United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
E. Bucklo United States District Judge.
action, plaintiff asserts that defendant violated the Fair
Debt Collection Practices Act (“FDCPA”) by
sending her a dunning letter after she had filed for Chapter
13 bankruptcy. Before me are cross-motions for summary
judgment. For the reasons that follow, defendant's motion
is granted and plaintiff's motion is denied.
facts giving rise to the alleged violation are undisputed
except where noted. In or around January of 2013, plaintiff
opened a credit card with Credit One Bank and incurred a
consumer debt. MSW Capital, LLC later acquired that debt. In
early August of 2014, MSW placed the account with defendant,
Monarch Recovery Management, Inc., for collection. Shortly
thereafter, Monarch submitted the account to the credit
reporting agency Experian for a “bankruptcy scrub,
” which was completed on August 12, 2014.
sent plaintiff collection letters on August 13, 2014, and
October 8, 2014, and it also attempted to reach plaintiff by
phone but was unsuccessful. Then, on November 20, 2014,
plaintiff filed a Chapter 13 voluntary petition for
bankruptcy. Neither Monarch nor MSW was included on the
bankruptcy service list, nor did either receive notice of the
creditors meeting in plaintiff's bankruptcy
sent plaintiff a third collection letter on January 5, 2015.
As of that date, Monarch had not received notice of
petitioner's bankruptcy petition. On January 12, 2015, Monarch
closed plaintiff's collection account at MSW's
direction. Defendant received notice of plaintiff's
bankruptcy for the first time in a letter from
plaintiff's counsel dated January 26, 2015.
judgment is appropriate when the “pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of
law.” Fed.R.Civ.P. 56(c). I must construe all facts in
favor of the nonmoving party, and may grant summary judgment
only “if, on the record as a whole, a rational trier of
fact could not find for the non-moving party.”
Turner v. J.V.D.B. & Associates, 330 F.3d 991,
995 (7th Cir. 2003)
four-count complaint alleges violations of 15 U.S.C.
§§1692e(2), 1692e(10), 1692f, and 1692c(a)(2) of
the FDCPA. Section 1692(e), which plaintiff asserts in Counts
I and II, makes it unlawful for debt collectors to use false
representations or means in connection with the collection of
a debt. “A demand for immediate payment while a debtor
is in bankruptcy (or after the debt's discharge) is
‘false' in the sense that it asserts that money is
due, although, because of the automatic stay (11 U.S.C.
§ 362) or the discharge injunction (11 U.S.C. §
524), it is not.” Randolph v. IMBS, Inc., 368
F.3d 726, 728 (7th Cir. 2004). This section creates a strict
liability rule, meaning that there is no scienter
requirement. (“Debt collectors may not make false
claims, period.”). Id. at 730. Nevertheless, a
debt collector who violates § 1692e, or any other
substantive portion of the FDCPA, can escape liability if it
establishes “by a preponderance of the evidence that
(1) the violation was unintentional, resulting from a
‘bona fide error, ' and (2) that error occurred
not-withstanding the maintenance of procedures reasonably
adapted to avoid any such error.” Turner, 330
F.3d at 995-96 (7th Cir. 2003) (internal quotation marks and
citation omitted); 15 U.S.C. § 1692k(c).
central issue in the parties' cross-motions is whether
the undisputed facts establish Monarch's bona fide error
defense. For the purposes of examining this issue, I assume
that Monarch's conduct violates the asserted provisions
of the FDCPA.
noted above, the first prong of the bona fide error defense
asks whether defendant's violation of the FDCPA was
unintentional. Plaintiff does not dispute that Monarch had no
knowledge of plaintiff's bankruptcy prior to sending the
January 5, 2015, letter, and she articulates no theory under
which Monarch's presumed violation of § 1692e can be
deemed intentional under those circumstances. Cf.
Turner, 330 F.3d at 996 (“proof that [the debt
collector] was unaware of the bankruptcy would be a logical
first step” to establishing that its violation was
unintentional). Indeed, plaintiff's response to
Monarch's bona fide error defense focuses exclusively on
the second prong: whether the procedures Monarch had in place
to avoid sending collection letters to consumers in
bankruptcy were reasonably adapted to avoiding the error that
led to the violation.
President, Diane Mazzacano, testified in an affidavit and at
her subsequent deposition about Monarch's procedures for
ensuring compliance with the FDCPA's ban on collecting
from consumers involved in a bankruptcy. In her affidavit,
Mazzacano explains that generally, “it is not
advantageous” for debt owners to place accounts that
are in bankruptcy with debt collectors, and that “as a
result, the practice for all clients, including MSW, is not
to place accounts with Monarch for collection where the
consumer has filed bankruptcy.” Mazzacano Aff. at
¶ 4, Exh. 1 to Def.'s L.R. 56.1 Stmt. Mazzacano also
testified that as part of its regular business practices,
Monarch runs all new accounts through an outside bankruptcy
“scrub” service, where the new placements are
checked for bankruptcy, before it begins any collection
activity. Id. at ¶ 5; Mazzacano Dep. at
17:15-18, Exh. 2 to Def.'s L.R. 56.1 Stmt. In addition,
Monarch employees “are trained, and there is a
procedure in place, when a consumer indicates that she has
filed bankruptcy, for the collector to notate the account,
and the account is closed to the collection floor.”
Mazzacano Aff. at ¶ 8. Mazzacano also testified that
Monarch's collectors are monitored and supervised daily
by assistant managers, managers, the vice president of
collections, the quality assurance department, and the
compliance department to ensure compliance with the FDCPA.
Mazzacano Dep. at 9:8-10:9.
addition to Mazzacano's testimony, Monarch produced two
versions of its written bankruptcy policy. Both documents
outline the three general ways in which Monarch may become
aware of a bankruptcy-through a verbal notification from the
consumer, a written notification from any source, or a
“scrub” notification from Experian-and define the
specific steps collectors are to take in each instance.
See Exh. F to Pl.'s L.R. 56.1 Stmt. (DN 30-2).
Plaintiff's argument that Monarch's procedures are
not reasonably adapted to avoid violating the FDCPA's ban
on collecting from bankrupt ...