United States District Court, N.D. Illinois, Eastern Division
[Copyrighted Material Omitted]
For Tommy Kasalo, Plaintiff: Mario Kris Kasalo, LEAD ATTORNEY, The Law Office of M. Kris Kasalo, Ltd., Chicago, IL.
For Trident Asset Management, L.L.C., OPS 10, L.L.C., Defendants: David M Schultz, LEAD ATTORNEY, Corinne Cantwell Heggie, Hinshaw & Culbertson, Chicago, IL.
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, United States District Judge.
Tommy Kasalo has sued Trident Asset Management, LLC and OPS 10LLC, asserting claims under the Fair Debt Collection Practices Act (FDCPA) concerning a debt he alleges defendants attempted to collect from him in 2012. Kasalo has moved for summary judgment on some but not all of his claims. In response, defendants have filed a cross-motion for summary judgment on all of Kasalo's claims. For the following reasons, the Court grants Kasalo's motion in part, grants defendants' motion in part, and otherwise denies the motions.
At some point in the past--the parties dispute when--Kasalo opened and maintained an account with Columbia House, a company that sells DVDs and other items to consumers. In his complaint, Kasalo alleges that he obtained a copy of his credit report from a company called TransUnion
on March 28, 2012 and discovered that it cited information, attributed to Trident, that he had a past due balance on his Columbia House account. On March 30, Kasalo called Trident and spoke to an employee named Teresa Davis Mautz. The parties agree that Trident's policy at the time required its employees to follow a script during phone calls with consumers that provided information required to be disclosed per 15 U.S.C. § 1692g when a consumer disputes a debt. The parties disagree, however, on what Mautz said to Kasalo. The phone call was not recorded, and Kasalo has lost his notes about the call. The parties do agree, however, that the phone call was the " initial communication" between Trident and Kasalo for purposes of the FDCPA.
At some point before or after the phone call, Trident communicated information about Kasalo's account to various credit reporting agencies. The parties dispute whether Trident told the agencies that the date Kasalo's debt first went delinquent was February 6, 2009.
On April 9, 2012, Trident wrote a letter to Kasalo stating that OPS " has purchased" his account " and placed it with our office for collection." Pl.'s Ex. N at 1-2. The envelope in which the letter was sent was postmarked April 10, 2012. The letter listed OPS as " Current Creditor" and stated the balance due was $117.70. Id. at 1. The parties disagree about whether this statement was accurate and whether OPS owned the account at the time of the letter. It is undisputed, however, that OPS bought the account at some point in time. The letter stated that Kasalo could notify Trident within thirty days that he disputed the debt, in which case Trident would " obtain verification of the debt or obtain a copy of a judgment and mail you a copy of such judgment or verification." Id. The letter also said that Kasalo could request the name and address of the original creditor, and it provided a number he could call " to discuss suitable payment options." Id. The letter also included two addresses for Trident (one in Alabama, one in Georgia). The letter was not sent within five days of Kasalo's phone call to Trident because the employee responsible for mailing such letters was on vacation in the interim period.
Kasalo filed this lawsuit on April 18, 2012 and served Trident with summons and the complaint on April 20. Trident's vice president and registered agent, James Hubbard, accepted these materials at Trident's address in Georgia.
A party is entitled to summary judgment if it " shows that there is no genuine dispute as to any material fact and is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). A court " must determine whether the evidence, so construed, establishes genuine disputes of material fact with respect to" plaintiffs' claims. Harper v. Fulton Cnty., 748 F.3d 761, 765 (7th Cir. 2014). A genuine dispute of material fact " exists only if there is enough evidence upon which a reasonable [finder of fact] could return a verdict in" the non-movant's favor. Swetlik v. Crawford, 738 F.3d 818, 826 (7th Cir. 2013). On cross motions for summary judgment, the court assesses whether each movant has satisfied the requirements of Rule 56. See Cont'l Cas. Co. v. Nw. Nat'l Ins. Co., 427 F.3d 1038, 1041 (7th Cir. 2005). " As with any summary judgment motion, we review cross-motions for summary judgment construing all facts, and drawing all reasonable inferences from those facts, in favor of the non-moving party." Laskin v. Siegel, 728 F.3d 731, 734 (7th Cir. 2013) (internal quotation marks omitted).
