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ALEXANDER v. UNLIMITED PROGRESS CORP.

March 21, 2003

CHERYL ALEXANDER, PLAINTIFF VS. UNLIMITED PROGRESS CORP., AND ILLINOIS CORPORATION, D/B/A CREDITORS DISCOUNT & AUDIT CO., DEFENDANT.


The opinion of the court was delivered by: Sidney I. Schenkier, United States Magistrate Judge

MEMORANDUM OPINION AND ORDER*fn1

The plaintiff Cheryl Alexander, has filed this action asserting two separate violations bythe Defendant, Unlimited Progress Corp., doing business as Creditors Discount & Audit Co. ("CDAC"), of the Fair Debt Collection Practices Act ("the FDCPA," or "the Act"), 15 U.S.C. § 1692 et seq. Count I of Ms. Alexander's complaint alleges that CDAC violated Sections 1692e and 1692f when CDAC attempted to collect a debt allegedly owed by Ms. Alexander to Dr. Joseph v. Kannankeril, at the time when that debt was subject to the automatic stay in Ms. Alexander's Chapter 13 bankruptcy proceeding. In Count II. Ms. Alexander alleges that CDAC violated Section 1692c(a)(2) when CDAC contacted Ms. Alexander directly in an attempt to collect the debt that she allegedly owed to Dr Kannankeril, own though CDAC knew that Ms. Alexander was represented by an attorney with respect to that debt.

Presently before the Court are cross-motions for summary judgment filed by Ms. Alexander (doc. #10) and CDAC (doc. #11). Based on the material and undisputed facts, the Court grants in part and denies in part both motions. We grant CDAC's motion against Ms. Alexander on Count I of the complaint, but deny the remaining portion of the motion. The Court further grants Ms. Alexander's motion for siimniaryjudginent against CDAC as to Count II of the complaint, and we deny the remaining portion of the motion.

I

Summary judgment may be granted when the Jack of a genuine issue ofmaterial fact makes a trial unnecessary. Fed.R.Civ.P. 56(c). A material fact is one that determines the outcome of a motion under the substantive law which governs the motion. Insolia v. Phillip Morris Inc., 216 F.3d 596, 598 (7th Cir. 2000). The party seeking summary judgment bears the initial burden of proving that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). if the party seeking summary judgment meets that burden, the opposing party may not rely on the pleadings alone to create a genuine issue of material fact Id. at 324. Local Rule 56.1(b)(3) states: "[a]ll material facts set forth in the statement required ol'the moving party will be deemed admitted unless controverted by the statement of the opposing party." The opposing party may show a genuine issue exists by serving and filing, pursuant to Local Rule 56.1, a concise statement which identifies the material facts in dispute and which cites to evidentiary materials (e.g., affidavits, depositions, answers to interrogatories, admissions, etc.) that support those facts. Insolia, 216 F.3d at 598.

II.

In this ease, no genuine dispLite of material fact exists. The following is a summary of the undisputed material facts.

On December 9, 1997, Ms. Alexander filed a Chapter 13 petition in bankruptcy in the United States Bankruptcy Court for the Northern District of Illinois, which was styled as In re Alexander, (N.D. Ill. Bankr. No. 97-37827) (PSOF #5).*fn2 During that proceeding, Ms. Alexander filed a document entitled "Schedule F — Creditors Holding Unsecured Nonpriority Claims," and listed $1,125.00 allegedly owed to Dr. Kannankeril (PSOF #6). On or about January 27, 1998, the Clerk's Office of the United States Bankruptcy Court for the Northern District of Illinois sent a notice of Ms. Alexander's bankruptcy to Dr. Kannankeril via first class mail (PSOF #7). This notice listed Stuart B. Flandelman as Ms. Alexander's attorney, provided Mr. Handelman's address, and listed the alleged $1,125.00 to Dr. Kannankeril (Pl.s Mem., Ex.3). Dr. Kannankeril subsequently filed a claim in Ms. Alexander's bankruptcyproceeding on February 11, 1998 (PSOF #8). On August 21, 1998, Ms. Alexander's Bankruptcy Trustee issued a Trustee's Record of Creditor's Additional Claim. The Trustee's Record also listed Stuart B. Handelman as the attorney for Ms. Alexander, provided Mr. Handelman's address, and listed the alleged debt to Dr. Kannankeril as one to be paid (in part) under the bankruptcy plan (Pl's Mem., Ex. 4).*fn3

