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Mehling v. Fullett Rosenlund Anderson PC

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

December 12, 2016

JULIE LYNN MEHLING and SHERI JANE MEHLING, Plaintiffs,
v.
FULLETT ROSENLUND ANDERSON PC, Defendant.

          MEMORANDUM OPINION AND ORDER

          Ruben Castillo United States District Court.

         Julie Lynn Mehling ("Julie") and Sheri Jane Mehling ("Sheri") (collectively "Plaintiffs") bring this action against Fullett Rosenlund Anderson PC ("Defendant"), alleging that Defendant violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 el seq., by falsely representing the character, amount, or legal status of a debt. (R. 17, Am. Compl.) Defendant moves to dismiss Plaintiffs' claim pursuant to Federal Rule of Civil Procedure 12(b)(6). (R. 18, Defs Mot. to Dismiss.) For the reasons stated below, the motion is granted in part and denied in part.

         BACKGROUND

         In the fall of 2015, Plaintiffs separately filed bankruptcy under Chapter 13 of the United States Bankruptcy Code. (R. 17, Am. Compl. ¶ 6; see also In re Julie Lynn Mehling, 15-33524 (Bankr. N.D. Ill.); In re Sheri Jane Mehling, 15-29902 (Bankr. N.D. Ill.).) Defendant is a law firm located in Illinois and represents Mayfair Station Condominium Association ("Mayfair"). (R. 17, Am. Compl. ¶¶ 5, 7.) On behalf of Mayfair, Defendant filed a motion to modify the automatic stay in each bankruptcy proceeding on March 24, 2016. (Id. ¶¶ 7-8; R. 17-2. Mots, to Modify.) The motions are virtually identical. In the motions. Defendant stated that Mayfair was the holder of a secured interest in the debtors' real property. (R. 17-2, Mots, to Modify at 2, 4.) Defendant claimed that Mayfair was entitled to relief from the bankruptcy automatic stay because Plaintiffs "made no post-petition assessment payments since the filing of the petition[s] for relief under Chapter 13" on August 31, 2015, and September 30, 2015, respectively. (Id. at 3, 5.) Both motions stated that the debtor was in "default of [her] post-petition assessment payments in the amount of $1, 396.53, " comprised of $783.03 post-petition default and $658.50 for post-petition attorneys' fees and costs. (Id.) The motions attached a "Required Statement to Accompany Motions for Relief From Stay" form. (R. 17-3, Req. Statements at 2, 3.) The forms reflect that each debtor was 12 months in post-petition default to Mayfair and that the amount due was $1, 396.53. (Id.)

         Plaintiffs claim that the motions to modify contained misrepresentations regarding the status and amount of their debt. First, Plaintiffs allege that on March 24, 2016-the date on which the motions to modify were filed-it was "categorically impossible for Plaintiffs to be twelve (12) months in post-petition default" because Plaintiffs had filed their bankruptcy petitions fewer than six months earlier.[1] (R. 17, Am. Compl. ¶ 18.) Second, Plaintiffs allege that Defendant incorrectly stated that Plaintiffs were in post-petition default in the amount of $738.03, when they actually owed $547.43. (R. 17, Am. Compl. ¶ 19; R. 17-5, Ex. E; see also R. 24, Resp. at 7 ("Plaintiffs were in post-petition default in the amount of $547.43.").)

         On June 6, 2016, Julie filed this FDCPA action. (R. 1, Compl.) Subsequently, Sheri filed a separate FDCPA lawsuit premised on the same underlying facts. Sheri Jane Mehling v. Fullett Rosenlund Anderson PC, Case No. 16-05922 (N.D. Ill. filed June 6. 2016). Defendant sought to consolidate the two cases, (R. 12, Mot. to Consolidate), and, on August 3, 2016, this Court granted Defendant's motion, (R. 16, Min. Order). Plaintiffs filed their amended complaint on August 10, 2016. (R. 17, Am. Compl.) The amended complaint alleges that Defendant violated 15 U.S.C. § 1692e by making false representations "of the character, amount or legal status of the debt" in the motions to modify. (R. 17, Am. Compl. ¶¶ 16-19.) Defendant now moves to dismiss the complaint under Rule 12(b)(6). (R. 18, Mot. to Dismiss.) On October 11, 2016, Plaintiffs responded, and Defendant replied on November 1, 2016. (R. 24, Resp.; R. 25. Reply.)

