United States District Court, N.D. Illinois, Eastern Division
DERICK L. HAMILTON, Plaintiff,
LOANCARE, LLC, Defendant.
MEMORANDUM OPINION AND ORDER
M. ROWLAND, UNITED STATES MAGISTRATE JUDGE
Derrick Hamilton (“Hamilton”), individually, and
on behalf of all others similarly situated, filed a complaint
against Defendant, LoanCare, LLC (“LoanCare”),
pertaining to a letter Hamilton received concerning a debt
from a real estate mortgage. Hamilton brings the claim for
violation of the Fair Debt Collection Practices Act (the
“FDCPA”), 15 U.S.C. § 1692 et seq.
(Dkt.15). This Court has subject matter jurisdiction pursuant
to 28 U.S.C. § 1331 and venue is proper under 28 U.S.C.
§ 1391(b)(2). Loancare moves to dismiss the First
Amended Class Action Complaint under Federal Rule of Civil
Procedure 12(b)(6). For the reasons stated herein, the Motion
to Dismiss  is DENIED.
January 10, 2013, Hamilton executed a mortgage (“the
Mortgage”) for the purchase of real estate located at
148 North Bertram Drive, Yorkville, Illinois (“the
Property”). (Amend. Compl., Dkt. 15 at ¶¶ 16,
27). The Mortgage secured the repayment of $124, 343.00 of
debt (“subject debt”). (Id. at ¶
8). On January 28, 2015, Hamilton initiated a bankruptcy case
for relief under Chapter 13 of the Bankruptcy Code, and the
Bankruptcy Court confirmed the Chapter 13 Plan on March 27,
2015. (Id. at ¶¶ 11, 13). On September 8,
2015, Hamilton's liability on the subject debt was
extinguished through the Chapter 13 Plan. (Id. at
¶15). On April 1, 2016, LenderLive transferred the
servicing rights to the subject debt to RoundPoint Mortgage
Servicing Corporation (“RoundPoint”). On May 2,
2017, the servicing rights to the subject debt were
transferred from RoundPoint to Loancare, and Loancare
received notice of Hamilton's bankruptcy discharge.
(Id. at ¶¶ 18, 19). At the time Loancare
acquired servicing rights, the subject debt was in default.
The Property was then sold at a public sale on July 10, 2017.
(Id. at ¶ 21). On December 13, 2018, Loancare
sent a letter entitled Deficiency Waiver Notice
(“Waiver Notice”) to Hamilton at the address of
the office suite of Hamilton's lawyers. (Dkt. 15-1, Dkt.
Waiver Notice stated: “After the application of
proceeds from the sale of the above listed property to your
mortgage loan balance, there remains a deficiency of $49,
867.54.” (Dkt. 15-1). The Waiver Notice then went on to
state that “the holder of the deficiency waives its
right to collect the unpaid deficiency balance from you, and
neither the [Department of Veterans Affairs
(“VA”)] nor the deficiency holder will pursue you
for any portion of the deficiency balance.”
(Id.). Further, the Waiver Notice indicated:
“To the extent the Fair Debt Collection Practices Act
(FDCPA) is applicable, please be advised that this
communication is from a debt collector and any information
obtained will be used for that purpose.” (Id.)
(emphasis removed from original). The Waiver Notice also
provided a bankruptcy disclaimer that stated if Hamilton
“previously received a discharge in a bankruptcy
proceeding, please notify [Loancare] immediately and be
advised that this notice is for informational purposes
only.” (Id.) (emphasis removed from original).
Moreover, the Waiver Notice stated: “This notice is not
intended to collect, recover, or offset the debt against you
personally and should not be considered a demand for payment
or indicate that you are personally liable for this
debt.” (Id.) (emphasis removed from original).
alleges that the Waiver Notice was “false and
misleading because it strongly implies that prior to
receiving [LoanCare's] letter, [Hamilton] was liable for
the deficiency balance that arose after the sale of the
Property.” (Amend. Compl. Dkt. 15 at ¶ 31).
Hamilton also alleges he was “highly confused and
misled by [Loancare's] letter because he was led to
believe that his bankruptcy discharge had no legal effect and
that he was liable for the deficiency balance up to the date
he received [Loancare's] letter.” (Id. at
Rule 8(a)(2), a plaintiff must provide “a short and
plain statement of the claim showing that the pleader is
entitled to relief.” Fed.R.Civ.P. 8. A Rule 12(b)(6)
motion to dismiss tests the sufficiency of the complaint; the
purpose is not to decide its merits. Gibson v. City of
Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). A
determination of the sufficiency of a claim must be made
“on the assumption that all allegations in the
complaint are true (even if doubtful in fact).”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
(2007). “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.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009).
survive a motion to dismiss, a plaintiff “must satisfy
two conditions: first, the complaint must describe the claim
in sufficient detail to give the defendant fair notice of
what the claim is and the grounds upon which it rests; and
second, its allegations must plausibly suggest that the
plaintiff has a right to relief, raising that possibility
above a speculative level.” Horning v. Lab. Corp.
of Am., No. 09 C 3421, 2009 U.S. Dist. LEXIS 80866, at
*4 (N.D. Ill. Sep. 3, 2009) (internal citations omitted).
claim is for a violation of the Fair Debt Collection
Practices Act (“FDCPA”), 15 U.S.C. § 1692
et seq. LoanCare moves to dismiss the claim, arguing
that the Complaint fails to state a cause of action for three
reasons: (1) the Waiver Notice is not “collection
activity” under the FDCPA; (2) the Waiver Notice was
sent to Hamilton's attorney's rather than Hamilton
and no “competent attorney” would have been
deceived by the notice; and (3) if the “competent
attorney” standard is not applied, the
“unsophisticated consumer” would still not have
been misled by the Waiver Notice. The Court will address the
first two of these arguments.
Whether the Waiver Notice is “collection
activity” under the FDCPA
FDCPA generally prohibits “debt collectors” from
engaging in abusive, deceptive, or unfair debt-collection
practices. Gburek v. Litton Loan Servicing LP, 614
F.3d 380, 384 (7th Cir. 2010). Pursuant to Section 1692e of
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.
§ 1692(e)(2). Two threshold criteria must be met for the
FDCPA to apply: 1) “the defendant must qualify as a
‘debt collector''”; and 2) “the
communication by the debt collector that forms the basis of
the suit must have been made ‘in connection with the
collection of any debt.'” Gburek, 614 F.3d
at 384 (quoting 15 U.S.C. § 1692a(6), §§
1692c(a)-(b), § 1692e, § 1692g).
does not dispute that it qualifies as a “debt
collector, ” but argues that the Waiver Notice was not
sent “in connection with the collection of a
debt” because the Waiver Notice did not make an express
demand for payment, list a payment due date, or threaten
consequences should the debtor fail to pay. (Dkt. 17 at 8-9).
Further Loancare asserts that the Waiver ...