Menu Close

Tag: E.D. Wisc.

Collector’s Reference to Faith in Debtor No FDCPA Claim

Link: Larkin v. FINANCE SYSTEM OF GREEN BAY INC. (E.D. Wisc. Nov. 8 2018).

Plaintiff filed an FDCPA 1692e claim based on a collection letter that contained the following:

You do not want to lose our confidence. You want to be worthy of the faith put in you by your creditor; yet the above past due account remains unpaid, possibly through an oversight on your part.
Please contact your creditor or our office to make arrangements for payment on the above account. We are interested in you preserving a good credit rating with the above creditor.

The Court Disagreed:

Larkin alleges that the unsophisticated consumer would be misled by the letter to believe that FSGB “has confidence” in her and that the creditor, Green Bay Radiology, “has faith” in her that she would lose if she did not pay her debt. But these statements are obviously true. Unless a radiologist is providing services for free, he or she no doubt trusts, i.e., has faith, that the person served will pay. Likewise, debt collectors likely have some confidence that many people, when provided notice of an outstanding debt, will pay if they are able. Otherwise, why make the effort? Larkin’s assertion that these innocuous statements imply that nonpayment will harm the physician-patient relationship is bizarre and idiosyncratic.

Class Cert Denied Based on Defense to Rep’s Claim

Link: Heisler v. CONVERGENT HEALTHCARE RECOVERIES, INC. (E.D. Wisc., Sept. 27, 2018).

In an FDCPA lawsuit brought by Edelman Combs Latturner & Goodwin LLC, a district court found that because a class representative was arguably subject to a defense of judicial estoppel—and some unnamed class members were not—that he’s not an adequate class representative under Rule 23.

Again, CHRI argues that Heisler’s cause of action should be barred by judicial estoppel based on actions taken during the course of Heisler’s bankruptcy proceedings. Heisler disputes that judicial estoppel applies in his case and raises both factual and legal arguments in support of his position. This judicial estoppel argument is both legally and factually specific to Heisler and his bankruptcy proceedings. Thus, I find that CHRI has presented at least an “arguable” defense to Heisler’s claim and therefore conclude that Heisler is an inadequate representative of the class. See Randall v. Rolls-Royce Corp., 637 F.3d 818, 824 (7th Cir. 2011) (“[N]amed plaintiffs who are subject to a defense that would not defeat unnamed class members are not adequate class representatives.”); see also Boyd v. Meriter Health Servs. Employee Ret. Plan, No. 10-CV-426-WMC, 2012 WL 12995302, at *11 (W.D. Wis. Feb. 17, 2012), aff’d sub nom. Johnson v. Meriter Health Servs. Employee Ret. Plan, 702 F.3d 364 (7th Cir. 2012) (finding the court was “compelled to conclude” the named plaintiff was an inadequate class representative when defendants alleged judicial estoppel due to plaintiff’s failure to disclose cause of action during banrkutpcy proceedings).

FDCPA Claim for Failure to ID “Current Creditor” Tossed Out

Link: Smith v. Simm Associates, Inc., Case No. 17-C-769 (E.D. Wisc., Sept. 30, 2018).

A class action case brought by Edelman Combs Latturner & Goodwin LLC was thrown at at summary judgment by judge William C. Griesbach. The plaintiff alleged that the collection letters sent out by the defendant violated  § 1692g(a) by:

Smith alleges that Simm violated §§ 1692g(a)(2) and 1692e of the FDCPA by failing to identify Comenity as the “current creditor” in its letter, instead of as the “original creditor.” Although Comenity was both the original and the current creditor, Smith claims that the letter nevertheless violated § 1692g(a)(2) by failing to also expressly identify Comenity as the “current creditor.”

The court found that:

There was nothing abusive, unfair, or deceptive about Simm’s notice to Smith about her outstanding debt. The letter contained the name of the creditor to whom the debt was owed, and offered payment arrangements authorized by PayPal Credit, the name Smith was most likely to recognize as the source of the debt. I therefore conclude that Simm did not violate § 1692g.

