Portalatin v. Blatt, Hasenmiller, Leibsker & Moore, LLC

• Citation: 125 F.Supp.3d 810
• Decision Date: 28 August 2015
• Docket Number: Case No. 14 C 8271
• Parties: Iwona Portalatin, Plaintiff, v. Blatt, Hasenmiller, Leibsker & Moore, LLC, and Midland Funding LLC, Defendants.
• Court: U.S. District Court — Northern District of Illinois

125 F.Supp.3d 810

Iwona Portalatin, Plaintiff,

v.Blatt, Hasenmiller, Leibsker & Moore, LLC, and Midland Funding LLC, Defendants.

Case No. 14 C 8271

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

Signed August 28, 2015

Mohammed Omar Badwan, Nathan Charles Volheim, Ahmad Tayseer Sulaiman, First, Daniel John McGarry, Sulaiman Law Group, Ltd., Majdi Y. Hijazin, First, Law Offices of Majdi Y. Hijazin, Ltd., Oak Brook, IL, for Plaintiff.

David Luther Hartsell, Helen Deborah Arnold, McGuirewoods LLP, David M. Schultz, Katherine Hannah Tresley, Hinshaw & Culbertson LLP, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

Iwona Portalatin sued Blatt, Hasenmiller, Leibsker & Moore, LLC, and Midland Funding, LLC, alleging that Blatt and Midland violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692i(a). Blatt, a law firm, filed a debt collection suit on Midland's behalf against Portalatin in the Circuit Court of Cook County's First Municipal District rather than its Fourth Municipal District, the district in which Portalatin resided. Portalatin has since settled her dispute with Midland. Now, both Portalatin and Blatt have moved for summary judgment regarding whether Blatt's act of filing suit in the First Municipal District, allegedly in violation of the FDCPA, was the result of a "bona fide error" or is otherwise subject to an affirmative defense under the statute. For the reasons stated below, the Court denies Blatt's motion; grants Portalatin's motion with regard to Blatt's affirmative defenses; and otherwise denies Portalatin's motion.

Background

The following facts are undisputed. In October 2013, Blatt filed suit in the Circuit Court of Cook County against Portalatin on behalf of Midland Funding, LLC, to collect an outstanding consumer debt. Midland Funding LLC v. Iwona Portalatin, 2013–M1154928 (Ill. Cir. Ct. Cook Cty.). Portalatin lives in Elmwood Park, Illinois, which is located within the Circuit Court of Cook County's Fourth Municipal District; the courthouse for that district is in Maywood. Rather than filing suit there, Blatt filed in the First Municipal District, whose courthouse is in downtown Chicago at the Richard J. Daley Center. The state court entered a default judgment against Portalatin in April 2014, and Blatt sought to enforce the judgment by wage garnishment a short time later.

Under the FDCPA, "[a]ny debt collector who brings any legal action on a debt against any consumer shall ... bring such an action only in the judicial district or similar legal entity—(A) in which such consumer signed the contract sued upon; or (B) in which such consumer resides at the commencement of the action." 15 U.S.C. § 1692i(a). Prior to July 2014, the Seventh Circuit defined "judicial district or similar legal entity" in Illinois as the Illinois Circuit Courts, not the intra-county districts used to determine venue in Cook County. Newsom v. Friedman, 76 F.3d 813, 820 (7th Cir.1996). Under the Seventh Circuit's interpretation of the statute in Newsom, Blatt was entitled to file in any district in Cook County. In July 2014, however, the Seventh Circuit, sitting en banc, overruled Newsom, reinterpreting "judicial district or similar legal entity" to mean the "smallest geographic area that is relevant for determining venue in the court system in which the case is filed." Suesz v. Med–1 Sols., LLC, 757 F.3d 636, 638 (7th Cir.2014) (en banc).

Portalatin filed this lawsuit on October 21, 2014, alleging that Blatt violated the FDCPA when it filed the debt collection action against her in the First Municipal District rather than the Fourth. Blatt denies that Portalatin is a "consumer" and denies her allegations that she suffered actual damage. Blatt admits, however, that it may be considered a "debt collector" that filed a collection action in a judicial district other than the one in which the debtor resided or signed a contract giving rise to the debt. Blatt contends, however, that it is not liable under the FDCPA because its decision to file in the First Municipal District was predicated on its reasonable reliance on the Seventh Circuit's then-controlling holding in Newsom .

