Baranowski v. Blitt and Gaines, P.C. et al

Filing 25

ENTER MEMORANDUM OPINION AND ORDER Signed by the Honorable Harry D. Leinenweber on 8/2/2017: Ruling date stricken. Civil case terminated. Mailed notice(wp, )

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IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION YVONNE BARANOWSKI, Plaintiff, v. Case No. BLITT AND GAINES, P.C., and MSW CAPITAL, LLC, 17 C 2407 Judge Harry D. Leinenweber Defendants. ORDER Defendants’ Joint Rule 12(b)(6) Motion to Dismiss [ECF Nos. 11, 17] is granted. STATEMENT At the heart of this case is a communication that Defendant Blitt and Gaines, Baranowski P.C. (“Blitt”) (“Baranowski”) incident sent to to Plaintiff its Yvonne representation of Defendant MSW Capital, LLC (“MSW”) in the latter’s underlying state-court debt. action to recover Baranowski’s delinquent See, MSW Capital LLC v. Yvonne Baranowski, No. 14 M1 135267 (Circ. Ct. Cook Co., Ill.). MSW alleged had purchased after her default. Baranowski’s Before filing that lawsuit, alleged debt from Credit One (See, ECF No. 1 (“Compl.) ¶¶ 15-17.) On March 17, 2017, Blitt mailed to Baranowski a notice concerning the need for all parties conference in the case. to appear at an (Compl. at Ex. G.) upcoming status Blitt also mailed this letter to Andrew Finko (“Finko”) at an address associated with the law firm Wood Finko & Thompson PC. (Ibid.) then filed this lawsuit, claiming that Blitt’s Baranowski sending this notice to her violated a provision of the Fair Debt Collection Practices Act (the “FDCPA”) prohibiting a debt collector from communicating with a consumer without her consent in connection with the collection of any debt “if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s name and address.” 15 U.S.C. § 1692c(a)(2). Defendants do not contest that the notice constitutes a “communication with a consumer in connection with the collection of any debt” within the meaning of the FDCPA. dispute Baranowski’s collector.” allegation that Nor do Defendants Blitt is a “debt See, e.g., Heintz v. Jenkins, 514 U.S. 296, 299 (1995) (applying the FDCPA “to attorneys who ‘regularly’ engage in consumer-debt-collection consists of litigation”). activity, even for that activity Instead, Defendants spotlight facts omitted from Baranowski’s Complaint: appeared when Baranowski Finko, who had previously informally, was granted permission to withdraw his firm from the case. formal (ECF No. 11 (“Defs.’ Mot.”) at Exs. 1-2 (Finko’s “Motion to Withdraw and Substitute Counsel” filed on October 30, 2015).) In its November 12, 2015 order granting Finko’s motion, the circuit court instructed him to file a November 19, 2015. (Id. at Ex. 3.) substitute appearance by No appearance was filed, and Finko did not appear at hearings or status conferences (although it is unclear if there were any) until the one that was the subject of Blitt’s March 17, 2017 notice. 2017 status Baranowski, conference, and the Finko judge again noted At that April 20, appeared that on Blitt’s behalf of notice to Baranowski was appropriate “due to no counsel having substituted into the matter.” (Id. at Ex. 4.) Relying on these facts, Defendants argue that Blitt by sending Baranowski the notice was merely attempting to follow - 2 - the strictures instruct in of the appearance” the case within 21 Illinois of Supreme “failure days of to Court file withdrawal Rules, [a] which supplementary that “subsequent notices and filings shall be directed to the party at the last known business or residence address.” Ill. S. Ct. R. 13(c)(5). This authorization, in Blitt’s estimation, amounted to “express permission of a court” within the meaning of § 1692c(a) direct notice to Baranowski. (See, Defs.’ Mot. at 4.) to Blitt alternatively contends that, to the extent it lacked express permission of a court of competent jurisdiction, Baranowski fails to allege plausible continuation of its knowledge that Finko represented Baranowski after the circuit court’s substitution deadline came and went. To survive a Rule 12(b)(6) motion to dismiss, a complaint “must state a claim that is plausible on its face,” with all inferences from the factual allegations drawn in favor of the plaintiff. Adams v. City of Indianapolis, 742 F.3d 720, 728 (7th Cir. 2015) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). plaintiff pleads A claim enjoys “facial plausibility when the sufficient factual content that allows the court to draw the reasonable inference that the defendant is liable for the alleged misconduct.” Adams, 742 F.3d at 728 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). ruling on a motion to dismiss, district courts may When consider