MEMORANDUM OPINION AND ORDER
Bеfore the Court are Defendants’ Motions to Dismiss Plaintiffs Corrected First Amended Complaint. For the reasons stated herein, the Court grants both Motions to Dismiss in part and denies them in part.
I. BACKGROUND
At the Motion to Dismiss stage, the Court accepts Plaintiffs well-pleaded factual allegations as true. Before 2004, Plaintiff Mark Terech had a credit card account with U.S. Bank. After he became delinquent in his payments, the account vyаs charged off (removed from U.S. Bank’s books) on August 31, 2004. At charge-off, U.S. Bank reversed a number of accrued fees, including some late fees and interest, reducing the charge-off amount to $2,475.87. U.S. Bank sent Plaintiff no additional account statements after the account was charged off.
U.S. Bank sold the debt to Unifund CCR Partners (“Unifund”) on January 25, 2005, listing the value of the debt as $2,475.87. The Bill of Sale attached to the Complaint, which purportеdly governs that sale, states that U.S. Bank assigned (as-is) its:
rights, title and interest in and to each of the assets identified in the AssetSchedule [not provided] ... together with the right to collect all principal, interest or other proceeds of any kind with respect to the Assets remaining due and owing as of the date hereof ... from and after the date of this Bill of Sale and Assignment of Assets.
Compl. Ex. C.
Defendant First Resolution Investment Corporatiоn (with Defendant First Resolution Management Corporation, “First Resolution”) allegedly purchased the debt on July 25, 2007, at which time the debt amount was still listed as $2,475.87. (The purchase price was significantly lower, reflecting the risk of non-collection. References to “face value” are accordingly understood to describe the amount of the delinquent debt as listed in the schedule of assets in each sale.) First Resоlution adjusted the amount owed by adding interest at a rate of 15.65%, dating back to the 2004 charge-off date, well before it owned the debt.
On March 11, 2009, the Law Office of Keith S. Shindler, Ltd. (“Shindler”) filed a collection action on First Resolution’s behalf in the Circuit Court of Cook County, seeking $4,385.80 (which included the principal, calculated interest, and $350.00 in legal fees). Plaintiff was served on or around September 29, 2010. It appears to be undisputed that the lawsuit was barred by the statute of limitations; it was non-suited in April 2011.
Plaintiff brings several claims on behalf of himself and putative classes of similarly situated consumers. Count I alleges that the retroactive addition of interest violated the federal Fair Debt Collection Practices Act (“FDCPA,” 15 U.S.C. § 1692 et seq.). Count II is a similar claim under the Illinois Collection Agency Act (“ICAA,” 225 111. Comp. Stat. 425/1 et seq.). Count III seeks declaratory and equitable relief on the same theory. Finally, Count IV is an individual ICAA claim, based on First Resolution’s time-barred lawsuit. Only Count I is brought against all defendants; the remainder are against First Resolution alone. Defendants now seek to dismiss all counts. The parties focus on Plaintiffs individual claims at this stage, and this Court accordingly defers questions regarding the viability of the proposed classes.
II. LEGAL STANDARD
On a Motion to Dismiss under Rule 12(b)(6), the Court accepts as true all well-pleaded facts in Plaintiffs Complaint and draws all inferences in his favor. Cole v. Milwaukee Area Tech. Coll. Dist.,
The FDCPA governs when and how debt collectors (those who buy delinquent debts) may endeavor to collect from indebted consumers. See 15 U.S.C. § 1692a. The statute broadly prohibits unfair or deceptive conduct in debt collections. For example, debt collectors may not use harassing or abusive conduct, 15 U.S.C. § 1692d, or unfair or unconscionable means, 15 U.S.C. § 1692f, to collect a debt. Unconscionable means include collecting any amount not authorized by law or the original debt agreement. The Act also
A debt collector who fails to comply with the FDCPA with regard to a consumer is liable to that consumer for the sum of: (1) any aсtual damages; (2) statutory damages up to $1000 (or up to $500,000 or 1% of the debt collector’s net worth in a class action); and (3) attorneys’ fees and costs. 15 U.S.C. § 1692k.
III. DISCUSSION
Both Defendants have moved to dismiss the Complaint, strenuously arguing that Plaintiff has alleged no unlawful conduct because First Resolution was entitled to collect interest dating back to 2004. Because both Motions largely hinge on whether Plaintiff has adequately allegеd that U.S. Bank and Unifund waived their rights to collect interest, the Court turns first to that question.
