United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
JOHNSON COLEMAN United States District Judge.
Puncochar (“Puncochar”) filed her four count
second amended complaint (Dkt. 27) against Revenue Management
of Illinois Corp. (“RMIC”), Ronald R. McLaughlin
(“McLaughlin), RMK Holdings, Inc. (“RMK
Holdings”), and Sue Patterson (“Patterson”)
alleging violations of the Fair Debt Collection Practice Act
(“FDCPA”) at 15 U.S.C. § 1692, et
seq. RMK Holdings and Patterson (collectively,
“RMK Defendants”) move to dismiss all counts of
Puncochar's complaint. For the following reasons,
RMK's motion to dismiss  is granted.
following facts are taken from Puncochar's complaint and
accepted as true for the purpose of ruling on the instant
incurred a debt which is the subject of this suit. (Dkt. 27
¶ 4). On or around January 27, 2015, Puncochar filed a
voluntary bankruptcy petition that allegedly
“included” the debt. (Id. ¶ 17).
The complaint does not describe what the debt is or to whom
it is owed. RMK Holdings, a company owned and operated
by Patterson, acquired the debt sometime after January 27,
2015. (Id. ¶¶ 10, 18). Puncochar does not
allege the specific date that the RMK Defendants acquired the
debt. RMK then referred the debt to RMIC, a company owned and
operated by McLaughlin, for collection. (Id.
¶¶ 7, 19). On or around April 24, 2015, RMIC sent a
letter to Puncochar to collect the debt. (Id. ¶
motion to dismiss pursuant to Federal Rule of Civil Procedure
12(b)(6) tests the legal sufficiency of a complaint, not the
merits of the allegations. To overcome a motion to dismiss, a
complaint must include sufficient factual allegations which,
taken as true, state a plausible claim for relief.
Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct.
1937, 173 L.Ed.2d 868 (2009). This does not mean that a
complaint must include “detailed factual allegations,
” but it must provide “more than an unadorned,
Id. (citation omitted). “A pleading that
offers ‘labels and conclusions' or ‘a
formulaic recitation of the elements of a cause of action
will not do.'” Id. (quoting Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct.
1955, 167 L.Ed.2d 929 (2007)). Further, while a court is
required to accept as true allegations within a complaint for
purposes of a 12(b)(6) motion to dismiss, this requirement is
“inapplicable to legal conclusions.”
Iqbal, 556 U.S. at 678. “Threadbare recitals
of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.” Id.
While legal conclusions can form the framework of a
complaint, “they must be supported by factual
allegations.” Id. at 679
Defendants argue that Puncochar failed to allege that they
are debt collectors or that they engaged in any debt
collection activity, therefore they are not subject to the
FDCPA. Puncochar contends that the allegations support
inferences that the RMK Defendants were indirectly engaged in
debt collection activity because she filed for bankruptcy
before RMIC attempted to collect the debt.
must be a debt collector to be subject to the FDCPA.
Pettit v. Retrieval Masters Creditor Bureau, Inc.,
211 F.3d 1057, 1059 (7th Cir. 2000). Under the FDCPA a debt
collector is “any person who uses any instrumentality
of interstate commerce or the mails in any business the
principal purpose of which is the collection of any debts, or
who regularly collects or attempts to collect, directly or
indirectly, debts owed or due or asserted to be owed or due
another.” 15 U.S.C. § 1692a(6). Creditors are not
considered debt collectors under the Act and are therefore
not subject to its provisions. § 1692a(6)(F)(iii);
Schlosser v. Fairbanks Capital Corp., 323 F.3d 534,
536 (7th Cir. 2003). A party is considered a creditor if the
debt she seeks to collect was not in default at the time she
purchased or otherwise obtained it. § 1692a(6)(F)(iii);
Schlosser, 323 F.3d at 536.
