SARAH EVANS BARKER, District Judge.
Plaintiff filed his original Complaint on July 12, 2013. [Dkt. No. 1.] On October 3, 2013, Defendants filed a motion to dismiss. [Dkt. No. 22.] That motion was fully briefed on November 19, 2013. [See Dkt. No. 42.] On May 2, 2014, Plaintiff sought leave of Court to amend his complaint [Dkt. No. 53], which was granted on June 3, 2014 [Dkt. No. 54]. Consequently, Defendants' October 3, 2013 Motion to Dismiss the original complaint at Docket Number 22 is
In response to Plaintiff's Amended Complaint, Defendants filed a Motion to Dismiss on June 23, 2014. [Dkt. No. 59.] Because Defendants' original Motion to Dismiss was still pending at the time, Defendants incorporated their arguments contained in that motion and brief. Consequently, the Court will consider the parties' arguments related to both motions to dismiss in deciding Defendants' Motion to Dismiss the Amended Complaint.
Plaintiff Stephen Morgan complains that Defendants LVNV Funding LLC, Nelson Watson & Associates, LLC, Northland Group, Inc., and Resurgent Capital Services, LP violated the Fair Debt Collection Practices Act ("FDCPA") in three ways. First, Plaintiff alleges that Defendants misrepresented the amount owed as evidenced by the discrepancy in the debt amount contained in two letters, Plaintiff's credit report and the Proof of Claim Defendant Resurgent Capital Services filed on behalf of LVNV Funding in Plaintiff's Chapter 13 bankruptcy action. Second, Plaintiff alleges that Defendants do not legally own the debt they attempted to collect. Third, Plaintiff alleges that after he filed for bankruptcy, Defendant Nelson "contacted the Plaintiff directly via telephone call on July 22, 2013," in violation of the FDCPA. Defendants argue that Plaintiff's Amended Complaint fails to state a claim upon which relief can be granted and move to dismiss. We
A motion to dismiss tests the legal sufficiency of the complaint. McReynolds v. Merrill Lynch & Co., 694 F.3d 873, 878 (7th Cir. 2012). To survive a motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939, 946 (7th Cir. 2013) (citations omitted).
"As a general matter, we view the confusing nature of a dunning letter as a question of fact, that, if well-pleaded, avoids dismissal on a Rule 12(b)(6) motion." Zemeckis v. Global Credit & Collection Corp., 679 F.3d 632, 636 (7th Cir. 2012) (citations omitted). Although district courts must "tread carefully before holding that a letter is not confusing as a matter of law when ruling on a rule 12(b)(6) motion . . . a plaintiff fails to state a claim and dismissal is appropriate as a matter of law when it is `apparent from a reading of the letter that not even a significant fraction of the population would be misled by it.'" Id. (citing McMillan v. Collection Prof'ls, Inc., 455 F.3d 754, 759 (7th Cir. 2006); Taylor v. Cavalry Inv., L.L.C., 365 F.3d 572, 574 (7th Cir. 2004)).
Plaintiff alleges that Defendants' communications with Plaintiff in an attempt to collect a debt violated the FDCPA. Specifically, Plaintiff alleges that on August 2, 2012, Defendant Northland sent a settlement letter to Plaintiff claiming the current balance on his HSBC/Hsbc Card Services account was $971.13 and offering to settle for $242.76. [Dkt. No. 57-6.]
Plaintiff alleges that his Experian credit report shows varying monthly reports of the balance on the same account beginning in November 2011 at $946 continuing through December 2012 at $985. [Dkt. 57-8.] The monthly incremental increase in the account balance reported on Plaintiff's credit report varies over time. On June 26, 2013, Defendant Resurgent Capital Services submitted a proof of claim alleging that at the time Plaintiff filed for bankruptcy (March 6, 2013 as per Dkt. No. 57 at ¶ 41), LVNV was owed $468.00 on Plaintiff's HSBC account. [Dkt. No. 57-11.] Plaintiff alleges that because Defendant Resurgent Capital Services did not check the box on the Proof of Claim stating "Check this box if the claim includes interest or other charges in addition to the principal amount of the claim" that "no interest is due on this account." [Dkt. No. 57 at ¶ 52; Dkt. No. 57-11.]
