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Cannon v. Kelly

April 27, 2009

FRANKLIN CANNON, PLAINTIFF,
v.
FREDERICK D. KELLY AND, MARPAST OF TEXAS, INC., D/B/A THE MONEY CENTER, INC., DEFENDANTS.



The opinion of the court was delivered by: Michael A. Telesca United States District Judge

DECISION and ORDER

INTRODUCTION

Plaintiff Franklin Cannon ("Cannon"), brings this action pursuant to the Fair Debt Collection Practices Act, codified at 15 U.S.C. § 1692 et seq., and New York State law, against defendants Frederick D. Kelly ("Kelly"), a debt collector, and Marpast of Texas, Inc., ("Marpast") a lender, claiming that the defendants used unlawful methods in an attempt to collect a debt from him, and violated New York statutory and common law in connection with their attempts to collect the debt.

Defendant Marpast now moves to dismiss plaintiff's Amended Complaint pursuant to Rules 12(b)(1), (2), and (6) of the Federal Rules of Civil Procedure on grounds that: (1) this Court lacks subject matter jurisdiction over Marpast, (2) this Court lacks personal jurisdiction over Marpast, and (3) plaintiff has failed to state a cause of action against Marpast. In the alternative, Marpast seeks an order compelling plaintiff to enter into arbitration in lieu of this litigation.

For the reasons set forth below, I deny defendant's motion to dismiss, and deny defendant's motion to compel arbitration.

BACKGROUND

According to the Amended Complaint, in 2007, plaintiff Franklin Cannon obtained a loan in the amount of $150.00 from defendant Marpast of Texas, Inc. Plaintiff obtained this loan through an internet website allegedly operated by Marpast. Pursuant to the loan agreement, Marpast was allowed to make direct withdrawals from Cannon's checking account for purposes of repaying the loan.

Cannon contends, however, that on at least one occasion, Marpast attempted to make a withdrawal from his account on a date earlier than had been agreed to. Plaintiff claims that because he did not have sufficient funds in his account to cover the withdrawal, he incurred fees from Marpast and his bank, which caused his financial situation to worsen, and resulted in his defaulting on the loan.

Thereafter, plaintiff claims that defendant Frederick Kelly, a debt collector acting on behalf of Marpast, began to call him, and demanded repayment of the loan, along with thousands of dollars in additional fees. Cannon claims that Kelly, in violation of the Fair Debt Collection Practices Act, called him at his place of employment, and also called his mom, girlfriend, and his boss at work, claiming that if Cannon did not immediately pay $3,000.00, he would be arrested and taken to jail. According to the plaintiff, Kelly informed Cannon's co-workers that he was under criminal investigation. Plaintiff claims that he has suffered emotional and financial damages as a result of the defendants' actions.

DISCUSSION

I. The Court has Supplemental Jurisdiction over Defendant Marpast

Marpast contends that because the Court does not have federal question jurisdiction over it, the court can not exercise supplemental jurisdiction over the company pursuant to 28 U.S.C. § 1367. 28 U.S.C. § 1367 provides in relevant part that, subject to exceptions not applicable in this case:

[I]n any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties.

28 U.S.C. § 1367(a). In the instant case, there is no dispute that this court has federal question jurisdiction over defendant Kelly pursuant to the Fair Debt Collection Practices Act. Accordingly, if Cannon's claims against Marpast are sufficiently related to the claims made against Kelly that they "form part of the same case or controversy under Article III of the United States Constitution" then the court must assume jurisdiction over those claims, unless the claims raise a novel or complex issue of state law, predominate over the federal question claim against Kelly, or there are exceptional circumstances which militate against exercising supplemental jurisdiction. 28 U.S.C. § 1367(a), (c). Indeed, the claims against Marpast and Kelly arise out of the same nucleus of operative fact, (the loan made by Marpast and the efforts of Marpast's alleged agent Kelly to collect on the loan) and thus I find that they are sufficiently related for the exercise of supplemental jurisdiction over Marpast. Moreover, because the claims against Marpast are not overly complex, nor dominant over the ...


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