Burton v. Kohn Law Firm

934 F.3d 572

John H. BURTON, Plaintiff-Appellant,

v.KOHN LAW FIRM, S.C., et al., Defendants-Appellees.

No. 18-2059

United States Court of Appeals, Seventh Circuit.

Argued November 29, 2018

Decided August 9, 2019

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

Paul R. Erickson, Attorney, Lauren Lynn Wick, Attorney, Gutglass, Erickson, Bonville & Larson, S.C., Milwaukee, WI, for Defendant-Appellee Kohn Law Firm, S.C.

David Anthony Ambrosh, Attorney, Kohn Law Firm S.C., Milwaukee, WI, for Defendant-Appellee Unifund CCR Partners, Inc.

Before Flaum, Ripple, and Manion, Circuit Judges.

Ripple, Circuit Judge.

The history of this litigation began in the circuit court for Brown County, Wisconsin. Kohn Law Firm, S.C. ("Kohn"), acting on behalf of Unifund CCR, LLC ("Unifund"), a debt collection agency, brought an action against John H. Burton. Unifund sought to collect from Mr. Burton a debt incurred on a Citibank, N.A. ("Citibank"), credit card account. Mr. Burton denied knowledge of, or any association with, that account.

While that action was pending in state court, Mr. Burton filed the present lawsuit against Kohn in the United States District Court for the Eastern District of Wisconsin. He alleged that, with respect to the same debt, Kohn had violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692 – 1692p, and the Wisconsin Consumer Act ("WCA"), Wis. Stat. §§ 421–427, by filing the Wisconsin action against Mr. Burton without first providing him notice of his right to cure the default.

The Wisconsin state court later dismissed Kohn’s action against Mr. Burton on the basis of Mr. Burton’s denial that he was the individual who had incurred the underlying debt. Mr. Burton then amended his complaint in this federal action to add Unifund as a defendant. Following cross-motions for summary judgment by the parties, the magistrate judge, sitting as the district court, entered judgment in favor of Kohn and Unifund.¹ The district court held that Mr. Burton could not proceed on his FDCPA or WCA claims because he had failed to present sufficient evidence that the debt incurred on the Citibank account was for personal, family, or household purposes and therefore a "consumer debt." Mr. Burton now challenges that determination.

We agree with the district court. On the record before us, Mr. Burton has not come forth with sufficient evidence that the debt in question is a consumer debt. Accordingly, we affirm the judgment of the district court.²

IBACKGROUND

On February 17, 2015, Kohn, on behalf of Unifund, brought a lawsuit against Mr. Burton in the Circuit Court of Brown County, Wisconsin. Kohn claimed that Mr. Burton had failed to make payments on a credit agreement with Citibank. In his answer, Mr. Burton stated, "I have never had any association with Unifund CCR, LLC in the past and do not know who you are or what you are talking about, so I strongly dispute this debt, with emphasis." ³

He also asserted counterclaims against Unifund, alleging that he had been " ‘ambushed’ by [Unifund’s] Summons and Complaint" and that he "did not have any association with Unifund CCR, LLC in the past, prior to this legal action."⁴ Mr. Burton further contended that his "personal information has also been compromised by the State of WI and 3rd party fraud may have occurred" on the account in question.⁵ He asserted as affirmative defenses that Unifund had failed to provide him notice of his right to cure the default prior to filing suit, in violation of Wisconsin Statutes §§ 425.104 and 425.105, and that there was a "Lack of Privity" because he "ha[d] never entered into any contractual or debtor/creditor arrangements" with Unifund.⁶ Furthermore, at an evidentiary hearing on July 6, 2015, Mr. Burton testified that he never had received statements, made payments, or made purchases on the Citibank account.

On May 19, 2016, while the Wisconsin action was still pending, Mr. Burton began this litigation in the district court. He alleged that, "[t]o the extent that Burton entered into a credit agreement with Citibank, NA, such agreement was entered into for personal, family or household purposes."⁷ He claimed that, by failing to provide written notice of his right to cure the default on the Citibank agreement before bringing the state court action, Kohn had violated the FDCPA, 15 U.S.C. §§ 1692d and 1692e, and the WCA, Wis. Stat. § 427.104(1)(h) and (1)(j).

