Parente v. Fay Servicing

TINA M. PARENTE Plaintiff, v. FAY SERVICING, LLC Defendant.

Case No. 1:19-cv-04138

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

March 12, 2020

Judge Marvin E. Aspen

MEMORANDUM OPINION & ORDER

Marvin E. Aspen, District Judge:

Plaintiff Tina M. Parente brought this suit against defendant Fay Servicing, LLC under the Fair Debt Collection Practices Act ("FDCPA") pursuant to 15 U.S.C. §§ 1692d, 1692e and 1692f, the Telephone Consumer Protection Act ("TCPA") pursuant to 47 U.S.C. § 227, and Section 524(a)(2) of the Bankruptcy Code. (First Am. Compl. ("FAC") (Dkt. No. 30) ¶ 1.) Presently before us is Fay's motion to dismiss for failure to state a claim and motion to dismiss the claim under the Bankruptcy Code for lack of jurisdiction. (Mot. to Dismiss First Am. Compl. ("Mot.") (Dkt. No. 34).) For the reasons set forth below, we deny Fay's motion to dismiss the claims under the FDCPA and the TCPA, and grant Fay's motion to dismiss the claim under the Bankruptcy Code. We deny Fay's motion to dismiss the Bankruptcy Code claim for lack of subject matter jurisdiction.

BACKGROUND

On November 6, 2019, Parente filed her First Amended Complaint against Fay for violations under the FDCPA, the TCPA, and the Bankruptcy Code. (FAC ¶ 1.) We draw the following allegations from Parente's First Amended Complaint and accept them as true for the purposes of the present motion.

Parente was the borrower of a mortgage against her personal residence in Burbank, IL. (FAC ¶¶ 8, 9.) The mortgage originated in 2005 and went into default in 2016. (FAC ¶¶ 8, 11.) On March 31, 2017, Parente filed a Chapter 7 bankruptcy petition in the Northern District of Illinois. (FAC ¶ 12.) On September 13, 2017, the Bankruptcy Court granted Parente an Order of Discharge, which discharged Parente's mortgage. (FAC ¶ 16.) Fay acquired servicing rights of Parente's mortgage following the discharge. (FAC ¶ 22.)

Parente alleges that Fay sent dunning letters to Parente in an attempt to collect the discharged mortgage. (FAC ¶¶ 25-29.) First, Parente received a dunning letter from Fay dated March 11, 2019 listing an amount due of $64,571.30 and a payment due date of April 1, 2019. (FAC ¶ 26.) Next, Parente received a dunning letter from Fay dated April 10, 2019 listing an amount due of $67,809.46 and a payment due date of May 1, 2019. (FAC ¶ 27.) Fay's dunning letters included a detachable payment coupon instructing Parente to return the coupon with payment to Fay. (FAC ¶ 28.) Parente received other similar letters from Fay demanding immediate payment towards the mortgage. (FAC ¶ 29.)

Parente also alleges that Fay called Parente's cellphone attempting to collect the discharged mortgage. (FAC ¶¶ 25, 30.) Between December 2018 and November 2019, Fay placed numerous phone calls to Parente's cellphone. (FAC ¶ 31.) Parente revoked consent to be contacted on her cellphone. (FAC ¶ 32.) In the calls that Parente answered, Parente heard "an approximate 3 second pause" before she got connected to a representative from Fay attempting to collect the discharged mortgage. (FAC ¶ 34.)

LEGAL STANDARDS

A Rule 12(b)(1) motion challenges the court's subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1). In determining whether jurisdiction exists, we may "look beyond the jurisdictional allegations of the complaint and consider any evidence submitted on the issue." Farnik v. F.D.I.C., 707 F.3d 717, 721 (7th Cir. 2013). A plaintiff faced with a 12(b)(1) motion to dismiss bears the burden of establishing that the jurisdictional requirements have been met. Lujan v. Def. of Wildlife, 504 U.S. 555, 561, 112 S. Ct. 2130, 2136 (1992); Farnik, 707 F.3d at 721.

A Rule 12(b)(6) motion is meant to "test the sufficiency of the complaint, not to decide the merits" of the case. Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990). Specifically, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974 (2007)). While a complaint need not give "detailed factual allegations," it must provide more than "labels and conclusions, and a formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 545, 127 S. Ct. at 1964-65; Killingsworth v. HSBC Bank Nev., N.A., 507 F.3d 614, 618-19 (7th Cir. 2007). In evaluating a motion to dismiss, we must accept all well-pleaded allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. Cole v. Milwaukee Area Tech. Coll. Dist., 634 F.3d 901, 903 (7th Cir. 2011).

ANALYSIS

I. Fair Debt Collection Practices Act Claims

Parente alleges that Fay's efforts to collect her discharged mortgage violated FDCPA Sections 1692d, 1692e and 1692f. (FAC ¶ 52.) We consider each of these claims in turn.

a. Section 1692d

Parente alleges that Fay violated FDCPA §§ 1692d and d(5) "by repeatedly or continuously calling Plaintiff's cellular phone, causing it to ring and engaging Plaintiff in multiple conversations" regarding the collection of mortgage, despite Fay knowing that the mortgage was discharged. (FAC ¶ 53.)

