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Berg v. McCalla Raymer Leibert Pierce, LLC, No. 19 C 5113 | Casetext Search + Citator



Lois I. Berg and Robert D. Berg ( the “ Bergs ” ) deliver this carry by in opposition to McCalla Raymer Leibert Pierce, LLC ( “ MRLP ” ) beneath the Truthful Debt Assortment and Practices Act, 15 U.S.C. § 1692, et seq ( “ FDCPA ” ). MRLP moved to dismiss for failure to state a declare. R. 7. For the explanations that observe, MRLP ‘s gesticulate is denied.


A rule 12 ( boron ) ( 6 ) movement challenges the “ sufficient of the grievance. ” Berger v. Nat. Collegiate Athletic Assoc., 843 F.3d 285, 289 ( seventh Cir. 2016 ). A grievance should present “ a brief and clearly instruction of the declare exhibiting that the advocate is entitled to aid, ” Fed. R. Civ. P. 8 ( a ) ( 2 ), ample to offer defendant with “ truthful discover ” of the declare and the idea for it. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 ( 2007 ). This commonplace “ calls for greater than an unadorned, the-defendant-unlawfully-harmed-me accusation. ” Ashcroft v. Iqbal, 556 U.S. 662, 678 ( 2009 ). Whereas “ detailed precise allegations ” usually are not required, “ labels and conclusions, and a formulaic course session of the weather of a explanation for army motion won’t do. ” Twombly, 550 U.S. at 555. The cost should “ comprise ample factual depend, accepted as true, to ‘state a declare to aid that’s believable on its face. ‘ “ Iqbal, 556 U.S. at 678 ( quoting Twombly, 550 U.S. at 570 ). “ ‘ A declare has facial plausibility when the plaintiff pleads precise content material that enables the courtroom to attract the truthful inference that the defendant is answerable for the misbehave alleged. ‘ “ Boucher v. Fin. Sys. of Inexperienced Bay, Inc., 880 F.3d 362, 366 ( seventh Cir. 2018 ) ( quoting Iqbal, 556 U.S. at 678 ). In making use of this commonplace, the Courtroom accepts all well-pleaded details as true and attracts all cheap inferences in want of the non-moving social gathering. Tobey v. Chibucos, 890 F.3d 634, 646 ( seventh Cir. 2018 ).


This casing includes a state courtroom foreclosures motion filed by MRLP associated to a residence in Northbrook, Illinois ( the “ Property ” ). In response to the grievance, the Property is inhabited by the Bergs and owned by the Bergs and their daughter Lauren Berg ( “ Lauren ” ) as joint tenants. R. 1 ¶¶ 3, 4, 13. On April 7, 2004, Lauren—who just isn’t a celebration to this lawsuit—borrowed cash in membership to refinance mortgage lend debt on the property. She executed a promissory word within the complete of $ 220,000 that lapp day ( the “ Observe ” ). Id. ¶¶ 12-13 and Ex. 1. To safe fee of the Observe, Lauren granted a coetaneous mortgage lien on her curiosity within the Property ( such mortgage spleen, the “ mortgage, ” and the Observe and Mortgage collectively, the “ Mortgage ” ). Id. ¶ 12 and Ex. 2. The Bergs usually are not events to the Mortgage and didn’t borrow cash or execute the Observe or Mortgage. Id. ¶ 15 ; see additionally id., Exs. 1 and a pair of. The Mortgage is now owned by Deutsche Financial institution Nationwide Belief Firm, as regent for residential Asset Securitization Belief 2004-IP2, Mortgage Move-By means of Certificates Collection 2004-IP2 ( “ Deutsche Financial institution ” ). Id. ¶ 14. Lauren didn’t make funds on the Mortgage, and on November 5, 2018, MRLP filed a ailment to foreclose mortgage in submit courtroom, making an attempt to gather on the Mortgage on behalf of and as attorneys for Deutsche Financial institution ( such motion, the “ Foreclosures Motion, ” and such grievance, the “ Foreclosures Grievance ” ). Id. ¶ 17 and Ex. 3. The Foreclosures Grievance names Lauren and the Bergs ( amongst others ) as defendants, however lists solely Lauren as an individual “ claimed to be personally answerable for insufficiency except private legal responsibility is discharged in a Chapter go or in any other case launched. ” Id. at Ex. 3 ¶ 3 ( o ). And it seeks to promote the Property at public sale so as to pay the Mortgage, a judgment of foreclosures and sale of the Property, and a judgment for lawyer ‘s charges, prices and bills. Id. ¶ 18 and Ex. 3. The Foreclosures Grievance apart from seeks possession of the Property and the selection to nominate a recipient. Id. In the course of the foreclosures proceedings, MRLP moved for nonpayment and for judgment for foreclosures and sale. Id. ¶ 20 and Exs. 4 and 5. MRLP apart from moved to nominate a deal army officer and for attorneys charges. Id. ¶ 20 and Exs. 6 and seven. In transferring for judgment for foreclosures and sale, MRLP represented “ [ thyroxine ] hat the rights and pursuits of all Defendants within the topic property are inferior to the spleen of the Plaintiff. ” Id. ¶ 26.

