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Polster v. Van Ru Credit Corp.

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

March 31, 2017

Kimberly Polster, Plaintiff,
v.
Van Ru Credit Corporation, Defendant.

          MEMORANDUM OPINION AND ORDER

          Virginia M. Kendall United States District Court Judge

         Plaintiff Kimberly Polster filed a Complaint against the Van Ru Credit Corporation for alleged violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. The parties filed cross-motions for summary judgment. For the following reasons, the Court grants Van Ru Credit Corporation's Motion for Summary Judgment [19] and denies Kimberly Polster's Motion for Summary Judgment [17].

         BACKGROUND

         The parties do not dispute the following facts unless otherwise noted.

         Prior to May 13, 2014, Defendant Van Ru Credit Corporation (“Van Ru” or “debt collector”) received from its client, Northshore Medical Healthsystem, (“Northshore” or “creditor”) the debts of Plaintiff Kimberly Polster (“Polster” or “consumer”) under account numbers 26073536-0205922172 (“Debt #1”), 6607734-0205922172 (“Debt #2”), and 28444892-0205922172 (“Debt #3”). (Dkt. 21-1, Plaintiff's Resp. to Defendant's LR 56.1 Statement of Facts, ¶ 5; Dkt. 18-2, at 25-26, Exs. A and B; Dkt. 18-3, Ex. C, Aff. Michael Martin, ¶¶ 7-8.) Later that year, in December 2014, Polster incurred further debts (Debt #4 and #5) with Northshore after she received medical treatment for a bulging disc. Northshore did not place these debts with Van Ru until May 2015. (Dkt. 17-2, at 2, 4, Ex. A and B; Dkt. 18-2, Ex. B, ¶ 3; Dkt. 20-1, Defendant's Resp. to Plaintiff's LR 56.1 Statement of Facts, ¶¶ B(1), B(6).)

         During that time, Polster voluntarily filed for Chapter 7 bankruptcy on March 6, 2015, which the parties agree discharged the debts that Polster had incurred with Northshore. (Dkt. 20-1, ¶¶ B(3)-(4); Dkt. 18-4, Ex. D; Dkt. 21-1, ¶ 6.) Polster's public bankruptcy petition listed Northshore and Van Ru as creditors. (Dkt. 18-4, Ex. D, 47-48.) Her petition also listed her name, address, and the last four digits of her social security number, as well as the name and address of her bankruptcy attorney, which were also listed on the public notice for the petition's meeting of creditors. (Id. at 2-4; Dkt. 21-2, Bankruptcy Creditors Meeting Notice, at 12.) According to these documents, David H. Cutler, a bankruptcy attorney at Cutler & Associates, represented Polster in these proceedings. (Dkt. 21-1, ¶¶ 25-26; Dkt. 18-2, Ex. B, Representation Agreement; Dkt. 18-1, Ex. A, Polster Dep., 39:22-41:6, 42:18-21.) Cutler informed Polster that, if anyone sought to collect on a debt that was protected by her bankruptcy petition, he could connect Polster with an attorney who could represent her in such a matter. (Dkt. 21-1, ¶ 27; Dkt. 18-1, Ex. A, 43:4-44:1; 53:6-18.) Indeed, Cutler later referred Polster to Richard Meier, the attorney representing Polster on this Complaint. (Id.; Dkt. 3.) No one, including Polster, notified Van Ru that Meier would represent Polster in this matter.[1] (Dkt. 21-1, ¶¶ 28-29.)

         On March 11, 2015, the bankruptcy court mailed Northshore and Van Ru notice of Polster's bankruptcy filing. (Dkt. 20-1, ¶ B(5); Dkt. 21-2, Ex. C, at 14-15.)[2] On March 17, Van Ru received a copy of Polster's bankruptcy petition, which identified Polster's debts that Northshore had placed with Van Ru by that time - specifically, Debts #1, 2, and 3. That same day, Van Ru closed the accounts associated with these debts and returned them to Northshore. From this point forward, Van Ru did not direct any further collection communication to Polster regarding Debts #1, 2, and 3. (Dkt. 21-1, ¶¶ 8-9; Dkt. 18-1, Ex. A, 32: 9-15; Dkt. 18-3, Ex. C, ¶ 9; Dkt. 18-5, Ex. E, ¶ 5; Dkt. 18-6, Ex. F, Michael Martin Dep., 16:15-19.)

