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Reed v. Lvnv Funding, LLC

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

March 27, 2015

HARVEY REED and TORRENCE DONNERSON, individually and on behalf of all others similarly situated, Plaintiffs,
v.
LVNV FUNDING, LLC and RESURGENT CAPITAL SERVICES, LP, Defendants.

MEMORANDUM OPINION AND ORDER

ELAINE E. BUCKLO, District Judge.

Harvey Reed and Torrence Donnerson allege that Defendants violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., by filing claims in their respective bankruptcy cases to collect credit card debts that fell outside the five-year statute of limitations in Illinois for such collection actions. See Portfolio Acquisitions, LLC v. Feltman, 909 N.E.2d 876, 884 (Ill.App.Ct. 2009) (holding that credit card agreement is considered an oral contract subject to five-year statute of limitations set forth at 735 ILCS § 5/13-205).

Defendants have filed a motion to dismiss arguing that Plaintiffs fail to state a claim upon which relief may be granted. I deny Defendants' motion to dismiss for the reasons stated below.

I.

At the motion to dismiss stage, I must accept the Plaintiffs' factual allegations as true and draw all reasonable inferences in their favor. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

In September 2003, Harvey Reed ("Reed") stopped making payments on a credit card issued by First Premier Bank. He repeated the pattern in September 2007 when he stopped paying a credit card issued by First Bank of Delaware. The banks charged-off Reed's accounts approximately six months after he stopped making payments on each card and sold the underlying debts to an unknown debt buyer. Defendant LVNV Funding, LLC ("LVNV") later purchased Reed's credit card debts.

On April 1, 2014, Reed petitioned for relief under Chapter 13 of the Bankruptcy Code. See In re Reed, No. 14-12120 (Bankr. N.D. Ill.). Resurgent Capital Services, LP ("Resurgent"), acting on LVNV's behalf, filed claims in Reed's bankruptcy case to collect the credit card debts he incurred in 2003 and 2007, respectively. Defendants valued the September 2003 claim at $600.07 and the September 2007 claim at $601.87. The bankruptcy court sustained Reed's objections, which asserted a statute of limitations defense to these two claims.

Torrence Donnerson ("Donnerson") alleges similar facts. At an unspecified time in the 1980s, he stopped making payments on a Citibank credit card. Citibank charged-off Donnerson's account on August 1, 1988 and sold the underlying debt to an unknown third party. LVNV later bought Donnerson's credit card debt.

On April 11, 2014, Donnerson filed for bankruptcy under Chapter 13 of the Code. See In re Donnerson, No. 14-13494 (Bankr. N.D. Ill.). On August 25, 2014, Resurgent filed a claim against Donnerson's bankruptcy estate on LVNV's behalf to collect the 1988 credit card debt valued at $396.85. The bankruptcy court sustained Donnerson's objection to this claim as barred under Illinois' five-year statute of limitations for collection actions on credit card debts.

Reed and Donnerson (collectively, "Plaintiffs") filed a class action suit against LVNV and Resurgent (collectively, "Defendants") alleging that the filing of time barred claims in their respective bankruptcy proceedings violated the following provision of the FDCPA:

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 following conduct is a violation of this section:
[...]
(5) The threat to take any action that cannot legally be taken or that is not ...

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