Price v. Seterus, Inc., 15 C 7541

• Decision Date: 08 April 2016
• Docket Number: No. 15 C 7541,15 C 7541
• Parties: Edward Jeff Price Plaintiff, v. Seterus, Inc., Defendant.
• Court: U.S. District Court — Northern District of Illinois

Edward Jeff Price Plaintiff, v. Seterus, Inc., Defendant.

No. 15 C 7541

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

April 8, 2016

Judge Virginia M. Kendall

MEMORANDUM ORDER AND OPINION

Plaintiff Edward Jeff Price brought this action against Defendant Seterus, Inc. ("Seterus") alleging that Seterus violated the Fair Debt Collection Practices Act ("FDCPA") pursuant to 15 U.S.C. § 1692, the Bankruptcy Discharge Injunction pursuant to 11 U.S.C. § 524, and the Illinois Consumer Fraud and Deceptive Practices Act ("ICFA") pursuant to 815 ILCS 505/1 et seq. Seterus now moves to dismiss each of Price's claims in their entirety. For the reasons set forth below, Seterus's Motion to Dismiss is granted with relation to the § 1692(g) claim in Count I with prejudice and the entirety of Counts II and III without prejudice. The Motion is denied as it relates to the remainder of Count I. (Dkt. No. 13.)

BACKGROUND

The Court takes the following allegations from the Complaint and treats them as true for the purposes of the Defendant's motion. See Gillard v. Proven Methods Seminars, LLC, 388 F. App'x 549, 549-550 (7th Cir. 2010).

On February 9, 2009, Price obtained a mortgage loan from GMAC Mortgage ("GMAC") secured by a property located at 2240 Misty Creek Trail in Bolingbrook, Illinois 60490 ("subject property"). (Dkt. No. 1 at ¶¶ 5, 7.) Price has owned and resided at the subject property at all relevant times, including at current. (Id. at ¶ 5.) On February 28, 2013, Price filed a Chapter 13 Bankruptcy Petition in the United States Bankruptcy Court, Northern District of Illinois, Case Number 13-07853. (Id. at ¶ 8.) On March 1, 2013, the Bankruptcy Noticing Center ("BNC") served GMAC with a notice of Plaintiff's bankruptcy filing and original plan. (Id. at ¶ 10.) At some point after the filing and while the subject loan was in default, GMAC transferred the subject loan to Ocwen Loan Servicing, LLC ("Ocwen"). (Id at ¶ 12.)

On May 24, 2013, Price filed a modified Chapter 13 plan ("Modified Plan") which provided: "Debtor is surrendering the [subject property] to GMAC Mortgage and Ocwen Loan Servicing in full satisfaction of their claims." (Id. at ¶¶ 13, 14.) The Bankruptcy Judge confirmed the Modified Plan that same day. (Id. at ¶ 15.) On September 24, 2013, the Bankruptcy Court entered an Order of Discharge in Price's case of all dischargeable debts, including the subject debt. (Id. at ¶ 17.) The Order provides that "[t]he discharge prohibits any attempt to collect from the debtor a debt that has been discharged. For example, a creditor is not permitted to contact a debtor by mail, phone, or otherwise, to file or continue a lawsuit, to attach wages or other property, or to take any other action to collect a discharged debt from the debtor...." (Id. at ¶ 18; Dkt. No. 1-5 at 2.) BNC served Ocwen with the Order on September 26, 2013. (Dkt. No. 1-5 at 4.) On November 15, 2013, Price's bankruptcy case was closed. (Id. at ¶ 21.) On April 15, 2015, Ocwen sent Price a Notice of Servicing Transfer stating that the mortgage loan was being transferred to Seterus effective May 1, 2015. (Id. at ¶ 23.)

Price alleges that Seterus sought to collect the subject debt despite the discharge through three separate communications. (Id. at ¶ 25.) First, on or around May 1, 2015, Seterus sent Price a Payment Schedule Letter, attaching a payment coupon, indicating that Price had to pay $1,613.17 for three subsequent months, beginning on May 1, 2015. (Id. at ¶ 27.) Second, on May 14, 2015, Seterus sent Price a Summary of Total Debt Composition which provided that thetotal amount of Price's debt was $330,167.19. (Id. at ¶ 28.) Third, on July 16, 2015, Price received a letter, with a payment coupon attached, from Seterus which stated: "As of July 16, 2015, you are delinquent on your mortgage loan by 806 days. Failure to bring your loan-up-to-date may result in fees, foreclosure, and loss of your home...The total amount due to reinstate the loan as of July 16, 2015 is $48,998.25. (Id. at ¶ 29.)

