Grant Bentrud v. Bowman, Heintz, Boscia & Vicia
Filing
Filed opinion of the court by Judge Kanne. AFFIRMED. Richard A. Posner, Circuit Judge; Kenneth F. Ripple, Circuit Judge and Michael S. Kanne, Circuit Judge. [6680546-1] [6680546] [14-2384]
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In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 14-2384
GRANT E. BENTRUD,
Plaintiff-Appellant,
v.
BOWMAN, HEINTZ, BOSCIA & VICIAN, P.C.,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Southern District of Indiana, Indianapolis Division.
No. 1:12-cv-1340 — William T. Lawrence, Judge.
____________________
ARGUED DECEMBER 9, 2014 — DECIDED JULY 27, 2015
____________________
Before POSNER, RIPPLE, and KANNE, Circuit Judges.
KANNE, Circuit Judge. Grant E. Bentrud owes Capital One
Bank, N.A. (“Capital One”), money—$10,955.20 to be exact.
He amassed that debt on his credit card, and he does not
dispute it here. Bentrud’s dispute instead concerns the manner in which Capital One’s lawyers attempted to collect the
debt. The way he sees it, Bowman, Heintz, Boscia & Vician,
P.C. (“Bowman Heintz”), an Indiana law firm specializing in
debt collection, committed multiple violations of the Fair
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Debt Collection Practices Act (“FDCPA”) during their collection efforts.
To remedy those alleged violations, Bentrud commenced
this action in the Southern District of Indiana. After a volley
of motions between the parties, the district court granted
summary judgment in favor of Bowman Heintz on each of
Bentrud’s FDCPA claims. For the reasons expressed below,
we affirm the judgment of the district court.
I. BACKGROUND
The alleged FDCPA violations that form the basis for this
federal case occurred in state court. On January 6, 2012,
Bowman Heintz filed a complaint in Hendricks County Superior Court in Indiana. There, Bowman Heintz sought recovery of the full amount of Bentrud’s credit card debt owed
to Capital One. The case proceeded unremarkably, and nearly ten months later, on October 1, 2012, Bowman Heintz filed
a motion for summary judgment. See Ind. R. Trial P. 56(c).
Bentrud responded to that motion by invoking the arbitration provision in his credit card agreement with Capital
One. The arbitration provision provides: “If you or we elect
arbitration of a claim, neither you nor we will have the right
to pursue that claim in court or before a judge or jury.” The
state court granted Bentrud’s election of arbitration and denied Bowman Heintz’s motion for summary judgment. It also stayed the case, allowing Bentrud thirty days to initiate
arbitration. If, however, Bentrud failed to initiate arbitration
within that window, the court ordered the stay “automatically dissolved.”
That was a prescient order, because a curveball quickly
emerged: no one agreed to do the arbitration. The American
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Arbitration Association (“AAA”) declined because Capital
One had previously failed to comply with its policy regarding consumer claims. Although it is unclear whether Bentrud, Bowman Heintz, or Capital One attempted to contact
other possible arbitrators, what is clear is that after AAA declined, efforts to arbitrate stalled. Bentrud subsequently
failed to meet the thirty-day deadline (April 11, 2013) set by
the state court, which meant that the stay was automatically
dissolved.
So on May 20, 2013, more than a month after the deadline
to arbitrate had lapsed, Bowman Heintz filed a second motion for summary judgment. 1
Importantly, that filing forms the first basis of Bentrud’s
FDCPA case. For he characterizes that motion, made after he
had elected to pursue arbitration of the debt claim, as an unfair or unconscionable means of attempting to collect a debt.