Discussion

The parties have now cross-moved for summary judgment. A party is entitled to summary judgment if it shows that there is no genuine issue of material fact and it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). On a motion for summary judgment, the Court views the record in a light most favorable to the non-moving party and draws all reasonable inferences in that party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment is inappropriate "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248, 106 S.Ct. 2505. On cross-motions for summary judgment, the Court assesses whether each movant has satisfied the requirements of Rule 56. See Cont'l Cas. Co. v. Nw. Nat'l Ins. Co., 427 F.3d 1038, 1041 (7th Cir.2005) ; see also Laskin v. Siegel, 728 F.3d 731, 734 (7th Cir.2013).

Congress protects the interests of debtors through the FDCPA, which imposes civil liability on debt collectors who fail to comply with a variety of restrictions and requirements that guide the process of debt collection.See 15 U.S.C. § 1692k(a). Under the FDCPA, debt collectors may communicate with debtors only at certain times of day. Id. § 1692c. They may contact third parties only to seek a debtor's contact information and typically may do so only once. Id. § 1692b. They are strictly prohibited from harassing or abusing debtors by making threats or using obscene or profane language. Id. § 1692d. They may not make false representations regarding a debt's character, amount, or legal status, id. § 1692e(2), and they may not use unconscionable means to collect on a debt, id. § 1692f. They are also required to sue in "the judicial district or similar legal entity" in which the debtor resides or in which the underlying contract was signed. Id. § 1692i(a).

The FDCPA also provides some safeguards for debt collectors who take appropriate measures to comply with the statute. Under the statute's "bona fide error" defense, "[a] debt collector may not be held liable ... if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error." Id. § 1692k(c). Under the statute's "safe harbor" provision, debt collectors are not liable for acts done or omitted "in good faith in conformity with any advisory opinion of the [Consumer Financial Protection Bureau (CFPB) ], notwithstanding that after such act or omission has occurred, such opinion is amended, rescinded, or determined by judicial or other authority to be invalid for any reason." Id. § 1692k(e).

The gist of Blatt's argument is that it is inappropriate to impose civil liability on a debt collector who followed controlling circuit precedent in determining where to file suit. Blatt grounds this argument on three statutory bases. First, Blatt argues that its reliance on Newsom was a bona fide error within the meaning of section 1692k(c). Second, it contends that its reliance on controlling circuit court precedent entitles it to the safe harbor protection of section 1692k(e). Finally, Blatt says that even if relying on Newsom was not a bona fide error or protected under the safe harbor provision, Suesz should not be applied retroactively because doing so would frustrate the FDCPA's purpose. Blatt argues that both provisions evince Congress's intent to protect debt collectors who do their best to conform their behavior to the law and that it should not be held liable because it made reasonable efforts to do that.

Portalatin, for her part, argues that summary judgment should be granted in her favor because none of these affirmative defenses is valid and there is no dispute regarding the material facts: Blatt is a debt collector who brought suit against a consumer in the First Municipal District, a district in which the debt was not incurred and the consumer did not reside.

A. Blatt's affirmative defenses

The primary focus of the parties' dispute is whether the bona fide error defense protects Blatt from liability. To qualify for the bona fide error defense, a defendant must show that: (1) the FDCPA violation was not intentional; (2) the violation resulted from a bona fide error; and (3) the defendant maintained procedures reasonably adapted to avoid such error. See 15 U.S.C. § 1692k(c) ; Ruth v. Triumph P'ships, 577 F.3d 790, 803 (7th Cir.2009). The parties here dispute only the second element of the defense: whether Blatt's reliance on Newsom was a bona fide error.

Portalatin contends that the Supreme Court has addressed this precise issue, holding that "bona fide errors in § 1692k(c) do not include mistaken interpretations of the FDCPA." Jerman v. Carlisle, McNellie, Rini, Kramer, & Ulrich LPA, 559 U.S. 573, 587, 130 S.Ct. 1605, 176 L.Ed.2d 519 (2010). In Jerman, a debt collector in Ohio (in the Sixth Circuit) sent notice to a consumer that the consumer's debt would be presumed valid unless disputed in writing. The Sixth Circuit had not addressed whether an "in writing" requirement violated the FDCPA, and courts at the time were split on the issue. Compare Graziano v. Harrison, 950 F.2d 107, 112 (3d Cir.1991) (holding that an "in writing" requirement is not an FDCPA violation), with Camacho v. Bridgeport Fin., Inc., 430 F.3d 1078, 1082 (9th Cir.2005) (holding that an "in writing" requirement violates the FDCPA). When sued for violating the FDCPA, the debt collector asserted that its reliance on the Third Circuit's decision in Graziano was a bona fide error, a mistake of law that the collector took reasonable measures to avoid. The Supreme Court rejected this argument, holding that the bona fide...