Macias v. Credit Control, LLC et al

Filing 31

MEMORANDUM Opinion and Order Signed by the Honorable Amy J. St. Eve on 6/16/2017:Mailed notice(kef, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
RICHARD MACIAS,

)
)
Plaintiff,
)
)
v.
)
)
CREDIT CONTROL, LLC, RESURGENT )
CAPTIAL SERVICES L.P., AND LVNV )
FUNDING, LLC,
)
)
Defendants.
)

Case No. 1:17–cv-01158
Hon. Amy St. Eve

MEMORANDUM OPINION AND ORDER
AMY J. ST. EVE, District Court Judge:
On February 14, 2017, Plaintiff Richard Macias brought the present Complaint against
Credit Control LLC (“Credit Control”), Resurgent Capital Services LP (“Resurgent”), and
LVNV Funding, LLC (“LVNV”), collectively “Defendants,” alleging violations of the Fair Debt
Collection Practices Act, 15 U.S.C. § 1692, et. seq. (“FDCPA”), specifically, 15 U.S.C. §§
1692e, 1692e(10) and 1692f. Before the Court is Defendants’1 motion to dismiss brought
pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, the Court
grants Defendants’ motion.
BACKGROUND
Credit Control is a Missouri limited liability company that conducts business in Illinois,
and its registered agent and office is CT Corporation System, of Chicago, Illinois. (R. 1, Compl.
¶ 7.) LVNV is a Delaware limited liability company that conducts business in Illinois, and its

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Resurgent and LVNV filed the present Motion to Dismiss, but Credit Control joined in Resurgent and
LVNV’s motion, and accordingly, the Court refers to this motion as “Defendants’ Motion to Dismiss.”
(R. 23, Notice of Joinder.)

registered agent is Illinois Corporation Service, of Springfield, Illinois. (Id. ¶ 7.) Resurgent is a
Delaware limited liability partnership that regularly does business in Illinois. (Id. ¶ 15.) Plaintiff
alleges that Defendants are debt collectors under the FDCPA, are licensed as collection agencies
in the State of Illinois, and regularly use the mails and telephone to collect consumer debts
originally owed to others. (Id. ¶¶ 8-19). Plaintiff is a resident of Illinois, and this case arises
from Defendants’ attempts to collect delinquent consumer debt from Plaintiff. (Id. ¶ 6.)
Plaintiff alleges that he incurred a debt in relation to a consumer credit account with
Capital One that he used for personal and familial purposes. (Id. ¶ 20.) Plaintiff was unable to
pay the alleged debt and subsequently went into default. (Id. ¶ 21.) Capital One reported
Plaintiff’s alleged debt to Equifax on January 8, 2017. (Id. ¶ 30; see also Ex. H.) LVNV
purchased the debt from Capital One and assigned it to Resurgent for collection. (Compl. ¶ 22.)
Resurgent in turn hired Credit Control for assistance in collecting the alleged debt. (Id. ¶ 23.)
On February 3, 2017, Credit Control mailed a collection letter to Plaintiff regarding the alleged
debt. (Id. ¶ 24.) The letter contained information identifying the “Current Creditor” (LVNV),
the Original Creditor (Capital One), the account number, and the balance due. (Id. ¶ 25; see also
Ex. G.) The letter stated, “This letter is to notify you that the above account has been purchased
by LVNV Funding LLC and assigned to this office for collection.” (Id.) It further provided,
“Please note that a negative credit bureau report reflecting on your credit record may be
submitted to a credit reporting agency by the current account owner if you fail to fulfill the terms
of your credit obligations.” (Compl. ¶ 28; see also Ex. G.)
Plaintiff alleges that he believed, as an unsophisticated customer, that Defendants were
implying that they would submit a negative credit report to a credit bureau if Plaintiff did not
settle the alleged debt. (Compl. ¶ 29.) Plaintiff claims that Capital One had already reported the

