Loja v. Main St. Acquisition Corp.
906 F.3d 680
7th Cir.2018Background
- Main Street Acquisition (and its law firm) sued someone they alleged was "Mario Loja" on a charged-off Washington Mutual Visa account; Loja says he never opened the account.
- Main Street pursued a small-claims collection action in DuPage County; Loja defended, the small-claims court entered judgment for Loja (dismissal with prejudice).
- Loja sued Main Street in federal court under the FDCPA and the Illinois Collection Agency Act alleging unlawful debt-collection practices.
- Main Street moved to dismiss under Rule 12(b)(6), arguing Loja was not a "consumer" under 15 U.S.C. § 1692a(3) because he alleged he did not owe the debt and thus was not "obligated" to pay it.
- The district court sua sponte dismissed Loja's FDCPA claim, holding the statutory definition required that a plaintiff actually owe the debt; the court ruled amendment would be futile.
- On appeal, the Seventh Circuit reversed, holding the FDCPA definition of "consumer" includes persons who are "allegedly obligated" to pay a debt (i.e., those mistakenly dunned), and remanded, allowing Loja leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a person who denies owing a disputed debt qualifies as a "consumer" under 15 U.S.C. § 1692a(3) | Loja: “allegedly obligated” covers individuals mistakenly dunned; alleged collection attempt suffices | Main Street: "obligated or allegedly obligated" requires the plaintiff actually be obligated to pay | The phrase is disjunctive; "allegedly obligated" covers persons alleged by collectors to owe a debt, so Loja is a consumer under the FDCPA |
| Whether amendment should be allowed after district court found futility | Loja: counsel preserved request to amend; futility was based on statutory misinterpretation | Main Street: Loja waived amendment argument or failed to seek leave at hearing | Court: issue not waived; because dismissal on statutory grounds was incorrect, amendment is not futile and Loja should be given leave to amend |
| Whether the court should resolve sufficiency of debt-as-"consumer" pleadings under §1692a(5) | Loja: pleaded the debt was a personal credit card and lacks access to transaction details | Main Street: pleading insufficient to show debt was for personal, family, or household purposes | Court: declined to rule on §1692a(5) sufficiency; left standards (Twombly/Iqbal) for district court on remand |
| Whether FDCPA focuses on collector conduct irrespective of debt validity | Loja: statutory language and precedent extend FDCPA to mistaken dunning | Main Street: (implicitly) emphasis on actual obligation | Held: FDCPA focuses on collectors' conduct; validity of the debt is not dispositive for FDCPA coverage |
Key Cases Cited
- Keele v. Wexler, 149 F.3d 589 (7th Cir.) (FDCPA focuses on collector misconduct rather than debt validity)
- Schlosser v. Fairbanks Capital Corp., 323 F.3d 534 (7th Cir.) ("obligation or alleged obligation" extends FDCPA reach regardless of actual debt)
- Dunham v. Portfolio Recovery Associates, LLC, 663 F.3d 997 (8th Cir.) (individuals mistakenly dunned are covered by §1692a(3))
- Corley v. United States, 556 U.S. 303 (2009) (canon against superfluity in statutory interpretation)
- Twombly v. Bell Atlantic Corp., 550 U.S. 544 (pleading standard for plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard clarifications)
- Rubin v. Islamic Republic of Iran, 830 F.3d 470 (7th Cir.) (anti-superfluity canon application)