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Satran v. LVNV Funding, LLC

United States District Court, W.D. Wisconsin

June 1, 2018

JOHN SATRAN, Plaintiff,
v.
LVNV FUNDING, LLC, and MESSERLI & KRAMER, PA, Defendants.

          OPINION & ORDER

          JAMES D. PETERSON DISTRICT JUDGE.

         This case arises out of a debt-collection action that defendant Messerli & Kramer, PA, filed on behalf of its client, defendant LVNV Funding, LLC, against plaintiff John Satran. See LVNV Funding, LLC v. Satran, No. 2017-SC-5749 (Dane Cty. Cir. Ct. filed Sept. 11, 2017). In his complaint in this court, Satran contends that defendants violated a provision of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692e, and a provision of the Wisconsin Consumer Act (WCA), Wis.Stat. § 427.104, because defendants failed to give Satran notice of his right to cure default before filing suit against him and falsely represented that an attorney was meaningfully involved in the debt collection process. Dkt. 1. Defendants have moved to dismiss the complaint for lack of subject-matter jurisdiction and for failure to state a claim. Dkt. 11 and Dkt. 16. The court will deny defendants' motions.

         ALLEGATIONS OF FACT

         The court draws the following facts from Satran's complaint, Dkt. 1, and documents referred to in it, and accepts them as true for the purposes of deciding defendants' motion. Lee v. City of Chicago, 330 F.3d 456, 468 (7th Cir. 2003).

         On September 11, 2017, Satran was served with a summons and small claims complaint notifying him that he was being sued by “LVNV Funding LLC as successor in interest to Credit One Bank, N.A., c/o Messerli & Kramer PA” for $603.95 in credit card debt. Dkt. 14-1, at 1. Satran had never received notice that he was in default on any account, that he had the right to cure default, or that any debt he owed had been assigned to LVNV.

         The small claims complaint was signed by Jillian Walker, a Messerli attorney representing LVNV. From 2007 to 2017, Walker was listed as attorney of record in 10, 162 cases in five Wisconsin counties. She also practices in Minnesota.

         On November 27, 2017, Satran filed this lawsuit against LVNV and Messerli asserting three causes of action. First, he claims that defendants violated § 1692e of the FDCPA by falsely representing that LVNV had the right to file suit against him, when in fact, LVNV did not have the right to file suit because it had not given him notice of his right to cure default, as required by section 425.104 of the WCA. Second, he claims that defendants violated section 427.104(1)(j) of the WCA by filing suit against him without first giving him notice of his right to cure default. Third, he claims that defendants violated § 1692e of the FDCPA by falsely representing “that an attorney was meaningfully involved in the debt collection process when . . . . [i]n fact, there was no meaningful attorney involvement.” Dkt. 1, ¶ 38. He alleges that these three statutory violations caused him “emotional distress at being sued on a debt he did not believe could be the subject of a lawsuit at that time, and without notice that any such suit might be forthcoming.” Id. ¶ 41. More specifically, he suffered “anxiety over the lawsuit, worries about whether he could find and afford a lawyer, ” and “difficulty concentrating.” Id.

         ANALYSIS

         Defendants move to dismiss Satran's complaint for lack of subject-matter jurisdiction and failure to state a claim. On all aspects of defendants' motion, the court accepts Satran's well-pleaded factual allegations as true and draws all reasonable inference from those facts in his favor. Lee, 330 F.3d at 459, 468. When deciding the jurisdictional issue of standing, the court may consider supporting evidence adduced by the parties. Id. at 468. When it comes to the motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim, the court does not consider supporting evidence. Id. at 459.

         A. Standing

         Defendants first contend that Satran lacks standing to assert his claims.[1] As the plaintiff, Satran “bears the burden of establishing” the three elements of Article III standing: injury in fact, causation, and redressability. Lee, 330 F.3d at 468. At the pleading stage, “the plaintiff must ‘clearly . . . allege facts demonstrating' each element.” Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016) (quoting Warth v. Seldin, 422 U.S. 490, 518 (1975)).

         Defendants challenge all three elements, arguing that Satran has not alleged an injury related to the alleged misrepresentations that form the basis of his claims. They imply that Satran's “garden variety emotional distress” was caused by a “properly filed” lawsuit, not by the alleged misrepresentations or lack of a notice of right to cure default. Dkt. 13, at 5, 7 (quoting Cheslek v. Asset Acceptance Capital Corp., No. 16-cv-1183, 2017 U.S. Dist. LEXIS 217500, at *9 (W.D. Mich. Dec. 22, 2017)). Cheslek applied the Sixth Circuit's standing requirements for FDCPA claims, which are not controlling here. The Seventh Circuit has explained that “‘the violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact, ' such as where the statutory violation creates ‘risk of real harm.'” Evans v. Portfolio Recovery Assocs., LLC, Nos. 17-1773, 17-1860, 17-1866, 17-2622, 17-2756, & 18-1374, 2018 WL 2035315, at *3 (7th Cir. May 2, 2018) (quoting Spokeo, 136 S.Ct. at 1549).

         Here, Satran alleges that he was actually harmed by defendants' alleged statutory violations. Drawing all reasonable inferences from the factual allegations in his favor, Messerli filed a lawsuit on LVNV's behalf without first giving him notice of his right to cure default as required by the WCA, and Messerli wouldn't have made that mistake if an attorney had actually reviewed LVNV's claim before filing a complaint. The improper filing of the complaint caused Satran emotional distress, which can be redressed by monetary damages. So Satran's allegations are sufficient to confer standing.

         Satran shies away from this theory in his brief, arguing that “[w]hether or not the lack of involvement created a material error is irrelevant to the disposition on a motion to dismiss.” Dkt. 19, at 5. Satran's theory-that statutory violations of the FDCPA alone are sufficient to confer standing-is a stretch, and here, the factual allegations don't require the court to consider it. Satran alleges an actual injury caused by procedural violations of the FDCPA and WCA, so he has standing to assert his claims.

         B. Failure to state a claim

         Second, defendants contend that Satran fails to state a claim on each of his three causes of action.[2] When evaluating a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the question is “simply whether the complaint includes factual allegations that state a plausible claim for relief.” BBL, Inc. v. City of Angola, 809 F.3d 317, 325 (7th Cir. 2015); accord Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         1. The FDCPA's application to state-court pleadings

         Defendants contend that § 1692e of the FDCPA doesn't regulate the content of state-court pleadings, so Satran's claims under the FDCPA must be dismissed. But just two years ago, the Seventh Circuit held that § 1692e applies to state court complaints and other legal pleadings. Marquez v. Weinstein, Pinson & Riley, P.S., 836 F.3d 808, 810-11 (7th Cir. 2016). So the court will not ...


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