Allen v. Potestivo & Associates PC

Filing 16

ORDER. Signed by the Honorable Manish S. Shah on 11/13/2017: Defendant's motion to dismiss 8 is granted in part, denied in part. The court has subject-matter jurisdiction, but the complaint does not state a claim under 15 U.S.C. § 169 2e. The complaint may proceed on its claim under 15 U.S.C. § 1692f. Defendant shall file an answer by December 4, 2017, and the parties shall file a joint status report with a proposed discovery schedule on December 4, 2017. The court will enter a scheduling order and set a status hearing after reviewing the status report. [For further detail see attached order.] Notices mailed. (psm, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
QIANA ALLEN,
Plaintiff,

No. 17 CV 787

v.

Judge Manish S. Shah

POTESTIVO & ASSOCIATES, P.C.,
Defendant.
ORDER

Defendant’s motion to dismiss [8] is granted in part, denied in part. The court
has subject-matter jurisdiction, but the complaint does not state a claim under 15
U.S.C. § 1692e. The complaint may proceed on its claim under 15 U.S.C. § 1692f.
Defendant shall file an answer by December 4, 2017, and the parties shall file a
joint status report with a proposed discovery schedule on December 4, 2017. The
court will enter a scheduling order and set a status hearing after reviewing the
status report.
STATEMENT
When her mother died in 2009, plaintiff Qiana Allen inherited the home they
had shared and made monthly payments on the mortgage. [1] ¶¶ 6–10.* She fell
behind on her payments the following year, and eventually, Deutsche Bank
National Trust Company, in its capacity as trustee of the trust containing the
mortgage, instituted foreclosure proceedings. [1] ¶¶ 11–13.
Defendant Potestivo & Associates, P.C., represented Deutsche Bank in that
state-court action. [1] ¶ 13. The complaint in that action names Allen’s mother as
the mortgagor, attaches copies of the note and the mortgage which are signed by
Allen’s mother, and does not claim anyone to be personally liable for any deficiency.
[1] ¶¶ 14–15. Nevertheless, Potestivo filed a motion on Deutsche Bank’s behalf
requesting a personal deficiency judgment against Allen in the amount of
$146,244.96. [1] ¶ 18. Allen’s counsel in the foreclosure action objected to that
request at the motion hearing, but the Potestivo attorney who appeared refused to
withdraw it. [1] ¶¶ 21–23. The motion was entered and continued for two weeks,
and a different Potestivo attorney appeared at the second hearing. [1] ¶¶ 24–25.
*

Bracketed numbers refer to entries on the district court docket.

When Allen’s counsel objected again, the Potestivo attorney agreed to withdraw the
request for a personal deficiency judgment, and the court struck the corresponding
language in the motion before granting it. [1] ¶¶ 25–26. Potestivo knew that Allen
could not be liable for a personal deficiency judgment when it filed its motion, and it
would have obtained the deficiency judgment against Allen had her attorney failed
to intervene. [1] ¶ 27. She claims that by filing the motion, Potestivo violated the
Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692e, 1692f.
Potestivo seeks dismissal of the complaint for failing to allege an injury in
fact sufficient to establish Article III standing. Spokeo, Inc. v. Robins, 136 S.Ct.
1540, 1547 (2016) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992)). To
meet the injury-in-fact requirement, a plaintiff must have “suffered ‘an invasion of a
legally protected interest’ that is ‘concrete and particularized’ and ‘actual or
imminent, not conjectural or hypothetical.’” Spokeo, 136 S.Ct. at 1548 (quoting
Lujan, 504 U.S. at 560).
Potestivo argues that because it withdrew the request for a personal
judgment against Allen and no judgment was entered, Allen did not suffer a
concrete harm. By the time Allen filed this action, the risk of a personal deficiency
judgment against her had already ceased to exist; it was no longer imminent. But
that does not necessarily mean that Allen is asserting the type of hypothetical
injury that cannot satisfy the injury-in-fact requirement.
In Spokeo, the Court confirmed that “Congress has the power to define
injuries and articulate chains of causation that will give rise to a case or controversy
where none existed before.” 136 S.Ct. at 1549 (quoting Lujan, 504 U.S. at 580
(Kennedy, J., concurring in part and concurring in judgment)). Through the
FDCPA, Congress created a right to be free from being subjected to any deceptive,
misleading, unfair, or unconscionable means to collect or attempt to collect a debt.
15 U.S.C. §§ 1692e, 1692f. Allen alleges that Potestivo violated that right by filing a
motion in state court in an attempt to collect a debt that Allen did not owe. That the
attempt was ultimately unsuccessful is irrelevant to whether there is a concrete
injury here. Allen’s complaint articulates a concrete injury—being subjected to an
effort to collect a debt through means that were either false or unfair. The motion
attempted to make Allen liable for a personal judgment, and that prospect (even
though it never came to fruition) was itself a cognizable harm under the FDCPA.
Congress defined such conduct as giving rise to a case or controversy, and that is
sufficient to present a justiciable case in federal court.
Allen alleges that Potestivo’s conduct violated sections 1692e and 1692f of the
FDCPA. Section 1692e prohibits the use of “any false, deceptive, or misleading
representation or means in connection with the collection of any debt.” 15 U.S.C.
§ 1692e. Allen alleges that Potestivo made false representations in the motion it
filed with the state court in an attempt to deceive the judge and collect on a debt
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that Allen did not owe. The underlying complaint did not seek a personal judgment;
the only false representation about a personal judgment was in the motion to the
state-court judge, and Allen’s lawsuit here expressly alleges that the motion was an
effort to “deceive the court.” [1] ¶ 34. Representations made to mislead a judge do
not violate § 1692e, even when the consumer was an indirect target of the
misrepresentations. O’Rourke v. Palisades Acquisition XVI, LLC, 635 F.3d 938, 942
(7th Cir. 2011). The complaint does not state a claim under § 1692e.
Section 1692f prohibits a debt collector from using “unfair or unconscionable
means to collect or attempt to collect any debt.” 15 U.S.C. § 1692f. Stripped of
conclusory allegations (which need not be accepted as true when reviewing a motion
to dismiss) and recitations of the statutory language, the complaint alleges that
Potestivo knew that Allen could not be liable for a personal judgment, but engaged
in a short-lived effort to get one anyway. The statute provides examples of unfair
conduct, including “[t]he collection of any amount (including any interest, fee,
charge, or expense incidental to the principal obligation) unless such amount is
expressly authorized by the agreement creating the debt or permitted by law.” 15
U.S.C. § 1692f(1). In Turner v. J.V.D.B. & Assocs., Inc., 330 F.3d 991, 998 (7th Cir.
2003), the court held that a letter that may have violated § 1692e was not an unfair
or unconscionable means to collect a debt. But the specific conduct at issue in
Turner was different than that alleged here; in Turner, the allegedly unconscionable
letter simply tracked other required, statutory language. Allen alleges that
Potestivo effectively schemed to get money from her (through a motion filed in
state-court) that it was not authorized to collect. This plausibly alleges an unfair
method of the type described in § 1692f(1). The motion to dismiss is denied with
respect to the claim under § 1692f.
ENTER:
___________________________
Manish S. Shah
United States District Judge

Date: November 13, 2017

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