See 15 U.S.C. § 1692f. This FDCPA claim, of course, did not
arise until Bentrud filed his federal action in the Southern
District of Indiana. At the time, Bentrud simply responded to
the second motion for summary judgment with a combined
“Verified Motion to Dismiss or Continue Stay.” The state
court granted the continuance but denied the motion to dismiss. It extended his deadline to initiate arbitration to July
31, 2013—three months after the original deadline. That ex1
There is some question as to whether this motion was actually a second
motion for summary judgment or a mere renewal of the first motion for
summary judgment. At oral argument, counsel for Bowman Heintz presented it as the latter. Given the posture of this case and the fact that the
state court denied Bowman Heintz’s initial motion for summary judgment, we treat the motion as a second, discrete motion for summary
judgment.
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tension worked, as Bentrud and Capital One are now proceeding with arbitration of the state-law debt collection
claim.
Bentrud has another FDCPA claim against Bowman
Heintz. His second claim concerns interest rates. Two rates
are at issue here: 10.65% and 13.9%. Bentrud claims that
from May 17, 2009 to May 16, 2011, the Annual Percentage
Rate (“APR”) on his credit card debt with Capital One was
13.9%. That APR is reflected on his May 16, 2011, statement
from Capital One. Yet when Bowman Heintz filed its complaint in the state court action, it averred the applicable interest rate to be 10.65%. Bentrud, apparently unsatisfied with
that reduced interest rate, sees impropriety in the averment.
So he advances an either-or argument against Bowman
Heintz. Either the correct interest rate is 13.9%, in which case
Bowman Heintz misrepresented the interest rate when it
averred the interest rate to be 10.65% in its complaint. See 15
U.S.C. § 1692e (prohibiting misrepresentation of the amount
of the debt). Or the correct interest rate is 10.65%, in which
case Bowman Heintz attempted to collect a debt that was not
authorized by the terms of the agreement. See 15 U.S.C.
§ 1692f(1) (prohibiting collection of a debt not authorized by
the agreement). Regardless, he argues, Bowman Heintz violated the FDCPA.
Before turning to the merits, we make a couple of observations on this second FDCPA claim. First, Bentrud’s credit
card agreement with Capital One expressly states that Capital One “may add, delete or change any term” of the agreement at “any time[.]” That same agreement further states
that Bentrud’s APR may go up or down, depending on the
market index.
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Second, record evidence demonstrates that Capital One
formally changed Bentrud’s rate to 10.65% on May 17,
2011—nearly seven months before Bowman Heintz filed its
complaint. With that change came the deletion of the “D”
designation accompanying the interest rate. According to the
terms of the agreement, the presence of a “D” next to the interest rate signifies that the interest rate was calculated using
the monthly prime rate (3.25%) plus a previously disclosed
margin. The earliest statement that Bentrud gave the district
court—May 16, 2011—listed a “D” next to the 13.9% interest
rate. By contrast, the next statement—dated August 15,
2011—lists the interest rate at 10.65% without the “D” designation. Some math: 13.9% minus the monthly prime rate of
3.25% equals 10.65%—the rate Bowman Heintz averred in its
complaint.
II. ANALYSIS
We review a district court’s grant of summary judgment
de novo. Hanover Ins. Co. v. N. Bldg. Co., 751 F.3d 788, 791 (7th
Cir. 2014). Summary judgment is appropriate where the admissible evidence reveals no genuine issue of any material
fact. Fed. R. Civ. P. 56(c); Lawson v. CSX Transp., Inc., 245 F.3d
916, 922 (7th Cir. 2001). A fact is “material” if it is one identified by the law as affecting the outcome of the case. Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue of material fact is “genuine” if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”
Anderson, 477 U.S. at 248. We “construe all facts and reasonable inferences in the light most favorable to the non-moving
party.” Apex Digital, Inc. v. Sears, Roebuck, & Co., 735 F.3d 962,
965 (7th Cir. 2013). On cross-motions for summary judgment,
we draw inferences “in favor of the party against whom the
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motion under consideration was made.” McKinney v. Cadleway Props., Inc., 548 F.3d 496, 500 (7th Cir. 2008).
