Mogg v. Jacobs

Filing 54

MEMORANDUM AND ORDER, denying 34 MOTION for Summary Judgment filed by Jonathan Mogg and denying 37 MOTION for Summary Judgment filed by Mitchell D. Jacobs. The Court REFERS this case to Magistrate Judge Wilkerson for a settlement conference. Signed by Judge J. Phil Gilbert on 8/18/2016. (jdh)

UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
JONATHAN MOGG,
Plaintiff,
v.

Case No. 15-cv-1142-JPG-DGW

MITCHELL D. JACOBS, individually and
d/b/a Jacobs Law Office,
Defendant.
MEMORANDUM AND ORDER
This is an action filed by plaintiff Jonathan Mogg alleging that defendant Mitchell D.
Jacobs violated the Fair Debt Collections Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq.,
when Jacobs, on behalf of his client Ardmore Finance Corporation (“Ardmore”), sent a collections
letter to Mogg and filed a lawsuit against Mogg after Mogg had filed a petition for Chapter 13
bankruptcy. This matter comes before the Court on the parties’ cross-motions for summary
judgment (Docs. 34 & 37) and their respective responses (Docs. 50 & 46). The parties have also
submitted various other documents either in support of or opposing their summary judgment
motions (Docs. 35, 36, 38, 39, 41 & 47), all of which the Court has considered in ruling on the
pending motions.
I.

Standard for Summary Judgment
Summary judgment must be granted “if the movant shows that there is no genuine dispute

as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Spath v. Hayes Wheels Int’l-Ind.,
Inc., 211 F.3d 392, 396 (7th Cir. 2000). The reviewing court must construe the evidence in the
light most favorable to the nonmoving party and draw all reasonable inferences in favor of that

party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Chelios v. Heavener, 520
F.3d 678, 685 (7th Cir. 2008); Spath, 211 F.3d at 396.
The initial summary judgment burden of production is on the moving party to show the
Court that there is no reason to have a trial. Celotex, 477 U.S. at 323; Modrowski v. Pigatto, 712
F.3d 1166, 1168 (7th Cir. 2013). Where the non-moving party carries the burden of proof at trial,
the moving party may satisfy its burden of production in one of two ways. It may present
evidence that affirmatively negates an essential element of the non-moving party’s case, see Fed.
R. Civ. P. 56(c)(1)(A), or it may point to an absence of evidence to support an essential element of
the non-moving party’s case without actually submitting any evidence, see Fed. R. Civ. P.
56(c)(1)(B). Celotex, 477 U.S. at 322-25; Modrowski, 712 F.3d at 1169. Where the moving
party fails to meet its strict burden, a court cannot enter summary judgment for the moving party
even if the opposing party fails to present relevant evidence in response to the motion. Cooper v.
Lane, 969 F.2d 368, 371 (7th Cir. 1992).
In responding to a summary judgment motion, the nonmoving party may not simply rest
upon the allegations contained in the pleadings but must present specific facts to show that a
genuine issue of material fact exists. Celotex, 477 U.S. at 322-26; Anderson, 477 U.S. at 256-57;
Modrowski, 712 F.3d at 1168. A genuine issue of material fact is not demonstrated by the mere
existence of “some alleged factual dispute between the parties,” Anderson, 477 U.S. at 247, or by
“some metaphysical doubt as to the material facts,” Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986). Rather, a genuine issue of material fact exists only if “a
fair-minded jury could return a verdict for the [nonmoving party] on the evidence presented.”
Anderson, 477 U.S. at 252.

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II.

Facts
The essential framework of this case is undisputed. Mogg borrowed $200.00 from

