Rosales v. Weltman Weinberg & Reis Co, L.P.A., 1:15-cv-06943

Background

In 2006 Rosales executed a balloon personal loan note later assigned (via an allonge) to Deutsche Bank, as Trustee for Home Equity Loan Asset-Backed Trust, Series INDS 2006-3 (the 2006-3 Trust). Rosales later defaulted.
In Oct. 2014 law firm Weltman sued Rosales in Cook County, but the state-court complaint named a different Deutsche Bank trust—the 2006-2B Trust—as plaintiff and sought about $49,730. The pleadings included the note and an allonge showing indorsements to the 2006-3 Trust; the indorsements were undated.
Rosales moved to dismiss in state court for lack of standing because the complaint named the wrong trust; the state court granted dismissal on that ground in April 2015.
Rosales then filed this federal suit under the FDCPA and Illinois Consumer Fraud Act (ICFA) against Weltman and both trusts, alleging false representations, threats to take unlawful action, and improper attempts to collect money owed to the wrong trust.
Defendants moved to dismiss under Rule 12(b)(6). The district court held the claims against the Trusts fail because the complaint did not plausibly allege the Trusts were "debt collectors" under the FDCPA, but denied dismissal of the FDCPA claim against Weltman based on the misidentified plaintiff in the state-court complaint. The ICFA claim against the Trusts was dismissed as barred by the litigation privilege.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Trusts are "debt collectors" under the FDCPA	The Court should look to the Trusts’ general business (regularly collecting debts); they therefore qualify.	The statutory exception bars FDCPA coverage where the defendant acquired the debt before default; complaint alleges no post-default acquisition.	Held: Dismissed as to the Trusts — complaint lacks plausible allegation they acquired the debt after default, so not debt collectors.
Whether a state-court complaint that misidentifies the creditor can violate §1692e (FDCPA)	Weltman’s complaint falsely represented that Rosales owed money to the 2006-2B Trust, misleading consumers and violating multiple FDCPA provisions.	Pleading errors are procedural and not actionable under the FDCPA; any exhibit (the allonge) clarifies the mistake.	Held: Denied dismissal as to Weltman — misidentification could mislead the unsophisticated consumer; materiality and consumer perception are fact questions.
Whether the misidentification was a nonmaterial "typo"	Rosales: the misidentification was material and misleading, not a harmless typo.	Weltman: the error was a harmless typo and the attached allonge supplanted the pleading, so no FDCPA violation.	Held: Error was not a mere typo; it was a substantive misstatement that could mislead and therefore survives dismissal.
Whether the ICFA claim against the Trusts survives	Rosales alleged material misrepresentations regarding liability to the trusts.	The litigation privilege and Illinois law bar ICFA claims based on conduct occurring in litigation; wrongful-filing claims are limited to malicious prosecution or abuse of process.	Held: ICFA claim against the Trusts dismissed — barred by Illinois litigation privilege; plaintiff did not respond to this defense.

Key Cases Cited

Marquez v. Weinstein, Pinson & Riley, P.S., 836 F.3d 808 (7th Cir. 2016) (§1692e can reach representations made in court filings)
Pantoja v. Portfolio Recovery Assocs., LLC, 852 F.3d 679 (7th Cir. 2017) (debt collectors violate FDCPA by suing on time-barred debts)
Lox v. CDA, Ltd., 689 F.3d 818 (7th Cir. 2012) (materiality requirement for FDCPA false/misleading statements)
Beler v. Blatt, Hasenmiller, Leibsker & Moore, LLC, 480 F.3d 470 (7th Cir. 2007) (discusses limits of FDCPA claims based on pleadings; distinguished where complaint is deceptive)
Ruth v. Triumph Partnerships, 577 F.3d 790 (7th Cir. 2009) (FDCPA regulates only "debt collectors")
O'Rourke v. Palisades Acquisition XVI, LLC, 635 F.3d 938 (7th Cir. 2011) (context can render a misleading statement nonmaterial under FDCPA)