Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-19-01184/USCOURTS-ca7-19-01184-0/pdf.json

Parties Involved:
Lawrence Towing, LLC.
Appellee
Par, Inc.
Appellee
Nichole L. Richards
Appellant

Document Text:

In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 19-1184

NICHOLE L. RICHARDS,

Plaintiff-Appellant,

v.

PAR, INC., and

LAWRENCE TOWING, LLC,

Defendants-Appellees.

____________________

Appeal from the United States District Court for the

Southern District of Indiana, Indianapolis Division.

No. 1:17-cv-00409-TWP-MPB — Tanya Walton Pratt, Judge.

____________________

ARGUED SEPTEMBER 19, 2019 — DECIDED MARCH 25, 2020

____________________

Before SYKES, HAMILTON, and BRENNAN, Circuit Judges.

SYKES, Circuit Judge. When Nichole Richards defaulted on 

her car loan, her lender hired PAR, Inc., to repossess the 

vehicle. PAR subcontracted with Lawrence Towing to carry 

out the repossession. Richards protested when employees of 

the towing company arrived at her Indianapolis home and 

tried to take the car. She ordered them off her property. They 

summoned the police, and a responding officer handcuffed 

Case: 19-1184 Document: 26 Filed: 03/25/2020 Pages: 9
2 No. 19-1184

Richards and threatened her with arrest. The officer removed the handcuffs after the car was towed away.

Richards sued PAR and Lawrence Towing for violating

the Fair Debt Collection Practices Act (“FDCPA” or “the 

Act”). As relevant here, the Act makes it unlawful for a debt 

collector to take “nonjudicial action” to repossess property if 

“there is no present right to possession of the property 

claimed as collateral through an enforceable security interest.” 15 U.S.C. § 1692f(6)(A). Richards concedes the validity 

of the security interest and admits that she defaulted on her 

loan. Her argument is that the defendants lacked a present 

right to possess the vehicle because Indiana law authorizes 

nonjudicial repossession only if the repossession “proceeds 

without breach of the peace.” IND. CODE § 26-1-9.1-609. If a 

breach of the peace occurs, the repossessor must immediately stop and seek judicial remedies.

The district judge viewed the claim as an improper attempt to repackage a state-law violation as a violation of the 

FDCPA and entered summary judgment for the defendants.

We reverse. Whether a repossessor had a “present right 

to possession” for purposes of § 1692f(6)(A) can be determined only by reference to state law. Based on the evidentiary record, a reasonable jury could find that the towing

company employees did not have a present right under 

Indiana law to possess Richards’s vehicle when they seized 

it. Accordingly, she has a viable FDCPA claim.

I. Background

Richards obtained a loan from Huntington National Bank

to finance her purchase of a used Chevrolet Tahoe. The loan 

agreement gave the bank a security interest in the vehicle 

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No. 19-1184 3

and the right to take possession of it if Richards defaulted on 

her payment obligations. The agreement also specified that 

any repossession would proceed without a breach of the 

peace.

When Richards later defaulted on her loan payments,

Huntington contracted with PAR, Inc., to repossess the

Tahoe. PAR in turn subcontracted with Lawrence Towing to 

complete the repossession. In the early-morning hours on 

February 6, 2017, employees of Lawrence Towing arrived at 

Richards’s home in Indianapolis to take possession of the 

Tahoe. Richards protested and said she would not voluntarily surrender it. They persisted, and one of them told her they 

could “either do this the hard way or ... do this the easy 

way.” Richards ordered them to leave her property. They 

responded by calling the police.

An officer arrived and Richards continued to object to the 

repossession. When she stepped off her porch, the officer

grabbed her arm, handcuffed her, and threatened her with 

arrest. He removed the handcuffs after the Tahoe was towed

away.

Richards sued PAR and Lawrence Towing alleging a violation of the FDCPA—more specifically, a violation of 

§ 1692f(6)(A) of the Act, which prohibits debt collectors from

“[t]aking ... any nonjudicial action to effect dispossession or 

disablement of property if there is no present right to possession

of the property claimed as collateral through an enforceable 

security interest.” (Emphasis added.) The basis of her claim

is that the Lawrence Towing employees had no “present 

right to possess” the Tahoe when they seized it because 

section 26-1-9.1-609 of the Indiana Code permits repossession of collateral without judicial process only if the reposCase: 19-1184 Document: 26 Filed: 03/25/2020 Pages: 9
4 No. 19-1184

sessor “proceeds without breach of the peace.” The complaint also raised several state-law claims.

