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Gregory Leeb, On Behalf of Himself and the Class v. Pendrick Capital Partners

August 1, 2012


The opinion of the court was delivered by: Elaine E. Bucklo United States District Judge


Plaintiff Gregory Leeb, individually and on behalf of others similarly situated, filed a three-count first amended complaint alleging that defendants Pendrick Capital Partners, LLC and Nationwide Credit Corp. violated the Illinois Collection Agency Act ("ICAA") (Count I) and the Fair Debt Collection Practices Act ("FDCPA") (Count II) when Nationwide tried to collect debts on behalf of Pendrick, which is not licensed as a debt collector in Illinois. Plaintiff also alleges that defendant Nationwide violated the FDCPA (Count III) when it sent him a dunning letter after he had disputed the alleged debt in writing. Defendants have moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, defendant Pendrick's motion is granted, and defendant Nationwide's motion is granted in part and denied in part.*fn1


According to the complaint, Pendrick is a Delaware corporation that purchased plaintiff's consumer debt (and the debts of other Illinois residents) and then hired Nationwide (and other debt collectors) to collect the debt. While Pendrick is not licensed as a collection agency in Illinois, Nationwide is. On December 26, 2011, Nationwide mailed a dunning letter to plaintiff, demanding payment of a debt that Pendrick had purchased from Infinity Healthcare Physicians Services. Two days later, plaintiff mailed, via certified mail and fax, a letter to Nationwide, disputing the validity of the alleged debt. Plaintiff also sent a letter via fax instructing Nationwide to cease all further communication with him regarding the debt. On or around January 5, 2012, Nationwide mailed a second letter to plaintiff, stating that Nationwide was unable to continue its investigation into the validity of the debt and requiring plaintiff to submit further information. The letter also contained a payment slip and the balance allegedly due.

II. "A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state a claim upon which relief may be granted." Hallinan v. Fraternal Order of Police of Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). In ruling on a motion to dismiss, I assume that all the well-pleaded facts alleged in the complaint are true. Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007). A complaint must include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Under the federal notice pleading standards, to survive a motion to dismiss a plaintiff's "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citation omitted).

Generally, on a Rule 12(b)(6) motion I may only consider the plaintiff's complaint and any attachments to it. Rosenblum v. Ltd., 299 F.3d 657, 661 (7th Cir.2002). There are some exceptions recognized in this circuit, id., but because I do not find it necessary to consider any document beyond the pleadings and the letter attached thereto, I do not address whether the various exhibits submitted by the parties are appropriate on a motion to dismiss.

III. A. Counts I and II

Plaintiff's first two causes of action, against both defendants, must be dismissed. Plaintiff purports to bring count I under the Illinois Collection Agency Act, 225 ILCS 425/1a et seq. ("ICAA"), alleging that defendant Pendrick has engaged in collection efforts without being licenced in Illinois in violation of § 4 of the ICAA. The complaint also alleges that defendant Nationwide violated various sections of the statute by "demanding payment" for Pendrick's debts, which, as an "unlicensed debt buyer," Pendrick did not have the right to collect. (Pl.'s First Am. Compl., at ¶¶ 62-68.)

Defendant Pendrick argues that it does not operate as a collection agency simply by purchasing debts and placing those debts with a third party for collection. Indeed, the plain language of the ICAA forecloses plaintiff's claim that Pendrick illegally purchased debts in Illinois and indirectly acted to collect those debts. Sections 2 and 3 of the ICAA define "collection agency." Section 2 defines a debt collector or collection agency as "any person who, in the ordinary course of business, regularly, on behalf of himself or herself or others, engages in debt collection." Section 3 further states:

A person, association, partnership, corporation, or other legal entity acts as a collection agency when he or it . . . Engages in the business of collection for others of any account, bill or other indebtedness . . . [or] [b]uys accounts, bills or other indebtedness and engages in collecting the same.

225 ILCS 425/3 (West 2008). In turn, § 4 provides:

No collection agency shall operate in this State, directly or indirectly engage in the business of collecting, solicit claims for others, . . . exercise the right to collect, or receive payment for another of any account, bill or other indebtedness, without registering under this Act.

Id. at § 4. Under the ICAA, a debt buyer is not a collection agency unless it "engages in collecting" the debts it has purchased. If a debt purchaser does not engage in collection activities, it is not considered a collection agency under the ICAA and does not need to be licensed by the state. The facts as alleged reveal that Pendrick is not a collection agency and did not have to be licensed before purchasing plaintiff's debt.

The cases plaintiff cites do not support a contrary conclusion. Plaintiff relies heavily on LVNV Funding, LLC v. Trice, 952 N.E.2d 1232 (Ill. App. Ct. 2011), but that case is distinguishable. In LVNV, the plaintiff, a debt purchaser not licensed as a collection agency in Illinois, had acquired a credit card company's interest in the defendant debtor's unpaid credit card account. After acquiring the debt, the plaintiff sued the debtor to recover the amount due on the account, and after a trial, judgment was entered in favor of the debt purchaser. The defendant then moved to vacate the judgment, arguing that the judgment was void on account of the fact that the debt purchaser had violated ยง 4 of the ICAA. The LVNV court concluded that if the debtor could prove that the plaintiff had not registered as a collection agency before filing its lawsuit, it would have committed a crime under the ICAA "when it purchased the debt and sued to collect it." LVNV, 952 N.E.2d at 1236 (emphasis added). By contrast, Pendrick did not sue plaintiff to collect on the debt. Pendrick did not even send the dunning letters to plaintiff. In fact, plaintiff ...

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