Folkerts v. Seterus, Inc.
| Decision Date | 15 March 2019 |
| Docket Number | 17 C 4171 |
| Parties | DENNIS A. FOLKERTS and JANET L. FOLKERTS, Plaintiffs, v. SETERUS, INC., Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
Plaintiffs Dennis and Janet Folkerts sued Defendant Seterus, Inc., alleging that Defendant repeatedly contacted them via mail and phone regarding a debt that had already been discharged in bankruptcy. Plaintiffs claim that these communications violated the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., and the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq. The parties have filed cross-motions for summary judgment. For the following reasons, Plaintiffs' motion and Defendant's motion are granted in part and denied in part.
The following facts are undisputed except where otherwise noted. Plaintiffs are Illinois residents. Defendant is a corporation engaged in servicing real estate loans. Pls.' LR 56.1(a) Stmt. ¶¶ 1-2, ECF No. 58-1; Def.'s LR 56.1(b) Stmt. ¶ 2, ECF No. 68.
In 2009, Plaintiffs obtained a residential property loan in the amount of $417,000, secured by a mortgage. Def.'s LR 56.1(b) Stmt. ¶ 5. On July 27, 2015, Plaintiffs filed for relief from their debts pursuant to Chapter 13 of the Bankruptcy Code. Pls.' LR 56.1(a) Stmt. ¶ 6. The Chapter 13 plan provided that the residence would be surrendered in full satisfaction of the debt, and the debt would be discharged. Id. ¶ 7.
In early February 2016, Defendant began servicing the loan. Def.'s LR 56.1(b) Stmt. ¶ 8. Then, on February 22, 2016, Plaintiffs received a discharge of their debts, including the mortgage loan, from the bankruptcy court. Pls.' LR 56.1(a) Stmt. ¶ 9. Defendant then filed a "Transfer of Claim Other Than For Security" in the bankruptcy case on February 29, 2016. Id. ¶ 10.
In early May 2016, Plaintiffs' bankruptcy attorney, John Reed, sent a letter to Defendant, inquiring whether it would accept a deed to the property in lieu of going through the foreclosure process. Id. ¶ 16. Reed asked Defendant to respond to his office, which Defendant did on June 20, 2016. Id. ¶¶ 16-17; Pls.' Ex. 22, ECF No. 58-24.
Defendant claims that on July 27, 2016, it completed a "discharge review" of Plaintiffs' case and noted that Plaintiffs' bankruptcy included a surrender of the property subject to the mortgage loan.1 Def.'s LR 56.1(a) Stmt. ¶ 10, ECF No. 67. According to Defendant, despite its understanding of this fact, it entered an incorrect code for the bankruptcy into its system. Id. The code it entered, "Code 5," signifies a "standard Chapter 13 bankruptcy where the long-term debt is not discharged (and resumes normal collections)." Id. But the loan should have been designated as "Code 17," which is for properties that have been surrendered and the debt discharged. Id. If the loan had been properly coded, Defendant claims, it would not have initiated contact with Plaintiffs unless they contacted Defendant and asked it to call them back. Id. ¶ 11. Additionally, Defendant explains, it would have sent an update to credit-reporting agencies, reporting the debt discharge with a zero balance and zero scheduled payment. Id.
Instead, on or about August 16, 2016, Defendant sent Plaintiffs a statement reflecting an amount due on the mortgage loan. Pls.' LR 56.1(a) Stmt. ¶ 30; see Pls.' Ex. 7, ECF No. 58-9. The statement claimed that a payment of $24,358.73 was due on September 1, 2016, and that if payment was received after September 16, a late fee of $113.53 would be charged. Pls.' Ex. 7 at 1. The statement further described the outstanding principal and interest rate and reflected a past-due payment of $20,434.68. Id. On the bottom of the first page was a detachable "payment coupon," which Plaintiffs could tear off and send back to Defendant with an enclosed payment. See id. The second page included a number of notices, such as information about how to avoid late-payment charges, request a payoff quote, seek relief for difficulty making payments, and sign up for autopay. See id. at 2.
On the bottom third of the second page, in smaller font, a disclaimer read:
THIS COMMUNICATION IS FROM A DEBT COLLECTOR AS WE SOMETIMES ACT AS A DEBT COLLECTOR. WE ARE ATTEMPTING TO COLLECT A DEBT AND ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE. HOWEVER, IF YOU ARE IN BANKRUPTCY OR RECEIVED A BANKRUPTCY DISCHARGE OF THIS DEBT, THIS LETTER IS NOT AN ATTEMPT TO COLLECT THE DEBT. THIS NOTICE IS BEING FURNISHED FOR YOUR INFORMATION AND TO COMPLY WITH APPLICABLE LAWS AND REGULATIONS. IF YOU RECEIVE OR HAVE RECEIVED A DISCHARGE OF THIS DEBT THAT IS NOT REAFFIRMED IN A BANKRUPTCY PROCEEDING, YOU WILL NOT BE PERSONALLY RESPONSIBLE FOR THE DEBT.
See id. at 2; Def.'s LR 56.1(b) Stmt. ¶ 30.
