Winiecki v. Creditors Interchange Receivable Management, LLC et al

Filing 48

MEMORANDUM Opinion and Order Entered by the Honorable Ruben Castillo on 1/27/2014:\.(gcy, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OT' ILINOIS
EASTERN DIVISION
LISA WINIECKI, individually and on
)
behalf of a class of similarly situated persons, )
)

Plaintiff,
No. 13 C 3461

v.

CREDITORS INTERCHAIIGE
RECEIVABLE MANAGEMENT,
LLC and ECAST SETTLEMENT
coRPoRATrON,

Chief Judge Rub6n Castillo

Defendants.

MEMORANDUM OPINION AND ORDER
Plaintiff Lisa Winiecki brings this putative class action against Defendants Creditors
Interchange Receivable Management, LLC ("CIRM") and eCAST Settlement Corporation

("eCAST") pursuant to the Fair Debt Collection Practices Act, 15 U.S.C. 51692 et seq. (the

"FDCPA"). Presently before the Court is eCAST's motion to dismiss Plaintiff

s

complaint

pursuant to Federal Rule of Civil Procedure 12(bX6). For the reasons set forth below, eCAST's

motion to dismiss is denied.

RELEVANT FACTS
Plaintiff resides in Northern Illinois. (R.

l,

Compl. fl 4.) CIRM is a limited liability

company ("LLC") organized under Delaware law that does business in Illinois. (Id. n 5.)

eCAST is a Delaware corporation that does business in Illinois. (Id.

n9.) CIRM

and eCAST are

in the business of collecting defaulted consumer debts originally owed to others. (1d.fl16, 10.)
eCAST specializes in purchasing or acquiring the right to collect bankruptcy debt. (Id. tl 1 1.)

Plaintiff asserts that eCAST frequently purchases or acquires the right to collect more than one
debt owed by a debtor. (Id.n

2.)

Plaintiff asserts that Defendants have attempted to collect several alleged credit card
debts she incurred,

"if at all," for personal, family,

asserts, on information and

or household purposes

. (Id.n 14.) Ptaintiff

beliel that eCAST became involved with her debts after

she

filed an

unsuccessfulChapterl3bankruptcypetition.(1d.n15.) OnoraboutMayll,20|2,CIRM,
acting on behalf of eCAST, sent Plaintiff a settlement offer letter ("settlement Letter"), which

Plaintiff attached to her complaint. (Id.n rc; R. 1-1, Ex. A, Settlement Letter). CIRM's
company seal appears in the upper left hand comer of the tear-off portion of the letter. (R. 1-1,

Ex. A, Settlement Letter.) Immediately next to that seal, the Settlement Letter states: "RE: Your
account with our client ECAST SETTLEMENT CORPORATION and various others." (1d.)

Immediately below that subject line is: "For/Original Creditor: BAC" followed by the last four
digits of Plaintiff s BAC account number and a statement that the current balance is $18,745.10.

(Id.) The text of the letter,

as relevant here, states:

TAKE ADVANTAGE OF THIS OPPORTI-]NITY!!
We are offering you a settlement of your total current balance. Upon clearance of
the payment below, you will be released from the above described debt and any
further obligations on this account only. This is a good opportunity but you need
to act!

We will accept a payment of $5,623.53 as full settlement, which is a 70o/o
discount, as long as you pay before 05-25-12. It may be possible to extend the
deadline under certain circumstances. . . . We are not obligated to renew this offer.
(1d.) (emphasis added). The Settlement Letter then provides information on how to make a

payment and ends: "Sincerely, Tammy Dibble," followed by a telephone number. (Id.) At the

bottom of the letter is a chart of three different accounts, each identified by the last four digits
the account number.

of

(Id.) The chart indicates that the amount owed on one Citibank account is

$13,293.21; the amount owed on the BAC account is $2,056.19; the amount owed on a second

Citibank account is $3,395.70; and the total balance owed on these three accounts is $18,745.10.
(rd.)

Plaintiff alleges that the Settlement Letter is "confusing, internally inconsistent, and
misleading to the unsophisticated consumer with respect to (1) who the current creditor or owner

of the debt is and (2) what the settlement offer being made is." (R.

l,

Compl.

tT

17.) Plaintiff

contends that the offer in the second paragraph of the Settlement Letter only constifi$es a70Yo

discount if it includes all three accounts identified at the bottom of the Settlement Letter. (Id.n

l7(e).) Plaintiff

alleges that this interpretation is inconsistent with the language "the above

described debt and any further obligations on this account only," which she contends refers only

to the BAC account. (Id.)

