Heisler v. Convergent Healthcare Recoveries Inc et al
Filing
74
DECISION AND ORDER signed by Magistrate Judge Nancy Joseph on 12/4/2018 denying 69 Motion for Reconsideration. (cc: all counsel) (llc)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
CHAD H. HEISLER,
Plaintiff,
v.
Case No. 16-CV-1344
CONVERGENT HEALTHCARE RECOVERIES, INC.,
And JOHN AND JANE DOES Nos. 1-25,
Defendants.
DECISION AND ORDER ON PLAINTIFF’S MOTION
FOR RECONSIDERATION
Chad H. Heisler filed a single count complaint against Convergent Healthcare
Recoveries, Inc. (“CHRI”) alleging that a debt collection letter sent to him violated the Fair
Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq. Heisler filed a motion
for class certification and I denied the motion on September 27, 2018. (Docket # 68.)
Presently before me is Heisler’s motion for correction of, or relief from, the class
certification order, pursuant to Fed. R. Civ. P. 54(b) or 60(b)(1) and 60(b)(6). (Docket # 69.)
For the reasons more fully explained below, Heisler’s motion for reconsideration is denied.
ANALYSIS
1.
Reconsideration Standard
Heisler moves for reconsideration of the September 27, 2018 order denying his
motion for class certification pursuant to Fed. R. Civ. P. 54(b) or 60(b)(1) and (b)(6). Fed. R.
Civ. P. 54(b) allows a court to exercise its inherent authority to reconsider nonfinal orders.
See Civix-DDI, LLC v. Hotels.com, LP, 904 F. Supp. 2d 864, 866 (N.D. Ill. 2012) (citing Moses
H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 12 (1983) (“every order short of a
final decree is subject to reopening at the discretions of the . . . judge”). A motion for
reconsideration serves a very limited purpose in federal civil litigation; it should be used
only “to correct manifest errors of law or fact or to present newly discovered evidence.”
Rothwell Cotton Co. v. Rosenthal & Co., 827 F.2d 246, 251 (7th Cir.1987) (quoting Keene Corp.
v. Int'l Fid. Ins. Co., 561 F. Supp. 656, 665-66 (N.D.Ill.1982), aff’d, 736 F.2d 388 (7th
Cir.1984)). While “[a] court has the power to revisit prior decisions of its own,” courts
“should be loathe to do so in the absence of extraordinary circumstances such as where the
initial decision was ‘clearly erroneous and would work a manifest injustice.’” Christianson v.
Colt Indus. Operating Corp., 486 U.S. 800, 817 (1988) (quoting Arizona v. California, 460 U.S.
605, 618 n.8 (1983)). In general, “litigants must fight an uphill battle in order to prevail on a
motion for reconsideration.” United Air Lines, Inc. v. ALG, Inc., 916 F. Supp. 793, 795
(N.D.Ill. 1996). A motion seeking relief under Rule 54(b), “as a general rule” should be filed
within “thirty days after the entry of the adjudication to which it relates.” King v. Newbold,
845 F.3d 866, 868 (7th Cir. 2017) (internal quotation and citation omitted).
Rule 60(b)(1) permits the court to relieve a party from an order for “mistake,
inadvertence, surprise, or excusable neglect.” “Mistake” under Rule 60(b)(1) usually
involves an inadvertent “misunderstanding of the surrounding facts and circumstances.”
Eskridge v. Cook County, 577 F.3d 806, 809 (7th Cir. 2009). A motion under Rule 60(b)(1)
must be made with a “reasonable time” and “no more than a year after the entry of the . . .
order . . . .” Fed. R. Civ. P. 60(c)(1). Rule 60(b)(6) is a catch-all rule allowing relief from an
order for “any other reason that justifies relief.” Heisler’s motion, filed October 11, 2018, is
timely under either rule.
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2.
Reconsideration of Class Certification Order
CHRI argued that Heisler was not an adequate class representative because he was
subject to a defense that could not be sustained against other class members, namely judicial
estoppel. CHRI argued that on September 26, 2016, Heisler filed for Chapter 7 bankruptcy
protection and identified “Convergent Healthcare Recoveries, Inc.” as an entity attempting
to collect a debt of $250.00 owed to “Elmbrook Memorial.” CHRI argued that ten days
later, Heisler filed this FDCPA action alleging that he was confused by CHRI’s abbreviation
of Elmbrook Memorial. CHRI argued that Heisler’s bankruptcy was formally discharged.
CHRI argued Heisler should be judicially estopped from pursuing this action because
he failed to list this class action as an asset and showed no signs of being confused by
CHRI’s letter, namely, he was able to identify Elmbrook Memorial as a creditor and CHRI
as the entity collecting the account on Elmbrook Memorial’s behalf. Heisler was then able
to secure a discharge of the debt.
I found that while the parties disputed the application of judicial estoppel, I did not
need to determine the validity of the defense at the class certification stage. Rather, my focus
was on whether CHRI posited “an arguable defense peculiar to” Heisler which may “bring
into question the adequacy of the named plaintiff’s representation.” See CE Design Ltd. v.
