LVNV Funding, LLC v. Davis

Decision Date23 December 2020
Docket Number5-19-0380
Citation450 Ill.Dec. 544,2020 IL App (5th) 190380,181 N.E.3d 896
Parties LVNV FUNDING, LLC, Plaintiff and Counterdefendant-Appellant, v. Casey DAVIS, as Independent Administrator of the Estate of Guillermo Macia, Individually and on Behalf of Class Defined Herein, Defendant and Counterplaintiff-Appellee (Alegis Group, LLC; Resurgent Capital Services LP; and Sherman Financial Group, LLC, Third-Party Defendants-Appellants).
CourtUnited States Appellate Court of Illinois

Nabil G. Foster, of Barron & Newburger, P.C., of Evanston, and Louis J. Manetti Jr., of Hinshaw & Culbertson LLP, of Chicago, for appellants.

David Cates, of Cates Mahoney, LLC, of Swansea, and Sean K. Cronin, of Donovan Rose Nester, P.C., of Belleville, for appellee.


JUSTICE MOORE delivered the judgment of the court, with opinion.

¶ 1 The plaintiff/counterdefendant, LVNV Funding, LLC (LVNV), along with the third-party defendants, Alegis Group, LLC, Resurgent Capital Services LP, and Sherman Financial Group, LLC, appeal, pursuant to Illinois Supreme Court Rule 306(a)(8) (eff. Oct. 1, 2019), the August 5, 2019, order of the circuit court of St. Clair County that granted the motion of the defendant and counterplaintiff, Casey Davis, as independent administrator of the estate of Guillermo Macia, deceased, to certify a class as to count I of Davis's counterclaim, which alleges a violation of section 8b of the Collection Agency Act (Act) ( 225 ILCS 425/8b (West 2012) ). For the following reasons, we reverse and remand for further proceedings.


¶ 3 On December 26, 2012, LVNV filed a complaint against Guillermo Macia in the circuit court of St. Clair County. The complaint requested payment for a debt Macia owed to Chase Bank USA for use of a credit card. According to the complaint, Chase Bank USA assigned, "for value," its rights under the credit card agreement to LVNV "per Exhibit B." Thereafter, Macia filed a class action counterclaim against LVNV, as well as third-party claims against Alegis Group, LLC, Resurgent Capital Services LP, and Sherman Financial Group, LLC (collectively, the defendants).1

¶ 4 Macia's counterclaim alleges that LVNV is a licensed debt collection agency that is "in the business of purchasing or acquiring defaulted debts, including debts originally owed to others and incurred for personal, family, or household purposes." Count I of the counterclaim requests money damages as a result of the defendants' alleged violation of section 8b of the Act. Id. In particular, count I alleges that the defendants violated section 8b of the Act in the following ways: (1) filing suit without having an assignment in the form specified by section 8b and (2) filing suit without attaching an assignment in the form specified by section 8b.

¶ 5 On January 21, 2014, the circuit court was informed that Macia had died, and Davis was substituted as the representative for his estate. On April 30, 2018, Davis filed an amended motion for partial class certification, requesting class certification for count I of the class action counterclaim only. On August 14, 2018, after full briefing by the parties, the circuit court held a hearing on the amended motion for partial class certification and took the matter under advisement. On August 5, 2019, the circuit court entered an order certifying the following class:

"THE ILLINOIS CLASS : All individuals who have been named as a defendant in a collection lawsuit filed in an Illinois court, since January 1, 2008, to this date, where any of the ‘debt collectors’ was a named plaintiff, and the lawsuit, on the date it was filed, did not comply with the provisions of the Illinois Collection Agency Act, 225 ILCS 425/1 et seq. , in that the debt collector was not in possession of a valid assignment of the purported debt and/or failed to attach same to the Complaint.
Further, the Court HEREBY FINDS that the term ‘debt collector,’ as defined by the Illinois Class, means:
‘DEBT COLLECTORS’ : Counter-Defendant and Third Party Defendants and any other entities or individuals associated in fact with the above or which are owned, wholly or in part, managed, agents, employed by, or otherwise controlled by the above." (Emphases in original.)

¶ 6 On September 4, 2019, the defendants filed a petition for leave to appeal from the circuit court's order certifying the class. On October 2, 2019, this court entered an order allowing the appeal.


