HBLC, Inc. v. Egan

• Decision Date: 04 March 2016
• Docket Number: No. 1–14–3922.,1–14–3922.
• Citation: 401 Ill.Dec. 703,50 N.E.3d 1185
• Court: United States Appellate Court of Illinois
• Parties: HBLC, INC., Plaintiff and Counterdefendant–Appellee, v. Danny EGAN, Individually and on Behalf of the Class Defined Below, Defendant and Counterplaintiff–Appellant (Steven J. Fink & Associates, P.C., Counterdefendant–Appellee).

50 N.E.3d 1185

401 Ill.Dec. 703

HBLC, INC., Plaintiff and Counterdefendant–Appellee

v.Danny EGAN, Individually and on Behalf of the Class Defined Below, Defendant and Counterplaintiff–Appellant (Steven J. Fink & Associates, P.C., Counterdefendant–Appellee).

No. 1–14–3922.

Appellate Court of Illinois, First District, Fifth Division.

March 4, 2016.

Keith J. Keogh and Katherine M. Bowen, both of Keogh Law, Ltd., of Chicago, for appellant.

Hinshaw & Culbertson LLP, of Chicago (Stephen R. Swofford, David M. Schultz, John P. Ryan, and Corinne Heggie, of counsel), for appellees.

OPINION

Justice GORDONdelivered the judgment of the court, with opinion.

¶ 1 The instant appeal arises from a debt collection lawsuit filed by plaintiffHBLC, Inc.(HBLC), which sought to collect on an unpaid credit card account that defendantDanny Egan claimed had been opened fraudulently.Egan filed a class action counterclaim, which alleged that HBLC and counterdefendant Steven J. Fink & Associates, P.C.(Fink), violated the federal Fair Debt Collection Practices Act (FDCPA)(15 U.S.C. § 1692 et seq.(2012) ) and the Illinois Collection Agency Act(225 ILCS 425/1 et seq.(West 2012)) by filing time-barred lawsuits for the collection of debts that were beyond the statute of limitations.The trial court dismissed Egan's counterclaim under section 2–615 of the Code of Civil Procedure(735 ILCS 5/2–615(West 2012) ) and, for the reasons that follow, we reverse.

¶ 2 BACKGROUND

¶ 3 On January 26, 2012, HBLC filed a verified complaint against Egan, alleging that Egan opened a Credit One Bank credit card account but failed to make monthly payments due on the account.The complaint alleged that “pursuant to the Affidavit attached hereto as Exhibit ‘1’ there is due to Plaintiff from the Defendant, as of the filing date of this complaint, the sum of $2545.84 (which includes $350 as reasonable attorneys' fees as permitted by the Cardmember Agreement) plus court costs as permitted by the Cardmember Agreement and as permitted by statute plus post-judgment interest at the rate allowed by law until the debt is paid.”

¶ 4 On February 16, 2012, Egan filed an answer, affirmative defenses, and class action counterclaim.Egan denied the allegations of the complaint and alleged that the debt at issue was opened fraudulently using Egan's personal information without his knowledge or authorization.Egan raised as an affirmative defense “failure to state a claim/statute of limitations,” in which he alleged that his credit report indicated that the date of last activity on the alleged debt was September 14, 2006, meaning that the filing of a lawsuit to collect the debt was time-barred because the five-year statute of limitations had run at the time of the filing of the complaint.

¶ 5 Egan also included a class action counterclaim against HBLC and the law firm of Steven J. Fink & Associates, P.C.(Fink), alleging that HBLC and Fink had violated the FDCPA(15 U.S.C. § 1692 et seq.(2012) ) and the Collection Agency Act(225 ILCS 425/1 et seq.(West 2012)) by filing time-barred lawsuits for the collection of debts that were beyond the statute of limitations.

¶ 6 The counterclaim alleged that on October 7, 2011, Egan obtained a copy of his personal credit report and discovered the existence of a credit card account from Credit One Bank (Credit One), which Egan was unaware of and which had been opened without his authorization.Egan contacted Credit One on October 17, 2011, to dispute the debt, and Credit One responded by advising him that Credit One had sold the disputed account to HBLC.On February 8, 2012, Egan received a summons and complaint alleging that a debt of $2,545.84 was owed to HBLC as final transferee of Credit One; the complaint had been filed on January 26, 2012, by Fink and was signed by Steven J. Fink.The counterclaim alleged that Egan's credit report indicated that Credit One had reported the last activity on the account as occurring on September 14, 2006, meaning that at the time that HBLC and Fink filed the lawsuit, the five-year statute of limitations had run and the action was consequently time-barred.The counterclaim further alleged that “HBLC and Fink knew, or should have known, that the five year statute of limitations had run on the alleged debt at the time they caused the complaint to be filed.”

