Crawford v. Vision Financial Corporation et al
AMENDED MEMORANDUM Opinion and Order. Signed by the Honorable James F. Holderman on 11/1/2012. Notice mailed by judge's staff(ntf, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
WILLIAM CRAWFORD, on behalf of plaintiff
and a class,
VISION FINANCIAL CORPORATION and
PRECISION RECOVERY ANALYTICS, INC.,
No. 12 C 4397
AMENDED MEMORANDUM OPINION AND ORDER
JAMES F. HOLDERMAN, Chief Judge:
Plaintiff William Crawford’s Amended Complaint (Dkt. No. 20 (“Am. Compl.”)) alleges that
defendants Vision Financial Corporation (“Vision”) and Precision Recovery Analytics, Inc.
(“Precision”) violated the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692p, by sending
him a deceptive and misleading letter in an attempt to collect a debt. Crawford is also attempting to
bring his claims on behalf of a class of similarly situated individuals who received deceptive or
misleading letters from Vision or Precision. (Am. Compl. ¶¶ 38-47.) Currently pending before the
court is Vision’s “Motion to Dismiss Plaintiff’s Amended Complaint” under Fed. R. Civ. P. 12(b)(6)
for failure to state a claim. (Dkt. No. 23.) For the reasons explained below, that motion is denied.
Defendant Vision is a debt collection agency that regularly attempts to collect defaulted
debts it has purchased from creditors. (Am. Compl. ¶ 7.) On August 17, 2011, Vision sent a letter
to plaintiff William Crawford, an Illinois resident, seeking to collect on a credit card debt that he had
incurred. (Id. ¶ 19.) Crawford had incurred the debt more than five years previously, so that the
Illinois statute of limitations on credit card debt had already run. (Id. ¶¶ 22, 24.) The letter read, in
Our client, Precision Recovery Analytics, Inc., has purchased your account
and all rights to the debt receivable from GE Money Bank/Peach Direct. There is an
outstanding balance due of $3,178.83 which has been listed for collection with
Vision Financial Corp.
Our client, Precision Recovery Analytics, Inc., has authorized Vision
Financial Corp. to communicate to you a special offer that will allow you to resolve
this outstanding debt at this time.
Precision Recovery Analytics, Inc. will accept $2,384.12 as payment, and full
resolution of this debt. You may take advantage of this special offer by contacting
us . . . . Once credit card or check payment by phone is taken, processed and applied
to the account, the account will be considered settled in full. You will be released
from any further financial liability concerning repayment of this account.
(Dkt. No. 20, Ex. A.) Crawford alleges that Vision regularly sends standard form letters substantially
identical to its August 17, 2011, letter to Crawford in its attempts to collect debts on which the
statute of limitations has expired. (Am. Compl. ¶ 26.)
Under the Federal Rules of Civil Procedure, a complaint need only contain “a short and plain
statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The
complaint must “give the defendant fair notice of what the . . . claim is and the grounds upon which
it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S.
41, 47 (1957)). While “detailed factual allegations” are not required, “labels and conclusions, and
a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555.
The complaint must “include sufficient facts ‘to state a claim for relief that is plausible on its face.’”
Cole v. Milwaukee Area Tech. College Dist., 634 F.3d 901, 903 (7th Cir. 2011) (quoting Justice v.
Town of Cicero, 577 F.3d 768, 771 (7th Cir. 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.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). In
ruling on a Rule 12(b)(6) motion, the court “construe[s] the . . . [c]omplaint in the light most
favorable to Plaintiff, accepting as true all well-pleaded facts and drawing all possible inferences
in his favor.” Cole, 634 F.3d at 903.
The FDCPA provides that “[a] debt collector may not use any false, deceptive, or misleading
representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. Without
limiting the general applicability of that prohibition, the statute provides a list of specific violations,
including “[t]he false representation of . . . the character, amount, or legal status of any debt.” 15
U.S.C. § 1692e(2)(A).