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alleged debt to a credit bureau—Equifax. (Id. 30.) According to Plaintiff, Defendants were
aware of the existing negative credit report, and were thus offering a false incentive for Plaintiff
to pay his alleged debt in an attempt to “coerce” Plaintiff into settling the alleged debt. (Id. ¶¶
31-33.) Plaintiff claims that Defendants’ February 3 letter violated 15 U.S.C. §§ 1692e and
1692f because it made a misleading or unfair representation by stating that Defendants may
submit a negative credit report, when in fact a credit report had already been submitted regarding
the alleged debt. (Id. ¶ 41.)
LEGAL STANDARD
“A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the
viability of a complaint by arguing that it fails to state a claim upon which relief may be
granted.” Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 736 (7th Cir. 2014). Under
Rule 8(a)(2), a complaint must include “a short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The short and plain statement under Rule
8(a)(2) must “give the defendant fair notice of what the claim is and the grounds upon which it
rests.” Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted). Under the federal
notice pleading standards, a plaintiff’s “factual allegations must be enough to raise a right to
relief above the speculative level.” Twombly, 550 U.S. at 555. Put differently, a “complaint
must contain 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) (quoting Twombly, 550 U.S. at 570).
In determining the sufficiency of a complaint under the plausibility standard, courts must
“accept all well-pleaded facts as true and draw reasonable inferences in the plaintiffs’ favor.”
Roberts v. City of Chicago, 817 F.3d 561, 564 (7th Cir. 2016). When ruling on motions to
dismiss, courts may also consider documents attached to the pleadings without converting the

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motion to dismiss into a motion summary judgment, as long as the documents are referred to in
the complaint and central to the plaintiff’s claims. See Adams v. City of Indianapolis, 742 F.3d
720, 729 (7th Cir. 2014); Fed. R. Civ. P. 10(c). Because Plaintiff attaches photocopies of the
collection letter and prior credit report to his Complaint and these documents are central to his
claim, the Court may consider these attachments in ruling on the present motion.
ANALYSIS
Plaintiff alleges that Defendant’s letter violated 15 U.S.C. §§ 1692e, 1692e(10), and
1692f. Section 1692e provides that it is a violation for a debt collector to use any “false,
deceptive, or misleading representation or means in connection with the collection of any debt.”
15 U.S.C. § 1692e. Under § 1692e(10), it is a violation for a debt collector to “use . . . any false
representation or deceptive means to collect or attempt to collect any debt or to obtain
information concerning a consumer.” 15 U.S.C. § 1692e(10). Under § 1692f, it is a violation
for a debt collector to use “unfair or unconscionable means to collect or attempt to collect any
debt.” 15 U.S.C. § 1692f.2
According to well-settled Seventh Circuit precedent, “[c]laims brought under the Fair
Debt Collection Practices Act are evaluated under the objective ‘unsophisticated consumer’
standard.” Gruber v. Creditors’ Prot. Serv., Inc., 742 F.3d 271, 273 (7th Cir. 2014); see also
Heng v. Heavner, Beyers & Mihlar, LLC, 849 F.3d 348, 352 (7th Cir. 2017) (“We apply the
‘unsophisticated consumer’ standard when evaluating whether a debt collector's representations
comply with the FDCPA”); McMahon v. LVNV Funding, LLC, 744 F.3d 1010, 1019 (7th Cir.

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Because Plaintiff’s § 1692f claim that Defendants’ means of collecting a debt were unfair or
unconscionable is based on his § 1692e claims that Defendants’ statements were false or misleading, the
Court analyzes Plaintiff’s claims under all the FDCPA provisions together. See Cruz v. MRC Receivables
Corp., 563 F. Supp. 2d 1092, 1101 (N.D. Cal. 2008) (analyzing claims under sections 1692e, 1692e(10),
and 1692f together).

