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Heisler v. Convergent Healthcare Recoveries Inc.

United States District Court, E.D. Wisconsin

June 12, 2019

CHAD H. HEISLER, on behalf of himself and all others similarly situated, Plaintiff,
v.
CONVERGENT HEALTHCARE RECOVERIES, INC., and JOHN AND JANE DOES No. 1 THROUGH 25. Defendants.

          DECISION AND ORDER ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AS TO DEFENDANTS' JUDICIAL ESTOPPEL DEFENSE

          NANCY JOSEPH UNITED STATES MAGISTRATE JUDGE

         Chad H. Heisler brought this class action complaint against Convergent Healthcare Recoveries, Inc. (“Convergent”), alleging that Convergent sent a debt collection letter that violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. (“FDCPA”). (Docket # 1.) In its answer, Convergent asserted as an affirmative defense that Heisler is judicially estopped from claiming or recovering sums in excess of amounts claimed in his separate action in Bankruptcy Court. (Docket # 30 at 18.) I denied Heisler's motion for class certification because Convergent had an arguable judicial estoppel defense to Heisler's claim that was legally and factually specific to Heisler, rendering Heisler an inadequate class representative. (Docket # 68 at 8-10.) Heisler filed a motion for reconsideration, which I denied. (Docket # 74 at 3-6.) Heisler then filed a motion for summary judgment as to the judicial estoppel defense. (Docket # 80.) For the reasons below, Heisler's motion will be granted in part and denied in part.

         UNDISPUTED FACTS

         On September 26, 2016, Heisler, represented by counsel, filed a Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the Eastern District of Wisconsin. In re Heisler, No. 16-29492-beh (Bankr. E.D. Wis. 2017) (Decl. of Francis R. Greene (“Greene Decl.”) Ex. A, Docket # 82-1). Heisler's Bankruptcy Schedule E/F lists Convergent as a creditor with an unsecured claim. (Greene Decl. Ex. B, Docket # 82-2; Defendants' Response to Plaintiff's Proposed Findings of Fact (“DPFOF”) ¶ 4, Docket # 87.) Heisler reported $6, 250 worth of property and claimed $6, 250 in exempt property, including “2 FDCPA claims against collection agencies” valued at $2, 000. (Proposed Findings of Fact (“PFOF”) ¶¶ 2-3, Docket # 83; DPFOF ¶ 23.) Heisler did not schedule a class representative incentive reward as an asset in his original bankruptcy petition, although he later amended his schedules to include it. (DPFOF ¶ 19; Plaintiff's Response to DPFOF (“Response to DPFOF”) ¶ 19, Docket # 91; Defs.' Br. at 18, Docket # 86.)

         Heisler's bankruptcy petition included a notice as required by 11 U.S.C. § 342(b), which states that the petitioner must promptly file detailed information about creditors, assets, liabilities, income, expenses, and general financial condition; warned that the court may dismiss the case if the petitioner does not file the information within the deadlines; and directed petitioners to a website for more information. (DPFOF ¶¶ 20-21.) The bankruptcy petition contained a signed declaration that Heisler had examined the petition; declared under penalty of perjury that the information provided was true and correct; and understood that making a false statement, concealing property, or obtaining money or property by fraud in connection with a bankruptcy case can result in fines or imprisonment. (Id. ¶ 24.) Heisler's bankruptcy petition also included a signed declaration that he had read the summary and schedules filed with his declaration and that they were true and correct. (Id. ¶¶ 25-26.)

