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Sims v. Immediate Credit Recovery Inc.

United States District Court, E.D. Wisconsin

November 21, 2017

RACHAEL SIMS, Plaintiff,



         1. INTRODUCTION

         Plaintiff obtained a student loan through the Department of Education (“DOE”). When she defaulted on the loan, the DOE brought in Defendant Immediate Credit Recovery, Inc. (“ICR”) to help collect what was owed. The DOE also began administratively garnishing Plaintiff's wages. Plaintiff contacted ICR in an attempt to stop the garnishment. Over several months, Plaintiff worked with ICR to become eligible for the DOE's loan rehabilitation program, which would end the garnishment. Plaintiff's lawsuit alleges that ICR obstructed her efforts to enter the program, unnecessarily prolonging her garnishment. She maintains that this conduct violated the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., and the Wisconsin Consumer Act (“WCA”), Wis.Stat. § 427 et seq.

         On September 5, 2017, ICR filed a motion for summary judgment. (Docket #40). Plaintiff opposed the motion on October 9, 2017, and ICR replied on October 23, 2017. (Response, Docket #49; Reply, Docket #51). Plaintiff then sought leave to submit a sur-reply, alleging that ICR raised new arguments in its reply brief. (Docket #53). The Court will grant that motion and accept Plaintiff's sur-reply. It does not change the result-summary judgment is appropriate in ICR's favor on all of Plaintiff's claims.


         Federal Rule of Civil Procedure 56 states that the “court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Boss v. Castro, 816 F.3d 910, 916 (7th Cir. 2016). A “genuine” dispute of material fact is created when “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court construes all facts and reasonable inferences in a light most favorable to the non-movant. Bridge v. New Holland Logansport, Inc., 815 F.3d 356, 360 (7th Cir. 2016). In assessing the parties' proposed facts, the Court must not weigh the evidence or determine witness credibility; the Seventh Circuit instructs that “we leave those tasks to factfinders.” Berry v. Chicago Transit Auth., 618 F.3d 688, 691 (7th Cir. 2010).


         Upon review of the parties' factual briefing, the Court finds that the following facts are material to ICR's motion. The Court notes the parties' disputes where appropriate.[1] ICR works for the DOE to help collect delinquent DOE-issued student loans. ICR receives a commission for this work, which in Plaintiff's case was 15.2% of the wages which had been garnished from her. The DOE refers to ICR, and the many other companies performing similar services, as “private collection agencies” or “PCAs.” The activities of PCAs are governed by a DOE-issued document known as the PCA manual (the “Manual”), as well as various laws. PCAs are charged not only with collecting student loans, but assisting in rehabilitating defaulted loans. Rehabilitation is one way to end wage garnishment for a borrower in default.

         PCAs use a multi-step process to determine eligibility for loan rehabilitation. First, they obtain information about the borrower's income, expenses, and family size over the phone. The PCA uses that information to arrive at an estimated rehabilitation payment. The borrower immediately begins making estimated payments, while also sending a “Financial Disclosure for Reasonable and Affordable Rehabilitation Payments” form (“Financial Disclosure” form) and income verification documents (such as pay stubs) to the PCA. Once all of the documents and forms are submitted, the information is processed by the PCA and the DOE. The borrower must also make nine of the estimated monthly payments to qualify for rehabilitation.

         If they confirm the borrower is eligible for loan rehabilitation, the PCA sends a rehabilitation agreement letter (“RAL”) containing the final terms. The final rehabilitation payment stated therein may be higher or lower than the estimated payment. If it is higher, the borrower has an opportunity to challenge that figure. If the borrower accepts the terms of the RAL, they must sign and return it to the PCA. Only then is the borrower formally entered into the rehabilitation program. Plaintiff says that according to the Manual, the RAL must be sent within fifteen days of receiving the borrower's completed paperwork.

         On April 30, 2016, the DOE placed Plaintiff's defaulted student loan with ICR for collection. In October 2016, wage garnishment began.[2] At that time, Plaintiff attempted to contact ICR. She called and left messages with ICR on October 20, and the called on each day from November 1 to November 4, 2016. She was unable to speak with someone in the department handling her loan, however, and ICR could not reach her each time it tried calling back.

         Finally, on November 28, 2016, Plaintiff spoke with an ICR representative, Ashley Hunter (“Hunter”). Hunter told Plaintiff about the loan rehabilitation program. She noted that an active wage garnishment may be suspended after the fifth consecutive estimated rehabilitation payment is made, so long as the borrower has met all of the other requirements for rehabilitation. Hunter further stated that Plaintiff was required to send in proof of her income, and that “[o]nce your proof of income is received and reviewed, a [RAL] will be sent to you within 15 days.” (Docket #48 at 8). Finally, Hunter informed Plaintiff that she would not be entered into the rehabilitation program until the Financial Disclosure and RAL forms were signed and returned, and advised Plaintiff to complete those tasks as soon as possible.[3]

         Hunter then took Plaintiff's relevant financial information. Plaintiff's statements indicated that she had one dependent and a family size of two, meaning that her estimated rehabilitation payment was five dollars. Hunter told Plaintiff she could make her payment over the phone or by mail. Hunter said that a payment made that day would be credited to November 2016 (thus speeding along Plaintiff's path towards rehabilitation). Plaintiff made a payment over the phone at that time. On December 30, 2016, Plaintiff called to make her next payment. No one was available to take her call, so she left a message.

