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Puncochar v. Revenue Management of Illinois Corp.

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

March 31, 2017

Christine Puncochar, Plaintiff,
v.
Revenue Management of Illinois Corp., Ronald R. McLaughlin, RMK Holdings, Inc., and Sue Patterson, Defendants.

          MEMORANDUM OPINION AND ORDER

          SHARON JOHNSON COLEMAN United States District Judge

         Christine Puncochar (“Puncochar”) filed a four count second amended complaint (Dkt. 27) against Revenue Management of Illinois Corporation (“RMIC”), Ronald R. McLaughlin (“McLaughlin”), RMK Holdings, Inc. (“RMK Holdings”), and Sue Patterson (“Patterson”) alleging multiple violations of the Fair Debt Collection Practices Act (“FDCPA”). 15 U.S.C. § 1692 et seq. RMIC and McLaughlin (collectively, “RMIC Defendants”) and Puncochar filed cross-motions for summary judgment. The RMIC Defendants also filed a Rule 11 motion for sanctions. For the following reasons, Puncochar's motion for summary judgment [64] is denied, the RMIC Defendants' motion for summary judgment [49] is granted, and the RMIC Defendants' motion for sanctions [51] is denied.

         Background

         The following facts are undisputed unless otherwise indicated.

         On November 12, 2014, Puncochar incurred a debt of $108.10 to Kurtz Ambulance Service, Inc. (“Kurtz”). (Dkt. 67-1 ¶ 2; Dkt. 70 ¶ 6).[1][2] This debt (the “Kurtz debt”) is the subject of this suit. (Dkt. 67-1 ¶ 2). Kurtz passed the Kurtz debt on to RMK Holdings for collection. (Dkt. 67-1 ¶ 3; Dkt. 70 ¶ 11). On April 23, 2015, RMK Holdings forwarded the Kurtz debt to RMIC for collection. (Dkt. 67-1 ¶ 4; Dkt. 70 ¶ 12). On or about April 24, 2015, McLaughlin, the RMIC owner and operator, (Dkt. 67-1 ¶ 6), sent a dunning letter on RMIC letterhead to Puncochar for the Kurtz debt. (Dkt. 67-1 ¶ 5; Dkt. 70 ¶ 13). The letter contained the following:

The [Kurtz debt] has been referred to our office for collection. Unless you notify this office within 30 days after receiving this notice that you dispute the validity of this debt or any portion thereof, this office will assume the debt is valid . . . If you do not contact our office in the time specified, we will proceed with the collection of this account, which may include referring this account for legal action or reporting this delinquency to the credit bureau . . . This is an attempt to collect a debt and any information obtained will be used for that purpose. (Dkt 65-1 at PDF p. 9)

         On January 27, 2015, Puncochar filed for Chapter 13 bankruptcy. (Dkt. 67-1 ¶ 1; Dkt. 70 ¶ 7). Puncochar did not list the Kurtz debt, Kurtz, RMK Holdings, or RMIC in her bankruptcy petition schedules. (Dkt. 67-1 ¶ 2). She also did not include Kurtz or any of the defendants on the bankruptcy service list. (Dkt. 53-4). On May 19, 2015, Puncochar's counsel, Richard Meier, sent the RMIC Defendants a letter in response to the dunning letter informing them of possible FDCPA violations. (Dkt. 67-1 ¶ 6; 53-3 at PDF p. 10). The letter attached a draft complaint informing the RMIC Defendants that Puncochar was involved in a bankruptcy proceeding. (53-3 at PDF pp. 11-13). The RMIC Defendants immediately ceased all collection activities. (Dkt. 67-1 ¶ 6). Kurtz and the defendants never received notice of the bankruptcy proceedings prior to the May 19 letter. (Dkt. 67-1 ¶ 7; Dkt. 53-4).

         RMK Holding's relationship with RMIC was governed by the “Third Party Delinquent Accounts Receivable Agreement.” (“RMK/RMIC Agreement”) (Dkt. 67-1 ¶ 8). The RMK/RMIC Agreement provides that “RMK agrees all accounts placed with [RMIC] are valid and legally enforceable debts and are not disputed or subject to defense . . . or bankruptcy proceedings, unless otherwise disclosed in writing by RMK or its clients.” (Dkt. 67-1 ¶ 8; Dkt. 53-5). Any bankruptcy notice affecting an account covered by the RMK/RMIC Agreement would be communicated to RMIC so that any collection proceedings would be terminated. (Dkt. 67-1 ¶ 9).

         As part of their collection efforts on behalf of RMK Holdings, the RMIC Defendants implemented several procedures to ensure compliance with the FDCPA. First, the RMIC Defendants rely on the RMIC/RMK Agreement which is meant to ensure that RMK will not pass along any debt known to be the subject of a bankruptcy proceeding. (Dkt. 67-1 ¶ 25). Next, the RMIC Defendants provide debtors with a 30-day period to dispute a debt. (Id.) Before filing any action following that waiting period, RMIC searches TLO and Pacer. (Id.) Finally, the RMIC Defendants subscribe to BAE Systems Bankruptcy Notifications through which they are notified when RMIC, a client, or an underlying creditor on an account are listed in a bankruptcy. (Id.)

         Legal Standard

         Summary judgment is proper where the pleadings, depositions, admissions and affidavits demonstrate that there is no genuine issue as to any material fact and that the movant is entitled to summary judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment is appropriate where the nonmoving party has failed to make a sufficient showing on an essential element of his case with respect to which it has the burden of proof. Celotex, 477 U.S. at 322-23. Thus, “[s]ummary judgment is appropriate if, on the record as a whole, a rational trier of fact could not find for the non-moving party.” Commercial Underwriters Ins. Co. v. Aires Envtl. Servs., Ltd., 259 F.3d 792, 795 (7th Cir. 2001).

         This Court may impose sanctions on any attorney, law firm, or party that violates Rule 11(b). Fed.R.Civ.P. 11(c)(1). “The central goal of Rule 11 is to deter abusive litigation practices.” Corley v. Rosewood Care Ctr., Inc. of Peoria, 388 F.3d 990, 1013 (7th Cir. 2004).

         Discussion

         1. Cross-motions for ...


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