         The same cannot be said for Debts #4 and 5. Northshore placed these debts with Van Ru under accounts 34367813-0205922172 (“Debt #4”) and 34440969-0205922172 (“Debt #5”), on May 11 and May 18, 2015, respectively, after Polster filed her March 2015 bankruptcy petition. (Dkt. 20-1, ¶¶ B(6), B(9); Dkt. 18-3, Ex. C, ¶ 10; Dkt. 18-6, Ex. F, 10:20-12:10.) This happened despite the fact that Northshore and Van Ru agreed that Northshore would not send Van Ru accounts that were subject to bankruptcy and that Northshore “shall notify” Van Ru about any bankruptcies of which Northshore “may or should have knowledge” that would affect any debts placed with Van Ru.[3] (Dkt. 20-1, ¶ B(13); Dkt. 18-3, Ex. C, ¶ 13; Ex. F, 34:24-35:6; Dkt. 17-2, Ex. G, at 53; Dkt. 21-1, ¶¶ 19-20.) Yet Van Ru never received notice from Northshore that Polster's Debts #4 and 5 were subject to bankruptcy. (Dkt. 18-3, Ex. C, ¶¶ 14, 21; Dkt. 18-6, Ex. F, 16:20-23; Dkt. 18-5, Ex. E, ¶ 5.) At no point did Northshore provide Van Ru with Polster's social security number to associate with these debts. (Dkt. 21-1, ¶ 13; Dkt. 18-5, Ex. E, ¶ 5; Dkt. 18-6, Ex. F, 17:9-17, 23:2-6; 29:13-15; 30:14-15; Dkt. 18-3, Ex. C, ¶ 11.)

         As a result, even though Van Ru has an automated process to review the accuracy of its accounts - and thus avoid collecting debts from people in bankruptcy - that process did not catch Polster's March 2015 bankruptcy and its implications for Debts #4 and 5. (See Dkt. 20-1, ¶ B(12); Dkt. 21-1, ¶¶ 16, 18; Dkt. 18-3, Ex. C, ¶ 3; Dkt. 18-5, Ex. E, ¶ 5; Dkt. 18-6, Ex. F, 15:3-9; 26:6-13.) For that process, when Van Ru receives an account from a creditor, Van Ru runs the name and social security number associated with the account through LexisNexis in a “bankruptcy scrub.” To perform the scrub, Van Ru needs an individual's social security number to be associated with the account. The scrub then searches for that individual's bankruptcy filings to-date. LexisNexis retains the information and rescrubs the accounts weekly. (Dkt. 21-1, ¶¶ 16-18; Dkt. 18-3, Ex. C, ¶¶ 3-4; Dkt. 18-6, Ex. F, 17:9-17.) Because Van Ru did not have Polster's social security number associated with Debts #4 and 5, it did not perform a bankruptcy scrub on these accounts. (Dkt. 21-1, ¶ 18; Dkt. 18-5, Ex. E, ¶ 5.) Van Ru has a process for manually reviewing accounts to verify whether a bankruptcy scrub has produced accurate information, but for that process to occur, it has to perform the scrub in the first place, which requires a social security number. The system does not alert anyone at Van Ru to review an account if the scrub does not produce results. (Dkt. 20-1, ¶ B(12); Dkt. 18-6, Ex. F, 18:4-21:9, 24:7-25:22, 33:13-20; 34:13-23.) Alternatively, Van Ru relies on notice from consumers after they receive a debt collection letter from Van Ru. (See Dkt. 21-1, ¶ 22; Dkt. 18-3, Exs. 1 and 2, at 7, 10; Dkt. 18-3, Ex. C, ¶ 5.) Van Ru did not hear from Polster about her bankruptcy. (See Dkt. 21-1, ¶¶ 24, 29; Ex. A, 44:11-45:5; Dkt. 18-2, ¶¶ 2-4, 19; Dkt. 18-3, Ex. C, ¶ 21.)