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2014) (unsophisticated consumer “standard applies to claims under both § 1692e and § 1692f”).
As the Seventh Circuit has explained, “[o]n the one hand, the unsophisticated consumer may be
‘uninformed, naive, or trusting,’ but on the other hand the unsophisticated consumer does
possess[ ] rudimentary knowledge about the financial world, is wise enough to read collection
notices with added care, possesses reasonable intelligence and is capable of making basic logical
deductions and inferences.” Gruber, 742 F.3d at 273–74 (citation and internal quotation marks
omitted); see also Pantoja v. Portfolio Recovery Assocs., LLC, 852 F.3d 679, 686 (7th Cir. 2017)
(same). The Seventh Circuit, however, has been explicit that “as a matter of law, we shall not
entertain a plaintiff’s bizarre, peculiar, or idiosyncratic interpretation” under the unsophisticated
consumer standard. McMillan v. Collection Prof’l Inc., 455 F.3d 754, 758 (7th Cir. 2006). In
other words, if it is not “apparent from a reading of the letter that not even a significant fraction
of the population would be misled by it.” McMahon, 744 F.3d at 1020 (quoting Taylor v.
Cavalry Investment, L.L.C., 363 F.3d at 574-75 (7th Cir. 2004).
Here, Defendants argue that the Court should dismiss Plaintiff’s claims because the
statements in the February 3 letter were not false or misleading. Defendants contend that a
current account owner (in this case, LVNV) is allowed to make a negative credit bureau report
regardless of whether the original creditor (in this case, Capital One) has already made a credit
bureau report. Plaintiff responds that Defendants’ statement was false, misleading, and unfair for
two reasons. First, Plaintiff argues that Defendants’ letter was deceptive because it obscured the
fact that Capital One had already made a credit bureau report in relation to this debt and created a
false incentive to pay off the remainder of the debt. Second, Plaintiff contends that while the
letter identified LVNV as the current creditor, it asserted only that the current account owner
could make a credit bureau report without making it clear that LVNV was both the current

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creditor and the current account owner. The Court addresses each of Plaintiff’s arguments in
turn.
I.

Defendants’ Statement That It “May” Report Plaintiff’s Debt
Plaintiff first argues that Defendants’ letter was false and misleading because it stated

that Defendants may make a credit report, even though the original creditor had already made a
report.
Courts in this District have held that debt collectors do not violate the FDCPA when they
report a debt, even if another entity has already made a credit bureau report about the same debt.
In Kohut v. Trans Union L.L.C., No. 04 C 2854, 2004 WL 1882239 at *3 (N.D. Ill. Aug. 11,
2004), for example, the plaintiff sued a collection agency and a reporting agency under the
FDCPA after the collection agency reported a debt that the plaintiff’s original creditor had
already reported. Id. at *1. The court granted the defendants’ motion to dismiss, reasoning that
the credit report was accurate and emphasizing that the collection agency was legally permitted
to report the same debt that the original creditor had already reported. Id. at *2. The court thus
found that “it [was] not false, deceptive, or misleading for [defendants] to tell a consumer credit
reporting agency that it attempted to collect a debt that [plaintiff] concedes is valid.” Id.
Additionally, several courts have found that it is not a violation of the FDCPA for a debt
collector to state in a collection letter that it may, as it is legally permitted to do, submit a
negative credit report, even if another entity has already submitted a negative credit report. In
Cruz v. MRC Receivables Corp., 563 F. Supp. 2d 1092, 1101 (N.D. Cal. 2008), for example, the
plaintiff brought claims under sections 1692e, 1692e(10), and 1692f of the FDCPA because the
defendant-debt collectors’ letter to the plaintiff stated that they may submit a negative credit
report to a credit reporting agency if the plaintiff failed to pay her debt. The plaintiff argued that