Ardmore. Having failed to pay it back according to the terms of the loan, Ardmore engaged
Jacobs to collect the debt from Mogg. Before paying the debt, Mogg, through counsel, filed a
petition for bankruptcy under Chapter 13 on September 23, 2014, and listed Ardmore as one of his
creditors. See Case No. 14-31584-lkg (Bankr. S. D. Ill.).
On October 15, 2014, Jacobs sent Mogg a letter trying to collect the debt to Ardmore. The
letter stated, in pertinent part:
I represent Ardmore Finance Corporation d/b/a Ardmore Finance with regard to
your account. On October 26, 2007, you borrowed $200.00 and agreed to repay
that amount plus a finance charge of $98.00 by May 26, 2008. You have failed to
do so and your account, which has been forwarded to me for collection has the
balance of $2,040.67, including all payments and credits and including interest up
to today. Please forward your payment for this amount immediately or call the
undersigned to arrange for payment or you may be responsible for attorney fees as
well.
Mogg did not pay as requested in the letter, so on December 4, 2014, Jacobs filed a state
court lawsuit on behalf of Ardmore to collect the debt from Mogg. Mogg was still in bankruptcy
at that time. Mogg sought legal assistance from his bankruptcy attorney to stop Jacobs’ collection
activities.
In January 2015, Jacobs received a suggestion of bankruptcy Mogg had filed in the state
court action. Following receipt of that document, Jacobs took no further action to collect the debt
outside the bankruptcy proceedings. On January 5, 2015, the state court stayed the collection case
pending discharge or closure of Mogg’s bankruptcy proceedings. Jacobs took no affirmative
action to dismiss the case at that time, although he dismissed the case within 30 days of receiving
notice that Mogg’s bankruptcy plan had been confirmed in March 2016.
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The parties dispute other facts. First, Mogg asserts Ardmore received notice of his
bankruptcy petition three times: (1) at the time of filing on September 23, 2014, (2) on October 6,
2014, when the Trustee sent notice of the creditor’s meeting, and (3) on November 18, 2014, when
Mogg’s attorney sent creditors an Amended Plan. He argues it is reasonable to conclude from
these facts that Jacobs knew of the bankruptcy filing before sending his October 15, 2014, letter
and filing the December 4, 2014, collection action. Mogg has pointed to no evidence in the
District Court or Bankruptcy Court record that the original petition was sent to Ardmore when it
was filed, so the Court cannot credit his assertion to that effect. There is a certificate of service
attesting that on October 6, 2014, the Trustee sent the notice of the creditors meeting to creditors
on the matrix, of which Ardmore was one (Doc. 36-7 at 4). There is also a certificate of service
attesting to that on November 18, 2014, Christy Heuer, presumably someone working in Mogg’s
bankruptcy attorney’s office, mailed Mogg’s Amended Plan to Ardmore (Doc. 36-5 at 9-13). The
reasonable inference that can be drawn from the foregoing evidence is that two notices were
mailed to Ardmore that, if received, should have alerted it to the existence of Mogg’s bankruptcy
proceeding.
On the other side, Jacobs has presented evidence that neither he nor Ardmore ever received
any notice of Mogg’s bankruptcy and that he did not know of the bankruptcy proceeding at the
time he acted to collect the debt to Ardmore. He has presented affidavit testimony from
Ardmore’s president, Andrew Doehring, that Ardmore never received notice of a bankruptcy
filing and that, if it had, it would have implemented its established procedure to notify Jacobs.
That procedure was (1) making a note on the Ardmore file whenever a matter was referred to
Jacobs for collection, (2) after receiving any notice relating to a debtor, looking at the debtor’s file

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to see if it had been referred to Jacobs, and (3) if it had been referred, immediately forwarding a
copy of the notice to Jacobs. Jacobs has also presented his own affidavit testimony that neither he
nor his office ever received a notice of Mogg’s bankruptcy filing from Ardmore. The Court
believes Doehring is competent to testify about the procedures in place at Ardmore to convey
information about bankruptcy filings to Jacobs in cases it had referred to him for collection.
However, Doehring and Jacobs have not established that they have personal knowledge of every
piece of paper that comes in the mail to their offices such that they could testify that no notice
regarding Mogg’s bankruptcy arrived. Nevertheless, there is no issue of fact about whether
Jacobs knew of Mogg’s bankruptcy filing before he sent his October 15, 2014, letter or filed the
December 4, 2014, lawsuit; the uncontroverted evidence shows he did not.
The parties further dispute the harm, if any, Mogg suffered as a result of receiving Jacobs’
October 15, 2014, letter and of being sued. Mogg states in his affidavit that he was “highly
confused and upset” by Jacobs’ demand for payment; was “deceived [by the letter and the
collection lawsuit] into thinking [he] had to pay” the debt; “sought out the assistance of [his]
attorney to protect [him]self and ensure the collections stopped,” for which he spent time and
money; and was “inconvenienced and felt harassed” by Jacobs’ collection efforts. Mogg Aff.
¶¶ 7-11. Jacobs notes that Mogg never paid any of the Ardmore debt and claims that his
emotional disturbance was not substantial enough to amount to a concrete injury.
In October 2015, Mogg filed this lawsuit under the FDCPA alleging that Jacobs violated
the act by:


sending him the October 15, 2014, letter when he knew Mogg was represented by counsel,
in violation of § 1692c(a)(2);



