Hunte v. Safeguard Properties Management, LLC et al
Filing
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MEMORANDUM Opinion and Order written by the Honorable Gary Feinerman on 6/6/2017.Mailed notice.(jlj, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
JEREMY HUNTE,
Plaintiff,
vs.
SAFEGUARD PROPERTIES MANAGEMENT, LLC
and JPMORGAN CHASE BANK, N.A.,
Defendant.
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16 C 11198
Judge Gary Feinerman
MEMORANDUM OPINION AND ORDER
Jeremy Hunte sued Safeguard Properties Management, LLC and JPMorgan Chase Bank,
N.A., alleging violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692
et seq., and state law. Doc. 1. Safeguard and Chase each move to dismiss under Federal Rule of
Civil Procedure 12(b)(6). Docs. 19, 22. The motions are granted, and the complaint is dismissed
without prejudice.
Background
In resolving a Rule 12(b)(6) motion, the court assumes the truth of the operative
complaint’s well-pleaded factual allegations, though not its legal conclusions. See Zahn v. N.
Am. Power & Gas, LLC, 815 F.3d 1082, 1087 (7th Cir. 2016). The court must also consider
“documents attached to the complaint, documents that are critical to the complaint and referred
to in it, and information that is subject to proper judicial notice,” along with additional facts set
forth in Hunte’s brief opposing dismissal, so long as those additional facts “are consistent with
the pleadings.” Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1020 (7th Cir. 2013). The
facts are set forth as favorably to Hunte as those materials allow. See Pierce v. Zoetis, 818 F.3d
274, 277 (7th Cir. 2016). In setting forth those facts at this stage, the court does not vouch for
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their accuracy. See Jay E. Hayden Found. v. First Neighbor Bank, N.A., 610 F.3d 382, 384 (7th
Cir. 2010).
Hunte owns real property in Momence, Illinois. Doc. 1 at ¶ 8. He entered into a
mortgage agreement with Chase secured by the property. Id. at ¶ 9. Hunte eventually fell behind
on his payments, sending the loan into default. Id. at ¶¶ 13-14. In May 2016, Hunte decided to
complete a short sale of the property, and in June, he retained a law firm to assist him in the
process. Id. at ¶¶ 18-19. He authorized Chase to share information concerning his mortgage
with his attorneys. Id. at ¶ 20. Chase then approved “pre-foreclosure.” Id. at ¶ 23.
In July, while Hunte was out of town, his law firm sent an agent to check the property for
mail. Id. at ¶ 27. The mail included a letter from Chase (which Hunte’s attorney also received
directly), stating: “We’ve been notified your property is vacant. If this is incorrect and you’re
still living in or maintaining the property, please contact us … by August 3, 2016 … . If we
don’t receive your response by then, we’ll secure the property, which may include changing the
locks and winterizing it.” Id. at ¶¶ 28-29. Hunte’s attorney responded to Chase via e-mail, fax,
and U.S. mail to say that Hunte had not abandoned the property. Id. at ¶¶ 30-31.
When Hunte returned home, he began receiving letters asking if he still lived there, and
he responded by calling Chase to alert it that he did. Id. at ¶¶ 35-36. Hunte then left town once
more. Id. at ¶ 39. On September 14, a neighbor called to tell him that Safeguard representatives
had reported that his house was being seized due to a foreclosure action. Id. at ¶ 41, 44. Upon
returning, Hunte found the home empty of his personal belongings, which had been placed in
dumpsters. Id. at ¶ 46. The house’s locks had been changed and its plumbing winterized. Ibid.
Hunte then filed this lawsuit against Safeguard and Chase. Only one count, an FDCPA
claim against Safeguard, arises under federal law. Id. at ¶¶ 72-84. Hunte premises subject
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matter jurisdiction over the state law claims on the supplemental jurisdiction, 28 U.S.C.
§ 1367(a); the complaint does not expressly invoke the diversity jurisdiction, 28 U.S.C. § 1332,
and it does not allege the citizenship of Hunte or Safeguard, precluding any conclusion on the
pleadings that the parties are completely diverse. Id. at ¶¶ 1, 3-6.
