Wilder v. J.C. Christensen and Associates, Inc.
Filing
24
MEMORANDUM OPINION AND ORDER Signed by the Honorable Robert M. Dow, Jr. on 12/6/2016. Mailed notice(cdh, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
MICHELLE WILDER,
)
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Plaintiff,
v.
J.C. CHRISTENSEN &
ASSOCIATES, INC.,
Defendant.
Case No. 16-cv-1979
Judge Robert M. Dow, Jr.
MEMORANDUM OPINION AND ORDER
Before the Court is Defendant J.C. Christiansen & Associates’ motion to dismiss [11].
Also before the Court is Plaintiff Michelle Wilder’s motion for leave to file a sur-reply to
Defendant’s motion to dismiss [20]. Plaintiff’s motion to file a sur-reply [20] is granted. For the
reasons set forth below, Defendant’s motion to dismiss [11] is granted. Plaintiff is given until
January 6, 2017, to file an amended complaint.
I.
Background
Plaintiff Michelle Wilder was delinquent on her $922.09 credit card debt. In June 2015,
Credit One Bank, N.A. (“Credit One”), Plaintiff’s original creditor, charged off her account,
ceased adding late fees and interest to her account, and stopped sending her periodic statements
about her outstanding debt.
Shortly thereafter, Credit One sold Plaintiff’s debt to LVNV
Funding, LLC (“LVNV”), which hired Defendant J.C. Christiansen & Associates—a debt
collection agency. On June 11, 2015, Defendant sent Plaintiff a dunning letter indicating that her
account was overdue. The letter indicates that the “Total Due” is “$922.09.” [1-1, at Ex. C.]
The letter also includes the following statement: “Please recognize that interest may be accruing
on your account. If applicable, we will receive and apply balance adjustments as interest
accrues.” Id. According to a consumer credit report, no interest was added to Plaintiff’s account
between June 2015 and February 2016.
On February 5, 2016, Plaintiff filed her complaint [1], alleging that the two sentences
regarding interest in Defendant’s dunning letter violate the Fair Debt Collection Practices Act, 15
U.S.C. § 1692 (“FDCPA”), and the Illinois Collection Agency Act, 225 Ill. Comp. Stat. Ann.
452 (“ICAA”). Specifically, Plaintiff alleges that Defendant was not legally authorized to add
interest to Plaintiff’s debt because Credit One waived its right to collect interest before assigning
the debt to LVNV and there was no other statutory or contractual basis by which LVNV (and
thus, Defendant) could add interest. Therefore, according to Plaintiff, this statement in the
dunning letter was false, misleading, deceptive, unfair, and unconscionable. Defendant filed a
motion to dismiss the complaint in its entirety [11].
II.
Legal Standard
To survive a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief
can be granted, the complaint first must comply with Rule 8(a) by providing “a short and plain
statement of the claim showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), such
that the defendant is given “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)) (alteration in original). Second, the factual allegations in the complaint must
be sufficient to raise the possibility of relief above the “speculative level.”
E.E.O.C. v.
Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at
555). “A pleading that offers ‘labels and conclusions’ or a ‘formulaic recitation of the elements
of a cause of action will not do.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 555). Dismissal for failure to state a claim under Rule 12(b)(6) is proper
“when the allegations in a complaint, however true, could not raise a claim of entitlement to
2
relief.” Twombly, 550 U.S. at 558. In reviewing a motion to dismiss pursuant to Rule 12(b)(6),
the Court accepts as true all of Plaintiff’s well-pleaded factual allegations and draws all
reasonable inferences in Plaintiff’s favor. Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d
614, 618 (7th Cir. 2007). The “documents attached to a motion to dismiss are considered part of
the pleadings if they are referred to in the plaintiff’s complaint and are central to his [or her]
claim” and “may be considered by the district court in ruling on the motion to dismiss * * *
without converting [it] to a motion for summary judgment.” Wright v. Associated Ins. Cos. Inc.,
29 F.3d 1244, 1248 (7th Cir. 1994).
III.
Analysis
1.
FDCPA Section 1692e Claims
The purpose of the FDCPA is “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). Sections 1692e, 1692e(2)(a),
1692e(5), and 1692e(10) of the Act prohibit the use of “any false, deceptive, or misleading
representation or means in connection with the collection of debt,” including “[t]he threat to take
any action that cannot legally be taken or that is not intended to be taken,” “[t]he false
representation of * * * the character, amount, or legal status of any debt,” and “[t]he use of any
false representation or deceptive means to collect or attempt to collect any debt or to obtain
information concerning a consumer.”
