Gary v. Badger Process Services Inc et al
ORDER signed by Judge J.P. Stadtmueller on 11/13/2017. 23 Defendants' Motion to Dismiss Plaintiff's Amended Complaint GRANTED as to Plaintiff's Section 1983 claim and DENIED as to Plaintiff's FDCPA claim. 18 Defendants' Motion to Dismiss Plaintiff's Original Complaint DENIED as moot. See Order. (cc: all counsel) (jm)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
BADGER PROCESS SERVICES, INC.
and GURSTEL LAW FIRM, P.C.,
Case No. 17-CV-1016-JPS
This is a case about sewer service. Plaintiff, Wyndham Gary
(“Gary”), was a defendant in a state-court collection action. He claims that
he was never properly served with process. Defendants allegedly made
false statements to the contrary in that proceeding. Those false statements
nearly allowed the plaintiff to obtain a default judgment against Gary. He
has now filed this action against Gurstel Law Firm, P.C. (“Gurstel”), the law
firm that represented the plaintiff, and Badger Process Services, Inc.
(“Badger”), the company that Gurstel hired to effect service. Gary claims
that Defendants’ conduct violated the Fair Debt Collection Practices Act
(“FDCPA”), 15 U.S.C. § 1692 et seq., and his constitutional due-process
rights as protected in 42 U.S.C. § 1983. Defendants have moved to dismiss
and, for the reasons stated below, the motion will be granted in part and
denied in part.
Federal Rule of Civil Procedure 12(b)(6) provides for dismissal of
complaints which fail to state a viable claim for relief. Fed. R. Civ. P.
12(b)(6). To state a claim, a complaint must provide “a short and plain
statement of the claim showing that the pleader is entitled to relief.” Fed. R.
Civ. P. 8(a)(2). In other words, the complaint must give “fair notice of what
the. . .claim is and the grounds upon which it rests.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007). The allegations must “plausibly suggest
that the plaintiff has a right to relief, raising that possibility above a
speculative level[.]” Kubiak v. City of Chicago, 810 F.3d 476, 480 (7th Cir. 2016)
(citation omitted). In reviewing the complaint, the Court is required to
“accept as true all of the well-pleaded facts in the complaint and draw all
reasonable inferences in favor of the plaintiff.” Id. at 480–81.
When considering a motion to dismiss under Rule 12(b)(6), the court
is generally limited to the allegations within the four corners of the
complaint. To rely upon extrinsic materials, the court would normally be
required to convert the motion to dismiss into one for summary judgment.
See Fed. R. Civ. P. 12(d). Nevertheless, a court can consider other documents
if they are referred to in the pleadings and central to the case. See Fed. R.
Civ. P. 10(c); Hecker v. Deere & Co., 556 F.3d 575, 582 (7th Cir. 2009).
Gary incurred a debt with American Express Bank FSB. He defaulted
on the debt, and so a lawsuit was instituted against him in Milwaukee
County Circuit Court. Gurstel represented the bank, and Badger was
retained by Gurstel to serve the summons on Gary.
Gary claims that service was never made. (Docket #24-3 ¶ 6). He
alleges that Badger’s employee, Timothy Pinney (“Pinney”), provided a
false affidavit of service. In the affidavit, Pinney stated that on April 26,
2017, he effected substitute service of the summons on “John Doe (refused
to give name),” identified as Gary’s “co-resident,” at Gary’s apartment.
(Docket #24-1 at 2). Pinney averred that when he served John Doe, he
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“informed said person of the contents [of the summons], in compliance
with state statutes.” Id. The affidavit further reflects that Pinney made three
prior, unsuccessful attempts at service on Gary personally during the sixday period leading to April 26. Id.
Gary alleges that he was in Houston, Texas on business from April
23–27, 2017. (Docket #22 ¶ 22); (Docket #24-3 ¶ 3). He explains that the “John
Doe” mentioned by Pinney was his roommate, Dan Hansher (“Hansher”).
