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Torres v. Lvnv Funding, LLC

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

March 27, 2018

VIRGINIA TORRES, Plaintiff,
v.
LVNV FUNDING, LLC, and NATIONS RECOVERY CENTER, INC., Defendants.

         Hon. Virginia M. Kendall

          MEMORANDUM OPINION AND ORDER

         Pending before the Court are cross-motions for summary judgment filed by Plaintiff Virginia Torres (“Torres”) and Defendants LVNV Funding, LLC (“LVNV”) and Nations Recovery Center, Inc. (“NRC”). The motions seek judgment as a matter of law on Torres's lawsuit alleging that the Defendants called her twice on the phone in an effort to collect a debt when represented by counsel in violation of the Fair Debt Collection Practices Act (“FDCPA” or “the Act”), 15 U.S.C. §§1692, 1692c (1977). For the following reasons, the Plaintiff's Motion for Summary Judgment is granted in part against Defendant LVNV, and the Defendants' Motion for Summary Judgment is granted in part as to NRC. [55, 70.]

         FACTS

         The following facts are undisputed unless otherwise indicated.

         I. The Parties

         Virginia Torres, a resident of Chicago, Illinois, opened Sears credit card account and made purchases. (Dkt. No. 57, at ¶¶ 1, 10; Dkt. No. 72, at ¶ 4.) Torres's husband at the time also used the same Sears credit card. (Dkt. No. 72, at ¶ 5.) LVNV is a Delaware company with a registered agent in Illinois. (Dkt. No. 57, at ¶ 2.) LVNV's master servicing agent is Resurgent Capital Services, L.P. (Dkt. No. 72, ¶ 8.) At times prior to this litigation, Resurgent placed Torres's credit card account - then owned by LVNV -with Blatt, Hasenmiller, Leibsker & Moore, LLC (“Blatt”); Bleecker, Brodey & Andrews (“Bleecker”); and Miller and Steeno (“Miller”). (Id. ¶ 9.) Resurgent ultimately placed Torres's account with NRC, which is a Georgia corporation with a registered agent in Illinois. (Id. ¶¶ 3, 12.)

         II. The Debt and Collection Efforts

         Torres and her husband used the card only for personal purposes - specifically, to buy auto-parts for her husband's car. (Dkt. No. 57, at ¶ 10; Ex. A, at ¶ 2; Ex. D, at 31-32; Ex. E, at ¶¶ 36-37, 40). The Defendants do not dispute that the Sears card belonged to Torres and that she and her husband used it to make purchases, but they dispute whether the purchases were for personal as opposed to business-related purposes. (Dkt. No. 68, ¶ 10.) Over time Torres could no longer make payments on the credit card and the account went into default. (Dkt. No. 57, ¶ 11.) Subsequently, the debt was charged off and sold to Sherman Originator, LLC (“Sherman”) - an affiliate of LVNV. (Dkt. No. 72, at ¶ 6.) In June 2003, LVNV acquired the debt from Sherman. (Dkt. No. 57, at ¶ 12; Dkt. No. 72, at ¶ 7.) In December 2005, Blatt - the first servicer for LVNV - filed a lawsuit against Torres in order to collect the debt, and a state court entered a default judgment on June 22, 2006. (Dkt. No. 57, at ¶¶ 14-15; Ex. E., at ¶ 7.) In August 2013, Bleecker - the second firm servicing the LVNV account - filed a petition for revival of judgment against Torres and, in response to the summons for that state action, Torres retained Community Lawyers Group to represent her in the matter. (Id. ¶¶ 17-18; Ex. E., at 10, 15.) In November 2014, Miller took over collection efforts as the third servicer for the LVNV account. (Id. ¶ 21; Ex. F, at 5.) Then, on February 3, 2015, in response to the second request for a revival of judgment, counsel for Torres entered an appearance in state court. (Id. ¶ 22; Ex. F, at 5.) Regardless, the state court granted revival of the judgment on August 14, 2015. (Id. at 7.) Finally on March 3, 2016, NRC received the Torres account in order to collect the judgment. (Dkt. No. ¶ 27.)

         III. Communications with The Plaintiff, Counsel, and the Defendants

         In September and October 2013, Torres's lawyer notified Blatt and Bleecker that Torres had counsel in the state collection action and any other debt-related matters, and that the she disputed the debt. (Id. ¶¶ 19, 20.) In addition to filing an appearance in court, Torres's lawyer served notice of appearance on Blatt, Bleecker, and Miller. (Id. ¶ 22.) Miller, the third firm assigned to collect the debt as of February 16, 2015, sent a letter to Torres's counsel acknowledging her representation in state court. (Id. ¶ 23.) On March 7, 2016, NRC contacted Torres three times to inform her of the outstanding debt. (Id. ¶ 29.) On March 22, 2016, NRC again called Torres attempting to collect the debt. (Id. ¶ 31.) During at least one call, NRC left a voice message indicating that the purpose for the call was the collection of a debt. (Id. ¶ 30.)

         IV. Defendants' Debt Collection Policies and Procedures

         Both LVNV and NRC hold a collection agency license from the State of Illinois. (Id. ¶¶ 5, 8.) LVNV's master servicing agent, Resurgent, placed accounts with servicers to collect outstanding amounts due. (Dkt. No. 72, at ¶ 8.) As a part of the collection process Resurgent had a system called AMCS, which is an electronic system used both to store and share information with servicers retained to collect the accounts. (Dkt. No. 62, at 15-17.) For instance, if a servicer had a problem that required information from Resurgent, the servicer could communicate with Resurgent via the AMCS system. (Id.) Examples of information stored by Resurgent included items like the state court trial call order granting judgment in the matter of LVNV Funding versus Virginia M. Torres. (Id.)

         Resurgent had policies and procedures whereby they require lawyers and servicers to comply with all state and federal laws, and an expectation that notification of attorney representation be sent to Resurgent in order to update its accounts. (Id. at 39.) Further, Resurgent provided servicers with information about how the communication system works, and expected its servicers to maintain policies and procedures that comport with policies established by Resurgent. (Id. at 40.) However, Resurgent did not always inform law firms that serviced debt accounts “how to practice law within the lawsuit.” (Id.)

         NRC received the LVNV account via Resurgent in order to collect on Torres's dormant judgment. (Dkt. No. 72, Ex. 4, at 8.) As a part of its procedures, NRC provided all of its employees with a memo regarding how to deal with debtors who have attorney representation. (Id. at 29.) They also conducted weekly training covering a range of topics, including what to do in the event an attorney represents a consumer, so that all employees are apprised of the company policies and procedures. (Id. at 30.) NRC used a program called Latitude in order to record information about debtor accounts under its assignment - including information as to whether a debtor had counsel. (Id. at 32.) NRC also had a policy that a consumer's representation of counsel be lodged in their system if either the consumer or the creditor notified NRC of attorney representation, and further that the account be pulled and placed in a “holding queue” so that the account is removed from the floor. (Id. at 32-33.) NRC did not pull the Torres account because neither Torres nor LVNV notified ...


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