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Kraemer v. Fox Hills Owners Association

United States District Court, D. Colorado

April 7, 2016

JENNIE L. KRAEMER, Plaintiff,
v.
FOX HILLS OWNERS ASSOCIATION, FH RESORT LIMITED PARTNERSHIP, f/k/a Fox Hills Resorts, JOHN F. MAYER, NASH, SPINDLER, GRIMSTAD & MCCRACKEN LLP, and VIAL FOTHERINGHAM LLP, Defendants.

ORDERS & OPINION REGARDING [1] THE FOX HILLS DEFENDANTS’ MOTION TO DISMISS (DOCKET NO. 18); [2] DEFENDANT VIAL FOTHERINGHAM’S MOTION TO DISMISS (DOCKET NO. 30); [3] PLAINTIFF’S MOTION FOR A STAY (DOCKET NO. 53); [4] DEFENDANT VIAL FOTHERINGHAM’S MOTION FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION (DOCKET NO. 54); AND [5] DEFENDANT VIAL FOTHERINGHAM LLP’S MOTION TO SUPPLEMENT (DOCKET NOS. 56 & 57)

MICHAEL J. WATANABE United States Magistrate Judge

Defendants in this case secured, or have helped collect upon, a default judgment against Plaintiff in Wisconsin small claims court. Plaintiff disputes the underlying contract on which that default judgment is based, and further disputes the validity of the default judgment itself. She has challenged it in the Wisconsin small claims court in which it originated; she has challenged it in the Colorado state court in which it was domesticated for enforcement against her Colorado assets; and she has challenged it in a collateral lawsuit filed in Colorado state court. The actual default judgment has been satisfied by garnishments by Plaintiff’s employer, Rose Medical Center-but Plaintiff is now subject to continuing garnishments to collect on a $46, 000 award of fees and costs entered against her in state court. Here, Plaintiff primarily asserts that Defendants’ efforts to collect (past and present) violate the Fair Debt Collection Practices Act.

Five motions are currently pending in this case: The Fox Hills Defendants’ Motion to Dismiss (Docket No. 18); Defendant Vial Fotheringham’s Motion to Dismiss (Docket No. 30); Plaintiff’s Motion for a Stay (Docket No. 53); and Defendant Vial Fotheringham’s Motion for a Temporary Restraining Order and Preliminary Injunction (Docket No. 54), along with supplemental briefing thereon that the Court construes as a Motion to Supplement (Docket No. 56).

The motion for a preliminary injunction (Docket No. 54) is summarily DENIED because Defendant Vial cannot establish any likelihood of success on the merits, for the simple fact that it hasn’t asserted any counterclaims on which to succeed. The motion to supplement (Docket Nos. 56 & 57) are therefore DENIED AS MOOT. The motion to stay (Docket No. 53) is DENIED AS MOOT in light of the remainder of this Order.

The motions to dismiss (Docket Nos. 18 & 30) are GRANTED for the reasons set forth below. The Court has reviewed the parties’ filings (Docket Nos. 18, 32, 33, 42; 30, 34, 47), taken judicial notice of the Court’s entire file, and considered the applicable Federal Rules of Civil Procedure, statutes, and case law. Now being fully informed, the Court makes the following order and opinion.

FACTS AS ALLEGED IN THE COMPLAINT

Plaintiff’s Amended Complaint alleges generally that Defendants have engaged in a variety of collection actions over an invalid or unlawful debt. The underlying debt, Plaintiff alleges, “was created with no statutorily valid contract ever existing and included debts the defendants previously manufactured without any statutorily valid contract or deed or ownership existing.” (Id. ¶ 8; see also ¶¶ 29-40 (alleging various deficiencies in the purported debt, citing Wisconsin statutes and case law).)

Plaintiff further alleges that Defendants sued her in small claims court in Wisconsin in 2010, Manitowoc County Court case 10SC1109-and “obtained service by publication and a default judgment.” (Id. ¶ 8.) The debts asserted in that action may have been more than six years old, past the applicable statute of limitations. (Id.) Defendants allegedly filed the small-claims action despite Plaintiff’s “numerous letters . . . requesting they cease their actions or provide a statutorily valid contract.” (Id.) Plaintiff claims, thus, that Defendants’ actions amount to “acts of fraud, perjury, bad faith, meritless actions, a false verification to a court, and spoliation.” (Id.) Further, she alleges that Defendants have a pattern of abusive collections practices-most particularly, procuring default judgments and then waiting over a year before beginning garnishments, hoping the defaults won’t be challenged. (Id.)

Plaintiff further alleges that she was unaware of the default judgment against her until Defendants attempted to garnish her wages. (Id.) Then, Plaintiff “provided a debtor’s answer to the garnishment on December 4, 2012” denying liability on the underlying debts. (Id.) Defendants “have never filed with the Wisconsin court an objection or demand for hearing on the Debtor’s answer.” (Id.) Plaintiff further alleges that Defendants relied on the judgment, knowing it was invalid, to begin garnishments. (Id. ¶ 8.)

Plaintiff also alleges bad faith in the garnishment process. She alleges that, under Wisconsin law, an employer must accept as true the positions that a judgment-debtor takes in the debtor’s answer, unless a court orders otherwise. (Id. ¶ 12.) Plaintiff denied all liability on the judgment; thus, she alleges it was fraudulent for Defendants to present her employer with any claim for garnishment. (Id.) Defendants nonetheless did so, and Rose Medical Center began garnishing her wages in January 2013. (Id. ¶ 16.) In March 2013, Plaintiff filed a claim to challenge to the garnishment with the Colorado Division of Labor, triggering both an internal review by the employer and a review by the Division. (Id. ¶ 22.) “Both determined [the garnishment] was illegal [] and immediately stopped the garnishment action” (id.), because Defendants had failed to domesticate the judgment (see Id. ¶¶ 26-28), In May 2013, Defendants filed a motion in the Wisconsin small claims court to hold Rose Medical Center liable for the unsatisfied garnishments. (Id. ¶¶ 23, 26.) The Wisconsin court ultimately denied the motion. (Id. ¶¶ 26, 26 (the Amended Complaint contains two paragraphs numbered 26).)

Plaintiff further alleges that she filed suit in Colorado state court challenging the garnishments, Case No. 2014CV30294, against a number of the same Defendants present in this case. (Id.) She alleges that the state court unlawfully granted the defendants’ motion for summary judgment. (Id.) It did not, however, act on the state-court defendants’ post-trial motion for attorneys’ fees and costs until over six months after judgment entered-at which point a different judge granted the motion. (Id.) Plaintiff alleges that this violates C.R.C.P. 59(j). Defendants have begun garnishments to collect the award of fees and costs, allegedly without bothering to contact or notify Plaintiff directly about the matter. (Id.)

First Claim for Relief

The heart of Plaintiff’s first claim for relief appears to be this sentence:

In a bill dated 11/11/2014 and postmarked by the US. Postal service Nov. 14, 2014 mailed by defendant Fox Hills Owners contained a fraudulent debt that had previously been collected for 2008-2010 fees which had been collect by small claims debt collection agent, defendant Mayer.

(Docket No. 5 ¶ 9.) Plaintiff claims that the November 14, 2014 bill constituted a false or misleading representation in violation of 15 U.S.C. § 1692e. She also claims that it violated Defendants’ “common law duty of good faith and fair dealing” and, because it was mailed, it constituted mail fraud under 18 U.S.C. § 1341. (Id. ¶¶ 9-11.)

Second Claim for Relief

Plaintiff’s second claim for relief points to at least five ...


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