Failure to ID Creditor Suffices Spokeo Standard

Link: Heisler v. Convergent Healthcare Recoveries, Inc., Case No. 16-CV-1344 (E.D. Wisc., Sept. 27, 2018).

Plaintiff filed suit alleging that the dunning letters sent by CHRI did not identify the original creditor in violation of the Fair Debt Collection Practices Act, 15 U.S.C. 1692g.

The court provides a great analysis of the FDCPA for purposes of Article III standing analysis post-Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016).

Heisler alleges that CHRI violated his rights under the FDCPA by failing to identify the creditor to whom the debt was owed and by using false, deceptive, and misleading representations or means in connection with the collection of the debt. (Compl. ¶ 46.) As in Pogorzelski, Heisler’s allegations that the debt collection letter sent by CHRI failed to identify the creditor of the debt in violation of his rights under the FDCPA sufficiently pleads a concrete injury-in-fact for purposes of standing. As to CHRI’s allegation that Heisler never opened the letter, this fact is irrelevant as Heisler seeks statutory damages, “a penalty that does not depend on proof that the recipient of the letter was misled.” See Bartlett v. Heibl, 128 F.3d 497, 499 (7th Cir. 1997). Thus, I find that Heisler has standing to sue in this case.

Unfortunately for Plaintiffs represented by Edelman, Combs, Latturner & Goodwin, judge Nancy Joseph also denied class certification because there is a unique defense that Plaintiff’s cause of action should be barred by judicial estoppel based on actions taken during the course of Plaintiff’s bankruptcy proceedings.

FDCPA Class Certified in E.D. Wisc. Based on Ambiguous Settlement Offer

Link: Al V. Van Ru Credit Corporation, Case No. 17-CV-1738-JPS-JPS (E.D. Wisc. Sept. 25, 2018).

Plaintiff, represented by Ademi & O’Reilly LLP, filed a class action under the Fair Debt Collection Practices Act based on the following language in a dunning letter:

You can settle your account with the above client for lees than the full amount you owe. The balance you owe as of the date of this letter is $462.31. Presently, we are willing to accept $277.39 to settle your account provided that you act promptly. We are not obligated to renew this offer.

The Letter does not define “promptly” and does not state a firm expiration date for the settlement offer. Id. Plaintiff’s overarching theory of liability is that failing to include a better description of the parameters of the settlement offer misleads the recipient into believing that the offer may shortly expire, when this is not true.

Judge J.P. Stadtmueller found that Plaintiffs met their burden under Rule 23 to certify the following class:

“(a) all natural persons in the State of Wisconsin (b) who were sent a collection letter in the form represented by Exhibit A to the complaint in this action, (c) seeking to collect a debt allegedly owed for personal, family or household purposes, (d) between December 13, 2016 and December 13, 2017, (e) that was not returned by the postal service.”

The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights. A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone’s (usually an attorney’s) labor.

True, the FDCPA allows for individual recoveries of up to $1000 [(which is more than is usually obtained for individual class members)]. But this assumes that the plaintiff will be aware of her rights, willing to subject herself to all the burdens of suing and able to find an attorney willing to take her case. These are considerations that cannot be dismissed lightly in assessing whether a class action or a series of individual lawsuits would be more appropriate for pursuing the FDCPA’s objectives. Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997).

“Breaching the Peace” During Car Repo Can Violate FDCPA

Link: Gable v. UNIVERSAL ACCEPTANCE CORPORATION, Case No. 17-c-463 (E.D. Wisc., Sept. 17, 2018).

