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Quinn v. Specialized Loan Servicing, LLC

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

August 11, 2016

THOMAS QUINN and THERESA QUINN, individually and on behalf of a class of similarly situated persons, Plaintiffs,
v.
SPECIALIZED LOAN SERVICING, LLC, Defendant.

          MEMORANDUM OPINION AND ORDER

          Elaine E. Bucklo United States District Judge.

         Plaintiffs Thomas and Theresa Quinn (“the Quinns”) have brought this suit, individually and on behalf of a purported class, against Specialized Loan Servicing, LLC (“SLS”) for violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., and the Illinois Consumer Fraud and Deceptive Practices Act (“ICFA”), 815 ILCS 505/1 et seq. SLS has moved to dismiss the complaint and, in a separate motion, has moved to strike certain of the complaint’s class action allegations. For the reasons discussed below, the motion to dismiss is granted in part and denied in part, and the motion to strike is denied.

         I.

         In November 2008, the Quinns obtained a loan from Cherry Creek Mortgage Company for the purchase of their home. After experiencing a series of misfortunes, they defaulted on their mortgage payments. The loan was subsequently transferred to Bank of America (“Bof A”), and the Quinns retained The Residential Litigation Group (“RLG”) to negotiate the loan dispute with Bof A. In July 2012, Bof A filed a foreclosure action against the Quinns. To act as their attorneys in the foreclosure proceedings, the Quinns retained Consumer Legal Group, P.C. (“CLG”).

         At some point between September and November 2013, servicing of the Quinns’ loan was transferred from Bof A to SLS. The amended complaint alleges that at some point around September 2013, SLS began sending them correspondence demanding payment on the loan. SLS also began sending “field inspectors” to the Quinns’ home, who stationed themselves conspicuously outside of the Quinns’ residence and took pictures of the premises. Beginning in March 2015, the inspections became more frequent. In some cases, inspectors visited the Quinns’ home as many as three times in a given month. This caught the attention of the neighbors and prompted questions that caused the Quinns humiliation and embarrasement.

         In November 2015, an inspector visited the Quinns’ residence while they were away and left a “door hanger” that included a slip of paper stating: “AT THE REQUEST OF SPECIALIZED LOAN SERVICE, AN INDEPENDENT FIELD INSPECTOR CALLED ON YOU TODAY. PLEASE CONTACT SPECIALIZED LOAN SERVICING AT 1-800-306-6062. THANK YOU.” Compl. ¶ 39. In December 2015, an inspector left another hanger containing essentially the same message on the Quinns’ door. When the Quinns dialed the phone number provided in the message, they reached SLS’s collections department. There was no phone option for calls pertaining to home inspections.

         In January 2016, an inspector visited the Quinns’ home once again. At the time, the Quinns’ daughter was home alone and she became frightened after the inspector began banging on the door. She called the Quinns but they felt helpless and could do nothing more than remain on the phone with her until the banging ceased. When the Quinns arrived at home, they found another door hanger like the first two.

         The Quinns’ amended complaint asserts several causes of action under the FDCPA, some individually, and some on behalf of a proposed class. Count I is a class claim alleging that SLS violated FDCPA § 1692c(a)(2) by communicating with the Quinns directly despite its awareness that they were represented by counsel; Count II is a class claim alleging that SLS violated FDCPA § 1692e by using false, deceptive, or misleading representations in attempting to collect a debt; Count III asserts an individual claim alleging that SLS violated FDCPA § 1692d by engaging in harassing, oppressive, or abusive conduct in attempting to collect a debt. Based on essentially the same conduct as that alleged in Counts I-III, the Quinns assert claims under the ICFA, both on behalf of the class (Count IV) and individually (Count V).

         SLS has moved to dismiss all of the claims, and has also moved to strike the class action allegations from Counts I and IV. I address the motion to dismiss first and then turn to the motion to strike.

         II.

