In the

United States Court of Appeals

For the Seventh Circuit

Nos. 16-1668, 16-2051 & 16-2052

KIMTYLERY HENG, et al.,

Plaintiffs-Appellants,

v.

HEAVNER, BEYERS & MIHLAR, LLC,

Defendant-Appellee.

JUSTIN GIERKE, on behalf of plaintiff

and a class,

Plaintiff-Appellant,

v.

CODILIS & ASSOCIATES, P.C.,

Defendant-Appellee.
2 Nos. 16-1668, 16-2051 & 16-2052

LAURA ZUNIGA, et al.,

Plaintiffs-Appellants,

v.

PIERCE and ASSOCIATES,

Defendant-Appellee.

Appeals from the United States District Court for the 

Northern District of Illinois, Eastern Division.

No. 15 C 08454 — Charles R. Norgle, Judge.

No. 15 C 11618 — Robert W. Gettleman, Judge.

No. 16 C 01897 — Milton I. Shadur, Judge. 

ARGUED OCTOBER 27, 2016 — DECIDED FEBRUARY 17, 2017

Before WOOD,Chief Judge, andBAUER and MANION,Circuit

Judges.

BAUER, Circuit Judge. In these three separate cases consolidated on appeal, appellants challenge the dismissal of their

claims brought under the Fair Debt Collection Practices Act, 15

U.S.C. § 1692, et. seq. Appellants in Heng, et al., v. Heavner, et al.,

separately challenge the district court’s order striking an

exhibit, and also challenge the district court’s denial of their

request for leave to amend. We affirm.
Nos. 16-1668, 16-2051 & 16-2052 3

I. BACKGROUND

We need not discuss the specifics for each individual case

because the underlying facts are consistent (the exception to

this is the procedural history in Heng). Appellants obtained a

Federal Housing Administration-insured residential mortgage

loan and subsequently defaulted due to financial hardship.1

Appellees are law firms that represent the loan servicing

agents; they filed foreclosure complaints in Illinois state court

against appellants. These complaints generally followed the

statutory complaint template set forth in Section 15-1504(a) of

the Illinois’ Mortgage Foreclosure Law. See 735 Ill. Comp. Stat.

5/15-1504(a). The template includes the following language:

“Names of defendants claimed to be personally liable for

deficiency, if any[,]” and, “[a] personal judgment for a deficiency, if sought.” Id. at 5/15-1504(a)(3)(M), (3)(iii). Appellees

included both allegations in their foreclosure complaints, and

identified appellants to be personally liable for any deficiency.

Appellants filed suit against appellees, alleging violations

of the FDCPA. According to the complaints, the FHA does not

authorize deficiency judgments where, as here, appellants

suffered a financial hardship. Attached as an exhibit to their

complaints, appellants included a letter from the FHA responding to a Freedom of Information Act request. In part, the

FHA’s response provided:

There have been zero foreclosed FHA loans in

Illinois in which the pursuit of a deficiency

Federal Housing Administration (FHA) is part of the United States

1

Department of Housing and Urban Development (HUD).
4 Nos. 16-1668, 16-2051 & 16-2052

judgment was authorized. FHA is not currently

pursuing deficiency judgments....[T]he Department has determined it is not [in] the best interests of FHA to routinely seek deficiency judgments in connection with [claims without conveyance of title or “CWCOT”] claims. Therefore,

FHA is not requesting that the mortgagees

pursue any deficiency judgments in connection

with CWCOT claims, unless FHA makes a

special request pursuant to 24 C.F.R. [§] 203.369.

... Since FHA is not currently pursuing deficiency judgments, we do not maintain any

reports tracking deficiency judgments.

Appellees filed a motion to dismiss, which the district court

granted under Federal Rule of Civil Procedure 12(b)(6).

Appellants filed timely notices of appeal. This consolidated

appeal followed.

We turn to certain facts pertaining only to the Heng case. As

stated above, appellants filed a complaint and appellee filed a

motion to dismiss. Shortly thereafter, appellants filed a first

amended complaint on December 12, 2015. On December 23,

2015, appellee filed a motion to dismiss the amended complaint. Appellants received a letter dated December 23, 2015,

from appellants’ loan servicing agent who was represented by

appellee. This letter provided an explanation about deficiency

judgments and an offer to waive a deficiency judgment.

