Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Timothy Greene, et al. v. Ccdn

March 25, 2011


The opinion of the court was delivered by: Judge Robert M. Dow, Jr.


Plaintiffs Timothy and Christine Greene ("Plaintiffs") filed the instant lawsuit to assert violations of the federal Credit Repair Organizations Act, 15 U.S.C. §§ 1679 et seq., ("CROA"), and the Illinois Credit Service Organizations Act, 815 ILCS §§ 605/1 et seq., ("ICSOA"). Before the Court is Plaintiffs' motion for summary judgment [97]. For the reasons stated below, Plaintiffs' motion is granted in part and denied in part.

I. Background

The procedural history of this lawsuit is perplexing. Plaintiffs' second amended complaint [71] named a bevy of Defendants-19 in total. On March 14, 2011, Plaintiffs voluntarily dismissed 15 Defendants pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i) [102], leaving the following four Defendants in the case: CCDN, LLC ("CCDN"), R.K. Lock & Associates ("RKLA"), Robert K. Lock, Jr., Esq. ("Lock"); and Philip M. Manger ("Manger").*fn1

The Court will refer to CCDN, RKLA, Lock, and Manger collectively as "Defendants."

There is no evidence on the docket sheet that any of the Defendants was properly served with the second amended complaint.*fn2 None of the Defendants has filed an answer to the second amended complaint. However, the docket sheet reflects that Defendants-through their counsel (now Defendant Lock)-have actively litigated this matter since Plaintiffs filed their second amended complaint on February 22, 2010 (for example, Defendants responded to Plaintiffs' motion for summary judgment). For this reason, it is clear that Defendants are aware of the second amended complaint and have waived any defense they might have had based on defective service.*fn3 See Relational, LLC v. Hodges, 627 F.3d 668, 672 n.4 (7th Cir. 2010) ("defenses based on a lack of personal jurisdiction, such as legally defective service may be waived"). Furthermore, the fact that Defendants have not filed their answer to the operative complaint does not preclude the Court from considering the instant summary judgment motion. Federal Rule of Civil Procedure 56(b) provides that "[u]nless a different time is set by local rule or the court orders otherwise, a party may file a motion for summary judgment at any time until 30 days after the close of all discovery." (emphasis added). While it is unusual, a motion for summary judgment may be made and ruled upon before an answer is filed.*fn4 See In re KJK Const. Co., Inc., 414 B.R. 416, 426-27 (Bankr. N.D. Ill. 2009).

The Court takes the facts relevant to the disposition of the instant motion from the parties' Local Rule ("L.R.") 56.1 statements. (See [97-1; 98-1]). L.R. 56.1 requires that statements of facts contain allegations of material fact and that factual allegations be supported by admissible record evidence. See L.R. 56.1; Malec v. Sanford, 191 F.R.D. 581, 583--85 (N.D. Ill. 2000). It is the function of the Court, with or without a motion to strike, to review carefully statements of material facts and to eliminate from consideration any argument, conclusions, and assertions that are unsupported by the documented evidence of record offered in support of the statement. See, e.g., Sullivan v. Henry Smid Plumbing & Heating Co., Inc., 2006 WL 980740, at *2 n.2 (N.D. Ill. Apr. 10, 2006); Tibbetts v. RadioShack Corp., 2004 WL 2203418, at *16 (N.D. Ill. Sept. 29, 2004); Rosado v. Taylor, 324 F. Supp. 2d 917, 920 n.1 (N.D. Ind. 2004). The Court's scrutiny of material statements of facts applies equally to the party seeking summary judgment and the party opposing it.

Where a party has offered a legal conclusion or a statement of fact without offering proper evidentiary support, the Court will not consider that statement. See, e.g., Malec, 191 F.R.D. at 583. Additionally, where a party improperly denies a statement of fact by failing to provide adequate or proper record support for the denial, the Court deems that statement of fact to be admitted. See L.R. 56.1(a), 56.1(b)(3)(B); see also Malec, 191 F.R.D. at 584. The requirements for a response under Local Rule 56.1 are "not satisfied by evasive denials that do not fairly meet the substance of the material facts asserted." Bordelon v. Chicago Sch. Reform Bd. of Trs., 233 F.3d 524, 528 (7th Cir. 2000). In addition, the Court disregards any additional statements of fact contained in a party's response brief but not in its L.R. 56.1(b)(3)(B) statement of additional facts. See, e.g., Malec, 191 F.R.D. at 584 (citing Midwest Imports, Ltd. v. Coval, 71 F.3d 1311, 1317 (7th Cir. 1995)). Similarly, the Court disregards a denial that, although supported by admissible record evidence, does more than negate its opponent's fact statement- that is, it is improper for a party to smuggle new facts into its response to a party's L.R. 56.1 statement of fact. See, e.g., Ciomber v. Cooperative Plus, Inc., 527 F.3d 635, 643 (7th Cir. 2008). The Seventh Circuit repeatedly has confirmed that a district court has broad discretion to require strict compliance with L.R. 56.1. See, e.g., Koszola v. Bd. of Educ. of the City of Chicago, 385 F.3d 1104, 1109 (7th Cir. 2004); Curran v. Kwon, 153 F.3d 481, 486 (7th Cir. 1998) (citing Midwest Imports, Ltd., 71 F.3d at 1317 (collecting cases)).