Whether a debt collector’s communication is false, deceptive, or misleading is evaluated
“through an objective standard of the ‘unsophisticated consumer.’” Simkus v. Cavalry Portfolio
Servs., LLC, 12 F. Supp. 3d 1103, 1107 (N.D. Ill. 2014) (quoting Fields v. Wilber Law Firm,
P.C., 383 F.3d 562, 564 (7th Cir. 2004)). This standard assumes that the debtor is “uninformed,
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naive, or trusting,” but still possesses “rudimentary knowledge about the financial world” and is
“capable of making basic logical deductions and inferences.” Fields, 383 F.3d at 564 (internal
quotations omitted); see also Evory v. RJM Acquisitions Funding LLC, 505 F.3d 769, 774 (7th
Cir. 2007) (“the court asks whether a person of modest education and limited commercial savvy
would be likely to be deceived”).
Consumers “don’t need protection against false statements that are immaterial in the
sense that they would not influence a consumer’s decision—in the present context his decision to
pay a debt in response to a dunning letter.” Muha v. Encore Receivable Mgmt., Inc., 558 F.3d
623, 628 (7th Cir. 2009). “If a statement would not mislead the unsophisticated consumer, it
does not violate the FDCPA—even if it is false in some technical sense. For purposes of §
1692e, then, a statement isn’t ‘false’ unless it would confuse the unsophisticated consumer.”
Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 645–46 (7th Cir. 2009); accord O’Rourke v.
Palisades Acquisition XVI, LLC, 635 F.3d 938, 945 (7th Cir. 2011) (citing Ruth v. Triumph
P’ships, 577 F.3d 790, 800 (7th Cir. 2009)). Similarly, “a false or misleading statement is only
actionable under the FDCPA if it is material, meaning that it has ‘the ability to influence a
consumer’s decision.’” Lox v. CDA, Ltd., 689 F.3d 818, 826 (7th Cir. 2012) (internal citations
omitted); Hahn v. Triumph P’ships, LLC, 557 F.3d 755, 758 (7th Cir. 2009) (“A statement
cannot mislead unless it is material, so a false but non-material statement is not actionable”).
Plaintiff alleges that the dunning letter’s statement regarding interest violates Sections
1692e(2)(a), 1692e(5), and 1692e(10) because Defendant could not legally add interest to
Plaintiff’s account after Credit One waived that right. Defendant responds that the letter is a
“simple truism”—interest “may” be added to the account “if applicable”—and Plaintiff has not
4
alleged facts showing that Credit One waived LVNV’s ability to add interest prospectively to
Plaintiff’s account, meaning that the letter was, in fact, true.
In Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, L.L.C., the Seventh
Circuit fashioned a “safe harbor” to allow debt collectors to comply with the FDCPA
requirement to state the “amount of the debt,” 15 U.S.C. § 1692g(a)(1), when that amount varies
because of interest or other charges. 214 F.3d 872, 876 (7th Cir. 2000). That safe harbor reads:
As of the date of this letter, you owe $___ [the exact amount due]. Because of
interest, late charges, and other charges that may vary from day to day, the
amount due on the day you pay may be greater. Hence, if you pay the amount
shown above, an adjustment may be necessary after we receive your check, in
which event we will inform you before depositing the check for collection. For
further information, write the undersigned or call 1–800–[phone number].
Id. The court explained that “[a] debt collector who uses this form will not violate the ‘amount
of the debt’ provision, provided, of course, that the information he furnishes is accurate and he
does not obscure it by adding confusing other information (or misinformation).” Id.
The Seventh Circuit addressed similar principles for an alleged violation of Section
1692e in Taylor v. Cavalry Inv., L.L.C., 365 F.3d 572 (7th Cir. 2004). In Taylor, one dunning
letter included the statement, “if applicable, your account may have or will accrue interest at a
rate specified in your contractual agreement with the original creditor.” Id. at 574. The other
letter stated, “your account balance may be periodically increased due to the addition of accrued
interest or other charges as provided in your agreement with your creditor.” Id. at 575. The
Seventh Circuit held that any claim that these statements were “false” in violation of Section
1692e because “two of the creditors did not add interest” was “downright frivolous.” Id. The
court explained that “the letter didn’t say they would [add interest], only that they might.” Id.
