Ratcliff v. Freedman Anselmo Lindberg LLC et al
Filing
31
MEMORANDUM OPINION AND ORDER Signed by the Honorable Harry D. Leinenweber on 5/14/2015:Mailed notice(wp, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
Case No. 14 C 6694
consolidated with
14 C 7091
14 C 7092
14 C 7371
14 C 7373
14 C 7374
14 C 7812
14 C 8173
14 C 8175
14 C 8217
14 C 10176
15 C 558
JULIA MALDANADO,
Plaintiff,
v.
FREEDMAN ANSELMO LINDBERG,
LLC, and PORTFOLIO RECOVERY
ASSOCIATES, LLC,
Defendants.
Judge Harry D. Leinenweber
MEMORANDUM OPINION AND ORDER
Before
which
were
the
Court
filed
are
under
the
following
original
Motions
case
to
numbers
Dismiss,
before
consolidation: (1) Defendants Freedman Anselmo Lindberg, LLC and
Portfolio Recovery Associates, LLC’s Motion to Dismiss Plaintiff
Kathy Kethchum’s Complaint [ECF No. 19 under 14 C 8217]; (2)
Defendant Atlantic Credit & Finance Special Finance Unit LLC’s
Motion to Dismiss Count III of Plaintiff Nuha Jaber’s Complaint
[ECF No. 25 under 14 C 7374]; and (3) Defendant Cavalry SPV 1,
LLC’s Motion to Dismiss Count III of Plaintiff James Ratcliff’s
Complaint [ECF No. 17 under 14 C 7371].
herein, all of the Motions are granted.
For the reasons stated
I.
BACKGROUND
These cases arise out of various debt collectors’ attempts
to
secure
repayment
of
obligations
through
obtaining
judgments in the amount of the delinquent debts.
brought
suit
judgments
challenging
were
the
obtained.
method
Several
of
by
which
default
Plaintiffs
the
Plaintiffs’
default
Complaints
allege that the debt collectors purposefully sought and secured
default judgments against them in courts that are far from their
homes, thereby violating state consumer fraud and federal fair
debt collection statutes.
The Court has previously deemed these
cases related and consolidated them for ease of adjudication.
Kethchum’s Complaint against Freedman and Portfolio alleges
in part violations of the Fair Debt Collection Practices Act
(the “FDCPA”), 15 U.S.C. § 1692 et seq.
Freedman
and
collection
District,
Portfolio
suit
in
Municipal
violated
the
One
the
Circuit
FDCPA
Court
division,
According to Ketchum,
of
rather
when
Cook
than
they
filed
County,
the
a
First
Markham
Courthouse, which is closer to her residence in Calumet City,
Illinois.
Id.
§ 1692i(2).
Freedman
and
Portfolio
move
to
dismiss Ketchum’s Complaint under Rule 12(b)(6), asserting that
Ketchum’s Complaint is time barred because she filed it after
the applicable one-year statute of limitations.
Jaber’s and Ratcliff’s Complaints against debt collectors
Atlantic Credit and Cavalry, respectively, are nearly identical.
- 2 -
Counts I and II allege FDCPA violations, similar to Kethchum’s
Complaint.
But their Complaints also include a third count,
which alleges that the debt collectors violated the Illinois
Consumer Fraud and Deceptive Business Practices Act (the “ICFA”)
by purposefully filing collection cases at the Richard J. Daley
Center Courthouse in the First Municipal District instead of the
Bridgeview Courthouse which is closer to Jaber’s residence or
the Skokie Courthouse which is closer to Ratcliff’s residence.
Both courthouses are located in Cook County, the County in which
both Jaber and Ratcliff reside.
have
each
moved
to
dismiss
Atlantic Credit and Cavalry
Count
III
under
Rule
12(b)(6).
Because the briefing and issues related to these Complaints are
virtually
the
same,
the
Court
will
consider
II.
both
Motions
LEGAL STANDARD
jointly.
A motion to dismiss for failure to state a claim under
Federal Rule of Civil Procedure 12(b)(6) challenges the legal
sufficiency of a complaint.
Hallinan v. Fraternal Order of Chi.
Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009).
A complaint
must contain a short and plain statement showing the plaintiff
is entitled to relief and providing the defendant with “fair
notice” of the claim and its basis.
Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007) (citing FED. R. CIV. P. 8(a)(2)).
