Navy Fed. Credit Union v. LTD

368 F. Supp. 3d 889
CourtDistrict Court, E.D. Virginia
DecidedMarch 18, 2019
DocketCase No. 1:18-cv-1424 (AJT/TCB)
StatusPublished
Cited by7 cases

This text of 368 F. Supp. 3d 889 (Navy Fed. Credit Union v. LTD) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Navy Fed. Credit Union v. LTD, 368 F. Supp. 3d 889 (E.D. Va. 2019).

Opinion

Anthony J. Trenga, United States District Judge

In this action, Plaintiff Navy Federal Credit Union ("Navy Federal") alleges that it sold certain accounts to Defendant Advantage Assets II, Inc. ("AAII") pursuant to a written contract, and that AAII subsequently resold those accounts to Defendant Debt Management Partners, LLC ("DMP") in violation of that contract, after which DMP allowed holders of those accounts to be subjected to unscrupulous debt-collection activities. DMP has filed a Motion to Dismiss [Doc. 55] ("the Motion") on the basis that the Court lacks subject matter jurisdiction.1 For the foregoing reasons, the Motion is GRANTED and the action is DISMISSED.

I. BACKGROUND

Navy Federal alleges the following, which the Court assumes to be true for the purpose of the Motion:

Navy Federal is a federally chartered, not-for-profit credit union based in Vienna, Virginia. [Doc. 52 at 1, 6]. Historically, Navy Federal has not sold its members' accounts to any third parties. Id. at 2. However, on April 30, 2012, it sold certain of its accounts to AAII pursuant to a Consumer Loan Purchase and Sale Agreement ("the CLPSA"). Id. The CLPSA, which was structured to protect Navy Federal's members from harassment and to protect Navy Federal's reputation, prohibited AAII from transferring accounts to any other third party without Navy Federal's consent. Id.

Nevertheless, on September 20, 2018, AAII sold the accounts to DMP through AAII's agent, LTD Financial Services, LP ("LTD"), without notifying Navy Federal of the transfer. Id. DMP subsequently sold some of those accounts to other parties, including to Defendant Bayview Solutions *892LLC ("Bayview"). Id. at 2-3. Thereafter, Navy Federal learned that some of the holders of the transferred accounts had been subjected to "improper, unfair, deceptive, misleading, aggressive, intimidating, and/or harassing tactics and practices from debt collectors who purported to be acting with respect to the Accounts." Id. at 2. Navy Federal promptly demanded that AAII, LTD, and DMP do something to stop these tactics. Id. at 3. Upon receiving this demand, LTD's Chief Executive Officer and President admitted that AAII and LTD failed to notify Navy Federal of the transfer and obtain its consent, which was required by the CLPSA. Id. However, these Defendants refused to take any action until after Navy Federal filed this suit. Id. After this suit was filed, AAII and LTD reacquired some of the transferred accounts but still allowed Bayview to retain 322 of the accounts. Id. The holders of those 322 accounts continue to be subjected to the alleged improper debt-collection practices. Id.

Plaintiff filed this action on November 16, 2018, and then filed a six count Amended Complaint on December 17, 2018. [Docs. 1, 52]. Counts One through Five allege various breaches of the CLPSA by AAII and LTD. Id. at 12-17. Count Six alleges that Bayview intentionally made defamatory statements concerning Navy Federal to the account holders by "expressly stat[ing] or impl[ying] that Bayview and its debt collectors, agents, or contractors, were acting as Navy Federal's agents or that Navy Federal sponsored, approved of, or was connected to the unlawful conduct." Id. at 18. All six counts seek relief pursuant to Virginia law. Id.

Navy asserts jurisdiction solely under 28 U.S.C. § 1332(c) based on diversity of citizenship. In that regard, Navy Federal alleges that diversity jurisdiction exists because the amount in controversy exceeds $ 75,000 and the parties are citizens of different states. Id. at 3-4. Specifically, Navy Federal alleges that Defendants maintain their principal places of business in Texas, New York, and Florida, while Navy Federal maintains its principal place of business in Virginia. Id. at 3.2

II. LEGAL STANDARD

A motion to dismiss under Fed. R. Civ. P. 12(b)(1) places the burden on the plaintiff, as the party asserting jurisdiction, to prove that federal jurisdiction is proper. White v. CMA Const. Co., Inc. , 947 F.Supp. 231, 233 (E.D. Va. 1996) (citing McNutt v. General Motors Acceptance Corp. , 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936) ; Adams v. Bain , 697 F.2d 1213, 1219 (4th Cir. 1982) ). A Rule 12(b)(1) motion may challenge subject matter jurisdiction in two different ways. First, a Rule 12(b)(1) motion may attack the complaint on its face, asserting simply that the complaint "fails to allege facts upon which subject matter jurisdiction can *893be based." Id. (quoting Adams , 697 F.2d at 1219 ). Under such a facial challenge to jurisdiction, "the facts alleged in the complaint are assumed to be true and the plaintiff, in effect, is afforded the same procedural protection as he would receive under a Rule 12(b)(6) consideration." Id.

A defendant may also challenge "the existence of subject matter jurisdiction in fact, quite apart from any pleadings." Mortensen v. First Fed. Sav. and Loan Ass'n , 549 F.2d 884, 891 (3d Cir. 1977). In such a fact-based challenge, the district court's "very power to hear the case" is at issue; and the district court is then free to weigh the evidence to determine the existence of jurisdiction. See Adams

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368 F. Supp. 3d 889, Counsel Stack Legal Research, https://law.counselstack.com/opinion/navy-fed-credit-union-v-ltd-vaed-2019.