McMahon v. LVNV Funding, LLC

• Citation: 301 F.Supp.3d 866
• Decision Date: 14 March 2018
• Docket Number: No. 12 C 1410,12 C 1410
• Parties: Scott MCMAHON, on behalf of plaintiff and the classes defined herein, Plaintiff, v. LVNV FUNDING, LLC, Resurgent Capital Services, L.P., Alegis Group, LLC, and Tate & Kirlin Associates, Inc., Defendants.
• Court: U.S. District Court — Northern District of Illinois

301 F.Supp.3d 866

Scott MCMAHON, on behalf of plaintiff and the classes defined herein, Plaintiff,

v.LVNV FUNDING, LLC, Resurgent Capital Services, L.P., Alegis Group, LLC, and Tate & Kirlin Associates, Inc., Defendants.

No. 12 C 1410

United States District Court, N.D. Illinois, Eastern Division.

Signed March 14, 2018

Daniel A. Edelman, Cassandra P. Miller, Cathleen M. Combs, James O. Latturner, Tiffany Nicole Hardy, Edelman, Combs, Latturner & Goodwin LLC, Chicago, IL, for Plaintiff.

David M. Schultz, Jennifer W. Weller, Joel David Bertocchi, Lindsey A.L. Conley, Nabil G. Foster, Hinshaw & Culbertson LLP, Chicago, IL, for Defendants.

HON. JORGE ALONSO, United States District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff, Scott McMahon, brings this case under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq , against defendants LVNV Funding, LLC ("LVNV"), Resurgent Capital Services, L.P. ("Resurgent"), Alegis Group, LLC ("Alegis"), and Tate & Kirlin Associates, Inc. ("Tate & Kirlin"). The case is before the Court on the parties' cross-motions for summary judgment, defendant's motion to bar plaintiff's expert from testifying, and and plaintiff's motion to strike. For the following reasons, plaintiff's motion for summary judgment is granted in part and denied in part; defendants' motion for summary judgment is denied; defendants' motion to exclude plaintiff's expert's testimony is granted; and plaintiff's motion to strike is denied.

BACKGROUND

In December 2011, plaintiff received a letter, dated December 19, 2011, from Tate & Kirlin seeking to collect a debt of $584.98 originally owed to Nicor Gas. (Defs.' Resp. to Pl.'s LR 56.1 Stmt. ¶¶ 30–32, ECF No. 259.) The letter offered "An Opportunity : We are pleased to extend to you an offer to settle your account in full for $233.99. This represents a savings of 60% off your balance." (Id. ¶ 33.)

On December 29, 2011, plaintiff sent a letter in response, in which he requested that Tate & Kirlin verify the debt so that "we can settle this quickly." (Id. ¶ 34; see 2d Am. Compl. Ex. B.) Plaintiff received a reply letter from Resurgent, dated January 13, 2012, informing him that "this account has been placed with Resurgent Capital Services L.P.," and enclosing a separate typewritten page titled "Validation of Debt," dated January 12, 2012, which stated: "LVNV Funding LLC currently owns [this debt]. The account was previously sold by Nicor Gas on or about 09–23–2011 and at that time the balance on this account was $584.98." (Defs.' Resp. to Pl.'s LR 56.1 Stmt. ¶¶ 35–36.) Although the letter did not mention it, plaintiff last made a payment on the debt to Nicor Gas in 1997, and the debt was charged off in 1998. (Id. ¶ 32.) Nothing in the December 19, 2011 or January 13, 2012 communications mentioned the statute of limitations or disclosed whether it would bar any legal action to collect the debt in 2012. (Id. ¶ 38.)

LVNV is in the business of acquiring defaulted consumer debt originally owed to others, including creditors such as banks, finance companies, and other debt buyers. (Id. ¶¶ 8–9.) LVNV outsources the collection of the debt it purchases to Resurgent, which serves as its master servicing agent and holds limited power of attorney to manage and work LVNV's debt inventory. (Id. ¶¶ 10–11, 13.) Resurgent operates as a collection agency for some of the accounts for which it acts as a master servicer, and refers other accounts to other collection agencies and law firm. (Id. ¶¶ 14–15.) Alegis is Resurgent's general partner. (Id. ¶ 4.) Resurgent calculates the applicable statute of limitations period on all of its accounts before referring them to an outside collector. (Id. ¶ 21.) Resurgent retained collection agency Tate & Kirlin for the purpose of collecting debt owed to its clients. (Id. ¶¶ 19, 24.) Tate & Kirlin was authorized to make settlement offers to debtors. (Id. ¶ 26.)

Although aware that the statute of limitations on the debt had expired, Resurgent placed plaintiff's debt with Tate & Kirlin. (Id. ¶¶ 28–29, 43.) The above-described correspondence ensued, and in February 2012, plaintiff brought this lawsuit.