Discussion
The court will begin with the FDCPA claim, which alleges that Safeguard violated 15
U.S.C. §§ 1692f(6)(A), 1692c(b), 1692d(1), and 1692e(2), (10). Id. at ¶¶ 73-84. To be held
liable under the FDCPA, a defendant must be a “debt collector.” See Ruth v. Triumph P’ships,
577 F.3d 790, 796 (7th Cir. 2009) (“The FDCPA regulates only the conduct of ‘debt collectors
… .’”). The statute defines “debt collector,” in pertinent part, as:
[A]ny person who uses any instrumentality of interstate commerce or the
mails in any business the principal purpose of which is the collection of any
debts, or who regularly collects or attempts to collect, directly or indirectly,
debts owed or due or asserted to be owed or due another. … For the purpose
of section 1692f(6) of this title, such term also includes any person who uses
any instrumentality of interstate commerce or the mails in any business the
principal purpose of which is the enforcement of security interests.
15 U.S.C. § 1692a(6).
In his opposition brief, Hunte does not contend that Safeguard’s principal purpose is to
collect debts. Rather, he argues that its principal purpose is to enforce security interests. As the
text of § 1692a(6) clearly provides, a business with that principal purpose qualifies as a “debt
collector” where, as here, the plaintiff alleges a violation of § 1692f(6), which prohibits “[t]aking
or threatening to take any nonjudicial action to effect dispossession or disablement of property if
… (A) there is no present right to possession of the property claimed as collateral through an
enforceable security interest; (B) there is no present intention to take possession of the property;
or (C) the property is exempt by law from such dispossession or disablement.” Doc. 33 at 2-6;
see Nadalin v. Automobile Recovery Bureau, Inc., 169 F.3d 1084, 1085 (7th Cir. 1999).
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Safeguard retorts that it is not a “debt collector” because its principal purpose is property
preservation, not the enforcement of security interests. Doc. 25 at ¶¶ 25-37.
Paragraph 5 of Hunte’s complaint alleges that “Safeguard’s principal purpose is the
enforcement of security interests.” Doc. 1 at ¶ 5. If that were all the complaint said about
Safeguard’s principal purpose, Safeguard would be, at least at the pleading stage, a debt collector
for purposes of a § 1692f(6) claim. But Paragraph 4 of the complaint alleges that Safeguard’s
“principal purpose [is to] manage and preserve at-risk and foreclosed properties.” Id. at ¶ 4. If
that were true, then Safeguard is not a debt collector under the FDCPA. See Alqaq v.
CitiMortgage, Inc., 2014 WL 1689685, *3-4 (N.D. Ill. Apr. 29, 2014) (holding that property
preservation incidental to debt collection does not amount to enforcement of a security interest
within the meaning of § 1692f(6)); see also Seghetti v. Flagstar Bank, FSB, 2016 WL 3753143,
*3 (D. Md. July 13, 2016) (following Alqaq).
Paragraph 4 was no typographical error, as Hunte reiterates in his opposition brief that
Safeguard’s “principal purpose is to manage and preserve at-risk and foreclosed properties.”
Doc. 33 at 6 (emphasis added). True, in the next sentence, he says: “Plaintiff has also pleaded
that Safeguard has as a primary purpose the enforcement of security interests … .” Ibid.
(emphasis added). But note that his brief says that Safeguard’s “principal purpose”—a term
found in the definition of “debt collector” in § 1692a(6)—is managing and preserving at-risk and
foreclosed properties. By contrast, the brief states merely that Safeguard has “as a primary
purpose”—a term not found in the statutory definition—the enforcement of security interests.
This is not a situation where Hunte is engaged in alternative pleading under Rule 8(d)(2),
which permits a party to “set out 2 or more statements of a claim … alternatively or
hypothetically, either in a single count or defense or in separate ones,” and provides that “[i]f a
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party makes alternative statements, the pleading is sufficient if any one of them is sufficient.”