Regarding the FDCPA, Congress passed the Act to eliminate the many evils associated with debt collection. Under
the FDCPA, no longer may debt collectors: (1) make false or
misleading representations; (2) attempt to collect an amount
(including interest) not authorized by the agreement; or
(3) engage in unfair practices when attempting to collect a
debt. See 15 U.S.C. §§ 1692e–f. Although the FDCPA forbids
other conduct, these three proscriptions form the focus of
Bentrud’s appeal. We note that his opponent, Bowman
Heintz, qualifies as a “debt collector” under the FDCPA.
Heintz v. Jenkins, 514 U.S. 291, 292 (1995).
Our analysis starts with the summary judgment motion
and then proceeds to the interest rate issue.
A. The Second Motion for Summary Judgment
Bentrud claims that Bowman Heintz’s second motion for
summary judgment violated 15 U.S.C § 1692f. 2 That section
states in relevant part: “A debt collector may not use unfair or
unconscionable means to collect or attempt to collect any
debt.” 15 U.S.C. § 1692f (emphasis added). Unfortunately,
the statute does not define the phrase “unfair or unconscionable,” and we have called the phrase “as vague as they
come.” Beler v. Blatt, Hasenmiller, Leibsker & Moore, LLC, 480
2
Below, Bentrud also argued that the motion constituted “harassment or
abuse” under 15 U.S.C. § 1692d. He abandons that theory on appeal, now
asserting his “claim is only about whether it was unfair to file the second
summary judgment motion in light of the terms of the parties’ arbitration
agreement.” (emphasis added). Whether a debt-collection practice is unfair is a question of law under § 1692f.
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F.3d 470, 474 (7th Cir. 2007). Fortunately, however, the statute
provides a list of eight illustrative violations. We need not
list each of them; subsection (6) is the most relevant one here.
That subsection prohibits “[t]aking or threatening to take
any nonjudicial action to effect dispossession or disablement
of property” under certain circumstances. 15 U.S.C.
§ 1692f(6)(A)–(C) (emphasis added). The operative phrase
here, is “nonjudicial action.” It implies “that state judicial
proceedings are outside the scope of § 1692f.” Beler, 480 F.3d
at 475. And if state judicial proceedings are outside the scope
of § 1692f, then Bentrud does not have a leg to stand on. For
it is undisputed that the basis for his § 1692f action against
Bowman Heintz flows from the state proceedings in Hendricks County Superior Court. Accordingly, we very much
doubt that a state court motion for summary judgment—
filed to collect an overdue credit card debt—could qualify as
an unfair or unconscionable act under the FDCPA. Nevertheless, we note that subsection (6) is merely one of eight illustrations in a non-exhaustive list. 15 U.S.C. § 1692f (stating the
list does not limit the general application of the section). So
we look to the facts of this particular case before we pass
judgment on Bentrud’s claim.
Significantly, there is only one fact that matters for Bentrud’s FDCPA claim under § 1692f: the invocation of his arbitration provision with Capital One. Once again, that arbitration provision states: “If you or we elect arbitration of a
claim, neither you nor we will have the right to pursue that
claim in court or before a judge or jury.” Given the plain
terms of that provision, Bentrud argues that it was unfair for
Bowman Heintz to file its second motion for summary
judgment after he had elected arbitration. So unfair, in fact,
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that by doing so it offended § 1692f of the FDCPA. We disagree.
The FDCPA is not an enforcement mechanism for matters
governed elsewhere by state and federal law. Beler, 480 F.3d
at 474. But that is what Bentrud is attempting to do here; he
seeks to transform the FDCPA into an enforcement mechanism for the arbitration provision in his credit card agreement. In Beler, we rejected such a use of § 1692f. There, the
appellant theorized that it was “‘unfair’ or ‘unconscionable’
for a debt collector to violate … rule[s] of positive law.” Id. at
473. Specifically, the appellant faulted a debt collector law
firm (like the one here) for allegedly violating federal and
state laws exempting Social Security benefits from execution
or attachment. Id. at 473-74. We denied the claim, noting that
both the federal and state laws implicated provided remedies for violations.