LEGAL STANDARD

A complaint must contain sufficient factual matter to state a claim to relief that is plausible on its face to survive a 12(b)(6) challenge. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A claim is plausible on its face when the complaint contains factual content that supports a reasonable inference that the defendant is liable for the harm. Id. The complaint should be dismissed only if the plaintiffs would not be entitled to relief under any set of facts that could be proved consistent with the allegations. See Visiting Nurses Ass'n of Southwestern Indiana, Inc. v. Shalala, 213 F.3d 352, 354 (7th Cir. 2000). In making the plausibility determination, the Court relies on its "judicial experience and common sense." McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011) (quoting Iqbal, 129 S.Ct. At 1950). For purposes of this motion, this Court accepts all well-pleaded allegations in the complaint as true and draws all reasonable inferences in the non-movant's favor. See Yeftich v. Navistar, Inc., 722 F.3d 911, 915 (7th Cir. 2013).

DISCUSSION

As an initial point, Seterus seems to contend that the Modified Plan, and by association its confirmation, are invalid because (1) the Modified Plan was filed and confirmed on the same day, thus robbing Seterus of an opportunity to object in violation of its due process rights, and (2) the Modified Plan does not contain any provision to transfer title and does not provide anyindication of the value of the property. (See Dkt. No. 14 at 3-4; Dkt. No. 27 at 2-3.) The Court declines to comment on the strength of these contentions particularly because Seterus has not previously¹ and does not now appeal the Bankruptcy Court's Order of Confirmation. As such, these issues are not before the Court and consideration of them would undermine the finality of the bankruptcy confirmation. See Adair v. Sherman, 230 F.3d 890, 895 (7th Cir. 2000) ("Allowing collateral attacks of the type brought by Mr. Adair would give debtors an incentive to refrain from objecting in the bankruptcy proceeding and would thereby destroy the finality that bankruptcy confirmation is intended to provide."). In terms of Seterus's due process contention specifically, while it is "not questionable that a confirmation order entered in violation of due process notice requirements is void," as Seterus alleges is the case here, it is equally the case that "Federal Rule of Civil Procedure 60(b)(4) is proper vehicle to provide relief from such an order." See, e.g., In re Erdmann, 446 B.R. 861, 865-66 (Bankr. N.D. Ill. 2011). As Seterus has not filed a Rule 60(b) motion here, the Court declines to delve into its due process contentions.² As such, for the purposes of this proceeding, the Modified Plan and its confirmation are held to be valid. Adair, 230 F.3d at 890 ("As a general rule, a failure to raise an objection at the bankruptcy plan confirmation hearing, or to appeal from the order of confirmation, should preclude attack on the plan or any provision therein as illegal in a subsequent proceeding.").

Price sets forth three Counts in his Complaint. Count I alleges that Seterus violated various sections of the FDCPA. (Dkt. No. 1 at 5-7.) Count II alleges that Seterus violated theDischarge Injunction. (Id. at 7-9.) Finally, Count III alleges that Seterus violated the ICFA. (Id. at 9-11.) Seterus moves to dismiss all Counts.

I. Count I - FDCPA Claims

To state a claim under the FDCPA, Price must allege that (1) Seterus qualifies as a debt collector as defined in § 1692a(6), (2) the actions of which Price complains were taken in connection with the collection of any debt and (3) the actions violated one of the FDCPA's substantive provisions. See Gburek v. Litton Loan Servicing LP, 614 F.3d 380, 384 (7th Cir. 2010); see also, e.g., Kabir v. Freedman Anselmo Lindberg LLC, No. 14 C 1131, 2015 WL 4730053, at *2 (N.D. Ill. Aug. 10, 2015). In deciding whether collection letters violate the FDCPA, courts must view them "through the eyes of the unsophisticated consumer." Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 645 (7th Cir. 2009) (internal quotations omitted). "The unsophisticated consumer isn't a dimwit. She may be uninformed, naive, [and] trusting but she has rudimentary knowledge about the financial world and is capable of making basic logical deductions and inferences." Id. (internal quotations and citations omitted).

Price alleges that Seterus violated "§§ 1692e(2), e(10), f, f(1), and (g) through its debt collection efforts on a debt discharged in bankruptcy."³ (Dkt. No. 1 at 6.) Seterus, in its Motion to Dismiss, does not dispute that it qualifies as a debt collector. Rather, Seterus contends that its actions were not taken in relation to collecting on a debt and that it did not violate the FDCPA's substantive provisions for a number of reasons.

1. Surrender of Subject Property

First, Seterus argues that because Price has not yet surrendered the Subject Property in accordance with the Modified Plan, its actions to continue to collect subject to the lien do not runafoul of the FDCPA. (See Dkt. No. 14 at 3-4; Dkt. No. 27 at 2-4.) As a preliminary point, there is no precise delineation of what surrender requires in the bankruptcy context. See, e.g., In re Ware, 533 B.R. 701, 705 (Bankr. N.D. Ill. 2015) (stating that "[n]either section 1325 specifically nor the Bankruptcy Code as a whole provides a definition, however, of the word 'surrender,'" followed by substantial analysis of competing interpretations). In any event, the Court need not decide this issue at this point in the proceeding as Seterus fails to provide, and the Court has not found, any authority supporting its contention that it may continue to collect payments simply because surrender has not yet occurred. The outcome may be different if it was clear that Price had no intention of ever surrendering the Subject Property. However, taking the non-movant's...