Fed. R. Civ. P. 8(d)(2). As the Seventh Circuit has explained, although parties “need not use
particular words to plead in the alternative, they must use a formulation from which it can be
reasonably inferred that this is what they were doing.” Holman v. Indiana, 211 F.3d 399, 407
(7th Cir. 2000). Nothing in the complaint or Hunte’s opposition brief indicates that he intended
to plead that Safeguard’s principal purpose was managing and preserving at-risk and foreclosed
properties in the alternative to pleading that its principal purpose was enforcing security interests.
It follows that Paragraph 5’s allegation that Safeguard’s principal purpose was enforcing security
interests is not a Rule 8(d)(2)-compliant alternative pleading capable of grounding Hunte’s
FDCPA claim. See ibid. (rejecting inconsistent facts when not made in the context of an
alternative pleading).
Perhaps Hunte meant to allege that Safeguard has two principal purposes—(1) enforcing
security interests and (2) managing and preserving at-risk and foreclosed properties. If so, that
would do Hunte no good, as the FDCPA does not cover such dual-principal purpose entities.
The pertinent portion of § 1692a(6) defines “debt collector” as an entity “the principal purpose of
which is the enforcement of security interests.” 15 U.S.C. § 1692a(6) (emphasis added). Not “a
principal purpose of which,” but “the principal purpose of which.” Congress’s use of the definite
article to modify “principal purpose” means that Congress intended to cover only entities having
one principal purpose, that of enforcing security interests. See Rumsfeld v. Padilla, 542 U.S.
426, 434-35 (2004) (“The federal habeas statute straightforwardly provides that the proper
respondent to a habeas petition is ‘the person who has custody over the petitioner.’ The
consistent use of the definite article in reference to the custodian indicates that there is generally
only one proper respondent to a given prisoner’s habeas petition.”) (citations and brackets
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omitted); Edgenet, Inc. v. Home Depot U.S.A., Inc., 658 F.3d 662, 666 (7th Cir. 2011) (“Yet the
2006 contract speaks of ‘the product collection taxonomy’ … and this use of the definite article
is appropriate only if there is just one taxonomy.”); Am. Bus Ass’n v. Slater, 231 F.3d 1, 4-5
(D.C. Cir. 2000) (“[I]t is a rule of law well established that the definite article ‘the’ particularizes
the subject which it precedes.”). Thus, if Hunte meant to allege that Safeguard had two principal
purposes, the allegation would take Safeguard outside the FDCPA’s definition of “debt
collector” even though one of those purposes was enforcing security interests. See Rockridge
Trust v. Wells Fargo, N.A., 985 F. Supp. 2d 1110, 1137 (N.D. Cal. 2013) (“[T]he [complaint]
alleges that ‘one of the principal businesses of [Wells Fargo] is debt collection on a regular
basis.’ … [This] establishes only that debt collection is some part of Wells Fargo’s business. For
Wells Fargo to be a debt collector …, Plaintiffs must allege that the principal purpose of Wells
Fargo’s business is debt collection, not that one of Wells Fargo’s principal businesses is debt
collection.”) (second brackets in original).
Before wrapping up this point, the court acknowledges that Paragraph 6 of the complaint
alleges that “Safeguard regularly collects or attempts to collect defaulted consumer debts using
the mails and telephone.” Doc. 1 at ¶ 6. If this were all the complaint alleged regarding
Safeguard’s activities, Safeguard would, at least for pleading purposes, be a debt collector for
purposes of any FDCPA claim and not merely for the § 1692f(6) claim. However, Hunte’s
opposition brief does not press this argument, instead relying exclusively on the allegation that
Safeguard’s principal purpose is enforcing security interests. Accordingly, Hunte has forfeited
for purposes of the present motions to dismiss any argument that Safeguard is a debt collector
because it regularly collects or attempts to collect defaulted consumer debts. See Firestone Fin.