PROCEDURAL HISTORY
On May 8,2013,Plaintiff filed a one-count complaint alleging that Defendants violated
Section 1692e of the FDCPA by sending o'a confusing and misleading collection letter." (R.

l,

Compl. fl 19.) On June 25,2013, Plaintiff moved for entry of default against CIRM for failure to

timely appear or answer, (R. 19, Pl.'s Mot. Default), which the Court granted on July 9, 2013, (R.
31, Min. Entry). Plaintiff also moved for class certification. (R. 7, Pl.'s Mot. Certiff Class.)

Briefing of that motion is pending the Court's disposition on eCAST's motion to dismiss the
complaint for failure to state a claim pursuant to Rule l2(bx6), which it filed on July 1, 2013. (R.
25, eCAST's Mot.) eCAST argues that Plaintiff s complaint should be dismissed for failure to
allege any material misrepresentations with regard to the Settlement Letter, and because her
allegations reflect an "idiosyncratic reading of the letter insufficient to state a claim upon which

relief may be granted." (R. 26, eCAST's Mem. at 4.) Plaintiff responded, (R. 29,P1.'s Resp.),

and eCAST replied, (R. 32, eCAST's

Reply). Plaintiff subsequently moved for leave to cite

additional authority, (R. 33, Pl.'s Mot. Leave), and eCAST responded in opposition to the
additional authority Plaintiff cited, (R. 35, eCAST's Resp. Add'l Auth.). The Court granted
PlaintifPs motion, (R. 36, Min. Entry), and takes the additional authority and eCAST's response
into consideration here.

LEGAL STANDARDS
A motion under Rule l2(b)(6) "challenges the sufficiency of the complaint to state a
claim upon which relief may be granted." Hallinanv. Fraternal Order of Police of ChL Lodge

No. 7,570 F.3d 811, 820 (7th Cir. 2009). When reviewing

a

Rule l2(bX6) motion to dismiss,

the Court construes the complaint in the light most favorable to the nonmoving pafty, accepts all

well-pleaded factual allegations as true, and draws all reasonable inferences in the non-movant's

favor. Tamayo v. Blagojevich,526F.3d 1074,1081 (7th Cir. 2008). Pursuant to Rule 8(a)(2),

a

complaint must contain "a'short and plain statement of the claim showing that the pleader is
entitled to relief' sufficient to provide the defendant with 'fair notice' of the claim and its basis."

1d (quoting Fed. R. Civ. P. 8(a)(2) and Bell Atl. Corp. v. Twombly, 550 U.S. 544,555 (2007)).
"Detailed factual allegations" are not required, but the complaint "must contain sufficient factual
matter, accepted as true, to 'state a claim to relief that is plausible on its face."' Ashcroft v.

Iqbal,556 U.S. 662,678 (2009) (quoting Twombly,550 U.S. at 570). A claim has facial
plausibility when its factual content "allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged." Id.

A document that is attached to a pleading "is a part of the pleading for all purposes."
Fed. R. Civ. P. 10(c). Thus, when ruling on a Rule 12(bX6) motion to dismiss, a court must

"consider documents attached to the complaint as part of the complaint itself." Reger Dev., LLC

v. Nat',l

city &ank,592F.3d759,764 (7th Cir. 2010) (citing Int'l Mktg., Ltd.

v. Archer-Daniels-

Midland Co.,192F.3d724,729 (7th Cir. 1999)). 'oSuch documents may permit the court to
determine that the plaintiff is not entitled to judgment" in her favor. Id. (citing Hecker v. Deere

& Co.,556 F.3d 575, 588 (7th Cir. 2009)).
ANALYSIS
The purpose of the FDCPA is to

'to eliminate abusive debt collection practices by debt

collectors, to insure that those debt collectors who refrain from using abusive debt collection
practices are not competitively disadvantaged, and to promote consistent State action to protect
consumers against debt collection abuses." 15 U.S.C. $ 1692(e). Under the FDCPA, a debt

collector is liable to a consumer if the debt collector uses "any false, deceptive, or misleading
representation or means in connection with the collection of any debt." 15 U.S.C. $ 1692e. The

FDCPA prohibits, inter alia, "[t]he use of any false representation or deceptive means to collect
or attempt to collect any debt or to obtain information conceming a consumer." l5 U.S.C.

