United States District Court, W.D. Wisconsin
OPINION & ORDER
D. PETERSON, District Judge.
case arises out of a debt that plaintiff Patricia Murphy owed
to Associated Bank. Murphy filed for bankruptcy and received
a discharge, In re Murphy, No. 09-17656 (Bankr. W.D.
Wis.), but in 2016, defendant Stupar, Schuster & Bartell, SC,
filed an action in state court on Associated's behalf in
which it sought to enforce a reaffirmation agreement between
Murphy and Associated. Murphy's position in the state court
lawsuit is that the affirmation agreement is not enforceable
because it does not meet all the requirements for such
agreements in 11 U.S.C. § 524. In her complaint in this
court, Murphy contends that Stupar violated the Fair Debt
Collection Practices Act, 15 U.S.C. § 1692e, because
Stupar “falsely represented the character and legal
status of the debt by filing, and maintaining, a legal action
against Patricia Murphy” for an invalid debt. Dkt. 1,
has filed a motion to dismiss the complaint under Rule
12(b)(6) of the Federal Rules of Civil Procedure, or, in the
alternative, to abstain from hearing the case until the state
court lawsuit is resolved. Dkt. 5. Because Stupar has not
shown that it is entitled to either form of relief, the court
will deny the motion.
Stupar raises abstention as an “alternative” to
its motion to dismiss, Dkt. 6, at 6, abstention generally is
considered a “threshold” question that is decided
before the merits. Tenet v. Doe, 544 U.S. 1, 6 n.4
(2005); Local Union No. 12004, United Steelworkers of Am.
v. Massachusetts, 377 F.3d 64, 76 (1st Cir. 2004).
Regardless, the issue appears to be moot. Stupar asks the
court to abstain from hearing this case under Colorado
River Water Conservation Dist. v. United States, 424
U.S. 800 (1976), while the state court action is pending, but
the electronic docket for the Wisconsin state courts shows
that the Circuit Court for Dane County dismissed
Associated's claim against Murphy and entered judgment in
her favor. Associated Bank, NA v. Gaffney, No.
2016cv2048 (Dane Cty. Cir. Ct. Dec. 20, 2017).
state court docket does not show the reason for the dismissal
of the claim against Murphy (and the parties haven't
provided any information), but the state court found in favor
of Associated on the claim against Gaffney, suggesting that
the court dismissed the claim against Murphy for a reason
unique to her, which could be her bankruptcy discharge.
Whatever the reason, the state court litigation appears to be
concluded. And even if it weren't, Stupar's
own view is that the state court litigation is not
dispositive of Murphy's claim in this court, Dkt. 6, at 6
n. 2, so Stupar has not shown that this is one of the
“rare” cases, Growe v. Emison, 507 U.S.
25, 32 (1993), in which it would be appropriate to make an
exception to the “virtually unflagging obligation of
the federal courts to exercise the jurisdiction given
them.” Colorado River, 424 U.S. at 817.
neither side has filed a supplemental brief about the effect,
if any, of the state court's decision on this case, the
court will not consider that issue now. If any party believes
that the state court's decision is preclusive, that party
may raise the issue in a motion for summary judgment.
is bringing her claim under 15 U.S.C. § 1692e, which
states that “[a] debt collector may not use any false,
deceptive, or misleading representation or means in
connection with the collection of any debt.” The
statute lists 16 nonexhaustive examples of prohibited
conduct, including “[t]he false representation of . . .
the character, amount, or legal status of any debt.”
§ 1692e(2). The question raised by Stupar's motion
is what qualifies as a “false, deceptive, or misleading
representation or means” in the context of state court
basic points appear to be undisputed. First, § 1692e
applies to a lawyer's conduct that occurs in the context
of litigation. Heintz v. Jenkins, 514 U.S. 291
(1995). Second, the complaint itself may qualify as a false
representation under § 1692e. Marquez v. Weinstein,
Pinson & Riley, P.S., 836 F.3d 808, 810 (7th Cir. 2016).
For example, in Phillips v. Asset Acceptance, LLC,
736 F.3d 1076, 1079 (7th Cir. 2013), the court held that
filing a time-barred debt collection action is itself a
violation of § 1692e “because such a suit falsely
implies that the debt collector has legal recourse to collect
the debt.” Eul v. Transworld Sys., No. 15 C
7755, 2017 WL 1178537, at *8 (N.D.Ill. Mar. 30, 2017) (citing
Phillips, 736 F.3d at 1079). See also Rehman v. Pierce &
Assocs., P.C., No. 16 C 5178, 2017 WL 131560, at *4
(N.D.Ill. Jan. 13, 2017) (“The filing of a legally
defective debt collection suit can violate § 1692e where
the filing falsely implies that the debt collector has legal
recourse to collect the debt.”).
case, Murphy's view is that the state court complaint
falsely implies that Associated has a legal right to collect
a discharged debt. Randolph v. IMBS, Inc., 368 F.3d
726, 728 (7th Cir. 2004) (“A demand for immediate
payment . . . after the debt's discharge . . . is
‘false' in the sense that it asserts that money is
due, although, because of the . . . discharge injunction (11
U.S.C. § 524), it is not.”). See also McMahon
v. LVNV Funding, LLC, 744 F.3d 1010, 1020 (7th Cir.
2014) (“Whether a debt is legally enforceable is a
central fact about the character and legal status of that
debt. A misrepresentation about that fact thus violates the
FDCPA.”). Although Stupar says that it has a
reaffirmation agreement with Murphy, she says that the
agreement is unenforceable under § 524 because it is
missing certain required information.
acknowledges that Murphy is disputing the validity of the
debt, but its position is that a complaint seeking to collect
a debt is not “false, deceptive, or misleading”
if it is filed in “good faith.” Dkt. 17, at 3.
Stupar suggests that a complaint does not violate §
1692e unless: (1) the debt is “on its face, patently
invalid”; or (2) a court has already determined the
debt to be invalid. Id. at 4.
abstract, Stupar's position has some force. If acting in
good faith does not defeat a claim under § 1692e, then a
debt collector subjects itself to potential liability under
the FDCPA any time it seeks to enforce a disputed debt. But
at least at this ...