Liang v. Frontline Asset Strategies, LLC et al

Filing 50

MEMORANDUM Opinion and Order Signed by the Honorable John Z. Lee on 12/22/16.Mailed notice(ca, ).

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
WEI LIANG, on behalf of plaintiff
and a class,
Plaintiff,
v.
FRONTLINE ASSET STRATEGIES,
LLC, LVNV FUNDING, LLC,
RESURGENT CAPITAL SERVICES,
L.P., and ALEGIS GROUP, LLC,
Defendants.

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15 C 09054
Judge John Z. Lee

MEMORANDUM OPINION AND ORDER
Plaintiff Wei Liang filed suit against Frontline Asset Strategies, LLC, LVNV
Funding, LLC, Resurgent Capital Services, L.P., and Alegis Group, LLC alleging
violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692,
1692a–1692p. Defendants have filed a motion to dismiss [35]. For the reasons
stated below, the motion is granted.
Factual Background
In 2005, North Star Capital Acquisition, LLC brought an action against
plaintiff Wei Liang for a debt originating from a credit card. See 2d Am. Compl.
¶¶ 26–27, ECF No. 32. On December 29, 2005, a default judgment was entered
against Liang. See id. ¶ 26; id., App. A.
Now, after a series of transactions, defendant LVNV Funding, LLC is the
purported owner of the debt. See id. ¶¶ 35–36. Defendant Alegis Group, LLC is the
sole partner of defendant Resurgent Capital Services, L.P., which is responsible for

managing LVNV’s debt portfolio. See id. ¶¶ 16–19, 23. Defendant Frontline Asset
Strategies, LLC (“FAS”) is a debt collection agency retained by LVNV. See id. ¶¶ 6–
8, 37–40. It should be noted that the file for the case resulting in the default
judgment does not show LVNV as the assignee of record. See id. ¶ 34.
On July 8, 2015, FAS sent a collection letter to Liang identifying LVNV as
the creditor to whom the debt is owed and stating:
A judgment was entered against you on 12/29/2005. Your unpaid
judgment has been turned over to us for collection with a total amount
due of $10,539.18 as of the date of this letter.
....
. . . . Nothing contained in this letter changes or alters your consumer
rights.
See id. ¶¶ 37–39.
Plaintiff’s primary objections to the letter are that (1) it did not disclose that
the judgment in question was a dormant judgment under Illinois law and (2) the
defendants were not the judgment creditors. Defendants now seek to dismiss the
lawsuit pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6).
Legal Standard
A motion under Rule 12(b)(6) challenges the sufficiency of the complaint.
Christensen v. Cty. of Boone, Ill., 483 F.3d 454, 457 (7th Cir. 2007). Under the
federal notice pleading standards, “a plaintiff’s complaint need only provide 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.”
Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008); see also Fed. R. Civ. P.
8(a)(2). When considering a motion to dismiss under Rule 12(b)(6), the Court must

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“accept . . . as true all well-pleaded facts alleged, and draw[ ] all possible inferences
in [the plaintiff’s] favor.” Tamayo, 526 F.3d at 1081.
A complaint, however, must also allege “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) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
For a claim to have facial plausibility, a plaintiff must plead “factual content that
allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. “The plausibility standard is not akin to a ‘probability
requirement,’ but it asks for more than a sheer possibility that a defendant has
acted unlawfully.” Id. Plausibility, however, “does not imply that the district court
should decide whose version to believe, or which version is more likely than not.”
Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010).
Analysis
I.

Dormant Judgment
The FDCPA prohibits debt collectors from using “any false, deceptive, or