Multiple courts in this district have held that the mere attempt to collect a time-barred debt,
even without disclosing to the debtor that the statute of limitations has run, does not violate the
FDCPA unless the collection attempt is accompanied by a threat of litigation. See Magee v. Portfolio
Recovery Ass’ns, LLC, 12 C 1624, 2012 WL 3560996, at *3 (N.D. Ill. Aug. 15, 2012); McMahon
v. LVNV Funding, LLC, No. 12 C 1410, 2012 WL 2597933, at *2 (N.D. Ill. July 5, 2012) (Kocoras,
J.), motion to reconsider denied, 2012 WL 3307011 (N.D. Ill. Aug. 13, 2012); Murray v. CCB
Credit Servs., Inc., No. 04 C 7456, 2004 WL 2943656, at *2 (N.D. Ill. Dec.15, 2004) (Moran, J.);
Walker v. Cash Flow Consultants, Inc., 200 F.R.D. 613, 616 (N.D. Ill. 2001) (Pallmeyer, J.). Those
courts reason, persuasively, that under Illinois law, the statute of limitations is a procedural defense
that does not alter the creditor’s substantive rights. See Belleville Toyota, Inc. v. Toyota Motor Sales,
U.S.A., 770 N.E.2d 177, 194 (Ill. 2002) (“Statutes of limitations are procedural, merely fixing the
time in which the remedy for a wrong may be sought, and do not alter substantive rights.”).
Accordingly, the creditor may attempt to collect the debt outside of court, even though a statute of
limitations defense would defeat any claim that the creditor might try to bring in court.1
Here, Crawford nonetheless contends that Vision’s letter to him was deceptive because of
two comments that falsely imply Vision was able to sue him in court. First, he points to the
statement that if he pays the designated amount, “the account will be considered settled in full.”
Second, Crawford relies on the statement that “[y]ou will be released from any further financial
liability concerning repayment of this account.” According to Crawford, the words “settled” and
“liability” imply a legal settlement and legal liability, suggesting to any reader the possibility of a
lawsuit that needs to be “settled” lest Crawford incur legal “liability.”
When evaluating a motion to dismiss a claim under the FDCPA that a debt-collection letter
was deceptive or misleading, the court must view letter through the eyes of an “unsophisticated
debtor.” McMillan v. Collection Prof’ls Inc., 455 F.3d 754, 758 (7th Cir. 2006). The unsophisticated
debtor “may be uninformed, naïve, and trusting, but is not a dimwit, has rudimentary knowledge
Crawford contends that the court should disregard these judicial decisions and instead give
deference to several consent decrees that the Federal Trade Commission and other federal agencies
entered into with Asset Acceptance, LLC, and American Express, each of which requires the
defendant to cease attempts to collect time-barred debts without informing the debtor that the debt
is time-barred. (Dkt. No. 25, Exs. B-F.) The court agrees with Judge Kocoras’s reasoning in
McMahon, 2012 WL 2597933, at *2-4, however, that the consent decrees are not entitled to
deference because they did not arise out of a formal adjudication or out of a notice-and-comment
rulemaking procedure, because there is no evidence that Congress intended the agencies to interpret
the FDCPA authoritatively through consent decrees or other litigation procedures, because the
consent decrees lack any description of the reasoning or process behind the conclusion that the
FDCPA forbids the collection of a time-barred debt, and because the conclusions in the consent
decrees therefore may be contingen t on the specific circumstances of the cases in which they were
entered, including the particulars of the applicable state law. See United States v. Mead Corp., 533
U.S. 218, 227-31 (2001).
about the financial world, and is capable of making basic logical deductions and inferences.” Lox
v. CDA, Ltd., 689 F.3d 818, 822 (7th Cir. 2012) (citations, quotation marks, and alterations omitted).
The question for the court when considering the unsophisticated debtor is whether the letter is
“‘confusing to a significant fraction of the population.’” Id. (citation omitted).
Moreover, the ultimate question of whether a letter is misleading or deceptive is a question
of fact on which it is appropriate to introduce evidence about how the general public would react
to the language of a particular letter. Id. Accordingly, the Seventh Circuit has “cautioned that a
district court must tread carefully before holding that a letter is not confusing as a matter of law
when ruling on a Rule 12(b)(6) motion because district judges are not good proxies for the
unsophisticated consumer whose interest the statute protects.” McMillan, 455 F.3d at 759. The
Seventh Circuit continued:
Whether characterized as issues of fact or issues of mixed fact and law, district courts
must act with great restraint when asked to rule in this context on a motion to dismiss
under Federal Rule of Civil Procedure 12(b)(6). Undoubtedly, there will be
occasions when a district court will be required to hold that no reasonable person,
however unsophisticated, could construe the wording of the communication in a
manner that will violate the statutory provision. In most instances, however, a proper
application of the rule will require that the plaintiff be given an opportunity to
demonstrate that his allegations are supported by a factual basis responsive to the
Id. at 760.