The judge entered summary judgment for the defendants, construing the claim as an impermissible attempt to use 

the FDCPA to enforce a violation of state law. The judge

declined to exercise supplemental jurisdiction over the statelaw claims, dismissing them without prejudice. After an 

unsuccessful motion for reconsideration, the judge entered 

final judgment for the defendants, and this appeal followed.

II. Discussion

We review a summary judgment de novo, construing the 

evidence and drawing all reasonable inferences in favor of

the nonmoving party—here, Richards. Pantoja v. Portfolio 

Recovery Assocs., LLC, 852 F.3d 679, 682 (7th Cir. 2017).

The FDCPA broadly proscribes unfair debt-collection 

practices: “A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt.” 

15 U.S.C. § 1692(f). This language is obviously quite general, 

but the statute also sets forth some specific prohibited debtcollection methods. Immediately after the main clause we 

just quoted, the statute says this: “Without limiting the 

general application of the foregoing, the following conduct is 

a violation of this section,” id., and a list of eight specific

prohibited acts follows.

This case involves the sixth: a debt collector may not

“[t]ak[e] or threaten[] to take any nonjudicial action to effect 

dispossession or disablement of property if there is no 

present right to possession of the property claimed as collateral through an enforceable security interest.” Id.

§ 1692f(6)(A). Repossessors qualify as debt collectors under 

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No. 19-1184 5

the Act. Id. § 1692a(6) (defining “debt collector” to include a 

person in “any business the principal purpose of which is 

the enforcement of security interests”). Together, these 

provisions establish the following rule: a repossession 

without judicial process violates § 1692f(6)(A) unless the 

property is collateral under an enforceable security interest 

and the repossessor has a “present right to possession” of the 

property.

Richards admits that she defaulted on her loan and that

Huntington’s security interest is valid and enforceable. The 

premise of her claim is that the Lawrence Towing employees

lacked a present right to possess the Tahoe when they seized 

it because Indiana law permits nonjudicial repossession only 

if the process doesn’t breach the peace. More specifically, 

section 26-1-9.1-609 of the Indiana Code provides that a 

secured party may take possession of collateral without 

judicial process only “if it proceeds without breach of the 

peace.” If a breach of the peace occurs, the repossessor

“must desist and pursue his remedy in court.” Allen v. First 

Nat’l Bank of Monterey, 845 N.E.2d 1082, 1086 (Ind. Ct. App. 

2006) (quotation marks omitted).

It’s undisputed that the Lawrence Towing employees 

were pursuing a self-help remedy by seizing the Tahoe. 

Drawing inferences in Richards’s favor, a reasonable jury 

could conclude that a breach of the peace occurred during 

the repossession attempt. At that point the towing company 

no longer had a present right to possession, but its employees took Richards’s Tahoe anyway. The record is factually 

and legally sufficient to proceed on a claim for violation of 

§ 1692f(6)(A). 

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6 No. 19-1184

The defendants counter with a statutory-interpretation

argument. As they read § 1692f(6)(A), the requirement of a 

“present right to possession” means only that the repossessor must have an enforceable security interest in the property claimed as collateral. On this reading, the statutory phrase 

“through an enforceable security interest” modifies “present 

right to possession.” But that interpretation skips over 

language that appears between these two phrases.

Recall the actual text of the statute: debt collectors may 

not take nonjudicial action to effect dispossession of property if “there is no present right to possession of the property 

claimed as collateral through an enforceable security interest.” § 1692f(6)(A). Under the last-antecedent canon, “a 

limiting clause or phrase ... should ordinarily be read as 

modifying only the noun or phrase that it immediately 

follows.” Lockhart v. United States, 136 S. Ct. 958, 962 (2016) 

(quotation marks omitted); see also ANTONIN SCALIA & BRYAN 

A. GARNER, READING LAW: THE INTERPRETATION OF LEGAL 

TEXTS 144–46 (2012). Thus, in § 1692f(6)(A), the phrase

“through an enforceable security interest” modifies the 

phrase directly preceding it: “the property claimed as collateral.” That is, the phrase “through an enforceable security 

interest” identifies the legal mechanism through which the 

property is “claimed as collateral”; it does not modify “present right to possession.”

But the more important and indeed decisive point is that 

the FDCPA does not define the phrase “present right to 

possession.” Repossession rights are governed by the relevant state’s property and contract law, so in the absence of 

an FDCPA-specific rule, we must look to state law to deterCase: 19-1184 Document: 26 Filed: 03/25/2020 Pages: 9
No. 19-1184 7

mine whether a repossessor had a present right to possess

the property at the time it was seized.

