United States District Court, E.D. Wisconsin
MABEL L. HEREDIA, on behalf of herself and all others similarly situated, Plaintiff,
CAPITAL MANAGEMENT SERVICES, L.P., Defendant.
DECISION AND ORDER GRANTING MOTION TO
William C. Griesbach, Chief Judge.
Mabel L. Heredia, individually and on behalf of all others
similarly situated, filed this action against Capital
Management Services, L.P. (CMS), alleging that CMS violated
the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C.
§§ 1692, et seq., when it sent a series of
letters to Heredia that sought to collect a debt she owed to
Discover Bank (Discover) and stated in part: “Settling
a debt for less than the balance owed may have tax
consequences and Discover may file a 1099C form.” Am.
Compl., ECF No. 32, Exs. B, C, D. Heredia alleges that
CMS's use of the statement “Discover may file a
1099C form” is false, deceptive, and misleading in
violation of 15 U.S.C. § 1692e and an unfair or
unconscionable means of collection in violation of §
1692f. Presently before the court are CMS's motion to
dismiss Heredia's first amended complaint for failure to
state a claim and Heredia's motion for leave to amend the
complaint. For the reasons that follow, CMS's motion to
dismiss will be granted and Heredia's motion for leave to
amend will be denied.
motion to dismiss pursuant to Federal Rule of Civil Procedure
12(b)(6) challenges the viability of a complaint by arguing
that it fails to state a claim upon which relief may be
granted.” Camasta v. Jos. A. Bank Clothiers,
Inc., 761 F.3d 732, 736 (7th Cir. 2014); Fed.R.Civ.P.
12(b)(6). To survive a motion to dismiss under Rule 12(b)(6),
a complaint must provide “enough facts to state a claim
to relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A
claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). When reviewing a motion to dismiss for failure to
state a claim, a court must “accept as true all of the
well-pleaded facts in the complaint and draw all reasonable
inferences in favor of the plaintiff.” Kubiak v.
City of Chicago, 810 F.3d 476, 480-81 (7th Cir. 2016).
While, as a general matter, the confusing nature of a dunning
letter is a question of fact that, if well-pleaded, avoids
dismissal under Rule 12(b)(6), dismissal is appropriate when
it is “apparent from a reading of the letter that not
even a significant fraction of the population would be misled
by it.” Zemeckis v. Global Credit & Collection
Corp., 679 F.3d 632, 636 (7th Cir. 2012) (citing
Taylor v. Cavalry Inv., L.L.C., 365 F.3d 572, 574
(7th Cir. 2004)).
OF THE AMENDED COMPLAINT
claims arise out of a series of letters she received from
CMS, who sought to collect a debt she owed to Discover.
Heredia's debt arose from one or more transactions for a
credit card account that Heredia used primarily for personal,
family, or household purposes. After Heredia defaulted and
the Debt was charged off, CMS, a debt collector, sought to
collect the Debt on Discover's behalf. In its attempt to
collect the Debt, CMS sent Heredia four collection letters.
Although Heredia appears to generally allege that each of the
four letters violates the FDCPA, see ECF No. 32 at
¶ 120, she only alleges that three of the letters
violate specific sections of the Act, namely §§
1692e and 1692f. See Id. at ¶ 139.
four letters contain near-identical captions. In the
top-right corner of each letter, under CMS's logo,
Discover is listed as the “Original Creditor” and
“Current Creditor, ” the
“Description” reads “Discover Card, ”
the last four digits of Heredia's account number are
listed, and $1, 892.43 is listed as the “Amount of
Debt.” See id., Exs. A, B, C, D. Although the
bodies of the letters differ in some respects, each states:
“This is an attempt to collect a debt; any information
obtained will be used for that purpose. This communication is
from a debt collector.” Id.
to the amended complaint, CMS's first letter, dated
October 5, 2016, was the initial written communication mailed
to Heredia to collect the Debt. The letter states that
“[CMS] has been engaged by DISCOVER BANK to resolve
your delinquent debt of $1, 892.43.” Id., Ex.
A. The letter also offers Heredia thirty days after her
receipt of the letter to dispute the validity of the Debt or
any portion thereof, otherwise CMS will assume the Debt is
valid. If Heredia timely files a written notice of dispute,
CMS will obtain verification of the Debt or obtain a copy of
a judgment and mail Heredia a copy of such verification or
judgment. The letter then instructs Heredia to submit her
payment by check, money order, or online. Although the
amended complaint alleges that the October 5, 2016 letter
“fails to disclose how much of the ‘Amount of
Debt' consists is [sic] principal, ” id.
at ¶ 34, the complaint does not allege that such a
failure violates a particular provision of the FDCPA.
second letter, dated November 6, 2016, offers three payment
arrangements, or “settlement offers.”
Id., Ex. B. The offers are as follows:
A. 29% reduction of [Heredia's] present balance to the
amount of $1343.63, if paid in full on or before 11/30/2016.
(A savings of: $548.80)
B. 24% reduction of [Heredia's] present balance to the
amount of $1438.25. The first payment of $719.13 or more is
due on or before 11/30/2016. The second and final payment of
$719.12 or more is due on or before 12/30/2016. (A savings
C. 19% reduction of [Heredia's] present balance to the
amount of $1532.87. The first payment of $510.96 or more is
due on or before 11/30/2016. The second payment of $510.96 or
more is due on or before 12/30/2016. The third and final
payment of $510.95 or more is due on or before 1/30/2017. (A
savings of: $359.56).
Id. After the settlement offers, the letter states:
“The amount of money you want to save is in your
control” and that, “[i]n addition, upon clearance
of these funds, we will provide, upon request, an account
paid letter.” Id. After presenting information
on payment arrangements, the letter states: “Settling a
debt for less than the balance owed may have tax consequences
and Discover may file a 1099C form. We cannot provide you
with tax advice. If you have any questions, Discover
encourages you to consult a tax advisor of your
to the complaint, “[w]hen, among other required
conditions exist, Discover writes off or forgives $600 or
more of the principal amount of a debt, it may be required by
law to file IRS Form 1099C and to send a copy to
obligor.” Id. at ¶ 47. The complaint
alleges that “Discover (like other credit card issuing
banks) does not, however, file IRS Form 1099C when the amount
of principal forgiven is less than $600.” Id.
at ¶ 48. The complaint further alleges that the
settlement offers do not state what amount of principal, if
any, is to be written off if Heredia accepts. Because none of
the settlement offers involve a savings of $600 or more, the
complaint alleges that, principal ...