The letter was not confusing, but was “the clear statement of a truism.” Id.
5
Plaintiff seeks to distinguish Miller and Taylor in three ways. First, she argues that
“language from [Miller] applies to mortgages,” whereas in this case “Defendant is not collecting
a mortgage, but rather a charged off credit card account.” [18, at 3.] That is a distinction
without a difference. Both are “debts” under the FDCPA. 15 U.S.C. § 1692a(5); [1 ¶ 8]. Courts
apply the Miller safe harbor to dunning letters seeking to collect on credit card debts too. See,
e.g., Washington v. Portfolio Recovery Assocs., LLC, 2016 WL 5477519, at *6–7 (N.D. Ill. Sept.
29, 2016); Stricklin v. First Nat. Collection Bureau, Inc., 2012 WL 1076679, at *8–10 (S.D. Ill.
Mar. 30, 2012). Plaintiff does not identify any basis from Miller, its progeny, or the FDCPA’s
text that suggests that the Miller safe harbor does not apply to cases involving credit card debts.
Second, Plaintiff argues that Miller does not apply because Defendant did not use the
exact language from Miller and “included its unnecessary interest phrase to imply a right to
interest.”1 [18, at 4.] Plaintiff makes a similar effort to distinguish the language from Taylor,
which Plaintiff notes includes the phrase “as provided in your agreement with your creditor.” Id.
at 5. These efforts are unavailing. Miller cautioned that “[o]f course we do not hold that a debt
collector must use this form of words to avoid violating the statute.” 214 F.3d at 876. The
Miller and Taylor provisions also refer to “interest,” so Defendant’s use of an “interest phrase” is
not a material difference. Plaintiff fails to explain how Defendant’s language is meaningfully
different from Miller or why, under her theory, Defendant would not have violated the FDCPA
had it used the Miller language. But whether or not Defendant’s language follows Miller
perfectly, it is nearly identical to Taylor: both provisions express the possibility that interest
“may” accrue “if applicable.” Taylor did not state—or even imply—that explicit reference to a
credit agreement was required to avoid Section 1692e liability. Considering the ubiquity of
1
Plaintiff also argues that the letter does “not state an amount ‘as of the date of this letter’” [18, at 4], but
the letter prominently states, “Total Due: $922.09” [1-1, at Ex. C], and it is undisputed that this was the
correct amount due on June 11, 2015.
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interest charges on delinquent credit card debts, it is hard to see how including a reference to the
credit agreement adds anything to Defendant’s language (and Plaintiff never says what it adds
here). See Beasley v. Sessoms & Rogers, P.A., 2010 WL 1980083, at *5 (E.D.N.C. Mar. 1,
2010) (“Even the ‘least sophisticated debtor’ understands that a debt may continue to accrue
interest.”). Defendant’s language is equivalent to and falls within the Miller safe harbor.
Third, Plaintiff argues that the Miller safe harbor applies only to claims under Section
1692g(a)(1) involving the failure to state the “amount of the claim.” Plaintiff asserts that she
“has not raised a claim under § 1692(g), but rather, all of her claims fall under § 1692e” relating
to misrepresentations “in connection with the collection of any debt.” [18, at 4]; 15 U.S.C. §
1692e. Plaintiff’s complaint, however, does raise allegations that Defendant misrepresented the
“amount of the debt alleged to be owed” for her pendant ICAA claims [1, ¶ 50] in a manner
identical to a Section 1692g claim. For example, Plaintiff argues in her response that “[t]hough
Defendant’s letter states in the header that the ‘Total Due: $922.09,’ the statement that interest
may be accruing on the account conflicts—Plaintiff, and the unsophisticated consumer, would
not know whether interest has increased the balance from the ‘Total Due’ amount when reading
the letter.” [18, at 10.] That claim is plainly foreclosed by Miller and Taylor: a debt collector
who uses safe harbor-equivalent language does not misrepresent the amount of the debt owed by
indicating that interest may be applied, whether or not interest is in fact applied. Miller, 214
F.3d at 876; Taylor, 365 F.3d at 575. But even if Plaintiff had not repackaged a Section 1692g
claim as an ICAA claim, this argument would still fail. Miller would not offer much of a safe
harbor if this language (or its equivalent) subjected debt collectors to liability under a different
FDCPA provision as “misleading” or “deceptive” on its face. That may be why courts have
applied Miller to claims under Section 1692e. See Washington, 2016 WL 5477519, at *7;
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Tilmon v. LVNV Funding, LLC, 2014 WL 335234, at *3 (S.D. Ill. Jan. 30, 2014). And regardless
of Miller’s application, Defendant’s language tracks Taylor, which squarely rejected a Section
1692e claim. Thus, use of the language from Miller or Taylor remains instructive for evaluating
a Section 1692e claim.
