Boerner v. LVNV Funding LLC, Case No. 17-CV-1786-JPS

358 F.Supp.3d 767

George BOERNER, Plaintiff,

v.LVNV FUNDING LLC and Messerli & Kramer PA, Defendants.

Case No. 17-CV-1786-JPS

United States District Court, E.D. Wisconsin.

Signed January 8, 2019

Briane F. Pagel, Jr., Lawton & Cates SC, Madison, WI, for Plaintiff.

Nabil G. Foster, Hinshaw & Culbertson LLP, Chicago, IL, James E. Kachelski, Messerli & Kramer PA, Plymouth, MN, for Defendants.

ORDER

J. P. Stadtmueller, U.S. District Judge

1. INTRODUCTION

On December 22, 2017, Plaintiff George Boerner ("Boerner") filed a complaint against defendants LVNV Funding, LLC ("LVNV") and Messerli & Kramer, PA ("Messerli") (collectively, "Defendants") alleging violations of the Federal Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692(e) and the Wisconsin Consumer Act ("WCA"), Wisc. Stat. § 427.104, in connection with the collection of a credit card debt. (Docket # 1). On November 7, 2018, Messerli filed a motion for summary judgment, which LVNV joined. (Docket # 38 and # 45). For the reasons stated below, the motions will be denied.

2. LEGAL STANDARD

Federal Rule of Civil Procedure 56 states that the "court shall grant summary judgment 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 Boss v. Castro , 816 F.3d 910, 916 (7th Cir. 2016). A "genuine" dispute of material fact is created when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The Court construes all facts and reasonable inferences in a light most favorable to the non-movant. Bridge v. New Holland Logansport, Inc. , 815 F.3d 356, 360 (7th Cir. 2016). In assessing the parties' proposed facts, the Court must not weigh the evidence or determine witness credibility; the Seventh Circuit instructs that "we leave those tasks to factfinders." Berry v. Chicago Transit Auth. , 618 F.3d 688, 691 (7th Cir. 2010).

The Seventh Circuit has provided additional direction in evaluating the viability of FDCPA claims. Such claims are assessed from the perspective of the "unsophisticated consumer." An unsophisticated consumer "may be uninformed, naïve, [and] trusting, but is not a dimwit, has rudimentary knowledge about the financial world, and is capable of making basic logical deductions and inferences[.]" Lox v. CDA, Ltd. , 689 F.3d 818, 822 (7th Cir. 2012) (citations and quotations omitted).

3. RELEVANT FACTS

George Boerner held a Menard's/Capital One credit card, for which he fell behind on payments after he lost his job. Between October 2016 and February 2017, Boerner received billing statements in the mail that contained information including the amount due and the payment due date. As is customary with credit card billing statements, Boerner was allowed to make partial payments, or "minimum payments," on the debt. Boerner owed a total of $ 1,957.57 on the Menard's/Capital One credit card before it was finally turned off ("charged off") in early 2017. By February 2017, Boerner was required to pay $ 649.00 on the total owed balance. At some point following the charge off, the Menard's/Capital One credit card debt was sold. It passed through multiple financial institutions and ultimately arrived at LVNV, which retained the Messerli law firm to collect on the delinquent account.

On June 19, 2017, Messerli sent Boerner's bankruptcy attorney a standard form letter stating that it represented LVNV in the collection of the debt, and, if appropriate, Boerner must dispute the validity of the debt within 30 days. (Docket # 40-2). Boerner does not recall seeing this letter and, to this day, is confused by the fact that it refers to HSBC Bank Nevada, a bank Boerner has never used. The letter does not contain any information regarding Boerner's opportunity to cure the default, nor does it mention that the debt stems from Boerner's Menard's/Capital One card. It does, however, list the last four digits of that credit card. Id. Neither Boerner, nor his attorney, responded to this letter. On October 25, 2017, Messerli filed a summons and complaint against Boerner in Washington County Circuit Court, seeking to collect LVNV's debt (Case No. 17SC2061). On November 16, 2017, Boerner filed an answer with the state court, followed by an amended answer and counterclaims on December 15, 2017.

LVNV is a long-term client of the Messerli firm, and Messerli is familiar with LVNV's business practices and accounts. When retained to collect a particular debt, Messerli receives consumer files from LVNV, as well as general demographic information about the debtor. State court complaints are drafted on a standard form template, which Messerli attorneys review "at least annually." (Docket # 50 at 10–11). Messerli regularly trains its employees on legal compliance and industry developments. Id. Messerli attorneys use a file-tracking system to show work performed on each case. (Docket # 53 at 7).