¶ 8 This court has explained the standards we are to employ when reviewing an order granting class certification as follows:

" ‘The decision regarding class certification is within the discretion of the trial court and will not be disturbed on appeal unless the trial court abused its discretion or applied impermissible legal criteria.’ Cruz v. Unilock Chicago, Inc. , 383 Ill. App. 3d 752, 761 [322 Ill.Dec. 831, 892 N.E.2d 78] (2008) (citing Smith v. Illinois Central R.R. Co. , 223 Ill. 2d 441, 447 [307 Ill.Dec. 678, 860 N.E.2d 332] (2006) ). ‘The proponent of the class action bears the burden to establish all four of the prerequisites set forth in section 2-801 [of the Code of Civil Procedure ( 735 ILCS 5/2-801 (West 2002) )].’ Cruz , 383 Ill. App. 3d at 761 [322 Ill.Dec. 831, 892 N.E.2d 78] (citing Avery v. State Farm Mutual Automobile Insurance Co. , 216 Ill. 2d 100, 125 [296 Ill.Dec. 448, 835 N.E.2d 801] (2005) ). However, as indicated by the Illinois Supreme Court in Barbara's Sales, Inc. [v. Intel Corp. , 227 Ill. 2d 45, 72, 316 Ill.Dec. 522, 879 N.E.2d 910 (2007) ], there is no need to determine whether the prerequisites of the class action are satisfied if, as a threshold matter, the record establishes that the plaintiffs have not stated an actionable claim." Coy Chiropractic Health Center, Inc. v. Travelers Casualty & Surety Co. , 409 Ill. App. 3d 1114, 1118 [354 Ill.Dec. 381, 957 N.E.2d 1174] (2011).

¶ 9 The defendants ask this court to consider whether there is a private right of action under the Act and to reverse the class certification on the basis that no such private right of action exists. We decline to do so because, as an initial matter, we find that count I fails to state an actionable claim against the defendants. Count I of the class action counterclaim, upon which the class was certified in this case, is predicated on LVNV's alleged violation of section 8b of the Act. 225 ILCS 425/8b (West 2012). Specifically, count I is based upon LVNV's filing of a collection lawsuit against Macia in December 2012 without possessing an assignment that complies with section 8b and/or without attaching that assignment to the complaint. Section 8b of the Act provides, in relevant part, as follows:

"Assignment for collection. An account may be assigned to a collection agency for collection with title passing to the collection agency to enable collection of the account in the agency's name as assignee for the creditor provided:
(a) The assignment is manifested by a written agreement, separate from and in addition to any document intended for the purpose of listing a debt with a collection agency. The document manifesting the assignment shall specifically state and include:
(i) the effective date of the assignment; and
(ii) the consideration for the assignment.
* * *
(e) No litigation shall commence in the name of the licensee as plaintiff unless: (i) there is an assignment of the account that satisfies the requirements of this Section and (ii) the licensee is represented by a licensed attorney at law." Id.

¶ 10 Our colleagues in the First District explained the scope of section 8b's requirements in Unifund CCR Partners v. Shah , 2013 IL App (1st) 113658, 373 Ill.Dec. 212, 993 N.E.2d 518. In Shah , the court began by explaining the distinction between first-party collection, assignment for collection, and the sale of a debt:

"First, the creditor may try to collect the debt itself by bringing an action in its own name against the debtor. Alternatively, the creditor may hire a third party, known as a collection agent, to pursue the lawsuit against the debtor. In this situation, the creditor assigns legal title in the debt to the collection agent but retains equitable title for itself. This type of partial assignment is known as an assignment for collection . Finally, the creditor may decide to sell off its entire interest in the account to a third party, commonly known as a debt buyer. By doing so, the creditor divests itself of both legal and equitable title and retains no ownership interest in the debt." (Emphasis added.) Id. ¶ 5 (citing Sprint Communications Co. v. APCC Services, Inc. , 554 U.S. 269, 128 S.Ct. 2531, 171 L.Ed.2d 424 (2008) (explaining generally the history of assignments for collection and the legal/equitable title dichotomy)).

¶ 11 As pointed out by the court in Shah , section 8b of the Act ( 225 ILCS 425/8b (West 2012) ) is titled " ‘Assignment for collection’ " and refers only to "an account that is ‘assigned to a collection agency for collection with title passing to the collection agency to enable collection of the account in the agency's name as assignee for the creditor.’ " (Emphases in original.) Shah , 2013 IL App (1st) 113658, ¶ 14, 373 Ill.Dec. 212, 993 N.E.2d 518. According to the Shah court, "[t]his is a textbook definition of an assignment for collection, which is a specific legal concept that refers to the transfer of only legal title for the sole purpose of collecting a debt on behalf of the creditor." Id. As the Shah court explained, "assignment for collection is distinct from a sale, which refers to the transfer of both legal and equitable title." (Emphasis in original.) Id. (citing Sprint , 554 U.S. at 275-80, 128 S.Ct. 2531 (historical overview of the evolution of the assignability of choses in action)).

¶ 12 In subsection (a), which explains the documentation necessary to effectuate an assignment for collection, we find further support for the conclusion that the legislature did not intend for section 8b of the Act ( 225 ILCS...

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