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Category: ICFA

7th. Cir.: Online Estimates From Zillow and Redfin Not Actionable

Steven Uhrich

Link: Patel v. Zillow, Inc., No. 18-2130 (7th Cir. 2019).

The 7th Circuit affirmed two decisions from the Northern District of Illinois, confirming that a disgruntled property owner can’t sue Zillow (and likley similar sites like Redfin or Trulia) for the low “Zestimate” on its website. Plaintiff, on behalf of the class, alleged it was not licensed to issue appraisals and that its activity violated the Illinois Uniform Deceptive Trade Practices Act, 815 ILCS §§ 510/1 to 510/7.

The court confirmed that the licensing statute at issue (  Illinois Real Estate Appraiser Licensing Act, 225 ILCS 458/1 to 458/999-99) does not confer a private right of action, and that as for the IUDTPA claim, that

the district judge was right to observe that the statute deals with statements of fact, while Zestimates are opinions, which canonically are not actionable. See, e.g., Sampen v. Dabrowski, 222 Ill. App. 3d 918, 924-25 (1st Dist. 1991) (where a valuation is explicitly labeled an estimate, there is no deception)…

Mortgage Still “Valid Debt” Despite Being Unenforceable

Steven Uhrich

Link: Bauer v. RoundPOINT MORTGAGE SERVICING CORPORATION (N.D.Ill Oct. 29 2018).

In seeking to foreclose on Plaintiff’s home, the mortgagee violated the single refiling rule in Illinois that says you can’t re-file the same lawsuit twice. As a result, the mortgage loan became unenforceable as a matter of law. (A recent Illinois Supreme Court Decision, First Midwest v. Cobo, also found this would apply to an action on the promissory note).

The mortgage companies continued to send statements, some demanding payments. Plaintiff, represented by Rusty Payton and Marc Dann of DannLaw, filed suit to quiet title and actions under the Fair Debt Collection Practices Act, the Truth in Lending Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, and the Illinois Consumer Fraud Act against the mortgage servicer (Roundpoint), the investor, and the foreclosure mill law firm Wirbicki Law Group, LLC.

Judge Virginia M. Kendall found that the debt was still “valid” even though it was legally unenforceable—meaning that many of the claims do not survive.

Although the single refiling rule prevents the defendants from pursuing another foreclosure action, extinguishing their legal remedy, the rule does not extinguish the right to the underlying debt—that remains. See Midland Funding, LLC v. Johnson, 137 S. Ct. 1407, 1411-12 (2017); Pantoja v. Portfolio Recovery Assocs., LLC, 852 F.3d 679, 684 (7th Cir. 2017), cert. denied, 138 S. Ct. 736 (2018)(explaining that Illinois treats a “debt as a debt” because “[t]he creditor retains the legal right to appeal to the debtor to honor the debt out of a sense of moral obligation even if the legal obligation can no longer be enforced in court”); Owens v. LVNV Funding, LLC, 832 F.3d 726, 731 (7th Cir. 2016) (citing Fleming v. Yeazel,40 N.E.2d 507, 508 (1942) (“[T]he statute of limitations controls the remedy for recovery of the debt, but the debt remains the same as before, excepting that the remedy for enforcement is gone.”)).
Indeed, a creditor retains some right to payment, even if its remedy is no longer a legal one but a moral one. See Buchanan v. Northland Grp., Inc., 776 F.3d 393, 396-97 (6th Cir. 2015) (recognizing that a time-barred “debt remains a debt even after the statute of limitations has run on enforcing” and “[t]here thus is nothing wrong with informing debtors that a debt remains unpaid” and “to let the debtor know what the debt is and to ask her to pay it”); HBLC, Inc. v. Egan, 2016 IL App (1st) 143922 (2016) (citing Huertas v. Galaxy Asset Management, 641 F.3d 28, 32-33 (3d Cir.2011) (noting that “the FDCPA permits a debt collector to seek voluntary repayment of the time-barred debt so long as the debt collector does not initiate or threaten legal action in connection with its debt collection efforts”).
Moreover, a debt once-unenforceable can become enforceable again under certain circumstances. 

