United States District Court, N.D. Illinois, Eastern Division
ORDER
Charles Ronald Norgle United States District Judge.
Defendants'
motion to dismiss for failure to state a claim and for lack
of subject matter jurisdiction [22] is denied.
STATEMENT
Galaeso
Hinojosa and Maria Cardona ("Plaintiffs") bring
this putative class action against the firm Linebarger Goggan
Blair & Sampson, LLP and the City of Chicago
("Defendants"), alleging violations of the Fair
Debt Collection Practices Act ("FDCPA"), 15 U.S.C.
§ 1692, et seq. Before the Court is Defendants'
motion to dismiss. For the reasons stated below, the motion
is denied.
This
case involves an alleged deceptive debt collection.
Plaintiffs claim that a debt collection law firm, on behalf
of the City of Chicago, attempted to collect a water bill
payment eighteen years after the debt was due. Specifically,
they allege that it was deceptive for the firm to send them a
collection letter without informing them that the city's
claim was time-barred by statute of limitations or that
Plaintiffs would sacrifice this defense if they made partial
payment.
In
their Motion to Dismiss, Defendants argue that
Plaintiffs' first claim, for violation of the Federal
Debt Collection Practices Act, should be dismissed for
failure to state a claim pursuant to Rule 12(b)(6) because
FDCPA regulation cannot apply to Plaintiffs' water bill
as it is not consumer debt that "aris[es] out of a
consensual "transaction." 15 U.S.C. l692a(5)
(defining "debt" in the FDCPA). They also argue
that Count I fails because the four-year statute of
limitations from Illinois' Uniform Commercial Code
invoked by Plaintiffs[1]does not apply to the water bill, due to
the City of Chicago's authority stemming from Home Rule
and the doctrine of nellum tempus.[2] Second, they
argue that Plaintiffs' other count, for declaratory and
injunctive relief, fails pursuant to Rule 12(b)(1) because
those claims for relief: (1) do not independently confer
federal jurisdiction; (2) are not remedies allowed under the
FDCPA; and (3) are mere remedies rather than causes of
action. Finally, Defendants contend that the second
Plaintiff, Galaeso Hinojosa's wife Maria Cardona, is not
a proper plaintiff because she was not named on the water
bill.
For the
following reasons, the Court denies the motion at this early
stage of litigation. Plaintiffs have met the notice-pleading
requirements of a complaint. Simply put, Plaintiffs plead
facts that make their claims plausible. Bell Atlantic
Corp. v. Twombly, 550 U.S. 544 (2007). The Court is not
ruling, however, that Defendants' arguments fail as a
matter of law. They may in fact prove successful at the
summary judgment stage.
Rule
8(a) of the Federal Rules of Civil Procedure requires that a
complaint contain a "short and plain statement of the
claim showing that the plaintiff is entitled to relief."
Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
554-557 (2007). This statement must provide sufficient
plausible facts to put a defendant on notice of the claims
against him. Brooks v. Ross, 578 F.3d 574, 581 (7th
Cir. 2009). The complaint "must provide enough factual
information to 'state a claim to relief that is plausible
on its face' and 'raise a right to relief above a
speculative level.'" Doe v. Village of Arlington
Heights, 782 F.3d 911, 914 (7th Cir. 2015) (quoting
Twombly, 550 U.S. at 555, 570). Rule 8 "demands
more than an unadorned, the-defendant-unlawfully-harmed-me
accusation." Ashcroft v. Iqbal 129 S.Ct. 1937,
1949 (2009). "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." Id. (citations and
quotation marks omitted). In reviewing a plaintiffs claim,
the court "must construe all of the plaintiffs factual
allegations as true, and must draw all reasonable inferences
in the plaintiffs favor." Virnich v. Vorwald,
664 F.3d 206, 212 (7th Cir. 2011).
Consumer
Debt under the FDCPA
Having
reviewed the pleadings and briefs submitted by the parties,
and taking Plaintiffs' factual allegations as true, the
Court concludes that Plaintiffs' claims do not fail as a
matter of law at this point. Plaintiffs meet the above
pleading standards and put Defendants on notice of the claims
against them. In short, they allege that they had a contract
with the city for the sale of water. They further assert that
Defendant LGB&S, on behalf of the City, and after the
water bill was eighteen years old (which is well beyond the
statute of limitations invoked by Plaintiffs), attempted to
collect the debt via a letter. In doing so, Defendants
failed-allegedly deceptively-to inform Plaintiffs that
Plaintiffs could no longer be sued to recover the debt or
that Plaintiffs might forfeit this defense should they choose
to begin paying the debt. See Pantoja v. Portfolio
Recovery Associates, LLC, 852 F.3d 679, 684 (7th Cir.