On February 5, 2016, appellants filed a response to the

second motion to dismiss, which included the letter as an

exhibit and allegations concerning it. Appellee filed both a
Nos. 16-1668, 16-2051 & 16-2052 5

reply and a motion to strike on February 19, 2016. Appellants

were not given an opportunity to oppose the motion to strike,

which the district court granted without comment. 

On February 25, 2016, appellants filed a motion to reconsider the district court’s order granting appellee’s motion to

strike and, alternatively, requested leave to amend the first

amended complaint to include the exhibit. On March 23, 2016,

the district court denied appellants’ motion to reconsider and

the alternative request for leave to amend, and granted appellee’s motion to dismiss.

II. DISCUSSION

On appeal, appellants challenge the dismissal of their

claims that were brought under the FDCPA. Appellants in the

Heng case separately challenge the order granting appellee’s

motion to strike the exhibit attached to their response to

appellee’s motion to dismiss; they also challenge the denial of

their request for leave to amend.

A. FDCPA Claim

We review de novo a district court’s decision granting a

motion to dismiss under Rule 12(b)(6), accepting all wellpleaded factual allegations in the complaint as true and

drawing all reasonable inferences in favor of the appellants.

St. John v. Cach, LLC, 822 F.3d 388, 389 (7th Cir. 2016). To avoid

dismissal, the complaint must “state a claim to relief that is

plausible on its face.” Jackson v. Blitt & Gaines, P.C., 833 F.3d

860, 862 (7th Cir. 2016) (quoting Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009)).
6 Nos. 16-1668, 16-2051 & 16-2052

The main issue is whether appellants stated a plausible

claim under the FDCPA. The FDCPA provides that “[a] debt

collector may not use any false, deceptive, or misleading

representation or means in connection with the collection of

any debt.” 15 U.S.C. § 1692e. This broad prohibition is accompanied by a non-exhaustive list specifying sixteen potential

violations, including the “threat to take any action that cannot

legally be taken or that is not intended to be taken.” Id.

§ 1692e(5). “[R]epresentations may violate § 1692e of the

FDCPA even if made in court filings in litigation.” Marquez v.

Weinstein, Pinson & Riley, P.S., 836 F.3d 808, 812 (7th Cir. 2016).

We apply the “unsophisticated consumer” standard when

evaluating whether a debt collector’s representations comply

with the FDCPA. Avila v. Rubin, 84 F.3d 222, 226–27 (7th Cir.

1996).

Appellants contend that appellees violated the FDCPA by

alleging in their state-court foreclosure complaints that

appellants are “claimed to be personally liable for the deficiency, if any,” and by requesting “[a] personal judgment for

a deficiency, if sought.” See 735 Ill. Comp. Stat. 5/15-

1504(a)(3)(M), (3)(iii). Appellants argue that appellees included

these allegations even though appellees knew that the FHA,

the insurer of appellants’ loan, had a longstanding policy of

not authorizing mortgagees to pursue deficiency judgments.

Appellants assert that not only did appellees pursue a deficiency judgment without FHA’s prior authorization, but also

that the FHA’s policies prohibited appellees from taking such

action in the first place. Appellants, therefore, contend that

appellees made threats to seek a deficiency judgment and had

no particularized intention of actually enforcing this legal
Nos. 16-1668, 16-2051 & 16-2052 7

remedy against appellants. Appellants also assert that appellees falsely represented that this legal remedy was available.

Based on these suppositions, appellants argue that “[b]ecause

the request for a deficiency was not authorized, [appellants’]

FDCPA complaint stated a claim.” Appellant’s Br. at 17.

As a preliminary matter, we note that the crux of appellants’ argument rests on the assumption that unless the FHA

provides prior authorization to appellees to pursue a deficiency judgment against appellants, appellees are prohibited

from engaging in the complained of conduct. We will therefore

see if appellants have any plausible basis for this assumption. 

