Carlvin v. Ditech Financial LLC
237 F. Supp. 3d 753
N.D. Ill.2017Background
- Plaintiff Belinda Carlvin alleged Ditech/Landmark (debt collector) sent collection letters and a separate privacy notice after she defaulted on a residential mortgage and the debt was purchased by Defendant.
- October 27, 2015 collection letter offered a $2,500 reduction and stated: “Ditech is required to report any debt forgiveness to the Internal Revenue Service,” and warned that debt forgiveness “may affect your eligibility” for public assistance.
- November 23, 2015 privacy notice separately informed Plaintiff Defendant may share personal data (SSN, income, payment history) with affiliates and non‑affiliates; it was mailed separately from collection letters and contained no payment demand or account status.
- Plaintiff sued under the FDCPA, alleging the IRS‑reporting and public‑assistance statements were false/misleading (15 U.S.C. § 1692e(5), e(10)), and that the privacy notice misstated disclosure recipients/protections.
- Defendant moved to dismiss under Rule 12(b)(6); court considered attachments (letters and notice) and applied the unsophisticated‑consumer standard.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| IRS reporting statement | Statement was false/misleading because it omitted exceptions to IRS reporting and thus threatened to take an unlawful action | Statement was true because a $2,500 discharge exceeds the $600 reporting threshold, so reporting would be required | Denied dismissal — plausible FDCPA claim; omission of exceptions could make statement misleading and reporting might be legally impermissible if an exception applied |
| Public‑assistance statement | Statement was misleading even if conditional because it lacked clarification on when benefits would be affected | Statement was a factually true conditional possibility and not misleading | Granted dismissal — statement is an accurate conditional consequence and not misleading to an unsophisticated consumer |
| Privacy notice as "in connection with" collection | Notice misstated disclosure recipients and protections and was sent by a debt collector to a debtor | Notice was not sent in connection with debt collection (no demand, no account status, separate mailing) | Granted dismissal — notice was not sent in connection with debt collection under Gburek factors |
Key Cases Cited
- Gruber v. Creditors' Prot. Serv., Inc., 742 F.3d 271 (7th Cir.) (unsophisticated‑consumer standard for FDCPA claims)
- McMahon v. LVNV Funding, LLC, 744 F.3d 1010 (7th Cir.) (unsophisticated‑consumer standard applies to §1692e and §1692f)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility pleading standard)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must state plausible claim)
- Gburek v. Litton Loan Servicing LP, 614 F.3d 380 (7th Cir.) (factors to determine if communication was "in connection with" debt collection)
- Ruth v. Triumph P'ships, 577 F.3d 790 (7th Cir.) (privacy notice sent in same envelope as collection letter is "in connection with" collection)
- Evon v. Law Offices of Sidney Mickell, 688 F.3d 1015 (9th Cir.) (conditional language describing possible legal consequences is not misleading)
- Bailey v. Security Nat'l Serv. Corp., 154 F.3d 384 (7th Cir.) (communications without payment demand and clearly unrelated purpose are not "in connection with" collection)
- McMillan v. Collection Prof'l, Inc., 455 F.3d 754 (7th Cir.) (court will not accept bizarre or idiosyncratic interpretations under unsophisticated‑consumer standard)