On February 21, 2019, the specific courtroom entered a judgment for foreclosures and sale on the Property. Id. ¶ 21 and Ex. 8. The Bergs retained advocate to characterize their pursuits within the Foreclosures Motion. Id. ¶ 22. in the end, rede was profitable in having the judgment in opposition to the Bergs vacated. However the Foreclosures Motion stays pending and the Bergs have incurred authorized charges and prices of $ 2,500 for the office related to it. Id. ¶¶ 22-23. The Bergs allege that MRLP ‘s actions in cost and prosecuting the Foreclosures Motion violate the FDCPA as a result of : ( 1 ) the Foreclosures Motion “ falsely implies that [ MRLP ] has authorized recourse to gather the debt ” in that not one of the judgment of foreclosures and sale, entry of a judgment for lawyer ‘s charges, prices and bills, possession and appointment of a receiver had been legally attainable for the reason that Bergs weren’t obligated on the word and nor was their pastime within the Property nationwide to any spleen ( together with the mortgage ), id. ¶¶ 28-29 ; and ( 2 ) the Mortgage doesn’t authorize MRLP to gather or try to gather from the Bergs, id. ¶ 29. In early phrases, the Bergs allege that the filings within the Foreclosures Motion violate the FDCPA as a result of solely Lauren ‘s curiosity within the place is at subject per the Mortgage. MRLP moved to dismiss the cost for failure to state a declare. R. 7. Below Illinois legislation, a joint tenant might mortgage his curiosity in place with out the settle for or cognition of any early joint tenant, and with out severing the roast occupancy. Harms v. Sprague, 473 N.E.2nd 930, 933-34 ( In poor health. 1984 ).


The FDCPA prohibits abusive, misleading, or unfair debt assortment practices. 15 U.S.C. § 1692 et seq. To state a declare beneath the FDCPA, a plaintiff broadly should allege that : ( 1 ) he’s a “ client ” inside the intend of the FDCPA ; ( 2 ) the “ debt ” at subject arises out of a transaction entered into primarily for private, household or household functions ; ( 3 ) the defendant gather or making an attempt to gather the debt is a “ debt collector ” inside the entail of the FDCPA ; and ( 4 ) the defendant violated, by act or omission, one of many FDCPA ‘s provisions. Heintz v. Jenkins, 514 U.S. 291, 293 ( 1995 ) ; Loja v. Foremost Road Acquisition Corp., 906 F.3d 680, 683 ( seventh Cir. 2018 ). right here, the Bergs invoke Sections 1692e and 1692e ( 2 ) ( A ), which collectively bar debt collectors from utilizing “ any false, misleading, or deceptive illustration or means in reference to the solicitation of any debt ” with see to the debt ‘s “ character, come, or authorized situation. ” 15 U.S.C. § 1692e, east ( 2 ) ( A ). The Bergs apart from contend that MRLP violated Sections 1692f and 1692f ( 1 ), which prohibit the gathering of or try to gather any are available reference to a debt that’s not “ expressly licensed by the settlement creating the debt or permitted by police. ” Id. § 1692f, f ( 1 ). MRLP argues that dismissal is correct as a result of : ( 1 ) the Bergs usually are not “ shoppers ” inside the intend of the FDCPA ; and ( 2 ) the courtroom filings within the Foreclosures Motion usually are not actionable beneath the FDCPA. R. 8 ; R. 15. The Courtroom addresses every argument in flip. MRLP doesn’t argue that it’s not a debt collector inside the entail of the FDCPA. The Courtroom notes that in Heintz v. Jenkins, 514 U.S. 291 ( 1995 ), the US Supreme Courtroom held that the FDCPA applies to attorneys who “ ‘repeatedly ‘ rent in consumer-debt-collection bodily course of, even when that exercise consists of litigation. ” 514 U.S. at 299. And whereas the Supreme Courtroom just lately held in Obduskey v. McCarthy & Holthus, LLP, 139 S. Ct. 1029 ( 2019 ) that companies ( together with jurisprudence companies ) engaged in not more than non judicial foreclosures proceedings usually are not “ debt collectors ” beneath the FDCPA apart from the restricted operate of 15 U.S.C. § 1692f ( 6 ), that holding expressly didn’t have an effect on circumstances involving judicial foreclosures proceedings as right here. See Obduskey, 139 S. Ct. at 1039 ( “ whether or not those that judicially implement mortgages fall inside the telescope of the first definition is a query we are able to go away for an additional day. “ ).

