Zelner v. Atg Credit, LLC

Sandra Zelner, Plaintiff, v. ATG Credit, LLC, Defendant.

Case No: 17 C 8007

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

February 12, 2019

Judge Ronald A. Guzmán

MEMORANDUM OPINION AND ORDER

For the reasons stated below, ATG's motion for summary judgment [72] is granted and Plaintiff's cross-motion for summary judgment [75] is denied. ATG's Rule 11 motion [12] and request for attorney's fees under 28 U.S.C. § 1927 are denied. Civil case terminated.

STATEMENT

Facts

The facts of this case are largely undisputed. In November 2012, Plaintiff underwent a medical procedure at Chicago Lake Shore Medical Associates, Ltd. ("CLS"), for which CLS charged Plaintiff $20.00. When CLS billed Plaintiff for the $20.00, she failed to pay. The contract Plaintiff signed with CLS at the time she received the medical services states that "in the event an unpaid balance (over 90 days past due) is placed in collections with any third party collection agency, a collection fee will be added to the total amount due and owed by me." CLS incurred costs to collect the amount owed by Plaintiff and assessed a $4.00 collection fee pursuant to the contract between the parties. On July 15, 2015, CLS retained ATG Credit, LLC ("ATG") to collect the $24.00 owed by Plaintiff. To date, CLS has not paid any amount to ATG for its collection activity related to Plaintiff's account. In the instant action, Plaintiff sues ATG for alleged violations of the Fair Debt Collection Practices Act ("FDCPA").

Motion for Summary Judgment Standard

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 also Shell v. Smith, 789 F.3d 715, 717 (7th Cir. 2015). To survive summary judgment, the nonmoving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp, 475 U.S. 574, 586 (1986). Instead, it must "establish some genuine issue for trial such that a reasonable jury could return a verdict in her favor." Gordon v. FedEx Freight, Inc., 674 F.3d 769, 772-73 (7th Cir. 2012). The Court gives the nonmoving party "the benefit of conflicts in the evidence and reasonable inferences that could be drawn from it." Grochocinski v. Mayer Brown Rowe & Maw, LLP, 719 F.3d 785, 794 (7th Cir. 2013). The Court must not make credibility determinations or weigh conflicting evidence. McCann v. Iroquois Mem'l Hosp., 622 F.3d 745, 752 (7th Cir. 2010).

Analysis

FDCPA Claim

Plaintiff alleges that ATG violated the FDCPA by misrepresenting the amount of the debt when it "inflated the balance of a debt with unauthorized fees"; threatening to take an action not permitted by law when it "threatened to collect unauthorized collection fees"; and attempting to collect an amount not expressly authorized by any agreement when it sought to "collect additional fees on a medical debt without authorization to do so." (Compl., Dkt. # 1, ¶¶ 33-35.)

At the Court's direction, the parties entered into stipulated facts prior to briefing the summary judgment motions, and agreed to the following:

1. ATG did not add the collection fee to Plaintiff's account;

2. CLS added the collection fee to Plaintiff's account;

3. CLS did so pursuant to the contract Plaintiff signed.

(Stip. Facts, Dkt. # 67, ¶¶ 6, 7, 8, 11.) ATG contends that these three agreed-upon facts demonstrate that it did not violate the FDCPA as alleged.

Plaintiff first asserts that she "did not specifically agree to pay collection fees above and beyond the outstanding amount of the debt." This is incorrect. As already noted above, paragraph 15 of the contract between Plaintiff and CLS expressly states: "in the event an unpaid balance (over 90 days past due) is placed in collections with any third party collection agency, a collection fee will be added to the total amount due and owed by me." Not only did ATG not "inflate" the amount due, which was set by CLS prior to handing over the debt to ATG for collection, but it also did not threaten to collect unauthorized collection fees. The language of the contract is clear - Plaintiff authorized CLS to add a collection fee to the amount due "and [will be] owed by [Plaintiff]." Here, that amount was $4.00 and that is what ATG sought on CLS's behalf.