misleading representation or means in connection with the collection of any debt.”
15 U.S.C. § 1692e. According to Liang, “by referring to a judgment” that has become
dormant, the defendants “misrepresented . . . that they were entitled to . . . judicial
enforcement.” 2d Am. Compl. ¶ 45.
In assessing a debt collector’s statements, courts use the “unsophisticated
consumer” test to determine whether collection messages are deceptive or
misleading. Gammon v. GC Servs. Ltd., 27 F.3d 1254, 1257 (7th Cir. 1994). If a
statement would mislead an unsophisticated consumer, then making that
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statement in connection with an attempt to collect a debt violates the FDCPA. See
Lox v. CDA, Ltd., 689 F.3d 818, 822 (7th Cir. 2012).
Furthermore, a false or misleading statement is actionable under the FDCPA
only if it is material. See Lox, 689 F.3d at 826. For the purposes of § 1692e, a
misleading statement is material if it “could have any practical impact on a
consumer’s rights or decision-making process.” Janetos v. Fulton Friedman &
Gullace, LLP, 825 F.3d 317, 324 (7th Cir. 2016). Therefore, in this case, the letter’s
failure to disclose the dormant nature of the judgment would be material only if
knowledge of the debt’s dormancy would have impacted the debtor’s decision to
challenge or pay the debt.
Hahn v. Triumph P’ships, LLC, 557 F.3d 755 (7th Cir. 2009), is illustrative.
There, the plaintiff debtor received a debt collection letter stating that “$1,051.91 of
[the balance] was an ‘AMOUNT DUE’ and the remaining $82.64 was ‘INTEREST
DUE.’” 557 F.3d at 756. According to the plaintiff, however, the amount due portion
also contained interest from an earlier accrual period; therefore (at least in the
plaintiff’s eyes), the letter falsely represented the character of the debt. See id. The
Seventh Circuit disagreed, finding that “the difference between principal and
interest is no more important to the [FDCPA] than the color of the paper that [the
defendant] used.” Id. at 757. Whether the paper is tan, light blue, or gray, “[a] dollar
due is a dollar due.” Id. Because the breakdown of interest and principal of the debt
would not have altered the debtor’s behavior, the statement did not violate the
FDCPA even though it may have been technically inaccurate. See id.

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The question presented in this case is whether the dormancy of the judgment
would have been material to Liang’s decision of how to respond to the letter from
LVNV. In Illinois, apart from certain limited exceptions not applicable here, “no
judgment shall be enforced after the expiration of 7 years from the time the same is
rendered, except upon the revival of the same by a proceeding provided by Section
2-1601.” 735 Ill. Comp. Stat. 5/12-108(a). Section 2-1601 provides that a judgment
can be revived “by employing a petition filed in the case in which the original
judgment was entered in accordance with Section 2-1602.” 735 Ill. Comp. Stat. 5/21601. Section 2-1602, in turn, states that a “judgment may be revived in the seventh
year after its entry, or in the seventh year after its last revival, or at any other time
thereafter within 20 years after its entry.” 735 Ill. Comp. Stat. 5/2-1602(a). It goes
on to state that such a petition “shall be filed in the original case in which the
judgment was entered.” 735 Ill. Comp. Stat. 5/2-1602(b); see also First Nat’l Bank of
Marengo v. Loffelmacher, 603 N.E.2d 80, 84 (Ill. App. Ct. 1992) (“[A] party may not
enforce a judgment after the expiration of seven years from the time that judgment
was rendered unless the judgment is subsequently revived.”).
Despite the rather straightforward language in these provisions, Illinois
courts have largely blunted their impact. Department of Public Aid ex rel. McGinnis
v. McGinnis, 643 N.E.2d 281 (Ill. App. Ct. 1994), is instructive. There, the plaintiff
filed a motion to force her ex-husband to pay child support in accordance with a
divorce judgment that was older than seven years. The Department of Public Aid
filed a petition to intervene to collect the judgment. The Department’s original

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petition, however, did not seek to revive the judgment, even though it was dormant.
And so the Department later filed an amended petition seeking revival and
enforcement.
In response, the defendant, who was served with the original petition but not
the amended one, sought to dismiss the petition on the basis that he was not
adequately served with an action seeking revival of the judgment. Although the
court recognized that the first petition did not seek to revive the judgment, it was
unpersuaded by the defendant’s argument, noting that it had “recently declared an
express request for revival is not necessary to effect revival.” Id. at 285 (citation
omitted). The court continued, “[T]he initial petition described the original
judgment by date, amount, and parties, stated whether any of the judgment was
satisfied, and requested defendant be ordered to pay the judgment with interest.”
Id. at 285. As a result, the court held, “[t]he initial petition attempted revival (albeit
inartfully) and, therefore, gave defendant adequate notice of an attempted revival of
the dormant judgment against him.” Id. In short, the Department was deemed to
have revived the dormant judgment simply by stating the details of the judgment
and seeking its enforcement. 1
Other Illinois cases evince an equally generous reading of Section 5/12-108.
For example, in James T. Haddon, Ltd. v. Weiss, 796 N.E.2d 109 (Ill. App. Ct. 2003),
The statute subsequently was amended in 1997 so that “[c]hild support
judgments, including those arising by operation of law, may be enforced at any
time.” As a result, such judgments are no longer subject to the seven-year
limitation. See In re Marriage of Stockton, 937 N.E.2d 657, 665 (Ill. App. Ct. 2010).

