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Schmitz v. Valentine & Kebartas LLC

United States District Court, E.D. Wisconsin

December 5, 2019

SHEILA SCHMITZ and ROBERT SCHMITZ, Individually, as Representatives of the Estate of JOANNE SCHMITZ, and on Behalf of All Other Similarly Situated, Plaintiffs,
v.
VALENTINE & KEBARTAS, LLC and LVNV FUNDING, LLC, Defendants.

          DECISION AND ORDER ON DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS

          Nancy Joseph United States Magistrate Judge.

         Sheila and Robert Schmitz (collectively the “Schmitzes”) filed this putative class action against Valentine & Kebartas, LLC and LVNV Funding, LLC (“Valentine” and “LVNV”), alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (the “FDCPA”) and the Wisconsin Consumer Act, Wis.Stat. §§ 421-427 (the “WCA”). The Schmitzes sue both in their individual capacities and as representatives of their mother's estate. For the reasons explained below, the defendants' motion is granted in part and denied in part.

         BACKGROUND

         The Schmitzes are brother and sister and the adult children of Joanne Schmitz, who died on April 30, 2017. (Am. Compl. ¶¶ 3-6, Docket # 33.) They allege that prior to their mother's death, they resided at the same address as Joanne Schmitz and were appointed as her powers of attorney. (Id. ¶ 7.) The Schmitzes allege that they are the representatives of Joanne Schmitz's estate; specifically, Sheila Schmitz was appointed Special Administrator of the probate estate and Robert Schmitz was authorized to review bills, invoices, and other financial correspondence on behalf of the estate. (Id. ¶ 8.)

         On or about November 11, 2017, Valentine sent a debt collection letter to Joanne Schmitz at the address at which Joanne Schmitz resided with the Schmitzes. (Id. ¶ 33, Ex. A.) The alleged debt referenced in the letter is a Citibank credit card account, used only for personal, family, or household purposes, including but not limited to purchases of household goods and services. (Id. ¶ 34.) The Schmitzes allege that as Joanne Schmitz's caregivers, they received and read the debt collection letter addressed to Joanne Schmitz from Valentine. (Id. ¶ 36.) The debt collection letter contained the following:

WISCONSIN RESIDENTS: This collection agency is licensed by the Division of Banking in the Wisconsin Department of Financial Institutions, www.wdfi.org.

(Id. ¶ 37.) The Schmitzes allege that this language is a representation that the debt collector holds a Wisconsin Collection Agency License pursuant to Wis.Stat. § 218.04 and Wis. Admin. Code § DFI-Bkg. 74. (Id. ¶ 38.) However, the Schmitzes allege that Valentine does not, in fact, hold a Wisconsin Collection Agency License and is not licensed by the Division of Banking or any other Wisconsin government agency. (Id. ¶¶ 39-43.) The Schmitzes allege that this representation constitutes a materially false statement in violation of the FDCPA. (Id. ¶ 44.) The Schmitzes further allege that they were confused by the collection letter, they had to spend time and money investigating the collection letter, and an unsophisticated consumer would be confused by the collection letter. (Id. ¶¶ 46-49.) The Schmitzes allege that LVNV is either directly or vicariously liable for Valentine's alleged violations. (Id. ¶ 45.) As such, the Schmitzes sue Valentine and LVNV under 15 U.S.C. §§ 1692e, 1692(e)(1), and 1692(9) and Wis.Stat. § 427.104(1)(k). (Id. ¶¶ 52-62.)

         APPLICABLE RULE

         The defendants move for judgment on the pleadings under Federal Rule of Civil Procedure 12(c). Rule 12(c) provides that “After the pleadings are closed--but early enough not to delay trial--a party may move for judgment on the pleadings.” Valentine and LVNV allege that the Schmitzes lack standing to bring their FDCPA and WCA claims. The defendants' challenge to the Schmitzes' standing attacks the court's subject-matter jurisdiction and thus arises under Fed.R.Civ.P. 12(b)(1). See Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443-45 (7th Cir. 2009). In evaluating a challenge to subject matter jurisdiction, the court must first determine whether a factual or facial challenge has been raised. Silha v. ACT, Inc., 807 F.3d 169, 173 (7th Cir. 2015). A factual challenge contends that even if the pleadings are formally sufficient there is in fact no subject matter jurisdiction. Id. A facial challenge argues that the plaintiff has not sufficiently alleged a basis of subject matter jurisdiction. Id. When addressing a factual challenge, the court may look beyond the pleadings; whereas when addressing a facial challenge, the court must accept all well-pleaded factual allegations as true and draw all reasonable inferences in favor of the plaintiffs.

         Valentine and LVNV argue a facial challenge to the court's jurisdiction. (Defs.' Br. at 3-4, Docket # 38.) Thus, I evaluate the amended complaint pursuant to the standard articulated in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). Silha, 807 F.3d at 173. Factual allegations in the complaint must be sufficient to raise the possibility of relief above a speculative level. Twombly, 550 U.S. at 555. Although detailed allegations are not required, the Schmitzes must allege facts that state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 570). “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.” Id. (citing Twombly, 550 U.S. at 556). That said, “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. I must view all of the facts in a light most favorable to the Schmitzes (as the non-moving party) and only grant the motion if it is beyond doubt that the Schmitzes can plead no facts that would support their claims for relief. United States v. Wood, 925 F.2d 1580, 1581 (7th Cir. 1991).

         DISCUSSION

         The Schmitzes allege that the debt collection letter addressed to their deceased mother, but received and opened by them, contained a false statement in violation of the FDCPA and the WCA. Valentine and LVNV argue that the Schmitzes' amended complaint must be dismissed because the Schmitzes lack standing to prosecute their claims both individually and as representatives of their mother's estate.

         1. Individual Capacity Claims

         As an initial matter, although Valentine and LVNV argue for judgment on the pleadings as to both the Schmitzes' FDCPA and WCA claims, they do not separately argue standing or cite to any legal authority as to the WCA claims. However, given the fact that Wisconsin courts follow the policies underlying the FDCPA when interpreting the WCA, see Brunton v. Nuvell Credit Corp., 2010 WI 50, ¶ 45, 325 Wis.2d 135, 161, 785 N.W.2d 302, 314 (“Our construction is also in accordance with the policies underlying a federal consumer credit protection act, policies with which we are ...


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