Plaintiff's reliance on Bradley v. Franklin Collection Services, Inc., 739 F.3d 606 (11th Cir. 2008), is misplaced. In that case, the court found that the addition by the original creditor of a set amount that had been negotiated between it and the debt collector (33 ? percent of the debtor's balance) violated the FDCPA because the debtor's contract with the creditor provided that the debtor would "pay all costs of collection, including a reasonable attorney's fee" in the event of non-payment. The Bradley court concluded that the amount added by the creditor constituted liquidated damages and did not represent the "costs of collection, including areasonable attorney's fee" to which the plaintiff had agreed. Bradley, 739 F.3d at 609-10 ("[The plaintiff] agreed to pay the actual costs of collection; his contractual agreement with [the medical provider-creditor] did not require him to pay a collection agency's percentage-based fee where the fee did not correlate to the costs of collection."). Accordingly, the Bradley court found that both the creditor and third-party debt collector had violated the FDCPA. Here, however, ATG sought on behalf of CLS to collect the amount due plus "a collection fee," which here was $4.00, and which Plaintiff expressly authorized when she signed the contract with CLS. The language of Plaintiff's contract with CLS does not require that the "collection fee" represent the actual costs of collection. Thus, Bradley is inapposite.

Nor does Plaintiff's citation to Bass v. I.C. Systems, Inc., 316 F. Supp. 3d 1047 (N.D. Ill. 2018), alter this Court's conclusion. In Bass, the court addressed a similar factual situation to the one at bar, and stated as follows:

Though the parties' dispute arises in the context of Bass's FDCPA claims, it is largely a dispute over the meaning of the contract: whether Bass, through the T-Mobile contract, authorized the fee in the manner that it was calculated.

The contract itself is spare on details: "We may use a collection agency to collect past due balances and you agree to pay collection agency fees. . . . Late payment, non-payment, or collection agency fees are liquidated damages intended to be a reasonable advance estimate of our costs resulting from late payments and non-payments by our customers; these costs are not readily ascertainable and are difficult to predict or calculate at the time that these fees are set." Under this contractual term, ICS would be in the clear if it could establish that the $79.35 corresponded to a "collection agency fee[]" that was "a reasonable advance estimate of [T-Mobile's] costs[.]" But the Court cannot resolve this dispute, because neither party has clarified how T-Mobile calculated the collection agency fee. ICS introduces one document that states that T-Mobile determined the fee "based on the outstanding balance" of Bass's debt. But this information does not resolve whether a reasonable jury could find that a nearly $80 fee was a "reasonable advance estimate of [T-Mobile's] costs." In short, the record is insufficient to entitle either party to summary judgment on this basis.

Id. at 1053 (internal citations and footnotes omitted). Bass is distinguishable in that the contract language there expressly stated that the plaintiff agreed to pay "collection agency fees." Because the court found that a factual dispute existed as to whether the fee that was charged constituted a reasonable estimate of the collection agency fees, as provided in the contract, it denied summary judgment. Here, however, Plaintiff did not agree to pay the collection agency fees but "a collection fee," which was not tied to the actual costs of collection.

For this same reason, Plaintiff's assertion that ATG violated the FDCPA by conveying inaccurate information to a credit-reporting agency is unconvincing. Although not entirely clear,it appears Plaintiff is contending that because ATG cannot provide information as to what the actual collection costs are, then it must have communicated false or misleading information to the credit-reporting agency. As an initial matter, Plaintiff did not allege a claim for falsely reporting information to a credit reporting agency. Moreover, the Court has already established that actual collection costs are not at issue in this case. Finally, Plaintiff has not pointed to any evidence that the amount that was reported to the credit-reporting agency was different from the amount ATG stated was due and owing. Accordingly, this argument fails.

ATG's Request for Sanctions

ATG moves for sanctions under Federal Rule of Civil Procedure 11 and 28 U.S.C. § 1927 on the ground that the instant suit is frivolous. Plaintiff filed this action on November 6, 2017. On December 12, 2017, ATG served a Rule 11 motion upon Plaintiff, detailing why it believed Plaintiff's complaint was baseless. "Under Rule 11, a district court may impose sanctions on a lawyer who submits frivolous legal arguments--those not warranted 'by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law.'" Hollars v. Roadhouse Host, LLC, No. 18 C 1142, 2019 WL 367988, at *3 (S.D. Ind. Jan. 30, 2019) (citations omitted). ATG's motion in relevant part states:

ATG's documentation demonstrates that Plaintiff's FDCPA claim, as alleged, lacks merit, as ATG did not assess the collection fee alleged in Plaintiff's Complaint, and the FDCPA does not prohibit a debt collector from collecting a fee that was lawfully charged by a creditor prior to its assigning the debt for collection. See 15 U.S.C. §

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