filing a lawsuit to collect a debt after Mogg filed for bankruptcy, triggering the automatic
bankruptcy stay of 11 U.S.C. § 362(a), and refusing to dismiss the suit, thus harassing,
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oppressing or abusing Mogg, in violation of § 1692d;


falsely representing in his October 15, 2014, letter and state court filings that the debt was
collectible when it was not because of the automatic bankruptcy stay, in violation of
§ 1692e(2)(A) and (10); and



attempting to collect attorney’s fees and costs incurred in filing a lawsuit in violation of the
automatic bankruptcy stay, in violation of § 1692f(1).
Mogg asks the Court for summary judgment on his claim that Jacobs violated the FDCPA

by making false representations in violation of § 1692e(2)(A) and (10) when he tried to collect a
pre-petition debt that was unable to be collected because of the automatic bankruptcy stay.
Jacobs asks the Court for summary judgment on all counts. He claims he had no
knowledge of Mogg’s bankruptcy petition when he acted, he dismissed the state court action
within a reasonable time after the Bankruptcy Court confirmed Mogg’s Chapter 13 Plan, and none
of his actions were misleading or had the natural consequence of harassing, oppressing or abusing
anyone. Alternatively, he argues he is entitled to the bona fide error defense.
III.

Analysis
The Court first briefly addressed a jurisdictional matter touched on in Jacobs’ response to

Mogg’s motion for summary judgment: Mogg’s standing to sue because of a lack of concrete
injury. It then turns to the merits of Mogg’s claims and Jacobs’ defense.
A.

Standing to Sue

The doctrine of standing is a component of the Constitution’s restriction of federal courts’
jurisdiction to actual cases or controversies. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560
(1992); see U.S. Const. art. III, § 2. Standing contains three elements.
First, the plaintiff must have suffered an injury in fact – an invasion of a legally
protected interest which is (a) concrete and particularized . . . and (b) actual or
imminent, not conjectural or hypothetical. . . . Second, there must be a causal
connection between the injury and the conduct complained of – the injury has to be
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fairly . . . trace[able] to the challenged action of the defendant, and not . . . the result
[of] the independent action of some third party not before the court. . . .. Third, it
must be likely, as opposed to merely speculative, that the injury will be redressed
by a favorable decision.
Lujan, 504 U.S. at 560-61 (internal citations, quotations and footnotes omitted); accord Sierra
Club v. Franklin County Power of Ill., LLC, 546 F.3d 918, 925 (7th Cir. 2008).
The issue of standing has been a hot topic this summer following the Supreme Court’s
decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016). Spokeo addressed the first component
of standing – injury-in-fact – and what it takes to be a “concrete” injury. The Spokeo plaintiff,
Robin, sued Spokeo, Inc. under the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq.,
because it had published false information about him on its website, a violation of the FCRA that,
by itself, warranted a statutory penalty under the act. Id. at 1546. Spokeo challenged whether
Robin had standing to sue for violations of the act without showing actual or imminent concrete
injury beyond a procedural violation of his statutorily created rights. Id.
The Supreme Court noted the independent requirement that a plaintiff’s injury must be
concrete, that is, real, not abstract, and actually existing. Id. at 1548. It noted that the injury does
not have to be tangible to be concrete. Id. at 1549. Nevertheless, the injury must be more than “a
bare procedural violation, divorced from any concrete harm.” Id. The key inquiry is whether the
statutory violation “entail[s] a degree of risk sufficient to meet the concreteness requirement.” Id.
at 1550.
In this case, Mogg has presented evidence of a concrete injury resulting from alleged
violations of the FDCPA. Aside from his emotional trauma, he has suffered the adverse
consequences of having a lawsuit filed against him and has had to incur costs to obtain legal
representation in that lawsuit. See Phillips v. Asset Acceptance, LLC, 736 F.3d 1076, 1082-83
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(7th Cir. 2013) (being sued is concrete harm); Lane v. Bayview Loan Servicing, LLC, No. 15 C
10446, 2016 WL 3671467, at *5 (N.D. Ill. July 11, 2016) (noting Phillips survived Spokeo). It is
true that Mogg had already hired an attorney to represent him in his bankruptcy proceeding, but
representation in the collection action likely posed additional representation costs. Those costs,
and the intangible injury as a consequence of being a defendant in a collection action, suffice to
satisfy Article III standing requirements.
B.