Dr. Kaunankeril died in the Fall of 2000 (DSOF #10). Thereafter, on March 21, 2001, Dr. Kan.nankeril's office referred Ms. Alexander's account to CDAC for collection (DSOF #12)*fn4 CDAC acts as a debt collector, as defined by 15 U.S.C. § 1692a (PSOF #4).

When Dr. Kannankeril's office transferred Ms. Alexander's account to CDAC for collection, it provided CDAC with a statement of Ms. Alexander's account, her social security number, phone number, and a statement ofthe amount ofMs. Alexander's outstanding debt (DSOF #13). CDAC's policy is not to accept accounts from creditors when the creditor noti lies CDAC that the debtor has filed for bankruptcy (DSOF #20). If CDAC learns that a debtor has filed for bankruptcy after CDAC has accepted the debtor's account, then CDAC stops trying to collect the debt, cancels and returns the account to the creditor, and notifies both the creditor and the credit bureau of the debtor's bankruptcy (DSOF # 21, 23, 26, 29). However, ODAC has offered no evidence of any policy or practice it has to determine whether a debtor is represented by counsel before contacting him or her directly.

Dr. Kannankeril's office did not notify CDAC of Ms. Alexander's bankruptcy, or provide CDAC with information that would indicate that Ms. Alexander had retained an attorney to represent her with respect to the debt allegedly owed to Dr. Kannankeril (DSOF #s 18, 19). After obtaining Ms. Alexander's account from Dr. Kannankeril' s office, CDAC attempted to collect the debt allegedly owed by Ms. Alexander to Dr. Kannankeril. On March 22, 2001, CDAC sent a collection letter directly to Ms. Alexander seeking a payment of $1,125.00 (DSOF #22). On May 7, 2001 CDAC sent a second collection letter directly to Ms. Alexander which also sought a payment of $1,125.00 (DSOF #25). On May 22, 2001, an attorney informed CDAC that Ms. Alexander had filed a petition for bankruptcy (DSOF #27). Upon receiving this information, CDAC ceased all collection activity on Ms. Alexander's account (DSOF #30).

III

The FDCPA seeks to eliminate abusive, deceptive, and unfair debt collection practices. Rutnya v. Collection Accounts Terminal, Inc., 478 F. Supp. 980, 981 (N.D. Ill. 1979). To trigger the protections of the FDCPA, a complaint must allege the existence of a debt as defined by the Act. Arruda it Sears, Roebuck & Co., 310 F.3d 13, 23 (1st Cir. 2002). Section 1692a(5) defines a debt as: "any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment." 15 U.S.C. § 1692(a)(5) (emphasis added). Therefore, the FDCPA covers both admitted obligations of a consumer, and those that are alleged but may not, in fact, exist.

The alleged obligation at the center of the dispute between Ms. Alexander and CDAC is of the character required by Section 1692a(5). It is undisputed that Ms. Alexander incurred this obligation in connection with Pm Kannankeril's performance of medical services — a cons amer debt arising out of the performance of services for personal purposes, as required by Section 1692a(5). ft is also undisputed that, by listing $1,125.00 as allegedly owed to Dr. Kannankeril on "Schedule F — Creditors Holding Unsecured Nonpriority Claims," filed in her bankruptcy proceeding (PSOF #6), Ms. Alexander asserted the existence of a debt as defined by the FDCPA. Moreover, the actions of defendant CDAC evidence the existence of an alleged obligation as required by Section 169245): on March 31, 2001 and again on May 7, 2001, CDAC sent letters directly to Ms. Alexander which alleged that Ms. ...


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