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Carole Grant-Hall, Paul J. Asiama, Cornelius Gray, and Jena Perry v. Cavalry Portfolio Services

February 24, 2012

CAROLE GRANT-HALL, PAUL J. ASIAMA, CORNELIUS GRAY, AND JENA PERRY, ON BEHALF OF THEMSELVES AND THOSE SIMILARLY SITUATED, PLAINTIFFS,
v.
CAVALRY PORTFOLIO SERVICES, LLC, ARTHUR B. ADLER & ASSOCIATES, LTD. D/B/A ADLER & ASSOCIATES, LTD., LAW OFFICE OF KEITH S. SHINDLER, LTD. D/B/A THE SHINDLER LAW FIRM, AND KEVIN M. KELLY, P.C., DEFENDANTS.



The opinion of the court was delivered by: Judge Feinerman

MEMORANDUM OPINION AND ORDER

Section 8b of the Illinois Collection Agency Act ("ICAA"), 225 ILCS 425/8b, provides that a debt collection agency may file suit in its own name against a debtor only if it has been assigned the debtor's account, and only if the assignment has been documented in a written agreement that states the effective date of and consideration paid for the assignment and that identifies the assigned account. Plaintiffs Carole Grant-Hall, Paul J. Asiama, Cornelius Gray, and Jena Perry, on behalf of themselves and a putative class, brought this lawsuit against Defendant Calvary Portfolio Services, LLC, a debt collection agency that brought collection actions against them in Illinois state court, and Defendants Arthur B. Adler & Associates, Ltd., Law Office of Keith S. Shindler, Ltd., and Kevin M. Kelly, P.C. (together, "Law Firms"), the lawyers who represented Calvary in those actions. The gist of this lawsuit is that Defendants filed the state court actions even though Calvary did not have the documentation required by § 8b. Plaintiffs' amended complaint purports to state claims against Calvary under the ICAA, 225 ILCS 425/1 et seq., and the Illinois Consumer Fraud Act ("ICFA"), 815 ILCS 505/1 et seq., and against all Defendants under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. Cavalry and the Law Firms have separately moved to dismiss the amended complaint under Federal Rule of Procedure 12(b)(6). Their motions are denied.

Background

The well-pleaded facts alleged in Plaintiffs' amended complaint are assumed true on a Rule 12(b)(6) motion. See Reger Dev., LLC v. Nat'l City Bank, 592 F.3d 759, 763 (7th Cir. 2010). Also pertinent at the Rule 12(b)(6) stage are exhibits attached to the amended complaint. See Fed. R. Civ. P. 10(c); Witzke v. Femal, 376 F.3d 744, 749 (7th Cir. 2004). Among those exhibits are the state court complaints from Calvary's collection actions against Plaintiffs. Doc. 30-3 at 4-11 (Grant-Hall), 13-25 (Asiama); at 35-36 (Gray); 38-39 (Perry). Orders entered and filings made in this and other courts are subject to judicial notice on a Rule 12(b)(6) motion. See Cancer Found., Inc. v. Cerberus Capital Mgmt., LP, 559 F.3d 671, 676 n.2 (7th Cir. 2009); United States v. Stevens, 500 F.3d 625, 628 n.4 (7th Cir. 2007). To the extent an exhibit or a judicially noticed court document contradicts the amended complaint's allegations, the exhibit or court document takes precedence. See Forrest v. Universal Sav. Bank, F.A., 507 F.3d 540, 542 (7th Cir. 2007).

Cavalry is a debt collection agency licensed in Illinois. Kelly, Adler, and Shindler are law firms that represent Calvary in debt collection actions. In September 2010, Kelly sent Grant-Hall a letter saying that unless she paid her debt to Cavalry, Kelly would "be entitled to file a lawsuit against you for the collection of this debt when the week is over." Doc. 30 at ¶ 28; Doc. 30-3 at 2. In November 2010, Kelly filed collection actions on Calvary's behalf in the Circuit Court of Cook County against Grant-Hall and Asiama. Doc. 30 at ¶¶ 32-33; Doc. 30-3 at 4-11, 13-25. In July 2010, Shindler filed a collection action on Calvary's behalf in the Cook County court against Perry, and in January 2011, Adler filed a collection action on Calvary's behalf in the Circuit Court of Will County against Gray. Doc. 30 at ¶¶ 34-35; Doc. 30-3 at 35-36, 38-39.

The complaints in the Grant-Hall and Asiama state court cases are nearly identical. They allege that Grant-Hall and Asiama opened accounts with Orchard Bank and Wells Fargo Bank, N.A., respectively; that Calvary "is the successor in interest of said charge account[s] . having purchased said account[s] in good faith, for value and in the regular course of business"; and that the accounts were in default. Doc. 30 at ¶ 36; Doc. 30-3 at 4, 13. Attached to each complaint is an "Affidavit of Claim" executed by a Calvary employee, a "Bill of Sale," an "Assignment," and an account statement. The Affidavits of Claim state that Grant-Hall and Asiama opened accounts with "HSBC Bank Nevada, N.A. \ Orchard Bank" and Wells Fargo Bank, N.A., respectively; that Calvary SPV I, LLC purchased the accounts; that "the servicing and collection rights for the account[s] were assigned by Cavalry SPV I, LLC to [Cavalry]"; that the accounts are in default; and that a certain amount is due. Doc. 30 at ¶ 39; Doc. 30-3 at 5, 14.