Accordingly, the interest language in Defendant’s dunning letter is not—on its face—
false, misleading, confusing, or otherwise violative of Section 1692e of the FDCPA. The
statement is a truism: interest may or may not be accruing and if it is, Defendant will adjust the
balance on Plaintiff’s account as it accrues. The language makes no definitive statement about
whether interest has accrued or will necessarily be applied to the account in the future. It is a
truthful, non-deceptive conditional statement.
But that does not resolve this case. Plaintiff’s main allegation is that Defendant’s interest
statement is latently false because LVNV was bound by Credit One’s waiver of its right to
collect additional interest and there was no circumstance in which LVNV (and Defendant) could
have legally added interest to Plaintiff’s account. Thus, Plaintiff’s theory is essentially that
extrinsic facts render this otherwise truthful statement false, misleading, and deceptive.
This theory finds some support in the case law. Courts have held that “it is improper
under the FDCPA to imply that certain outcomes might befall a delinquent debtor when, legally,
those outcomes cannot come to pass.” Lox, 689 F.3d at 825. “‘When language in a debt
collection letter can reasonably be interpreted to imply that the debt collector will take action it
has no intention or ability to undertake, the debt collector that fails to clarify that ambiguity does
so at its peril.’” Id. (quoting Gonzales v. Arrow Fin. Servs., LLC, 660 F.3d 1055, 1063 (9th Cir.
2011)). Said differently, literally true conditional language in a dunning letter can be deceptive
if the action suggested is legally prohibited. Examples include statements that a court “could
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allow” attorney’s fees despite the absence of any statutory or contractual right to fees (Lox); that
an attorney may “review [the] account for possible legal action” where the statute of limitations
on any claim had run (Karr v. Med-1 Sols., LLC, 2014 WL 1870928, at *5 (S.D. Ind. May 7,
2014)), that the debt collector would share information related to the delinquent account “to the
extent permitted by law” where it was legally barred from doing so absent the plaintiff’s consent
(Ruth, 577 F.3d at 799–801), and that a “negative credit report reflecting on your credit record
may be submitted to a credit reporting agency” and “if we are reporting the account, the
appropriate credit bureaus will be notified that this account has been settled” where there was
“no circumstance under which [defendant] could legally report an obsolete debt to a credit
bureau” (Gonzales, 660 F.3d at 1063).2
Truisms about potential interest payments are no different; they are not deceptive only “if
[Defendant] could actually charge interest on [Plaintiff’s] account.” Toction v. Eagle Accounts
Grp., Inc., 2015 WL 127892, at *3 (S.D. Ind. Jan. 8, 2015); see also Safdieh v. P & B Capital
Grp., LLC, 2015 WL 2226203, at *5 (D.N.J. May 12, 2015). “[I]f Plaintiff can show that interest
or charges could never accrue and therefore the balance owed is truly fixed, then his claim
should be allowed to go forward to determine if, under those circumstances, Defendants’ letter
was threatening or materially misleading.” Walker v. Shermeta, Adams, Von Allmen, PC, 623 F.
App’x 764, 768 (6th Cir. 2015).
The stumbling block for Plaintiff is whether she has pled sufficient facts to show that it is
plausible that Credit One waived its right to add interest and that this waiver bars LVNV from
2
Plaintiff’s response relies heavily on Gonzalez, but the Ninth Circuit in that case analyzed whether
communications were misleading or threats “under the least sophisticated debtor standard,” 660 F.3d at
1063, which is not the standard applied in this Circuit. See Lox, 689 F.3d at 822 (“[B]ecause we have
rejected the ‘least sophisticated consumer’ standard, a letter must be confusing to ‘a significant fraction of
the population.’”). Lox’s citation to Gonzalez was principally for the point that conditional language may
violate the FDCPA when certain conditions legally cannot materialize. Lox, 689 F.3d at 824–25.