First, the regulation governing deficiency judgments

provides that “the Secretary may require the mortgagee

diligently to pursue a deficiency judgment in connection with

any foreclosure.” 24 C.F.R. § 203.369(a)(1) (emphasis added);

see also 24 C.F.R. § 203.402(o) (reimbursement for certain costs

when Commissioner requires or requests the mortgagee to

seek a deficiency judgment pursuant to § 203.369). This

regulation gives FHA the authority to require a mortgagee to

pursue a deficiency judgment on a FHA-insured loan, but does

not prohibit the mortgagee from seeking a deficiency judgment. So the regulation does not support the position that

appellees are prohibited from engaging in the complained of

conduct without FHA’s prior authorization.

Second, appellants provide references to HUD Mortgagee

Notice 1994-89, and Mortgagee Letters 2006-15, and 2013-15.

However, although neither party pointed this out, these

documents are out-of-date; the letters and notice were supersededby HUD’sFHA Single Family Housing Policy Handbook
8 Nos. 16-1668, 16-2051 & 16-2052

4000.1 (or “Handbook”). These Mortgagee Letters and Notice 2

also do not help appellants’ position. 

Lastly, the Handbook provides that “[u]nless specifically

requested by FHA, the Mortgagee is not required by FHA to

pursue any deficiency Judgments in connection with CWCOT

procedures.” Handbook at III.A.2.u.ii. It further states that a

3

“[m]ortgagee may engage in Judgment collection activities if a

claim for FHA insurance benefits is not filed.” Id. at

III.A.2.u.iii.(B). Appellees contend that the Handbook supports

its position that a mortgagee is allowed to pursue a deficiency

judgment if it chooses not to file a claim for insurance benefits.

In response, appellants argue that the decision to pursue a

deficiency judgment “belongs to HUD at all relevant times,”

and to accept appellees’ interpretation takes that decisionmaking away from the FHA. Appellant’s R. Br. at 7. Not

exactly, the Handbook follows the wording of 24 C.F.R.

§ 203.369, by reiterating FHA’s authority to request or require

See “Single Family Housing Notices Superseded by Handbook 4000.1” 2

https://portal.hud.gov/hudportal/HUD?src=/program_offices/admini

stration/hudclips/sfhsuperseded/notices (noting that the “documents on

this page should be used for reference purposes only[,]” including

Mortgagee Letter 1994-89 ) (last visited February 17, 2017); see also

“Mortgagee Letters Superseded by HUD Handbook 4000.1”

https://portal.hud.gov/hudportal/HUD?src=/program_offices/admini

stration/hudclips/sfhsuperseded/mltrs_full (listing Mortgagee Letters

2006-15 and 2013-15 as superseded by the Handbook) (last visited

February 17, 2017).

See FHA Single Family Housing Policy Handbook 4000.1, p. 720. 3

https://portal.hud.gov/hudportal/documents/huddoc?id=40001HSGH

.pdf (last visited February 17, 2017). 
Nos. 16-1668, 16-2051 & 16-2052 9

a mortgagee to pursue a deficiency judgment; it does not

prohibit the complained of conduct. 

Appellants have not identified any law, regulation, or FHA

policy requiring a mortgagee to obtain authorization from the

FHA prior to including the two allegations at issue in their

state-foreclosure complaint. Appellants have failed to distin- 4

guish themselves from all other Illinois mortgagors who have

defaulted on their payments and had Illinois-statutory-shortform complaints filed against them. Because the predicate to

appellants’ arguments is absent, we need not address them.

Appellants have failed to state a plausible claim under the

FDCPA. 

B. Procedural Claims in Heng

1. Motion to Strike

The Heng appellants contend that the district court erred in

granting appellee’s motion to strike an exhibit that was

included in appellants’ response to appellee’s motion to

dismiss the amended complaint. “A district court’s grant or

denial of a motion to strike is reviewed for an abuse of discretion.” Zuppardi v. Wal-Mart Stores, Inc., 770 F.3d 644, 647 (7th

Cir. 2014) (citation omitted).