King Architectural Metals, Inc., 637 F.3d 721, 726 (7th Cir. 2011) (“The fear is that the named
plaintiff will become distracted by the presence of a possible defense applicable only to him
so that the representation of the rest of the class will suffer.”) (quotation marks and citation
omitted). I found that CHRI had presented at least an “arguable” defense both legally and
factually specific to Heisler and his bankruptcy proceedings and therefore concluded that
Heisler was an inadequate representative of the class.
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Heisler challenges CHRI’s arguments that Heisler should be judicially estopped from
pursuing this action. Again, CHRI argues for judicial estoppel because: (1) Heisler failed to
list this class action as an asset and (2) he showed no signs of being confused by CHRI’s
letter, namely, he was able to identify Elmbrook Memorial as a creditor and CHRI as the
entity collecting the account on Elmbrook Memorial’s behalf. As to CHRI’s second
argument, I agree, as stated in the class certification order, that whether Heisler showed
signs of actual confusion is irrelevant to the FDCPA claim because Heisler seeks statutory
damages, “a penalty that does not depend on proof that the recipient of the letter was
misled.” Bartlett v. Heibl, 128 F.3d 497, 499 (7th Cir. 1997).
However, Heisler’s reconsideration motion primarily challenges CHRI’s first
argument. Heisler argues that standing—not judicial estoppel—is the correct analysis in this
case. Heisler argues that because CHRI argues he never disclosed this class action as an
asset during his bankruptcy, he cannot be the “real party in interest” because when an
action is not disclosed by the debtor, it remains property of the bankruptcy estate even after
the case is closed unless it is administered or abandoned by the trustee. (Docket # 70 at 7
citing In re Arana, 456 B.R. 161, 170 (Bankr. E.D.N.Y. 2011)). Heisler argues if he did not
disclose the asset, then only the trustee, not Heisler, could be the real party in interest.
(Docket # 73 at 3.) Heisler reasons that because CHRI concedes that Heisler is a real party
in interest, Heisler must have disclosed the asset. (Id.)
I disagree with Heisler’s analysis. Again, in Cannon-Stokes v. Potter, 453 F.3d 446 (7th
Cir. 2006), at the same time Cannon-Stokes was pursuing an administrative claim under the
Rehabilitation Act against the Postal Service, she filed a Chapter 7 bankruptcy petition
asserting that she had no assets. Id. at 447. The bankruptcy court discharged approximately
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$98,000.00 in unsecured debts. Id. After the bankruptcy was over, Cannon-Stokes filed a
federal lawsuit asserting the Rehabilitation Act claim. The Postal Service argued that
judicial estoppel foreclosed the action. Id. The court noted that if the “estate (through the
trustee) abandons the claim, then the creditors no longer have an interest, and with the
claim in the debtor’s hands the possibility of judicial estoppel comes to the fore.” The court
found that this “is what has happened here: the trustee abandoned any interest in this
litigation, so the creditors are out of the picture and we must decide whether Cannon-Stokes
may pursue the claim for her personal benefit.” Id. The court agreed that judicial estoppel
blocked Cannon-Stokes’ lawsuit. Id. at 449.
Heisler effectively argues that it is impossible for the trustee to abandon an asset
when it was never disclosed. Heisler’s position is not without support. As he points out,
Judge Stadtmueller recently found in Kitchner v. Fiergola, No. 18-CV-133-JPS, 2018 WL
4473359, at *1 (E.D. Wis. Sept. 18, 2018) that a claim that was never listed was never
abandoned. A district court in the Northern District of Indiana noted the fact that some
district courts in this circuit have found that a claim remains with the bankruptcy estate into
perpetuity unless affirmatively abandoned by the trustee. Canen v. U.S. Bank Nat. Ass’n, 913
F. Supp. 2d 657, 663 (N.D. Ind. 2012) (citing cases). However, citing Cannon-Stokes, the
Canen court found that the closing of the bankruptcy estate is an act that effectively
constitutes abandonment, thus invoking the application of judicial estoppel. Id. I agree with
the Canen court’s rationale. Again, in Cannon-Stokes, the court applied the judicial estoppel
doctrine in a case where an asset was not disclosed in a Chapter 7 bankruptcy, but the debts
had been discharged and the bankruptcy closed. Thus, as the Canen court stated, the “key
dividing line that separates when [the doctrines of standing or judicial estoppel] is
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appropriate,” is “the closing of a bankruptcy estate.” Id. While Heisler may disagree with
my interpretation of Cannon-Stokes, he has not demonstrated a manifest error of law. Thus,
judicial estoppel was the proper doctrine to invoke.
The remainder of Heisler’s arguments go to the merits of whether his claim should be
foreclosed by judicial estoppel. Again, whether Heisler could win on the merits is not before
me at this time. Rather, the fact that CHRI has presented at least an arguable defense to
Heisler’s claim renders him an inadequate class representative. Nothing Heisler presents in
his motion persuades me to reconsider my earlier finding. Thus, Heisler’s motion for
reconsideration is denied.
ORDER
NOW, THEREFORE, IT IS HEREBY ORDERED that the plaintiff’s motion for
reconsideration (Docket # 69) is DENIED.
Dated at Milwaukee, Wisconsin this 4th day of December, 2018.
BY THE COURT:
s/Nancy Joseph
NANCY JOSEPH
United States Magistrate Judge
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