Collopy v. Dynamic Recovery Solutions, LLC. et al

Filing 46

OPINION and ORDER Signed by the Honorable Sara L. Ellis on 4/4/2017: For the reasons stated in the Opinion and Order enter this day, the Court grants in part and denies in part the motion to dismiss 27 . The Court grants the motion with respect to Count III, the ICFA claim, and the Court denies the motion with respect to Counts I and II, the FDCPA claims. Defendants are ordered to answer the complaint by April 26, 2017. (See Order For Further Details) Mailed notice(lxs, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
DIANE COLLOPY,

)
)
Plaintiff,
)
)
v.
)
)
DYNAMIC RECOVERY SOLUTIONS, LLC, )
PINNACLE CREDIT SERVICES, LLC, and )
BANK OF AMERICA, N.A.,
)
)
Defendants.
)

No. 16 C 6777
Judge Sara L. Ellis

OPINION AND ORDER
After receiving a letter (the “Letter”) from Defendants Dynamic Recovery Solutions,
LLC (“Dynamic”) and Pinnacle Credit Services, LLC (“Pinnacle”) (collectively “Defendants”) 1
that falsely lead Plaintiff Diane Collopy to believe that she owed a debt, which was no longer
collectable pursuant to the Illinois statute of limitations, Collopy filed this lawsuit alleging that
Defendants violated the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, et
seq., and the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”), 815 Ill.
Comp. Stat. 505/2, et seq. Defendants move to dismiss [27] the complaint, arguing that the
Letter is not misleading on its face as a matter of law. Because whether the Letter is misleading
is a question of fact that the Court cannot determine on the pleadings, the Court denies
Defendants’ motion to dismiss the FDCPA claims, but because Collopy abandons her state law
claim in her response to the motion to dismiss, the Court grants Defendants’ motion to dismiss
the ICFA claim.

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Collopy initially included Bank of America, N.A. (“BOA”), as a codefendant, but subsequently filed
stipulation dismissing BOA with prejudice.

BACKGROUND 2
Collopy is an individual consumer who obtained a credit card from BOA and, more than
ten years ago, defaulted on the debt she had incurred on that card. Subsequently, Pinnacle, a
debt collector, purchased from BOA the debt’s collection rights. In February 2016, Dynamic,
also a debt collector, sent a letter to Collopy on behalf of Pinnacle seeking to collect on the debt.
The Letter included the following statement:
The law limits how long you can be sued on a debt. Because of the
age of your debt, Pinnacle Credit Services, LLC will not sue you
for it and Pinnacle Credit Services, LLC will not report it to any
credit reporting agency.
Doc. 1-1 at 2. It also included three payment options, each including the disclaimer, “We are not
obligated to renew this offer.” Id. Reading the Letter, Collopy believed that if she did not pay
the debt, then Defendants would sue her, due to her ignorance that the applicable Illinois statute
of limitations would, in fact, bar any suit filed on the debt. Additionally, the Letter concealed
that a partial payment on the debt would revive the statute of limitations, thus subjecting her to
suit on the debt.
LEGAL STANDARD
A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not
its merits. Fed. R. Civ. P. 12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir.
1990). In considering a Rule 12(b)(6) motion to dismiss, the Court accepts as true all wellpleaded facts in the plaintiff’s complaint and draws all reasonable inferences from those facts in
the plaintiff’s favor. AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011). To survive
a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of a
claim’s basis but must also be facially plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct.
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The facts in the background section are taken from the complaint and are presumed true for the purpose
of resolving the Rule 12(b)(6) challenges. See Virnich v. Vorwald, 664 F.3d 206, 212 (7th Cir. 2011).

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1937, 173 L. Ed. 2d 868 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.
Ct. 1955, 167 L. Ed. 2d 929 (2007). “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.” Iqbal, 556 U.S. at 678.
ANALYSIS
Under 15 U.S.C. § 1692e, any debt collector violates the FDCPA by using “any false,
deceptive, or misleading representation or means in connection with the collection of any debt.”
15 U.S.C. § 1692e. Section 1692e(10) specifically prohibits, “[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.” Id. § 1692e(10). Section 1692f similarly prohibits a debt
collector from using “unfair or unconscionable means to collect or attempt to collect any debt.”
15 U.S.C. 1692f. Collopy argues that Defendants violated §§ 1692e and 1692f when they sent
her a letter seeking to collect on a debt because that letter did not state that she “cannot be sued
on the subject debt,” Doc. 1 ¶ 57, and because it failed to disclose that if Collopy made a partial
payment on the debt it would revive the statute of limitations.
To determine whether a communication violates the FDCPA, the Court must apply the
“unsophisticated consumer” test. Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 645 (7th
Cir. 2009). “If a statement would not mislead an unsophisticated consumer, it does not violate
the FDCPA.” Id. at 645–46. The unsophisticated consumer has “rudimentary knowledge about
the financial world and is capable of making basic logical deductions and inferences.” Id. at 645
(quotation marks omitted) (citations omitted). An unsophisticated consumer “may tend to read
collection letters literally, he does not interpret them in a bizarre or idiosyncratic fashion.”
Gruber v. Creditors’ Prot. Serv., Inc., 742 F.3d 271, 274 (7th Cir. 2014) (quotation marks

