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Castle v. Global Credit & Collection Corp.

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

January 10, 2020

BONNIE CASTLE, Plaintiff,
v.
GLOBAL CREDIT & COLLECTION CORP., et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          Steven C. Seeger, United States District Judge.

         Plaintiff Bonnie Castle received a letter from a debt collector, Defendant Global Credit & Collection Corporation, to collect an outstanding balance on her credit card account. That was news to her. Plaintiff had settled with the owner of that debt, Defendant LVNV Funding, LLC, about six months earlier. One month after the first letter, Global Credit sent a second one, this time offering to settle the debt for 50 cents on the dollar (when, mind you, she owed nothing). Plaintiff, feeling “annoyed and harassed, ” filed this lawsuit. Cplt. ¶ 60.

         At first, Defendants engaged the dispute in this federal forum. But a few months later, Defendants moved to compel arbitration. That tactical move was not a complete surprise. After all, Defendants invoked the possibility of arbitration in their answers. Plaintiff now argues that Defendants waived their right to arbitration by not filing their motions sooner.

         In light of the strong federal policy favoring arbitration and the enforcement of arbitration agreements, this Court holds that Defendants did not waive their right to arbitration. Defendants did not act with alacrity, but they did not delay the issue long enough to surrender their contractual right to arbitration.

         Background

         Plaintiff Bonnie Castle applied online for a credit card with Credit One Bank, N.A. in 2014. See Dckt. No. 39-1, at ¶ 13. During the application process, Plaintiff had access to the proposed credit agreement, and acknowledged its terms by finalizing the application. Id. at ¶ 15. Credit One accepted her application and opened her credit card account, which she used for several years. Id. at ¶ 14; Dckt. No. 39-4. Sometime later, Credit One amended the credit agreement, and mailed a copy to Plaintiff. See Dckt. No. 39-1, at ¶ 16; Dckt. No. 39-3. She continued to use her account. See Dckt. No. 39-1, at ¶ 17; Dckt. No. 39-4.

         Both the original and amended agreements included an arbitration provision. See Dckt. No. 39-2, at 6-7; Dckt. No. 39-3, at 6-7. The arbitration provision was not hidden in the depths of a long contract. Instead, the title of the agreement itself - the VISA/MASTERCARD CARDHOLDER AGREEMENT, DISCLOSURE STATEMENT AND ARBITRATION AGREEMENT - highlighted the agreement to arbitrate. See Dckt. No. 39-2, at 2 (bold in original); Dckt. No. 39-3, at 2 (same). The agreement devoted an entire section to arbitration, spanning a full page. See Dckt. No. 39-2, at 6-7; Dckt. No. 39-3, at 6-7.

         The agreement entitled either party to submit “any controversy or dispute between [the parties] . . . to mandatory, binding arbitration.” See Dckt. No. 39-2, at 6; Dckt. No. 39-3, at 6. “Claims subject to arbitration include . . . collections matters relating to your Account.” See Dckt. No. 39-3, at 6. The agreement covered class actions, too. Id. Either party had a right to “compel arbitration of Claims subject to arbitration, or to stay the litigation of any Claims pending arbitration, in any court having jurisdiction.” Id. at 7.

         The parties agreed that it was fair game to demand arbitration until the eve of trial itself: “Such action may be brought at any time, even if any such Claims are part of a lawsuit, unless a trial has begun or a final judgment has been entered.” Id. The parties also agreed that a delay in enforcing the right to arbitration would not be a waiver (although the parties presumably could waive that non-waiver provision). “Failure or forbearance to enforce this Arbitration Agreement at any particular time, or in connection with any particular Claims, will not constitute a waiver of any rights to require arbitration at a later time or in connection with any other Claims.” Id.

         In 2017, Credit One assigned the rights to Plaintiff's account to a credit agency, and the receivables went through a string of assignments from one company to another. See Dckt. No. 39-1, at ¶¶ 22-23; Dckt. No. 39-5, at ¶¶ 3-6; Dckt. No. 39-6, at ¶¶ 3, 6; Dckt. No. 39-7, at ¶¶ 3-6. At the end of the string, Defendant LVNV, a debt collection agency, ultimately acquired Plaintiff's account. See Dckt. No. 39-7, at ¶ 6; Dckt. No. 39-8, at ¶ 3. LVNV assumed all “rights, title, and interest in” Plaintiff's account. Dckt. No. 39-8, at ¶ 3.

         Later that year, LVNV sued Plaintiff to collect an outstanding balance on her credit card account. See Cplt. ¶ 35. The parties settled the suit and released Plaintiff from her debt in January 2018. Id. at ¶ 36. Sometime after settlement, Defendant Resurgent Capital Services, L.P., a debt collection agency acting on behalf of LVNV, hired Defendant Global Credit to collect the discharged debt. Id. at ¶ 37. Aptly-named Resurgent attempted to collect a debt that Plaintiff no longer owed.

         Global Credit sent Plaintiff two collection letters. Id. at ¶¶ 39, 44. The first letter claimed that Castle owed a balance of $2, 203.79, and that Global Credit was “authorized to collect the outstanding amount owed.” See Dckt. No. 1-1, at 2. The letter failed to acknowledge that the debt was settled. But reading between the lines, Global Credit seemed aware of the fact that it needed to tread lightly. After requesting payment for an expired debt, Global Credit offered a nugget of truth: “The law limits how long you can be sued on a debt. Because of the age of your debt, LVNV Funding LLC will not sue you for it, and LVNV Funding LLC will not report it to any credit reporting agency.” Id.

         Global Credit tried again one month later. Global Credit sent Castle a second letter, claiming that it had “approval to settle your account.” Id. at 5. Global Credit floated a 50% haircut, offering to settle for $1, 101.90. Id. Global Credit didn't mention that, in truth, Castle owed nothing.

         Instead of paying a debt that she did not owe, Castle turned the tables. On October 12, 2018, Castle filed suit under the Fair Debt Collection Practices Act on behalf of herself and a putative class. Plaintiff essentially alleges that the letters were a trick. The debt was time-barred, but making a partial payment on the debt arguably could have restarted the statute of limitations. See Dckt. No. 1, at ¶ 43; see also Pantoja v. Portfolio Recovery Assoc., LLC, 852 F.3d 679, 684 (7th Cir. 2017) (discussing the ‚Äúdanger that a debtor who accepts the offered terms of settlement will, by doing so, waive his otherwise absolute ...


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