         A motion to dismiss pursuant to Federal Rule 12(b)(6) challenges the sufficiency of a complaint, not its merits. See, e.g., Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In evaluating the complaint’s sufficiency, I must “construe it in the light most favorable to the nonmoving party, accept well-pled facts as true, and draw all inferences in [the plaintiff’s] favor.” Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939, 946 (7th Cir. 2013) (quotation marks and brackets removed).

         A. Section 1692c(a)(2)

         Count I asserts a class claim under § 1692c(a)(2). “The FDCPA § 1692c(a)(2) states that a debt collector may not communicate with a consumer, in connection with the collection of any debt, if the debt collector knows that the consumer is represented by counsel.” Bravo v. Midland Credit Mgmt., Inc., 812 F.3d 599, 602 (7th Cir. 2016). It is well settled that § 1692c(a)(2) is violated only where the debt collector has actual knowledge of the debtor’s legal representation. See, e.g., Randolph v. IMBS, Inc., 368 F.3d 726, 730 (7th Cir. 2004). Moreover, the debt collector must have knowledge not just that the debtor is represented by counsel generally, but that he or she is represented in connection with the specific debt at issue. See, e.g., Miller v. Allied Insterstate, Inc., No. 04 C 7126, 2005 WL 1520802, at *4 (N.D. Ill. June 27, 2005) (citing cases).

         SLS argues that the Quinns have failed to allege that it had actual knowledge that they were represented by counsel. I disagree. The amended complaint asserts that when SLS began servicing the Quinns’ loan, the prior servicer provided SLS with records that included a notice that the Quinns were represented by RLG vis-à-vis the loan dispute with Bof A. The amended complaint also alleges that SLS received copies of the foreclosure pleadings identifying CLG as the Quinns’ attorney for purposes of the foreclosure action. Additionally, the Quinns allege that SLS received and responded to discovery requests from the Quinns’ foreclosure counsel. These allegations plausibly assert that SLS knew that the Quinns were represented by counsel when it attempted to contact them.

         Against this, SLS cites a trio of cases from the Middle District of Florida: Wolhuter, v. Carrington Mtg. Servs., LLC, et al, Case No. 8:15-cv-00552 (M.D. Fla. Oct. 18, 2015); Nordwall v. PNC Mortgage, No. 2:14-CV-747-FTM-CM, 2015 WL 4095350 (M.D. Fla. July 7, 2015); and Wright v. Select Portfolio Servicing, Inc., No. 8:14-CV-2298-T-30TGW, 2015 WL 419618 (M.D. Fla. Feb. 2, 2015). In each of these cases, the plaintiffs alleged that the debt collectors had knowledge of their representation by counsel because the debt collectors had received notice of the plaintiffs’ attorneys’ appearances in foreclosure actions. And in each case, the courts held that the debt collectors’ knowledge of the plaintiffs’ representation in the foreclosure proceedings was not sufficient to establish knowledge that the plaintiffs were represented by counsel for other debt-collection purposes. See, e.g., Wolhouter, No. 8:15-cv-00552 at 10; Nordwall, 2015 WL 4095350, at *3; Wright, 2015 WL 419618, at *5.

         These decisions are inapposite. The plaintiffs in these cases were represented by a single firm or attorney, and the representation was limited to foreclosure proceedings. Here, however, the amended complaint alleges that the Quinns were represented by counsel -- and that SLS knew they were represented by counsel -- in connection with debt-collection matters beyond the foreclosure action. At this juncture, I am required to take the amended complaint’s allegations as true and to construe them in the light most favorable to the Quinns. Accordingly, I deny SLS’s motion to dismiss Count I of the amended complaint.

         B. Section 1692e(10) & (11)

         Count II of the amended complaint asserts a claim under § 1692e of the FDCPA, which prohibits debt collectors from “us[ing] any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. The Quinns claim that SLS violated subsection 10 of the statute, which prohibits “[t]he use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer, ” 15 U.S.C. § 1692e(10); and also subsection 11, which requires debt collectors “to disclose in the initial written communication with ...


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