(Docket #22 ¶ 21). According to Hansher, Pinney came to their door that
night and asked for Gary. Id. ¶¶ 23–24. Hansher stated that Gary was out
of town and shut the door. Id. ¶ 25. Later, Hansher found copies of
“documents related to the case”—he did not say whether they were the
summons and complaint—outside the door. Id. ¶ 26; see also (Docket #22 ¶¶
Gurstel later sought a default judgment against Gary. To support the
motion, Badger (through Pinney) prepared the false affidavit of service, and
Gurstel filed it with the court. Gary, who had heard of the case from
Hansher, entered his appearance through counsel and opposed the motion.
The court later denied the motion for default judgment.
Gary asserts two claims in this case. First, he contends that
Defendants’ actions in preparing and relying upon a false affidavit of
service in the collection action constituted false and misleading statements
made in connection with the collection of a debt, in violation of the FDCPA,
15 U.S.C. § 1692e. Second, Gary argues that Defendants’ reliance upon
improper service in the state court action denied him his due-process rights
secured by the Fourteenth Amendment, in violation of 42 U.S.C. § 1983.
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Defendants’ motion to dismiss largely avoids the substance of Gary’s
claims—that is, Defendants do not contest the notion that sewer service
might give rise to an FDCPA or Section 1983 claim. Rather, Defendants say
that service was unquestionably proper based on documents the Court can
consider in connection with its motion, including Pinney’s affidavit of
service and Hansher’s and Gary’s affidavits submitted in the state collection
action. For that reason, Defendants posit that no false statement was ever
made, and thus no FDCPA or Section 1983 violation occurred.
In Wisconsin, service of process is governed by Wis. Stat. § 801.11,
which provides, in relevant part, that service may be made:
[U]pon a natural person:
(a) By personally serving the summons upon the defendant
either within or without this state.
(b) If with reasonable diligence the defendant cannot be
served under par. (a), then by leaving a copy of the summons
at the defendant’s usual place of abode:
1. In the presence of some competent member of the
family at least 14 years of age, who shall be informed
of the contents thereof;
1m. In the presence of a competent adult, currently
residing in the abode of the defendant, who shall be
informed of the contents of the summons; or
2. Pursuant to the law for the substituted service of
summons or like process upon defendants in actions
brought in courts of general jurisdiction of the state in
which service is made.
Wis. Stat. § 801.11(1)(a)–(b). It is uncontested that service was not made
personally upon Gary.
Defendants rest instead on Section 801.11(b)(1m), arguing that
Pinney had “no duty to hand the documents to Mr. Hansher” during their
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encounter on April 26, 2017. (Docket #24 at 5). Defendants maintain that
under Wisconsin law, if a person refuses to accept service, the process
server may simply inform that person of the contents of the document and
deposit it “in some appropriate place, in the presence of the party if
possible, or where it will be most likely to come to his possession. If then
the party to be served does not get the copy of the summons it will be
entirely owing to his own fault.” Borden v. Borden, 23 N.W. 573, 574 (Wis.
Defendants’ reliance on Borden is misplaced, as there are factual
disputes here concerning what transpired on the night of April 26.
Assuming for the moment that all of the other elements of service under
Section 801.11(b)(1m) are satisfied, there is a material disagreement
between Pinney and Hansher as to whether Pinney ever told Hansher about
the contents of the document he was serving. Gary has alleged (and
Hansher has averred) that the entire exchange between Hansher and
Pinney was: (1) Pinney asked for Gary; (2) Hansher informed Pinney that
Gary was out of town; and (3) Hansher shut the door. According to Gary
and Hansher, nothing more was said, and nothing more occurred between
the men, until Hansher later discovered the summons on their doorstep. In
fact, Hansher says only that he found “documents related to the case” in
front of his door, (Docket #22 ¶ 26); (Docket #24-2 ¶ 6), suggesting that he
did not know their nature. Moreover, nothing in Pinney’s statements about
his prior attempts at service indicates that he interacted with Hansher in
any fashion, further undermining the idea that Hansher knew of the
contents of the documents before Pinney left them.