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the defendants’ statement was false and misleading because the original creditor had already
issued a negative credit report. Id. The court dismissed the plaintiff’s claim because
“[a]dditional negative credit reports are not prohibited” and “[n]ot only could [the defendants]
have submitted additional negative credit reports lawfully, they could have notified [the plaintiff]
of those reports without running afoul of the FDCPA” Id. at 1101. The court emphasized that
the letter was not false with regard to the potential consequences of the plaintiff’s failure to pay
her debt and nothing in the letter could be seen as “unfairly inducing [the plaintiff] to take an
action she might otherwise not take.” Id. The court concluded that, reading the context of the
letter as a whole, the credit reporting notice was not “misleading or unfair to the least
sophisticated consumer.” Id. See also Campbell v. Credit Protection Ass’n, L.P., No. 4: 12 CV
00289 AGF, 2013 WL 1282348, at *8 (E.D. Mo. Mar. 27, 2013) (finding no FDCPA violation
where debt collector stated that it may submit a negative credit report); Schuerkamp v. Afni, Inc.,
No. 10-6282-HO, 2011 WL 5825969, at *4 (D. Or. Nov. 16, 2011) (finding same); Boyle v.
Arrow Financial Services, LLC, No. C 08-3381 PJH, 2008 WL 4447727, at *2 (N.D. Cal. Oct. 2,
2008) (finding same).
Here, Plaintiff’s claim is directly analogous to Cruz. Like in Cruz, Defendants’ letter
stated that it may make a credit report in relation to Plaintiff’s debt, even though the original
creditor had already made such a report. As the court found in Cruz, however, this statement
was not misleading or unfair and Defendants were not creating a false incentive for Plaintiff
because Defendants could have lawfully submitted an additional credit report related to
Plaintiff’s debt regardless of the fact that the original creditor had already made a credit report.
563 F. Supp. 2d at 1101; see also Kohut, 2004 WL 1882239 at *3 (finding a second credit report
permissible and explaining that if adding extra pressure to a debtor was always a violation of the

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FDCPA, debt collectors essentially would never be able to report delinquent accounts). Simply
put, the statement in Defendants’ letter was not false or misleading, it was a true statement of
Defendants’ legitimate power to make a negative credit report.
In contrast to the line of cases discussed above, the two cases upon which Plaintiff relies
are distinguishable from this case. In Johnson v. Enhanced Recovery Company L.L.C., No. 2:16cv-00330-PPS-APR, __ F. Supp. 3d __, 2017 WL 168960 (N.D. Ind. Jan. 17, 2017), the first
case Plaintiff discusses, the defendant-debt collector sent a collection letter to the plaintiff stating
that it “may” report the plaintiff’s account to the credit bureaus. Id. at *2. Before the defendant
sent the letter, however, the defendant itself had already reported the debt to a credit bureau. Id.
at *2, *4. In denying the defendant’s motion to dismiss, the court reasoned that the use of the
word “may” indicated an “unrealized possibility” of reporting the debt, but that statement could
plausibly have misled a reasonable unsophisticated consumer because the defendant had already
reported the debt prior to sending the letter and thus reporting the debt was not a possibility, but
rather, an action the defendant had already taken. Id. at *2, *4. Here, in contrast, the original
creditor reported the debt and a new creditor, Defendant, stated that it also may report the debt.
Defendants did not create a potential false impression of an “unrealized possibility” of reporting
the debt because they had not previously reported the debt, and, as the new owner of the debt,
they were legally permitted to report the debt if they chose to do so. Kohut, 2004 WL 1882239
at *3.
Plaintiff also relies on Delgado v. I.C. Systems, Inc., No.17-cv-01366, Dkt. 20 (N.D. Ill
May 18, 2017). In Delgado, the plaintiff alleged that the defendant’s collection letter was a false
“attempt to mislead the plaintiff into believing she had an incentive to pay the amount due within
30 days,” despite the fact that the original creditor had already reported the debt to a credit

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reporting agency. Id.; see also Dkt. 1, ¶ 13. The letter stated that the plaintiff’s account was
“scheduled to be reported” and explained that the defendant “will not submit the account
information . . . until the expiration of the time period described in the notice below.” Dkt. 20.
In a brief order, the court denied the defendant’s motion to dismiss. Aside from the fact that
Delgado does not address why the defendant’s letter was misleading, the letter at issue in this
case is distinguishable from the defendant’s letter in Delgado. Unlike here where Defendants’
letter stated that they “may” make a negative credit report, the defendant’s letter in Delgado not
only stated that a credit report was already “scheduled,” but explicitly stated that the defendant
would not report the debt if the plaintiff made a payment within 30 days. Defendants’ letter in
this case merely stated that Defendant may make a credit report. Delgado therefore is not
persuasive here.
In sum, a debt collector is legally permitted to report the same debt that an original
creditor has already reported. Kohut, 2004 WL 1882239 at *2. Thus, like in Cruz, Defendants’
statement that it “may” report Plaintiff’s debt was not false or misleading under the FDCPA.
II.