Applying that standard, Crawford contends that this case is indistinct from Rawson v. Source
Receivables Mgmt., LLC, 11 C 8972, 2012 WL 3835096 (N.D. Ill. Sept. 4, 2012) (Bucklo, J.), a case
denying a motion to dismiss a similar FDCPA claim about a misleading debt-collection letter. In
Rawson, however, the letter included a request for payment “[t]o avoid further collection efforts,”
language that the court held “represents a thinly-veiled threat of future litigation.” Id. at *2 (citation
omitted). The language in Crawford’s letter does not explicitly reference future collection efforts.
Instead, it merely refers to the need to “settle” the debt and references the debtor’s “further financial
liability” if he does not pay, language that cannot be construed as such a blatant threat of future
The court must therefore parse the particular language in Crawford’s letter. In accord with
other courts that have addressed the issue, the court first determines that the use of the term “settle”
by itself is not misleading and does not imply the possibility of litigation against Crawford. Magee,
2012 WL 3560996, at *4 (“[A] debt collector is allowed to use the term ‘settle’ or ‘settlement’ in
a debt-collection letter.”); see also Evory v. RJM Acquisitions Funding L.L.C., 505 F.3d 769, 775
(7th Cir. 2007) (stating that in the debt collection context, “[t]here is nothing improper about making
a settlement offer”). But see McMahon, 2012 WL 3307011, at *3 (allowing an amended complaint
to assert a claim that an offer to “settle” a debt implicitly threatens litigation because “[w]hether a
settlement offer in a dunning letter is deceptive is a fact-intensive question that is generally not
resolvable at the pleadings stage of a lawsuit”). Indeed, an unsophisticated debtor would likely
interpret the term “settle” in a debt-collection letter to mean only the “settlement” of a debt, not the
settlement of a lawsuit. Indeed, in common parlance, the financial meaning of “settlement” is
somewhat more common than the legal meaning. See The American Heritage Dictionary 1122 (2d
coll. ed. 1982) (10th meaning v. 12th meaning). No matter how quick lawyers and judges might be
to assume that “settlement” refers to a legal settlement (and lawyers should, as the court has
frequently said, always be thinking about settlement), the unsophisticated debtor likely does not
have the legal context so close to his mind. Here, the unsophisticated debtor is much more likely to
think of settlement of a debt, particularly because Crawford’s letter refers to the possibility that the
debt will be “settled in full,” a usage unique to the financial meaning of the term. (One does not
usually speak of “settling in full” a lawsuit.)
The reference to “further financial liability,” however, may improperly imply litigation. The
parties have not cited any cases, and the court has found none, addressing a debt-collection letter
using language referring to “further financial liability.” The word “liability,” of course, has
considerably fewer possible meanings than the word “settle,” and applies almost exclusively to
financial liability or legal liability.2 Moreover, those two meanings frequently overlap in common
usage, as a legal liability is often a financial liability, and vice-versa.3 Accordingly, an
unsophisticated debtor, upon reading of possible “liability,” is somewhat likely to connect the word
to a possible lawsuit. Plainly, the inclusion of the modifier “financial” in front of liability is meant
to guard against that interpretation. Again, however, there is a fine line between a financial and a
legal liability. An unsophisticated debtor may well think that a “financial liability,” although
primarily referring to a financial debt that exists apart from legal process, can be enforced in court.
Accordingly, because it is a close question, the court thinks it best to follow the Seventh
Circuit’s admonition to act with restraint and to err on the side of giving the plaintiff a chance to
submit evidence showing that the language of a debt-collection letter is misleading. McMillan, 455
F.3d at 760. For that reason, Vision’s motion to dismiss is denied.
See The American Heritage Dictionary 727 (2d coll. ed. 1982). The term “liability” can also
be used metaphorically, drawing on those two common meanings, as when one comments that “the
gymnast’s churlish demeanor was a great liability with the judges” or “the candidate could not
overcome the liability of his inability to connect with the electorate.”
For example, the General Counsel of a corporation might comment that “our failure to
comply with the license agreements could open us to a lot of liability,” meaning both that the
corporation could be sued, and that, ultimately, the corporation could pay a lot of money.
The motion to dismiss of defendant Vision Financial Corporation (Dkt. No. 23) is denied.
The defendants’ answer is due 11/14/12. Counsel are to confer pursuant to Rule 26(f) and jointly
file a Form 52 on or before 11/27/12. The case is set for status and entry of a scheduling order at
9:00 AM on 11/29/12. The parties are encouraged to discuss settlement.
JAMES F. HOLDERMAN
Chief Judge, United States District Court
Amended Order Issued: November 1, 2012
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