Plaintiffs' statement of facts [97-1] contains 24 separate paragraphs. Defendants' response [98-1] does not respond "to each numbered paragraph in the moving party's statement,"

L.R. 56.1(b)(3)(B), but instead discusses only paragraphs 2, 3, and 13 of Plaintiffs' statement. Accordingly, to the extent that the other of the paragraphs in Plaintiffs' statement are properly supported by record evidence, they are admitted. L.R. 56.1(b)(3)(C). Defendants' statement [98-1] also contains its own 17-paragraph statement of facts. Plaintiffs have not responded to Defendants' statement of facts. Accordingly, to the extent that each of the facts in Defendants' statement of facts is properly supported by record evidence and not controverted by a fact in Plaintiffs' statement, it is admitted. L.R. 56.1(a). The Court has identified a number of instances where the facts asserted in the parties' statements of facts are not properly supported by the record evidence identified.*fn5 The parties' lax compliance with L.R. 56.1 made the Court's consideration of the instant motion difficult. The parties are strongly encouraged to carefully review L.R. 56.1 and Judge Castillo's opinion in Malec v. Sanford prior to filing or responding to another motion for summary judgment in this district.

Defendants Lock and Manger are the co-founders and owners of CCDN, which does business as the "Credit Collection Defense Network." CCDN is exclusively managed by Lock and Manger.*fn6 RKLA is a sole proprietorship owned entirely by Lock under which Lock practices law.

Plaintiffs and their two sons reside in Spring Valley, Illinois. Christine*fn7 is employed as a nurse and Timothy is employed as a police officer. In early 2006, Plaintiffs had more than $50,000 in credit card and school loan debt. Although Plaintiffs' debts were current, Plaintiffs felt that they "had a lot of debt" and Christine was concerned about the fact that they were "only making the minimum payments." (Pl. Ex. 12, Christine Dep. at 33-39). Plaintiffs sought out CCDN's help because "CCDN said that they could help me get out of debt and help me get rid of it." (Id. at 38:5-8).

Plaintiffs first learned of CCDN through an e-mail or Internet pop-up advertisement that they received in or around April or May of 2006. In response to that communication, Christine called a representative of CCDN (a John Charles) who directed her to Manger. Christine called Manger and asked him questions about the CCDN program. Manger told Christine that CCDN helped with credit negotiation, credit restoration, and that CCDN could help fix her credit scores. (Christine Dep. at 27-28). Manger said that CCDN "got the credit stuff that was being illegally put on our credit scores dropped, they negotiated that through their program, that there was a whole program that you went through." (Id. at 29:10-14). Manger told Christine that CCDN would "help make my credit score better by helping get rid of charges that they were stating were on my credit wrongly by helping restore anything that was wrong in my credit history." (Id. at 32:10-33:1-3). Following her initial conversation with Manger, Christine and Timothy spoke with Manger on a number additional occasions in order to better understand the CCDN program. (See id. at 44-47; Pl. Ex. 16, Timothy Dep at 18-19). During these conversations, Manger told Plaintiffs that CCDN would "negotiate and eliminate our credit card debt" and "repair and rebuild our credit back to original, if not better." (Timothy Dep at 18:16-18). Manger told Plaintiffs that CCDN would eliminate their debt without them ever having to go to court, and if a court appearance ever became necessary, then "somebody would be there to represent us." (Timothy Dep. at 24:14-21). Plaintiffs believed that by signing up for the CCDN program and by paying CCDN the approximately $6,000 that they charged, CCDN would eliminate the tens of thousands of dollars of credit card debt that they had and would restore their credit. (Timothy Dep. at 32-33).

Following these conversations, Plaintiffs obtained the required enrollment paperwork from CCDN. Plaintiffs attach the CCDN Debt Reconciliation Program Enrollment Manual (hereinafter, the "Manual") as an exhibit to their motion. Page three of the Manual (the first page following the index) is a letter signed by Lock and Manger, who identify themselves as "CCDN Founders." The letter states in part: "[w]e believe the average consumer, who finds themselves drowning in debt, deserves a second chance" and concludes by welcoming consumers to the CCDN program and to "the start of you getting a second chance!"

On page five of the Manual begins the "CCDN Program Overview," which describes the "three phases" of the "CCDN Debt Reconciliation Program." (Pl. Ex. 8 at 5-6). Phase I is the 12-month "Credit Restoration" phase. (Id. at 5). According to the Manual:

"Credit Restoration begins as soon as you enter our program and will continue for 12 months thereafter. Our experience is the majority of negatives will be removed from a typical customers credit reports within the first 4 to 6 months of this process, but we will continue to challenge unverified information and monitor all customers' reports for the full 12 months."