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adding interest going forward.
“In Illinois, waiver is the voluntary and intentional
relinquishment of a known right.” Delta Consulting Grp., Inc. v. R. Randle Const., Inc., 554
F.3d 1133, 1140 (7th Cir. 2009). Because Plaintiff does not allege express waiver, she must
allege facts sufficient to plausibly claim that Credit One’s waiver can be implied. Waiver “may
be implied from the conduct, acts or words of the party who is alleged to have waived a right.”
Id. “An implied waiver may arise where a person against whom the waiver is asserted has
pursued such a course of conduct as to sufficiently evidence an intention to waive a right or
where his conduct is inconsistent with any other intention than to waive it.” Id. (citing Ryder v.
Bank of Hickory Hills, 146 Ill. 2d 98, 105 (1991)). To show implied waiver, “the act relied on to
constitute the waiver must be clear, unequivocal and decisive.” Id.
The only factual allegations in the complaint for Credit One’s implied waiver are that it
“charged off the account in June 2015,” “ceased charging interest and late fees to Plaintiff on or
about June, 2015,” and “ceased sending statements to Plaintiff after June, 2015.” [1, ¶¶ 10–12.]
“Thus,” Plaintiff concludes, “Credit One has waived any right to collect interest.” Id. ¶ 13.
These sparse allegations fall short. See Bunce v. Portfolio Recovery Assocs., LLC, 2014
WL 5849252, at *2–6 (D. Kan. Nov. 12, 2014) (holding that plaintiffs’ allegations of implied
waiver based on “the facts that (1) the accounts were charged off, and (2) the original lenders
stopped sending monthly statements * * * fail to present a plausible basis for inferring any
waiver”); Willingham v. Midland Funding, LLC, 2014 WL 12600798, at *5 (W.D. Okla. Mar.
11, 2014) (denying motion to amend FDCPA claim because allegations that creditor charged off
debt, monthly statements ceased, and creditor stopped charging interest were insufficient to show
“implied waiver of its right to accrue additional interest on the unpaid debt”).
To start,
“[c]harging off the delinquent accounts is a federal regulatory requirement.” Bunce, 2014 WL
10
5849252, at *2. Pursuant to the Uniform Retail Credit Classification and Account Management
Policy, a financial institution must charge-off a credit card loan that remains delinquent for 180
days. See 65 Fed. Reg. 36,903-01 (June 12, 2000); [1-1, Ex. D at 10]. Thus, Credit One’s
charge-off is not evidence of waiver since it is “not a voluntary action of the creditor.” Bunce,
2014 WL 5849252, at *2.
Likewise, the requirement to send periodic statements is determined by the Truth In
Lending Act, 15 U.S.C. § 1601 et seq. (“TILA”), and its implementing regulations, 12 C.F.R. §
226 (“Regulation Z”). “While such a cessation [of periodic statements] may occur when a lender
waives further interest charges, it may also happen if the creditor decides the debt is
uncollectible, it has commenced a delinquency action, additional statements are precluded by
statute, or if it sells the debt.” Bunce, 2014 WL 5849252, at *2; 12 C.F.R. § 226.5(b)(2)(i);
Terech v. First Resolution Mgmt., 854 F. Supp. 2d 537, 542–43 (N.D. Ill. 2012) (concluding that
even under a prior version of Regulation Z, which “did not permit a creditor to automatically
stop sending statements after charge-off,” the absence of periodic statements “add[s] nothing to
the inquiry” into whether a creditor waived the right to add interest). Here, Credit One’s
obligation to send periodic statements ended once it “ceased collection efforts”—that is, when it
assigned Plaintiff’s debt to LVNV between the “June, 2015” charge-off and the June 11, 2015
dunning letter. [1, ¶¶ 10, 15]; 12 C.F.R. § Pt. 226, Supp. I ¶ 5(2)(b)(i)(3); Bunce, 2014 WL
5849252, at *2 (explaining that a creditor’s “obligation to send statements ends after the sale of
the account”); see also Neff v. Capital Acquisitions & Mgmt. Co., 352 F.3d 1118, 1121 (7th Cir.