         In a January 10, 2017 conversation with ICR, ICR's representative said that the November 2016 payment was posted on December 1, 2016. To Plaintiff, this suggested that the payment was credited to December 2016. Thus, in her view, it had not been not processed in accordance with Hunter's promise in the November 28 telephone conversation. ICR explains that the even though the payment was posted on December 1, it still counted as a November payment. In fact, ICR states that Plaintiff could have elected to apply the payment to November or December. Shifting the payment from one month to the other may have assisted Plaintiff in completing the above-described steps towards entry into the rehabilitation program.[4] Plaintiff was not told about these policies, however, during the January 10 conversation or at any other time.

         Plaintiff faxed the Financial Disclosure form and her paystubs to ICR on April 25, 2017. In an affidavit submitted with her response brief, Plaintiff explains that she waited to send in the documents because she wanted to complete the five payments required to suspend the garnishment. By her calculation, her fifth payment was made in April 2017. If she had been told about the ability to move the November 2016 payment to December 2016, she could have reached her fifth payment in March 2017. Plaintiff further states that ICR did not process her paperwork within fifteen days as they had promised to do. Instead, it took ICR seventy-one days to process her documents and issue the RAL.

         ICR counters that the fifteen-day period only began once it reviewed her documents, not simply upon their receipt. Further, it claims that Plaintiff's instant explanation for waiting until April 2017 to return her paperwork contradicts her deposition testimony. During her deposition, she stated that she waited because of her difficulties in obtaining the paperwork in October and November 2016. She acted in April 2017 apparently upon advice from her lawyer. Finally, as to Plaintiff's focus on the continuing garnishment, ICR informed her in the November 28 conversation that she could request a hearing to dispute the garnishment at any time.

         Plaintiff's account was placed in a suspended status when ICR received this lawsuit on January 26, 2017. ICR says that it does not communicate with borrowers who are in suspended status. Thus, when it received Plaintiff's paperwork in April 2017, ICR claims that it could not contact Plaintiff. Plaintiff counters that ICR spoke with her a number of times to take monthly payments. ICR also communicated about the garnishment through Plaintiff's counsel.

         In fact, Plaintiff's counsel asked ICR about the status of Plaintiff's rehabilitation paperwork on June 13, 2017.[5] Plaintiff's counsel was told that Plaintiff had left blank the “family size” portion of the Financial Disclosure form. ICR implies that it did not contact Plaintiff earlier about this issue because of the suspended status of Plaintiff's account. In accordance with DOE standards, when confronted with the blank family size on Plaintiff's Financial Disclosure form, ICR defaulted to a family size of one. This meant that, from ICR's perspective, Plaintiff's five dollar monthly payments were too low and did not count towards her entry into the rehabilitation program.

         This was, of course, different than the information Plaintiff provided in the November 2016 phone call, and ICR claimed that they were required to use what was in the form. On June 29, 2017, ICR, via counsel, asked Plaintiff, via counsel, to complete another Financial Disclosure form consistent with the telephone information. The updated form was provided on June 30, 2017. Plaintiff's updated form corrected the issue by confirming that Plaintiff's family size was two. This allowed Plaintiff to receive appropriate credit for her earlier payments. ICR performed this review on July 5, 2017. Normally, however, it was ICR's practice to process the Financial Disclosure form and related paperwork within 48 hours of receipt.

         With the paperwork correctly completed, ICR was finally able to send Plaintiff her RAL on July 6, 2017. Plaintiff signed and returned the letter that same day. ICR notified the DOE that it should stop the garnishment on August 1, 2017. The last garnishment occurred in Plaintiff's July 2017 paycheck. Plaintiff maintains that the Manual require the RAL to be processed within three days, meaning that ICR's stop order was extremely late. ICR objects to the version of the Manual provided by Plaintiff, which contains this three-day limit, because it lacks foundation and is heavily redacted for unknown reasons. See (Docket #50-3 at 69-98).[6]

         As to the saga of the improperly-completed Financial Disclosure form, Plaintiff says it was largely unnecessary. She suggests that ICR should have used a family size of one-a default assumption contained in ICR's training materials-to complete its review of her paperwork.[7] ICR would have then been equipped to issue the RAL within fifteen days of receiving Plaintiff's April 25, 2017 fax. Again, Plaintiff believes this fifteen-day turnaround time was promised to her at the beginning of the rehabilitation process. Plaintiff also cites the relevant portion of the Manual, which states that “the PCA must send the RAL letter within 15 days of the receipt of all required documentation.” Id. at 87. Plaintiff could have then objected to the payment amount listed in the RAL. Plaintiff asserts that all of this would have resulted in stopping the garnishment sooner.

         ICR stresses that “all required documentation” must actually be received, which was not the case on April 25, 2017, namely with respect to the incomplete Financial Disclosure form. Plaintiff finds that this contention, supported by ICR's internal policies, is in conflict with the Manual. ICR argues that “[l]ogically, . . . ICR must actually review the documents it receives for ...

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