854 F. Supp. 2d 537
N.D. Ill.2012Background
- Plaintiff Mark Terech had a U.S. Bank credit card; account charged off on Aug 31, 2004 after delinquency.
- At charge-off, U.S. Bank reduced the balance to $2,475.87 after reversing certain fees; no further statements were sent after charge-off.
- Debt was sold to Unifund CCR Partners on Jan 25, 2005, with face value $2,475.87.
- First Resolution Investment Corp. (and First Resolution Management Corp.) purchased the debt on July 25, 2007 and added 15.65% interest dating to 2004.
- Shindler law firm filed a state court collection action on First Resolution’s behalf on Mar 11, 2009; plaintiff served Sept 29, 2010; action was barred by statute of limitations and non-suited in Apr 2011.
- Plaintiffs bring FDCPA and ICAA claims (Counts I–IV); Count I against all defendants, Counts II–IV against First Resolution; court addresses waiver and timing issues at Rule 12(b)(6) stage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waiver of interest sufficient to support FDCPA claim? | Plaintiff argues U.S. Bank/Unifund waived post-charge-off interest. | Waiver not sufficiently pled; Bill of Sale preserves only amounts due and owing. | Plaintiff adequately pled waiver under Rule 8; possible waiver supported by facts. |
| Materiality of allegedly misrepresented interest in state court filing? | Misrepresentation about entitlement to collect retroactive interest is material. | Not material or not misrepresentation under FDCPA. | Misrepresentation is material; state court complaint can violate § 1692e. |
| Whether § 1692f (unfair/unconscionable means) applies given waiver context? | Waiver-related collection of interest may be unfair or unconscionable. | § 1692f(l) concerns fees outside original agreement; broader § 1692f applies. | Plaintiff states a claim under § 1692f; § 1692f(l) not separately stated. |
| Damages or declaratory relief viability and relation to statute of limitations? | Plaintiff seeks damages and declaratory relief for unlawful interest charges; timely claims. | Damages under ICAA/FDCPA require proof of injury; possible limitations issue. | Count II (ICAA damages) dismissed without prejudice; Count III (declaratory relief) dismissed without prejudice; FDCPA damages viable. |
| Is the FDCPA one-year statute of limitations a bar to claims? | Violation occurred within one year of filing; service date relevant. | Limitations clock may start at filing or service; potential tolling issues. | Limitations clock runs from service date; timeliness issue preserved for later challenge. |
Key Cases Cited
- Olvera v. Blitt & Gaines, P.C., 431 F.3d 285 (7th Cir. 2005) (waiver principles in debt collection assignments)
- Pielet v. Hiffman, 407 Ill.App.3d 788 (Ill.App.Ct. 2011) (clear and unequivocal act required to show waiver)
- Hahn v. Triumph Partnerships LLC, 557 F.3d 755 (7th Cir. 2009) (materiality of misrepresentations under FDCPA)
- O’Rourke v. Palisades Acquisition XVI, LLC., 635 F.3d 938 (7th Cir. 2011) (state court complaints can violate FDCPA when alleging debt misrepresentation)
- Berg v. Blatt, Hasenmiller, Leibsker & Moore, No. 07 C 4887, 2009 WL 901011 (N.D. Ill. 2009) (cases recognizing FDCPA scope over state court filings)
- Van Slyke v. Capital One Bank (USA), N.A., No. 06 C 7707, 2007 WL 2682878 (N.D. Ill. 2007) (regarding Regulation Z and periodic statements)