2003) (holding that credit card debt assignees have no obligation to send periodic statements).
Thus, “simply because the original creditors charged off the accounts and stopped sending month
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statements does not preclude the assignee of the accounts from seeking to collect interest.”
Bunce, 2014 WL 5849252, at *3.
Accordingly, Plaintiff’s only factual allegations in support of a waiver claim are that
Credit One (1) charged-off her account, as it was legally required to do; (2) did not send any
further periodic statements after June 1, as it was legally permitted to do once it ceased collection
efforts; and (3) did not add any interest in the ten days between charge-off and the dunning letter.
None of these facts, standing alone or together, plausibly suggests that Credit One waived even
its own ability to add interest, much less the rights of all assignees to add interest prospectively.
The fact that Plaintiff’s credit report shows LVNV did not add interest after it purchased
Plaintiff’s account suggests nothing about whether Credit One took any “clear, unequivocal and
decisive” act that constitutes waiver before the assignment.3 Delta Consulting, 554 F.3d at 1140.
Plaintiff also argues that it is “likely that the Asset Purchase Agreement, by which Defendant
purchased [Plaintiff’s] account likely set forth that Defendant had no right to charge interest on
the accounts.” [18, at 8.] But speculation is not a substitute for factual allegations.4 “Where a
complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of
the line between possibility and plausibility of ‘entitlement to relief.’” Iqbal, 556 U.S. at 678
(quoting Twombly, 550 U.S. at 557). Plaintiff’s complaint never moves beyond possibility.
The cases relied on by Plaintiff that allowed FDCPA claims based on implied waiver
theories to survive a motion to dismiss differ in two critical respects. First, the length of time
that the allegedly waiving original creditor did not add interest or send periodic statements was
3
Plaintiff further states that Defendant “threatened to charge interest when it had no intention of charging
interest, evidenced by the fact that the balance on the alleged debt remained unchanged since the date of
charge-off by Credit One.” [18, at 10.] The fact that interest was not added does not state a Section
1692e violation. Taylor, 365 F.3d at 575 (“The letter didn’t say they would, only that they might.”).
4
Regardless, LVNV, not Defendant, acquired Plaintiff’s account from Credit One. Defendant does assert
a right to “charge interest,” only to “receive and apply” interest that may be imposed by LVNV.
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significantly longer than the ten-day period here. See Simkus v. Cavalry Portfolio Servs., LLC,
2012 WL 1866542, at *4–5 (N.D. Ill. May 22, 2012) (denying motion to dismiss where prior
creditors did not collect interest or send further billing statements for over two years after
charge-off); McDonald v. Asset Acceptance LLC, 296 F.R.D. 513, 518 (E.D. Mich. 2013)
(finding implied waiver, in part, because original creditor had not added interest for the twentysix months after charge-off, at which point the debt was sold to defendant); Terech, 854 F. Supp.
2d at 539 (denying motion to dismiss where original creditor did not charge interest or send
periodic statements for five months and “reversed a number of accrued fees, including some late
fees and interest” at charge-off, then the intermediate buyer did not charge interest or send
statements for two-and-a-half years, and plaintiff offered other “detailed allegations” about
standard banking practices concerning interest); Stratton v. Portfolio Recovery Assocs., LLC, 770
F.3d 443, 445 (6th Cir. 2014) (reversing dismissal of FDCPA claim where Defendant “concedes
that [the prior creditor] waived its right to collect interest at the contractually agreed upon rate”;
prior debtor had stopped charging interest and sending periodic account statements for “a little
more than a year” after charge-off, at which point it assigned its ownership to defendant).
Second, in each case, the defendant-creditor tried to impose retroactively the interest that
the original creditor had allegedly waived.5 See Simkus, 2012 WL 1866542, at *2 (alleging
defendant “retroactively added interest for the period of time between the charge-off by [prior
creditor] and [defendant’s] purchase of the account” in violation of the FDCPA); McDonald, 296
F.R.D. at 526 (“Because [prior creditors] waived the interest, [Defendant] could not retroactively
impose interest for the period in which it did not own the accounts.”); Terech, 854 F. Supp. 2d at
540 (“Count I alleges that the retroactive addition of interest violated the [FDCPA]”); Stratton,
5
Plaintiff appears to acknowledge that these cases all involve “[w]hen a debtor collector tries to collect
interest that a previous collector had waived” [18, at 3], which is not what Defendant did here.
