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Washington v. Portfolio Recovery Associates, LLC

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

September 29, 2016

BRENDA WASHINGTON, Plaintiff,
v.
PORTFOLIO RECOVERY ASSOCIATES, LLC and FREEDMAN ANSELMO LINDBERG, LLC, Defendants.

          MEMORANDUM OPINION AND ORDER

          ROBERT M. DOW, JR. UNITED STATES DISTRICT JUDGE

         This matter is before the Court on the parties' cross-motions for summary judgment on Count I of Plaintiff's complaint, which alleges violations of the Fair Debt Collection Practices Act. See [75] and [89]. For the reasons explained below, the Court grants in part and denies in part Plaintiff's motion [75] and grants in part and denies in part Defendants' motion [89]. Summary judgment is granted in favor of Plaintiff and against Defendants on Plaintiff's claim that Freedman's March 20, 2014 wage deduction notice violated 15 U.S.C. § 1692c(a)(2). Summary judgment is granted in favor of Defendants and against Plaintiff on (1) Plaintiff's claim that Defendant Freedman's February 13, 2014 letter to Plaintiff's counsel violated 15 U.S.C. §§ 1692e, 1692e(5), 1692(e)(10), 1692f and 1692f(1); and (2) Plaintiff's claim that Defendant Freedman's March 20, 2014 wage deduction notice violated 15 U.S.C. §§ 1692e, 1692e(5), 1692(e)(10), 1692f and 1692f(1).

         Count II of Plaintiff's complaint, a claim against Defendant Freedman for abuse of process, remains pending. This case is set for status hearing on October 19, 2016 at 9:00 a.m.

         I. Background

         The following facts are drawn primarily from the parties' Local Rule 56.1 statements, [75-2], [90], [94-1], and [94-2], and are undisputed unless otherwise noted.

         Plaintiff Brenda Washington (“Plaintiff”) obtained a GE Capital Retail Bank credit card branded as a Lord & Taylor credit card (the “Card”). See [90] at 5. According to her declaration and deposition testimony, Plaintiff used the Card to buy clothing for her personal use and did not use the Card for business purposes. [90] at 6; [75-6] at 3; [76-1] at 101. In approximately July 2013, Plaintiff lost her job and was unemployed for the next year and a half. Plaintiff did not keep up with the payments on the Card and Plaintiff's account went into default and was charged off. [90] at 5-7.

         Defendant Portfolio Recovery Associates, LLC (“PRA”) purchased the alleged debt after it entered default. PRA is licensed as a collection agency in Illinois and, in certain circumstances, acts as a “debt collector” as defined by the FDCPA. [90] at 2-3. PRA retains Defendant Freedman Anselmo Lindberg, LLC (“Freedman”), an Illinois law firm, to collect outstanding balances on accounts on its behalf, including on consumer accounts. [90] at 4. Freedman is also, in certain circumstances, a “debt collector” as defined by the FDCPA. [90] at 4.

         PRA hired Freedman to collect Plaintiff's outstanding debt on the Card. [90] at 5, 7. The retainer agreement (“Retainer Agreement”) between PRA and Freedman provides that Freedman “may not adjust any Account Balance at any time to include additional finance charge(s) or other fees and charges, with the exception of allowable pre-judgment and post-judgment interest, court costs incurred, and attorneys' fees awarded by a court on the court's own volition without a request made by Attorney.” [90] at 8 (quoting [76-3] at 8, ¶ 2(i)). The parties dispute whether the Retainer Agreement allows the imposition of late charges. Defendants take the position that the Retainer Agreement “would support charges ordered by the Court.” [90] at 12. They cite the deposition testimony of Barbara Nilsen, who was formerly a Freedman attorney, that such charges would “[p]ossibly” include late charges “if the Court [awarded such charges] on its own volition.” [79] at 14.

         The Retainer Agreement also provides that Freedman shall, “[a]fter reasonable notice, provide to PRA all letters, notices, forms, scripts or other forms of communication with PRA customers for PRA's approval, which may be withheld or granted in PRA's sole discretion.” [90] at 9-10 (quoting [76-3] at 8, ¶ 2(g)). Further, the Retainer Agreement requires Freedman to “establish and maintain internal policies and procedure documents for the process of receiving, collection, litigating, processing payments and maintaining PRA accounts” and to “perform the services as counsel for PRA using [Freedman's] reasonable professional judgment.” [76-3] at 7-8, ¶¶ 2(a), (j).

         At the end of October 2013, Freedman, acting on behalf of PRA, filed a complaint against Plaintiff in the Circuit Court of Cook County, Illinois (Case No. 13-M1-159783) to collect the debt (the “State Action”). [90] at 8. On December 17, 2013, the Cook County Circuit Court entered a default judgment against Plaintiff in the amount of $803.60 with costs assessed. [90] at 9.

