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Berg v. Blatt

March 31, 2009


The opinion of the court was delivered by: Rebecca R. Pallmeyer United States District Judge

Judge Pallmeyer


In July 2005, Defendant Inovision, Inc., the owner of Plaintiff Cherish Berg's debts, retained Defendant Blatt Hasenmiller Leibsker & Moore, LLC ("BHLM"), a law firm based in Chicago, to collect amounts overdue plus interest owed on two credit card accounts in Berg's name. On August 30, 2006, BHLM sued Berg in Cook County Circuit Court for recovery on these outstanding debts. On September 28, 2006, Berg appeared pro se at the initial hearing, where she spoke with Larry Ballard, a BHLM collector, advising him that she intended to retain an attorney. The court continued the matter to November 30, 2006, and Berg's counsel filed his appearance on that date. Several months later, on June 27, 2007, Berg filed her answer to the complaint, and on July 9, 2007, Defendants voluntarily dismissed the complaint without prejudice and without having collected on either debt.

On August 29, 2007, Berg filed this lawsuit against Defendants for violations of the Illinois Collection Agency Act, 225 ILCS 425/1 et seq. ("ICAA"), and the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692e et seq. ("FDCPA"). Specifically, Berg alleges that Defendants made false and misleading statements in their state court complaint as to (1) the amount of debt at issue, (2) the amount of interest due, (3) the name of the entity filing suit and its authority to do business in the State of Illinois, (4) the qualifications of the affiant to the complaint's attached affidavit, and (5) the "books and records" from which the debts were computed. In addition, Berg contends that BHLM violated the FDCPA in that BHLM contacted her after learning she was represented by counsel, failed to engage in meaningful attorney review of the state court complaint, and permitted one of its collectors to falsely impersonate an attorney. Defendants moves for summary judgment against Berg on all counts. Berg moves for partial summary judgment as to her claims under the ICAA and §§ 1692e, 1692e(2)(A), 1692e(10) of the FDCPA.


The identity of two of the named Defendants in this action is somewhat obscure. Defendant Inovision, Inc. has its principal office in Pennsylvania and is part of the NCO Group, an entity that neither party has adequately identified. Inovision, Inc. owns two credit card accounts in the name of Plaintiff Cherish Berg and was the named plaintiff in an Illinois state court debt collection suit against Berg in December 2005. Defendant Inovision, a NCOP company, LLC, f/k/a Inovision, a Marlin Company, LLC (hereinafter "Inovision LLC"), is, according to Defendants, a "sister" company to Inovision, Inc. with no involvement or interest in the collection of Berg's accounts. (Defs.' 56.1 ¶ 4.)

As Defendants concede, it is unclear from the state court complaint whether Inovision, Inc. or Inovision LLC brought the December 2005 suit against Berg. (Def.'s 56.1 Resp. ¶ 8.) Although Inovision, Inc. and Inovision LLC are named Defendants in this case, Berg has not explained her basis for naming Inovision LLC as a Defendant, and there is nothing in the record to indicate that Inovision LLC holds any interest in the accounts at issue. Defendants assert that "Inovision" (again whether Inovision, Inc. or Inovision, LLC is unclear) has no employees and is in fact owned by NCO Portfolio Management, a debt buying company. (Pl.'s 56.1 ¶¶ 22-23; Schlee Dep. at 24-25, Dkt. 7.) NCO Financial, the "sister" company of NCO Portfolio Management, is "Inovision's" "servicing agent" and collects on debts owned by "Inovision." Kenneth Wake, an attorney with BHLM, the law firm that brought suit against Berg on "Inovision's" behalf, testified that NCO Financial "is a major servicing agent for multiple creditors and debt buyers around the country" and "routinely places accounts with BHLM to pursue collection on behalf of those creditors," including the two accounts owned by Inovision, Inc. in this case. (Wake Decl. ¶¶ 3-4.) Both NCO Financial and NCO Portfolio Management are subsidiaries of the NCO Group. (Schlee Dep. at 24-25.) Neither NCO Financial, NCO Portfolio Management, nor the NCO Group is named as a defendant in this action. Defendants have agreed, for the purposes of Plaintiff's claims in this case, to withdraw any argument that "Inovision" is not a debt collector. (See Minute Order 5/13/2008, Dkt. 36.) To avoid confusion, the court will refer to Inovision, Inc. and Inovision LLC collectively as the "Inovision Defendants."