$

1692e(10). The FDCPA requires that a debt collector's written notice to a debtor must include,
inter alia, the amount of the debt and the name of the creditor to whom the debt is owed. 15

u.S.C. $$ 16929(1), (2).
Plaintiff alleges that Defendants violated l5 U.S.C. g 1692e by sending a confusing and
misleading collection letter. (R.

l,

Compl. fl 19.) Specifically, Plaintiff alleges that the

Settlement Letter is "confusing, internally inconsistent, and misleading to the unsophisticated
consumer with respect to (1) who the current creditor or owner of the debt is and (2) what the
settlement offer being made

is." (Id. fl 17.) eCAST argues that the identity of the owner of the

debt and the terms of the settlement offer are clear from the face of the Settlement

Letter. (R. 26,

eCAST's Mem. at 6.) eCAST contends that Plaintiff s allegations reflect an "idiosyncratic

reading" of the Settlement Letter, not the interpretation of a reasonable unsophisticated consumer.
(Id. at 9.) eCAST ulrgues that even if PlaintifPs allegations are true, Plaintiff has failed to allege
that the defects in the Settlement Letter are material

. Qd. at I 1.) Finally, eCAST contends

that

Plaintiff fails to sufficiently plead her claim because her allegations are conclusory and merely
parrot the statutory language. (Id. at 13.)

To state a claim under $ 1692e, a plaintiff must show that the communication'owould
confuse the unsophisticated consumer." Wahl v. Midland Credit Mgmt., Inc., 556 F.3d, 643, 646

(7th Cir. 2009). "The unsophisticated consumer may be uninformed, naiVe, and trusting, but is
not a dimwit, has rudimentary knowledge about the financial world, and is capable of making
basic logical deductions and inferences." Lox v. CDA, Ltd.,689 F.3d 818, 822 (7thCir.2012)

(internal citations and quotation marks omitted) (quoting Veach v. Sheela,3l6 F.3d 690, 693
(7th Cir. 2003); Wahl,556 F.3d at645). In the Seventh Circuit, "the question of whether an
unsophisticated consumer would find certain debt collection language misleading
[is] a question

of fact." Id.; see also McMillan v. Collection Prof'ls Inc. , 455 F .3d

7 54,

7

60 (7th Cir. 2006)

("district courts must act with great restraint when asked to rule [on claims brought under
$
1692e and $ 1692f7 on a motion to dismiss under Federal Rule of

Civil Procedure l2(b)(6)").

If

the debt collection language "is not misleading or confusing on its face, but has the potential to
be misleading to the unsophisticated consumer," a court should allow the

plaintiff the

opportunity to produce extrinsic evidence "to prove that unsophisticated consumers do in fact
find the challenged statements misleading or deceptive." Lox,689 F.3d at 822 (citing Ruth

v.

Triumph P'ships, 577 F.3d 790, 800 (7th Cir. 2009)). On the other hand, "a plaintiff fails to state
a claim and dismissal is appropriate as a matter

of law when it is 'apparent from

letter that not even a significant fraction of the population would be misled by

6

a reading

it."'

of the

Zemeckis v.

Global Credit & Collection Corp.,679 F.3d 632,636 (7thCir.2012) cert. denied,133 S. Ct. 584
(2012) (quoting Taylor v. Cavalry Inv., L.L.c., 365 F.3d 572,574 (7th

cir.

2004)).

Plaintiff asserts that an unsophisticated consumer reading the Settlement Letter would be
confused as to the identity of the current owner and creditor of the debt because the subject line

of the letter states that the letter is in regards to her "account with our client ECAST

SETTLEMENT CORPORATION and various others," but immediately beneath is the phrase:
"For/Original Creditor: BAC." (R. 1, Compl. tl 17.) Plaintiff contends that the "various others,,
are unspecified and unknown, and that

"For/Original Creditor" gives rise to conflicting

inferences as to whether BAC is the party for whom eCAST is collecting or the prior owner of a
debt who is currently uninvolved. (R. 29, Pl.'s Resp. at

6.) Thus, Plaintiff argues that the

Settlement Letter fails to properly identify the owner of the debt for which eCAST seeks

collection. (1d.) eCAST contends that the Settlement Letter is clearly an offer made by CIRM
on behalf of eCAST to settle debt originally owned by Citibank and BAC. (R. 32, eCAST,s

Reply at 6.) eCAST also contends that the letter included the name and phone number of the

individual at CIRM who sent the letter. (Id. at6 n.1.) The signature of Tammy Dibble, however,
does not indicate what entity she works

for.