Defendants would like the Court to credit Pinney’s assertion that he
informed Hansher of the contents of the summons. This is not permitted
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under the standard of review, which requires the Court to accept Gary’s
factual allegations as true and draw inferences therefrom in his favor, not
against him. Kubiak, 810 F.3d at 480–81; see also Hennessy v. Penril Datacomm
Networks, Inc., 69 F.3d 1344, 1354 (7th Cir. 1995) (“In order for a fact to be
judicially noticed, indisputability is a prerequisite.”). Thus, while it is true
that “Mr. Hansher does not indicate what more was said between [he and
Pinney], and the Amended Complaint also leaves out that information,”
(Docket #24 at 6); (Docket #32 at 7), the Court cannot infer from the absence
of such information that something damaging to Gary’s claims—
notification of the contents of the summons—occurred. Indeed, because the
whole case is about Pinney’s allegedly false statements in the affidavit of
service, it would be inappropriate to believe Pinney’s statements over
Gary’s at this juncture. Hecker, 556 F.3d at 582 (noting that where the
plaintiff alleged that certain statements in documents were untrue, the
district court was correct in “[taking] plaintiffs’ point of view on all such
disputes”); Bogie v. Rosenberg, 705 F.3d 603, 609 (7th Cir. 2013) (noting that
a plaintiff can contradict the contents of an exhibit or other relevant
document through specific factual allegations).
Because of this, the Court has no occasion to consider whether Gary
was evading service, whether Pinney’s prior attempts at service met
Wisconsin’s “reasonable diligence” standard, or whether Hansher acted
unfairly in shutting the door in Pinney’s face.1 All the Court can do at this
Defendants, relying upon Borden, state that Pinney had no options left
after Hansher shut the door on him, and leaving the documents at the door was
therefore permissible. (Docket #24 at 9); (Docket #32 at 8–9). But Borden dealt with
evasion by the defendant himself, not his co-habitant, see Borden, 23 N.W. at 574,
and the Court will not at this early juncture read Borden as broadly as Defendants
do. Under the liberal standard of review applicable here, the Court finds that
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time is compare Pinney’s actions to the requirements of the statute.
Drawing all reasonable inferences in Gary’s favor, the Court is obliged to
conclude that Pinney’s attempt at service in the evening of April 26, 2017
did not pass muster. Because his affidavit falsely claimed that all elements
of service had been satisfied, the Court must allow Gary’s FDCPA claim to
Before evaluating Gary’s Section 1983 claim, the Court will address
Gurstel’s final, separate argument regarding the FDCPA claim—namely,
that it cannot be liable for Badger’s false affidavit because Gary has not
alleged a sufficient principal-agent relationship between them. (Docket #24
at 13). This contention is without merit, as the Seventh Circuit has plainly
held that “[a] debt collector should not be able to avoid liability for unlawful
debt collection practices simply by contracting with another company to do
what the law does not allow it to do itself. Like the Third Circuit, we think
Hansher, a person entirely unconnected with the collection action, was not
required to make himself available for conversation with Pinney. Hansher’s lack
of cooperation did not obviate Pinney’s duty to actually inform him of the contents
of the summons in order to make proper service under Section 801.11(b)(1m).
The FDCPA contains an exception from its coverage for process servers. It
provides that “any person  serving or attempting to serve legal process on any
other person in connection with the judicial enforcement of any debt” does not fall
within the definition of a “debt collector” and therefore cannot be liable under the
FDCPA. 15 U.S.C. § 1692a. However, courts have held, and Defendants appear to
concede, that this exception does not protect process servers who engage in
“coercive, abusive, or harassing activities,” including preparing false affidavits of
service. Spiegel v. Judicial Attorney Servs., Inc., No. 09 C 7163, 2010 WL 5014116, at
*1 (N.D. Ill. Dec. 3, 2010); (Docket #24 at 10–11); Flamm v. Sarner & Assoc., P.C., No.
02–4302, 2002 WL 31618443, at *5 (E.D. Pa. Nov. 6, 2002). The Court need not weigh
in on this question at present, since Defendants’ argument is premised upon a
finding that Pinney’s service on Hansher was proper. The Court has concluded
that on the facts alleged, it was not, and that is enough to sideline the processserver exception for now.
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it is fair and consistent with the Act to require a debt collector who is
independently obliged to comply with the Act to monitor the actions of
those it enlists to collect debts on its behalf.” Janetos v. Fulton Friedman &
Gullace, LLP, 825 F.3d 317, 325 (7th Cir. 2016); Pollice v. Nat’l Tax Funding,
L.P., 225 F.3d 379, 405 (3d Cir. 2000). As long as the purported principal is
itself a debt collector—and Gurstel makes no attempt to argue that it is
not—liability can be imputed from those the principal contracts with in aid
of its debt collection efforts. See Janetos, 825 F.3d at 325.