¶ 7 The counterclaim stated that Egan was bringing the class action counterclaim on behalf of three classes.The “HBLC FDCPA Class” consisted of “(a) all natural persons residing in Illinois (b) against whom HBLC, Inc. filed a lawsuit to collect a credit card debt (c) where the date of last activity on such account was more than five years prior to the date of filing (d) between a date of one year prior to and 20 days after the filing of this counter-claim.”The “HBLC ICAA Class” consisted of “(a) all natural persons residing in Illinois (b) against whom HBLC, Inc. filed a lawsuit to collect a credit card debt (c) where the date of last activity on such account was more than five years prior to the date of filing (d) between a date of five years prior to and 20 days after the filing of this counter-claim.”The “Fink FDCPA Class” consisted of “(a) all natural persons residing in Illinois (b) against whom Steven J. Fink & Associates, P.C. filed a lawsuit to collect a credit card debt (c) where the date of last activity on such account was more than five years prior to the date of filing (d) between a date of one year prior to and 20 days after the filing of this counter-claim.”The counterclaim alleged that HBLC had filed over 1,000 consumer debt collection lawsuits between 2011 and 2012 in the circuit court of Cook County alone, and that Fink had filed each of those lawsuits on HBLC's behalf and had represented HBLC in the lawsuits.

¶ 8 Count I of the counterclaim was for violations of the FDCPA and alleged that HBLC and Fink violated the FDCPA by “falsely representing the legal status of the debt in the complaint filed on January 26, 2012,” and by “using unfair and deceptive means to attempt to collect a debt, namely by falsely representing that Counter–Plaintiff was obligated to repay the original Credit One Bank debt, when in fact that remedy was extinguished by operation of law, thus suing on a time-barred debt.”Count I further alleged that as a result of the FDCPA violations, HBLC and Fink were liable to Egan and the classes for actual damages, statutory damages of $500,000 each, and costs and attorney fees.

¶ 9 Count II of the counterclaim was for violations of the Collection Agency Act, which alleged that the Collection Agency Act prohibited a collection agency from attempting or threatening to enforce a right or remedy with knowledge or reason to know that the right or remedy does not exist and further prohibited a collection agency from misrepresenting the amount owed and from collecting or attempting to collect any amount not authorized by law.Count II further alleged that “[w]ith respect to counter-plaintiff, HBLC attempted to enforce a remedy they had reason to know did not exist, misrepresented the amount legally owed, and attempted to collect an amount unauthorized by law in violation of the [Collection Agency Act] when they caused to be filed a time-barred lawsuit for the collection of a debt when the statute of limitations had already run.”Count II requested judgment in favor of Egan and the classes for actual damages, punitive damages, and costs and attorney fees.

¶ 10 On February 16, 2012, on the same day as the filing of his answer, affirmative defenses, and class action counterclaim, Egan filed a motion for class certification on his counterclaim.

¶ 11 On March 13, 2012, Egan filed a motion to transfer the case from the first municipal division to the chancery division of the circuit court because his counterclaim sought class certification.On May 18, 2012, the case was reassigned to the chancery division.

¶ 12 On September 14, 2012, HBLC filed its answer and affirmative defenses to Egan's class action counterclaim.Also on September 14, 2012, Fink filed its answer and affirmative defenses to Egan's class action counterclaim.

¶ 13 On November 14, 2012, the trial court gave Egan leave to file amended affirmative defenses and an amended counterclaim, which Egan filed on November 28, 2012.In his amended class action counterclaim, Egan added allegations that HBLC failed to provide valid assignments to establish its ownership of the debt or to otherwise establish a chain of title.The amended counterclaim alleged that HBLC first filed documentation of the alleged assignments of the debt when it attached them to a motion to compel arbitration; HBLC did not attach them to its complaint.Furthermore, the amended counterclaim alleged that the attached documents did not comply with the requirements of the Collection Agency Act, so HBLC had not established that it owned the alleged debt that it was attempting to collect.

¶ 14 The amended counterclaim identified five classes, as opposed to the original counterclaim's three classes.The “HBLC ICAA–Assignment Class” consisted of “(a) all natural persons residing in Illinois (b) against whom HBLC, Inc. filed a lawsuit to collect a debt incurred for personal, family, or household purposes (c) where no assignment was attached to the complaint or where the attached assignment does not include the effective date of the assignment, the consideration for the assignment, or identifying information for the account that is being assigned (d) between February 16, 2007 and March 7, 2012.”

¶ 15 The “HBLC FDCPA–Assignment Class” consisted of “(a) all natural persons residing in Illinois (b) against whom HBLC, Inc. filed a lawsuit to collect a debt incurred for personal, family, or household purposes (c) where no assignment was attached to the complaint or where the attached assignment does not include the effective date of the assignment, the consideration for the assignment, or identifying information for the...