However, the Court allowed one claim under the Fair Debt Collection Practices Act and two claims under the Illinois Consumer Fraud Act concerning Roundpoint’s threats to foreclose or legally enforce the mortgage debt.

Collection Calls to Wrong Person Basis for Valid FDCPA, TCPA claims—Not ICFA

Steven Uhrich

Link: Hayes v. RECEIVABLES PERFORMANCE MANAGEMENT, LLC, Case No. 17-cv-1239 (N.D. Ill. Sept. 26, 2018).

This suit, filed by Sulaiman Law Group, Ltd., alleges that employees from RPM called plaintiff numerous times looking to speak with and collect a debt from someone named “Lesha Wayne.” The plaintiff told RPM numerous times they had the wrong number and told them to stop calling. They didn’t. Plaintiff filed suit under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. (Count I); Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227 et seq. (Count II); and the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”), 815 ILCS 505/1 et seq. (Count III). Defendant filed a motion to dismiss, which the court, judge Robert M. Dow, granted in part and dismissed in part.

The court found Plaintiff did not sufficiently allege facts to show that he qualifies as a consumer under § 1692a(3) of the FDCPA, and dismissed his claim under Section 1692b(3) which requires that:

Any debt collector communicating with any person other than the consumer for the purpose of acquiring information about the consumer shall * * * not communicate with any such person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information.

The court also dismissed his claim under section 1692c(a)(1) which provides:

Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the collection of any debt (1) at any unusual time or place or a time or place known or which should be known to be inconvenient to the consumer.

The court dismissed his claim under 1692e finding that Plaintiff didnot allege that he believed he owed the debt, or that Defendant or its agents ever said anything to him that even implicitly suggested he owed the debt. Instead, Plaintiff argued the calls were an attempt to mislead him into paying the debt.

The court also dismissed his f claim:

A Plaintiff who uses the same factual allegations underlying another § 1692 claim for his § 1692f claim, however, fails to state an independent basis on which relief can be granted.

The court did allow the section 1692d(5) claim to stand:

While Defendant asserts these allegations are not enough to state claim, the court in Wright v. Enhanced Recovery Company denied a motion for summary judgment where the parties agreed that the defendant had only been called 21 times but disagreed at what point and how many times the plaintiff had asked for the calls to stop. 227 F. Supp. 3d at 1214-15. In light of Wright, and the fact that Plaintiff alleges he demanded the calls to stop on numerous occasions, Plaintiff has alleged facts to show a plausible violation of the FDCPA with regard to § 1692d(5).

The TCPA claim survived despite Defendant’s argument regarding whether plaintiff alleged they used an autodialer:

Here, Plaintiff alleges both that he has experienced the distinctive “click and pause” after answering calls from Defendant [1, ¶ 18], and that on other occasions he experienced “dead air” and received no response whatsoever when he answered Defendant’s calls, [1, ¶ 19]. Given these experiences, Plaintiff infers that Defendant used an ATDS to make these calls. [1, ¶ 47.] Considering the precedent above, the Court agrees that Plaintiff has pled sufficient facts to support the reasonable inference that Defendant used a ATDS to place the relevant calls.

The Court also dismissed the ICFA claim:

As explained above, Plaintiff has not pled facts sufficient to show that Defendant engaged in a deceptive act or practice under 15 U.S.C. § 1692e. Thus, he has not pled facts to support his claim under the ICFA. While Defendant’s calls may have been annoying, and possibly abusive, nothing in Plaintiff’s complaint suggests that Defendant sought to deceive Plaintiff.

Claims for Botched Servicing of Student Loans May Move Forward

Steven Uhrich

Link: Fleischer v. ACCESSLEX INSTITUTE, Case No. 17-cv-08295 (N.D. Ill., Sept. 19, 2018).

Plaintiff filed suit against the servicer, owner, and collector of his consolidated student loans (Accesslex Institute D/B/A Access Group, Conduent Education Services, LLC F/K/A Acs Education Services, Massachusetts Higher Education Assistance Corporation D/B/A American Student Assistance, Delta Management Associates, Inc., and F.H. Cann & Associates, Inc.). Plaintiff is represented by Kruger & Gruber, LLP.

