Pennell v. LVNV Funding, LLC
| Decision Date | 24 February 2021 |
| Docket Number | No. 1:18-cv-03304-JRS-TAB,1:18-cv-03304-JRS-TAB |
| Citation | 549 F.Supp.3d 897 |
| Parties | Sonja PENNELL, et al., Plaintiffs, v. LVNV FUNDING, LLC & Resurgent Capital Services, LP, Defendants. |
| Court | U.S. District Court — Southern District of Indiana |
Angie K. Robertson, David J. Philipps, Mary E. Philipps, Philipps and Philipps, Ltd., Palos Hills, IL, for Plaintiffs Sonja Pennell, Kenneth Chappelle, James Lee, Patricia Smith, Laura Jean Stewart, Joan Martin, Diane Benjamin, Barbara Staluppi, Roberta Salav, Louise Reitz, Francis Emery, Luz Senquiz, Mirta Alvarado.
David J. Philipps, Philipps and Philipps, Ltd., Palos Hills, IL, for Plaintiffs Albert Dicresce, Rita Mcbride, Joyce Young, Estela Munguia, Jackie Adams, Debra Pray, Maralene Hundley, Donna Lindsey, Sherry Key, Gene Sides, Jr., Robert Martin, Shelia Mahoney, Francis Spinelli, Jr., Valerie Weaver, Valicia Gentry, Robert Morin, Lewis Shellenberger, Renee Stasik, Anita Rivera.
Katherine M. Saldanha Olson, Nicole Marie Strickler, Stephanie A. Strickler, Messer Strickler, Ltd., Chicago, IL, for Defendants.
Order on Motions for Summary Judgment (ECF Nos. 51, 67)
Defendants LVNV Funding, LLC ("LVNV") and Resurgent Capital Services, LP ("Resurgent") allegedly attempted to collect overdue consumer debts from thirty-two1 elderly and disabled Plaintiffs who had sought representation from a nationwide legal aid program. Plaintiffs brought claims under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. The parties filed cross-motions for summary judgment. (ECF Nos. 51, 67.) For the following reasons, Defendants’ motion is granted in large part but denied as to Plaintiff Sonja Pennell, and Plaintiffs’ motion is denied.
Summary judgment is appropriate 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). The movant bears the initial burden of production. Modrowski v. Pigatto , 712 F.3d 1166, 1168 (7th Cir. 2013). That initial burden consists of either "(1) showing that there is an absence of evidence supporting an essential element of the non-moving party's claim; or (2) presenting affirmative evidence that negates an essential element of the non-moving party's claim." Hummel v. St. Joseph Cnty. Bd. of Comm'rs , 817 F.3d 1010, 1016 (7th Cir. 2016) (citing Modrowski , 712 F.3d at 1169 ). If the movant discharges its initial burden, the burden shifts to the non-moving party, who must present evidence sufficient to establish a genuine issue of material fact on all essential elements of his case. See Lewis v. CITGO Petroleum Corp. , 561 F.3d 698, 702 (7th Cir. 2009). "The ordinary standards for summary judgment remain unchanged on cross-motions for summary judgment: [the Court] construe[s] all facts and inferences arising from them in favor of" the non-moving party. Blow v. Bijora, Inc. , 855 F.3d 793, 797 (7th Cir. 2017) (citation omitted).
Plaintiffs are indigent persons—seniors, people with disabilities, or both—who were unable to pay their debts. (ECF No. 68-5 ¶ 21.) They turned to the Chicago Legal Clinic for help. (Id. ) The Chicago Legal Clinic operates a program called Legal Advocates for Seniors and People with Disabilities ("LASPD"). (ECF No. 68-3 ¶ 6; ECF No. 68-4 ¶¶ 2, 8.) LASPD offers its clients a limited legal representation arrangement by which LASPD will notify a client's creditors or debt collectors that LASPD is representing the client and that the client refuses to pay and requests that collection communications cease. (ECF No. 68-3 ¶ 6; ECF No. 68-4 ¶¶ 2, 17.) However, LASPD informs clients the organization will not represent them in connection with any lawsuit, arbitration, or negotiation arising from their debts. (ECF No. 68-5 ¶ 14.) The end goal of all of this is to get creditors and debt collectors to leave the clients alone. (ECF No. 68-3 ¶¶ 6, 7.) Although it is based in Chicago, LASPD advertises itself as a "nationwide" legal aid program, (ECF No. 52-5 at 46), and Plaintiffs indeed hail from all over the country, (ECF No. 24 ¶ 3).