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770 F.3d at 446 (assignee-defendant “alleged that [debtor] owed interest during the 10 months
after [original creditor] charged off her debt and before [original creditor] sold that debt to
[defendant]”). None of these cases held that subsequent creditors were precluded from charging
interest prospectively. Plaintiff offers no other authority to substantiate this proposition, which is
the legal lynchpin on which her complaint depends. Thus, Plaintiff fails to offer any factual or
legal support to show the plausibility of her contention that Credit One waived its successor-ininterest’s right to add interest to Plaintiff’s unpaid balance going forward.
If that were not enough, Defendant argues that LVNV could have added interest pursuant
to Illinois’ prejudgment interest statute, 815 Ill. Comp. Stat. Ann. 205/2, regardless of any
alleged contractual waiver by Credit One. See Haney v. Portfolio Recovery Associates, L.L.C.,
837 F.3d 918, 928 (8th Cir. 2016) (“Nothing inherent in the process of charging off a debt
precludes a claim for statutory interest”); Grochowski v. Daniel N. Gordon, P.C., 2014 WL
1516586, at *3 n.2 (W.D. Wash. Apr. 17, 2014) (“Contrary to plaintiff’s assertion, Capital One’s
decision to forego the contractual rate of interest did not relinquish its right to seek prejudgment
interest at the statutory rate.”); but see Stratton, 770 F.3d at 447–48. Plaintiff’s only response to
this argument is that “Defendant did not comply with the [prejudgment interest statute’s] notice
provisions.” [18, at 2]; 815 Ill. Comp. Stat. Ann. 205/2 (requiring 30 days’ written notice before
interest may be imposed). That is a non sequitur. Whether or not the dunning letter served as
notice—and there are at least circumstances where a request for interest may be implied, see
Gonzalez v. Second Fed. Sav. & Loan Ass’n, 954 N.E.2d 245, 256, 2011 IL App (1st) 102297,
¶ 58—Plaintiff implicitly concedes that Defendant could have served notice and then would have
been able to collect interest. That means it was legally possible for LVNV to add interest to
Plaintiff’s account prospectively (assuming it complied with the notice requirement), which
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dooms her claims that Defendant “had no legal * * * right to impose charge interest.” [18, at 6
(capitalization altered).] Thus, Plaintiff’s Section 1962e claims must be dismissed.
2.
FDCPA Section 1692f Claims
Section 1692f of the FDCPA prohibits “[a] debt collector [from] us[ing] unfair or
unconscionable means to collect or attempt to collect any debt.” Plaintiff argues that Defendant
used “unfair and unconscionable means” in violation Section 1692f “when [it] threatened to
collect interest” and “made this false threat in an attempt to coerce Plaintiff into paying the
balance in full on the alleged debt.” [1, ¶¶ 31, 34.] Defendant responds by arguing that the
interest statement in the dunning letter was a “legal truism” that would not be understood to be a
threat by an unsophisticated consumer. [11, at 7.]
Although the complaint does not specifically reference Section 1692f(1), Plaintiff’s
response block quotes this subsection as supplying the means by which Defendant’s dunning
letter was “unfair” and “unconscionable.” [See 18, at 6.] Section 1692f(1) precludes “collection
of any amount (including any interest * * *) unless such amount is expressly authorized by the
agreement creating the debt or permitted by law.” Courts have held that Section 1692f(1) is
“directed at debt collectors who charge fees not contemplated by the original agreement, not debt
collectors who seek to charge fees contemplated by the agreement but arguably waived
thereafter.” Terech, 854 F. Supp. 2d at 544. As a result, Plaintiff’s allegation that Defendant
engaged in “unfair” or “unconscionable” conduct by claiming that interest “may” be added to
Plaintiff’s account is not a violation of Section 1692f(1) even if she could demonstrate that
Credit One waived its contractual right. See Simkus, 12 F. Supp. 3d at 1110 (“[E]ven if BOA
waived its right to collect interest, Defendants cannot have violated 1692f(1) if the original
agreement between [plaintiff] and BOA allowed for charging interest on late payments.”). And,
15
other than Credit One’s alleged waiver, the complaint does not allege anything “unfair” or
“unconscionable” about the dunning letter, which is true on its face and protected by Miller.6
Washington, 2016 WL 5477519, at *7. Plaintiff’s Section 1692f claim cannot survive either.