He alleged that after consolidating his loans in 2011, he entered into a forbearance with his then-servicer Access Group where he would pay only 2.5% interest for three years on his $38,000 balance. 23 months later, Delta Management (whom Plaintiff had never heard of) sent him a letter saying his balance was over $50,000. After years of disputes with the Consumer Financial Protection bureau and the Defendants, the account was sent to debt collectors who went after Plaintiff for the inflated amount.

Plaintiff filed action under the Illinois Consumer Fraud and Deceptive Practices Act against F.H. Cann, Delta, and Conduent; claims under the Fair Debt Collection Practices Act against F.H. Cann and Delta; breach-of-contract and promissory-estoppel claims against Conduent; fraudulent and negligent-misrepresentation claims against Delta; and a fraudulent-concealment claim against Conduent. Defendants filed a motion to dismiss and for judgment on the pleadings.

Judge Manish S. Shah allowed his ICFA claim of unfairness to proceed against Conduent, and found that the ICFA claim against Conduent and Delta would normally be time-barred—but it falls within the “continuing violation” tolling doctrine, which delays accrual of the statute of limitations until (1) the date of the last injury or (2) when the tortious acts cease. Gredell v. Wyeth Laboratories, Inc., 346 Ill.App.3d 51, 59 (1st Dist. 2004).

The court allowed the FDCPA claims against F.H. Cann and Delta to survive, alleging that they failed to give him the required notice under 15 U.S.C. § 1692g and that its statements regarding removing his default status from his credit report was potentially false or misleading.

The court allowed the breach of contract claim to survive, but dismissed the negligent and intentional misrepresentation claims and fraudulent concealment claim.

Class Cert Denied on Pet Treat Claims

Steven Uhrich

Link: BIETSCH v. SERGEANT’S PET CARE PRODUCTS, INC., Case No. 15-cv-5432 (N.D. Ill., Sept. 19, 2018).

Plaintiff, represented by Siprut PC, brought a class action alleging that Defendant’s pet treats caused their dogd to fall ill under the Magnuson-Moss Warranty Act, the Illinois Consumer Fraud Act, and 10 other states’ consumer fraud laws as a nation-wide class. The allegations are basically that the dog treats failed to break down within dogs’ digestive tracts and as a result caused digestive issues.

The court denied Plaintiff’s motion for class certification under 23(b)(2) for injunctive relief and 23(b)(3) seeking monetary damages in the form of a full refund. The court also ruled on evidentiary issues related to expert witnesses brought under FRE 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S. Ct. 2786, 125 L. Ed. 2d 469 (1993).

Judge Sara L. Ellis ruled that Plaintiff could not meet their burden of showing that the treats were defective and unsafe, because their own expert wouldn’t say they were categorically unsafe and thus the court had no basis upon which to conclude that the treats are so unsafe that no reasonable consumer would purchase them. The court also rejected the 23(b)(2) injunction as untenable from a judicial enforcement standpoint and would require the court to create a standard for evaluating the safety of the reformulated treats.

The court noted the Plaintiff is up against a rough burden as to damages (apologies for the pun; I had to):

Plaintiffs likely wonder what evidence would be sufficient to meet this burden. The Court does not have an answer for that hypothetical question, but merely notes that on the facts of this case sufficient common proof is likely hard to come by. As other courts have noted, “Proving a class-wide defect where the majority of class members have not experienced any problems with the alleged defective product, if possible at all, would be extremely difficult.” Mahtani v. Wyeth, No. CIV.A. 08-6255 KSH, 2011 WL 2609857, at *8 (D.N.J. June 30, 2011) (citation omitted) (internal quotation marks omitted) In trying to argue that a product is categorically unfit for dogs to eat, when very few dogs have experienced ill effects eating it, Plaintiffs are attempting to cross a wide gap, and as such, need a strong bridge.

 

Consumer Fraud and Automotive Repair Act Judgment Upheld

Steven Uhrich

Link: Bell v. Ring, 2018 IL App (3d) 170649.

