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Wilder v. J.C. Christensen & Associates, Inc.

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

December 6, 2016



          Robert M. Dow, Jr. Judge

         Before the Court is Defendant J.C. Christiansen & Associates' motion to dismiss [11]. Also before the Court is Plaintiff Michelle Wilder's motion for leave to file a sur-reply to Defendant's motion to dismiss [20]. Plaintiff's motion to file a sur-reply [20] is granted. For the reasons set forth below, Defendant's motion to dismiss [11] is granted. Plaintiff is given until January 6, 2017, to file an amended complaint.

         I. Background

         Plaintiff Michelle Wilder was delinquent on her $922.09 credit card debt. In June 2015, Credit One Bank, N.A. (“Credit One”), Plaintiff's original creditor, charged off her account, ceased adding late fees and interest to her account, and stopped sending her periodic statements about her outstanding debt. Shortly thereafter, Credit One sold Plaintiff's debt to LVNV Funding, LLC (“LVNV”), which hired Defendant J.C. Christiansen & Associates-a debt collection agency. On June 11, 2015, Defendant sent Plaintiff a dunning letter indicating that her account was overdue. The letter indicates that the “Total Due” is “$922.09.” [1-1, at Ex. C.] The letter also includes the following statement: “Please recognize that interest may be accruing on your account. If applicable, we will receive and apply balance adjustments as interest accrues.” Id. According to a consumer credit report, no interest was added to Plaintiff's account between June 2015 and February 2016.

         On February 5, 2016, Plaintiff filed her complaint [1], alleging that the two sentences regarding interest in Defendant's dunning letter violate the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 (“FDCPA”), and the Illinois Collection Agency Act, 225 Ill. Comp. Stat. Ann. 452 (“ICAA”). Specifically, Plaintiff alleges that Defendant was not legally authorized to add interest to Plaintiff's debt because Credit One waived its right to collect interest before assigning the debt to LVNV and there was no other statutory or contractual basis by which LVNV (and thus, Defendant) could add interest. Therefore, according to Plaintiff, this statement in the dunning letter was false, misleading, deceptive, unfair, and unconscionable. Defendant filed a motion to dismiss the complaint in its entirety [11].

         II. Legal Standard

         To survive a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted, the complaint first must comply with Rule 8(a) by providing “a short and plain statement of the claim showing that the pleader is entitled to relief, ” Fed.R.Civ.P. 8(a)(2), such that the defendant is given “fair notice of what the * * * claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)) (alteration in original). Second, the factual allegations in the complaint must be sufficient to raise the possibility of relief above the “speculative level.” E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at 555). “A pleading that offers ‘labels and conclusions' or a ‘formulaic recitation of the elements of a cause of action will not do.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). Dismissal for failure to state a claim under Rule 12(b)(6) is proper “when the allegations in a complaint, however true, could not raise a claim of entitlement to relief.” Twombly, 550 U.S. at 558. In reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court accepts as true all of Plaintiff's well-pleaded factual allegations and draws all reasonable inferences in Plaintiff's favor. Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618 (7th Cir. 2007). The “documents attached to a motion to dismiss are considered part of the pleadings if they are referred to in the Plaintiff's complaint and are central to his [or her] claim” and “may be considered by the district court in ruling on the motion to dismiss * * * without converting [it] to a motion for summary judgment.” Wright v. Associated Ins. Cos. Inc., 29 F.3d 1244, 1248 (7th Cir. 1994).

         III. Analysis

         1. FDCPA Section 1692e Claims

         The purpose of the FDCPA is “to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.” 15 U.S.C. § 1692(e). Sections 1692e, 1692e(2)(a), 1692e(5), and 1692e(10) of the Act prohibit the use of “any false, deceptive, or misleading representation or means in connection with the collection of debt, ” including “[t]he threat to take any action that cannot legally be taken or that is not intended to be taken, ” “[t]he false representation of * * * the character, amount, or legal status of any debt, ” and “[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.”

         Whether a debt collector's communication is false, deceptive, or misleading is evaluated “through an objective standard of the ‘unsophisticated consumer.'” Simkus v. Cavalry Portfolio Servs., LLC, 12 F.Supp.3d 1103, 1107 (N.D. Ill. 2014) (quoting Fields v. Wilber Law Firm, P.C., 383 F.3d 562, 564 (7th Cir. 2004)). This standard assumes that the debtor is “uninformed, naive, or trusting, ” but still possesses “rudimentary knowledge about the financial world” and is “capable of making basic logical deductions and inferences.” Fields, 383 F.3d at 564 (internal quotations omitted); see also Evory v. RJM Acquisitions Funding LLC, 505 F.3d 769, 774 (7th Cir. 2007) (“the court asks whether a person of modest education and limited commercial savvy would be likely to be deceived”).

         Consumers “don't need protection against false statements that are immaterial in the sense that they would not influence a consumer's decision-in the present context his decision to pay a debt in response to a dunning letter.” Muha v. Encore Receivable Mgmt., Inc., 558 F.3d 623, 628 (7th Cir. 2009). “If a statement would not mislead the unsophisticated consumer, it does not violate the FDCPA-even if it is false in some technical sense. For purposes of § 1692e, then, a statement isn't ‘false' unless it would confuse the unsophisticated consumer.” Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 645-46 (7th Cir. 2009); accord O'Rourke v. Palisades Acquisition XVI, LLC, 635 F.3d 938, 945 (7th Cir. 2011) (citing Ruth v. Triumph P'ships, 577 F.3d 790, 800 (7th Cir. 2009)). Similarly, “a false or misleading statement is only actionable under the FDCPA if it is material, meaning that it has ‘the ability to influence a consumer's decision.'” Lox v. CDA, Ltd., 689 F.3d 818, 826 (7th Cir. 2012) (internal citations omitted); Hahn v. Triumph P'ships, LLC, 557 F.3d 755, 758 (7th Cir. 2009) (“A statement cannot mislead unless it is material, so a false but non-material statement is not actionable”).

         Plaintiff alleges that the dunning letter's statement regarding interest violates Sections 1692e(2)(a), 1692e(5), and 1692e(10) because Defendant could not legally add interest to Plaintiff's account after Credit One waived that right. Defendant responds that the letter is a “simple truism”-interest “may” be added to the account “if applicable”-and Plaintiff has not alleged facts showing that Credit One waived LVNV's ability to add interest prospectively to Plaintiff's account, meaning that the letter was, in fact, true.

         In Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, L.L.C., the Seventh Circuit fashioned a “safe harbor” to allow debt collectors to comply with the FDCPA requirement to state the “amount of the debt, ” 15 U.S.C. § 1692g(a)(1), when that amount varies because of ...

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