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Young v. Unifund CCR Partners

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

September 22, 2014

WILLIE YOUNG and LAURA VELISSARIS, individually and on behalf of others similarly situated, Plaintiffs,
v.
UNIFUND CCR PARTNERS, CREDIT CARD RECEIVABLES FUND, INC., and ZB LIMITED PARTNERSHIP, Defendants.

MEMORANDUM OPINION AND ORDER

EDMOND E. CHANG, District Judge.

Plaintiffs Willie Young and Laura Velissaris filed a second amended complaint [R. 62] against Defendants Unifund CCR Partners, and its partners Credit Card Receivables Fund, Inc. and ZB Limited Partnership (for convenience, referred to collectively as "Defendants"), alleging that Defendants violated provisions of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., and the Illinois Collection Agency Act (ICAA), 225 ILCS 425/1 et seq., while attempting to collect credit card debts from Plaintiffs.[1] Defendants now move to dismiss [R. 46] Counts One (FDCPA proposed-class claim), Two (ICAA proposed-class claim), and Four (ICAA individual claim) of the second amended complaint under Federal Rule of Civil Procedure 12(b)(6). 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 Plaintiffs' favor. Ashcroft v. al-Kidd, ___ U.S. ___, 131 S.Ct. 2074, 2079 (2011). Plaintiffs are Illinois residents, who have defaulted on credit card payments. R. 62, Second Am. Compl. ¶¶ 6-7, 15-18. Defendant Unifund is a collection agency that acquired legal, but not equitable, title to Plaintiffs' accounts. This means that, in exchange for some consideration, the owner of Plaintiffs' debts transferred its right to bring a collection action to Unifund, but retained the right to receive the balance of the debts if they are ultimately collected. R. 48, Def.'s Br. at 4.

In 2008, Unifund filed a lawsuit against Plaintiff Young in state court to collect the credit card debt. Second Am. Compl. ¶ 15. In its complaint, Unifund represented itself as "Unifund CCR Partners Assignee of Palisades Collection, LLC, ... the successor in interest of [Young's] account... having purchased said account in the regular course of business in good faith and for value." R. 1-2, State Compl. ¶ 4. Young, in turn, filed this lawsuit in 2009, alleging that Defendants "threaten and bring lawsuits against Illinois residents on credit card debts which they do not own and have no right to file suit on... and which are time-barred." Second Am. Compl. ¶ 3. Specifically, Count One of the second amended complaint alleges that, because Unifund held only legal title to the alleged debt, Unifund's statement that it purchased Young's account was a deceptive and unfair debt-collection practice in violation of Sections 1692e and 1692f of the FDCPA. Id. ¶¶ 29-31. Relatedly, Count Two alleges that, by filing suit on a debt it did not own, Unifund "[a]ttempt[ed] or threaten[ed] to enforce a right or remedy with knowledge or reason to know that the right or remedy does not exist" in violation of the ICAA, 225 ILCS 425/9. Id. ¶¶ 42-43. Finally, Counts Three and Four allege that Unifund also violated the FDCPA and the ICAA by attempting to collect on an eight-year-old debt, when the applicable statute of limitations is five years. Id. ¶¶ 55, 58.

The previously assigned district judge stayed this case for more than three years while the Illinois Appellate Court decided the standing issue encompassed in Count Two in a similar debt-collection case, Unifund CCR Partners v. Shah, 946 N.E.2d 885 (Ill.App.Ct. 2011) (" Shah I ") and Unifund CCR Partners v. Shah, 993 N.E.2d 518 (Ill.App.Ct. 2013) (" Shah II "). Ultimately, the Illinois Appellate Court held that an assignee for collection may sue a debtor in its own name, provided that certain statutory requirements concerning the assignment are met. Shah I, 946 N.E.2d at 890. In light of Shah 's resolution, the stay on this case has been lifted and Defendants now move to dismiss Counts One (FDCPA class claim), Two (ICAA class claim), and Four (ICAA individual claim) of Plaintiffs' complaint.

II. Legal Standard

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 a 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); McGowan v. Hulick, 612 F.3d 636, 638 (7th Cir. 2010) (courts accept factual allegations as true and draw all reasonable inferences in plaintiff's favor). "[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

Defendants argue that Counts One, Two, and Four of the second amended complaint should be dismissed for failure to state a claim. With respect to Count One, Defendants contend that Unifund's representation that it "purchased said account in the regular course of business in good faith and for value" is not a material misrepresentation under the FDCPA. Defs'. Br. at 10-14. Defendants argue that Count Two should be dismissed because the Illinois Appellate Court decided in Shah I that an assignee that is merely an assignee for collection (and not the outright owner of the debt) may sue on an alleged debt, meaning that, contrary to Plaintiffs' assertion, Unifund did not "fil[e] suit on a debt it did not own and had no right to file suit on." Id. at 9-10; see Second Am. Compl. ¶¶ 42-43. And on Plaintiffs' ICAA claims, Counts Two and Four, Defendants argue that Plaintiffs have failed to allege an actual or specific injury. Defs.' Br. at 14-15. Plaintiffs agree to dismissal of Count Two, see R. 53, Pls.' Response Br. at 1 n. 1, so that claim is dismissed, with prejudice. The Court addresses Counts One and Four below.

A. Count One: FDCPA

Count One of the second amended complaint alleges that Unifund engaged in both deceptive debt-collection practices, in violation of Section 1692e of the FDCPA, and unfair debt-collection practices, in violation of Section 1692f. Second Am. Compl. ¶¶ 29-31. For deceptive practices, Section 1692e of the FDCPA prohibits the use of false or misleading representations in the collection of a debt:

A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the ...

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