Defendant LVNV is a company that purchases defaulted consumer debts. (ECF No. 68-2 ¶ 12.) Although LVNV has no employees, Defendant Resurgent acts as LVNV's master servicer by engaging third-party debt collectors to collect debts owned by LVNV. (ECF No. 52-1 ¶ 4.) LVNV purchased the thirty-two Plaintiffs’ defaulted debts from their original creditors or other predecessors-in-interest, (ECF No. 52-1 ¶ 6), and LVNV's agents subsequently contacted each Plaintiff in an effort to collect his or her debt, (see generally ECF Nos. 24-6, 24-7, 25). Plaintiffs allege that these collection efforts violated the FDCPA, and each Plaintiff brought claims against Defendants under 15 U.S.C. §§ 1692c(a)(2) and 1692c(c).
Because many of the Plaintiffs’ claims differ somewhat in pertinent facts and legal issues, more specific information will be discussed as necessary.
Congress enacted the FDCPA to protect consumers from abusive debt collection practices and to ensure that debt collectors engaging in such practices are not competitively advantaged. See 15 U.S.C. § 1692(e). Each Plaintiff invokes two provisions of the FDCPA: §§ 1692c(a)(2) and 1692c(c). First, § 1692c(a)(2) prohibits a debt collector from communicating directly with a consumer if the debt collector knows the consumer is represented by an attorney:
[A] debt collector may not communicate with a consumer in connection with the collection of any debt ... if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney's name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector ....
15 U.S.C. § 1692c(a)(2). Second, § 1692c(c) prohibits a debt collector from communicating directly with a consumer if the debt collector is notified that the consumer wants the collector to cease communications:
If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt.
15 U.S.C. § 1692c(c).
The FDCPA only applies to debt collectors. The Act lays out two alternative definitions of "debt collector." Under the first definition, a debt collector is "any business the principal purpose of which is the collection of any debts." 15 U.S.C. § 1692a(6). Under the second definition, a debt collector is any entity that "regularly collects or attempts to collect, directly or indirectly, debts owed ... another." Id. These are known respectively as the "principal-purpose" and "regularly-collects" definitions. See Schlaf v. Safeguard Prop., LLC , 899 F.3d 459, 466 (7th Cir. 2018).
Defendants contend that Plaintiffs have not established that LVNV and Resurgent are debt collectors subject to the Act. The Court will address each entity in turn.
First up is LVNV. The parties agree the appropriate question regarding LVNV is whether it fits the principal-purpose definition.2 LVNV admits that "at all relevant times over ninety-nine percent (99%) of its revenue originated from activity undertaken by licensed third-party collectors engaged by RCS related to debts owned by LVNV which were characterized as defaulted consumer debts at the time of purchase." (ECF No. 68-2 ¶ 12.) LVNV's argument that it is not a debt collector hinges on the fact that it owns the debts it seeks to collect. According to LVNV, since LVNV wears the mantles of both debt collector and debt owner, its principal purpose cannot be debt collection.
Although the Seventh Circuit apparently has not confronted the issue, other circuits have uniformly rejected LVNV's argument that a debt owner collecting its own debts cannot meet the principal-purpose definition. See Tepper v. Amos Fin., LLC , 898 F.3d 364, 370 (3d Cir. 2018) (); McAdory v. M.N.S. & Assocs., LLC , 952 F.3d 1089, 1093 (9th Cir. 2020) (), cert. denied sub nom. DNF Assocs., LLC v. McAdory , No. 20-376, ––– U.S. ––––, 141 S.Ct. 627, 208 L.Ed.2d 231 (2020) ; Reygadas v. DNF Assocs., LLC , 982 F.3d 1119, 1125 (8th Cir. 2020) (). These decisions relied on the ordinary meaning of the words "any business the principal purpose of which is the collection of any debts." 15 U.S.C. § 1692a(6). "[A] business's ‘purpose’ is shown by its actions." Reygadas , 982 F.3d at 1125. And cross-referencing the statute with a dictionary confirms that "an entity that has the ‘collection of any debts’ as its ‘most important’ ‘aim’ is a debt collector" under the primary-purpose definition. Barbato v. Greystone All., LLC , 916 F.3d 260, 267 (3d Cir.) (citations omitted), cert. denied sub nom. Crown Asset Mgmt. LLC v. Barbato , ––– U.S. ––––, 140 S. Ct. 245, 205 L.Ed.2d 129 (2019).
LVNV wants the Court to read "the principal purpose" as precluding two equally important purposes—for LVNV, those purposes are debt acquisition and debt collection. Because those activities are equally important to sustain LVNV's business, LVNV argues its business has no principal purpose. The Court is not persuaded for two reasons. First, if the Court were to accept LVNV's argument, not even the archetypal repo man would fit the primary-purpose definition, as he could simply say that his...
To continue reading
Request your trial