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Kim v. Riscuity Inc

July 31, 2006


The opinion of the court was delivered by: Matthew F. Kennelly, District Judge


Plaintiff Aaron Kim brings this action on behalf of himself and all others similarly situated, requesting a declaratory judgment the contracts signed between the class members and Bally Total Fitness Corp. or Crunch Fitness International Inc. void and unenforceable for violating the Illinois Physical Fitness Services Act (IPFSA), 815 ILCS 645/8(b), 9(c). Kim also claims Riscuity violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692e, 1692f; the Illinois Collection Agency Act (ICAA), 225 ILCS 425/9; and the Illinois Consumer Fraud Act (ICFA), 815 ILCS 505/2Z. Kim's complaint against Riscuity arises from the contracts that he and the putative class members signed with Bally or Crunch. Riscuity allegedly purchased these contracts from Bally or Crunch to collect amounts that were due. Kim claims that Riscuity violated the FDCPA, ICAA, and ICFA in the collection process.

Riscuity has moved to dismiss Counts 1, 3, and 4 for failure to state a claim upon which relief can be granted. For the reasons stated below, the Court grants the motion as to Count 4 but denies it as to Counts 1 and 3.


On or about November 20, 2002, Kim entered a health club membership contract with Bally. The contract required payment of an initial membership fee of $1,530, which Bally financed over a period of three years. Complaint Ex. A. Kim made monthly payments on the membership fee along with monthly membership dues payments of $6. Id. The Illinois Appellate Court recently held that this type of contract gave rise to a cause of action under the IPFSA. See Pulcini v. Bally Total Fitness Corp., 353 Ill. App. 3d 712, 717-18, 820 N.E.2d 31, 35-6 (2004). The Pulcini court said that the contract violated section 8(b) of the IPFSA because the plaintiffs' monthly membership fees were less than ten percent of the initial membership cost. Id.

In 2006, after Kim stopped making payments on his Bally contract, he received a letter from Riddle and Associates, a law firm retained by Riscuity, attempting to collect on the Bally debt. Complaint Ex. B. Kim alleges that Riscuity damaged his credit score by way of its collection efforts. Kim further alleges that Riscuity made attempts to collect the debt knowing the membership contracts were invalid.


The Court may grant a 12(b)(6) motion only if it appears beyond a doubt that no relief can be granted consistent with any set of proved facts consistent with the allegations. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002). When considering a motion to dismiss, the Court takes the facts alleged and any reasonable inferences in the light most favorable to the plaintiff. Bontkowski v. First Nat'l Bank of Cicero, 998 F.2d 459, 461 (7th Cir. 1993).

I. Count 1 - Declaratory Judgment

Riscuity asks the Court to dismiss Count 1 on the grounds that the FDCPA does not allow a private action for injunctive relief and that there is no actual controversy because Bally is not a party to this case and Riscuity is no longer attempting to collect Kim's debt. Kim argues that he is requesting injunctive and declaratory relief under the IPFSA, not the FDCPA, and that there is an actual controversy regarding Riscuity's compliance with the former statute.

The Court agrees with Kim. In his complaint, Kim unequivocally states that the basis of his request for injunctive and declaratory relief is the IPFSA, not the FDCPA. See Complaint ¶ 32. There is nothing in the IPFSA that precludes an individual from bringing an action for injunctive relief. Thus, Kim properly states a request for injunctive relief.

To maintain a claim for a declaratory judgment, Kim must allege an actual controversy between himself and Riscuity. See 28 U.S.C. § 2201. Kim sufficiently does so. Specifically, he alleges that Riscuity purchases consumer debt contracts similar to the one Kim entered with Bally, Complaint ¶ 18, these contracts are void under law, id. ¶ 20, and Riscuity attempts to collect on these invalid contracts, id. ¶ 19. Kim also alleges that in 2006, Riscuity was attempting to collect on his alleged debt. Id. ¶ 24. These facts, if proven, show an actual controversy between Kim and Riscuity. Riscuity's assertions that it is no longer attempting to collect on Kim's debt are misplaced in a motion to dismiss for failure to state a claim.

II. Count 3 - ICAA violation

Riscuity contends that the Court should dismiss Count 3, Kim's ICAA claim, on the grounds that Kim has not alleged he suffered any actual damages; Riscuity is not a collection agency within the meaning of the ICAA; ...

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