Tena v. Transworld Systems, Inc.

Filing 24

ORDER. Signed by the Honorable Manish S. Shah on 12/18/2018: Defendant's motion to dismiss, 12 , is granted. The complaint is dismissed with prejudice. Enter judgment and terminate civil case. [For further detail see attached order.] No appearance on 12/19/18 is necessary. Notices mailed. (psm, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
ROCIO TENA,
Plaintiff,

No. 18 CV 4144

v.

Judge Manish S. Shah

TRANSWORLD SYSTEMS, INC.,
Defendant.
ORDER
Defendant’s motion to dismiss, [12], is granted. The complaint is dismissed
with prejudice. Enter judgment and terminate civil case.
STATEMENT
Plaintiff Rocio Tena brings a Fair-Debt-Collection-Practices-Act claim against
defendant Transworld Systems, Inc. stemming from a debt-collection letter
Transworld sent to Tena. The letter said, in part, “[c]ollection costs are charged in
accordance with Federal Regulation 34 CFR 682.410(b)(2). Payments are applied in
accordance with Federal Regulation 34 CFR 682.404(f).” [1-1]. It went on to note,
“[t]he account balance will be periodically increased due to the addition of accrued
interest, as permitted by applicable law.” Id. The letter listed the total balance due
on Tena’s account as $13,597.15. Id. It also included a breakdown of that amount,
which included principal, interest, and collection fees for each of Tena’s four loans.
Id. Tena alleges that from the letter it was unclear whether Transworld sought only
the $13,597.15 or whether it sought additional interest or collection fees. Transworld
moves to dismiss.
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6)
a complaint must contain factual allegations that plausibly suggest a right to relief.
Ashcroft v. Iqbal, 556 U.S. 662, 677–78 (2009). All reasonable inferences are drawn
in favor of the non-movant, but “written exhibits attached to the complaint may

trump contradictory allegations.” Squires-Cannon v. Forest Preserve Dist. of Cook
Cnty., 897 F.3d 797, 802 (7th Cir. 2018).
The FDCPA, 15 U.S.C. §§ 1692 et seq., requires that a debt collector include
“the amount of the debt” that it is trying to collect when sending a collection letter to
the debtor. § 1692g(a)(1); Chuway v. Nat’l Action Financial Servs., Inc., 362 F.3d 944,
946–47 (7th Cir. 2004). To state a claim under § 1692g, a plaintiff must allege either
that the required information was not communicated or that it was provided in a
confusing manner. McMillan v. Collection Prof’ls Inc., 455 F.3d 754, 758 (7th Cir.
2006). Because “confusion is a fact-based question, dismissal is typically not available
under 12(b)(6).” Id. at 759. That said, “there will be occasions when a district court
will be required to hold that no reasonable person, however unsophisticated, could
construe the wording of the communication in a manner that will violate the statutory
provision.” Id. at 760. Dismissal is appropriate only in “cases involving statements
that plainly, on their face” are not confusing. See Boucher v. Fin. Sys. of Green Bay,
Inc., 880 F.3d 362, 366 (7th Cir. 2018). And “as a matter of law, [a court] shall not
entertain a plaintiff’s bizarre, peculiar, or idiosyncratic interpretation” of the
allegedly confusing statement. McMillan, 455 F.3d at 758.
A letter violates § 1692g when a significant fraction of the population would be
misled by it. Id. The Seventh Circuit has provided debt collectors with a safe-harbor
provision that can be used to ensure compliance when the amount of debt varies dayto-day. See Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, and Clark, LLC, 214
F.3d 872, 876 (7th Cir. 2000) (“As of the date of this letter, you owe $___ [the exact
amount due]. Because of interest, late charges, and other charges that may vary from
day to day, the amount due on the day you pay may be greater. Hence, if you pay the
amount shown above, an adjustment may be necessary after we receive your check,
in which event we will inform you before depositing the check for collection. For
further information, write the undersigned or call 1–800– [phone number].”) Though
the quoted language is one example of how to properly disclose the amount of debt
owed, strict adherence to the Miller language is not required. Williams v. OSI Educ.
Servs., Inc., 505 F.3d 675, 680 (7th Cir. 2007). It is compliance with the statute, and
not with Miller, that matters. Id. A statement is consistent with the Act if “[n]o
reasonable person could conclude that the statement . . . does not inform the debtor
of the amount due.” Miller, 214 F.3d at 876.
Transworld’s letter satisfies the unsophisticated consumer standard and
fulfills the requirements of § 1692g(a)(1). It states the balance due and illustrates the
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breakdown of principal, interest, and collection fees for each loan. An unsophisticated
consumer would understand that the balance owed encompassed all those charges
and included all charges in effect as of the date the letter was sent. See id. at 875–76
(“[S]tate the total amount due—interest and other charges as well as principal—on
the date the dunning letter was sent.”). That the letter also indicated that interest
would continue to accrue is consistent with the safe-harbor language from Miller and
would not confuse the unsophisticated consumer. See Taylor v. Cavalry Inv., LLC,
365 F.3d 572, 574–75 (7th Cir. 2004). Similarly, the statement that collection costs
are charged in accordance with federal regulations is consistent with the breakdown
of charges, which showed that the balance due included collection costs. Transworld
provided the citation to the applicable federal regulation, but no outside research was
required for the unsophisticated consumer to understand that the amount due
included all collection costs that had already accrued. The FDCPA requires that
Transworld state the amount due as of the date of the communication. It does not
require that Transworld disclose whether additional costs may accrue in the future if
the debt goes unpaid. Nothing about the letter suggested that additional collection
fees had already accrued. The unsophisticated consumer would not be left wondering
if the list of charges was incomplete.
Tena has failed to state a FDCPA claim based on Transworld’s letter. Leave to
amend a complaint should be freely given. See Runnion ex rel. Runnion v. Girl Scouts
of Greater Chi. & Nw. Ind., 786 F.3d 510, 518 (7th Cir. 2015). But because Tena’s
claim depends entirely on the letter, and because the letter on its face would not
confuse to the unsophisticated customer, amendment would be futile and dismissal
with prejudice is appropriate.
ENTER:

Date: December 18, 2018

Manish S. Shah
U.S. District Judge

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