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Velazquez v. Fair Collections & Outsourcing, Inc.

United States District Court, Seventh Circuit

August 30, 2013

JOSE VELAZQUEZ, on behalf of himself and all others similarly situated, Plaintiff,
v.
FAIR COLLECTIONS & OUTSOURCING, INC., Defendant.

MEMORANDUM OPINION AND ORDER

EDMOND E. CHANG, District Judge.

Plaintiff Jose Velazquez filed an amended complaint, alleging that Defendant Fair Collections & Outsourcing, Inc. violated provisions of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. R. 30, Am. Compl.[1] Specifically, Velazquez alleges that Fair Collections sent him two debt-collection letters that overshadowed his right to verify the debt within thirty days of the letter's receipt, in violation of § 1692g, and that its debt-collection agents made false representations when they used aliases to make collection phone calls in violation of §§ 1692e and 1692f. Id. ¶¶ 29, 31-39. Fair Collections now moves to dismiss the amended complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. R. 36, Def.'s Mot. Dismiss.[2] For the reasons stated below, the motion to dismiss is granted in part and denied in part.

I. Background

In evaluating a motion to dismiss, the Court must accept as true the complaint's factual allegations and draw reasonable inferences in Velazquez's favor. Ashcroft v. al-Kidd, ___ U.S. ____, 131 S.Ct. 2074, 2079 (2011). In 2011, Velazquez had an outstanding debt arising from a residential lease, which was assigned or referred to Fair Collections, a debt-collection agency. Am. Compl. ¶¶ 4, 15, 16. Fair Collections' initial attempts to collect on the debt were made in the form of collection letters. Id. ¶¶ 17-19. But the first two letters were sent to an incorrect address and never reached Velazquez. Id. ¶ 19. On October 25, 2011, Fair Collections sent its first collection letter to Velazquez's correct address. Id. ¶ 17.[3] In bold-face text, and in a box in the upper right part of the October 25 letter, Fair Collections stated, "Pay in full online anytime" and provided the address for its website. R. 30-1, Pl.'s Exh. A. In bold-face, slightly larger font above the body of the letter, Fair Collections wrote, "Payment demand - $1624.50." Id. At the bottom of the letter, in a font size matching the rest of the letter's text, Fair Collections printed a notice detailing Velazquez's right to seek validation of the debt (a verification of amount and source of the debt) within thirty days. Id.

On November 14-less than thirty days after the first letter's mailing-Fair Collections sent Velazquez a second collection letter. Am. Compl. ¶ 18. The same statement regarding "Pay in full online anytime" appeared in a bold-face text box, but there was no similar language about a "payment demand." R. 30-2, Pl.'s Exh. B. The letter also stated that Velazquez's account "has already been reported or is scheduled to be reported" to several national credit reporting bureaus (this was not in the first letter). Id. The second letter also told Velazquez that "this is a favorable time to clear your account." Id. Unlike the first letter, the second letter did not contain a notice informing Velazquez of his right to seek validation of the debt. Id. At the bottom of the second letter, in bold, Fair Collections instructed Velazquez to "SEE REVERSE SIDE FOR IMPORTANT INFORMATION REGARDING STATE AND FEDERAL LAWS AND YOUR RIGHTS." Id. The back of the letter also did not contain any information about the validation period. Id.

Fair Collections continued in its collection efforts by placing phone calls to Velazquez's cell phone. Am. Compl. ¶¶ 20, 21. On December 5 and December 7, 2011, Fair Collections agent Devon Paul Taylor called Velazquez, but identified himself as "Andy Stone" or "Anthony Stone." Am. Compl. ¶¶ 32, 33. A couple of days later, on December 9, collections agent Elizabeth Diaz called Velazquez, but used the alias "Alicia Vera." Id. ¶ 34. And finally, in four collection calls to Velazquez in January and February 2012, collections agent Edward Smith used the alias "Mark Stein." Id. ¶¶ 35-38. The amended complaint provides few details about these collection calls, but there is no allegation that the collection agents attempted to hide the identity of Fair Collections, or the purpose for their call.

Velazquez filed his amended complaint on November 8, 2012, alleging multiple violations of the Fair Debt Collection Practices Act (FDCPA). First, he claims that the first and second collection letters violated 15 U.S.C. § 1692g, because they overshadowed his right to validate the debt within thirty days of the initial notice of collection. Am. Compl. ¶ 29. Second, Velazquez alleges that the debt-collection agents' use of aliases when making phone calls violated 15 U.S.C. § 1692e because the use of an alias is false, deceptive, or misleading. Am. Compl. ¶¶ 31, 39. In his response brief, Velazquez also contends that the use of aliases is an unfair means of collecting a debt in violation of 15 U.S.C. § 1692f. R. 39, Pl.'s Resp. at 5.[4] Fair Collections now moves to dismiss the entirely of Velazquez's amended complaint for failure to state a claim.

II. Standard of Review

Under Federal Rule of Civil Procedure 8(a)(2), a complaint generally need only include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). This short and plain statement must "give the defendant fair notice of what the claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quotation marks and citation omitted). The Seventh Circuit has explained that this rule "reflects a liberal notice pleading regime, which is intended to focus litigation on the merits of a claim' rather than on technicalities that might keep plaintiffs out of court." Brooks v. Ross, 578 F.3d 574, 580 (7th Cir. 2009) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002)).

"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 Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). "[W]hen ruling on defendant's motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citing Twombly, 550 U.S. at 555-56); see also McGowan v. Hulick, 612 F.3d 636, 638 (7th Cir. 2010). "[A] complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). These allegations "must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. The allegations that are entitled to the assumption of truth are those that are factual, rather than mere legal conclusions. Iqbal, 556 U.S. at 678-79.

III. Analysis

Velazquez's amended complaint is divided into two counts-Count 1 is based on the collection letters and Count 2 is based on the phone calls that the agents placed using aliases. See Am. Compl. Fair Collections moves to dismiss both counts. Def.'s Mot. Dismiss. As explained below, Count 1 may proceed but Count 2 is dismissed.

A. The Collection Letters

In Count 1, Velazquez alleges that the collection letters to Velazquez violated 15 U.S.C. § 1692g because the letters overshadowed his right to seek validation of the debt within 30 days. Am. Compl. ¶¶ 22-29. Fair Collections asserts several arguments in support of its motion to dismiss the claim. First, Fair Collections contends that the first and second collection letters did not overshadow the thirty-day validation period because (a) neither contained a demand for payment at a specific time or within a time period before the expiration of the thirty-day period, and (b) both contained only language of "puffery." R. 37, Def.'s Br. at 6-8, 11. Focusing specifically on the second collection letter, Fair Collections argues that it did not violate the FDCPA because (a) sending a follow-up letter within the thirty-day validation period is proper under the FDCPA as long as it does not ...


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