A. Retroactive Addition of Interest
Unifund and then First Resolution undisputedly stepped into the shoes of their respective assignors when they purchased Mr. Terech’s debt, taking that debt subject to any existing waivers or defenses. See Olvera v. Blitt & Gaines, P.C.,
Plaintiff argues that First Resolution unlawfully sought to collect interest that U.S. Bank and Unifund had knowingly waived, which was both deceptive (§ 1692e) and unfair (§ 1692f). Accordingly, Plaintiffs allegations are based on the FDCPA’s standards and do not, as Defendants argue, seek impermissibly to convert a state-court defense into a federal claim. Cf. Beler v. Blatt, Hasenmiller, Leibsker & Moore, LLC,
Contrary to Plaintiffs assertions, however, merely pleading that “U.S. Bank waived” is, at this stage, essentially a legal conclusion that this Court need not accept. Accordingly, the critical question is whether Plaintiff has alleged sufficient facts, taken as true, to show that U.S. Bank and Unifund waived interest that otherwise would have accrued after charge-off, such that First Resolution likewise cannot collect that interest. Plaintiff presses two facts relating to waiver: (1) that the “face value” of the debt each time it was sold was the same as the amount at charge-off, and therefore that no interest had been added to it; and (2) that U.S. Bank sent Plaintiff no periodic statements after charge-off, which it should have done if interest was accruing.
Defendants object that Plaintiffs claims are insufficient to prove waiver, and that
1. Face Value of Loan
Plaintiff alleges that the face value of the debt remained the same from the date of charge-off until First Resolution acquired it, which necessarily means that neither U.S. Bank nor Unifund added interest tо the amount due. (First Resolution’s argument that U.S. Bank would have zeroed out any interest on its accounting books when U.S. Bank sold the debt is irrelevant — the question is whether it added the interest in the first place, not how its accountants handled the sale.) Plaintiff offers detailed allegations about what banks commonly do — waiving interest on charged-off accounts to minimize the amount of “bad debt” on their books — but does specifically allege that U.S. Bank has such a policy. Therefore, those allegations, taken as true, establish (at most) U.S. Bank’s incentive to waive interest, and not its actual practice. All together, Plaintiffs allegations may not be sufficient to carry the day at trial, as they say nothing about the prior holders’ actual policies. However, the allegations are sufficient to create more than “a shеer possibility” that any interest was waived. Iqbal,
Defendants argue that the statement which U.S. Bank sent to Plaintiff when it charged off his account defeats any claim of waiver, because it specifies that interest will continue to accrue. Compl. Ex. D. However, drawing all inferences in Plaintiffs favor, such boilerplate only indicates that the waiver, if it occurred, was knowing — ’that U.S. Bank knew that it could still collect interest, but chose not to.
2. Absence of Periodic Statements
Plaintiff alleges that U.S. Bank did not send him any periodic statements after charging off his account. This is significant, he argues, because in 2004 the Truth In Lending Act (the “TILA”) regulations required the bank to send him a billing statement until it deemed the account “uncollectible,” at which point it would no longer be adding interest to the balance; the lack of statements thus would indicate an absence of new interest charges. (The duty tо send periodic statements did not extend to subsequent debt purchasers like Unifund. Neff v. Capital Acquisitions & Management Co.,
In 2004 and 2005, TILA’s Regulation Z required credit card creditors to send periodic statements to account holders for any billing cycle in which the account had a balance of more than one dollar or in which the creditor added a finance charge (such as interest). 12 C.F.R. § 226.5(b)(2)® (2005); 12 C.F.R. Pt. 226, Supp. I (2004); 12 C.F.R. § 226.4(b) (defining “finance charge” to include interest). At that time, a creditor did not have to send statements if: (1) if sending one would have violated federal law; (2) delinquency collection proceedings had been instituted; or (3) it had deemed the account uncollectible. See 12 C.F.R. § 226.5(b)(2)® (2005). All parties assume that U.S. Bank stopped sending Plaintiff statements under the “uncollectibility” prong. Effective July 1, 2010, the regulation was clarified to explain that a creditor has deemed an account “unсollectible” when it stops trying to collect on it. 74
While earlier cases equated charge-off and uncollectibility, the clarification rejects that result and the cases adopting it, like Van Slyke v. Capital One Bank,
Accordingly, the 2004 regulation did not permit a creditor to automatically stop sending statements after charge-off. Still, it is difficult to see what the discontinued statements add to Plaintiffs waiver аrgument. Plaintiff argues that the determination of uncollectibility is important because adding interest to the account would have indicated that U.S. Bank deemed the account collectible, pointing to an IRS regulation relating to disclosure of discharge of indebtedness income. 26 C.F.R. § 1.6050P-1. However, Plaintiff has identified no authority for construing § 226.5 by reference to § 1.6050P-1, and this Court has found none. Cf. Murray v. Citibank (S.D.), N.A., No. 04 C 3294,
B. § 1692e
Having concluded that Plaintiff has adequately alleged waiver in support of his FDCPA claim, the Court turns to Shindler’s additional challenges to Count I. Most of Shindler’s objections are necessarily dispensed with under the analysis above, or amount to attacks on the merits, and need not detain us long. There are, however, two arguments relating to § 1962e buried in his brief that merit further consideration. The first is that the statements in the state сourt complaint were immaterial and therefore not misleading, because however much interest was claimed on a genuine debt would not affect a consumer’s behavior; the second is that a state court complaint does not amount to a false representation within the meaning of the statute.