The fact that Gurstel hired Badger to serve process on Gary is enough
to satisfy the Court at this early stage that it can be liable for Badger’s
actions. Besides, Gurstel does not address the distinct allegation that it filed
the false affidavit from Badger with the state court, an affirmative act that
goes beyond the mere principal-agent relationship relied upon in Janetos.
See id. Thus, Gurstel is incorrect to claim that its liability in this case is
premised solely on Badger’s conduct. See (Docket #24 at 13–14).
Consequently, the Court will not dismiss the FDCPA claim as to Gurstel.
Although Gary’s FDCPA claim may proceed, the result is different
for the Section 1983 claim. In connection with this claim, Defendants assert
that Gary’s due-process rights were not violated because he eventually
received notice of the collection lawsuit, appeared through counsel, and
defeated the motion for default judgment. (Docket #24 at 11–13). Thus, he
suffered no harm. Id. Gary rejoins that deprivation of notice of ongoing
proceedings is itself actionable injury. See (Docket #29 at 4–5).
Gary’s position is undercut by long-standing precedent. Where a
due-process claim is premised on a lack of notice, if a plaintiff succeeds in
regaining the position he would have occupied had he been given notice,
he no longer has any injury upon which to base his federal claim. Young v.
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Murphy, 90 F.3d 1225, 1231 (7th Cir. 1996); Garry v. Geils, 82 F.3d 362, 1368
(7th Cir. 1996); Thomas v. 5445 Edgewater Plaza Condominium Ass’n, 210 F.3d
376, 2000 WL 279666, at *2 (7th Cir. 2000). Gary does not dispute the fact
that he successfully opposed the motion for default judgment in the state
case. Indeed, he attached the transcript of the hearing on the motion to his
amended complaint. See (Docket #22-1); Hecker, 556 F.3d at 582. Thus, it is
uncontested that Gary managed to overcome Defendants’ alleged
wrongdoing, and he therefore suffered no injury to his due-process rights.
Gary’s citations to Armstrong v. Manzo, 380 U.S. 545, 551 (1965), and
United States v. Wiseman, 445 F.2d 792, 797 (2d Cir. 1971), are unavailing, as
in those cases the failure of notice resulted in actual harm. See Armstrong,
380 U.S. at 551 (petitioner forced to overcome adverse adoption decree
previously entered); Wiseman, 445 F.2d at 794 (false affidavits were used to
secure default judgments). In Armstong, the Court observed that if the trial
court had granted the petitioner’s motion to set aside the adoption decree,
it “would have wiped the slate clean” and “would have restored the
petitioner to the position he would have occupied had due process of law
been accorded to him in the first place.” Armstrong, 380 U.S. at 552. That
having occurred in Gary’s case, there remains no injury on which to base a
claim under Section 1983. Of course, because the FDCPA affords statutory
damages to a plaintiff who suffers a violation of the rights created
thereunder, any failure of actual damages has no effect on the justiciability
of that claim. 15 U.S.C. § 1692k(a)(2)(A); Keele v. Wexler, 149 F.3d 589, 593
(7th Cir. 1998). Accordingly, Defendants’ motion will be granted as to the
Section 1983 claim and denied as to the FDCPA claim.
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Defendants’ motion to dismiss relies largely upon disputed facts.
Those facts, construed in Gary’s favor, compel the Court to deny the motion
with respect to his FDCPA claim. However, Gary’s due-process claim must
be dismissed because, unlike an FDCPA claim, he was required to assert an
actual injury to support it. He cannot do so in this case, and so the claim
IT IS ORDERED that Defendant’s motion to dismiss the amended
complaint (Docket #23) be and the same is hereby GRANTED in part and
DENIED in part as stated herein; and
IT IS FURTHER ORDERED that Defendants’ motion to dismiss the
original complaint (Docket #18) be and the same is hereby DENIED as
Dated at Milwaukee, Wisconsin, this 13th day of November, 2017.
BY THE COURT:
J. P. Stadtmueller
U.S. District Judge
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