A
complaint need only contain sufficient factual allegations that,
- 3 -
if accepted as true, state a claim for relief that is “plausible
on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(citing Twombly, 550 U.S. at 570).
III.
The
Court
will
ANALYSIS
discuss
the
Motion
to
Dismiss
Ketchum’s
Complaint before moving on to consider jointly the Motions to
Dismiss Count III of Jaber’s and Ratcliff’s Complaints.
A.
The
facts
Freedman
and
Kethchum
in
Kethchum’s Complaint is Time Barred
are
undisputed
Portfolio
the
that
filed
Circuit
a
Court
on
September
collection
of
Cook
11,
action
County,
2013
against
Illinois.
Kethchum was served on September 30, 2013, and on October 29,
the Circuit Court entered a default judgment against her for
failure to appear.
Then, on November 12, 2013, Freedman and
Portfolio filed a Motion to Collect on the judgment previously
entered.
Subsequently, on October 20, 2014, Ketchum filed her
federal complaint, alleging that Freedman and Portfolio violated
the FDCPA’s venue provision by not filing suit against her at
the Markham Courthouse, which is closer to her home.
The
issue
before
the
Court
is
when
the
statute
of
limitations begins to run for the purposes of § 1692i(a)(2).
The
FDCPA
requires
plaintiffs
to
bring
actions
under
§
1692
“within one year from the date on which the violation occurs.”
15 U.S.C. § 1692k(d).
- 4 -
Freedman and Portfolio argue that a “violation” under the
FDCPA occurs when the collection action is filed or, in the
alternative,
when
the
served.
this
interpretation
claim
If
is
time
complaint
barred
in
because
is
the
collection
correct,
she
did
then
not
file
action
is
Kethchum’s
it
until
October 20, 2014, which is more than one year from both the date
Freedman and Portfolio filed their collection action and the
date on which Ketchum was served with it.
Under the relevant portion of the FDCPA venue provision:
Any debt collector who brings any legal action on a
debt against any consumer shall . . . bring such
action only in the judicial district or a similar
legal entity (a) in which such consumer has signed the
contract sued upon; or (b) in which such consumer
resides . . . .
15 U.S.C. § 1692i(a)(2).
action”
should
be
Kethchum argues the phrase “any legal
interpreted
to
allow
claims
to
be
brought
within one year of any action taken by a defendant in the course
of litigating the collection action.
Thus, Kethchum posits that
her Complaint, filed on October 20, 2014, was timely because she
filed
it
within
one
year
from
the
date
of
Freedman
and
Portfolio’s two most recent “legal actions” in the underlying
collection
case:
the
default
judgment
they
obtained
on
October 29, 2013, and their Motion to Collect on that judgment
filed on November 12, 2013.
- 5 -
The
Court
§ 1692i(a)(2)
persuasive.
disagrees
and
finds
with
Kethchum’s
Freedman
and
interpretation
Portfolio’s
of
authority
Although the Seventh Circuit has not decided when a
FDCPA violation occurs and thus, when the statute of limitations
begins to run, several courts in this District and a few circuit
courts have considered the issue.
is
that
the
statute
of
The consensus of these courts
limitations
alleged wrongful litigation begins.
begins
to
run
when
the
Balik v. Blitt & Gaines,
P.C., No. 14 C 8702, 2015 WL 764013, at *3 (N.D. Ill. Feb. 21,
2015); Ford v. Blatt, Hasenmiller, Leibkser & Moore, No. 14 C
9601 (N.D. Ill. Feb. 4, 2015); Smith v. Markoff Law, LLC, No. 14
CV 7809 (N.D. Ill. Feb. 4, 2015); Komisar v. Blatt Hasenmiller
Leibsker & More, LLC, No. 14 CV 7948 (N.D. Ill. Jan. 29, 2015);
see also, Johnson v. Riddle, 305 F.3d 1107, 1113 (10th Cir.
2002); Naas v. Stolman, 130 F.3d 892, 893 (9th Cir. 1997).
Here, Freedman and Portfolio filed their collection action
in Cook County on September 11, 2013.
Kethchum was served with
the alleged wrongful collection action on September 30, 2013.
The statute of limitations for an FDCPA claim arising out of
that proceeding began to run on September 11, 2013, when the
legal action began, giving Kethchum one year from that date to
bring an action under the FDCPA.
764013, at *3.
