United States District Court, N.D. Illinois, Eastern Division
Lois I. Berg and Robert D. Berg, Plaintiffs,
McCalla Raymer Leibert Pierce, LLC Defendant.
Thomas M. Durkin
MEMORANDUM OPINION AND ORDER
HONORABLE THOMAS M. DURKIN, UNITED STATES DISTRICT JUDGE
Berg and Robert D. Berg (the “Bergs”) bring this
action against McCalla Raymer Leibert Pierce, LLC
(“MRLP”) under the Fair Debt Collection and
Practices Act, 15 U.S.C. § 1692, et seq
(“FDCPA”). MRLP moved to dismiss for failure to
state a claim. R. 7. For the reasons that follow, MRLP's
motion is denied.
12(b)(6) motion challenges the “sufficiency of the
complaint.” Berger v. Nat. Collegiate Athletic
Assoc., 843 F.3d 285, 289 (7th Cir. 2016). A complaint
must provide “a short and plain statement of the claim
showing that the pleader is entitled to relief, ”
Fed.R.Civ.P. 8(a)(2), sufficient to provide defendant with
“fair notice” of the claim and the basis for it.
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007). This standard “demands more than an unadorned,
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While
“detailed factual allegations” are not required,
“labels and conclusions, and a formulaic recitation of
the elements of a cause of action will not do.”
Twombly, 550 U.S. at 555. The complaint must
“contain sufficient factual matter, accepted as true,
to ‘state a claim to relief that is plausible on its
face.' ” Iqbal, 556 U.S. at 678 (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.' ” Boucher v. Fin. Sys. of Green Bay,
Inc., 880 F.3d 362, 366 (7th Cir. 2018) (quoting
Iqbal, 556 U.S. at 678). In applying this standard,
the Court accepts all well-pleaded facts as true and draws
all reasonable inferences in favor of the non-moving party.
Tobey v. Chibucos, 890 F.3d 634, 646 (7th Cir.
case involves a state court foreclosure action filed by MRLP
related to a residence in Northbrook, Illinois (the
“Property”). According to the complaint, the
Property is inhabited by the Bergs and owned by the Bergs and
their daughter Lauren Berg (“Lauren”) as joint
tenants. R. 1 ¶¶ 3, 4, 13. On April 7, 2004,
Lauren- who is not a party to this lawsuit-borrowed money in
order to refinance mortgage loan debt on the Property. She
executed a promissory note in the amount of $220, 000 that
same day (the “Note”). Id. ¶¶
12-13 and Ex. 1. To secure payment of the Note, Lauren
granted a contemporaneous mortgage lien on her interest in
the Property (such mortgage lien, the “Mortgage,
” and the Note and Mortgage together, the
“Loan”). Id. ¶ 12 and Ex. 2. The
Bergs are not parties to the Loan and did not borrow money or
execute the Note or Mortgage. Id. ¶ 15; see
also id., Exs. 1 and 2. The Loan is now owned by
Deutsche Bank National Trust Company, as trustee for
Residential Asset Securitization Trust 2004-IP2, Mortgage
Pass-Through Certificate Series 2004-IP2 (“Deutsche
Bank”). Id. ¶ 14.
failed to make payments on the Loan, and on November 5, 2018,
MRLP filed a complaint to foreclose mortgage in state court,
attempting to collect on the Loan on behalf of and as
attorneys for Deutsche Bank (such action, the
“Foreclosure Action, ” and such complaint, the
“Foreclosure Complaint”). Id. ¶ 17
and Ex. 3. The Foreclosure Complaint names Lauren and the
Bergs (among others) as defendants, but lists only Lauren as
a person “claimed to be personally liable for
deficiency unless personal liability is discharged in a
Bankruptcy proceeding or otherwise released.”
Id. at Ex. 3 ¶ 3(o). And it seeks to sell the
Property at public sale in order to pay the Loan, a judgment
of foreclosure and sale of the Property, and a judgment for
attorney's fees, costs and expenses. Id. ¶
18 and Ex. 3. The Foreclosure Complaint also seeks possession
of the Property and the option to appoint a receiver.
Id. During the foreclosure proceedings, MRLP moved
for default and for judgment for foreclosure and sale.
Id. ¶ 20 and Exs. 4 and 5. MRLP also moved to
appoint a selling officer and for attorneys fees.
Id. ¶ 20 and Exs. 6 and 7. In moving for
judgment for foreclosure and sale, MRLP represented
“[t]hat the rights and interests of all Defendants in
the subject property are inferior to the lien of the
Plaintiff.” Id. ¶ 26.
February 21, 2019, the state court entered a judgment for
foreclosure and sale on the Property. Id. ¶ 21
and Ex. 8. The Bergs retained counsel to represent their
interests in the Foreclosure Action. Id. ¶ 22.
Ultimately, counsel was successful in having the judgment
against the Bergs vacated. But the Foreclosure Action remains
pending and the Bergs have incurred legal fees and costs of
$2, 500 for the work associated with it. Id.
Bergs allege that MRLP's actions in filing and
prosecuting the Foreclosure Action violate the FDCPA because:
(1) the Foreclosure Action “falsely implies that [MRLP]
has legal recourse to collect the debt” in that none of
the judgment of foreclosure and sale, entry of a judgment for
attorney's fees, costs and expenses, possession and
appointment of a receiver were legally attainable since the
Bergs were not obligated on the Note and nor was their
interest in the Property subject to any lien (including the
Mortgage), id. ¶¶ 28-29; and (2) the Loan
does not authorize MRLP to collect or attempt to collect from
the Bergs, id. ¶ 29. In other words, the Bergs
allege that the filings in the Foreclosure Action violate the
FDCPA because only Lauren's interest in the Property is
at issue per the Loan. MRLP moved to dismiss the complaint for
failure to state a claim. R. 7.
FDCPA prohibits abusive, deceptive, or unfair debt collection
practices. 15 U.S.C. § 1692 et seq. To state a
claim under the FDCPA, a plaintiff generally must allege
that: (1) he is a “consumer” within the meaning
of the FDCPA; (2) the “debt” at issue arises out
of a transaction entered into primarily for personal, family
or household purposes; (3) the defendant collecting or
attempting to collect the debt is a “debt
collector” within the meaning of the FDCPA; and (4) the
defendant violated, by act or omission, one of the
FDCPA's provisions. Heintz v. Jenkins, 514 U.S.
291, 293 (1995); Loja v. Main Street Acquisition
Corp., 906 F.3d 680, 683 (7th Cir. 2018). Here, the
Bergs invoke Sections 1692e and 1692e(2)(A), which together
bar debt collectors from using “any false, deceptive,
or misleading representation or means in connection with the
collection of any debt” with regard to the debt's
“character, amount, or legal status.” 15 U.S.C.
§ 1692e, e(2)(A). The Bergs also contend that MRLP
violated Sections 1692f and 1692f(1), which prohibit the
collection of or attempt to collect any amount in connection
with a debt that is not “expressly authorized by the
agreement creating the debt or permitted by law.”
Id. § 1692f, f(1).
argues that dismissal is proper because: (1) the Bergs are
not “consumers” within the meaning of the FDCPA;
and (2) the court filings in the Foreclosure Action are not
actionable under the FDCPA. R. 8; R. 15. The Court addresses
each argument in turn.
Whether the Bergs are ...