documents attached to the complaint, documents central to the complaint and referred to in it, properly subject to judicial notice. and information that is Amin Ijbara Equity Corp. v. Village of Oak Lawn, 860 F.3d 489, 493 (7th Cir. 2017). (To the extent any of the state court documents are not central to the complaint’s allegations, they are proper fodder for judicial notice because they represent official directly on the matters at issue. - 3 - proceedings that bear See, Green v. Warden, U.S. Penitentiary, 699 F.2d 364, 369 (7th Cir. 1984) (“[F]ederal courts may also take notice of proceedings in other courts, both within and outside of the federal judicial system, if the proceedings have a direct relation to matters at issue.”).) The Court first notes that Finko’s failure to file a formal appearance initially is immaterial, as Finko made informal appearances without objection and with court recognition prior to moving to withdraw and substitute. See, e.g., Holcomb v. Freedman Anselmo Lindberg, LLC, No. 15 C 1129, 2017 WL 1105445, at *3-4 (N.D. Ill. Mar. 24, 2017); Washington v. Portfolio Recovery Assocs., LLC, 211 F.Supp.3d 1041, 1054-55 (N.D. Ill. 2016), reconsideration denied, 2017 WL 2958250 (July 11, 2017). The balance of the Court’s analysis is not indebted to the fact that Finko appeared informally in the case prior to his filing a motion to withdraw and subsequently failing to substitute within 21 days as instructed by the circuit court. On the contrary, case law in this Circuit suggests that, because Finko was Baranowski’s counsel of record, Illinois Supreme Court Rule 13(c)(5) sufficed as “express permission of a court of competent jurisdiction” for Blitt to send the notice to Baranowski. For example, in Thomas v. Law Firm of Simpson & Cybak, 392 F.3d 914 (7th Cir. 2004), superseded by statute on other grounds, Pub. L. 109-351, 120 Stat.2006 (Oct. 13, 2006), the Seventh Circuit found first that service of a summons and a complaint was a “communication” under § 1692g of the FDCPA. To allay concomitant concerns that “in any jurisdiction in which a defendant must be personally served, a debtor could arguably thwart service by simply retaining an attorney,” the court noted that “other exceptions within § 1692c could be read to allow for service.” Id. at 920. The court’s chief example was the license § 1692c(a) grants a debt collector to communicate “with debtors represented by attorneys with the - 4 - express permission of the court,” and permitting it unambiguously service permission.” could Ibid. be (emphasis stated read that as “[c]ourt granting What added). such rules more, is express in an earlier case, Spearman v. Tom Wood Pontiac-GMC, Inc., No. IP 00 C 1340, 2002 WL 31854892 (S.D. Ind. Nov. 4, 2002), a district court in this Circuit came to the same conclusion, noting in dicta that “the court rules that allow service of process on an individual might be considered express permission (as distinguished from particularized or case-specific permission) for such a communication with the consumer.” Id. at *3. The situation here is different from that characterizing Holcomb, in which the district court rejected a FDCPA defendant’s attempt to hide behind the Illinois Supreme Court Rules, because that case involved no comparable withdrawal and substitution confusion. (“[U]nder Illinois See, Holcomb, 2017 WL 1105445, at *4 law, trial courts have discretion to recognize an attorney’s appearance even when the attorney has not formally complied with Illinois S. Ct. Rule 13. Here, Holcomb was represented by an attorney in the state collection case, and appearance, Judge McGuire thereby permitted qualifying his unlimited, Holcomb’s attorney general as an ‘attorney of record’ under Illinois Supreme Court Rule 11(a).”). Holcomb is redolent of the issue sub judice only in that counsel for the putative debtor repeatedly appeared without filing a formal appearance. Also inapplicable to this dispute is the district court’s refusal in Washington to find that Illinois court rules plaintiff, conferred because the permission alleged to communicate debtor who with the received the communication was not even a party to the state-court action. See, Washington, 2017 WL 2958250 (“Thus, according to Defendants’ own argument, the Illinois court rules do not apply and cannot constitute ‘express - 5 - permission of a court of competent jurisdiction’ to communicate directly with a debtor whom the creditor knows to be represented by counsel.”) (citation omitted). Even if the Illinois Supreme Court Rules do not amount to express permission, and instead the “case-specific” edict of a court hearing the actual controversy is