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Franklin v. Parking Revenue Recovery Services, Inc.

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

November 25, 2014



EDMOND E. CHANG, District Judge.

Plaintiffs Carmen Franklin and Jenifer Chism brought this suit against Parking Revenue Recovery Services, Inc. and Bryon Bellerud, II, P.C., [1] alleging violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692, et seq. [2] R. 1, Compl. Plaintiffs claim that they are entitled to actual and statutory damages because Defendants violated the FDCPA when attempting to collect an unpaid parking fee. Parking Revenue now moves for summary judgment, arguing that the fees that Defendants sought to collect from Plaintiffs did not qualify as "debts" under the FDCPA. R. 76, Def.'s Mot. Summ. J. For the reasons discussed below, Parking Revenue's motion is granted.[3]

I. Background

In deciding Defendant's motion for summary judgment, the Court views the evidence in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). CPS Chicago Parking, LLC, a wholly-owned subsidiary of Central Parking System, Inc., operated 55 parking lots in Illinois as of the time period between April 5, 2012 and April 26, 2013. DSOF ¶¶ 5-8. Thirteen of these lots were owned by the Chicago Transit Authority (CTA), thirty-four were owned by the Commuter Rail Division of the Regional Transportation Authority (Metra), one was owned by the City of Chicago, and seven were owned by private companies or individuals. Id. ¶¶ 15, 17, 19, 21, 29, 42-46. Each lot owner contracted with Central Parking to operate the lots on its behalf. Id. Under each contract, Central Parking would pay the lot owner a percentage of the gross revenue collected from the lots. Id. ¶¶ 28, 41, 44, 46; see also Pls.' Resp. DSOF ¶ 46. Central Parking hired Parking Revenue to provide collection services for parking fees owed to Central Parking. DSOF ¶¶ 10, 12; see also Pls.' Resp. DSOF ¶¶ 10, 12.

On June 18, 2012, Franklin's silver Toyota Camry with the license plate CARMS10 parked in a lot near the Kensington Metra stop in Chicago, Illinois. DSOF ¶ 48. The Kensington lot was owned by Metra and operated by Central Parking. Pls.' Resp. DSOF ¶ 14; R. 75-12, Matic Dep. Exh. 5.1, Metra Agreement at 1. Franklin believes that she was the person who parked the car that day, although she admits that it is possible her son was driving instead. Pls.' Resp. DSOF ¶ 50. Franklin believes that she paid the $1.50 parking fee on June 18, but she is not certain. Id. ¶ 51. On June 22, 2012, Chism parked her Lexus GS 350 with the license plate K724412 at the Kensington lot. Id. ¶ 70. She believes that she paid the $1.50 parking fee on that day (though she does not have a receipt). Id. ¶ 71. Central Parking claims that neither Franklin nor Chism paid the $1.50 parking fee, and issued violations to both Plaintiffs for $46.50 for "NO PAYMENT IN BOX." DSOF ¶¶ 52, 72; see also id. ¶ 27 (identifying the $46.50 amount charged to parking violators in CTA lots as the $1.50 parking fee plus an additional $45).

On August 17, 2102, attorney Bryon Bellerud sent both Plaintiffs collection letters on behalf of Parking Revenue. DSOF ¶¶ 60, 73. The letters, which were identical in all material respects, stated that "[a]ccording to the account records of my clients, Central Parking and Parking Revenue Recovery Services, Inc., you have received one or more parking violation notices." R. 1-1, Compl. Exh. 1, Franklin Collection Notice; R. 1-2, Compl. Exh. 2, Chism Collection Notice. The letter expressed "no legal opinion... about this debt, " and requested payment within 30 days or notification in writing that the recipient of the letter "dispute[s] the validity of this debt or any portion thereof." Franklin Collection Notice; Chism Collection Notice. The letters contain additional boilerplate language about the rights of the consumer, the possibility of the debt being reported to credit agencies, and the potential for legal action. Franklin Collection Notice; Chism Collection Notice. Franklin and Chism brought this suit against Parking Revenue and Bellerud, alleging that the attempts to collect the $46.50 fee violated the Fair Debt Collection Practices Act. Compl. ¶ 60. Parking Revenue filed a motion for summary judgment, arguing that the $46.50 that it attempted to collect did not qualify as a "debt" within the meaning of the FDCPA. R. 86, Def.'s Am. Br. at 7-10.

