12 F. Supp. 3d 1103
N.D. Ill.2014Background
- Simkus accrued a BOA credit-card debt charged off April 30, 2009; BOA reported a $7,077.66 high balance and did not charge interest for the 25 months between charge-off and sale.
- In May 2011 BOA (via FIA Card Services) sold the account to Cavalry SPV I, LLC (SPV); SPV retroactively added interest for the post-charge-off period and CPS (assignee/agent) sent collection letters demanding roughly $10,800–$11,200.
- Simkus sued SPV and CPS under the FDCPA, alleging violations of § 1692e (false/misleading representations) and § 1692f (unfair practices), arguing BOA had waived interest and assignees cannot collect waived amounts.
- Defendants argued BOA never waived the right to interest and, in any event, the original card agreement authorized interest so collection was permitted; they also contended the dunning letter was not misleading on its face.
- District court found (1) Arizona law governs waiver (choice-of-law clause), (2) whether BOA waived interest is a factual question for the trier of fact and precludes summary judgment on the waiver-based FDCPA claims, (3) summary judgment for defendants granted on the §1692f(1) claim because the original agreement authorized interest, and (4) requested supplemental briefing on whether the dunning letter was misleading for unsophisticated consumers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law for waiver | Arizona law in the card agreement should govern | Parties largely relied on Illinois but contract selects Arizona | Court applied Arizona law (contract choice enforced) |
| Did BOA waive post-charge-off interest? | BOA’s failure to charge interest for 25 months amounts to waiver; assignee cannot collect waived interest | BOA did not waive rights; any waiver question is fact-specific | Question of fact for the trier of fact; summary judgment denied on waiver-based FDCPA claims |
| §1692f(1) — collection of unauthorized amounts | Collecting retroactive interest is unauthorized if BOA waived it | Original card agreement expressly authorized interest, so collection permitted | Granted for defendants — §1692f(1) claim fails because original agreement allowed interest |
| §1692e / §1692f — misleading dunning letter (failure to itemize interest) | Letter that increased balance by ~45% without itemization is misleading to unsophisticated consumer | Lumped principal+interest is permissible; no facially misleading statement | Not facially misleading under Seventh Circuit precedents; court denied plaintiff summary judgment and ordered limited supplemental briefing on whether extrinsic evidence shows confusion |
Key Cases Cited
- Fields v. Wilber Law Firm, 383 F.3d 562 (7th Cir.) (unsophisticated-consumer standard; collectors must clearly communicate itemized added charges)
- Veach v. Sheeks, 316 F.3d 690 (7th Cir.) (defines unsophisticated consumer standard)
- Anderson v. Liberty Lobby, 477 U.S. 242 (Sup. Ct.) (summary judgment standard — reasonable jury rule)
- Celotex Corp. v. Catrett, 477 U.S. 317 (Sup. Ct.) (summary judgment burden-shifting framework)
- Terech v. First Resolution Mgmt. Corp., 854 F. Supp. 2d 537 (N.D. Ill.) (assignee takes subject to creditor’s prior waivers; §1692f(1) targets fees not in original agreement)
- Wahl v. Midland Credit Mgmt., 556 F.3d 643 (7th Cir.) (collector need not break out principal and interest; lumping not necessarily misleading)
- Acik v. I.C. Sys., Inc., 640 F. Supp. 2d 1019 (N.D. Ill.) (failure to itemize ambiguous “additional charges” can be misleading)
- Hahn v. Triumph P’ship, 557 F.3d 755 (7th Cir.) (amount due can encompass prior creditor’s interest without itemization)