         LEGAL STANDARD

         To survive a motion to dismiss, a complaint must provide "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A Rule 12(b)(6) motion "challenges the viability of a complaint by arguing that it fails to state a claim upon which relief may be granted." Firestone Fin. Corp. v. Meyer, 796 F.3d 822, 825 (7th Cir. 2015) (citation omitted). In deciding a Rule 12(b)(6) motion, the Court must "construe it in the light most favorable to the nonmoving party, accept well-pleaded facts as true, and draw all inferences in [the party's] favor." Bell v. City of Chi. 835 F.3d 736. 738 (7th Cir. 2016) (citation omitted). "To survive a motion to dismiss under Rule 12(b)(6). plaintiff's complaint must allege facts which, when taken as true, plausibly suggest that the plaintiff has a right to relief, raising that possibility above a speculative level." Cochran v. III. Slate Toll Highway Auth., 828 F.3d 597. 599 (7th Cir. 2016) (internal quotation marks and citation omitted). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqhah 556 U.S. 662. 678 (2009) (citing Twombly, 550 U.S. at 556). The Court can consider "allegations set forth in the complaint itself, documents that are attached to the complaint, documents that are central to the complaint and are referred to in it, and information that is properly subject to judicial notice." Williamson v. Curran, 714 F.3d 432, 436 (7th Cir. 2013).[2]

         ANALYSIS

         Plaintiffs allege that the motions to modify falsely stated the duration of their post-petition default and the amount owed. (R. 17, Am. Compl. ¶¶ 18-19.) Defendant argues that "although Fullett mistakenly asserted Plaintiffs were twelve months in post-petition [default] instead of six months in default, the Motions to Lift the Automatic Stay were not deceptive or misleading to create a material violation of the FDCPA." (R. 19, Mem. at 2.) Plaintiffs respond that the motions to modify incorrectly represented the amount due and that this false representation was material because "[t]o the bankrupt debtor, there can be no question that a dollar due is material." (R. 24, Resp. at 5, 7-8.)

         The FDCPA prohibits "debt collectors" from engaging in abusive, deceptive, or unfair debt-collection practices. 15 U.S.C. § 1692. Plaintiffs allege that both misrepresentations violated Section 1692e of the FDCPA. (R. 17, Am. Compl. ¶¶ 16-19.) Section 1692e prohibits a debt collector from "us[ing] any false, deceptive, or misleading representation or means in connection with the collection of any debt" including "[t]he false representation of... the character, amount, or legal status of any debt."[3]

         Consumers "don't need protection against false statements that are immaterial in the sense that they would not influence a consumer's decision." Muha v. Encore Receivable Mgml., 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). In addition, ''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. CD A. Ltd., 689 F.3d 818, 826 (7th Cir. 2012) (citation and internal quotation marks omitted); see also 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."); Ruth v. Triumph P'ships, 577 F.3d 790. 800 (7th Cir. 2009) ("[Plaintiff] could not prevail in the district court simply by proving that statements in the notice were false. Whether they were false or not, she had to prove that an unsophisticated consumer would be deceived or misled by them.").

         As an initial matter, the parties dispute which standard the Court should apply when determining whether Plaintiffs have adequately alleged that the motions to modify violated Section 1692e. The applicable standard when determining whether a collection communication violates Section 1692e depends on whether the communication was directed to the consumer or to a lawyer, and whether the communication was allegedly false, misleading, or deceptive. Where the debt collector communicates directly to the debtor, and the communication is allegedly misleading or deceptive under Section 1692e, the "unsophisticated consumer'* standard governs. Evory v. RJM Acquisitions Funding, L.L.C., 505 F.3d 769, 774 (7th Cir. 2007). Under this standard, a communication violates Section 1692e if "a person of modest education and limited commercial savvy would be likely to be deceived." Id. The unsophisticated consumer is not a '"dimwit, " but may be ''uninformed, naive, and trusting." Wahl, 556 F.3d at 645 (citation and internal alterations omitted).

         In contrast, when a debtor collector makes an allegedly misleading or deceptive representation to the debtor's lawyer, the "competent attorney" standard applies. Evory, 505 F.3d at 774-75; Washington v. Portfolio Recovery Assocs., LLC, ___ F.Supp.3d ___, 2016 WL 5477519, at *4 (N.D. Ill. Sept. 29, 2016) ("An allegedly deceptive or misleading communication made to a lawyer is not actionable if it is unlikely to deceive a competent lawyer[.]" (citation and internal quotation marks omitted)). This standard asks "whether a competent attorney would be deceived, ...


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