II. Legal Standard

Summary judgment must be granted "if the movant shows that 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 of material fact exists if "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 (1986). In evaluating summary judgment motions, courts must view the facts and draw reasonable inferences in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 378 (2007). The court may not weigh conflicting evidence or make credibility determinations, Omnicare, Inc. v. UnitedHealth Grp., Inc., 629 F.3d 697, 704 (7th Cir. 2011), and must consider only competent evidence of a type otherwise admissible at trial, Gunville v. Walker, 583 F.3d 979, 985 (7th Cir. 2009). The party seeking summary judgment has the initial burden of showing that there is no genuine dispute and that they are entitled to judgment as a matter of law. Carmichael v. Village of Palatine, 605 F.3d 451, 460 (7th Cir. 2010); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Wheeler v. Lawson, 539 F.3d 629, 634 (7th Cir. 2008). If this burden is met, the adverse party must then "set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256.

III. Analysis

Congress passed the Fair Debt Collection Practices Act to protect consumers from "abusive, deceptive, and unfair debt collection practices." 15 U.S.C. § 1692(a). Accordingly, the FDCPA "prohibits a debt collector from using certain enumerated collection methods in its effort to collect a debt' from a consumer." Bass v. Stolper, Koritzinsky, Brewster & Neider, S.C., 111 F.3d 1322, 1324 (7th Cir. 1997). Plaintiffs allege that Parking Revenue and Bellerud violated the FDCPA by: (1) attempting to collect an amount not expressly authorized by the agreement creating the debt or permitted by law; (2) using false, deceptive, or misleading representations or means in connection with the collection of a debt; and (3) requiring a consumer dispute of a debt to be in writing "to avoid the assumption of validity." Compl. ¶ 60; see also 15 U.S.C. §§ 1692f(1), 1692e. Parking Revenue argues that Plaintiffs are not entitled to relief because the parking fees that it attempted to collect are not "debts" and therefore not actionable under the FDCPA. Def.'s Am. Br. at 7-10.

In order for collection efforts to fall under the purview of the FDCPA, the amount that the debt collector seeks to recover must qualify as a "debt." Bass, 111 F.3d at 1324. The FDCPA defines a "debt" as "any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment." 15 U.S.C. § 1692a(5). The FDCPA does not define "transaction, " but the Seventh Circuit has interpreted the term to mean "those obligations to pay arising from consensual transactions, where parties negotiate or contract for consumer-related goods or services." Bass, 111 F.3d at 1326; see also Hawthorne v. Mac Adjustment, Inc., 140 F.3d 1367, 1371 (11th Cir. 1998) ("[A]t a minimum, a transaction' under the FDCPA must involve some kind of business dealing or consensual obligation."). Based on this interpretation, courts have held that "fines"-penalties imposed for breaking the law or some other rule-are not the results of consensual transactions and thus cannot be "debts" under the FDCPA. See Gulley v. Markhoff & Krasny, 664 F.3d 1073, 1075 (7th Cir. 2011) ( per curiam ) (citing cases and stating that "[w]e agree with these decisions, and... conclude that the municipal fines levied against [plaintiff] cannot reasonably understood as debts' arising from consensual consumer transactions for goods and services"); Durso v. Summer Brook Preserve Homeowners Ass'n, 641 F.Supp.2d 1256, 1264-65 (M.D. Fla. 2008) (holding that fines assessed by a homeowners association for violation of subdivision rules did not create a "debt" under the FDCPA); Omran v. Beach Forest Subdivision Ass'n, No. 12-10116, 2012 WL 1676688, at *3 (E.D. Mich. May 11, 2012) (holding that fines imposed by a subdivision committee for violation of deed restrictions on the plaintiff's home did not constitute "debts" under the FDCPA). Like monetary obligations incurred through tortious or criminal action, fines do not involve "some form of initial business dealing' creating the obligation to pay." Reibe v. Juergensmeyer and Assocs., 979 F.Supp. 1218, 1220-21 (N.D. Ill. 1997) (citing Bass, 111 F.3d at 1323; Newman v. Boehm, Pearlstein & Bright, 119 F.3d 477, 481 (7th Cir. 1997)).