allegations that the RMK Defendants are debt collectors are
nothing but conclusory. Puncochar lumps all of the defendants
together without describing their relationship and then
asserts that all of the defendants are debt collectors,
without explanation, by essentially reciting the statutory
definition. (Dkt. 27 ¶¶ 13-15). While conclusory
allegations can provide the framework for a complaint, those
allegations must be supported with facts. Iqbal, 556
U.S. at 679. Puncochar offers nothing more than conclusory
allegations; accordingly, this Court finds that Puncochar
failed to plead that the RMK Defendants meet the statutory
definition of a debt collector.
also does not allege that the debt was in default when the
RMK Defendants acquired it, further supporting the conclusion
that she failed to plead that the RMK Defendants are debt
collectors. Puncochar argues that the debt was in default
because of the bankruptcy stay. 11 U.S.C. § 362. The
automatic stay simply prevents creditors and debt collectors
from attempting to collect a debt after an individual files
for bankruptcy. § 362(a)(1) (declaring that the stay
prevents “the commencement or continuation . . . of a
judicial, administrative, or other action or proceeding
against the debtor . . . to recover a claim against the
debtor that arose before the commencement of the case . . .
.”). The stay provision says nothing about whether a
debt is in default. Puncochar also argues that five months
without payment on the debt implies that it was in default.
While the FDCPA does not define “default, ”
courts typically recognize a distinction between a delinquent
debt and a debt in default. McKinney v. Cadleway
Props., 548 F.3d 496, 502 n.2 (7th Cir. 2008) (citing
Alibrandi v. Fin. Outsourcing Servs., Inc., 333 F.3d
82, 86 (2d Cir. 2003)). If not provided by statute, parties
are allowed to define when a debt goes into default in the
terms of the debt instrument or transaction.
McKinney, 548 F.3d at 502 n.2 (following the holding
in Alibrandi that the default terms of the debt
transaction control when a debt goes into default). If not
defined by either the debt instrument or statute, a debt does
not go into default until well after the debt has been
outstanding. Alibrandi, 333 F.3d at 87; see also
McKinney, 548 F.3d at 502 n.2. In the complaint,
Puncochar does not allege when the debt was due, and she does
not provide any details about the debt instrument. Simply
stating that Puncochar's debt was in default because she
filed for bankruptcy and because five months elapsed between
the date when the debt was incurred and when collection
efforts began is nothing more than conclusory. This Court
finds that Puncochar failed to plead that the debt was in
default when Puncochar acquired it.
Puncochar sufficiently alleged that the RMK Defendants were
debt collectors or that the debt was in default when they
acquired it, Puncochar only alleges that they indirectly
attempted to collect the debt. Indirect liability under the
FDCPA arises when “a company meeting the definition of
a ‘debt collector' under the FDCPA [is] held
vicariously liable for the actions of a second company acting
on its behalf.” Schutz v. Arrow Fin. Servs.,
465 F.Supp.2d 872, 876 (N.D. Ill. 2006) (Castillo, J.)
(citing Pollice v. Nat'l Tax Funding, L.P., 225
F.3d 379, 405 (3d Cir. 2000)). A “principal-agent
relationship exists when [a principal] manifests assent to
[an agent] that the agent shall act on the principal's
behalf and subject to the principal's control, and the
agent manifests assent or otherwise consents so to
act.” Id. at 877 (internal quotations omitted)
(quoting Restatement (Third) of Agency § 1.01 (2006)).
Here, Puncochar does not allege that the RMK Defendants
asserted control over RMIC interactions with debtors nor does
she allege that RMIC assented to being subject to the RMK
Defendants' control. Puncochar also does not allege that
the RMK Defendants maintained any right to control RMIC's
operations. The allegation that RMK Holdings referred
Puncochar's debt to RMIC and that RMIC sent a collection
letter does not rise to the level of a principal-agent
relationship. Accordingly, Puncochar has not pleaded that the
RMK Defendants are liable, directly or indirectly, for any
alleged violation of the FDCPA.
this Court finds that Puncochar has not stated a plausible
claim for relief as to RMK Holdings and Patterson, this Court
will not address ...