         Plaintiff consulted with attorneys at the Debtors Legal Clinic about the State Action. On December 27, 2013, one of Debtors Legal Clinic's attorneys, Andrew Finko, sent Freedman a letter stating that he was representing Plaintiff in the State Action and that Plaintiff “disputes this debt and intends to fully participate in the case.” [90] at 9. Plaintiff's attorneys entered appearances in the State Action on January 14, 2014. At the same time, they filed a motion to vacate the default judgment that had been entered against Plaintiff. [90] at 9. Plaintiff's attorneys never served Defendants with their appearances, the notice of motion to vacate, or the motion to vacate. [94-1] at 1.

         Around February 13, 2014, Freedman mailed a letter to Plaintiff's counsel regarding Plaintiff's account. The letter stated:

Pursuant to your request, we enclose a copy of the contract and/or payment history and/or supporting documentation to validate this particular issue. Please note that the original creditor is GE CAPITAL RETAIL BANK at PC BOX 960061, ORLANDO, FL 32896-0061, my client now the assignee of this particular creditor. After your review, I invite you to contact our office in hopes of amicable resolution of this matter without further inconvenience to your client.
Further, as of the date of this letter, the balance claimed is $1, 035.60. Because of interest, late charges, and other charges that may vary from day to day, the amount due on the day your client may pay could be greater. Hence, if your client pays the amount shown above, an adjustment may be necessary after we receive your client's check, in which event we will inform you before depositing the check for collection. It is important that you contact this office regarding this account. [94-1] at 2.

         On March 5, 2014, the Cook County Circuit Court granted Plaintiff's motion to vacate the default judgment that had been entered against her. [90] at 11. Plaintiff's attorneys never served Defendants with the order vacating the default judgment. [94-1] at 1.

         On March 7, 2014, PRA communicated to the Equifax consumer reporting agency that Plaintiff had a balance of $804. [90] at 12.

         On March 20, 2014, Freedman sent to Plaintiff (rather than to her attorney) a Wage Deduction Notice. [90] at 12-13. Defendants acknowledge that, as of this date, Freedman knew that Plaintiff was being represented by counsel. [90] at 14. The Wage Deduction Notice informed Plaintiff that there was a judgment against her in the amount of $803.60 [1-1] at 23; however, at the time Freedman sent the Wage Deduction Notice, the default judgment against Plaintiff had already been vacated by the Cook County Circuit Court. [90] at 14. The Wage Deduction Notice also informed Plaintiff that her balance due was $1, 102.93, and that the Cook County Circuit Court had issued a wage deduction summons against her employer. [1-1] at 23. The balance due consisted of the judgment amount, interest, and court costs. [90] at 13. According to Plaintiff, at the time she received the notice she was undergoing treatment for cancer and she became alarmed that she would not be able to afford her cancer treatments and that she could lose her job as a result of the garnishment. [90] at 14-15.

         According to Defendants, on March 21, 2014, Freedman learned for the first time that the default judgment had been vacated. [94-1] at 1-2. Freedman learned this information when it received notice from an attorney at another law firm that had received the Court's order in error. [94-1] at 2.

         On May 23, 2014, Plaintiff filed the instant lawsuit alleging claims for violation of the Fair Debt Collection Practices Act (“FDCPA”). See [1]. First, Plaintiff alleged that Freedman's February 13, 2014 letter falsely represented to Plaintiff's attorney that “late charges” could increase the total balance that Plaintiff owed, even though “there was no legal possibility that such charges could be added, ” in violation of 15 U.S.C. §§ 1692e, 1692e(5), 1692e(10), and 1692f(1). Second, Plaintiff alleged that Freedman's March 20, 2014 Wage Deduction Notice violated the FDCPA because (A) it was mailed directly to Plaintiff rather than to her attorney, in violation of 15 U.S.C. § 1692(a)(2); and (B) it falsely represented that there was a judgment against Plaintiff and that her wages could be garnished, in violation of 15 U.S.C. §§ 1692e, 1692e(2), 1692e(5), 1692(e)(10). Plaintiff's complaint also includes a claim against Freedman for abuse of process.

         Currently before the Court are the parties' cross-motions for summary judgment on Plaintiff's FDCPA claims.

         II. Legal Standards

         “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). A party's assertion that a fact cannot be or is genuinely disputed must be supported by the materials in the record, including but not limited to “depositions, documents, electronically stored information, affidavits or declarations, stipulations . . ., admissions, [and] interrogatory answers.” Fed.R.Civ.P. 56(c)(1). 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). The party seeking summary judgment has the burden of establishing the lack of any genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The Court “must construe all facts and draw all reasonable inferences in the light most favorable to the nonmoving party.” Majors v. Gen. Elec. Co., 714 F.3d 527, 532 (7th Cir. 2013) (citation and internal quotation marks omitted). Where, as here, the parties have ...


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