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Ewalt v. Collection Professionals, Inc.

United States District Court, C.D. Illinois, Rock Island Division

November 5, 2019

MARY A. EWALT, Plaintiff,
v.
COLLECTION PROFESSIONALS, INC., Defendant.

          ORDER

          JONATHAN E. HAWLEY U.S. MAGISTRATE JUDGE

         Now before the Court is Plaintiff Mary A. Ewalt's Renewed Motion for Leave to File Amended Complaint (Doc. 18) pursuant to Federal Rules of Civil Procedure 15(a)(2) and 16(b)(4) and Local Rule 7.1(B)(1) and Defendant Collection Professionals, Inc.'s Response (Doc. 19) thereto. For the reasons set forth below, the Plaintiff's Renewed Motion for Leave to File Amended Complaint is GRANTED.

         I

         The Plaintiff filed her original Complaint against Collection Professionals, Inc. (CPI) on February 6, 2019 pursuant to the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692, et seq., and the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/10a (ICFA). An August 2018 collection letter from the Defendant and phone call by the Plaintiff's power of attorney (her daughter) to CPI in response to that letter precipitated this case. The Plaintiff alleged the Defendant's attempt on or around August 21, 2018 to collect multiple medical debts (subject debt) the Plaintiff allegedly incurred to St. Margaret's Health and Perry Memorial Hospital violated Sections 1692e, e(2)(A), e(10), f, and f(1) of the FDCPA and Section 505/2 of the ICFA because: the subject debt was time-barred[1] and the Defendant failed to disclose or explain that fact or that it could not sue Ewalt to collect it; the Defendant failed to disclose or explain that by Ewalt paying or even agreeing to pay any portion of the subject debt or acknowledging its validity, it could have the effect of resetting the applicable statute of limitations as to the entire balance of the subject debt; and the Defendant's representations were false, deceptive, and/or misleading to the extent they created a false sense of urgency that Ewalt had to act quickly to avoid further assessment of “interest” in connection with the subject debt.

         On May 8, 2019, the Court adopted the parties' proposed discovery schedule which included a July 19, 2019 deadline to amend pleadings and join additional parties and a January 10, 2020 deadline for the completion of all discovery. After the Court denied without prejudice the Plaintiff's September 9, 2019 motion for leave to file an amended complaint for failure to comply with Local Rule 7.1(B)(1), the Plaintiff filed the instant Renewed Motion for leave to amend on October 3, 2019.

         In her Renewed Motion for leave to amend, the Plaintiff states that her counsel discovered new evidence on September 4, 2019 during a conversation with her which provides good cause to raise additional allegations and claims against Defendant and to add a party-defendant to the action. Specifically, on May 14, 2019, the Defendant sued Ewalt in Illinois state court (state court lawsuit) and subsequently communicated directly with her through its attorneys in further attempts to collect the time-barred consumer debt that is currently at issue in this case. The Plaintiff accordingly seeks to add a party, the law firm that represented the Defendant in the state court proceedings, Aplington, Kaufman, McClintock, Steele and Barry, Ltd. (Aplington), allegations against both the Defendant and Aplington that they violated the provisions of the FDCPA set forth in the original Complaint as well as Section 1692c(a)(2) of the FDCPA by reason of the state court collection lawsuit, and allegations against the Defendant under the ICFA by reason of the state court collection lawsuit.

         II

         A

         At this stage of the case, after the parties' deadline to amend the pleadings has expired, the Plaintiff must show “good cause” to amend his complaint. Fed.R.Civ.P. 16(b)(4) (“A schedule may be modified only for good cause and with the judge's consent”); Trustmark Ins. Co. v. Gen. & Cologne Life Re of America, 424 F.3d 542, 553 (7th Cir. 2005) (“To amend a pleading after the expiration of the trial court's Scheduling Order deadline to amend pleadings, the moving party must show ‘good cause'”). Good cause requires a showing of diligence by the party seeking the amendment. Trustmark Ins. Co., 424 F.3d at 553. The heightened good-cause standard of Rule 16(b)(4) is applied before considering whether the requirements of Rule 15(a)(2) are satisfied. Alioto v. Town of Lisbon, 651 F.3d 715, 719-20 (7th Cir. 2011).

         Here, the Plaintiff's counsel filed the the Motion to Amend just five days after counsel discovered the new evidence of the state court lawsuit. The fact that the Plaintiff did not inform her attorney of the May 14, 2019 state court lawsuit sooner will not be held against her; a layperson would not necessarily understand the potential significance of a debt collection action in state court on an already-pending FDCPA lawsuit in federal court. The fact Plaintiff's counsel sought to amend only days following his receipt of that new information is certainly the type of diligence contemplated by Rule 16(b)(4), and the Court therefore finds good cause to allow the amendment.

         B

         Turning to Federal Rule of Civil Procedure 15(a)(2), leave to amend may be denied where there is undue delay, bad faith on the movant's part, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party if the amendment is allowed, or futility. Bausch v. Stryker Corp., 630 F.3d 546, 562 (7th Cir. 2010). The Defendant argues the futility of the Plaintiff's new allegations for several reasons: 1) the new allegations fail to state a claim because Ewalt fails to allege that she was actually represented by counsel with respect to the debts in the state court lawsuit or that the representation was communicated to any third party; 2) the new allegations pertain to a state court lawsuit which did not seek a time-barred debt; and 3) the new allegations would be barred by res judicata and collateral estoppel.

         1.

         An amendment may be refused as futile “when the new pleading would not survive a motion to dismiss.” Gandhi v. Sitara Capital Mgmt., LLC, 721 F.3d 865, 869 (7th Cir. 2013). The purpose of a motion to dismiss is to test the legal sufficiency of the complaint, not the merits of the lawsuit. Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). A court may grant a Rule 12(b)(6) motion to dismiss only if a complaint lacks “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). The Court accepts all well-pleaded ...


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