So it is here. If Bentrud is concerned about Bowman
Heintz resuming litigation after he elected arbitration—a
procedural oddity, at worst—his remedy sounds in breach of
contract, not the FDCPA. A contrary ruling would require us
to declare that adherence to an arbitration provision in a
contract, even in the face of a state court order to the contrary, is essential to fair debt collection. Cf. Beler, 480 F.3d at 474.
This we will not do.
Prudential considerations compel this result. Forget
about the state court’s order giving Bentrud thirty days to
initiate arbitration, Bentrud impliedly argues, because once
invoked, the arbitration provision forever barred Bowman
Heintz from resuming litigation in court. Of course that cannot be the case. Once the thirty-day deadline of April 11,
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2013, lapsed, the state court’s stay was, as the court put it,
“AUTOMATICALLY DISSOLVED.” 3
Bowman Heintz, at that point, had every reason to resume litigation on behalf of its client Capital One. Indeed, if
it did not resume litigation, then Bowman Heintz may have
run afoul of one of the primary pillars of effective representation—diligence. See Model Rules of Prof’l Conduct R. 1.3.
(2004). What is more, the Indiana Rules of Trial Procedure
empower trial courts to dismiss civil actions for “failure to
prosecute” when no action has been taken on a case for a period of sixty days. Ind. R. Trial P. 41(E). Had Bowman Heintz
waited another month—it had already waited five weeks after the original deadline lapsed—to file something with the
court, it could have faced the ordeal of a show-cause hearing
to prevent dismissal of its case. Id.
Bentrud, then, would have Bowman Heintz choose between dismissal for failure to prosecute and a possible malpractice claim from Capital One, on the one hand, and a potential, albeit uncertain, FDCPA violation, on the other. That
is an easy choice for Bowman Heintz. In filing its second motion for summary judgment, Bowman Heintz made the only
choice that a reasonable advocate in its position would have
made. And that choice does not equate to an unfair or unconscionable means of attempting to collect a debt.
3
When a judicial order includes key phrases in capital letters, as the state
court’s order did here, it is the literary equivalent to shouting. Cf. Pat R.
Graves & Joyce Kupsh, Presentation Design & Delivery: Be Professional and
Effective 27 (2009) (“Using all capital letters (uppercase) is like
SHOUTING!”). Litigants disobey the order at their peril.
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If anything, Bentrud’s real gripe lay with the state court
for setting a deadline to arbitrate. That initial thirty-day
deadline set these wheels in motion. Without it, there would
be no incentive to press forward with the case after efforts to
arbitrate stalled and the deadline lapsed. Tellingly, however,
Bentrud did not complain of the deadline when it was first
imposed. Nor did he file a motion seeking clarification of the
state court order setting the deadline. Bentrud proceeded
with the litigation, as any party would. The state court acted
within its discretion when it set a deadline for Bentrud to
initiate arbitration, just as it acted within its discretion when
it extended that deadline for another three months.
In sum, when Bowman Heintz filed a second motion for
summary judgment, it acted consistently with the state court
order setting a time limit to initiate arbitration. We do not
find that such a motion is an unfair or unconscionable means
of attempting to collect a debt under § 1692f. Nor will we
transform the FDCPA into an enforcement mechanism for
matters governed by state law. We turn now to Bentrud’s final issue on appeal.
B. The Interest Rates
Bentrud’s next claim against Bowman Heintz is similarly
unavailing. The gist of this claim is that Bowman Heintz
averred an interest rate—10.65%—in its complaint that was
different than the interest rates Capital One previously reported in its credit card statements—13.9%. In light of this
discrepancy, Bentrud argues that one of two possibilities results: either (1) Bowman Heintz misrepresented the interest
rate when it alleged 10.65% in its complaint, in violation of
15 U.S.C. § 1692e; or (2) Bowman Heintz attempted to collect
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a debt not authorized by the agreement, in violation of 15
U.S.C. § 1692f(1). We reject this either-or argument.
