Swafford v. Unifund CCR Partners et al

Filing 40

MEMORANDUM OPINION Signed by the Honorable Samuel Der-Yeghiayan on 10/18/2013: Defendants' motion to dismiss 26 is granted. All pending dates and motions are stricken as moot. Civil case terminated. Mailed notice (mw, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
ROBERT SWAFFORD,

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Plaintiff,
v.
UNIFUND CCR PARTNERS, et al.,
Defendants.

No. 13 C 1572

MEMORANDUM OPINION
SAMUEL DER-YEGHIAYAN, District Judge
This matter is before the court on the Defendants’ Unifund CCR Partners
(Unifund), Credit Card Receivables Fund Inc., ZB Limited Partnership, and Pilot
Receivables Management LLC motion to dismiss. For the reasons stated below, the
motion is granted.

BACKGROUND
Plaintiff Robert Swafford (Swafford) allegedly obtained a Citibank credit card
(Credit Card) for personal, family, or household purposes. In July 2012, Unifund
allegedly attempted to collect debt owed on the Credit Card and mailed a collection
letter (July Letter) to Swafford on behalf of Defendant Pilot Receivables
Management LLC (PRM). Unifund allegedly mailed another debt collection letter to

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Swafford in September 2012 (September Letter). In November 2012, Unifund filed
suit against Swafford in Illinois state court. Swafford was allegedly informed that
debt was accruing interest since it was charged off by Citibank, meaning the point
that the credit card receivable was no longer carried on Citibank’s books as an asset.
Swafford contends that Defendants improperly added interest to his debt for the
period between the charge off and the alleged purchase of the debt by Defendants,
and added charges to the debt for interest that Citibank had waived. Swafford
includes in his complaint claims alleging that Defendants engaged in deceptive
collection practices and in an unfair collection practice in violation of the Fair Debt
Collection Practices Act (FDCPA), 15 U.S.C. § 1692, et seq. (Count I), and claims
alleging a violation of the Illinois Collection Agency Act (ICAA), 225 ILCS 425/1 et
seq. (Count II). Defendants now move to dismiss all claims.

LEGAL STANDARD
In ruling on a motion to dismiss brought pursuant to Federal Rule of Civil
Procedure 12(b)(6) (Rule 12(b)(6)), the court must draw all reasonable inferences
that favor the plaintiff, construe allegations of the complaint in the light most
favorable to the plaintiff, and accept as true all well-pleaded facts and allegations in
the complaint. Appert v. Morgan Stanley Dean Witter, Inc., 673 F.3d 609, 622 (7th
Cir. 2012); Thompson v. Ill. Dep’t of Prof’l Regulation, 300 F.3d 750, 753 (7th Cir.
2002). A plaintiff is required to include allegations in the complaint that “plausibly
suggest that the plaintiff has a right to relief, raising that possibility above a
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‘speculative level’” and “if they do not, the plaintiff pleads itself out of court.”
E.E.O.C. v. Concentra Health Services, Inc., 496 F.3d 773, 776 (7th Cir. 2007)
(quoting in part Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007); see also
Morgan Stanley Dean Witter, Inc., 673 F.3d at 622 (stating that “[t]o survive a
motion to dismiss, the complaint ‘must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face,’ and that ‘[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’”) (quoting Ashcroft v. Iqbal, 556 U.S. 662 (2009)).

DISCUSSION
Defendants move to dismiss the instant action, arguing Swafford lacks
standing, and arguing in the alternative that Swafford has not alleged sufficient facts
to state a valid FDCPA or ICAA claim.

I. Illinois Collection Agency Act Claim
Defendants contend that Swafford has failed to allege sufficient facts to state a
valid claim under the Illinois Collection Agency Act claims. Swafford in his
response to the instant motion, agrees to the dismissal of the Illinois Collection
Agency Act claim. (Ans. Dis. 15). Therefore, Defendants’ motion to dismiss the
Illinois Collection Agency Act claim is granted.