The Manual explained that customers were to send their paperwork to CCDN, who would then forward it on to another company called the "Fulfillment Center" for processing during this phase.

Phase II is the "Reconciliation" phase-"[t]he purpose of this phase is to create an administrative record and establish as much information as possible as to the ownership and validity of the alleged debt." (Id. at 5-6). During this phase, CCDN will "send out a series of proprietary letters at specific times to either the original creditor (OC) or the third party debt collector (3PDC) in an attempt to have the OC or 3PDC provide validation of the alleged debt." "If they are unable to do so, we demand they zero out our customer's account and mark it 'paid as agreed.'" (Id.). CCDN explains that "[w]hen you stop paying the creditors, they will begin their collection efforts" in the form of calls and letters. CCDN provides a log for customers to use to record any collection attempts, which according to CCDN "typically violate several laws designed to protect the consumer." According to the Manual, Phase II "usually takes from 3 to 8 months."

Phase III of the process is the "Federal Lawsuit" phase. During this phase, CCDN's "paralegals conduct a compliance audit of each account for each customer." (Id. at 6). Thereafter, the paralegals draft a "solid Federal Complaint" which they then forward to "one of our CCDN attorneys for filing in Federal Court." "The assigned CCDN attorney handles this matter from here."

In the "Summary" section of the CCDN Program Overview, CCDN promises that "your credit scores will dramatically improve and your debt resolved [sic]." (Id.). By following the instructions provided in the Manual, CCDN "can make this a smooth and successful process and begin getting you on the road to financial freedom." Plaintiffs attach print-outs of portions of CCDN's website as exhibits to their motion. The website repeats many of the same statements found in the Manual.*fn8

The "CCDN Debt Reconciliation Program Application" begins on page 8 of the Manual. Starting on the second page of the application, the customer is asked to initial a number of statements. (Pl. Ex. 8 at 9). There, the "Client Agrees to [among other things] * * * (1) Use the CCDN or its affiliates to dispute negative items believed to be unverifiable, inaccurate or misleading and non-compliant from my credit reports; * * * (4) Forward all copies of all correspondence from the Respective Agencies; * * * and (6) Give the CCDN the authority to contact the credit bureaus, creditors and collection agencies directly."

Unbeknownst to Plaintiffs (or to anyone else who happened to read CCDN's enrollment materials or website), CCDN did not actually ever perform any work intended to improve a consumer's credit record, credit history, or credit rating. Instead, CCDN would sign customers up and forward their paperwork and payments for services related to customers' credit reports to CCDN's partners such as the Fulfillment Center, Beacon Consulting Services, and the Consumer Advocate Foundation, who would then purportedly perform such services for consumers.*fn9 (See Pl. Ex. 11, Manger Dep. at 118-19). According to Defendants' unchallenged statement of facts, CCDN was not in the credit repair or debt settlement business; instead CCDN's "primary function is to educate consumers on their rights under state and federal consumer protection laws, and to assist in the identification and development of those claims for referral" to attorneys in CCDN's network, who then decide whether to pursue those claims. (Def. SOF [98-1] at ¶ 2).

Immediately upon enrolling at CCDN, Plaintiffs paid CCDN an up-front initial fee. (See Pl. SOF at ¶ 13; see also Timothy Dep at 26:14-15 ("[T]hey required the money up-front.")). Plaintiffs paid a total of $1,433.33 in July and August of 2006.*fn10

Immediately upon enrolling in the CCDN program, Christine "was advised by CCDN support to stop making payments to my creditors and my student loan."*fn11 (Christine Dep. at 77:24 -- 78:1; 78-79). Predictably, Plaintiffs soon began receiving threatening calls and letters from creditors and debt collectors both at home and work. Plaintiffs were eventually sued for their outstanding debts and received no assistance or representation whatsoever from Defendants. Defendants admit that they effectively performed no work on Plaintiffs' behalf and gave Plaintiffs no valuable guidance or advice other than tersely responding to some of Plaintiffs' e-mails wherein Plaintiffs expressed concerns about their lack of progress in having their problems resolved and the frightening letters and calls that they kept receiving. (See, e.g. Pl. Exs. 22; 25; 26; 27).

For example, On July 6, 2007, Plaintiffs e-mailed Lock directly. (See Pl. Ex. 15). Plaintiffs asked why CCDN had not appeared in court to represent them in their collection matters after representing that they would. Plaintiffs also asked what steps CCDN had taken to improve their credit. See id. ("Mr. Lock can you please give us an explanation on how this program is working for us, because other than filing paperwork sent to us by CCDN, we don't see the intervention from CCDN where it was explained they would fight for us (credit restoration and debt negotiation)."). On July 12, 2007, Lock sent a response e-mail that did not directly answer Plaintiffs' questions but instead told Plaintiffs that "[t]he ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.