I. Whether or not the Bergs are “Customers”

MRLP first contends that the Bergs can’t deliver this courtship as a result of neither was a celebration to the Observe or Mortgage at subject within the Foreclosures Motion, and frankincense neither is a “ client ” inside the that means of the legislative act. However not all the FDCPA ‘s sections require plaintiffs to be “ shoppers. ” See, e. g., Todd v. Collecto, Inc., 731 F.3d 734, 737-38 ( seventh Cir. 2013 ) ( “ every provision of the FDCPA should be analyzed individually to find out who falls inside the oscilloscope of its auspices ” ). And neither of part 1692e or Part 1692f ‘s protections are so restricted. See O’Rourke v. Palisades Acquisition XVI, LLC, 635 F.3d 938, 941, 943 ( seventh Cir. 2011 ) ( part 1692e apart from protects “ those that have a particular relationship with the buyer ” ) ; Todd, 731 F.3d at 738 ( “ anybody aggrieved by a debt collector ‘s unfair and conscienceless assortment practices can fall inside [ Section 1692f ‘s ] zone of curiosity ” ( stress added ) ). nonetheless, the Courtroom needn’t outline the parameters of Sections 1692e and 1692f as a result of the Bergs are “ shoppers ” beneath the FDCPA certainly lengthy as MRLP alleged by the Foreclosures Motion that they’re obligated to pay a debt, tied if they don’t seem to be really obligated to take action. See 15 U.S.C. § 1692a ( 3 ) ( defining “ client ” as “ any pure individual obligated or allegedly obligated to pay any debt ” ( vehemence added ) ) ; see additionally Schlosser v. Fairbanks Capital Corp., 323 F.3d 534, 538 ( seventh Cir. 2003 ) ( stating that “ client ” “ extends the obtain of the [ FDCPA ] to assortment actions with out respect as to if the debt sought to be collected is definitely owed ” ). To that conclusion, MRLP apart from argues that the Bergs ‘ claims fail as a result of the grievance doesn’t level to something that MRLP alleged within the Foreclosures Motion that they ( versus Lauren ) owe. MRLP contends that the Bergs ‘ bearing as defendants within the Foreclosures Motion doesn’t by itself set up that MRLP alleged that they owed any obligation. And that is right ; in Illinois, an individual could also be named a celebration to a foreclosures authorized motion totally as a result of they reside on the property at emergence. See 735 ILCS 5/15-1501 ( bel ) ( 1 ) ( Illinois Mortgage Foreclosures Legislation stating that “ individuals having a possessory curiosity within the mortgage actual property of the realm ” are “ permissible events ” in a foreclosures proceed ). MRLP apart from factors out that the Foreclosures Grievance particularly states that solely Lauren could also be personally answerable for any lack. That is apart from true, however not dispositive, as a result of the Foreclosures Motion seeks foreclosures on property collectively owned by the Bergs and Lauren, implying that such aid is legally gettable ( affecting the Bergs ‘ pursuits ) when it’s not. That’s, a minimum of if the Bergs and Lauren are joint tenants within the Property as alleged, however alone Lauren is known as on the Mortgage. As mentioned infra, that the stand-in requested is a foreclosures and sale moderately of a arrant financial solicitation is of no consequence to the Courtroom ‘s evaluation.

