Gagnon v. JPMorgan Chase Bank, N.A.
2017 U.S. Dist. LEXIS 374
N.D. Ill.2017Background
- Plaintiff Charles Gagnon executed a mortgage with Chase and filed Chapter 13 in July 2013; his Chapter 13 plan surrendered the property and the Bankruptcy Court confirmed the plan and entered a discharge on August 4, 2014.
- Chase transferred servicing to Seterus (effective Sept. 1, 2014). After discharge, Chase and Seterus sent multiple communications (mortgage statement, default notice, escrow statements); Pierce (law firm) later sent a demand letter. Plaintiff alleges these communications sought payment despite his bankruptcy discharge.
- Plaintiff discovered credit-report entries showing the mortgage as delinquent; he disputed with Equifax and Experian in August 2015 and attached his bankruptcy documents. Experian updated its file to reflect the discharge and $0 balance; Equifax updated only partially.
- Plaintiff sued, asserting claims under the FDCPA, FCRA, bankruptcy discharge injunction and automatic stay, and Illinois Consumer Fraud Act (ICFA) against Chase, Seterus, Pierce, Equifax, and Experian.
- Defendants moved to dismiss various counts. The court granted some dismissals (certain discharge, stay, ICFA, and one FCRA claim) and denied dismissal in other respects; several FDCPA and FCRA claims survive for further litigation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether debt-collection communications violated FDCPA §1692c(a)(2) (contact while represented by counsel) | Gagnon: dunning letters were sent knowing he was represented and bankruptcy was public record; systems should have revealed counsel | Seterus/Pierce: no plausible allegation they had actual knowledge of representation (Pierce: case closed months earlier) | Court denied dismissal as to Seterus’ §1692c(a)(2) claim; granted as to portion against Pierce where representation plausibly ended months before contact |
| Whether post-discharge communications were false, misleading, or attempts to collect in violation of FDCPA §§1692e(2),(8),(10) and 1692f(1) | Gagnon: letters demanded payment, showed amounts due, and could mislead an unsophisticated consumer despite disclaimers | Seterus/Pierce: communications were informational (in-rem lien enforcement), statutorily required notices, and contained bankruptcy disclaimers | Court allowed FDCPA claims to proceed as to Seterus’ Sept. 15, 2014 default notice and Oct. 3, 2014 escrow statement (disclosure and Jan. 28, 2015 escrow disclosure dismissed) and denied dismissal of Pierce’s FDCPA §§1692e/1692f claims |
| Whether Experian’s post-dispute credit report violated FCRA §1681e(b)/§1681i | Gagnon: Experian reported the mortgage as outstanding/ in default after dispute and failed to correct | Experian: its post-dispute report (attached) showed $0 balance and discharge; any account-history fields were pre-dispute data | Court granted Experian’s motion; the attached post-dispute report showed the account discharged and $0 balance, so no plausible inaccuracy |
| Whether Chase’s access to plaintiff’s credit file violated FCRA §1681b (impermissible purpose) | Gagnon: Chase accessed his credit report after discharge and lacked a permissible business purpose | Chase: lien survived (in-rem) and reviewing account or enforcing lien is a legitimate purpose | Court denied dismissal; plaintiff plausibly alleged lack of legitimate purpose and pleaded willfulness (statutory/punitive damages available) |
| Whether bankruptcy-related claims (violation of discharge §524 and automatic stay §362) are properly adjudicated in district court | Gagnon: district court can withdraw reference under 28 U.S.C. §157(d) and hear these claims | Defendants: bankruptcy court has exclusive jurisdiction to enforce discharge and stay; plaintiff hasn’t moved to withdraw reference | Court dismissed district-court discharge claims and declined jurisdiction over the automatic-stay claim (plaintiff may seek withdrawal of the bankruptcy reference) |
| Whether plaintiff pleaded ICFA actual damages from defendants’ post-discharge collection activity | Gagnon: time and costs consulting counsel and emotional distress are damages | Defendants: ICFA requires actual pecuniary loss; attorney consultation and emotional distress are insufficient | Court dismissed ICFA claims (Seterus and Chase) for failure to plead actual pecuniary damages |
Key Cases Cited
- Cochran v. Illinois State Toll Highway Auth., 828 F.3d 597 (7th Cir.) (motion-to-dismiss plausibility standard)
- Fields v. Wilber Law Firm, P.C., 383 F.3d 562 (7th Cir.) (unsophisticated consumer standard for FDCPA)
- Randolph v. IMBS, Inc., 368 F.3d 726 (7th Cir.) (bankruptcy representation and FDCPA contact issues)
- Cox v. Zale Del., Inc., 239 F.3d 910 (7th Cir.) (bankruptcy discharge enforcement generally for bankruptcy court)
- Evory v. RJM Acquisitions Funding LLC, 505 F.3d 769 (7th Cir.) (description of unsophisticated consumer standard)
- Sarver v. Experian Info. Sols., 390 F.3d 969 (7th Cir.) (FCRA claim requires inaccurate or misleading report)
- Bogie v. Rosenberg, 705 F.3d 603 (7th Cir.) (exhibit that contradicts complaint controls on motion to dismiss)