See, e.g., Balik, 2015 WL
Because Kethchum did not file her Complaint
until October 20, 2014, her claim is time barred.
- 6 -
B.
Defendants
Motions
to
Stating a Claim Under the ICFA
Atlantic
Dismiss
and
Count
Cavalry
III
of
have
brought
Ratcliff’s
Complaints, which allege ICFA violations.
and
identical
Jaber’s
The ICFA prohibits
“unfair methods of competition and unfair or deceptive acts or
practices, including but not limited to the use or employment of
any
deception,
fraud,
false
pretense,
false
promise,
misrepresentation or the concealment, suppression or omission of
any material fact.”
815 ILCS 505/2.
ICFA, a plaintiff must show:
To state a claim under the
(1) a deceptive or unfair act or
practice by the defendant; (2) the defendant’s intent that the
plaintiff rely on the deceptive or unfair practice; and (3) the
unfair practice occurred during a course of conduct involving
trade or commerce.
Wigod v. Wells Fargo Bank, N.A., 673 F.3d
547, 574 (7th Cir. 2012).
For ease of reference, the Court will
refer only to Atlantic’s Motion against Jaber in deciding both
that Motion and Cavalry’s Motion against Ratcliff.
Atlantic argues that Jaber’s Complaint should be dismissed
because (1) she cannot allege a claim under the ICFA based on a
violation of the FDCPA; (2) she fails to plead conduct that is
unfair or deceptive under the ICFA and relevant case law; (3)
litigation is not “trade or commerce” under the ICFA; (4) she
has not alleged that Atlantic’s conduct caused her damages and
has failed to plead actual damages, both of which are required
- 7 -
to recover on an ICFA claim; and (5) her claims are barred by
the litigation privilege.
Because the Court finds that Jaber
cannot satisfy the first element required to state a claim under
the ICFA — an unfair or deceptive practice — the Court need not
discuss the other elements.
Atlantic argues that Jaber has failed to allege an unfair
or deceptive practice because the allegedly unfair and deceptive
practice was, at the time, appropriate under the then applicable
law.
At the time Atlantic filed the debt collection lawsuit
that Jaber alleges was unfair, the Seventh Circuit in Newsome
made Atlantic’s choice of forum proper.
Newsome v. Friedman, 76
F.3d 813 (7th Cir. 1996), overruled by Suesz v. Med-1 Solutions,
LLC, 757 F.3d 636 (7th Cir. 2014).
The FDCPA requires debt
collectors to file lawsuits in the “judicial district” where the
debtor
held
resides,
that
15
U.S.C.
“judicial
§ 1692i(a)(2)(A),
district”
Circuit Court of Cook County.
meant
any
(B),
and
district
Newsome
within
the
Newsome, 76 F.3d at 817.
Since then, the Seventh Circuit in Suesz overruled Newsome
and changed what constitutes a “judicial district” for FDCPA
purposes.
Suesz, 757 F.3d at 642–49.
Suesz reinterpreted the
FDCPA and held that “judicial district” refers to the specific
division
within
debtor resides.
the
Id.
Circuit
Court
of
Cook
County
where
the
Also, the Seventh Circuit applied Suesz
retroactively, thus paving the way for FDCPA claims like those
- 8 -
in Counts I and II of Jaber’s Complaint.
Id. at 650.
The
parties appear to agree, however, that Suesz’s retroactivity has
no bearing on the propriety of an ICFA claim.
In other words,
the fact that Suesz allows FDCPA claims based on what used to be
legal conduct does not automatically make that prior conduct
deceptive or unfair under the ICFA.
See, Perperas v. United
Recovery Sys., Inc., No. 96 C 7693, 1997 WL 136326, at *4 (N.D.
Ill. Mar. 19, 1997) (finding that a violation of the FDCPA is
not a per se violation of the Consumer Fraud Act; a plaintiff
must
independently
plead
an
unfair
or
deceptive
practice
to
state a claim under the ICFA).
Jaber argues that she has stated an independent claim under
the ICFA, regardless of her FDCPA claims, because Atlantic filed
its suit further away from her home than necessary, even if
Atlantic’s chosen forum was legal at the time.
According to
Jaber, this constitutes an unfair or deceptive practice, but
Jaber has pointed to no case that finds similar conduct to be
unfair or deceptive.
The facts here are unique; the basis for
Jaber’s ICFA claim is conduct that was expressly authorized by
Illinois’ venue provision as well as binding Seventh Circuit
precedent.