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omitted) (citation omitted). Typically determining whether a communication is misleading is a
question of fact that a court cannot determine at the motion to dismiss stage. Walker v. Nat’l
Recovery, Inc., 200 F.3d 500, 501 (7th Cir. 1999). If the Court can determine from the face of
the letter in question that “not even a significant fraction of the population would be misled by it
. . . the court should reject it without requiring evidence beyond the letter itself.” Taylor v.
Cavalry Inv., L.L.C., 365 F.3d 572, 574–75 (7th Cir. 2004) (quotation marks omitted). If the
statements in question “plainly, on their face, are not misleading or deceptive,” the Court may
dismiss the case based on its own determination without looking to extrinsic evidence. Ruth v.
Triumph P’ships, 577 F.3d 790, 800 (7th Cir. 2009).
Collopy contends that the following statement in the Letter is deceptive and misleading:
The law limits how long you can be sued on a debt. Because of the
age of your debt, Pinnacle Credit Services, LLC will not sue you
for it and Pinnacle Credit Services, LLC will not report it to any
credit reporting agency.
Doc. 1-1 at 2. Collopy alleges the statement failed to advise her that she cannot be sued on the
subject debt. By using the words “will not sue you,” Collopy pleads, Defendants create the
misleading impression that Defendants are merely deciding not to sue rather than that
Defendants are completely barred from suing. Furthermore, Collopy states that additional
statements included in the letter add to the confusion by “blurring the line between an optional
payment request and a commanding payment demand,” Doc. 39 at 4, such as, “When you
provide a check as payment,” Doc. 1-1 at 2. She also argues that the inclusion of payment
options “provides a strong inference that [Dynamic] intentionally attempted to mislead Plaintiff
into making a payment on a debt she could no longer be sued for.” Doc. 39 at 4. Finally, she
asserts that the disclaimer, “We are not obligated to renew this offer,” Doc. 1-1 at 4, caused

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Collopy to believe that her failure to accept one of the payment options might result in further
collection activity, an increased balance, or a future lawsuit.
Defendants argue that the Court can determine based on the letter alone that Defendants
did not mislead Collopy and therefore, the Court should dismiss the complaint. They point out
that the statement that Pinnacle “will not sue [Collopy]” for the debt is nearly identical to
language that the Consumer Financial Protection Bureau (“CFPB”) and the Federal Trade
Commission (“FTC”) have approved for use in letters seeking collection of time-barred debts.
Defendants argue that opinions of the CFPB and the FTC are dispositive because the CFPB has
both rule making and enforcement authority over the FDCPA, and, prior to the 2010 amendment
of the FDCPA, the FTC had enforcement authority for the FDCPA.
The CFTC and FTC have required other debt collection companies to use nearly identical
language in at least three Consent Orders dealing with the collection of time-barred debts. See
United States v. Asset Acceptance LLC, No. 8:12-CV-182-T-27-EAJ (M.D. Fla. 2012); Portfolio
Recovery Assocs, LLC, 2015 CFPBSTIP 0023, 2015 WL 5667146 (Sept. 9, 2015); In re Encore
Capital Grp. Inc., et al., 2015 CFPBSTIP 0022, 2015 WL 5667145 (Sept. 9, 2015).
The Court agrees that it should accord some deference to the FTC and CFPB on
interpretation of the FDCPA, but because the language at issue is from Consent Decrees and is
not the result of the formal rule making process, that deference is far lower. Christensen v.
Harris County, 529 U.S. 576, 587, 120 S. Ct. 1655, 146 L. Ed. 2d 621 (2000) (“Interpretations
such as those in opinion letters—like interpretations contained in policy statements, agency
manuals, and enforcement guidelines, all of which lack the force of law—do not warrant
Chevron-style deference.”). The fact that the current and former enforcement authorities for the
FDCPA have specifically required the use of this language is strong evidence that, in their expert