Plaintiff asserts that the correspondence he received concerning his debt to Nicor Gas was deceptive and defendants are responsible for the use of unfair or deceptive means of collecting that debt, in violation of the FDCPA. This Court initially denied class certification, but the Seventh Circuit reversed and remanded the case. 807 F.3d 872 (7th Cir. 2015) (" McMahon II "). On remand, the Court certified and approved notice to the following class:

(a) all individuals in Illinois (b) to whom LVNV, Resurgent or any debt collector employed by LVNV or Resurgent (c) sent a letter seeking to collect a debt that referred to a "settlement" (d) which debt was (i) a credit card debt on which the last payment had been made more than five years prior to the letter, or (ii) a debt arising out of the sale of goods (including gas) on which the last payment had been made more than four years prior to the letter (e) which letter was sent on or after February 28, 2011 and on or before March 19, 2012, (f) where the individual after receipt of the letter, (i) made a payment, (ii) filed suit, or (iii) responded by requesting verification or contesting the debt.

(Defs.' Resp. to Pl.'s LR 56.1 Stmt. ¶ 54.) The parties now move for summary judgment.

DISCUSSION

"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) ; Wackett v. City of Beaver Dam , 642 F.3d 578, 581 (7th Cir. 2011). The Court may not weigh conflicting evidence or make credibility determinations, but the party opposing summary judgment must point to competent evidence that would be admissible at trial to demonstrate a genuine dispute of material fact. Omnicare, Inc. v. UnitedHealth Grp., Inc. , 629 F.3d 697, 705 (7th Cir. 2011) ; Gunville v. Walker , 583 F.3d 979, 985 (7th Cir. 2009) ; see Modrowski v. Pigatto , 712 F.3d 1166, 1167 (7th Cir. 2013) (court must enter summary judgment against a party who " ‘does not come forward with evidence that would reasonably permit the finder of fact to find in [its] favor on a material question’ ") (quoting Waldridge v. American Hoechst Corp. , 24 F.3d 918, 920 (7th Cir. 1994) ). A genuine dispute is one that could change the outcome of the suit, and is supported by evidence sufficient to allow a reasonable jury to return a favorable verdict for the non-moving party. Spivey v. Adaptive Mktg. LLC , 622 F.3d 816, 822 (7th Cir. 2010).

The FDCPA was enacted "to eliminate abusive debt collection practices, to ensure that debt collectors who abstain from such practices are not competitively disadvantaged, and to promote consistent state action to protect consumers." Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA , 559 U.S. 573, 577, 130 S.Ct. 1605, 176 L.Ed.2d 519 (2010) (citing 15 U.S.C. § 1692(e) ). Under the FDCPA, "[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692e. The statute specifically enumerates "[t]he false representation of ... the character, amount, or legal status of any debt," "the threat to take any action that cannot legally be taken or that is not intended to be taken," and "the use of any false representation or deceptive means to collect or attempt to collect any debt" as conduct that violates § 1692e. 15 U.S.C. § 1692e(2), (5), (10). Additionally, 15 U.S.C. § 1692f prohibits a debt collector from using "unfair or unconscionable means to collect or attempt to collect a debt." Both § 1692e and § 1692f apply only to the conduct of a "debt collector," which the FDCPA defines as "any person ... in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6).

A plaintiff who prevails on an FDCPA claim is entitled to "(1) any actual damage sustained by such person as a result of [a debt collector's failure to comply with the FDCPA]," as well as statutory damages as follows:

(2)(A) in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000; or

(B) in the case of a class action, (i) such amount for each named plaintiff as could be recovered under subparagraph (A), and (ii) such amount as the court may allow for all other class members, without regard to a minimum individual recovery, not to exceed the lesser of $500,000 or 1 per centum of the net worth of the debt collector.

15 U.S.C. § 1692k(a). In determining the amount of statutory damages to award, "the court shall consider, among other relevant factors ... the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional." 15 U.S.C. § 1692k(b)(1).

In his motion for summary judgment, plaintiff contends that the letter he received from Tate & Kirlin (hereafter, "the McMahon letter") violates the FDCPA on its face as a matter of law. Even if the letter does not violate the FDCPA on its face, according to plaintiff, it still violates the FDCPA as a matter of law based on extrinsic evidence, including the opinion of plaintiff's expert witness, Timothy Goldsmith, and research conducted by government agencies such as the FTC and CFPB. Additionally, plaintiff argues, all defendants are responsible for the violation, either vicariously or based on their own actions. Finally, plaintiff argues that the class members are entitled to statutory damages as well as actual damages of any amounts paid after receiving defendants' deceptive dunning letters.

Defendants respond, and move for summary judgment in their favor, by arguing that the McMahon letter does...