On September 8, 2016, the state court conducted a hearing on a motion by Unifund to dismiss Mr. Burton’s counterclaims. In response to a question from the court, Mr. Burton’s counsel confirmed that his "client ha[d] testified under oath that he’s not the John H. Burton that they are claiming had this account."⁸ Based on this information, the state court immediately dismissed Unifund’s claims and Mr. Burton’s counterclaims without prejudice. Mr. Burton then amended his federal complaint, adding Unifund as a defendant in this action. Kohn, Unifund, and Mr. Burton then filed cross-motions for summary judgment.

On April 13, 2018, the district court decided the parties’ cross-motions. First, the court denied Mr. Burton’s motion for summary judgment. Noting that "the FDCPA does not protect all obligations, but only those involving ‘consumer’ debt," the court held that Mr. Burton had not established that the underlying debt was a consumer debt.⁹ The court observed that, under the FDCPA, a consumer debt arises out of a transaction that is "primarily for personal, family, or household purposes."¹⁰ Similarly, the WCA only protects "customers," defined as persons "who seek[ ] or acquire[ ] real or personal property, services, money or credit for personal, family, or household purposes."¹¹

While continuing to maintain that he did not know anything about the debt in question, Mr. Burton attempted to demonstrate that the Citibank debt was incurred for "personal, family, or household purposes." In this respect, he submitted evidence that: (1) Kohn and Unifund described themselves as debt collectors; (2) the billing statements showed that the charges on the credit card were for personal, family, and household use; (3) the billing statements were addressed to Mr. Burton personally at his residence; and (4) in an email, a Citibank employee described the underlying account as a "consumer account."¹² The district court nevertheless determined that this evidence was insufficient to establish that the underlying debt was a consumer debt. The court observed that the defendants’ status as debt collectors did not establish that the particular debt in question here necessarily was consumer debt. Nor did the fact that the defendants sued Mr. Burton personally or that they repeatedly included FDCPA disclaimers in their communications to him establish that the debt was a consumer debt. The billing statements sent to Mr. Burton’s residence also did not establish that the debts were consumer debts because individuals often conduct business transactions at their home. Finally, the court noted that Mr. Burton admitted that he had testified that he had not applied for and had no knowledge of the transactions on the Citibank account. Viewing the evidence in the light most favorable to the nonmoving party, the court held that Mr. Burton was not entitled to judgment as a matter of law.

The district court then granted Kohn and Unifund’s motions for summary judgment. At the outset of its analysis, the court made clear that Mr. Burton had the burden of establishing that the underlying transactions were consumer transactions. The court noted again that Mr. Burton had disavowed, in sworn testimony, any knowledge of the underlying credit card transactions. Turning to the email from the Citibank employee describing the account as a "consumer account,"¹³ the court ruled that the email statement was inadmissible hearsay and that none of the exceptions to the rule against hearsay applied. The court also determined that the billing statements did "not facially show that the charges were made for personal use."¹⁴ Finally, the court considered Mr. Burton’s repeated assertions that he had no knowledge of, or association with, the Citibank account. Acknowledging that evidence of identity theft can be relevant to establishing the existence of consumer debt, the court nevertheless concluded that Mr. Burton had presented no such evidence in this case. Therefore, the court held that Mr. Burton had "not put forth any admissible evidence that show[ed] a genuine factual dispute regarding whether the debt incurred was for personal, family, or household use."¹⁵ The court accordingly entered judgment for the defendants. Mr. Burton filed a timely notice of appeal.

IIDISCUSSION

In this appeal, Mr. Burton focuses only on the district court’s grant of summary judgment for the defendants. We review de novo a district court’s decision to grant summary judgment. Lewis v. CITGO Petroleum Corp. , 561 F.3d 698, 702 (7th Cir. 2009). Summary judgment is proper "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).

"Thus, to survive summary judgment, the nonmoving party must present evidence sufficient to establish a triable issue of fact on all essential elements of [his] case." Lewis , 561 F.3d at 702. "If there is no triable issue of fact on even one essential element of the nonmoving party’s case, summary judgment is appropriate." Id.

Here, we examine the record in the light most favorable to Mr. Burton and grant him the benefit of all reasonable inferences that may be drawn from the evidence. We will reverse the judgment only if we find a genuine issue concerning any fact that might affect the outcome of the case. We must remember, however, that "[o]nce a party has made a properly-supported motion for summary judgment, the nonmoving party may not simply rest upon the pleadings but must instead submit evidentiary...