The defendants respond by invoking our decisions in

Beler v. Blatt, Hasenmiller, Leibsker & Moore, LLC, 480 F.3d 470 

(7th Cir. 2007), and Bentrud v. Bowman, Heintz, Boscia & 

Vician, P.C., 794 F.3d 871 (7th Cir. 2015). A close look at each 

case shows that neither applies here. In Beler the plaintiff

sued a law firm that served her bank with a citation to 

discover assets in an effort to execute on a state-court judgment for the law firm’s client. 480 F.3d at 472. In response to 

the citation, the bank froze her account. The plaintiff claimed

that the funds in her account came from her social-security 

disability payments, which are exempt from collection under 

both the Social Security Act and Illinois law. She accused the 

law firm of engaging in unfair or unconscionable debtcollection practices by trying to collect against exempt assets. 

Id. at 473.

We rejected that argument, explaining that § 1692f “creates its own rules ... ; it does not so much as hint at being an 

enforcement mechanism for other rules of state and federal 

law.” Id. at 474. We observed that the phrase “unfair or 

unconscionable” in § 1692f “is as vague as they come.” Id. 

But it is not “a piggyback jurisdiction clause” or a means “to 

enforce existing state and federal laws exempting certain 

assets from execution.” Id. We concluded that the FDCPA’s 

broad prohibition of “unfair or unconscionable” debtcollection practices should not be read to displace state

legislative or judicial rules about the execution of state-court 

judgments. Id. at 475.

In a similar vein, the plaintiff in Bentrud argued that it 

was unfair or unconscionable in violation of § 1692f for the 

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defendant to deviate from arbitration procedures dictated by 

contract. 794 F.3d at 875. The plaintiff’s claim was premised 

on a breach of contract governed by state law. Relying on 

Beler, we reaffirmed that § 1692f’s “vague” language prohibiting unfair or unconscionable debt-collection practices could

not be read to “transform the FDCPA into an enforcement 

mechanism for matters governed by state law.” Id. at 876.

Importantly, both Beler and Bentrud dealt with § 1692f’s 

general clause prohibiting “unfair or unconscionable” debtcollection methods. We held only that this broad and vague 

language does not transform every violation of state or 

federal law into a violation of the FDCPA. Nothing about the

general phrase “unfair or unconscionable” requires reference 

to state law, but elsewhere the FDCPA contains more specific provisions that do call for an inquiry into state law. As 

we’ve explained, § 1692f(6)(A) is one of them.

Two cases illustrate the point. In Seeger v. AFNI, Inc., 

548 F.3d 1107, 1111 (7th Cir. 2008), we consulted Wisconsin 

law to determine whether methods used by a cell-phone 

company to collect debts in that state were “expressly authorized by the agreement creating the debt or permitted by 

law” under § 1692f(1). We could not determine whether the 

methods were “permitted by law” without reference to 

Wisconsin law. Seeger, 548 F.3d at 1111. A second example is

our en banc decision in Suesz v. Med-1 Sols., Inc., 757 F.3d 636 

(7th Cir. 2014) (en banc). That case concerned § 1692i, which 

requires a debt collector to file a suit in the “judicial district 

or similar legal entity” where the contract was signed or 

where the debtor resides. We held that identifying the 

“judicial district or similar legal entity” for purposes of 

§ 1692i requires the identification of the “smallest geographCase: 19-1184 Document: 26 Filed: 03/25/2020 Pages: 9
No. 19-1184 9

ic area that is relevant for determining venue in the court 

system in which the case is filed.” Id. at 638. We looked to

Indiana law to identify the smallest “geographic area” for 

venue purposes because the collection action in question 

was filed in Indiana. Id. at 640.

This case is similar to Seeger and Suesz. A repossession of 

property without judicial process violates § 1692f(6)(A) 

unless the property is collateral under an enforceable security 

interest and the repossessor has a “present right to possession.” The statute doesn’t supply its own rule for determining whether a repossessor had a present right to possess the 

property when it was seized; that question can be answered

only by reference to state law. In Indiana a repossessor has a 

present right to take possession of collateral without judicial 

process only if he proceeds without a breach of the peace. 

Richards has a sound legal theory and enough evidence to 

present her § 1692f(6)(A) claim to a jury.

REVERSED AND REMANDED

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