3.
ICAA Claims
Plaintiff alleges that Defendant violated two provisions of ICAA. First, she alleges that
Defendant “attempt[ed] to collect interest or other charge or fee in excess of the actual debt” that
was not “expressly authorized by the agreement creating the debt” or “expressly authorized by
law.” [1, ¶ 49]; 225 Ill. Comp. Stat. Ann. 425/9(a)(33). Second, she alleges that Defendant
misrepresented “the amount of the debt alleged to be owed.” [1, ¶ 50]; 225 Ill. Comp. Stat. Ann.
425/9(a)(30). Plaintiff concedes that her ICAA “logically flow from [her] claims under the
FDCPA” [18, at 10], and does not argue that her ICAA claims can survive if her FDCPA claims
are dismissed. Because her FDCPA claims fail, so too must her ICAA claims.
Plaintiff’s ICAA claims also must be dismissed for independent reasons. “To state a
personal claim under the ICAA, a Plaintiff must show actual damages.” Stubbs v. Cavalry SPV
I, LLC, 2015 WL 135131, at *5 (N.D. Ill. Jan. 8, 2015). “Attorneys’ fees are not considered
actual damages under the ICAA.” Id.; accord Herkert v. MRC Receivables Corp., 655 F. Supp.
2d 870, 881 (N.D. Ill. 2009) (collecting cases). Plaintiff asserts an entitlement to an award of
“actual damages” for her FDCPA claim and “compensatory and punitive damages” for her ICAA
6
Plaintiff’s response advances the claim that Defendant violated Section 1691f(1) because it “has no
information about the terms of the agreement between the underlying creditor and the consumer’s
obligation to pay interest.” [18, at 6.] That conclusory allegation is absent from the complaint. “It is a
basic principle that the complaint may not be amended by the briefs in opposition to a motion to dismiss.”
Thomason v. Nachtrieb, 888 F.2d 1202, 1205 (7th Cir. 1989). Plaintiff analogizes this case to a
bankruptcy adversary proceeding from Massachusetts in which the court found a plausible Section
1691f(1) violation where the defendant “repeatedly fabricated the amount of the consumer’s obligation
‘out of thin air.” [18, at 6–7 (quoting In re Maxwell, 281 B.R. 101, 117 (Bankr. D. Mass. 2002)). The
conduct in Maxwell bears no resemblance to Defendant’s actions here, most notably because Defendant
never “assessed interest” on Plaintiff’s debt. Id. at 6; [1, ¶ 22].
16
claim, but does not provide notice—even generally—as to what her “actual damages” might be.
After all, Plaintiff alleges that no interest was added to the account [1, ¶ 22], and her full balance
remained outstanding at the time she filed the complaint [1-1, at Ex. D at 10]. Unless Plaintiff
can plead actual damages, her ICAA claims cannot advance.
In addition, Plaintiff’s ICAA claims fail as a matter of law. Plaintiff pled that Defendant
“did not intend to charge Plaintiff interest on the alleged debt” and never in fact added interest.
[1, ¶¶ 22, 32.] The dunning letter states that $922.09 was due. [1-1, at Ex. C.] Plaintiff does not
argue that this amount was inaccurate or that Defendant tried to collect funds from Plaintiff in
excess of this amount. Thus, Plaintiff has failed to show how Defendant “attempt[ed] to collect
interest * * * in excess of the actual debt” in violation of Section 9(a)(33). Moreover, as noted
above, Plaintiff does not offer any reason that her Section 9(a)(30) claim regarding
misrepresentations of the “amount of the debt” should not suffer the same fate as if her claim had
been brought under 15 U.S.C. § 1692g(a)(1). Miller, 214 F.3d at 876 (“[a] debt collector who
uses this form will not violate the ‘amount of the debt’ provision”). Accordingly, Plaintiff’s
ICAA claims must be dismissed.
IV.
Conclusion
For the foregoing reasons, the Court grants Plaintiff’s motion to file a sur-reply [20] and
Defendant’s motion to dismiss [10]. Plaintiff is given until January 6, 2017, to file an amended
complaint if she believes that she can cure the deficiencies set out above.
Dated: December 6, 2016
_________________________________
Robert M. Dow, Jr.
United States District Judge
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