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Seamans v. Hoffman, Swartz and Associates, Inc.

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

September 29, 2016

LEE SEAMANS, Plaintiff,


          John Z. Lee United States District Judge

         Plaintiff Lee Seamans filed suit against Paris Tauriac, Les Covington, and Hoffman, Swartz and Associates, Inc. (HSA), alleging violations of the Fair Debt Collection Practice Act (FDCPA) and fraud. Initially, Seamans obtained a default judgment against all defendants, but the judgment against Tauriac was vacated. Seamans and Tauriac have filed cross motions for summary judgment. The Court grants Tauriac's motion [85] and denies Seamans's motion [84].

         Factual and Procedural Background

         Hoffman, Swartz and Associates, Inc. (HSA), is a Georgia corporation engaged in the business of debt collection.[1] In that role, HSA acquires debts from the original creditor and attempts to collect on at least a portion of the amount owed. So, for instance, if HSA is able to contact a debtor, they try to set up a payment schedule that allows the debtor to pay back the debt over time. See Tr. 5/29/14 Hr'g at 19:23-20:4, ECF No. 63.[2]

         Until May 15, 2013, Defendant Paris Tauriac was the sole owner of the company. See Id. at 12:4-7. On that date, Tauriac entered into a Stock Purchase Agreement in which she agreed to sell HSA. See Def.'s LR 56.1 Stmt. ¶ 7, ECF No. 86.[3] In addition to transferring the ownership in the business and its assets (including its accounts), the Agreement dictated what would happen to the accounts receivable-that is, the debts HSA was attempting to collect. Under the Agreement, Tauriac would retain proceeds from debts acquired prior to May 15, 2013, and the buyer would receive payments on debts acquired thereafter. See Pl.'s 56.1 Stmt., Ex. C (“SPA”) § 6.1, ECF No. 84.

         Although the Agreement transferred all of HSA's accounts to the new owner, Tauriac remained in control of a business bank account where debtors' payments were deposited. See id., Ex. F. Tauriac testified (and Plaintiff points to no contrary evidence in the record) that, because the payment plans HSA negotiated with debtors could extend for many months, funds collected from pre-May 15 debts were still being transferred into the account even after the sale of the business. For a few months following the sale of HSA, Tauriac would review the funds that came into the account, keeping money collected from pre-May 15th debts and forwarding along to HSA money from post-May 15 debts. See id.

         Around June 11, 2013, Plaintiff Lee Seamans received a call from HSA attempting to collect on a debt. See Id. ¶ 3. The debt, however, had been previously discharged in Seamans's bankruptcy proceeding earlier that year. See Id. ¶ 1. Seamans filed suit against HSA, Tauriac, and Les Covington (the HSA employee that called Seamans) alleging violations of the FDCPA. See Compl., ECF No. 1.

         None of the defendants responded to the complaint, and the Court entered a default judgment against all three of them in the amount of $50, 000. See Min. Order 11/20/13, ECF No. 16. Relying on the judgment, Seamans seized funds from two personal bank accounts belonging to Tauriac. See Def.'s LR 56.1 Stmt. ¶ 14. (Seamans contends that the accounts were not Tauriac's personal property, but belonged to HSA.)

         When the money was seized, Tauriac filed a motion to vacate the judgment against her, arguing that she had not been properly served. See Mot. Vacate, ECF No. 23. The Court held a hearing at which it found that Tauriac had not been properly served and vacated the default judgment against her. See Tr. 5/29/14 Hr'g at 35:2-5.

         Seamans then amended the complaint and added a claim for fraud against Tauriac for making allegedly false statements during the hearing. See Am. Compl. ¶¶ 73-80, ECF No. 55.

         Legal Standard

         The Court shall grant summary judgment “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). The Court gives “the non-moving party the benefit of conflicts in the evidence and reasonable inferences that could be drawn from it.” Grochocinski v. Mayer Brown Rowe & Maw, LLP, 719 F.3d 785, 794 (7th Cir. 2013). In order to survive summary judgment, the nonmoving party must “do more than simply show that there is some metaphysical doubt as to the material facts, ” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986), and “must establish some genuine issue for trial such that a reasonable jury could return a verdict in her favor, ” Gordon v. FedEx Freight, Inc., 674 F.3d 769, 772-73 (7th Cir. 2012).


         I. ...

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