GRANDIDIER v. QUANTUM3 GROUP, LLC
1:14-cv-00138
S.D. Ind.Dec 8, 2014Background
- Plaintiff Brent Grandidier filed Chapter 13 bankruptcy on December 13, 2012.
- Galaxy Asset Purchasing, via agent Quantum3, filed a proof of claim on February 1, 2013 for long‑dormant credit card debt; last account activity was 1991.
- Indiana’s statute of limitations for credit card collection is six years; Plaintiff alleged the claim was time‑barred.
- Plaintiff’s counsel objected in bankruptcy court on June 17, 2013; the objection was sustained and the proof of claim was disallowed on July 26, 2013.
- Plaintiff sued under the FDCPA, alleging filing a time‑barred proof of claim violated 15 U.S.C. § 1692e; defendants moved to dismiss under Rule 12(b)(6).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether filing a time‑barred proof of claim can constitute an FDCPA violation | Filing the claim was an attempt to collect a debt and was deceptive/misleading in violation of §1692e | Bankruptcy procedures, not the FDCPA, govern proofs of claim; FDCPA should not apply to time‑barred claims in bankruptcy | Court: FDCPA can apply; filing a time‑barred proof of claim may be a deceptive means to collect a debt and survives dismissal |
| Whether courts can enforce FDCPA alongside the Bankruptcy Code | FDCPA remedies apply where the claim is a collection attempt; creditors can avoid FDCPA liability by not filing improper claims | Bankruptcy Code provides the exclusive remedy for bankruptcy violations; other courts have held FDCPA inapplicable here | Court: Both statutes can coexist under Seventh Circuit precedent; creditors may comply with both |
| Whether a proof of claim is an act "in connection with the collection of any debt" | A proof of claim is the first step to collect in bankruptcy and can mislead the least sophisticated consumer | Filing a proof of claim is a procedural act under bankruptcy law, not necessarily a collection communication under FDCPA | Court: Filing a time‑barred proof of claim can be an indirect means of collection and thus fall within §1692e |
| Sufficiency of complaint to survive Rule 12(b)(6) | Complaint plausibly alleges defendants are debt collectors who filed a time‑barred, misleading claim | Dismiss for failure to state a claim | Court: Complaint states a claim; motion to dismiss denied |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard requires plausible factual allegations)
- Bell Atlantic v. Twombly, 550 U.S. 544 (plausibility standard for complaints)
- EEOC v. Concentra Health Servs., 496 F.3d 773 (articulating pleading plausibility in Seventh Circuit)
- Randolph v. IMBS, Inc., 368 F.3d 726 (FDCPA and Bankruptcy Code can coexist)
- Gburek v. Litton Loan Servicing LP, 614 F.3d 380 (FDCPA applies only to communications made in connection with collection)
- Crawford v. LVNV Funding, LLC, 758 F.3d 1254 (filing time‑barred proofs of claim is an indirect means of collecting a debt; deceptive under §1692e)
- Phillips v. Asset Acceptance, LLC, 736 F.3d 1076 (recognizing limitations on collection remedies and relevance to FDCPA claims)
- Walls v. Wells Fargo Bank, N.A., 276 F.3d 502 (contrary view that Bankruptcy Code remedies may be exclusive)
- Simmons v. Roundup Funding, LLC, 622 F.3d 93 (Second Circuit decision adopting a narrower view of FDCPA applicability)