Partners v. Shah

• Decision Date: 25 February 2011
• Docket Number: No. 1–10–0855.,1–10–0855.
• Citation: 407 Ill.App.3d 737,349 Ill.Dec. 389,946 N.E.2d 885
• Parties: UNIFUND CCR PARTNERS, Plaintiff–Appellee,v.Mohammad SHAH, Defendant–Appellant.
• Court: United States Appellate Court of Illinois

407 Ill.App.3d 737

946 N.E.2d 885

349 Ill.Dec. 389

UNIFUND CCR PARTNERS, Plaintiff–Appellee,

v.Mohammad SHAH, Defendant–Appellant.

No. 1–10–0855.

Appellate Court of Illinois, First District, Second Division.

Feb. 1, 2011.Rehearing Denied Feb. 25, 2011.

Joseph P. Kincaid, Catherine Basque Weiler, Amy Z. Knapp, Swanson, Martin & Bell, LLP, Chicago, for Plaintiff–Appellee.Daniel A. Edelman, Cathleen M. Combs, Tiffany N. Hardy, James O. Latturner, Francis R. Greene, Edelman, Combs, Latturner & Goodwin, LLC, Chicago, for Defendants–Appellant.

[349 Ill.Dec. 391 , 407 Ill.App.3d 738] OPINION

Justice CONNORS delivered the judgment of the court, with opinion.

This appeal presents two certified questions. First, under section 8b of the Collection Agency Act (225 ILCS 425/8b (West 2008)), can a collection agency establish an assignment of accounts receivable for collection purposes through documents attached as exhibits to a complaint, where the identification of the accounts transferred, the consideration paid, and the effective date of the transfer of particular accounts are in multiple incorporated documents or affidavits? Second, does a collection agency have standing to sue under section 2–403 of the Code of Civil Procedure (735 ILCS 5/2–403 (West 2008)), where that agency pleads and proves that it has legal title to accounts receivable assigned “for collection purposes only”? We answer the first question in the affirmative with qualifications, and the second question in the affirmative.

I. BACKGROUND

We limit our recitation of the underlying facts of this case to only those that are necessary for a full discussion of the certified questions. The issues presented by the certified questions arose in the context of a motion to dismiss under section 2–619 of the Code of Civil Procedure (735 ILCS 5/2–619 (West 2008)), so for the purpose our discussion of the certified questions we will rely on facts alleged in the complaint and its attached affidavits. See

[349 Ill.Dec. 392 , 946 N.E.2d 888]

Coady v. Harpo, Inc., 308 Ill.App.3d 153, 158–59, 241 Ill.Dec. 383, 719 N.E.2d 244 (1999).

In 1996, defendant Mohammad Shah opened a credit card account with Citibank (South Dakota) N.A. Over the next nine years defendant ran up a significant balance on the account, eventually totaling close to $16,000. Defendant allegedly failed to make monthly payments on the debt as required by his account contract with Citibank and he eventually fell into default. Rather than personally collect the debt, however, Citibank chose to sell its interest in defendant's account to a third party. This decision began the series of transactions that are at issue in this case.

According to the complaint, Citibank sold defendant's account to a company called Unifund Portfolio A, L.L.C., on October 3, 2006. On that same day, Portfolio A sold the account to Cliffs Portfolio Acquisition I, L.L.C. On May 28, 2008, Cliffs Portfolio assigned its legal interest in the account to Palisades Collection, L.L.C., in order to enable Palisades to collect on the account. However, Cliffs Portfolio purported to retain an equitable interest in the debt itself. Finally, on that same day Palisades assigned its interest in the account to the plaintiff in this case, Unifund CCR Partners. Simply put, the complaint alleges that legal title to defendant's account passed from the original creditor to plaintiff through a series of intermediate transactions. The complaint alleges that plaintiff now holds sufficient title to the account in order for it to bring suit against defendant and collect the debt.

Plaintiff's complaint was dismissed three times for failure to adequately allege and support the chain of title that is described above, and it was not until plaintiff filed its third amended complaint that the sequence of alleged transactions became clear. In support of the allegations on the face of the complaint, plaintiff attached the affidavit of Bobby Carnes, an employee of plaintiff, in which Carnes explained the series of transactions. Carnes further testified that he had reviewed plaintiff's internal records related to defendant's account, which allegedly demonstrated that legal title to the account had been transferred to plaintiff for collection purposes. Carnes attached a number of documents to his affidavit that purported to be contracts of sale and assignment for defendant's account along with other incorporated agreements.

Defendant again moved to dismiss the complaint, arguing that the purported assignments of his account were inadequate under section 8b of the Collection Agency Act (225 ILCS 425/8b (West 2008)). Defendant asserted that the assignments were invalid because crucial information was scattered over multiple documents. In essence, defendant argued that the assignments failed to satisfy section 8b because the account information, consideration paid, and effective date of assignment were not contained in a single document.