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opinions, this statement is not misleading; however, it is not conclusive at this stage of the
litigation.
Defendants also cite several cases in which courts found nearly identical language not to
be misleading. Most of these cases were decided at summary judgment, but in Genova v. Total
Card, Inc., 193 F. Supp. 3d 360 (D.N.J. 2016), the court dismissed a § 1692e claim at the motion
to dismiss stage. The Genova court reasoned that the defendant did not mislead the plaintiff
because the defendant did not affirmatively misrepresent the legal status of a time-barred debt
and because it is not a violation of the FDCPA to attempt to collect a time-barred debt. Id. at
366–67. The court also cited the CFPB and FTC consent decrees discussed above to bolster its
decision. Id. at 367–68. But, as discussed above, the CFPB and FTC consent decrees are not
binding, especially at this juncture. Neither is the Genova decision especially persuasive where
it did not apply the Seventh Circuit “unsophisticated consumer” standard for determining
whether a statement is misleading.
Collopy plausibly alleges that the Letter is misleading to the unsophisticated consumer
because that consumer could reasonable construe the Letter as stating that Defendants are merely
electing not to sue on the debt, rather than that they are legally barred from doing so. The Court
finds that this interpretation of the Letter is not, as a matter of law, so bizarre or idiosyncratic as
to warrant dismissal at this stage. After discovery, however, Collopy must do more than
demonstrate that the Letter confused or misled her, but must provide evidence that it was
misleading to the unsophisticated consumer, which is an objective standard. Lox v. CDA, Ltd.,
689 F.3d 818, 826 (7th Cir. 2012) (“[T]he unsophisticated consumer test is an objective one,
meaning that it is unimportant whether the individual that actually received a violative letter was
misled or deceived.” (citations omitted) (quotation marks omitted)).

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Collopy also alleges that Defendants’ failure to state in the Letter that a partial payment
on the debt would revive the statute of limitations on the debt, potentially subjecting her to suit,
was a misleading, unfair attempt to collect the debt. There is no doubt that it is legally
permissible for a debt collector to attempt to collect a time-barred debt. See Murray v. CCB
Credit Servs., Inc., No. 04 C 7456, 2004 WL 2943656, at *2 (N.D. Ill. Dec. 15, 2004) (“Merely
attempting to collect a time-barred debt does not violate the FDCPA.”). However, such
collection efforts, if misleading or unfair, can violate the FDCPA. See, e.g., Delgado v. Capital
Mgmt. Servs. LP, No. 4:12-CV-4057-SLD-JAG, 2013 WL 1194708, at *7 (C.D. Ill. Mar. 22,
2013) (denying a motion to dismiss where a settlement offer could impermissibly imply a legal
obligation to pay a time-barred debt). Defendants argue that omitting potential consequences of
making a partial payment is not misleading because, under Illinois law, partial payment alone is
not sufficient to revive a time-barred debt. In support of this argument, Defendants cite several
cases in which courts held that a new promise to pay is not sufficient to revive a claim without an
express written agreement showing the nature and amount of the debt. See, e.g., Brenner Grp. v.
Seaboard Sur. Co., No. 00 C 306, 2001 WL 527437, at *2 (N.D. Ill. May 17, 2001). These cases
are not helpful because they only address how a promise to pay affects the statute of limitations,
and are silent on the effect of partial payment. The governing statute states:
[I]f any payment or new promise to pay has been made, in writing,
on any bond, note, bill, lease, contract, or other written evidence of
indebtedness, within or after the period of 10 years, then an action
may be commenced thereon at any time within 10 years after the
time of such payment or promise to pay.
735 Ill. Comp. Stat. 5/13-206. The express language of the statute makes clear that “any
payment” on a debt triggers a revival the statute of limitations on that debt. Therefore, because
a partial payment could revive a time-barred debt and it is a question of fact whether or not the

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Letter’s omission on this point would mislead an unsophisticated consumer, the Court denies the
motion to dismiss on this basis.
CONCLUSION
For the foregoing reasons, the Court grants in part and denies in part the motion to dismiss [27].
The Court grants the motion with respect to Count III, the ICFA claim, and the Court denies the
motion with respect to Counts I and II, the FDCPA claims. Defendants are ordered to answer the
complaint by April 26, 2017.

Dated: April 4, 2017

______________________
SARA L. ELLIS
United States District Judge

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