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Liang v. Frontline Asset Strategies LLC

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

April 14, 2017

WEI LIANG, on behalf of plaintiff and the class members described herein, Plaintiff,
v.
FRONTLINE ASSET STRATEGIES, LLC, LVNV FUNDING, LLC, RESURGENT CAPITAL SERVICES, L.P., and ALEGIS GROUP, LLC, Defendants.

          MEMORANDUM OPINION AND ORDER

          John Z. Lee United States District Judge.

         Plaintiff Wei Liang filed suit against Frontline Asset Strategies, LLC (“FAS”), LVNV Funding, LLC (“LVNV”), Resurgent Capital Services, L.P. (“Resurgent”), and Alegis Group, LLC (“Alegis”) asserting violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692e. Defendants have filed a motion to dismiss Plaintiff's Third Amended Complaint and strike certain allegations therein. For the reasons stated below, the motion [53] is granted in part and denied in part.

         Factual and Procedural Background

         This case arises from efforts by FAS to collect a debt from Plaintiff. 3d Am. Compl. ¶¶ 40, 42, ECF No. 51. The debt in question originated from a credit card account on which Plaintiff allegedly defaulted. Id. ¶¶ 26-27. In 2005, an entity not before this court, North Star Capital Acquisition, LLC (“North Star”), obtained a default judgment against Plaintiff with regard to the debt. Id. ¶ 26. Defendants contend that, by a series of transfers, LVNV then became the owner of the debt, and employed FAS to recover it. Id. ¶¶ 38, 40, 42.[1] The focus of Plaintiff's action is a letter in which he claims that FAS made various false or misleading representations while attempting to collect the debt. Id. ¶ 42; see Id. ¶ 50.

         Plaintiff originally filed suit on October 13, 2015, after which he amended his complaint twice in lieu of responding to Defendants' motions to dismiss. In his second amended complaint, he raised two primary grounds on which he alleged the letter was false or misleading: first, that “it did not disclose that the judgment in question was a dormant judgment under Illinois law”; and second, that the letter suggested defendants were the judgment creditors, despite the fact that they are not. Liang v. Frontline Asset Strategies, LLC, No. 15 C 09054, 2016 WL 7409913, at *1 (N.D. Ill.Dec. 22, 2016).

         The Court dismissed each of these claims with prejudice. Id. at *4. In regard to Plaintiff's first claim, the Court concluded that “even if the letter had disclosed the dormant status of the judgment, it would not have had any practical impact on an unsophisticated consumer's rights or decision-making process in relation to the debt, ” and thus was not a material statement that could give rise to FDCPA liability. Id. at *2-4. Then, in regard to Plaintiff's second claim, the Court found that “the letter notes that LVNV is the creditor to whom the debt is owed; it makes no statement that would mislead a debtor into thinking that LVNV was also the judgment creditor.” Id. at *4. Finally, the Court observed that, in his briefing, Liang “also appear[ed] to challenge LVNV's ownership of the debt, ” but that his second amended complaint did not clearly raise a claim based on lack of ownership. Id. It therefore granted Plaintiff leave to amend insofar as “he ha[d] a nonfrivolous argument that LVNV is not the owner of the debt at issue.” Id.

         In Plaintiff's Third Amended Complaint, he clarifies his allegation that LVNV did not own the debt on which it sought to collect only to represent otherwise in FAS's letter. 3d Am. Compl. ¶ 1, 50. Specifically, he states that a bill of sale seeking to assign certain “Accounts” from North Star to another entity, which in turn assigned the accounts to LVNV, was insufficient to transfer ownership of Plaintiff's debt. Id. ¶¶ 38-39; see id., Ex. M. This bill of sale states as follows: “[North Star] hereby transfers, sells, conveys, grants, and delivers to Buyer, its successors and assigns, all right title and interest of any kind in and to the Accounts set forth in the data file named ‘Zenith-NorthStar-2011-12, ' as shown in the Accounts Schedule, which is hereby incorporated by reference.” Id., Ex. M. Plaintiff maintains that, because his defaulted account had been reduced to a judgment, it was no longer an “account, ” and thus could not have been transferred by the bill of sale, negating LVNV's claim to ownership. Id. ¶ 39.

         In addition to this claim, Plaintiff continues to assert that Defendants violated the FDCPA by “[a]ttempting to collect a dormant judgment, on which defendants were not the judgment creditor.” Id. ¶ 50.

         Analysis

         I. Motion to Strike

         Defendants first move to strike various allegations from Plaintiff's Third Amended Complaint. “The court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed.R.Civ.P. 12(f). Motions to strike are generally disfavored because they “potentially serve only to delay.” Heller Fin., Inc. v. Midwhey Powder Co., 883 F.2d 1286, 1294 (7th Cir. 1989). “But where, as here, motions to strike remove unnecessary clutter from the case, they serve to expedite, not delay.” Id. A district court “has considerable discretion in striking any redundant, immaterial, impertinent or scandalous matter.” Delta Consulting Grp., Inc. v. R. Randle Const., Inc., 554 F.3d 1133, 1141 (7th Cir. 2009).

         The allegations that Defendants seek to strike all relate to the two bases for Plaintiff's claims that the Court dismissed with prejudice in its previous order (i.e., Plaintiff's theories related to the relevant judgment's dormancy and LVNV's non-status as a judgment creditor). Def.'s Mot. Dismiss 4-6, ECF No. 53. District courts have regularly stricken allegations seeking to revive claims that have been previously dismissed with prejudice. E.g., Brunson v. Schauf, No. CIV. 12-225-GPM, 2013 WL 66158, at *1-2 (S.D. Ill. Jan. 4, 2013); David v. Vill. of Oak Lawn, No. 95 C 7368, 1996 WL 494268, at *2 (N.D. Ill. Aug. 27, 1996); Gardean Envtl. Co. v. Local 225, Laborers Int'l Union, AFL-CIO, No. 92 C 4545, 1993 WL 462833, at *3 (N.D. Ill. Nov. 9, 1993); Wallace v. Xerox Corp., No. 87 C 8810, 1989 WL 51119, at *2-3 (N.D. Ill. May 8, 1989).

         Seeking to avoid this result, Plaintiff first contends that the Court's previous order “did not say that anything was to be deleted.” Pl.'s Resp. 10, ECF No. 58 (emphasis omitted). But this argument misses the mark. The Court unequivocally dismissed Plaintiff's claims based on these allegations with prejudice, thereby precluding Plaintiff from raising them again, as he has here.

         Plaintiff further states that “[t]he fact that the Court held that facts A and B were insufficient absent fact C does not make facts A and B irrelevant after C is added.” Resp. at 10. This argument misconstrues the Court's opinion. The Court did not hold that “facts A and B”-i.e., the issues Plaintiff raised as to the relevant judgment's dormancy and LVNV's non-status as a judgment creditor-were “insufficient absent fact C”-i.e., Plaintiff's allegation of lack of ownership. The Court ruled that the former theories failed to state a claim under the FDCPA, regardless of whether Plaintiff further disputed LVNV's ownership of the debt. Liang, 2016 WL 7409913, at *4. ...


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