Defendants’ Use of “Current Owner” and “Current Creditor”
Plaintiff next argues that Defendants’ letter was misleading because it used the term

“current creditor” and “current owner” interchangeably in a fashion that could confuse an
unsophisticated consumer. In Defendants’ letter, the heading stated that LVNV was the “Current
Creditor” and Capital One was the “Original Creditor.” In its body, the letter stated, “a negative
credit bureau report reflecting your credit record may be submitted to a credit reporting agency
by the current account owner.” Plaintiff argues that an unsophisticated consumer would not
understand the distinction between original creditor, current creditor, and current account owner
and might not understand that LVNV, the current creditor and account owner, was a different

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entity than Capital One, the original creditor, which had already made a negative credit report.
Plaintiff asserts that since Defendants never identified the “current account owner,” an
unsophisticated consumer might be confused by exactly which entity was threatening to report
the alleged debt.3
As noted above, the Seventh Circuit has explained that “[o]n the one hand, the
unsophisticated consumer may be ‘uninformed, naive, or trusting,’ but on the other hand the
unsophisticated consumer does possess[ ] rudimentary knowledge about the financial world, is
wise enough to read collection notices with added care, possesses reasonable intelligence and is
capable of making basic logical deductions and inferences.” Gruber, 742 F.3d at 273–74
(citation and internal quotation marks omitted); see also Muha v. Encore Receivable
Management, Inc., 558 F.3d 623, 629 (7th Cir. 2009) (stating that “false, deceptive or
misleading” under 1692e and 1692f should be interpreted as language that is “confusing” to the
reader and therefore has an intimidating effect). Further, the Seventh Circuit has recognized that
if “there [is] nothing deceptive-seeming about the communication the court would have to
dismiss the case.” Evory v. RJM Acquisitions Funding, L.L.C., 505 F.3d 769, 766 (7th Cir. 2007)
(citation omitted); see also Pettit v. Retrieval Masters Creditor Bureau, Inc., 211 F.3d 1057 (7th
Cir. 2000) (finding that the context and body of letter would allow unsophisticated consumer to
understand that defendant was a collection agency).
Here, even an unsophisticated consumer would understand that the “current account
owner” referenced in Defendants’ letter was LVNV. Although the letter’s header refers to
LVNV as the “Current Creditor,” the first paragraph in the body of the letter states, “This letter is
to notify you that the above account has been purchased by LVNV Funding LLC and assigned to

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In their motion to dismiss, Defendants use “current account owner,” “current owner,” and “current
creditor” interchangeably to refer to LVNV.

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this office for collection.” (Compl., Ex. G) (emphasis added). This sentence makes it abundantly
clear that LVNV owned Plaintiff’s account and that LVNV was the “current account owner”
referenced later in the letter in relation to credit reporting. In fact, LVNV is the only account
owner mentioned anywhere in the letter. Simply put, an unsophisticated consumer would
understand that when an entity purchases an account, the entity then owns the account and could
logically deduce that LVNV was the “current account owner.” Gruber, 742 F.3d at 273-74 (“the
unsophisticated consumer does possess[ ] rudimentary knowledge about the financial world”).
Taking the entire context of the letter into account, there was nothing “deceptive-seeming” about
Defendants’ use of “current account owner.” Evory, 505 F.3d at 776.
CONCLUSION
For these reasons, the Court grants Defendants’ Rule 12(b)(6) motion to dismiss with
prejudice.

Dated: June 16, 2017
ENTERED

______________________________
AMY J. ST. EVE
United States District Court Judge

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