Rawson v. Source Receivables Management, LLC et al
Enter MEMORANDUM Opinion and Order Signed by the Honorable Elaine E. Bucklo on 9/4/2012:Mailed notice (jdh)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
JEROLD S. RAWSON, on behalf of
himself and others similarly
SOURCE RECEIVABLES MANAGEMENT, LLC,
RESURGENT CAPITAL SERVICES, L.P.,
ALEGIS GROUP LLC, and LVNV FUNDING
No. 11 C 8972
MEMORANDUM OPINION AND ORDER
On May 22, 2012, plaintiff Jerold S. Rawson filed his
corrected third amended class-action complaint (“operative
complaint” or “complaint”) against defendants alleging violations
of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C.
§§ 1692g, 1692e, 1692e(2), 1692e(5), and 1692e(10).
have moved to dismiss count II of plaintiff’s two-count complaint
pursuant to Rule 12(b)(6) of the Federal Rules of Civil
For the following reasons, defendants’ motion is
According to the operative complaint, defendant Source
Receivables Management, LLC (“Source”) sent a dunning letter to
plaintiff Rawson on or about November 3, 2011.
The letter listed
the client as Resurgent Capital Services LP (“Resurgent”) but
does not indicate who the original creditor was and does not
otherwise include any information about the original debt.
letter simply shows a “current balance” of $11,426.29.
letter, attached to plaintiff’s complaint, further stated the
RESURGENT CAPITAL SERVICES LP has placed your account
with Source Receivables Management to recover the above
referenced Amount Due.
To avoid further collection
efforts, please contact us at the number listed below to
make arrangements for payment or remit the balance of the
Defendants have also requested leave to answer or
otherwise plead in response to count I of plaintiff’s complaint
after a ruling on the present motion. Defendant’s unopposed
request is granted. A partial 12(b) motion automatically extends
a party’s time to answer. See Oil Express Nat’l, Inc. v.
D’Alessandro, 173 F.R.D. 219, 220-21 (N.D. Ill. 1997).
Defendants are ordered to answer or otherwise plead in response
to count I within 14 days.
Plaintiff has moved to respond to arguments raised by
defendants in their reply. Because I do not address defendants’
argument based on Altria Group, Inc. v. Good, 555 U.S. 70 (2008),
this motion is denied as moot.
Amount Due to the address provided on the remittance
Unless you notify us within 30 days after receiving this
notice that you dispute the validity of this debt or any
portion thereof, we will assume the debt is valid.
you notify us in writing within 30 days after receiving
this notice that you dispute the validity of this debt or
any portion thereof, we will obtain verification of the
debt or obtain a copy of a judgment and mail you a copy
of such judgment or verification.
If you request of us
in writing within 30 days after receiving this notice, we
will provide you with the name and address of the
. . .
We are a debt collector attempting to collect a debt and
any information obtained will be used for that purpose.
If your financial institution rejects or returns your
payment for any reason, a service fee, the maximum
permitted by applicable law, may be added to the amount
Source sent the dunning letter on behalf of Resurgent and LVNV
Funding, LLC (“LVNV”) relating to a debt that LVNV charged off on
May 17, 2000.
Plaintiff Rawson believes that the underlying debt
is a credit card debt.
Because the statute of limitations on a
credit card bill is five years in Illinois, Source was attempting
to collect a debt that was time-barred.
The dunning letter does
not disclose that the debt is beyond the statute of limitations.
Plaintiff alleges that the letter Source sent to him was a form
letter also sent to class members.
Count II of the operative complaint alleges that the letter
sent by defendants constituted unfair and deceptive acts and
practices in violation of the FDCPA.
Plaintiff claims that the
letter misrepresented the legal status of the his debt in
violation of 15 U.S.C. § 1692e and various of its subsections.
Plaintiff also claims that defendants engaged in unfair practices
in violation of 15 U.S.C. § 1692f.
Specifically, plaintiff has
stated in response to my August 8, 2012, order, that he claims
that (1) defendants violated the FDCPA by failing to disclose
that the debt was time-barred and that defendants could not sue
on the time-barred debt and (2) the dunning letter represented or
implied that the debt is legally enforceable when it is not.
To the extent that plaintiff claims that the dunning letter
implies that the debt is legally enforceable when it is, in fact,
barred by the statute of limitations, I conclude that plaintiff
has stated a claim.
None of the cases cited by defendants
presents facts similar to those alleged here.
two cases from this district, but neither of the letters at issue
in those cases contained language comparable to that in the
dunning letter here.
Murray v. CCB Credit Services, Inc., No. 04
C 7456, 2004 WL 2943656, at *2 (N.D. Ill. Dec. 15, 2004); Walker
v. Cash Flow Consultants, Inc., 200 F.R.D. 613, at 616 (N.D. Ill.
The letter defendants sent to plaintiff threatened
“further collection efforts” and encouraged him to contact Source
“to make arrangements for payment.”
Such statements could
arguably lead an unsophisticated debtor to believe that the debt
is legally enforceable.
See Durkin v. Equifax Check Services,
Inc., 406 F.3d 410, 414 (7th Cir. 2005) (examining collection
letters alleged to have violated 15 U.S.C. §§ 1692e, 1692f, and
1692g “from the standpoint of the so-called unsophisticated
consumer or debtor”).
Further, Walker distinguished Stepney v.
Outsourcing Solutions, Inc., No. 97 C 5288, 1997 WL 722972 (N.D.
Ill. Nov. 13, 1997), a case involving strikingly similar language
to that at issue here.
In Stepney, the district court denied the
defendants’ motion to dismiss based on the “defendant’s knowing
attempt to collect time-barred debts with threats of ‘further
collection action.’” Id. at *5.
As the Walker court stated, in
distinguishing Stepney, such language “represents a thinly-veiled
threat of future litigation.”
200 F.R.D. at 616.
The Eighth Circuit in Freyermuth v. Credit Bureau Services,
Inc., 248 F.3d 767, 771 (8th Cir. 2001), disagreed with Stepney,
but Freyermuth is distinguishable for at least two reasons.
First, that case was decided on summary judgment and the
plaintiff had raised the claim that the defendant’s attempt to
collect an allegedly time-barred debt violated the FDCPA for the
first time in response to the defendant’s motion for summary
Also, in rejecting the reasoning of Stepney, the
Eighth Circuit adopted a standard requiring an “express threat of
litigation,” 248 F.3d at 771.
taken a similar stance.
No court in this district has
In fact, most courts have required only
allegations, and later a showing, that the collection agency
“explicitly or implicitly threaten litigation.”
Huertas v. Galaxy Asset Mgt., 641 F.3d 28, 33 (3d Cir. 2011)
(emphasis added); Walker, 200 F.R.D. at 616.
For the foregoing reasons, defendants’ motion to dismiss is
Elaine E. Bucklo
United States District Judge
Dated: September 4, 2012
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