Jaber does not dispute the legitimacy of the debt or
the validity of the underlying lawsuit, aside from the court in
which Atlantic filed, which further distinguishes her claim from
typical fraud and deceptive practices claims.
- 9 -
In
Mehra
v.
Law
Offices
of
Keith
S.
Shindler
LTD
and
Cavalry SPV I, LLC, the plaintiff, Mehra, brought claims under
the FDCPA and the ICFA. No. 14 CV 07509 (N.D. Ill. Apr. 29,
2015).
The court dismissed Mehra’s ICFA claim, which alleged
that the defendant engaged in deceptive or unfair practices by
filing a debt collection action in the Richard J. Daley Center
Courthouse instead of the Rolling Meadows Courthouse, which is
closer to Mehra’s home.
Mehra, No. 14 CV 07509, at *3.
The
court addressed the fact that:
venue is generally proper: (1) in the county of
residence of any defendant who is joined in good faith
and with probable cause for the purpose of obtaining a
judgment against him or her and not solely for the
purpose of fixing venue in that county, or (2) in the
county in which the transaction or some part thereof
occurred out of which the cause of the action arose.
Id. at *4 (citing 735 ILCS 5/2-101).
Mehra’s
allegations,
filing
the
based
underlying
solely
suit
in
on
an
In discussing whether
the
defendant’s
inconvenient
act
of
district,
sufficiently pleaded an unfair or deceptive act to state a claim
under the ICFA, the court stated “[i]t would be anamolous to
hold that Defendant committed fraud by filing their collection
action in a venue specifically authorized by the state statute.”
Id. at *5.
The Court agrees.
The Court also finds Perperas persuasive.
In that case,
the plaintiff brought suit under the FDCPA and the ICFA alleging
that defendant United Recovery improperly attempted to collect a
- 10 -
debt after Perperas notified the company that he was represented
by counsel.
United
Perperas, 1997 WL 136326, at *1.
Recovery’s
motion
to
dismiss,
the
In granting
court
found
that
Perperas’ complaint failed to allege any conduct or statements
that were misleading or deceptive in order to state a claim
under
the
ICFA.
Id.
at
*4.
United
Recovery
had
merely
attempted to collect an undisputed debt by way of contacting
Perperas and his wife.
Id.
Although United Recovery should
have gone through Perperas’ counsel, its attempt to collect an
undisputed debt, although improper, did not allege the kind of
deceptive conduct or unfair statements contemplated by the ICFA.
Id.
Like
the
debt
collection
activity
in
Perperas,
here
Atlantic’s attempt to collect on a debt by filing suit in a more
distant venue than necessary, while perhaps improper under the
FDCPA,
is
not
the
kind
of
deceptive
conduct
that
the
ICFA
contemplates.
This is not to say that debt collectors that file
lawsuits
exempt
are
from
ICFA
liability.
For
example,
debt
collectors may violate the ICFA if they fabricate the debt or
lie about their right to collect on a debt.
See, Grant-Hall v.
Cavalry Portfolio Servs., LLC, 856 F.Supp.2d 929, 945 (N.D. Ill.
2012) (finding that a debtor properly stated an ICFA claim where
the complaint alleged the collection agency told consumers — and
the court — that it had the right to file suit when it did not).
- 11 -
But Jaber does not dispute the underlying debt or Atlantic’s
right to collect on it.
Because Jaber has failed to allege a
deceptive or unfair practice, her ICFA claim must fail.
The Court must therefore dismiss Count III in Jaber’s and
Ratcliff’s Complaints. They are not without a remedy, however,
because Suesz paves the way for their claims in Counts I and II.
IV.
CONCLUSION
For the reasons stated herein, the Court rules as follows:
1.
Complaint
Freedman and Portfolio’s Motion to Dismiss Ketchum’s
[ECF
No.
19
under
14
C
8217]
is
granted
and
the
Complaint is dismissed with prejudice;
2.
Atlantic’s
Motion
to
Dismiss
Count
III
of
Jaber’s
Complaint [ECF No. 25 under 14 C 7374] is granted; and
3.
Cavalry’s Motion to Dismiss Count III of Ratcliff’s
Complaint [ECF No. 17 under 14 C 7371] is granted.
IT IS SO ORDERED.
Harry D. Leinenweber, Judge
United States District Court
Dated:5/14/2015
- 12 -
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?