Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-18-02449/USCOURTS-ca7-18-02449-0/pdf.json

Parties Involved:
Michael C. Kim
Appellee
Marshall Spiegel
Appellant

Document Text:

In the 

United States Court of Appeals 

For the Seventh Circuit ____________________ 

No. 18-2449 

MARSHALL SPIEGEL, 

Plaintiff-Appellant, 

v.

MICHAEL C. KIM, 

Defendant-Appellee. 

____________________ 

Appeal from the United States District Court for the 

Northern District of Illinois, Eastern Division. 

No. 1:16-cv-04809 — Sara L. Ellis, Judge. 

____________________ 

ARGUED JANUARY 23, 2020 — DECIDED MARCH 6, 2020 

____________________ 

Before ROVNER, HAMILTON, and SCUDDER, Circuit Judges. 

SCUDDER, Circuit Judge. For over four years, Marshall Spiegel and Michael Kim have been embroiled in a blazing and 

bitter dispute in the Circuit Court of Cook County, Illinois. 

Before us is one piece of this angry and protracted wrangle—

one that arose when Kim requested attorneys’ fees in the state 

court litigation. Spiegel took to federal court to allege that this 

run-of-the-mill request violated the Fair Debt Collection Practices Act, a federal statute that prohibits misleading and 

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unfair practices in the collection of consumer debts. The district court dismissed Spiegel’s complaint, and we affirm. 

I 

A 

Marshall Spiegel served as a director on the board of the 

1618 Sheridan Road Condominium Association, a homeowners’ association in Wilmette, Illinois, until the association’s 

members voted to remove him in December 2015. The association then sued Spiegel in the Circuit Court of Cook County, 

alleging that he took several unauthorized actions leading to 

and following his removal, including falsely holding himself 

out as president, attempting to unilaterally terminate another 

board member, freezing the association’s bank accounts, 

sending unapproved budgets to unit owners, and filing unwarranted lawsuits on behalf of the association. The association sought to enjoin Spiegel from interfering with board decisions or holding himself out as a director, and to recover 

damages, costs, and attorneys’ fees for his misconduct. The 

complaint invoked a condominium association agreement 

called the “Restated Declaration,” which Spiegel signed when 

he bought his unit. The Restated Declaration provided that 

condominium owners who violated the board’s rules or obligations would pay any damages, costs, and attorneys’ fees 

that the association incurred as a result. 

Spiegel denied wrongdoing but did not stop there. He 

went on the offensive by filing a slew of his own complaints 

and motions against the association, its lawyers, and nearly 

every condominium resident at 1618 Sheridan—racking up 

385 separate filings in the Cook County court. Spiegel did not 

prevail in these proceedings. Indeed, the Cook County court 

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No. 18-2449 3

dismissed his claims with prejudice and enjoined him from 

interfering with the board’s activities. The court found that 

Spiegel’s filings had “no basis in law or fact,” were riddled 

with “blatant lies,” and amounted to “a pattern of abuse, committed for an improper purpose to harass, delay and increase 

the cost of litigation.” Against these findings, the court ordered Spiegel to pay over $700,000 in fees and sanctions. 

A more complete recounting of the Cook County litigation 

is not necessary. Suffice it to say that the parties were at each 

other’s throats well before this appeal. 

B 

While the state court litigation was ongoing, Spiegel filed 

this federal suit against the association’s counsel, Michael 

Kim. Spiegel viewed Kim’s lawsuit requesting attorneys’ fees 

in Cook County as a further declaration of war and took the 

battle to federal court to fire the next shot. Spiegel invoked 

sections 1692e and 1692f of the Fair Debt Collection Practices 

Act, alleging that Kim’s application in state court for attorneys’ fees constituted an unfair debt collection practice. 

Kim answered and moved for judgment on the pleadings 

under Federal Rule of Civil Procedure 12(c). After initially 

staying proceedings under Colorado River Water Conservation 

District v. United States, 424 U.S. 800 (1976), the district court 

determined it could decide Kim’s motion without creating 

conflict with the state court litigation. It then granted Kim’s 

motion, concluding that Spiegel failed to state a claim because 

the attorneys’ fees Kim requested were not a “debt” within 

the meaning of the FDCPA. Spiegel moved to vacate the judgment and sought leave to amend his complaint, but the district court denied both motions. Spiegel now appeals. 

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II 

The FDCPA is a consumer protection statute that “prohibits ‘debt collector[s]’ from making false or misleading representations and from engaging in various abusive and unfair 

practices” in connection with the collection of a “debt.” Heintz

v. Jenkins, 514 U.S. 291, 292 (1995); see also Jerman v. Carlisle, 

McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573, 577 (2010) 

(describing the FDCPA’s consumer protection objectives). 

Congress limited the definition of “debt” to consumer debt—

specifically, to an obligation “arising out of a transaction in 

which the money, property, insurance, or services which are 

the subject of the transaction are primarily for personal, family, or household purposes.” 15 U.S.C. § 1692a(5); see also 

Heintz, 514 U.S. at 293 (emphasizing that Congress restricted 

the statutory definition of “debt” to consumer debt). 

The FDCPA applies to Spiegel’s claim only if what Kim 

sought to recover through his state court complaint constitutes a “debt” within the meaning of the statute. See Gburek v. 

Litton Loan Servicing LP, 614 F.3d 380, 384 (7th Cir. 2010) (interpreting 15 U.S.C. §§ 1692a(6), 1692c(a)–(b), 1692e, 1692g). 

The fit is not there on any fair reading of Kim’s complaint. 