On summary judgment, the central question is whether
there is a genuine issue of material fact for trial. Here, Bentrud offered no evidence that Bowman Heintz misrepresented the interest rate applicable to Bentrud’s debt with Capital
One, 4 or attempted to collect a debt not authorized by the
agreement. Because there is no evidence to support a theory
under § 1692e or § 1692f(1), the district court properly granted summary judgment in favor of Bowman Heintz.
In its January 6, 2012 state court complaint filed on behalf
of Capital One, Bowman Heintz averred that the interest rate
applicable to Bentrud’s debt was currently “10.65% per annum.” That averment is corroborated by Capital One’s August 2011 statement and by the affidavit of Stephen Hardy, a
representative of Capital One. Hardy’s affidavit, which was
attached to the state court complaint, swears that Bentrud
owed $10,955.20 with interest accruing from May 17, 2011
“at an annual percentage rate in accordance with the Customer Agreement, currently 10.65%.”
These facts do not evince a discrepancy. The earliest
statement that Bentrud provided to the district court was the
May 16, 2011 statement. To be sure, that statement listed the
interest rate as 13.9%. But no other statements provided to
the court did. In fact, the date noted by Hardy—May 17,
2011—is one day after the earliest statement provided to the
district court by Bentrud. The August 2011 statement is
4
Because we do not find evidence supporting the misrepresentation theory under § 1692e, we need not decide whether the bona fide error defense applies to Bowman Heintz.
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months later, and that, too, lists the interest rate to be
10.65%. The same is true for the complaint itself, which
averred that as of October 8, 2011, the interest rate was
10.65%. These rates are not inconsistent; they simply apply
at different points in time.
What is more, the record evidence demonstrates that interest rates could go up or down, and that Capital One could
change the rates. These facts are consistent with the terms of
the credit card agreement. The actual change that occurred
here is also consistent with the terms of the agreement. Capital One dropped the “D” designation from the APR listed on
Bentrud’s August statement. When it did, the amount that
the “D” represented, the 3.25% prime rate, also dropped.5
The result is that 13.9% became 10.65%, a reduced amount
that, we note, is advantageous to Bentrud. This is math. It is
not a misrepresentation, and it is not an attempt to collect an
amount not authorized by the terms of the agreement. In
short, it is not an FDCPA violation.
Bentrud has one arrow left in his quiver. He claims that
the district court inferred that Capital One’s change to the
interest rate constituted a legal—rather than illegal—change.
In assuming that Capital One’s change was of the legal variety, he argues that the district court made an impermissible,
adverse inference against him, the non-movant. See Apex
Digital, Inc., 735 F.3d at 965 (construing all facts and inferences on summary judgment in the light most favorable to
the non-moving party). We reject this argument.
5
Per Hardy’s affidavit, the lower rate applied on May 17, 2011. The August 2011 statement merely reflects that fact.
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First and foremost, Capital One is not a party to this action. If Bentrud has a complaint with the manner in which
Capital One changed (i.e. reduced) the interest rate, he can
raise that issue in arbitration. The district court’s inquiry, and
ours on appeal, concerns the representations and collection
efforts of Bowman Heintz, the party alleged by Bentrud to
have committed the FDCPA violations. Based on the record
before us, Bentrud has not raised a triable issue that Bowman Heintz either misrepresented the interest rate or attempted to collect an amount not authorized by the agreement with Capital One.
Because Bentrud failed to carry his burden, see Hess v.
Kanoski Bresney, 784 F.3d 1154, 1159 (7th Cir. 2015) (holding
plaintiff to his burden of persuasion on appeal of summary
judgment), his second FDCPA claim, theorized under
§ 1692e and § 1692f(1), fails.
III. CONCLUSION
For the foregoing reasons, the judgment of the district
court is AFFIRMED.
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