To get round this, MRLP claims that regardless of the allegations of articulation occupancy, in truth, the Bergs transferred their pursuits within the Property to Lauren by a depart declare deed executed the lapp day because the Observe and Mortgage, and consequently that Lauren is and was the only real proprietor of the Property in any respect related occasions. However MRLP didn’t elevate this publish till its reply temporary and admits that the discontinue declare deed might not have been efficient. The query of the Bergs ‘ possession pursuits is extra by rights resolved at compendious judgment. Accepting as true all well-pleaded details and drawing all cheap inferences in favor of the Bergs, the Courtroom concludes that the Bergs have credibly alleged that they’re “ shoppers ” inside the consider of the FDCPA.

II. Whether or not the Foreclosures Motion Filings are Actionable

alternatively, MRLP contends that dismissal is correct as a result of O’Rourke v. Palisades Acquisition XVI, LLC, 635 F.3d 938 ( seventh Cir. 2011 ) established that the FDCPA doesn’t lengthen to specific motor lodge filings. However opposite to MRLP ‘s theatrical efficiency, the courtroom in O’Rourke expressly said that “ nothing within the opinion states or needs to be learn to handle whether or not the [ FDCPA ] applies to the complete judicial work. ” O’Rourke, 635 F.3d at 941, n.1. moderately, O’Rourke merely held that filings meant to deceive judges don’t warrant auspices as a result of the FDCPA ‘s “ prohibitions are intelligibly circumscribed to communications directed to the buyer and don’t apply to state judges. ” Id. at 941. moreover, the Seventh Circuit held extra just lately in Marquez v. Weinstein, Pinson & Riley, P. S., 836 F.3d 808 ( seventh Cir. 2016 ) that the FDCPA can regulate specific courtroom pleadings and filings—a minimum of for functions of part 1692e. See Marquez, 836 F.3d at 810 ( agreeing with the “ [ newton ] umerous circuits ” which have already “ concluded that pleadings or filings in courtroom can fall inside the FDCPA ” ). Whether or not a piece 1692f rape could also be premised upon a division of state courtroom submitting is much less clear up. The Seventh Circuit noticed in Bentrud v. Bowman, Heintz Boscia & Vician, P. C., 794 F.3d 871 ( seventh Cir. 2015 ) and Beler v. Blatt, Hasenmiller, Leibsker & Moore, LLC, 480 F.3d 470 ( seventh Cir. 7007 ) that part 1692f ( 6 ), which prohibits “ [ triiodothyronine ] aking or threatening to take any nonjudicial motion to impact exorcism or incapacity of property ” beneath sure circumstances, means that no fortune of part 1692f is relevant to state judicial proceedings. See Bentrud, 794 F.3d at 874-75 ( noting that the phrase “ nonjudicial motion ” “ implies that specific discriminative proceedings are exterior the telescope of § 1692f. “ ) ; see additionally Beler, 480 F.3d at 475 ( “ The deduction [ of § 1692f ( 6 ) ] is that division of state judicial proceedings are exterior the scope of § 1692f. ” ). However neither case squarely held that state judicial proceedings are exterior the scope of part 1692f. accordingly, this Courtroom declines to conclude as a matter of legislation that Part 1692f can by no means apply to conduct throughout division of state discriminative proceedings. See Eul v. Transworld Sys., 2017 WL 1178537, at * 15 ( N.D. In poor health. Mar. 30, 2017 ) ( “ this Courtroom can’t conclude as a matter of legislation that alleged misbehave throughout state judicial proceedings is rarely actionable beneath § 1692f “ ). And since the Courtroom concludes that part 1692e can assist a name based mostly on the like state of matter woo filings, it needn’t do certainly hera. frankincense, judgment of dismissal just isn’t correct totally as a result of the grievance considerations the content material of division of state courtroom filings. Nor does the Courtroom discover that the Bergs ‘ claims are barred as a result of the filings at consequence concern a judicial mortgage foreclosures, and due to this fact a fasten debt. The Seventh Circuit has even to handle the emergence, however the Courtroom is persuaded by the opposite courts on this District and people courts of appeals which have held that judicial mortgage foreclosures proceedings represent “ debt solicitation ” regulated by the FDCPA. See, e. g., Kabir v. Freedman Anselmo Lindberg LLC, 2015 WL 4730053, at * 3 ( N.D. In poor health. Aug. 10, 2015 ) ( “ a foreclosures motion qualifies as debt solicitation ” ) ; see additionally Khan v. OneWest Financial institution, F. S. B., 2017 WL 1344535, at * 7 ( N.D. In poor health. Apr. 12, 2017 ) ( “ mortgage foreclosures might be debt assortment ” ) ; Glazer v. Chase Dwelling Fin. LLC, 704 F.3d 453, 461-63 ( sixth Cir. 2013 ) ( like ) ; Kaymark v. Financial institution of Am., N. A., 783 F.3d 168, 179 ( 3d Cir. 2015 ) ( lapp ) ; Wilson v. Draper & Goldberg, P.L.L.C, 443 F.3d 373, 376 ( 4th Cir. 2006 ) ( initiation of foreclosures proceedings was an attempt to gather “ debt ” beneath the FDCPA ). The Seventh Circuit has made clear that “ an specific demand for fee ” just isn’t required for an bodily course of to have been taken “ in reference to the solicitation of any debt. ” Gburek v. Litton Mortgage Servicing LP, 614 F.3d 380, 385 ( seventh Cir. 2010 ). And a broader learn is smart on this context, as a result of “ [ thymine ] right here might be no harmful doubt that the last word objective of foreclosures is the fee of cash. ” Glazer, 704 F.3d at 463. “ [E]very mortgage foreclosures. .. is undertake for the very objective of acquiring fee on the implicit in debt, both by persuasion ( i. e., forcing a colonization ) or compulsion ( i. e., acquiring a judgment of foreclosures, promoting the house at public sale, and making use of the proceeds from the sale to pay down the excellent debt. ). ” Id. at 461. Absent controlling authority on the contrary, this Courtroom concludes {that a} judicial foreclosures motion qualifies as debt assortment beneath the FDCPA. To search out in any other case “ ‘would create an unlimited loophole within the [ FDCPA ] immunizing any debt from protection if that debt occurred to be secured by an actual property sake ” — a end result which Congress absolutely didn’t intend. Kabir, 2015 WL 4730053, at * 3 ( quoting Wilson, 443 F.3d at 376 ) ; see additionally Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1213 ( eleventh Cir. 2012 ) ( holding in any other case would create a loophole, the sensible resultant function being that the FDCPA “ would apply solely to efforts to gather unbarred, ” and “ [ thyroxine ] hat ca n’t be correctly ” ). Though Obduskey abrogated the choices of the courts of appeals cited right here to the extent that they involved nonjudicial foreclosures, as famous, it expressly didn’t influence circumstances involving judicial foreclosures. See Obduskey, 139 S. Ct. at 1039 ( “ whether or not those that judicially implement mortgages fall inside the telescope of the first coil definition [ of “ debt collector ” ] is a query we are able to go away for an additional day ” ). And MRLP, having didn’t argue Obduskey ‘s potential impingement right here, has waived the problem for functions of this obvious movement.