First, the Court disagrees that the alleged misrepresentation is immaterial. The Seventh Circuit exрlained the materiality requirement in Hahn v. Triumph Partnerships LLC,
The Court likewise disagrees that the state court complaint cannot amount to a false representation of the character, amount, or legal status of Plaintiffs debt. The Seventh Circuit has declined to rule on whether complaints filed in state court, in the sense that they communicate with the consumer, can violate the FDCPA. See O’Rourke v. Palisades Acquisition XVI, LLC.,
C. § 1692f
Shindler also argues that Plaintiff has not shown an unfair or unconscionable means of collecting that under § 1692f. He first argues that the mere filing of a lawsuit is not oppressing or harassing. However, his argument and the cases he cites interpret § 1692d, not § 1692f, and are therefore inapposite.
Next, Shindler arguеs that there is no evidence that he knew of any waiver. Several provisions of the FDCPA predicate liability on knowing violations, see § 1692c(a)(2), but § 1692f does not appear to be among them. See Randolph v. IMBS, Inc.,
Finally, Shindler argues that because the credit card agreement provided for interest charges, Plaintiff cannot show any attempted “collection of any amount (including any interest[) ]” not “expressly authorized by the agreement creating the debt or permitted by law.” 15 U.S.C. § 1692f(l). The Court agrees that § 1692f(l) appears to be directed at debt collectors who charge fees not contemplated by the original agreement, not debt collectors who seek to charge fees contemplated by the agreement but arguably waived thereafter. See Transamerica Financial SVS, Inc. v. Skyes, No. 97 C 2568,
Defendants challenge whether Plaintiff adequately pled damages under either the ICAA or the FDCPA, because, although he appeared to defend the suit, it was dismissed without his having to pay the debt or any interest. Shindler argues that under the FDCPA, a plaintiff must show actual damages before statutory damages may be awarded. This is incorrect. See Anderson v. Credit Bureau Collection Servs., Inc.,
First Resolution makes a stronger argument under the ICAA. Reviewing courts in Illinois appeаr not to have addressed whether actual damages are required under the ICAA; however, several district courts have found that they are. See Grant-Hall v. Cavalry Portfolio Services, LLC,
First Resolution further argues, however, that Plaintiffs having to appear and defend the case is not an injury specific to the harm alleged here — the allegedly unlawful addition of retroactive interest. (Plaintiff did not respond to this argument in his surreply.) There is a certain perversity in the argument that Plaintiff sufferеd no damage by the allegedly unlawful addition of interest, because he already had to appear to contest the suit as time-barred. That issue aside, however, the Complaint does not adequately allege an injury specific to the purportedly unlawful addition of interest under Count II. Accordingly, the Court dismisses Count II without prejudice.
E. Availability of Declaratory Relief
First Resolution argues that Plaintiff is not entitled to declaratory relief in Count III, noting that it is within this Court’s discretion to deny declaratory relief where the governing statute offers more complete remedies. In attacking the necessity and relevance of declaratory relief, however, First Resolution largely ignores Plaintiffs additional request for injunctive relief. Without citing to a statute, Plaintiff asks this Court to declare First resolution’s actions “unlawful.” It is unclear by what metric Plaintiff would have the conduсt evaluated, except the FDCPA and ICAA. Injunctive relief is not available to private litigants under the FDCPA. Zanni v. Lippold,
F. Statute of Limitations
On December 16, 2011 the Court sought supplemental briefing from thе parties as to whether this action was time-barred under the FDCPA’s one-year statute of limitations, given that the state-court suit was filed in 2009. See 15 U.S.C. § 1692k(d) (FDCPA claims must be brought within one year of the violation). There is no dispute that the lawsuit was filed in 2009, but was not served upon Plaintiff until September 2010. Compl. Ex. A.
IV. CONCLUSION
For the reasons stated herein, the Court rules as follows:
1. Denies the Motions to Dismiss Count I as to all but the claim under § 1692f(l);
2. Grants the Motions to Dismiss Count II without prejudice; and
3. Grants the Motions to Dismiss Count III without prejudice.
IT IS SO ORDERED.