The gravamen of Plaintiff's claim is that Defendants violated the FDCPA by stating different amounts were owed by Plaintiff in multiple communications over time. [See Dkt. No. 57 at First Claim for Relief: ¶¶ 2-5.] FDCPA claims are evaluated from the perspective of an "unsophisticated consumer or debtor" who is "uniformed, naïve, [and] trusting," but possesses "rudimentary knowledge about the financial world, is wise enough to read collection notices with added care, possesses `reasonable intelligence,' and is capable of making basic logical deductions and inferences." Williams v. OSI Educ. Servs., Inc., 505 F.3d 675, 678 (7th Cir. 2007) (citing Pettit v. Retrieval Masters Creditor Bureau, Inc., 211 F.3d 1057, 1060 (7th Cir. 2000)). Multiple courts have held that "even the most unsophisticated consumer would understand that credit card debt accrues interest." Weiss v. Zwicker & Assocs., P.C., 664 F.Supp.2d 214, 217 (E.D.N.Y. 2009); see also, e.g., Leffler v. Miller & Steeno, P.C., No. 4:13cv1764 TCM, 2014 WL 1613946 at *3 (E.D. Mo. Apr. 22, 2014); Ivy v. Nations Recovery Center, Inc., No. 2:12-CV-037, 2012 WL 2049387, at *2 (E.D. Tenn. June 6, 2012); Schaefer v. ARM Receivable Mgmt., Inc., Civil Action No. 09-11666-DJC, 2011 WL 2847768, at *5 (D. Mass. July 19, 2011).
Plaintiff argues that "[a]ll of the alleged amounts by the Defendants cannot be correct" and characterizes the debt amount as changing in an "inconsistent manner." [Dkt. No. 63 at 7; Dkt. No. 38 at 7.] We disagree with that description of the facts based on what Plaintiff has alleged in the Amended Complaint and the exhibits attached thereto. The allegations in the Amended Complaint show that Plaintiff's credit card balance increased each month as interest accrued over time. The settlement letter dated August 2, 2012 shows a current balance of $971.13. [Dkt. No. 57-6.] The dunning letter dated October 23, 2012 provides:
[Dkt. No. 57-7.] The October dunning letter also states: "[a]s of the date of this letter, you owe $979.72. Because of interest, the amount due on the day you pay may be greater." [Id.] Plaintiff's credit report shows a debt steadily increasing over time beginning in November 2011 through December 2012. [Dkt. No. 57-8.] Plaintiff as the unsophisticated consumer would understand that credit card debt accrues interest. See Weiss, 664 F. Supp. 2d at 217.
Plaintiff alleges that no interest was due on this account at any time based on Defendants' Proof of Claim. [Dkt. No. 57 at ¶ 52.] Plaintiff contends that because Defendants did not check the box on the Proof of Claim to indicate that interest was included in the claim amount, Defendants "represented to the U.S. Bankruptcy Court that interest did not apply to this account." [Dkt. No. 38 at 3 (Plaintiff's response to original Motion to Dismiss).] This is not what the Proof of Claim states. Specifically, the Proof of Claim provides:
If all or part of the claim is secured, complete item 4.
If all or part of the claim is entitled to priority, complete item 5.
[Dkt. No. 57-11 (items 4 and 5 were not completed and no check was placed in the box).] The Proof of Claim form states that the amount of the claim ($486.00) does not include interest, not that interest never accrued on the account. Although it remains unclear why Defendants would not include interest in their bankruptcy claim, Plaintiff's allegation that "no interest is due on this account" contradicts the plain language of the Proof of Claim attached as an exhibit to the Amended Complaint. The Proof of Claim takes precedence over Plaintiff's contradictory allegations. See Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1019 (7th Cir. 2013) (citing Forrest v. Universal Sav. Bank, F.A., 507 F.3d 540, 542 (7th Cir. 2007) ("To the extent that an exhibit attached to or referenced by the complaint contradicts the complaint's allegations, the exhibit takes precedence.")).
The purpose of the FDCPA is to "protect consumers against debt collection abuses." 15 U.S.C. § 1692(e). As a result, "to be actionable a misleading statement must have the ability to influence a consumer's decision." O'Rourke v. Palisades Acquisition XVI, LLC, 635 F.3d 938, 942 (7th Cir. 2011) (emphasis in the original) (citing Hahn v. Triumph P'ships LLC, 557 F.3d 755, 758 (7th Cir. 2009) ("A statement cannot mislead unless it is material, so a false but non-material statement is not actionable.")). Here, Plaintiff has not alleged that Defendants' letters, reports to the credit agency or Proof of Claim misled him or influenced his decisions. Plaintiff quotes the Seventh Circuit that when a complaint "alleges that a dunning letter is confusing . . . the plaintiff has stated a recognizable legal claim; no more is necessary to survive a Rule 12(b)(6) motion." [Dkt. No. 63 at 7 (citing McMillian v. Collection Prof'ls, Inc., 455 F.3d 754, 759 (7th Cir. 2006)).]
