant a chance to pay the debt in full" and instructed Alston to "immediately render payment." Id. Keller warned that if Alston did not render payment or "an offer for a payment schedule" that Eberwein found acceptable, Keller would "file suit after I am properly able to assume that the debt is a valid debt." Id. The letter included a notice to Alston of his right under the Fair Debt Collection Practices Act ("FDCPA") to dispute the validity of, and require verification of, the debt within 30 days of receipt of the letter and of the procedure for doing so. Id. at 2-3.

         By a letter dated July 1, 2017, Alston requested validation of the debt. In a letter dated July 7, 2017, Keller stated that the claimed debt of $4, 252.79 was accurate.

         On July 28, 2017, Eberwein, represented by Keller, filed suit against Alston in the District Court of Maryland for Prince Georges's County ("the State Court Case") seeking $4, 252.79 for the outstanding debt and $625.00 in attorneys's fees. Mot Dismiss Ex. 1 at 6 (State Court Complaint), ECF No. 30-3. In that case, Alston filed a Notice of Intention to Defend in which he asserted several defenses, specifically, that the debt had been discharged through the doctrine of accord and satisfaction when Eberwein cashed the State Farm insurance check, that Eberwein had waived its right to collect the debt by waiting two years to begin its collection efforts, and that Eberwein was not entitled to collect the debt because it had breached the sales contract and the warranty by failing to repair the Caravan. After Alston disputed the debt in the state court proceeding,, Eberwein reduced its claim to $2, 796.52, citing a miscalculation on its part. On October 25, 207,, the case proceeded to trial, after which Alston was found liable for the entirety of the $2, 796.52 and was assessed $74.00 in costs and $325.00 in attorneys's fees. Although Alston noticed an appeal from that judgment,, he later abandoned it.

         In November 2017, Alston filed suit in this Court. After a June 13, 2018 Case Management Conference, the Court granted Alston leave to amend his Complaint to address alleged deficiencies identified by Defendants. Because Alston had been put on notice of Defendants' perceived deficiencies in the Complaint, by agreement of the parties, the Order granting Alston leave to amend also stated that any future motion to amend would not be granted "absent exceptional circumstances." June 13, 2018 Order at 1, ECF No. 28. On July 13, 2018, Alston filed an Amended Complaint alleging six causes of action: (1) breach of warranty by Eberwein; (2) breach of contract by Eberwein; (3) a violation of the Maryland Consumer Debt Collection Act ("MCDCA",, Md. Code Ann., Com. Law SS 14-201-14-204 (West 2013), by Eberwein and Keller; (4) a violation of the Maryland Consumer Protection Act ("MCPA",, Md. Code Ann., Com. Law SS 13-301-13-32,, by Eberwein; (5) fraud by Eberwein; and (6) a violation of the Fair Debt Collection Practices Act ("FDCPA",, 15 U.S.C. SS 1692-1692p (2012), by Keller.


         In their Motion, Defendants seek dismissal of all of Alstons's claims based on the doctrines of res judicata and collateral estoppel, asserting that all of these claims either were or could have been litigated in the state court proceeding. Alternatively, they assert that Alston has failed to plead sufficient facts to sustain his claims. In opposing the Motion, Alston focuses primarily on the argument that his MCDCA and FDCPA debt collection claims are not precluded by the state court judgment..

         I. Legal Standard

         Defendants' Motion seeks dismissal under Federal Rule of Civil Procedure 12(b)(6). To defeat a motion to dismiss under Rule 12(b)(6), the complaint must allege enough facts to state a plausible claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A claim is plausible when the facts pleaded allow "the Court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. Although courts should construe pleadings of self-represented litigants liberally, Erickson v. Pardus, 551 U.S. 89, 94 (2007), legal conclusions or conclusory statements do not suffice, Iqbal, 556 U.S. at 678. The Court must examine the complaint as a whole, consider the factual allegations in the complaint as true, and construe the factual allegations in the light most favorable to the plaintiff. Albright v. Oliver, 510 U.S. 266, 268 (1994); Lambeth v. Bd. of Comm 'rs of Davidson Cty., 407 F.3d 266, 268 (4th Cir. 2005). Documents attached to the complaint or motion may be considered if "they are integral to the complaint and authentic." Sec'y of State for Defence v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir. 2007). The court may also take judicial notice of matters of public record. Philips v. Pitt Cty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir. 2009). When considering a Rule 12(b)(6) motion based on res judicata or collateral estoppel, the courts may "take judicial notice of facts from a prior judicial proceeding" when the assertion of preclusion as a defense "raises no disputed issue of fact." Andrews v. Daw, 201 F.3d 521, 524 n.l (4th Cir. 2000). Accordingly, in resolving the Motion, the Court will consider both the Keller Letter, which is integral to the Amended Complaint, and the record of the State Court Case, of which it takes judicial notice.

         II. Res Judicata and Collateral Estoppel

         Under the doctrine of res judicata, a final judgment on the merits in an earlier decision precludes the parties from relitigating claims that were raised or could have been raised during that action. Pueschel v. United States,369 F.3d 345, 354 (4th Cir. 2004). This doctrine applies when there is: (1) a final judgment on the merits in a prior lawsuit; (2) an identity of cause of action in both the earlier and later suits; and (3) an identity of parties or their privies in the two suits. Id. at 354-55. Here, there can be no dispute that the State Court Case was a lawsuit between Eberwein and Alston that resulted in a final judgment on the merits in favor of Eberwein, such that the first and third prongs of res judicata are satisfied. As to the second prong, where the party filing the second suit was the defendant in the first suit, there are additional consideration.. In such instances, defendants in the first action are not precluded from subsequenlly litigating counterclaims that could have been raised in the first action except: (1) where the counterclaim was a compulsory one under statute or court rules, or (2) where "[t]he relationship between the counterclaim and the plaintiffs ...

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