In July 2005, Inovision, Inc. retained BHLM, a law firm based in Chicago, to recover debts past due plus accrued interest on two credit card accounts in Plaintiff's name. (Defs.' 56.1 ¶ 8.) On July 19, 2005, BHLM sent initial demand letters to Plaintiff Berg on both accounts. Berg claims not to have received these letters and did not respond to them. (Defs.' 56.1 ¶ 10; Pl.'s 56.1 Resp. ¶ 10.) On December 12, 2005, BHLM filed a two-count complaint in Cook County Circuit Court, seeking judgment on these accounts. (Defs.' 56.1 ¶ 14.) On August 30, 2006, BHLM served Berg with a summons and the complaint in that suit; why it took BHLM over eight months to serve Berg is not apparent. The complaint named "Inovision" as plaintiff, without further identification.

The amounts sought in the complaint are a subject of confusion. Paragraph 1 of the complaint represented that "Plaintiff, Inovision, is authorized to do business in the State of Illinois." Count I of the complaint sought a total of $2971.84 on "Chase Bank Card, account number 4226610653355517." Count II sought a total of $4284.25 on "Household Bank, account number 543391004754280." The sum total allegedly owed on these accounts was not listed on the face of the complaint. The complaint did, however, include an attached affidavit, signed by an employee of NCO Financial, breaking out the amounts owed on the each account in a chart, reproduced here:

CREDITOR/ACCOUNT NUMBERPRINCIPAL INTEREST ADJUSTMENTS- PAYMENTS= TOTAL INOVISION 42266106533555171848.962358.730.000.004207.69 INOVSION 5433910047542803048.402358.730.000.005407.13 TOTAL4897.362358.730.000.007256.09

Defendants admit that the amounts of interest listed in the first and second rows of this chart represent the total interest owed on both accounts (as stated accurately in the third row), and not the interest due on each individual account. As a result, the "TOTAL" column incorrectly lists the amounts owed on each account as $4207.69 and $5407.13, yielding an apparent total of $9614.82. The "TOTAL" row, however, states the correct total principal and total interest owed and the correct sum total of $7256.09. Unlike the figures in the complaint, the figures that appear in the chart identify the principal and interest amounts due on each account. The amounts sought in the complaint, in contrast, represent the total amount, principal plus interest, sought on each account.

In her deposition, Berg testified on direct examination that she was confused by the contents of the affidavit:

Q: Okay. And from this complaint, were you able to recognize either of these alleged debts?

A: No, I was not. And actually, the -- No, I was not. They don't seem to match with what the affidavit of indebtedness asked. I couldn't match anything.

Q: So can you explain what you mean by that?

A: In here, in the affidavit of indebtedness, it says, you know, principal plus interest totaling, you know, certain amounts, like 42, 54. And none of these amounts on here match the amounts that Inovision states of that -- or both Inovision states for both the credit cards. They are both different. None of them match up at all.

(Berg Dep. at 58).

Crystal Heckstall, an employee with NCO Financial, was the affiant to the complaint's attached affidavit. (Ex. A to Pl.'s Am. Compl.) The affidavit, which appears to be a fill-in-the-blank form, attests that the affiant is "an employee agent of: Inovision and has knowledge of the account balance." In addition, the affidavit's terms state, "Affiant states that the amounts shown below are taken/calculated from the original books and records of the above named plaintiff . . . ." (Id.) Berg alleges that none of these statements are true.

David Schlee, Jr., the vice president for attorney network services at NCO Financial, testified to NCO Financial's process for generating an affidavit. First, NCO Financial transmits account information to counsel, in this case BHLM. (Defs.' 56.1 ¶ 36.) BHLM attorneys decide whether to sue and put together an affidavit based on this information, which it returns to NCO Financial. (Id. ¶ 33, 36.) When NCO Financial receives a recommendation to sue and accompanying affidavit, the affidavit undergoes a three-step review by the company's mail clerk, the company's legal group, and the affiant, in this case Crystal Heckstall. (Defs.' 56.1 ¶ 33; Schlee Dep. at 53-58, Dkt. 70.) At each stage, the reviewer checks the affidavit against NCO Financial's computer records to make sure it contains "the right plaintiff's name," "the right person" and that "the account number is correct." (Schlee Dep. at 141-142.) Defendant admit that in this case, "the mathematical error in the affidavit apparently escaped Ms. Heckstall's attention." (Defs.' 56.1 ¶ 34; Schlee Dep. at 164-65.) Defendant's filings are silent as the apparent failings in the two earlier stages of review. It is worth noting that Ms. Heckstall reviews, on average, 200 to 300 affidavits per week. (Schlee Dep. at 58.) In addition, NCO Financial provides the law firm filing suit with an interest rate, and the law firm uses that rate in deciding ...

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