The Messerli attorney working on behalf of LVNV in Boerner's case, James Kachelski, is listed as the attorney of record in several hundred cases throughout Wisconsin.¹ The state court complaint filed in Boerner's case was the result of Messerli's mass-produced, computer-assisted process, which Kachelski reviewed and signed before the complaint was filed. There is no way to know for certain how long Kachelski actually spend reviewing the complaint, id. at 8, and the parties dispute how long Kachelski reviewed the complaint. Messerli's records contain two time stamps for this complaint, at 4:04 p.m. and 4:05 p.m. Boerner argues that this shows that the complaint was reviewed for one minute before it was sent to the assistant to be filed. Messerli argues that 4:04 p.m. is "the time the code was placed on the file after the review was completed," which is then followed by the time the file was sent to the assistant to be e-filed, and that all of the review was done prior to the time stamps. (Docket # 50 at 12). In any case, the Defendants do not say how long Kachelski spent reviewing the complaint, or how long it would be reasonable to review the complaint under the circumstances. They only state that Kachelski's review, however long it was, was reasonable. Id. at 13.

It is undisputed that Kachelski reviewed the complaint on October 23, 2017, and the complaint was ultimately filed on October 25, 2017. Id. There are no other entries from that period on the computer system for Boerner's case that can be attributed to any other attorney. The parties dispute how busy Kachelski's schedule was that week, including the number of hearings for which he made appearances. At some point after the complaint was filed, another attorney, Gina Ziegelbauer, became involved in Boerner's case.

4. ANALYSIS

The thrust of Plaintiff's argument is that LVNV unlawfully accelerated the maturity of his debt when LVNV filed suit against him without giving Plaintiff notice of his right to cure the default under the WCA, which, in turn, violated 15 U.S.C. § 1692e(2)(A) because LVNV falsely represented the legal status of the debt, i.e., that the debt was ready to be sued upon. Plaintiff also alleges that Messerli falsely represented that an attorney was meaningfully involved in the collections suit when, in fact, Kachelski was barely involved at all, in violation of 15 U.S.C. § 1692e(3). In its July 25, 2018 order on Defendants' motion to dismiss, the Court determined that Boerner could proceed on his two FDCPA claims, one of which is predicated on facts underlying the WCA the violation, which the court determined was precluded from litigation in federal court due to its dismissal in the state court action. (Docket # 32 at 18–19). Defendants now seek summary judgment on each of Boerner's claims, as well as dismissal of the entire action. The Court addresses each FDCPA claim below, as well as Defendants' argument against emotional damages.

4.1 FDCPA

The FDCPA is, as its name suggests, intended to "eliminate abusive debt collection practices." 15 U.S.C. § 1692(e)"Broadly, it prohibits debt collectors from using ‘any false, deceptive, or misleading representation or means in connection with the collection of any debt.’ " Schlaf v. Safeguard Prop., LLC , 899 F.3d 459, 465–66 (7th Cir. 2018) (quoting 15 U.S.C. § 1692e ). It contains a number of subsections which regulate certain debt collection practices, two of which, sections 1692e(2)(A) and 1692e(3), are at issue here.²

4.1.1 15 U.S.C. 1692e(2)(A)

A debt collector may not falsely represent "the character, amount, or legal status of any debt." 15 U.S.C. § 1692e(2)(A). Like the FDCPA, the WCA was enacted to protect consumers from unfair business practices, and is liberally construed to this effect. Wis. Stat. § 421.102(1) ; Kett v. Comm. Credit Plan, Inc. 228 Wis.2d 1, 18, 596 N.W.2d 786 (1999) ; Credit Acceptance Corp. v. Chao Kong , 344 Wis.2d 259, 263, 822 N.W.2d 506 (Ct. App. 2012). Under the WCA, a debt collector must give a debtor notice of the right to cure and wait 15 days before accelerating a debt or commencing an action to collect on the debt. Wis. Stat. § 425.105(1).

Defendants first argue that LVNV had the right to sue Boerner because Boerner no longer had a "right to cure" where the credit card balance was entirely past due and fully owed. (Docket # 39 at 7). Defendants refer to Rosendale State Bank v. Schultz , which holds that if "the customer defaults on an entire obligation, there is no right to cure." 123 Wis.2d 195, 199, 365 N.W.2d 911 (Ct. App. 1985). Boerner counters that the amount was not "fully owed" because Boerner had been permitted to make partial payments on the account, and, as far as he knew, would be allowed to make these payments for years to come, until the debt was paid off. (Docket # 46 at 3–4).

Boerner's position is supported by prior decisions in this district. In Johnson v. LVNV Funding , the court distinguished debts that are ...