         Generally, when Van Ru receives notice that an account is subject to bankruptcy, it “immediately ceases collection efforts, closes the account with a notation reflecting the bankruptcy and returns the account to the creditor.”[4] (Dkt. 21-1, ¶ 23; Dkt. 18-5, Ex. E, ¶ 5; Dkt. 18-6, Ex. F, 18:14-18; Dkt. 18-3, Ex.C, ¶ 6.) With Northshore specifically, Van Ru does not report any previous issues with receiving bankruptcy-afflicted accounts. (Dkt. 21-1, ¶ 12; Dkt. 18-6, Ex. F, 35:7-12.) Yet in Polster's case, without her social security number affiliated with Debts #4 and 5, Van Ru's system bypassed performing a bankruptcy scrub on these accounts when they came in on May 11 and May 18, 2015, due to “missing info, ” namely Polster's social security number. (Dkt. 20-1, ¶¶ B(6)-(7), B(9)-(10); Dkt. 18-3, Ex. 3, at 13, 16.)

         Consequently, Van Ru sent Polster a collection letter for Debt #4 on May 12, 2015, and for Debt #5 on May 19, 2015. (Dkt. 20-1, ¶¶ B(8), B(11); Dkt. 18-3, Ex. C, ¶ 15; Dkt. 18-3, Exs. 1 and 2, at 7, 10.) Van Ru's letters to Polster stated:

The above account(s) has been placed with us for collection. This is an important matter and deserves your immediate attention.
Your payment, made payable to NorthShore Univ Hlthsys, may be mailed in the enclosed envelope. If you have any questions or wish to discuss your account or payment options, you may contact us…
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 this debt is valid. If you notify this office in writing within 30 days from receiving this notice that you dispute the validity of this debt or any portion thereof, this office will obtain verification of the debt or obtain a copy of a judgment and mail you a copy of such judgment or verification. If you request of this office in writing within 30 days after receiving this notice this office will provide you with the name and address of the original creditor, if different from the current creditor.
This communication is from a debt collector. This is an attempt to collect a debt. Any information obtained will be used for that purpose.

(Dkt. 18-3, Exs. 1 and 2, at 7, 10.) (emphasis in original.)

         After receiving these letters, Polster did not contact Van Ru about her bankruptcy discharge or, specifically, the validity of Debts #4 and 5. (See Dkt. 21-1, ¶¶ 24, 29; Ex. A, 44:11-45:5; Dkt. 18-2, ¶¶ 2-4, 19; Dkt. 18-3, Ex. C ¶ 21.) Polster does not know whether one of her attorneys contacted Van Ru at this time. (Dkt. 18-1, Ex. A, 45:10-46:1.)

         After receiving a complaint on June 18, Van Ru ceased communication with Polster.[5](Dkt. 18-5, Ex. E, ¶ 5.) Neither did Van Ru contact Northshore to verify the accuracy of the information in these accounts. (Dkt. 20-1, ¶ B(16).) Van Ru did not contact Northshore about Polster's Debts #4 and 5 until December 11, 2015, when Van Ru sent them two e-mails, first to notify Northshore about this suit and then to notify Northshore that Van Ru intended to defend this suit. (See Id . Dkt. 21-2, at 24, Ex. E; Dkt. 17-2, Ex. H, at 55; Dkt. 18-6, Ex. F, 39:20-41:17.)

         Polster testifies that she experienced stress and anxiety as a result of the letters she received from Van Ru in May 2015 after her March 2015 bankruptcy petition. (Dkt. 21-1, ¶ 30; Dkt. 18-1, Ex. A, 56:13-57:13.) Polster did not seek medical or professional treatment. (Id.; Dkt. 18-2, Ex. B, ¶ 6.) Polster testified:

A: I was stressed, and some anxiety issues due to the letters that I received. I don't know if damages - it didn't physically harm me or anything, but emotionally, like I said, it was stressful and caused a lot of anxiety and I was confused.
Q: So I guess my next question would be you said nothing physical, did you have any physical manifestations in connection ...

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