The Bills of Sale attached to the Grant-Hall and Asiama complaints document the sale of the accounts from the original creditors to Cavalry SPV I. The Bill of Sale attached to the Grant-Hall complaint states:

HSBC CARD SERVICES (III) INC., HSBC BANK NEVADA, N.A. ("Seller"), for value received and pursuant to the terms and conditions of the Purchase Agreement ("Agreement") dated July 10, 2009 between Seller and Cavalry, SPV I, LLC, ("Purchaser"), does hereby sell, assign and convey to Purchaser, its successor and assigns, all right, title and interest of Seller in and to those certain purchased receivables listed on the Sale File.

Doc. 30-3 at 8. The Bill of Sale attached to the Asiama complaint states:

This purchase and sale is made pursuant to the terms of the [January 14, 2010 Purchase Agreement], which terms are incorporated herein by reference . . [Wells Fargo Bank, N.A.] hereby absolutely sells, transfers, assigns, sets over and conveys to Cavalry SPV I, LLC all of Seller's right, title, and interest in and to each of the Receivables identified in Schedule I.

Id. at 19. This Bill of Sale appears to identify the purchase price for the accounts, but the price is redacted in the copy attached to Calvary's state court complaint. Ibid.

The Assignments attached to the Grant-Hall and Asiama complaints document, at least in part, the assignment of the accounts from Cavalry SPV I to Cavalry. The Assignment attached to the Grant-Hall complaint states:

The undersigned Cavalry SPV I, LLC ("Assignor"), effective as of January 27, 2010 hereby transfers and assigns to [Cavalry] ("Assignee"), all of Assignor's rights to pursue collection and judicial enforcement of obligations under each of the Assignor's accounts purchased pursuant to that Purchase Agreement dated July 10, 2009, by and between Assignor and HSBC Bank Nevada, N.A. and HSBC Card Services (III), Inc., . including engagement of attorneys and commencement of legal actions reasonably required to enforce said obligations, for the consideration of the Assignor's covenants in the Servicing and Management Agreement between Assignor and Assignee dated as of June 13, 2003.

Doc. 30 at ¶ 40; Doc. 30-3 at 7. The Assignment attached to the Asiama complaint is materially identical, with the only differences being the effective date (February 22, 2010) and the referenced Purchase Agreement (January 14, 2010 Purchase Agreement). Doc. 30 at ¶ 41; Doc. 30-3 at 18. None of the documents referenced in the Bills of Sale and the Assignments-the Purchase Agreements, the Sale File, Schedule I, and the Servicing and Management Agreement-are attached to Calvary's state court complaints.

The Perry complaint alleges that Perry "opened an ... account with Washington Mutual Bank"; that Calvary "is the assignee and bona fide owner of Defendant's . account"; and that the account is in default. Doc. 30 at ¶ 38; Doc. 30-3 at 38. The Gray complaint alleges that Gray had been issued "a certain credit card/revolving charge (open end consumer credit) account" and that the account was in default. Doc. 30 at ¶ 37; Doc. 30-3 at 35. The only document attached to the Perry complaint and Gray complaint is an Affidavit of Claim materially identical to the those attached to the Grant-Hall and Asiama complaints. Doc. 30 at ¶ 39; Doc. 30-3 at 36, 39. Even though the Perry and Gray complaints do not attach the other sale and assignment documents, the amended complaint alleges that those documents exist and are effectively identical to the Bills of Sale and Assignments attached to the Grant-Hall and Asiama complaints. Doc. 30 at ¶ 42.

On January 18, 2011, Grant-Hall moved the state court to vacate a default judgment that had been entered against her; she also asserted as an affirmative defense that Calvary had not complied with § 8b of the ICAA. Doc. 30 at ¶ 50; Doc. 30-3 at 27-31. Before the motion could be heard, Calvary voluntarily dismissed the action. Doc. 30 at ¶ 51; Doc. 30-3 at 33. Calvary also voluntarily dismissed the Asiama, Perry, and Gray actions. Doc. 30 at ¶¶ 52-53; Doc. 51-1.

Grant-Hall and Asiama filed this lawsuit against Calvary and Kelly in the Circuit Court of Cook County in February 2011. Doc. 5 at 1-14. Calvary timely removed the suit to this court. Doc. 1. Plaintiffs then filed an amended complaint adding Gray and Perry as plaintiffs and Adler and Shindler as defendants. Doc. 30. The amended complaint alleges that "[n]one of the lawsuits filed or threatened against Illinois residents by defendants was based on an assignment that complied with ICAA § 8b" because "[n]othing in any 'assignment' purports to transfer title to any alleged debt to Cavalry[;] . specifies, by name, account number, or other unique identifiers, the particular debts that are supposedly transferred[; or] . purports to state the consideration for the transfer." Id. at ¶¶ 43-49, 59-60. Plaintiffs charge that the practice of filing or threatening to file suits prohibited by § 8b violates the ICAA, the ICFA, and the FDCPA.

Discussion

I. ...


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