required to cleanse any FDCPA taint, the circuit court did so. opportunity that absence any of Blitt’s notice attorney’s was It found at the first proper substitution in into light the matter the of for Baranowski. To Baranowski’s inevitable protest that Blitt did not the receive circuit court’s prior permission, the Court responds that no language in the statute appears to require ex ante procurement of express court permission. The FDCPA prohibits a debt collector from communicating with a consumer “[w]ithout the prior consent of the consumer given directly to the debt collector competent or the jurisdiction.” express 15 permission U.S.C. of a § 1692c(a). court of Whereas Congress saw fit to require the “prior consent of the consumer,” it declined requirement in that the ensuing would limit text the to impose ability permission retroactively or nunc pro tunc. of any courts analogous to grant Both expressio unius and the interpretive canon disfavoring construction of statutes that would curtail the judiciary’s inherent powers militate against finding ex post permission ineffective under § 1692c(a). See, e.g., N.L.R.B. v. SW General, Inc., 137 S.Ct. 929, 940 (2017) (noting the expressio unius canon’s application when “circumstances support a sensible inference that the term left out must have been meant to be excluded”) (quotation, internal quotation marks, and alterations omitted); Chambers v. NASCO, Inc., 501 U.S. 32, 43-47 (1991) (“[W]e do not lightly assume that Congress has intended to depart from established principles such as the scope of a court’s inherent powers.”) (quotation, - 6 - internal quotation marks, and citation omitted); California v. Am. Stores Co., 495 U.S. 271, 295 (1990) (“Unless a statute in so many words, or by a necessary and inescapable inference, restricts the court’s jurisdiction in equity, the full scope of that jurisdiction is to be recognized and applied.”) (quotation, internal quotation marks, and citation omitted). As such, even if the Illinois Supreme Court Rules are insufficiently casespecific to constitute “express permission of a court of competent jurisdiction” to send the notice to Baranowski, the circuit court’s finding that the notice was proper surely does. Because either Illinois Supreme Court Rule 13(c)(5) or the circuit court’s April 20, 2017 ruling amounted to “express permission of a court of competent jurisdiction” to send the notice to Baranowski, whatever knowledge Blitt may have had of Baranowski’s representation by Finko is immaterial. As such, Defendants’ Motion to Dismiss is granted. The Court takes a final moment to note an alternative basis for dismissing the claim against MSW. While Blitt may constitute a “debt collector” under the FDCPA, this says nothing of MSW’s status, which implicates the Supreme Court’s recent holding that a company may collect debts for its own account without triggering the statutory “debt collector” definition. Henson v. Santander Consumer USA Inc., 137 S.Ct. 1718 (2017). As the Seventh Circuit explained in Janetos v. Fulton Friedman & Gullace, LLP, 825 F.3d 317 (7th Cir. 2016), while a debt collector can be held vicariously liable for missives drafted and sent by its agents, “[o]n the other hand, a company that is not a debt collector would not liability under the Act at all.” (noting also that it “makes ordinarily be subject to Id. at 325 (citations omitted) less sense to impose vicarious liability on such a company for its attorney’s violations simply because the attorney happens to be a debt collector”) (emphasis - 7 - added) (citations omitted). Because individuals “who do not otherwise meet the definition of ‘debt collector’ cannot be held liable under the act,” Pettit v. Retrieval Masters Creditor Bureau, Inc., 211 F.3d 1057, 1059 (7th Cir. 2000) (citations omitted), MSW cannot be vicariously liable for the acts of Blitt even if it was acting as MSW’s agent for purposes of sending Baranowski the notice. Henson thus associated FDCPA claim against MSW. pulls the plug on any As an alternative to the Blitt-centered analysis above, the Court therefore finds that sua sponte dismissal of Baranowski’s claim against MSW would be appropriate. See, e.g., Ledford v. Sullivan, 105 F.3d 354, 356 (7th Cir. 1997) (“Sua sponte 12(b)(6) dismissals are permitted, provided that a sufficient basis for the court’s action is evident from the plaintiff’s pleading.”). For the reasons stated herein, the Court grants Defendants’ Motion to Dismiss. Civil case terminated. Each party is to bear its own costs. Harry D. Leinenweber, Judge United States District Court Dated: 8/2/2017 - 8 -

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