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Hahn v. Anselmo Lindberg Oliver, LLC

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

March 31, 2017



          Jorge L. Alonso, Judge

         Plaintiffs, Andrew and Heather Hahn, bring this case under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq, and the Illinois Consumer Fraud and Deceptive Practices Act (“ICFA”), 815 ILCS 505/c, against defendants Wells Fargo Bank, N.A. (“Wells Fargo”) and Anselmo Lindberg Oliver LLC (“ALO”). Defendants separately move to dismiss. For the following reasons, their motions are granted.


         On January 3, 2002, plaintiff Heather Hahn, then unmarried and known by her maiden name, Heather Johnson, executed a mortgage secured by her home, located at 305 North Street in Mazon, Illinois (“the Mazon property”). On February 10, 2012, after Ms. Hahn fell behind in her payments, defendant Wells Fargo filed a Complaint for Foreclosure in the Circuit Court of Grundy County, Illinois, naming Ms. Hahn and her husband, plaintiff Andrew Hahn, as defendants. Among the relief sought was foreclosure of the mortgage and “a personal deficiency judgment against . . . Heather Johnson only, if sought.” (Wells Fargo Mot. to Dismiss, Ex. 1 at 3.)[1] On July 20, 2012, Ms. Hahn filed for Chapter 13 bankruptcy. ALO, a law firm, filed an appearance for Wells Fargo in the bankruptcy court. On October 25, 2012, the bankruptcy court confirmed the Chapter 13 plan of reorganization. However, in 2014 Ms. Hahn began to fall behind in her payments again, and on March 17, 2015, Wells Fargo moved for relief from the automatic stay. Mot. for Relief from Automatic Stay, In re Heather D. Hahn, No. 12-28760 (Bankr. N.D.Ill. March 17, 2015), ECF No. 58. The motion was granted on March 27, 2015. On October 6, 2015, the trustee moved to dismiss the case because Ms. Hahn had missed plan payments. The bankruptcy court granted the motion on October 23, 2015. In November 2015, Wells Fargo resumed litigating the foreclosure case against Ms. Hahn.

         On September 2, 2015, Ms. Hahn purportedly transferred her interest in the Mazon property to herself and Mr. Hahn by quitclaim deed. A week later, on September 9, 2015, Mr. Hahn filed a Chapter 13 bankruptcy petition (Case No. 15-30730), listing defendants as creditors. He filed a proposed plan of reorganization that included monthly payments to Wells Fargo to make up the mortgage arrearage. On February 5, 2016, the bankruptcy court approved Mr. Hahn's Chapter 13 plan.

         Defendants had notice of Mr. Hahn's bankruptcy, but even so, they proceeded with the foreclosure action, with ALO representing Wells Fargo in that case throughout the remainder of 2015 and early 2016. On February 10, 2016, the Illinois court granted summary judgment for Wells Fargo.

         On June 30, 2016, plaintiffs filed this action. Their complaint consists of two counts. In Count I, they assert violations of the FDCPA against ALO for making misrepresentations concerning uncollectible debts and unfairly attempt to collect a legally uncollectible debt, pursuant to 15 U.S.C. §§ 1692e(2), 1692e(1), and 1692f, by litigating the foreclosure action. In Count II, they assert violations of the ICFA against Wells Fargo for its unfair or deceptive conduct in proceeding with the foreclosure action even after Mr. Hahn filed his bankruptcy petition.


         “A motion under Rule 12(b)(6) tests whether the complaint states a claim on which relief may be granted.” Richards v. Mitcheff, 696 F.3d 635, 637 (7th Cir. 2012). Under Rule 8(a)(2), a complaint must include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The short and plain statement under Rule 8(a)(2) must “give the defendant fair notice of what the claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (ellipsis omitted).

         Under federal notice-pleading standards, a complaint's “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. Stated differently, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “In reviewing the sufficiency of a complaint under the plausibility standard, [courts must] accept the well-pleaded facts in the complaint as true, but [they] ‘need[ ] not accept as true legal conclusions, or threadbare recitals of the elements of a cause of action, supported by mere conclusory statements.'” Alam v. Miller Brewing Co., 709 F.3d 662, 665-66 (7th Cir. 2013) (quoting Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009)).


         The FDCPA was enacted “to eliminate abusive debt collection practices, to ensure that debt collectors who abstain from such practices are not competitively disadvantaged, and to promote consistent state action to protect consumers.” Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573, 577 (2010) (citing 15 U.S.C. § 1692(e)). Under the FDCPA, “[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. In particular, 15 U.S.C. § 1692e(2) prohibits the “false representation of . . . the character, amount or legal status of any debt, ” and section 1692e(10) prohibits “[t]he use of any false representation or deceptive means to collect or attempt to collect any debt.” Further, 15 U.S.C. § 1692f prohibits a debt collector from using “unfair or unconscionable means to collect or attempt to collect a debt.”[2]

         Plaintiffs contend that ALO violated the above provisions by litigating the foreclosure case even after Mr. Hahn filed his bankruptcy petition, at which point ALO should have known that the foreclosure action was automatically stayed under sections 362 and 1301 of the Bankruptcy Code. ALO responds that the foreclosure action was not an attempt to collect a debt from Mr. Hahn at all, so ALO did not violate the FDCPA by litigating the foreclosure action while Mr. Hahn's bankruptcy was pending.

         The FDCPA defines debt as an “obligation . . . of a consumer to pay money, ” § 1692a(5), and it imposes liability only when an entity is attempting to collect “debt, ” see §§ 1692e, 1692f; Ho v. ReconTrust Co., NA, 840 F.3d 618, 621 (9th Cir. 2016). Courts across the nation are split on the issue of whether an attempt to enforce a security interest is an attempt to collect a debt to which the FDCPA applies. “It appears that the majority view is that mortgage foreclosure is not debt collection within the meaning of the FDCPA.” Aurora Loan Servs., LLC v. Kmiecik, 992 N.E.2d 125, 133 (Ill.App.Ct. 2013) (collecting cases); see Boyd v. J.E. Robert Co., No. 05-CV-2455, 2013 WL 5436969, at *9-11 (E.D.N.Y. Sept. 27, 2013) (citing cases), aff'd on other grounds, 765 F.3d 123 (2d Cir. 2014). The minority view-but the view of the majority of federal appellate courts that have considered the question-is that “the act ...

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