In this Illinois state court appeal, the court discusses the applicability of the “knowing” standard required to support a violation of the Automotive Repair Act, 815 ILCS 306/15, (and the resultant claim allowed under the Illinois Consumer Fraud Act). It’s a good discussion of the requirements of the ARA. The court upheld the small court claims finding that the Defendant knowingly violated the ARA when he:

knowingly and intentionally elected not to provide an estimate because he was “too busy” and never sought to obtain a written waiver from Lloyd for the estimate requirement. Instead, defendant chose to rely on his erroneous belief that the work was not covered by the Repair Act and did over $9000 worth of work on Lloyd’s truck without giving Lloyd an estimate and without obtaining prior authorization from Lloyd.

Summary Judgment Awarded Against Comcast for Impermissible Pull Claim

Steven Uhrich

Link: Santangelo v. Comcast Corporation, Case No. 15-cv-0293 (N.D. Ill., Sept. 17, 2018).

Plaintiff, represented by Keith Keogh of Keogh Law, Ltd., sued Comcast under the Fair Credit Reporting Act and the Illinois Consumer Fraud Act alleging they impermissibly pulled a credit check on him despite the fact he paid a $50 deposit to forgo a credit check when applying for internet services. As a result, his credit score dropped by six points. Comcast refunded Plaintiff the money he paid with interest and caused the hard pull to be masked. The parties filed cross motions for summary judgment which were both granted and denied in part.

FCRA Claim

Comcast argued that Plaintiff’s lowered credit score could not satisfy Article III’s injury-in-fact requirement with respect to his FCRA claim, because he has not shown that he was denied a loan, a purchase, or a credit application. Judge John Z. Lee disagreed, citing Evans v. Portfolio Recovery Assocs., LLC, 889 F.3d 337, 344-46 (7th Cir. 2018) for the proposition that “it is ‘very easy’ to envision a lowered credit score creating a real risk of financial or other harm that satisfies the injury-in-fact requirement.” The court also rejected the challenge to causation since the score dropped the same day as Comcast’s pull and that the case was not moot due to the refund or subsequent masking.

As to the merits, the parties disputed whether Comcast had a “legitimate business need” under § 1681b(a)(3)(F)(i), and the court found in favor of Plaintff:

There is no dispute that Comcast offered to provide Santangelo internet service without obtaining his TELCO information, if he paid a $50 deposit. And no reasonable jury could conclude that Comcast needed Santangelo’s credit score to determine his eligibility for service when Comcast’s own policies and representations to Santangelo indicated otherwise.

The court also ruled in favor of Plaintiff in regards to Comcast’s argument that Plaintiff agreed to the credit pull under § 1681b(a)(2), finding that it’s a strained argument and that Comcast failed to develop the record to support it. So liability as to the the FCRA claim was decided in favor of Plaintiff.

Whether Comcast violated the FCRA willingly or negligently (and thus whether Plaintiff may be awarded punitive damages or not) under § 1681n will be a fact for the jury:

There is evidence in the record from which a jury could reasonably conclude that the Comcast representative who initiated the credit check did so in error. But, there is other evidence from which a reasonable jury could conclude that Comcast knew or should have known that it would likely happen based upon prior experiences with similar incidents.

State Law Claims

The court found that as to the state law claims under the Illinois Consumer Fraud Act, breach of contract, and unjust enrichment, Plaintiff failed to adduce sufficient evidence of actual damages. As a result Comcast was awarded summary judgment on those counts. The court noted, however, that for purposes of Article III standing analysis, “actual damages and injury in fact ‘are not the same thing.’ Abbott v. Lockheed Martin Corp., 725 F.3d 803, 808 (7th Cir. 2013).”

Judge Dismisses RESPA Claim Under Rooker-Feldman

Steven Uhrich

Link: Adler v. Bayview Loan Servicing, LLC, Case No. 17-c-6735 (N.D. Ill., Sept. 18, 2018).