False Representations

The Court next addresses Mogg’s claim that Jacobs’ made false representations in his
October 15, 2014, letter and December 4, 2014, state court complaint that Mogg’s debt was
collectible when it actually was not because of the automatic bankruptcy stay. Mogg claims these
false representations constituted a violation of § 1692e(2)(A) and (10) of the FDCPA. This is the
only claim on which both parties have moved for summary judgment.
Before turning to the parties’ arguments, it is helpful to review some basics of the FDCPA,
including the contours of its prohibition on false representations contained in § 1692e. One of the
purposes of the FDCPA is “to eliminate abusive debt collection practices by debt collectors,”
§ 1692(e), including the use of “any false, deceptive, or misleading representation or means in
connection with the collection of any debt,” § 1692e. The act goes on to list sixteen specific
prohibitions in this category, including, as relevant to this case, “[t]he false representation of – (A)
the character, amount, or legal status of any debt; or (B) any services rendered or compensation
which may be lawfully received by any debt collector for the collection of a debt,” § 1692e(2), and
“[t]he use of any false representation or deceptive means to collect or attempt to collect any debt or
to obtain information concerning a consumer,” § 1692e(10).

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To establish a violation of § 1692e, a plaintiff must show that the statement made by the
debt collector would mislead or deceive the unsophisticated, but reasonable, consumer. Wahl v.
Midland Credit Mgmt., Inc., 556 F.3d 643, 645-46 (7th Cir. 2009). “The ‘unsophisticated
consumer’ isn’t a dimwit. She may be uninformed, naive, and trusting, but she has rudimentary
knowledge about the financial world and is capable of making basic logical deductions and
inferences.” Id. at 646 (internal quotations, citations and brackets omitted). A statement that is
technically false but would not mislead or deceive the reasonable unsophisticated consumer does
not satisfy this standard. Id. at 645-46.1 If the debt collector’s statement is misleading or
deceptive, there is no further requirement to show the debt collector’s state of mind in making the
statement. Id. at 646.2
Debt collectors that make misleading or deceptive statements to consumers may be
absolved from liability if they did so unintentionally and in spite of reasonable procedures to
prevent such statements. This describes the “bona fide error defense” set forth in § 1692k(c):
A debt collector may not be held liable in any action brought under this subchapter
if the debt collector shows by a preponderance of evidence that the violation was
not intentional and resulted from a bona fide error notwithstanding the maintenance
of procedures reasonably adapted to avoid any such error.
The defense applies where a debt collector makes a clerical or factual mistake, but not a mistake of
law in interpreting the FDCPA. Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559
U.S. 573, 577 (2010). For a debt collector to establish the bona fide error defense, “(1) it must
show that the presumed FDCPA violation was not intentional; (2) it must show that the presumed
Contrary to Jacobs’ assertion, the “least sophisticated consumer” test does not apply. Lox v.
CDA, Ltd., 689 F.3d 818, 822 (7th Cir. 2012).
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Jacobs argues in his motion for summary judgment that he could not have violated the FDCPA
because he did not know at the time of his actions that Mogg had filed for bankruptcy. While
relevant to whether Jacobs violated the Bankruptcy Code, 11 U.S.C. § 362(k), his state of mind is
not relevant to whether he violated the FDCPA by making misleading or deceptive statements.
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FDCPA violation resulted from a bona fide error . . ., and (3) it must show that it maintained
procedures reasonably adapted to avoid any such error.” Kort v. Diversified Collection Servs.,
Inc., 394 F.3d 530, 537 (7th Cir. 2005).
Mogg contends that Jacobs’ October 15, 2014, letter and December 4, 2014, state court
complaint, in the context of Jacobs’ refusal to dismiss that complaint, stated falsely that Mogg’s
debts were due and collectible even though they were not because the automatic bankruptcy stay
prevented their collection outside of bankruptcy. Mogg argues that these misrepresentations were
deceptive because they would cause the unsophisticated consumer to believe the debt was
collectible outside of bankruptcy.
Jacobs, on the other hand, argues that the reasonable unsophisticated consumer would not
have been misled by his letter or state court filing. Alternatively, Jacobs argues he is entitled to
rely on the bona fide error defense.
Mogg is not entitled to summary judgment based on Jacobs’ statements that Mogg’s debt
to Ardmore was collectible. Viewing all facts and reasonable inferences in Jacobs’ favor, the
Court believes it is highly likely Jacobs’ letter and lawsuit would mislead or deceive the reasonable
unsophisticated consumer3 into believing that the debt was legally enforceable outside of the
bankruptcy proceedings. See Phillips v. Asset Acceptance, LLC, 736 F.3d 1076, 1079 (7th Cir.
2013) (suing to collect debt beyond statute of limitations would mislead reasonable
unsophisticated consumer). However, it is possible Jacobs may be able to escape liability under
Neither party mentions the possibility that the relevant “unsophisticated consumer” is the
“unsophisticated consumer represented by counsel unbeknownst to the debt collector.” Evory v.
RJM Acquisitions Funding LLC, 505 F.3d 769, 774 (7th Cir. 2007), suggests that the appropriate
objective comparison group may be a group that shares certain characteristics with the consumer.
In Evory, the Court of Appeals noted that the appropriate benchmark for debt collectors that
targeted those with a poor command of English is the “unsophisticated consumer” in that group.
Id.
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§ 1692e using the bona fide error defense. As noted earlier in this order, there is no evidence from
which a reasonable jury could find Jacobs knew about Mogg’s bankruptcy filing before he
received the suggestion of bankruptcy in the state court lawsuit. Thus, even if they contained
misleading statements, Jacobs’ prior efforts to collect Ardmore’s debt from Mogg were
unintentional violations of § 1692e. There is also evidence from which a reasonable jury could
believe Ardmore and Jacobs had implemented reasonable procedures to alert Jacobs of bankruptcy
notices connected with cases referred to him and that any failures in that respect were either due to
postal service errors or isolated clerical errors within Ardmore. Thus, a reasonable jury could
find Jacobs excused from liability under the bona fide error defense.
However, Jacobs is not entitled to summary judgment either. Viewing all facts and
reasonable inferences in Mogg’s favor, a reasonable jury could conclude that the system Jacobs
and Ardmore had developed to prevent misleading statements to debtors was not reasonable to
achieve that end. The evidence shows that two notices were sent to Ardmore in connection with
the bankruptcy proceeding, yet neither of them made it to Jacobs. On two occasions, something
between the mailing of the notices from two different sources (the Trustee and Mogg’s bankruptcy
attorney’s office) and Jacobs did not work properly. Whether the problem was with the postal
service or Ardmore’s procedures is unknown, but the events could cause a reasonable jury to
question whether the system in place at Ardmore was adequate. The jury could reasonably
conclude that, although Ardmore’s notification system looked good on paper, it did not function as
planned and was therefore not “reasonably adapted to avoid” the kind of misstatements alleged in
this case. Jacobs cannot succeed on summary judgment without showing conclusively that the
system was satisfactory, and he has not carried that burden.