Parking Revenue argues that the $46.50 charged to each Plaintiff for failure to pay the $1.50 parking fee is a fine, much like a parking ticket. Def.'s Am. Br. at 7-10; see also Graham v. ACS State and Local Solutions, Inc., No. 06-2708, 2006 WL 2911780, at *1-2 (D. Minn. Oct. 10, 2006) (holding that unpaid parking tickets are not debts under the FDCPA); Gulley, 664 F.3d at 1075 ("agree[ing] with" the Graham decision, among others). Because it believes that fees are fines rather than debts, Parking Revenue claims that Plaintiffs are not entitled to relief under the FDCPA. Def.'s Am. Br. at 7-10. Plaintiffs respond that they entered into a consensual business dealing with Central Parking; Central Parking offered a public place to park, and Plaintiffs accepted the offer by agreeing to pay the $1.50 fee. R. 90, Pls.' Resp. Br. at 5. The initial obligation to pay the $1.50 parking fee arose from an agreement to purchase parking services from Central Parking, and the $45 is an unauthorized additional fee for alleged failure to pay-much like a late fee, which can comprise part of a debt. Id. at 5-6. They also argue that because Parking Revenue and Bellerud characterized the charges as "debts" in the letters to Plaintiffs, Parking Revenue should not be able to reclassify those obligations as "fines" to avoid the FDCPA. Id. at 6-7.[4]

Because the fees that Parking Revenue attempted to recover from the Plaintiffs are properly categorized as fines, Plaintiffs cannot recover under the FDCPA. The first step in the analysis is that there is no material distinction between the parking lots owned by government entities and those owned by private entities. Although many of the cases construing obligations as fines arose from fees imposed by government entities, see, e.g., Graham, 2006 WL 2911780 at *2-3; Reid v. Am. Traffic Solutions, Inc., Nos. 10-cv-204-JPG-DGW, 10-cv-269-JPG, 2010 WL 5289108, at *4-5 (S.D. Ill.Dec. 20, 2010), courts have also identified charges levied by private parties as fines for the purposes of the FDCPA, s ee Durso, 641 F.Supp.2d at 1264-65 (identifying fines imposed by a private homeowners association as outside the scope of the FDCPA); Gulley, 664 F.3d at 1075 ("agree[ing] with" Durso ). Nor does it matter that a third party is operating the lots on behalf of the owner. See Reid, 2010 WL 5289108 at *4-5 (holding that red-light tickets issued by a private enforcement agency hired by a municipality were fines rather than debts); Williams v. RedFlex Traffic Sys., Inc., No. 3:06-cv-400, 2008 WL 782540, at *5 (E.D. Tenn. Mar. 20, 2008) (same). The nature of the charged amount is not derived from the identity of the party imposing it, but whether the fee stems from an underlying consensual transaction creating an obligation to pay. It does not matter who is running the lots (especially when, at the very least, the underlying Metra contract authorizes a fee to be charged). See DSOF ¶ 31; Pls.' Resp. DSOF ¶ 31. Thus, to determine whether the parking fees were fines or debts, the Court will evaluate the charges as if the owner of the lot-Metra in this case-had imposed them.

The crucial question, then, is whether the $45 charge is like a late fee imposed on a pre-existing obligation to pay (but a consensually undertaken obligation), or whether it is a separate fine imposed for violation of a rule or law. As far as the undisputed facts in the record show, the fine did not arise from a business dealing creating an obligation to pay and therefore cannot be a debt under the FDCPA. To illustrate this conclusion, consider a situation in which someone parks in the parking lot without paying the $1.50 parking fee. This situation does not create a consensual transaction; the parker has not undertaken any obligation to pay or created any contract. He is, in effect, stealing the services of the parking lot. See Bass, 111 F.3d at 1326 (holding that theft does not create a consensual transaction); Yazo v. Law Enforcement Sys., Inc., No. CV 08-03512 DDP, 2008 WL 4852965, at *3 (C.D. Cal. Nov. 7, 2008) (holding that use of a toll road without paying is not a consensual transaction). And "although a thief undoubtedly has an obligation to pay for the goods or services he steals, the FDCPA limits its reach to those obligations to pay arising from consensual transactions, where parties negotiate or ...

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