Finally, on the third page was a "delinquency notice" showing that, as of August 16, Plaintiffs were delinquent on their mortgage loan by 259 days, and that "[f]ailure to bring [their] loan up-to-date may result in fees, foreclosure, and the loss of [their] home." Pls.' Ex. 7 at 3.
Statements in the same format, with different payment amounts and due dates, were sent on September 14, October 11, November 11, and December 14, 2016, and on January 12, 2017. Def.'s LR 56.1(b) Stmt. ¶¶ 31-35.
On September 23, 2016, Janet Folkerts sent Defendant an e-mail informing it that the August account statement was incorrect, and that the property subject to the loan had been surrendered in bankruptcy. Pls.' LR 56.1(a) Stmt. ¶ 18. She asked Defendant to contact Plaintiffs' attorney, John Reed, for questions regarding the bankruptcy and discharge. Def.'s LR 56.1(b) Stmt. ¶ 18. Defendant then called Reed nine times. Pls.' LR 56.1(a) Stmt. ¶ 19. On October 4, Defendant spoke with Reed, who again asked for a deed in lieu of foreclosure. Id. On October 5, Defendant sent Reed a letter stating that it had received his inquiry and would send a written explanation of the results. Def.'s LR 56.1(a) Stmt. ¶ 18; see Brangham Aff., Ex. F.2
On October 12, 2016, Defendant called Janet Folkerts's cell phone. Def.'s LR 56.1(a) Stmt. ¶¶ 19, 21; Pls.' LR 56.1(a) Stmt. ¶ 20. Janet explained that she was "not sure" if she was still represented by an attorney and that she did not want to receive any further calls from Defendant. Def.'s LR 56.1(a) Stmt. ¶ 21. At that point, Defendant began calling Plaintiffs regularly. See Pls.' LR 56.1(a) Stmt. ¶¶ 21-28; Pls.' Ex. 3, ECF No. 58-5.
On October 19, 2016, Plaintiffs told Defendant that they were represented by counsel and to contact him directly. Def.'s LR 56.1(a) Stmt. ¶ 22. The same day, Defendant sent Plaintiffs a letter stating that it had been notified that they were represented by an attorney, but did not have the attorney's contact information. Id. ¶ 23; Brangham Aff., Ex. G. Defendant asked Plaintiffs to provide the contact information within 20 days of the receipt of the letter. Brangham Aff., Ex. G.
On November 1, Defendant sent Reed a letter stating that its October 5 letter (which confirmed receipt of Reed's inquiry regarding a deed in lieu of foreclosure) had been sent in error.Def.'s LR 56.1(a) Stmt. ¶ 24; Brangham Aff., Ex. H. Defendant did not receive a response to this letter "confirming that [Reed] continued to represent Plaintiffs after the bankruptcy." Def.'s LR 56.1(a) Stmt. ¶ 25.
Meanwhile, Defendant continued to call Plaintiffs and send them account statements. On November 25, 2016, Janet Folkerts again informed Defendant that the property had been discharged in bankruptcy and that she did not want to receive further calls. Pls.' LR 56.1(a) Stmt. ¶ 24. On December 6 and 12, Plaintiffs told Defendant that they were represented by an attorney and terminated the calls. Def.'s LR 56.1(a) Stmt. ¶ 28. On December 20, Plaintiffs gave Defendant Reed's name, but said they did not have his contact information. Id. ¶ 29. On January 3, 2017, Plaintiffs stated that they would have their attorney call Defendant. Id. ¶ 30. And on January 11, Janet again informed Defendant that she had filed for bankruptcy and wanted to be removed from Defendant's contact list. Def.'s LR 56.1(b) Stmt. ¶ 25.
The parties had additional communications through June of 2017. On March 14, 2017, Plaintiffs stated that the discharged debt was being reported to TransUnion, and that they would be contacting a lawyer to file a lawsuit. Def.'s LR 56.1(a) Stmt. ¶ 33. On March 20 and 27, Plaintiffs told Defendant they had hired a lawyer, but refused to provide his contact information. Id. ¶ 34. On March 20 and June 26, Defendant sent Plaintiffs additional letters asking them to confirm whether they were represented by counsel. Id. ¶¶ 35, 42. And Defendant continued calling Plaintiffs, placing approximately 150 calls to Janet Folkerts's cell phone between August 17, 2016, and June 26, 2017. Pls.' LR 56.1(a) Stmt. ¶ 27; see Pls.' Ex. 3. Defendant also called Dennis Folkerts's cell phone approximately eight times during this same period. Pls.' LR 56.1(a) Stmt. ¶ 23.3
Defendant uses several software systems in the course of its business. For some calls, Defendant employs an automatic telephone dialing system, the Avaya Proactive Contact System. Def.'s LR 56.1(a) Stmt. ¶ 44. Defendant also provides its representatives with manual desktop phones, also made by Avaya, for loans ineligible for automatic dialing. Id. ¶ 45. The undisputed evidence shows that Defendant used its manual phones, not the Avaya Proactive Contact System, to call Plaintiffs. Id. ¶ 48. The manual phones do not store any lists of phone numbers and cannot generate random or sequential numbers. Id. Instead, to make a call using a manual phone, a representative picks up the phone and manually dials each digit of the phone number. Id. ¶ 49.
Both the manual phones and the Avaya Proactive Contact System are linked to SynTelate, a software...
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