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For these reasons, the Court will deny both parties’ motions for summary judgment on
Mogg’s claim for violations of § 1692e of the FDCPA based on Jacobs’ October 15, 2014, letter
and December 4, 2014, state court complaint.
C.

Other Alleged Violations

Both parties mention only in passing Mogg’s claimed violation of § 1692c (regarding
communication with a consumer represented by counsel) and § 1692d (regarding conduct likely to
harass, oppress or abuse a consumer), and both parties fail to mention Mogg’s claimed violation of
§ 1692f(1) (regarding collecting unauthorized fees). Neither party supports his positions with
respect to these alleged violations with a discussion of the relevant law or how it applies to the
facts of this case. Thus, neither has carried his burden on summary judgment of establishing he is
entitled to judgment as a matter of law on the remaining alleged violations of the FDCPA.
D.

Settlement Conference

It is not lost on the Court that this case is about a piddly sum in the grand scheme of things:
a debt that began as $298.00 and allegedly grew to more than $2,000.00 but which has been
discharged without collection. Thus, it appears the main drivers in this case now are actual
damages, which appear to be minimal; statutory damages capped at $1,000, Smith v. Greystone
Alliance, LLC, 772 F.3d 448, 449 (7th Cir. 2014); and reasonable attorney’s fees and costs. See
15 U.S.C. § 1692k(a); Fed. R. Civ. P. 54(b). The Court seriously doubts that, given the sum in the
balance to the plaintiff, it is worth the parties’ time and effort to prepare for trial, to try this case,
and possibly to pursue an appeal. The Court reminds the parties that the purpose of the FDCPA is
to protect consumers, not to employ attorneys. That being said, the Court will refer this matter to
Magistrate Judge Donald G. Wilkerson for a settlement conference, which was not held earlier in

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this case.
IV.

Conclusion
Because there are genuine issues of material fact regarding whether Jacobs’ procedures for

preventing such misleading statements were adequate, and because neither party has adequately
supported their respective motions for summary judgment on any other claim, the Court DENIES
the parties’ cross-motions for summary judgment (Docs. 34 & 37) and REFERS this case to
Magistrate Judge Wilkerson for a settlement conference.
IT IS SO ORDERED.
DATED: August 18, 2016
s/ J. Phil Gilbert
J. PHIL GILBERT
DISTRICT JUDGE

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