(See

R. 1-1, Ex. A, Settlement Letter.) Although the

Settlement Letter clearly indicates that CIRM is the entity to which Plaintiff should make a
payment, it offers no indication as to whether "ECAST SETTLEMENT CORPORATION and
various others" own the debt or whether eCAST and "various others" employed CIRM to collect
the debt on behalf of the original creditors who still own the debt. The Court thus concludes that

Plaintiff has sufficiently alleged facts that give rise to the inference that an unsophisticated
consumer would find the Settlement Letter confusing as to the identity of the owner of the debt.

Plaintiff also contends that the Settlement Letter is confusing
settlement offer because the language "We

will

as to the terms

accept a payment of $5,623.53 as

of the

fulI settlement,

which is a70%o discount," suggests that she will be released from the debt from all three
accounts because $5,623.53 is 30% of the total balance of $18,745.10. (R.29,P1.'s Resp. at 10.)

Plaintiff contends that aprior sentenss-6(fIpsn clearance of the payment below, you will be
released from the above described debt and any further obligations on this account
suggests that she

will only

only."-

be released from the single account with BAC and not the two

Citibank accounts because the original creditor and account number that are described above that
language refer only to her BAC account.

(Id)

eCAST argues that the tear-off portion that Plaintiff would return with her payment
makes clear that the settlement offer settles the sum of $18,745.10, and that any confusion is

clarified by the itemization of accounts at the bottom of the Settlement Letter. (R. 26, eCAST's
Mem. at7-8.) eCAST seems to believe that PlaintifPs alleged confusion stems from her belief
that $18,745.10 was listed as the total for the BAC account, and the Court agrees that such
alleged confusion would be implausible. Plaintiff does not allege confusion as to the amounts
listed, however, only as to whether her payment on all three accounts would release her from

obligations on all three accounts or if she would still in some way be liable on the two Citibank
accounts. (R. 29, Pl.'s Resp. at 10.) Plaintiff contends that the "unsophisticated consumer who
'accepts' this offer will thus pay on the basis of three debts and is likely to believe that he is
discharging the total 'Current Balance,' but on the face of the letter the consumer is only entitled

to be released from the smallest debt." (1d.) While the Court finds this conclusion to be a stretch,

it is not completely implausible, and Plaintiff alleges that there are occurences of consumers
believing that they have settled debts and then being dunned or sued for the same debts

. (Id. at

10-11) (quoting Chase Bank USA, N.A. v. Cardello, 896 N.Y.S .2d856,857 (N.Y. Civ. Ct. 2010)

("[O]n

a regular basis

this court encounters defendants being sued on the same debt by more than

one creditor alleging they are the assignee of the original credit card obligation. Often these
consumers have already entered into stipulations to pay off the outstanding balance due the credit
card issuer and find themselves frling an order to show cause to vacate a default judgment from
an unknown debt purchaser for the same

obligation."). Plaintiff contends that the confusion

created by the Settlement Letter "exposes the consumer to exactly this sort of abu se." (Id. at l

l.)

eCAST contends that Plaintiff s interpretation that she would have settled obligations
totaling $18,745.10 is the interpretation intended, and so she was not misled. (R. 32, eCAST's
Reply at 7.) Plaintiff did not state that that was her interpretation, however; she alleged that the
language was confusing as to whether that was in fact the meaning of the
Resp. at 10.)

it must

It is not enough for

a collection letter to state the elements required by the FDCPA;

state the terms of the settlement offer

is likelyto understand

it."

letter. (R. 29, Pl.'s

"clearly enough that [an unsophisticated consumer]

Chuwayv. Nat'l Action Fin. Servs., lnc.,362F.3d944,948 (7thCir.

2004).