"A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt." 15 U.S.C. § 1692d. Section 1692d(5) prohibits a debtor from "[c]ausing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number." 15 U.S.C. § 1692d(5). "The Seventh Circuit has not articulated a standard for evaluating § 1692d claims." Allen v. Bank of Am., N.A., No. 11 C 9259, 2012 WL 5412654, at *7 (N.D. Ill. Nov. 6, 2012). "Ordinarily, whether conduct harasses, oppresses, or abuses [under § 1692d] will be a question for the jury." Allen, 2012 WL 5412654, at *7 (citing Jeter v. Credit Bureau, Inc., 760 F.2d 1168, 1179 (11th Cir.1985)). "[W]ithout the specific communications between [plaintiff] and [defendant] (and without improperly subjecting the complaint to a fact-pleading level of detail), that is a determination the [c]ourt cannot yet make [at the motion to dismiss stage]." Gritters v. Ocwen Loan Servicing, LLC, No. 14 C 00916, 2014 WL 7451682, at *6 (N.D. Ill. Dec. 31, 2014).

At the motion to dismiss stage, courts have permitted cases to proceed where plaintiff asked defendant to stop calling and/or plaintiff received multiple calls within a short period of time. See Hayes v. Receivables Performance Mgmt., LLC, No. 17-CV-1239, 2018 WL 4616309, at *5 (N.D. Ill. Sept. 26, 2018) (denying motion to dismiss where plaintiff demanded defendant to stop calling and informed defendant that this was the wrong number, but Defendant continuedto call at least twenty times, sometimes multiple times a day); Bruner v. AllianceOne Receivables Mgmt., Inc., No. 15 C 9726, 2017 WL 770993, at *2 (N.D. Ill. Feb. 28, 2017) (denying motion to dismiss where plaintiff did not ask defendant to stop calling but allegedly received at least eleven phone calls over a six-week period).

In the present case, Parente alleged that she received "numerous phone calls" from Fay over eleven months, including several calls after Parente asked Fay to stop contacting her. (See FAC ¶¶ 31, 32; Plaintiff's Response to Motion to Dismiss First Amended Complaint ("Pl. Resp.") (Dkt. No. 43) at 3.) In addition, Parente alleged that Fay knows Parente's mortgage was discharged in bankruptcy but continued calling anyway. (See FAC ¶¶ 30, 53.) As in Hayes and Bruner, these allegations state a plausible claim under Sections 1692d and d(5) and we therefore deny Fay's motion to dismiss.

b. Sections 1692e and 1692f

Parente alleges that Fay's attempts to collect her discharged mortgage violated FDCPA §§ 1692e and 1692f. (FAC ¶¶ 54-62.) Section 1692e prohibits a debt collector from "us[ing] any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692e. Section 1692f prohibits a debt collector from "us[ing] unfair or unconscionable means to collect or attempt to collect any debt." 15 U.S.C. § 1692f.

1) Effect of the bankruptcy disclaimer

Fay argues that the collection letters sent to Parente include bankruptcy disclaimers and were for informational and compliance purposes and not an attempt to collect a debt, thus not triggering §§ 1692e and 1692f of the FDCPA.

Whether a communication from a debt collector is made "in connection with the collection of any debt" is a "question of objective fact, to be proven like any other fact." Ruth v.Triumph P'ships, 577 F.3d 790, 798 (7th Cir. 2009). Courts consider three factors as a whole: (1) "the absence of a demand for payment;" (2) "[t]he nature of the parties' relationship;" and (3) "the purpose and context of the communications—viewed objectively." Gburek v. Litton Loan Servicing LP, 614 F.3d 380, 384-85 (7th Cir. 2010). At the motion to dismiss stage, numerous courts have found that communications could be viewed in connection with the collection of a debt despite the inclusion of a bankruptcy disclaimer. See, e.g., Hamilton v. LoanCare, LLC, No. 19 C 0554, 2019 WL 3973132, at *3-4 (N.D. Ill. Aug. 22, 2019) (holding that communications could be debt collection activity despite the inclusion of a bankruptcy disclaimer and the absence of a demand for payment); Radney v. Bayview Loan Servicing, LLC, No. 15-CV-9380, 2016 WL 3551677, at *3 (N.D. Ill. June 30, 2016) (same); Price v. Seterus, Inc., No. 15 C 7541, 2016 WL 1392331, at *4 (N.D. Ill. Apr. 8, 2016) (denying motion to dismiss, notwithstanding the inclusion of a bankruptcy disclaimer).

Fay in its Motion to Dismiss First Amended Complaint attached copies of the two collection letters identified in Parente's First Amended Complaint paragraphs 26 and 27. (Mot. Exhibit A (Dkt. No. 34-1).)¹ The...