A. OPS as "debt collector"
Kasalo argues that OPS is a " debt collector" for purposes of the FDCPA, which
if so would subject OPS to liability under the statute. (Trident does not dispute it is a debt collector.) As support, Kasalo says OPS's purchase of defaulted consumer debts " for the purpose of subsequently collecting the same through others, including Trident," makes OPS a debt collector. Pl.'s Mem. at 10. Defendants respond that OPS is not a debt collector under the FDCPA because it does not perform collections but instead hires others to do so and that it is not the principal purpose of its business to collect debts. Because the FDCPA does not apply to OPS, defendants contend, OPS is entitled to summary judgment on all of Kasalo's claims.
Kasalo's claims fall under FDCPA provisions that concern the activities of " debt collector[s]." See, e.g., 15 U.S.C. § 1692e (" A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt." ); id. § 1692f (" A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt." ); id. § 1692g(a) (" Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall . . . send the consumer a written notice . . . ." ).
The statute defines a " debt collector" as " any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6). It also defines " creditor" as " any person who offers or extends credit creating a debt or to whom a debt is owed." Id. § 1692a(4). However, it excludes from the ranks of creditor " any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another." Id. Because the FDCPA concerns the actions of debt collectors, those parties who are deemed " creditors" rather than " debt collectors" " are not covered by the Act." Schlosser v. Fairbanks Capital Corp., 323 F.3d 534, 536 (7th Cir. 2003). Considering the fact that the " debt collector" definition excludes those collecting debts that were " not in default at the time it was obtained by such person," an entity that " simply acquires the debt for collection . . . is acting more like a debt collector." Id. " In other words," the court said, " the Act treats assignees as debt collectors if the debt sought to be collected was in default when acquired by the assignee, and as creditors if it was not." Id.
Schlosser, however, which Kasalo cites, does not discuss the scenario of an entity that purchases a debt in default but then hires a third party to perform the actual collection of the debt. The defendant in Schlosser purchased the plaintiffs' mortgage when it was in default and then " sent a letter . . . identifying itself as a debt collector" that stated it was " a formal demand to pay the amounts due." Id. at 535. The same was true in another Seventh Circuit case Kasalo cites, where the purchaser of a defaulted debt was found to be a debt collector. See McKinney v. Cadleway Props., Inc., 548 F.3d 496 (7th Cir. 2008). McKinney stated the rule this way: " [T]he purchaser of a debt in default is a debt collector for purposes of the FDCPA even though it owns the debt and is collecting for itself." Id. at 501. The defendant in the case was indeed " collecting for itself" : it " issued a collection letter" telling the plaintiff it had purchased the debt " and that she should begin making payments." Id. at 499. The court noted that the defendant was " in the business of acquiring and collecting on defaulted
debts originated by another." Id. at 502.
In Ruth v. Triumph P'ships, 577 F.3d 790, 796 (7th Cir. 2009), the Seventh Circuit addressed the situation of an entity that contended it was not a debt collector under the FDCPA because " it d[id] not collect debts; rather, it purchase[d] debts and then hire[d] others to collect them." The court noted that when " the party seeking to collect a debt did not originate it but instead acquired it from another party, we have held that the party's status under the FDCPA turns on whether the debt was in default at the time it was acquired." Id. Because the defendant in Ruth did not dispute that it acquired debts that were already in default, the court held that the defendant was a debt collector under the FDCPA. This conclusion was based on cases citing the statute's exclusion from the definition of debt collector an entity seeking a debt " not in default at the time it was obtained." Id. at 797 (quoting 15 U.S.C. § 1692a(6)(F)). The court then went on to address the defendant's argument that it " took no action" to collect the debts in the case because " did not draft, authorize, or send the collection letter at issue." Id. The court observed that the defendant admitted that " it drafted the notice and directed" another party " to include it in the mailing with the collection letter." Id. This drafting and direction " constituted affirmative conduct with regard to collecting a debt," because the notice was " sent in connection with an attempt to collect a debt." Id. at 797, 799. The court thus found that the defendant was indeed a debt collector.