         The trustee in Heisler's bankruptcy conducted a § 341 Meeting of Creditors on November 17, 2016. (PFOF ¶ 5, DPFOF ¶ 27.) Convergent did not file a claim. (PFOF ¶ 6.) Heisler attended the § 341 Meeting with his bankruptcy attorney. (DPFOF ¶ 29.) Heisler was under oath during the § 341 Meeting. (Id. ¶ 30.) At the § 341 Meeting, Heisler affirmed that he had provided his attorney the information he used to fill out the schedules; he had told his attorney about all his assets, debt, income, and expenses; his attorney had taken all that information and put it in the form of schedules for his review; he had reviewed the schedules before he signed them; and he understood that he signed them under penalty of perjury and knew what that meant. (DPFOF ¶ 31; Decl. of Chirag H. Patel (“Patel Decl.”) ¶ 3, Docket # 88.) In response to a statement from the trustee that “[a]pparently your attorney has got an FDCPA claim here, ” Heisler's bankruptcy attorney stated, “Two claims on this one. This one got down to a solid number.” (DPFOF ¶ 32; Patel Decl. ¶ 3.)

         On November 18, 2016, the trustee filed its Report of No. Distribution, meaning there was no property available for distribution from Plaintiff's bankruptcy estate. (PFOF ¶¶ 7, 14; DPFOF ¶¶ 7, 14.) The trustee reported $6, 250 in exempt assets and stated “that there is no property available for distribution from the estate over and above that exempted by law.” (PFOF ¶¶ 7-8, DPFOF ¶¶ 7-8.) The relevant portion of the report states in full:

Chapter 7 Trustee's Report of No. Distribution: having been appointed trustee of the estate of the above-named debtor(s), report that I have neither received any property nor paid any money on account of this estate; that I have made a diligent inquiry into the financial affairs of the debtor(s) and the location of the property belonging to the estate; and that there is no property available for distribution from the estate over and above that exempted by law. Pursuant to Fed R Bank P 5009, I hereby certify that the estate of the above-named debtor(s) has been fully administered. I request that I be discharged from any further duties as trustee. Debtor appeared. Key information about this case as reported in schedules filed by the debtor(s) or otherwise found in the case record: This case was pending for 2 months. Assets Abandoned (without deducting any secured claims): $ 0.00, Assets Exempt: $ 6250.00, Claims Scheduled: $ 37834.29, Claims Asserted: Not Applicable, Claims scheduled to be discharged without payment (without deducting the value of collateral or debts excepted from discharge): $ 37834.29.

         (DPFOF ¶ 33; Greene Decl. Ex. C at 4, Docket # 82-3.)

         On January 9, 2017, Heisler, through counsel, filed an Amended Property Schedule in his bankruptcy case. (PFOF ¶ 9.) Heisler's Amended Schedule reported and exempted $11, 250 worth of property, including “1 FDCPA claims against collection agencies (up to $1, 000 claim) and Class Representative Incentive Reward Case (up to $6000 claim).” (Id. ¶ 10.) On January 23, 2017, the Bankruptcy Court entered an order discharging Heisler's debts and a final decree closing the case. (Id. ¶ 11.)

         Convergent asserts that on or about January 24, 2018, while this case was referred to Magistrate Judge David E. Jones for mediation, Heisler issued a class settlement demand in which he requested a $10, 000 class incentive award. (DPFOF ¶ 34.) Heisler asserts that the $10, 000 demand was a scrivener's error that he immediately took steps to correct, notifying the court and opposing counsel that Heisler was seeking a $6, 000 incentive award. (Response to DPFOF ¶ 34; Decl. of Andrew T. Thomasson ¶ 4, Docket # 92.)

         SUMMARY JUDGMENT STANDARD

         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 also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). “Material facts” are those under the applicable substantive law that “might affect the outcome of the suit.” See Anderson, 477 U.S. at 248. The mere existence of some factual dispute does not defeat a summary judgment motion. A dispute over a “material fact” is “genuine” if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

         In evaluating a motion for summary judgment, the court must draw all inferences in a light most favorable to the nonmovant. Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). However, when the nonmovant is the party with the ultimate burden of proof at trial, that party retains its burden of producing evidence which would support a reasonable jury verdict. Celotex Corp., 477 U.S. at 324. Evidence relied upon must be of a type that would be admissible at trial. See Gunville v. Walker, 583 F.3d 979, 985 (7th Cir. 2009). To survive summary judgment, a party cannot rely on his pleadings and “must set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 248. “In short, ‘summary judgment is appropriate if, on the record as a whole, a rational ...


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