Plaintiffs Ronald and Lisa Adler, represented by attorney Daniel Brown of Main Street Attorney, LLC, brought claims under the Real Estate Settlement Procedures Act (“RESPA”) and the Illinois Consumer Fraud Act (“ICFA”) against their mortgage servicing company Bayview (and against the investor Bank of New York Mellon based on vicarious liability) relating to their attempts to modify the mortgage loan on their primary residence. They alleged that after successfully completing two trial period plans under the Home Affordable Modification Program in 2013 and 2014, the Plaintiffs received a proposed loan modification that did not account for the fact they discharged the debt in bankruptcy and should not be personally liable for it. After sending in qualified written requests under RESPA seeking clarification, Bayview sent them false, confusing and vexatious responses then told them they were going to sell their home at a foreclosure sale.

The Plaintiffs sought to file counterclaims in the state court proceeding and stay the sale, but the state court judge denied that relief. The home was sold at auction and Plaintiffs were subsequently evicted.

Defendants sought to dismiss the amended complaint under 12(b)(6) for failure to state a claim, and the judge granted the motion based on the Rooker-Feldman doctrine. The Rooker-Feldman doctrine, derived from Rooker v. Fidelity Trust Company, 263 U.S. 413 (1923) and District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983), “precludes lower federal court jurisdiction over claims seeking review of state court judgments . . . [because] no matter how erroneous or unconstitutional the state court judgment may be, the Supreme Court of the United States is the only federal court that could have jurisdiction to review a state court judgment.”

The court, judge Charles P. Kocoras, explained:

The state court entered an order of foreclosure and sale on February 27, 2012, and an order of possession on November 2, 2015. Now, the Adlers are attempting to collaterally attack the state court’s judgment by arguing that the foreclosure sale was improper under RESPA and ICFA violations. The Adlers’ request for relief is inextricably intertwined with the Defendants’ prior foreclosure proceedings … In the foreclosure proceeding on September 16, 2015, the Adlers argued that the sale of the subject property should be stayed because of the Defendants’ breach of contract in the loan modification process. In this Amended Complaint, the Adlers outright assert that “[a]s a direct and proximate result of Defendant’s misconduct, Plaintiffs lost their family home.” However, a district court cannot vacate the foreclosure judgment, and the Adlers’ request for relief is putting this Court in a position of appellate review, which Rooker-Feldman prohibits.

The court dismissed the ICFA claim finding that 28 U.S.C. § 1367 of the allows a federal district court to exercise supplemental jurisdiction over state law claims only if the court has original jurisdiction.

“Time Sensitive” Warning Not Violative of FDCPA

Steven Uhrich

Link: Preston v. Midland Credit Management, Inc., No. 18 C 1532 (N.D. Ill., Sept. 4, 2018)

Plaintiff, through the firm Sulaiman Law Group, Ltd., filed a putative class action claiming that the “TIME SENSITIVE” stamped on the outside of a debt collector’s letter violated § 1692e(2)(A), e(10), and § 1692f of the Fair Debt Collection Practices Act because it implied a false sense of urgency. MCM was represented by Hinshaw & Culbertson LLP.

§ 1692f(8) specifically prohibits:

using any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by the use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.

§ 1692(e)(2)(a) prohibits the “false representation of [ ] the character, amount or legal status of any debt;” and § 1692(e)(1), prohibits the “use of any false representation or deceptive means to collect or attempt to collect any debt.”

Preston claimed that the phrase “TIME SENSITIVE DOCUMENT,” on its own and when considered in combination with MCM’s discount offer urging him to “act now” plus the phrase “we are not obligated to renew any offers provided” violated these sections by creating a false sense of urgency.

The court, judge Sara L. Ellis, disagreed:

MCM’s use of language on the outside of the envelope falls within the benign language exception to § 1692f(8) and so Preston’s § 1692f(8) claim fails. The Court also finds that this language, alone or in combination with the discount offer, does not violate § 1692e(2)(A) or e(10) because MCM properly employed safe harbor language approved by the Seventh Circuit in connection with its discount offer.

Judge Ellis dismissed the FDCPA claims with prejudice but allowed Plaintiff to try to plead the Illinois Consumer Fraud and Deceptive Business Practices Act claim in state court.