Plaintiff sued a towing company and debt collector alleging that they breached the peace in attempting to repossess his car and thus violated the FDCPA. Wisconsin law allows nonjudicial repossession of motor vehicles if the customer has failed to demand a hearing . . . as long as the merchant does not “commit a breach of the peace.” Wis. Stat. § 425.206(1)(d), (2)(a). In this case, the police showed up and told the plaintiff that he had to let them repossess the car. This was wrong, and didn’t let defendants off the hook for FDCPA liability:

The fact that [Plaintiffs] acquiesced in the repossession after the police arrived and informed them the repossession was lawful, however, does not mean that they withdrew their objections to RPI and Chase’s conduct. The police officers were simply wrong in their conclusion that Johnson and Brunette were legally entitled to take the car over the debtor’s objection. See Marcus v. McCollum, 394 F.3d 813, 819 (10th Cir. 2004).

As a result, the court denied the defendants’ motion for summary judgment.

No Standing for Claims Not Disclosed on Bankruptcy Petition

Link: Kitchner v. FIERGOLA, Case No. 18-CV-133-JPS (E.D. Wisc., Sept. 18, 2018).

Judge J.P. Stadtmueller found that because the Plaintiff did not disclose her Fair Credit Reporting Act and Fair Debt Collection Practices Act claims on her Chapter 7 Bankruptcy petition, and because they arose prior to the filing of her bankruptcy, they were still property of the estate and the bankrtupcy trustee is the true party in interest for standing purposes. The court allowed the claim to be stayed under Rule 17:

Rule 17 instructs that “[t]he court may not dismiss an action for failure to prosecute in the name of the real party in interest until, after an objection, a reasonable time has been allowed for the real party in interest to ratify, join, or be substituted into the action. After ratification, joinder, or substitution, the action proceeds as if it had been originally commenced by the real party in interest.” Fed. R. Civ. P. 17(a)(3). Thus, Defendants having put Kitchner on notice of the standing issue, the Court is obliged to give Kitchner a reasonable period of time in which to ratify her commencement of the action by convincing the trustee to abandon these claims, or to substitute the trustee as the sole party plaintiff.

The court also rejected the defendant’s judicial estoppel defense, stating that the only person who could take inconsistent positions that would jeopardize the claims for purposes of judicial estoppel would be the trustee.

Court Dismisses ECOA Suit Claiming Lender Demanded Consumer Retract Credit Disputes

Link:  KOLODZINSKI v. PENTAGON FEDERAL CREDIT UNION, Case No. 17-CV-1768-JPS (E.D. Wisc. Aug. 28, 2018)

SmithMarco PC filed a suit on behalf of Plaintiff alleging that he was discriminated against in violation of the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. § 1691 et seq. because when he applied for a loan, the loan officer told him he had to remove the disputes from his credit report in order to obtain the loan. Once he did so, his credit score went down so low he could no longer obtain the loan.

Plaintiff argued that because his right to dispute credit lines derives from the Fair Debt Collection Practices Act and Fair Credit Reporting Act,  Defendant violated ECOA which provides that a creditor cannot discriminate against an applicant “because the applicant has in good faith exercised any right under this chapter.” 15 U.S.C. § 1691(a)(3). “[T]his chapter” refers to Chapter 41 of Title 15, entitled the Consumer Credit Protection Act (“CCPA”) which has within it the FDCPA and FCRA.

The court disagreed, finding that the FDCPA confers on consumers a private right of action to remedy violations of the statute, so ECOA just requires lenders not to discriminate against consumers who file such a private action.

As to the FCRA, the court drew a distinction between a duty and a right, stating that Plaintiff has not alleged that any person or consumer reporting agency failed to properly provide notice of a dispute in violation of Section 1681s-2(3), or that he exercised his right under the FCRA to seek a remedy for such a violation:

A consumer’s dispute is a precondition to the triggering of a duty; it is not an affirmative right conferred by the statute.

The court also noted that Plaintiff’s reading of the statute did not comport with Regulation B issued by the Consumer Financial Protection Bureau.

 Defendant has chosen to restrict the type of credit history it will consider to dispute-free reports, and that restriction is applied to all credit applicants. Plaintiff does not allege that this restriction is applied in a nonuniform way, and Defendant confirms in its briefing that this restriction is applied to every credit applicant.

Accordingly the court dismissed the lawsuit as failing to state a claim under Rule 12(b)(6).