2017) (finding that a letter attempting to recover a credit
debt was deceptive for the same two foregoing reasons). The
complaint makes out a plausible claim.
Defendants
argue that the nature of Chicago's provision of water
precludes Plaintiffs' FDCPA claim because water service
does not constitute a consensual transaction. Bass v.
Stolper, Koritzinsky, Brewster & Neider, S.C., 111
F.3d 1322, 1326 (7th Cir. 1997) ("the FDCPA limits its
reach to those obligations to pay arising from consensual
transactions, where parties negotiate or contract for
consumer-related goods or services."). They point out
that there is no alternative water provider and that water
prices, whether a property is metered or not, are dictated by
statute. However, the parties disagree about (1) whether
there was a contract;[3] (2) whether Chicago municipal code
requires water permit applications and whether provision of
water is automatic;[4]and (3) the nature of water services,
including penalties for non-payment, in other municipalities
from cited cases-specifically, New York City. See Boyd v.
J.E. Robert Co., 765 F.3d 123, 126 (2d Cir. 2014).
Again, Defendants may be correct on these issues, but the
Court is required to accept the facts alleged by Plaintiffs
and draw reasonable inferences in their favor at this stage.
Virnich, 664 F.3d at 212.
Without
the benefit of discovery, which may or may not reveal
additional relevant facts, the Court proceeds with an
abundance of caution and does not yet decide whether the
water bill here constitutes consumer debt under the FDCPA.
There appears to be no binding law on this Court, and federal
courts around the country have not uniformly resolved this
question. At this point, the Court will not rule as a matter
of law. See Boyd v. J.E. Robert Co., 765 F.3d 123,
126 (2d Cir. 2014) (finding that a New York City water bill
was not a FDCPA debt, as plaintiff was compelled to use the
city's service, making their relationship "akin
to" a taxpayer and taxing authority), but see People
ex rel. County of DuPage v. Smith, 21 Ill.2d 572, 173
N.E.2d 485 (1961) ("regardless of whether or not
connection is compelled, the [charge for use of sewer system]
arises from an implied contract . . ."), and Austin
View Civic Ass'n v. City of Palos Heights, 85
Ill.App.3d 89, 94, 405 N.E.2d 1256 (1980) ("When a
municipal corporation owns and operates a water system for
the purpose of selling water to consumers, it is acting in a
business capacity and is generally to be treated as if it
were a private utility company.");[5] see also
Franklin v. Parking Revenue Recovery Svcs, Inc.. 832
F.3d 741, 744 (7th Cir. 2016) (ruling that FDCPA applied to
parking bill because contract law created the payment
obligation when individuals chose to park in a government
parking lot, and explaining that the "arising out of
language in the FDCPA limits the law's reach to
"only those obligations that are created by the
contracts the parties use" and that "tort
law or traffic regulations" are "not covered by the
FDCPA."); Flowers v. Baltax 2017, LLC, No. CV
JKB-19-0618, 2019 WL 3501584, at *4 (D. Md. Aug. 1, 2019)
(holding that "Plaintiffs debt arising from unpaid water
bills could plausibly qualify as a consumer debt under the
FDCPA" and distinguishing the case from Boyd
because "water charges in New York City are incidental
to property ownership" whereas "Baltimore City
charges individuals for water based on the amount of water
consumed" by meter) but see Boyd v. J.E. Robert
Co., No. 05-CV-2455 KAM RER, 2013 WL 5436969, at *8
(E.D.N.Y. Sept. 27, 2013)[6] (stating that the water charges in
Boyd "were metered according to usage" but
declining to rule that "metered usage alone gives rise
to a consensual transaction under the FDCPA . . . where, as
here, property owners have no choice in determining whether
or not to use municipal water services.").
Statute
of Limitations
The
Illinois Constitution gives "home rule units" like
Chicago power "pertaining to its government and affairs
including, but not limited to, the power to regulate for the
protection of the public health, safety, morals and welfare;
to license; to tax; and to incur debt." 111. const. 1970
art. VII, § 6(a). Because the UCC statute of limitations
at issue does not mention home rule or explicitly preempt
local laws, Defendants argue that the state statute of
limitations does not apply to the city's attempts at debt
collection. However, Defendants only cite language regarding
the general principle that home rule units are afforded broad
power unless the legislature specifically steps in. Palm
v. 2800 Lake Shore Drive Condo Ass'n, 988 N.E.2d 75,
81, 370 Ill.Dec. 299 (2013) (the Illinois constitution gives
home rule units the "broadest powers possible" . .
. "except when those powers are limited by the General
Assembly" ... by passing "a law specifically
stating home rule authority is limited.") Defendants do
not point to any case or law that requires that a state
statute of limitations like the one contained in the UCC does
not apply to a home unit, nor do they point to any local
ordinance that might concurrently apply to cases brought by
the City of ...