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Hinojosa v. Linebarger Goggan Blair & Sampson, LLP

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

December 11, 2019



          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.


         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 ...

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