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the plaintiff was a law firm that filed an action to recover the attorneys’ fees
awarded to it by a previous divorce judgment. The defendant argued that the action
was invalid because eight years had passed since the judgment had been entered
and the law firm had failed to revive the judgment as required by Section 5/12-108.
Id. at 113. Noting that “an express request for revival is not necessary to effect
revival of a judgment,” the court disagreed, finding that the law firm’s “subsequent
actions to collect the debt operated as a revival” for the purposes of Section 5/12108. In so doing, the court disregarded the need for a separate petition altogether.
See also People ex rel. Wray v. Brassard, 589 N.E.2d 1012, 1014–15 (Ill. App. Ct.
1992) (holding that Department of Public Aid had sufficiently revived a dormant
judgment by filing a petition seeking the child support payments ordered by the
dormant judgment). Additionally, the Seventh Circuit itself has characterized the
revival of a dormant judgment under Section 5/12-108 by and large as nothing more
than a clerical requirement. See TDK Elecs. Corp. v. Draiman, 321 F.3d 677, 680
(7th Cir. 2003) (“Normally entry of a reviving order should be a clerical task; all it
entails is assurances that the judgment has not been vacated or marked satisfied
since its rendition.”). Accordingly, the dormant nature of a judgment under Illinois
law is hardly a barrier to enforcement. The dormant dollar is still a dollar due.
In this case, Defendants stated, “an unpaid judgment has been turned over to
us for collection.” 2d Am. Compl. ¶ 39; see also id., App. E. Given the state of Illinois
law, the Court concludes that, even if the letter had disclosed the dormant status of
the judgment, it would not have had any practical impact on an unsophisticated

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consumer’s rights or decision-making process in relation to the debt. Dormancy does
not make a debt unenforceable. See Thomas v. Parkinson, 2009 WL 4429867, *5–6
(C.D. Ill. 2009) (stating that a creditor did not violate the FDCPA when it
represented that a dormant judgment was enforceable). Therefore, Liang’s FDCPA
claim based on defendant’s failure to state that the debt was dormant is dismissed
with prejudice.
II.

Creditor of Record
Next, Liang alleges that Defendants further violated § 1692e by attempting

to collect a “judgment on which defendants were not the judgment creditor” because
only the creditor of record can execute a satisfaction. 2d Am. Compl. ¶¶ 44–45.
Liang relies on the fact that, once they pay any amounts owed, judgment debtors
are entitled to ask judgment creditors for a satisfaction of judgment, a vacation of
the judgment, and dismissal of the action. See 735 Ill. Comp. Stat. 5/12-183. Liang
claims that Defendants’ letter is misleading because it did not disclose that LVNV
was not the creditor of record. This is incorrect.
Nothing in the dunning letter was misleading as to LVNV’s status in relation
to the debt. In Illinois, “a judgment on an unsecured personal debt . . . is a mere
chose in action” and is assignable. Christiansen v. Saylor, 697 N.E.2d 1188, 1192
(Ill. App. Ct. 1998). And the assignee may bring a new action to enforce the
judgment. See Apollo Real Estate Inv. Fund, IV, L.P. v. Gelber, 935 N.E.2d 949,
955–56 (Ill. App. Ct. 2009); see also 735 Ill. Comp. Stat. 5/2-403 (“The assignee and
owner of a non-negotiable chose in action may sue thereon in his or her own
name.”). Consistent with these rules of assignment, the letter notes that LVNV is
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the creditor to whom the debt is owed; it makes no statement that would mislead a
debtor into thinking that LVNV was also the judgment creditor. Accordingly,
Liang’s FDCPA claim based on the contention that LVNV was not the creditor of
record is dismissed with prejudice.
III.

LVNV’s Ownership of the Debt
In his briefs, Liang also appears to challenge LVNV’s ownership of the debt.

See, e.g., Pl.’s Resp. Mot. Dismiss at 8, ECF No. 39 (questioning whether the
“receivables” referenced in the bill of sale attached as Appendix 1 “includes
judgments”). In response, Defendants point out that the complaint contains no
claims that LVNV is attempting to collect on a debt it does not own. The Court
agrees.

The

two

claims in

the

complaint

solely

are

based

on

alleged

misrepresentations related to (1) the dormant status of the debt and (2) the fact
that LVNV was not the judgment creditor. Although there is some language in the
complaint that appears to question whether LVNV actually acquired the debt, see
2d Am. Compl. ¶¶ 36, 43, the complaint does not assert a FDCPA claim premised on
lack of ownership. If Liang believes he has a nonfrivolous argument that LVNV is
not the owner of the debt at issue, he may amend his complaint to add such a claim
within fourteen days of the issuance of this order.

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Conclusion
For the reasons stated herein, the Court grants Defendants’ motion to
dismiss [35].

IT IS SO ORDERED.

ENTERED 12/22/16

__________________________________
John Z. Lee
United States District Judge

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