After full briefing and oral argument, the circuit court denied defendant's motion to dismiss. However, the circuit court acknowledged that the law in this area is unclear. At the request of both parties, the circuit court certified two questions for our review under Illinois Supreme Court Rule 308 (eff.Feb.1, 1994). We granted defendant's petition for leave to appeal, and this case is now before us.

II. ANALYSIS

The certified questions present two separate but related issues. First, can a plaintiff properly plead the existence of an assignment under section 8b of the Collection Agency Act (225 ILCS 425/8b (West 2008)) through multiple documents

[349 Ill.Dec. 393 , 946 N.E.2d 889]

attached to the complaint, or must the assignment be evidenced by a single document? Second, does an assignee for collection only of a debt have standing to sue in its own name?

Because this appeal is before us pursuant to Illinois Supreme Court Rule 308 (eff.Feb.1, 1994), our analysis is “strictly limited to the certified question[s] presented to the court.” Long v. Elborno, 397 Ill.App.3d 982, 988, 337 Ill.Dec. 432, 922 N.E.2d 555 (2010). We review de novo the questions of law presented. See id. “ “ ‘Our task is to answer the certified questions rather than to rule on the propriety of any underlying order.’ ” [Citation.]” Id. (quoting Giangiulio v. Ingalls Memorial Hospital, 365 Ill.App.3d 823, 829, 302 Ill.Dec. 812, 850 N.E.2d 249 (2006)).

A. Standing to File Suit as Assignee for Collection Only

We will address the question of standing first because if an assignee of a debt for collection only has no standing to bring suit in its own name, then the question of how it must plead or establish such an assignment is irrelevant.

Standing is the requirement that a lawsuit cannot commence unless a plaintiff has “ “ ‘some injury in fact to a legally recognized interest.’ ” [Citation.]” In re Marriage of Rodriguez, 131 Ill.2d 273, 280, 137 Ill.Dec. 78, 545 N.E.2d 731 (1989) (quoting In re Estate of Burgeson, 125 Ill.2d 477, 486, 126 Ill.Dec. 954, 532 N.E.2d 825 (1988)). As our supreme court has summarized, “The purpose of the doctrine of standing is to ensure that courts are deciding actual, specific controversies, and not abstract questions or moot issues. [Citation.] The primary focus of standing is that a party have a real interest in the action and in its outcome. [Citation.] Although standing is designed to preclude persons having no interest in a controversy from bringing suit, it should not preclude a valid suit from being litigated. [Citation.] * * * In deciding whether a party has standing, a court must look at the party to see if he or she will be benefitted by the relief granted. [Citation.]” Id. at 279–80, 137 Ill.Dec. 78, 545 N.E.2d 731.

Illinois courts have not yet explicitly held that an assignee for collection has standing to bring a suit in its own name in order to collect a debt that is owned by a party who retains beneficial ownership. The case closest to a holding on this point is Kennedy v. Deere & Co., 142 Ill.App.3d 781, 785, 96 Ill.Dec. 957, 492 N.E.2d 199 (1986). However, Kennedy only stated in passing and without reference to Illinois precedent that “[u]nder Federal common law, no less than the law of this State, an assignee for collection may sue as the real party in interest.” Id. (citing Staggers v. Otto Gerdau Co., 359 F.2d 292 (2d. Cir.1966)); accord Village of Westville v. Loitz Brothers Construction Co., 165 Ill.App.3d 338, 339–40, 116 Ill.Dec. 447, 519 N.E.2d 37 (1988). Given the lack of a clear holding on this issue, we will address it as a question of first impression.

When interpreting a statute, we “ascertain and give effect to the overall intent of the drafters.” Knolls Condominium Ass'n v. Harms, 202 Ill.2d 450, 458, 269 Ill.Dec. 464, 781 N.E.2d 261 (2002). Where two or more statutes relate to the same subject, they are “to be read harmoniously so that no provisions are rendered inoperative.” Id. at 458–59, 269 Ill.Dec. 464, 781 N.E.2d 261. Importantly for our resolution of this certified question, “[i]t is also a fundamental rule of statutory construction that where there exists a general statutory provision and a specific statutory provision, either in the same or in another

[349 Ill.Dec. 394 , 946 N.E.2d 890]

act, both relating to the same subject, the specific provision controls and should be applied.” Id. at 459, 269 Ill.Dec. 464, 781 N.E.2d 261.

Regarding the subject of assignment and bringing suit in a collection agency's own name, there are two controlling statutes. The first statute is found in the Code of Civil Procedure (735 ILCS 5/1–101 et seq. (West 2008)). Section 2–403 states:

“The assignee and owner of a non-negotiable chose in action may sue thereon in his or her own name. Such a person shall in his or her pleading under oath allege that he or she is the actual bona fide owner thereof, and set forth how and when he or she acquired title.” 735 ILCS 5/2–403 (West 2008).

A chose in action is...