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Bednarski v. Potestivo & Associates, P.C.

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

March 7, 2017

JOHN BEDNARSKI, JR., Plaintiff,
v.
POTESTIVO & ASSOCIATES, P.C. and CALEB J. HALBERG, Defendants.

          OPINION AND ORDER

          JOAN H. LEFKOW, U.S. DISTRICT JUDGE

         John Bednarski, Jr., filed suit against Potestivo & Associates, P.C., and Caleb J. Halberg, alleging they violated multiple sections of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 et seq. (Dkt. 4 ¶¶ 13-14.) Potestivo and Halberg move to dismiss for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) and for failure to state claim under Federal Rule of Civil Procedure 12(b)(6). (Dkt. 12.) For the reasons stated below, the motion to dismiss is granted in part and denied in part.

         BACKGROUND[1]

         Between 1993 and 1995, Bednarski received four student loans from the Illinois Student Assistance Commission. (Dkt. 15 at 1-2.) As of early 2015, the outstanding debt totaled $22, 824.43. (Dkt. 4 ¶ 7.) On March 10, 2015, Halberg, an attorney employed by Potestivo, drafted a collection letter regarding this debt, representing that he was writing on behalf of the United States Department of Justice. (Id. ¶ 9, Ex. A.) Halberg signed the letter under the typed name of the United States Attorney for the Northern District of Illinois, as “Attorney for the United States.” This letter was mailed to Bednarski's father's home address rather than to the address listed on Bednarski's student loan applications. (Id. ¶ 10; Dkt. 15 at 1.) Because Bednarski's father was deceased, the letter was received and opened by Bednarski's sister, who contacted Bednarski to inform him he “was being sued by the government.” (Dkt. 15 at 2.) Bednarski alleges the letter itself “is extremely confusing” and falsely represents both that Halberg is an attorney for the United States and that a lawsuit had been filed against Bednarski regarding the debt. (Dkt. 4 ¶¶ 11-12.)

         On March 2, 2016, Bednarski filed an Amended Complaint, which is the subject of this motion to dismiss. The Amended Complaint names both Potestivo and Halberg as defendants and claims they violated the FDCPA, sections 1692b(2); 1692c(b); 1692d; 1692e(1), (2), (5), (9), and (10); and 1692f. (Id. ¶¶ 13-14.)

         Potestivo and Halberg now move to dismiss Bednarski's Amended Complaint pursuant to Rules 12(b)(1) and 12(b)(6) arguing (a) they are entitled to qualified immunity under Yearsley v. W.A. Ross Constr. Co., 309 U.S. 18, 20, 60 S.Ct. 413, 84 L.Ed. 554 (1940), and therefore the court lacks subject-matter jurisdiction; (b) the Amended Complaint fails to state a claim against Halberg in his individual capacity; and (c) the Amended Complaint fails to state a claim against Potestivo. (Dkt. 12.)

         ANALYSIS

         I. Subject-Matter Jurisdiction

         “In considering a motion to dismiss for lack of subject matter jurisdiction, the district court must accept the complaint's well-pleaded factual allegations as true and draw reasonable inferences from those allegations in the plaintiff's favor.” Transit Exp., Inc. v. Ettinger, 246 F.3d 1018, 1023 (7th Cir. 2001).

         The FDCPA, at 15 U.S.C. § 1692k(d), grants to the district courts subject matter jurisdiction to enforce any liability created by violations of the Act. Yet, Potestivo and Halberg argue the court lacks the power to hear this case because, as a government contractor, they are entitled to qualified immunity under Yearsley. (Dkt. 12 at 3.) Yearsley held that a construction contractor working for the United States government could not be held “liable for his conduct causing injury to another, ” unless either “he exceeded his authority or that [authority] was not validly conferred.” 309 U.S. at 21. Yearsley teaches that, where the sovereign has agreed to accept responsibility for the actions of a contractor that has acted within the scope of its authority, the proper defendant is the United States and the proper court is the Court of Claims. Compare Tillett v. J.I. Case Co., 756 F.2d 591 (7th Cir. 1985) (where government contractor established, inter alia, that it supplied equipment in conformity with government specifications, government contractor defense applied, but because the government had not waived sovereign immunity, the plaintiff could not recover for her loss). Thus, only if the government has immunized its contractors from liability for violations of the FDCPA would Yearsley have any bearing here.

         In any event, the district court does not lack subject matter jurisdiction to determine whether the government contractor defense applies. See Ackerson v. Bean Dredging, LLC, 589 F.3d 196, 207 (5th Cir. 2009) (“Yearsley does not … address the court's power to hear a case.”); Adkisson v. Jacobs Eng'g Grp., Inc., 790 F.3d 641, 649 (6th Cir. 2015) (remanding for trial court to determine under Rule 12(b)(6) whether, based on the pleadings, the defendant was eligible for qualified immunity under the Yearsley doctrine).

         Moreover, it is highly unusual to dismiss a complaint based on an affirmative defense “since a complaint need not anticipate and overcome affirmative defenses.” Cancer Found., Inc. v. Cerberus Capital Mgmt., LP, 559 F.3d 671, 674 (7th Cir. 2009). “[O]nly where the allegations of the complaint itself set forth everything necessary to satisfy the affirmative defense” is dismissal appropriate. Chi. Bldg. Design, P.C. v. Mongolian House, Inc., 770 F.3d 610, 613-14 (7th Cir. 2014) (quotation marks omitted). Because this complaint does not plead facts that establish the government contractor defense, dismissal based on Yearsley is inappropriate.

         Furthermore, defendants identify no case in which a debt collector working for the government has been found immune from liability under Yearsley. This is likely because, as the Secretary of Education has stated, “third party collectors of defaulted student loans . . . [are] subject to the Fair Debt Collection Practices Act.” 55 Fed. Reg. 40120 (1990). Additionally, defendants ignore the fact that the FDCPA explicitly defines those excluded from the definition of “debt collector” and not subject to the Act and that list does not include debt collectors working on a government contract. See 15 U.S.C. § 1692a(6)(C) (“The term [debt collector] does not include . . . any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties.”) “A statute should be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous, void or insignificant.” Hibbs v. Winn, 542 U.S. 88, 101, 124 S.Ct. 2276, 159 L.Ed.2d 172 (2004). Had it wished to do so, Congress could have extended this exemption to include agents or contractors as well as officers and employees of the United States. Instead, Congress limited immunity to only officers or employees.[2]

         Accordingly, defendants' motion to dismiss based on qualified immunity ...


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