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Perea v. Codilis & Associates, P.C.

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

September 30, 2019

MARIO PEREA, individually and on behalf of a class, Plaintiff,
v.
CODILIS & ASSOCIATES, P.C. and NATIONSTAR MORTGAGE, LLC, Defendants.

          MEMORANDUM OPINION AND ORDER

          Honorable Edmond E. Chang United States District Judge.

         Mario Perea brought this suit against Codilis & Associates and Nationstar Mortgage (for convenience’s sake, together referred to as Defendants) alleging violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq.[1]R. 1, Compl.[2] Specifically, Perea alleged that Codilis sent him a letter containing false and misleading statements in violation of 15 U.S.C. § 1692e. Id. ¶¶ 43-48. Perea also alleged that the letter comprised an “unfair or unconscionable means” to collect a debt in violation of 15 U.S.C. § 1692f. Id. ¶¶ 49-52. Both Defendants now move to dismiss the complaint for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) or, alternatively, for failure to state a claim under Rule 12(b)(6). See R. 14, Nationstar Mot. to Dismiss at 1; R. 19, Codilis Mot. to Dismiss at 1. As discussed in this Opinion, Perea lacks standing to bring the claims, so Defendants’ motion to dismiss is granted.

         I. Background

         In evaluating this motion to dismiss, the Court must accept as true the complaint’s factual allegations and draw reasonable inferences in Perea’s favor. See Ashcroft v. al-Kidd, 563 U.S. 731, 742 (2011). In addition to the allegations in the pleading itself, documents attached to a complaint are also considered part of the complaint. Fed.R.Civ.P. 10(c). Perea is an Illinois resident who defaulted on his mortgage debt. Compl. ¶ 3. After he defaulted, Nationstar, a mortgage loan servicer, began servicing Perea’s debt. Id. ¶ 21. Nationstar hired the Codilis law firm to collect Perea’s debt on Nationstar’s behalf. Id. ¶¶ 11, 17, 23.

         To collect the debt, Codilis sent Perea a letter informing him that he owed $959, 995.30. Compl. ¶¶ 24-25, 27; R. 1-1, Exh. B, Collection Letter. The letter also said, “Because of interest, late charge and other charges that may vary from day to day, the amount due on the day you pay may be greater.” Id. Codilis sent this letter after the loan at issue had been accelerated (the importance of this timing is discussed later in the Opinion) and after demands had been made on Perea for the full amount due on the loan. Compl. ¶ 28. Also important: at no time did Perea seek reinstatement of the subject loan, note, and mortgage. Id. ¶ 29.

         Perea later filed this lawsuit, alleging that Codilis and Nationstar violated Sections 1692e and 1692f of the FDCPA. Specifically, Perea alleged that the Defendants cannot legally impose late fees on his already-accelerated debt (unless he reinstated the loan, which he had not), so the letter is false, misleading, and deceptive. The Defendants now move to dismiss the complaint, arguing that Perea lacks standing to bring the claims, and that (alternatively) he failed to adequately state a claim. See Nationstar Mot. to Dismiss at 1; Codilis Mot. to Dismiss at 1.

         II. Legal Standards

         A Rule 12(b)(1) motion tests whether the Court has subject-matter jurisdiction, Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009); Long v. ShoreBank Dev. Corp., 182 F.3d 548, 554 (7th Cir. 1999), whereas a Rule 12(b)(6) motion tests the sufficiency of the complaint, Hallinan, 570 F.3d at 820; Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990). In order to survive a Rule 12(b)(1) motion, the plaintiff must establish that the district court has subject-matter jurisdiction. United Phosphorous, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2011), overruled on other grounds, Minn-Chem, Inc. v. Agrium, Inc., 683 F.3d 845 (7th Cir. 2012). “If subject matter jurisdiction is not evident on the face of the complaint, [then] the ... Rule 12(b)(1) [motion is] analyzed [like] any other motion to dismiss, by assuming for the purposes of the motion that the allegations in the complaint are true.” Id.

         III. Analysis

         To satisfy Article III’s requirement of standing, Perea must show that he suffered an injury-in-fact that is fairly traceable to the conduct of the Defendants and can be redressed by a favorable decision. Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547-48 (2016) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 559-60 (1992)); see also Casilla v. Madison Ave. Assocs., Inc., 926 F.3d 329, 333 (7th Cir. 2019). An injury-in-fact must be both concrete and particularized. Spokeo, 136 S.Ct. at 1548. A concrete injury must be “de facto; that is, it must actually exist.” Id (cleaned up).[3] An injury can be intangible, but not every statutory violation by itself is enough. Id. at 1549. To determine if an intangible injury’s concreteness rises to the level required to satisfy standing, “both history and the judgment of Congress play important roles.” Id. A “violation of a procedural right granted by statute can be sufficient in some circumstances … [so that] a plaintiff in such a case need not allege any additional harm beyond the one Congress has identified.” Id. And the risk of harm might be concrete enough to meet standing requirements. Id. With regard to the “particularized”-injury requirement, the injury must “affect the plaintiff in a personal and individual way.” Id at 1548.

         As a preliminary matter, Perea argues that a plaintiff in an FDCPA case has Article III standing “based solely on receiving allegedly unlawful debt collection demands.” R. 30, Pl.’s Resp. Br. at 2 (citing cases)[4] (emphasis in original) (cleaned up); see also R. 38, Pl.’s Notice Supp. Authority.[5] Not so. As already discussed, a bare statutory violation is not necessarily enough-especially after Spokeo-to establish standing. Not all statutory violations are enough to “confer” Article III standing by themselves. See Spokeo, 136 S.Ct. at 1549; see also Casillas, 926 F.3d at 333 (“[T]he fact that Congress has authorized a plaintiff to sue a debt collector who fails to comply with any requirement of the Fair Debt Collection Practices Act ... does not mean that [a plaintiff] has standing.”) (cleaned up).

         To establish standing, Perea also alleges that “Defendants misrepresented the amount of the alleged debt [Codilis] is attempting to collect.” Compl. ¶ 13. He goes on to allege that “[a]n unsophisticated consumer would believe, upon receiving the Letter mailed to [him], that late fees could be sought and imposed when, in fact, it would not be legal to do so.” Id. ¶ 48. The problem with this allegation is that it says nothing about how the alleged misrepresentation was concrete and particular to Perea. And while Perea alleged that an unsophisticated consumer would be mislead by the letter, he fails to allege, again, that he himself was confused or misled by what the letter said.

         Applying Spokeo to the FDCPA, the Seventh Circuit recently made clear that a bare procedural allegation was not necessarily enough to establish standing. Casillas, 926 F.3d at 333. In Casillas, a debt collector sent the debtor a letter that described the process that the FDCPA requires for a debtor to obtain verification of a debt, but “neglected to specify that [the debtor] must communicate in writing to trigger the statutory protections, ” as is required under 15 U.S.C. § 1692g. Id. at 331 (emphasis added). The Seventh Circuit explained that “[t]he only harm [the plaintiff] claimed to have suffered … was the receipt of an incomplete letter” and concluded that was not enough to establish standing. Id. at 331-32. The Court reasoned “no harm, no foul, ” and explained:

[The debtor] did not allege that [the debt collector’s] actions harmed or posed any real risk of harm to her interest under the Act ... [S]he did not allege that she ever even considered contacting [the debt collector] ... She complained only that her notice was missing some ...

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