Corp. v. Meyer, 796 F.3d 822, 825 (7th Cir. 2015) (“[A] party generally forfeits an argument or
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issue not raised in response to a motion to dismiss.”); G&S Holdings LLC v. Cont’l Cas. Co., 697
F.3d 534, 538 (7th Cir. 2012) (“We have repeatedly held that a party waives an argument by
failing to make it before the district court.”). Even putting aside forfeiture, Hunte gives no
indication that Paragraph 6 was intended to be an alternative pleading under Rule 8(d)(2).
Because the complaint fails to allege facts sufficient to show that Safeguard is a debt
collector, the FDCPA claim is dismissed. All that remains are Hunte’s state law claims. As
noted, the complaint premises jurisdiction over those claims on 28 U.S.C. § 1367(a). Section
1367(c)(3), however, provides that “[t]he district courts may decline to exercise supplemental
jurisdiction over a claim under subsection (a) if … the district court has dismissed all claims over
which it has original jurisdiction.” 28 U.S.C. § 1367(c)(3). “As a general matter, when all
federal claims have been dismissed prior to trial, the federal court should relinquish jurisdiction
over the remaining pendent state claims.” Williams v. Rodriguez, 509 F.3d 392, 404 (7th Cir.
2007); see also Dietchweiler by Dietchweiler v. Lucas, 827 F.3d 622, 631 (7th Cir. 2016)
(“[W]hen the federal claims are dismissed before trial, there is a presumption that the court will
relinquish jurisdiction over any remaining state law claims.”). This general rule has three
exceptions: “when the refiling of the state claims is barred by the statute of limitations; where
substantial judicial resources have already been expended on the state claims; and when it is
clearly apparent how the state claim is to be decided.” Williams, 509 F.3d at 404; see also RWJ
Mgmt. Co., Inc. v. BP Prods. N. Am., Inc., 672 F.3d 476, 480 (7th Cir. 2012).
None of the exceptions apply here. First, if this court relinquishes supplemental
jurisdiction over the state law claims, Illinois law would give Hunte one year to refile those
claims in state court if their limitations period(s) expired while the case was pending here. See
Sharp Electronics Corp. v. Metropolitan Life Ins. Co., 578 F.3d 505, 515 (7th Cir. 2009) (citing
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735 ILCS 5/13-217); Davis v. Cook Cnty., 534 F.3d 650, 654 (7th Cir. 2008) (same); Timberlake
v. Illini Hosp., 676 N.E.2d 634, 636-37 (Ill. 1997) (same). Second, as this case is still at the
pleading stage, substantial federal judicial resources have not yet been committed to the state law
claims. See Davis, 534 F.3d at 654 (“[T]he district court disposed of the federal claims on
summary judgment, and so ‘substantial judicial resources’ have not yet been committed to the
case.”). And, third, it is not readily apparent how the state law claims will be resolved. Given all
this, relinquishing jurisdiction over the state law claims is the appropriate course under
§ 1367(c)(3). See Dietchweiler, 827 F.3d at 631; RWJ Mgmt. Co., 672 F.3d at 479-82; Wright v.
Associated Ins. Cos. Inc., 29 F.3d 1244, 1251-53 (7th Cir. 1994).
Conclusion
The motions to dismiss are granted. The dismissal is without prejudice to Hunte filing an
amended complaint with both his FDCPA claim and state law claims. See Runnion v. Girl
Scouts of Greater Chi. & Nw. Ind., 786 F.3d 510, 519 (7th Cir. 2015) (“Ordinarily, … a plaintiff
whose original complaint has been dismissed under Rule 12(b)(6) should be given at least one
opportunity to try to amend her complaint before the entire action is dismissed.”). Hunte has
until June 27, 2017 to file an amended complaint. If he does not do so, the dismissal of the
FDCPA claim will convert automatically to a dismissal with prejudice, and judgment will be
entered. If Hunte files an amended complaint, Defendants shall answer or otherwise plead to the
amended complaint within three weeks of its filing.
June 6, 2017
United States District Judge
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