The unsophisticated consumer might read "this account only" in the first paragraph as
pertaining to the BAC account, which is the only "above described account" the Settlement

Letter could be referring to. An unsophisticated consumer may not understand that the "above
described account" refers to the consolidated account--consisting of three separate 4ss6unf5-

eCAST "and various others" are attempting to collect. A sawier consumer would match the
"current balance" listed in the tear-off portion with the total balance of all three accounts at the
bottom of the letter and infer that she would, in fact, be released from all three accounts, but the
language of the Settlement Letter does not make that obvious. Additionally, the Court is not'oto

read the language from the perspective of a

sawy consumer, and consumers are under no

obligation to seek explanation of confusing or misleading language in debt collection letters."

Lox,689 F.3d at 826 (alterations in original) (quoting Gonzales v. Arrow Fin. Servs., LLC,660
F.3d 1055, 1062 (9thCir.2011)). Accordingly, the Court finds it plausible, although just barely,
that an unsophisticated consumer may be confused as to what account is being settled if they
make a payment of $5,623.53. Defendants could have easily avoided this confusion by

specifying precisely which debts Plaintiff would be released from had she accepted the offer
rather than referring to the tear-off portion that oontained the account name and number of only
one account but the total balance for all three aqcounts.

Finally, eCAST contends that Plaintiff has not alleged facts showing that the supposed
defects are material. (R. 26, eCAST's Mem. at 11.) In addition to showing that the language

would confuse an unsophisticated consumer, a plaintiff must also demonstrate that the false or
misleading statements are material. Lox,689 F.3d at822 (citing Hahn v. Triumph P'ships,557
F.3d 755, 757'58 (7th Cir.

2009). A material statement is one that "has the ability to influence

consumer 's decision." Id. at 826 (quoting O'Rourke v. Palisades Acquisition XVI,

a

LLC,635

F.3d 938, 942 (7thCir.2011)) (internal quotation marks omitted). eCAST contends that plaintiff
has failed to show that the alleged defects of the Settlement Letter are material because the

complaint does not allege that areasonable unsophisticated consumer who received the letter
would have done anything differently but for her alleged confusion as to the identity of the
creditor and the terms of the settlement offer. (R. 32, eCAST's Reply at 9.) Plaintiff does not
seek actual damages, however,

"only statutory damages,

a penalty that does

not depend on proof

thattherecipientoftheletterwasmisled." Bartlettv. Heibl,l28F.3d 497,499 (7thCir.
Additionally, the cases eCAST marshals in support of this ground for dismiss al

10

are

1997).

all opinions

on motions for summary judgment. See, e.g., Lox,689 F.3d at 826; wahl,556 F.3d at645;

Muha v. Encore Receivable Mgmt., Inc., 558 F.3d 623, 625 (7*1Cir. 2009). At this stage in the
proceedings, Plaintiff need only state allegations that allow the Court to "draw the reasonable
inference that the defendant is liable for the misconduct alleged." Iqbal,556 at678. plaintiff
contends that identification of the owner of the debt is material because

it is required by statute

and because identification of the owner is necessary so the consumer can inquire about the

collection efforts. (R. 29, Pl.'s Resp. at 1l-13.) Additionally, confusion as to whether a
consumer is settling one debt or three is material to her decision to accept the settlement offer or

not. The Court is thus able to draw the reasonable inforence that the Settlement Letter would
materially mislead or confuse an unsophisticated consumer. Accordingly, the Court finds that
.

Plaintiff has sufficiently stated a claim for an FDcpA violation.
While the complaint survives eCAST's motion to dismiss, Plaintiff must now produce
extrinsic evidence "to prove that unsophisticated consumers do in fact find the challenged
statements misleading or deceptive." Lox,6S9 F.3d at 822; see also Zemeckis, 679 F.3d

at 636;

Walker v. Nat'l Recovery, 1nc.,200 F.3d 500, 503 (7th Cir.1999). Before proceeding with a

further expenditure of resources, the parties should fully exhaust all settlement possibilities.

1l

CONCLUSION
For the reasons set forth above, the Court DENIES eCAST's motion to dismiss (R. 25).

In light of this opinion, the parties are instructed to exhaust all settlement possibilities. The
parties shall appear for a status hearing on March 18,2Ol4 at9:45 a.m. PlaintifPs motion for
class certification (R. 7) is DENIED without prejudice until the Plaintiff files a new motion for
class certification following

full

class discovery. The parties are authorizedto

class discovery on or before May 30, 2014,

if this

fully complete all

case cannot be settled.

ENTERED:
Chief Judge
b6n Castillo
United States District Court

Dated: January 2712014

l2