The documents attached to Plaintiff's Amended Complaint clearly show: (1) a settlement offer on a "current balance" of $971.13 on August 2, 2012; (2) a dunning letter seeking payment of $979.72 on October 23, 2012, of which $468.00 is principal; (3) a credit history showing an account balance that gradually increased from November 2011 through December 2012; and (4) a Proof of Claim that makes a claim for the principal of $468.00 which did not include any interest or fees. [Dkt. Nos. 57-6, 57-7, 57-8, 57-11.] At most, Plaintiff may have been confused as to why the Defendants would not have requested interest or fees in the amount of their bankruptcy claim.
Plaintiff alleges that Defendants violated the FDCPA because they "do not legally own the debt they are attempting to collect." [Dkt. No. 57 at ¶ 54.] Plaintiff includes no factual allegations to support this legal conclusion and indeed contradicts this conclusion with exhibits attached to the Amended Complaint. Plaintiff attaches to his Amended Complaint the Proof of Claim filed by Defendants. [Dkt No. 57-11.] The Proof of Claim, verified by Susan Gaines of Resurgent Capital Services, identifies LVNV Funding, LLC it successors and assigns as assignee of Arrow Financial Services, LLC as the "Creditor." Moreover, LVNV is identified as the account owner and creditor in both letters to Plaintiff and on his credit report. [See Dkt. Nos. 57-6 through 57-8.]
Plaintiff's legal conclusion is unsupported by any factual allegation and is contradicted by the exhibits attached to the Amended Complaint. "To the extent that an exhibit attached to or referenced by the complaint contradicts the complaint's allegations, the exhibit takes precedence." Phillips, 714 F.3d at 1019. Consequently, Plaintiff has not stated a claim upon which relief can be granted as to his claim that "Defendants violated the FDCPA pursuant to 15 U.S.C. § 1692e by attempting to collect a debt they do not legally own."
Plaintiff's Amended Complaint contains new allegations related to an alleged telephone call by Defendant Nelson to Plaintiff after Plaintiff filed for bankruptcy. Plaintiff alleges that Defendants received notice of Plaintiff's Chapter 13 filing by letter dated March 8, 2013. [Dkt. No. 57 at ¶ 43.] Plaintiff contends that after receiving that notice, Defendant Nelson "contacted the Plaintiff directly via telephone call on July 22, 2013." [Id. at ¶ 45.]
Plaintiff attaches to his Amended Complaint Defendant Nelson's notes. [Dkt. No. 57-10.] Nelson's notes provide:
Mon July 22, 2013, 08:21:18 AUDITOR01 Phoned: STEPHEN MORGAN at Cell Scrub (Manual Dial) dialed: 3174455677 Mon July 22, 2013, 08:21:21 AUDITOR01 Number Restricted, but was not called.
The exhibit at Docket Number 57-10 shows that Plaintiff Stephen Morgan was not called on July 22, 2013 by Defendant Nelson.
Defendants argue that Plaintiff fails to state a claim upon which relief can be granted based on this exhibit. We agree. Plaintiff did not respond to this glaring inconsistency between Plaintiff's allegations and the exhibit attached to the Amended Complaint. Plaintiff cannot ignore these facts that contradict his claim. As a result, Plaintiff has failed to plead a claim upon which relief can be granted in his Amended Complaint.
Defendants' initial Motion to Dismiss requested dismissal of Plaintiffs' claims with prejudice, as does their Motion to Dismiss the Amended Complaint. In their original Reply Brief, Defendants argued that "there isn't enough substance to the Complaint to warrant continuing this case under the current Complaint." [Dkt. No. 42 at 7.] This is strikingly different from seeking a permanent dismissal of Plaintiff's claims.
The Court finds that Plaintiff's Amended Complaint filed on June 9, 2014 [Dkt. No. 57] fails to state a claim upon which relief can be granted. Defendants' Motion to Dismiss [Dkt. No. 59] is