The attorneys’ fees that Kim sought did not “aris[e] out of” 

a consumer transaction as Congress employed that requirement in defining “debt.” See 15 U.S.C. § 1692a(5). To be sure, 

Kim’s complaint asked the state court to impose a financial 

obligation on Spiegel by requiring him to pay fees. But in determining whether Kim’s demand qualifies as a “debt,” “[t]he 

crucial question is the legal source of the obligation.” Franklin 

v. Parking Revenue Recovery Servs., Inc., 832 F.3d 741, 744–45 

(7th Cir. 2016). By its terms, “the FDCPA limits its reach to 

those obligations to pay arising from consensual transactions, 

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where parties negotiate or contract for consumer-related goods 

or services.” Bass v. Stolper, Koritzinsky, Brewster & Neider, S.C., 

111 F.3d 1322, 1326 (7th Cir. 1997) (emphases added). That 

limitation explains why a thief’s obligation to pay for stolen 

goods is not a debt under the FDCPA, see id., nor is a municipal fine levied on a property owner, see Gulley v. Markoff & 

Krasny, 664 F.3d 1073, 1075 (7th Cir. 2011) (per curiam). 

No doubt the attorneys’ fees Kim demanded in state court 

fall outside the statute as well. Spiegel’s obligation to pay attorneys’ fees arose out of his alleged wrongdoings as a board 

member, not from a consensual consumer transaction within 

the meaning of the FDCPA. Kim’s invocation of the Restated 

Declaration in his state court lawsuit does not change the 

analysis. Nobody disputes that Spiegel signed that agreement 

as part of a consensual transaction—the purchase of his condominium. But the state court complaint sought to impose a 

financial obligation on Spiegel for one and only one reason—

the way he conducted himself while serving on the association’s board. There is no way to read Kim’s state court complaint as seeking attorneys’ fees for any reason connected to 

Spiegel’s purchase of a condominium. Put most simply, any 

nexus between the financial demand lodged in the state court 

litigation and a consumer transaction is way too remote to satisfy what Congress required in the FDCPA for an obligation 

to qualify as “debt.” 

Spiegel sees things differently and urges a less exacting 

statutory analysis. His reasoning has several links but is not 

difficult to follow: he contends that but for his condominium 

purchase, he never would have served on the association 

board; but for his board service, he never would have become 

ensnared in state court litigation with the association; and but 

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for that litigation, he never would have found himself on the 

receiving end of Kim’s legal demand to pay attorneys’ fees. 

Spiegel anchors his position in our decision in Newman v. 

Boehm, Pearlstein & Bright, Ltd., where we held that assessments imposed by a homeowners’ association on its members 

could create a debt under the statute. See 119 F.3d 477, 481 

(7th Cir. 1997). 

We read Newman in a very different way. The members in 

Newman came under obligations to pay assessments that 

arose directly from the association’s declaration and bylaws, 

to which the members consented upon purchasing their condominiums. See id. Here, however, Spiegel’s obligation to pay 

attorneys’ fees arose from his actions as a board member. The 

mere fact that Spiegel can tell a story that starts with his condominium purchase (and thus the Restated Declaration), and 

many steps later ends with the Cook County litigation, does 

not bring the financial demand Kim pursued in state court 

within the FDCPA’s reach. To show that Kim sought to collect 

a debt, Spiegel needed to more directly establish that the litigation demand for attorneys’ fees “ar[ose] out of” a consumer 

transaction. See 15 U.S.C. § 1692a(5). Spiegel failed to do so. 

Any other conclusion would rid the FDCPA’s limitations of 

what qualifies as a “debt” of their fair import. The district 

court was right to enter judgment for Kim. 

Nor do we see any error in denying Spiegel’s request to 

amend his complaint. Leave to amend need not be granted 

where the proposed amendment would not result in the 

plaintiff succeeding in stating a viable legal claim. See Heng v. 

Heavner, Beyers & Mihlar, LLC, 849 F.3d 348, 354 (7th Cir. 2017). 

The district court was right to see Spiegel’s proposed amendment as futile. He does no more in his proposed amendment 

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than repeat his contention that Kim improperly demanded attorneys’ fees. Nowhere, however, does Spiegel explain how 

those fees constitute a “debt” under the FDCPA’s limited and 

consumer-protection-focused definition of that term. 

III 

A final issue deserves comment. This case came to our 

court at a red-hot temperature, only to climb to a boil during 

briefing. After the district court dismissed Spiegel’s complaint, but before oral argument in our court, the state court 

issued several decisions pertinent to the parties’ ongoing litigation. Kim attached those decisions to his brief. Among them 

were an entry of final judgment against Spiegel and three orders requiring him to pay fees and sanctions to the association 

and related parties, including Kim. Spiegel moved to strike 

these documents and to sanction Kim for even attaching them, 

contending that Kim improperly included information that 

the district court never considered. 

We deny Spiegel’s motions. A court may take judicial notice of public records such as the state court documents Kim 

attached. See Tobey v. Chibucos, 890 F.3d 634, 647–48 (7th Cir. 

2018) (collecting cases). Nor did Kim need to request leave to 

attach them, as “[t]he right place to propose judicial notice, 

once a case is in a court of appeals, is in a brief.” Matter of Lisse, 

905 F.3d 495, 497 (7th Cir. 2018) (Easterbrook, J., in chambers). 

Having taken judicial notice of the orders, it is not lost on us 

that the state court rejected all of Spiegel’s claims and reprimanded him for frivolous filings. 

Spiegel’s claim falls outside the ambit of the FDCPA, so we 

AFFIRM. 

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