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Rice v. Palisades Acquisition XVI

December 18, 2007

JAMES RICE, PLAINTIFF,
v.
PALISADES ACQUISITION XVI, LLC, BLATT HASENMILLER LEIBSKER & MOORE, LLC, AND JOHN & JANE DOES 1-10, DEFENDANTS.



The opinion of the court was delivered by: Charles P. Kocoras, District Judge

MEMORANDUM OPINION

Before this Court is Defendant Blatt, Hasenmiller, Leibsker & Moore, LLC ("Blatt")'s motion to dismiss Plaintiff James Rice ("Rice")'s three-count Complaint. For the following reasons, the motion is denied.

BACKGROUND

On or before September 2005, Rice allegedly incurred a $16,282.42 debt on his Chase Manhattan ("Chase") credit card. Chase was unsuccessful in collecting the debt and sold the account to New Century, who subsequently sold it to Centurion Capital Corporation ("Centurion"). Centurion hired Blatt to file a lawsuit against Rice in Cook County Circuit Court ("the state lawsuit") in an effort to collect payment on the alleged debt. While the suit was pending, Centurion sold Rice's account to Defendant Palisades Acquisition XVI, LLC ("Palisades"), who also retained Blatt to collect Rice's alleged debt. Subsequently, the court granted Blatt's motion to remove Centurion as defendant and replace it with Palisades. At trial on the state lawsuit, Defendant Palisades dismissed its lawsuit against Rice without prejudice on August 23, 2007.

That same day, Rice filed suit against Palisades, Blatt, and up to ten John and Jane Does (collectively "Defendants") alleging that Defendants violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., the Illinois Uniform Deceptive Business Practices Act, 815 ILCS § 510 et seq., and the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS § 505 et seq. by filing the state court lawsuit and amending it despite knowing that both Centurion and Palisades were not registered or incorporated in Illinois and were not licensed as collection agencies in Illinois. On November 11, 2007, Defendants filed the instant motion to dismiss pursuant to Fed. R. Civ. Pro. 12(b)(6) on the grounds that the complaint failed to state a claim upon which relief may be granted.

LEGAL STANDARD

A Rule 12(b)(6) motion to dismiss is used to test the legal sufficiency of a complaint. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In ruling on a motion to dismiss, a court must draw all reasonable inferences in favor of the plaintiff, construe allegations of a complaint in the light most favorable to the plaintiff, and accept as true all well-pleaded facts and allegations in the complaint. Bontkowski v. First Nat'l Bank of Cicero, 998 F.2d 459, 461 (7th Cir. 1993); Perkins v. Silverstein, 939 F.2d 463, 466 (7th Cir. 1991). To be cognizable, the factual allegations contained within a complaint must raise a claim for relief "above the speculative level." Bell Atlantic Corp. v. Twombly, - U.S. -, 127 S.Ct. 1955, 1965 (2007). However, a pleading need only convey enough information to allow the defendant to understand the gravamen of the complaint. Payton v. Rush-Presbyterian-St. Luke's Med. Ctr., 184 F.3d 623, 627 (7th Cir. 1999).

With these principles in mind, we consider the instant motion.

DISCUSSION

Before the court considers whether Rice has stated valid claims under the FDCPA, Illinois Uniform Deceptive Business Practices Act, and the Illinois Consumer Fraud and Deceptive Business Practices Act, we must first determine whether the FDCPA applies to Defendants. If Defendants are considered to be "debt collectors" as defined by the FDCPA, then the FDCPA applies to them.

The FDCPA defines a "debt collector" as: "any person who ... regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6). A "debt collector" "does not include: (F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity...(iii) concerns a debt which was not in default at the time it was obtained by such person." Schlosser v. Fairbanks Capital Corporation, 323 F.3d 534, 536 (7th Cir. 2003). In this case, Palisades acquired Rice's debt after it had already gone into default with Chase. As such, Palisades is considered to be a "debt collector" under the FDCPA.

I. FDCPA

A debt collector can be held civilly liable for using: "any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692(e). More pointedly, if a debt collector makes a "false representation of the character, amount, or legal status of any debt" it has done so in violation of the FDCPA. 15 U.S.C. § 1692(e)(2)(B). In the instant matter, Rice alleges that Palisades violated the FDCPA by falsely representing that it could file a collection suit against Rice in Illinois and that Blatt violated the FDCPA for filing Blatt's lawsuit against Rice on Palisades' behalf. According to Rice, Palisades did not have the power to file suit against Rice because Palisades was not registered with the Illinois Secretary of State and was not licensed as a "collection agency" in Illinois when the suit was filed. While the FDCPA does not require a debt collector to gain licensure as a "collection agency" with a state before it can file suit against a party, a state law "requiring simple licensing ...


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