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ALEXANDER v. UNLIMITED PROGRESS CORP.

October 19, 2004.

CHERYL ALEXANDER, Plaintiff,
v.
UNLIMITED PROGRESS CORP., an Illinois corporation, doing business as CREDITORS DISCOUNT & AUDIT CO., Defendant.



The opinion of the court was delivered by: SIDNEY SCHENKIER, Magistrate Judge

MEMORANDUM OPINION AND ORDER

In Randolph v. IMBS, Inc., 368 F.3d 726 (7th Cir. 2004), the Seventh Circuit vacated this Court's entry of summary judgment for Unlimited Progress Corporation ("CDA" or "defendant") on Count I of the Complaint, the entry of summary judgment and an award of damages to the plaintiff on Count II, and remanded the case to this Court for further proceedings as to Count I alone. In light of those rulings, the plaintiff has renewed her motion for summary judgment on Count I of the complaint, which alleges a violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692e ("FDCPA"). Based on the rule of law announced in Randolph and the factual record submitted on summary judgment, the Court grants the plaintiff's motion for summary judgment (doc. # 36).*fn1 I.

The legal standards governing a motion for summary judgment are well-established. Summary judgment is proper if the record shows that there is no genuine issue as to any material fact, and that the moving parties are entitled to judgment as a matter of law. Fed.R. Civ. P. 56(c).

  With regard to factual issues, a genuine issue for trial exists only when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted. Id. at 249-50; see also Flip Side Productions, Inc. v. Jam Productions, Ltd., 843 F.2d 1024, 1032 (7th Cir.), cert. denied, 488 U.S. 909 (1988). In deciding a motion for summary judgment, the Court must view all evidence in the light most favorable to the nonmoving party, Valley Liquors, Inc. v. Renfield Importers, Ltd., 822 F.2d 656, 659 (7th Cir.), cert. denied, 484 U.S. 977 (1987), and must draw all reasonable inferences in the non-movant's favor. Santiago v. Lane, 894 F.2d 218, 221 (7th Cir. 1990).

  When a material fact or a set of facts yields competing, but reasonable, inferences, then there is a genuine issue that precludes summary judgment. The non-moving party's burden is to identify facts that are both material and genuinely disputed. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986) To bele 56.1 Statement of Undisputed Facts ¶¶ 3 ("Pl.'s 56.1 St. ¶ ___"). The defendant in this case is Unlimited Progress Corporation, doing business as Creditor Discount & Audit Company ("CDA"). CDA is a debt collector, as defined by the FDCPA, 15 U.S.C. § 1692a, because it regularly uses the mails to collect, or attempt to collect, consumer debts (Id. ¶ 4). Plaintiff filed a voluntary Chapter 13 petition in bankruptcy on December 9, 1997 (Id. ¶ 5). A debt in the amount of $1,125.00, allegedly owed to Joseph V. Kannankeril, M.D. ("Dr. Kannankeril"), was listed on "Schedule F-Creditors Holding Unsecured Nonpriority Claims" of Alexander's bankruptcy petition" (Id. ¶ 6). On February 11, 1998, Dr. Kannankeril filed a claim in plaintiff's chapter 13 bankruptcy (Id. ¶ 8).

  On March 22, 2001 and then again on May 7, 2001, defendant sent plaintiff letters seeking to collect on the debt allegedly owed to Dr. Kannankeril (Id. ¶ 9). At the time that defendant sent its two form debt collection letters to plaintiff to collect on the debt allegedly owed to Dr. Kannankeril, plaintiff's debt was subject to her pending Chapter 13 bankruptcy (Id. ¶ 10). Defendant did not know about the bankruptcy until May 22, 2001, when plaintiff's attorney notified CDC of this fact (Pl.'s Ex. 6, Armstrong Aff., ¶ 24-26). Defendant's procedure is to cease collecting on a file once it learns the alleged debtor is in bankruptcy (Pl.'s 56.1 St., Ex. 6, ¶ 23). Pursuant to that procedure, defendant ceased all collection activity on plaintiff's alleged debt once it learned of plaintiff's bankruptcy (Id., ¶ 26).

  III.

  In Count I plaintiff alleges that defendant violated the FDCPA by sending collection letters to plaintiff claiming that she owed a debt to Dr. Kannankeril, even though this debt was subject to a pending Chapter 13 bankruptcy (Compl. ¶¶ 7-9). There are two issues raised by the parties on summary judgment. First, defendant claims that summary judgment should be denied because there is a genuine dispute of material fact on the issue of whether the statements made in the two collection letters were false, in violation of 15 U.S.C. § 1692e(2)(A). Second, defendant claims that even assuming there were false statements in the collection letters, there is a triable issue as to whether liability is foreclosed by the "bona fide error" affirmative defense that defendant has raised.

  For the reasons explained below, the defendant has not offered facts sufficient to create a triable issue on either issue.

  A.

  The Court will address the false statement issue first, since without a false statement there is no need to address the bona fide error issue. The defendant argues that there remains a fact dispute over whether the statements made in the collection letters to plaintiff were "false," in violation of the FDCPA. In our view, the Seventh Circuit has already resolved this issue in the earlier appeal in this case. In Randolph, the Seventh Circuit held that Section 1692e(2)(A) of the FDCPA "creates a strict liability rule. Debt collectors may not make false claims, period." 368 F.3d at 730. A "false claim," stated that appeals court, does not depend upon knowledge of falsity. Rather,
[a] demand for immediate payment while a debtor is in bankruptcy (or after the debt's discharge) is "false" in the sense that it asserts that money is due, although, because of the automatic stay (11 U.S.C. § 362) of the discharge injunction (11 U.S.C. § 524), it is not. A debt collector's false statement is presumptively wrongful under the Fair Debt Collection Practices Act, see 15 U.S.C. § 1692e(2)(A), even if the speaker is ignorant of the truth; but a debt collector that exercises care to avoid making false statements has a defense under § 1692k(c).
Randolph, 368 F.3d at 728 (emphasis added).

  It is undisputed that the two collection letters in this case demanded immediate payment from plaintiff while the plaintiff was in bankruptcy. Under Randolph, the claim for immediate payment was false, in violation of 15 U.S.C. § 1692e(2)(A), because the debtor had no obligation to make such a payment in light of the bankruptcy stay. As the Seventh Circuit made clear in Randolph, that is true even though it is undisputed that defendant was unaware of the bankruptcy. Consequently, the Court finds, as a matter of law, that the debt collection letters in this case made false statements in violation of Section 1692e(2)(A).

  We are unpersuaded by the defendant's argument that the holding in the case of Turner v. J.V.D.B., & Assocs., Inc., 330 F.3d 991 (7th Cir. 2003), on remand to the district court, 330 F.Supp.2d 998, supports the view that the falsity of the statements in the defendant's collection letters is a question of fact for the jury. On remand in Turner, the court found that Randolph did not control the mandate issued to that court in that case, namely, to conduct a trial to determine whether, "as a matter of fact a misleading implication (that Turner had to pay the $97.80 debt) arises from an objectively reasonable reading of J.V.D.B.'s collection letter of March 29, 2001." Turner, 330 F.Supp.2d at 1002. Turner turns (no pun intended) on the facts of that case. Here, however, the falsity of the statements in the defendant's letters was directly analyzed by the Seventh Circuit in Randolph, and we believe that analysis leaves open ...


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