The scenarios presented in Schlosser and McKinney are different from the situation here. OPS acquired an existing debt in default, as did the defendants in those cases, but then it hired another party (Trident) to collect the debt. And unlike the situation in Ruth, Kasalo alleges no action on the part of OPS other than hiring Trident; Kasalo does not allege that OPS drafted anything that was sent to Kasalo or took any action toward him. Neither party, in fact, offers a case with a factual scenario like this one, in which a party alleged to be a " debt collector" hired a third party to collect a debt it acquired post-default but did not take any actions itself toward the debtor. Case law on this scenario is admittedly sparse, although some district courts have addressed it briefly. See, e.g., Kloth v. Citibank (S.D.), 33 F.Supp.2d 115, 119 (D. Conn. 1998) (" Citibank is not a 'debt collector' under the FDCPA merely because it retains a collection agency to collect its debts." ); see also Grier v. Simmons & Clark Jewelers, Civ. Action No. 11-cv-14247, 2012 WL 1247171, at *5 (E.D. Mich. Feb. 17, 2012) (same); Challenger v. Experian Info Solutions, Inc., Civ. No. 06-5263, 2007 WL 895774, at *2 (D.N.J. Mar. 22, 2007) (same).
OPS may be a debt collector in one literal sense of the term; it purchases debts that people owe, such as the one in this case, and it does so for the purpose of making money on the debts by hiring others to collect. The FDCPA, however, has its own definition of the term. As the Court has indicated, a debt collector under the FDCPA is one who " regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6). The definition also includes " any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests." Id. The statute governs interactions between debt collectors and consumers and seeks " to eliminate abusive debt collection practices by debt collectors." Id. § 1692(a). An entity that acquires a consumer's debt hoping to collect it but that does not have
any interaction with the consumer itself does not necessarily undertake activities that fall within this purview.
Kasalo has not shown there is a genuine dispute of fact about whether OPS " uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." Id. § 1692a(6). Although OPS purchased Kasalo's debt when it was in default, OPS has not undertaken any collection activity, as required to fit the definition of " collector" as discussed or presumed of the defendants in the cases Kasalo cites. OPS does not " attempt[ ] to collect," as Kasalo argues. Pl.'s Mem. at 10. It hires others to so do, as evidenced by the fact that all of Kasalo's interactions in this case were with Trident. OPS's name was on the letter Trident sent to Kasalo, but OPS did not send the letter or any other letters or notices, nor did it make any phone calls to Kasalo. The Court therefore concludes that no reasonable jury could find in favor of Kasalo on his FDCPA claims against OPS, which require a determination that OPS is a " debt collector" within the meaning of the statute.
B. 15 U.S.C. § 1692g(a) claim
Kasalo's complaint asserts two claims under 15 U.S.C. § 1692g(a): first, the defendants did not provide certain information in their initial communication with him, and second, they failed to mail him a written validation notice within five days of his initial phone call about his debt with a Trident representative. Both sides have moved for summary judgment on these claims. Kasalo contends that Trident's " initial communication" with him--the phone call that he made to the debt collector--was deficient, because oral notice of his validation rights does not comply with the FDCPA; even if oral notice is sufficient, Trident did not provide him with all the required information over the phone, such as an address where he could send notice of a dispute regarding the debt; and Trident's follow-up letter incorrectly listed OPS as the current creditor. Defendants argue that although their letter to Kasalo was mailed five days past the five-day maximum required in section 1692g, oral notice is sufficient to convey the statute's terms, and that the information Trident's representative provided Kasalo over the phone met the FDCPA's requirements.
1. Permissibility of oral notice
Kasalo makes two arguments for why oral notice of the elements required in section 1692g(a) is prohibited or at least inadequate. He contends first that the Seventh Circuit's decision in Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, L.L.C., 214 F.3d 872 (7th Cir. 2000), " unequivocally" proscribes oral notice of section 1692g(a)'s elements. Pl.'s Mem. at 11. Second, he argues that there is too much information in section 1692g(a) to convey orally. Defendants dispute that Miller disallows oral ...