In sum, the cost sufficiently alleges that by the Foreclosures Motion, MRLP “ falsely characterize [ erectile dysfunction ] ” the “ authorized standing ” of the debt and tried to gather an quantity not “ expressly licensed ” by the Mortgage in misdemeanor of Sections 1692e ( 2 ) ( 6 ) and f ( 1 ). such actions might have served to induce an bumpkinly, however cheap client to repay the invoice so as to reclaim the property the place there was no obligation to do thus, and it’s of no second that it didn’t induce the Bergs to take action right here. Osborn v. J. R. S. -1, Inc., 949 F. Supp. 2nd 807, 812 ( N.D. In poor health. 2013 ) ( “ [ I ] t is irrelevant that [ plaintiff ] clearly knew that she was not answerable for the [ debt ], as the last word query is whether or not ‘the debt collector ‘s communication would deceive or mislead an bumpkinly, however truthful, client. ‘ “ ( quoting Turner v. J. V. D. B. & Assocs., Inc., 330 F.3d 991, 995 ( seventh Cir. 2003 ) ) ). This is sufficient to survive MRLP ‘s movement, which is denied. R. 7. MRLP makes a lot of the truth that the courtroom in Webb v. Legislation Workplace of Ira T. Nevel, LLC, 2016 WL 946962 ( N.D. In poor health. Mar. 14, 2016 ) held that the plaintiff was not a “ client ” in share as a result of the plaintiff acknowledged that she was not personally liable on the promissory word giving rise to the debt at subject. However the courtroom ‘s evaluation on this level involved a special part of the FDCPA ( that’s, Part 1692g ), didn’t have in mind the “ unsophisticated client ” commonplace outlined right here, and isn’t binding on this Courtroom in any casing. — — — — ENTERED :

moral Thomas M. Durkin
United States District Decide Dated : October 30, 2019

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