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II. Standing for FDCPA Claim
Defendants argue Swafford lacks standing to bring an FDCPA claim because
he failed to allege he suffered any injury-in-fact. In order to have a “case or
controversy” under Article III of the Constitution, a plaintiff must have: (1) “an
injury in fact,” (2) “an injury that is fairly . . . trace[able] to the challenged action of
the defendant, and not . . . th[e] result [of] the independent action of some third party
not before the court,” and (3) “an injury that is likely . . . [to] be redressed by a
favorable decision.” Johnson v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 2013
WL 2149971 (7th Cir. 2013))(quoting Lujan v. Defenders of Wildlife, 504 U.S. 555,
560 (1992))(internal quotations omitted); see also Freedom From Religion
Foundation, Inc. v. Obama, 641 F.3d 803, 805 (7th Cir. 2011)(stating that
“[s]tanding has three components: injury, causation, and redressability”); Whitaker v.
Ameritech Corp., 129 F.3d 952, 959 (7th Cir. 1997)(indicating that “injuries must be
‘concrete and particularized’” and “[i]ndignation that the law is not being obeyed . . .
will [not] support a federal lawsuit”)(internal quotations omitted)(quoting
Lujan, 504 U.S. at 560 and Cronson v. Clark, 810 F.2d 662, 664 (7th Cir. 1987)).
Defendants contend that Swafford fails to allege facts that suggest that he
suffered an injury-in-fact as a result of an alleged FDCPA violation. Defendants
argue that instead of alleging any direct injury to Swafford, Swafford presents
allegations regarding Defendants’ general business practices. Swafford contends that
he is not required to show that he suffered any actual damages in order to recover
under the FDCPA. Swafford cites Bartlett v. Heibl, 128 F.3d 497 (7th Cir. 1997).
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(Ans. Dis 5). In Bartlett, the Court held that a plaintiff did not have to offer proof of
actual damages in order to recover damages under the FDCPA. Id. at 500. The
Court in Bartlett, did not however, hold that a plaintiff need not have suffered an
injury in fact in order to recover under the FDCPA. Id.
Swafford’s allegations in the complaint reference general banking practices by
Defendants and Citibank. For example, Swafford alleges: (1) that “[a]s a standard
practice . . . most banks waive interest on credit card debts after chargeoff for as long
as the debts are held by the banks,” (2) that “[i]t is the policy and practice of Citibank
to not charge interest on credit card debts between the time of chargeoff and the time
of sale,” (3) that “Citibank informs debt buyers that purchase Citibank accounts that
finance charges were only assessed up to the date the account was charged off by
Citibank, and not thereafter,” and (4) “defendants add interest for the period between
chargeoff and the alleged purchase by defendants.” (Compl. Par. 45, 47, 51, 55). In
response to the instant motion, Swafford attempts to rewrite the allegations in his
complaint, adding Swafford individually to the general allegations of policies and
practices. (Ans. Dis. 4). However, Swafford cannot amend his complaint in a
response brief to a motion to dismiss. Nor has Swafford filed a motion for leave to
amend his complaint. Absent allegations in the complaint that Swafford himself was
subjected to conduct that violated the FDCPA, Swafford has not satisfied the
constitutional standing requirement.

III. Sufficiency of Facts for FDCPA Claim
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Defendants argue in the alternative that, even if Swafford had standing to
bring a FDCPA claim, he has failed to allege sufficient facts to state a valid FDCPA
claim. The FDCPA prohibits deceptive collection practices and unfair collection
practices. 15 U.S.C. § 1692e; 15 U.S.C. § 1692f. Swafford contends that
Defendants engaged in deceptive and unfair collection practices because, according
to Swafford, Citibank waived its rights to collect post-charge off interest on
Swafford’s account, and Defendants as assignees of Citibank thereafter proceeded to
collect post-charge off interest. Swafford argues Citibank waived its right to collect
post-charge off interest on Swafford’s account when Citibank “expressly told
defendants that ‘finance charges were only assessed up to the date the account was
charged off by Citibank, and not thereafter.’” (Ans. Dis. 12). While Swafford
presents such a theory in response to the motion to dismiss, the allegations included
in the complaint again do not match up with such a position.
A waiver is defined as “the voluntary and intentional relinquishment of a
known right.” Delta Consulting Group, Inc. v. R. Randle Const., Inc., 554 F.3d
1133, 1140 (7th Cir. 2009). The complaint includes allegations describing
Citibank’s general “policy and practice” relating to interest on credit card debts
between the time of charge off and the time of sale. (Compl. Par. 44-47). For
example, Swafford only references in the complaint to what Citibank generally does
with “debt buyers that purchase Citibank accounts. . . .” (Compl. Par. 47). The
complaint does not contain any allegation that specifically states that Citibank
communicated to Defendants that Citibank decided not to charge interest on
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Swafford’s account and intended to waive that right. Nor are there sufficient
allegations in the complaint to plausibly suggest a waiver on the part of Citibank as
to its conduct specifically relating to Swafford’s account. There are no allegations
that Citibank acted uniformly regarding all customer accounts and it would be mere
conjecture and speculation to assume that Citibank acted in a certain manner as to
Swafford’s account. Therefore, Defendants’ motion to dismiss Swafford’s FDCPA
claims is granted.

CONCLUSION
Based on the foregoing analysis, Defendants’ motion to dismiss is granted.

___________________________________
Samuel Der-Yeghiayan
United States District Court Judge
Dated: October 18, 2013

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