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Simkus v. Cavalry Portfolio Services, LLC

United States District Court, N.D. Illinois, Eastern Division

May 5, 2014



MARVIN E. ASPEN, District Judge.

Plaintiff Jonathan Simkus brings a two-count complaint against Defendants Cavalry SPV I, LLC (SPV) and Cavalry Portfolio Services, LLC (CPS) for violations of § 1692e and § 1692f of the Fair Debt Collections Practices Act. 15 U.S.C. § 1692 et seq. ("FDCPA"). Mr. Simkus contends that Defendants SPV and CPS (collectively, Defendants) unlawfully charged him interest retroactively on a debt SPV purchased from Bank of America ("BOA") for the purposes of collection. Defendants contend that BOA never waived its right to collect interest, and therefore, Defendants were permitted to charge that interest as BOA's assignee.

The parties filed cross-motions for summary judgment as to liability for both counts. We denied Mr. Simkus's motion. We denied Defendants' motion in part, and granted it in part.[1] We also requested additional briefing from the parties addressing whether Defendants' dunning letters were misleading because they failed to explain how the balance increased. (Op. at 13-14.)

The parties have submitted their supplemental briefs, and, for the reasons set forth below, we grant summary judgment in favor of Defendants on the issue of whether the dunning letters were misleading under § 1692e(2)(A) and § 1692f because they did not itemize interest charges.


Plaintiff Jonathan Simkus accrued $7, 077.66 in BOA credit card debt. (Plaintiff's 56.1 Statement of Facts ¶¶ 11-13.)[2] Mr. Simkus opened the account on July 18, 2003. ( Id. ¶ 6.) After Mr. Simkus lost his job and stopped making payments, the account went into default and BOA charged-off the account on April 30, 2009. ( Id. ¶¶ 11-12.) Mr. Simkus understood that under his agreement with BOA, the bank would charge interest on any unpaid balances. ( Id., Ex. A, Simkus Dep. at 10.) Also, he testified that he believed he knew how BOA would calculate this interest. (Defs.' 56.1 SOF, Ex. D, Simkus Dep. at 34.) On December 9, 2010, Capital Management Services, L.P, attempted on BOA's behalf to collect the charge-off amount of $7, 077.66. (Defs.' 56.1 SOF ¶ 15.)

On May 11, 2011, BOA's subsidiary, FIA Card Services, sold Mr. Simkus's credit card account to SPV, a debt collection agency. (Pl.'s 56.1 SOF ¶ 18.) In the agreement between BOA and SPV, the contract said the balance "may include interest (accrued or unaccrued)." ( Id., Ex. K, Loan Sale Agreement § 1.7.) BOA did not charge interest for the twenty-five months after the charge-off prior to its selling the account to Defendant SPV. ( Id., Ex. C, Aff. of Sale and Certification of Debt.) In the cardholder agreement between BOA and Mr. Simkus, the language provides that: "failure to exercise any rights... will not waive any of our rights in the future." ( Id., Ex. D, Cardholder Agreement § 7.17.) Also in May 2011, BOA reported to TransUnion that the "High Balance" on the account was $7, 077.66. (Defs.' 56.1 SOF ¶ 18.)

After purchasing the accounts from BOA, SPV then retroactively added interest to the account from the period BOA owned the account after the charge-off date until SPV purchased the account. (Pl.'s 56.1 SOF ¶ 22.) One month after SPV purchased the account, CPS[3] sent Mr. Simkus a collection letter demanding $10, 828.28. ( Id., Ex. H.) Mr. Simkus testified that he found the new amount confusing based on the previous statement from Capital Management services that requested the charge-off amount of $7, 077.66. ( Id., Ex. A, Simkus Dep. at 75-78.) Upon seeing the letter with the new balance, Mr. Simkus testified that his parents were also confused, but they speculated that the extra amount on the balance "was probably interest." (Simkus Dep. at 90:17-18.) On June 29, 2011 Mr. Simkus wrote to CPS, seeking information verifying his name in connection to the account. (Defs.' 56.1 SOF ¶ 29.) On September 2, 2011, CPS provided Mr. Simkus with the verification information on the account and informed him that the balance had increased to $11, 220.79.[4] (Pl.'s 56.1 SOF, Ex. J.)

Mr. Simkus argues that Defendants' retroactive charging of interest violates § 1692e and § 1692f of FDCPA. (Pl.'s MSJ ¶ 5.) Each party previously sought summary judgment on liability. In the earlier briefing, Defendants responded to Mr. Simkus's claim that their dunning letters were misleading under FDCPA, but Defendants did not affirmatively seek summary judgment on that issue. (Defs.' Resp. at 9-10.) Following our invitation to brief, Defendants now ask for summary judgment in their favor on the issue of whether their dunning letters were misleading under FDCPA.


Summary judgment is proper only when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). A genuine issue for trial exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510 (1986). This standard places the initial burden on the moving party to identify those portions of the record that "it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553 (1986) (internal quotations omitted). Once the moving party meets this burden of production, the nonmoving party "must go beyond the pleadings" and identify portions of the record demonstrating that a material fact is genuinely disputed. Id.; Fed.R.Civ.P. 56(c). In deciding whether summary judgment is appropriate, we must accept the nonmoving party's evidence as true, and draw all reasonable inferences in that party's favor. See Anderson, 477 U.S. at 255, 106 S.Ct. 2505.


The sole issue before us is whether Defendants are entitled to summary judgment on Mr. Simkus's claim that the dunning letters Defendants sent him were misleading in violation of § 1692e(2)(a) and § 1692f. Defendants contend in their supplemental brief that they are entitled to summary judgment because the letters do not violate FDCPA on its face, and because "Defendants' letter is not confusing to the unsophisticated consumer." (Defs.' Mem. at 4.)

To prevail on the claim at trial, Mr. Simkus must show either that the text of the challenged letters "plainly reveal that [they] would be confusing to a significant fraction of the population, " or that extrinsic evidence supports the claim of confusion. (Op. at 9.) Durkin v. Equifax Check Servs., Inc., 406 F.3d 410, 415 (7th Cir. 2005). Mr. Simkus claims in his supplemental brief that Defendants' letters were misleading as a matter of law, but we previously rejected that argument. (Op. at 12.) As explained in our January 27 opinion, the dunning letters cannot be facially confusing because combining interest and principal is permissible. ( Id. (citing Acik v. I.C. Sys., Inc., 640 F.Supp.2d 1019, 1023 (N.D. Ill. ...

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