The district court granted appellee’s motion to strike the

exhibit without comment, and it did not give appellants an

opportunity to respond. However, the district court’s reasoning for granting the motion to strike was provided in its order

We note that Appellants do not claim that Appellees violated any Illinois 4

state law.
10 Nos. 16-1668, 16-2051 & 16-2052

denying appellants’ motion to reconsider the order granting

the motion to strike. The district court noted that the exhibit

was sent by a non-party and that it was not mentioned in the

complaint. The district court also found that the exhibit was

not material to the complaint, and that the exhibit “did not

comply with Rule 12(b)’s requirement that the Court’s consideration of motions to dismiss is limited to the facts alleged in

the complaint.” The district court reasoned that because it did

not construe the motion as one for summary judgment, it was

required to disregard outside material submitted by appellants. 

Appellants argue that they were entitled to offer the exhibit

in response to appellee’s motion to dismiss in light of our

decisions in Defender Security Co. v. First Mercury Insurance Co.,

803 F.3d 327 (7th Cir. 2015), and Early v. Bankers Life & Casualty

Co., 959 F.2d 75, 79 (7th Cir. 1992). In Defender Security Co., we

noted that “nothing prevents a plaintiff opposing dismissal

from elaborating on the complaint or even attaching materials

to an opposition brief illustrating the facts the plaintiff expects

to be able to prove.” 803 F.3d at 335. Appellants claim that the

exhibit was probative of how the non-party’s representations

based on the foreclosure complaint may be used to the detriment of the consumer.

While our precedent makes it clear that appellants have

“much more flexibility in opposing a Rule 12(b)(6) motion,”

Geinosky v. City of Chi., 675 F.3d 743, 745 n.1 (7th Cir. 2012), the

flexibility is not without limitations. Materials or elaborations

in appellants’ brief opposing dismissal may be considered, so

long as those materials or elaborations are “consistent with the
Nos. 16-1668, 16-2051 & 16-2052 11

pleadings.” Geinosky, 675 F.3d at 745 n.1; see also Early, 959 F.2d

at 79 (“[A] plaintiff is free ... to allege without evidentiary

support any facts he pleases that are consistent with the

complaint ... [.]”). 

The district court did not abuse its discretion when it

granted appellee’s motion to strike the exhibit. The district

court found that the exhibit was not material to the complaint

and was a letter sent by a non-party; in other words, those

materials and elaborations were not consistent with the

complaint. While the district court was incorrect in reasoning

that it was required to disregard the outside material if it did

not convert appellants’ response to a motion for summary

judgment, it does not negate the overall finding that the exhibit

was not material. Furthermore, as we have considered appellants’ exhibit and elaborations as part of our de novo review of

the district court’s futility-based denial of appellants’ request

for leave to amend, “we are all the more at ease in holding that

the district court properly exercised its discretion in striking

[the exhibit].” McLeod v. Arrow Marine Transp., Inc., 258 F.3d

608, 617 (7th Cir. 2001).

2. Leave to Amend

As a general rule, a district court “should freely give leave

[to amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2).

“[D]istrict courts have broad discretion to deny leave to amend

where there is undue delay, bad faith, dilatory motive, repeated failure to cure deficiencies, undue prejudice to the

defendants, or where the amendment would be futile.” Arreola

v. Godinez, 546 F.3d 788, 796 (7th Cir. 2008). Generally, we

review a district court’s denial of leave to amend for an
12 Nos. 16-1668, 16-2051 & 16-2052

abuse of discretion. Runnion v. Girl Scouts of Greater Chi. & Nw.

Ind., 786 F.3d 510, 524 (7th Cir. 2015). However, “our review for

abuse of discretion of futility-based denials includes de novo

review of the legal basis for the futility.” Id.; see also Cohen v.

Am. Sec. Ins. Co., 735 F.3d 601, 607 (7th Cir. 2013). (noting

“[t]here is no practical difference, in terms of review, between

a denial of a motion to amend based on futility and the grant

of a motion to dismiss for failure to state a claim”). 

At first glance, the district court’s decision on this point is

fuzzy. The district court mentioned only the “fail[ure] to cure

the pleading’s deficiency” category of denials. There is,

however, no indication in the record that the district court ever

pointed out any deficiencies to appellants. Appellants also

appear to have filed the first amended complaint as a matter of

course. See Fed. R. Civ. P. 15(a)(1)(B) (a party has a right to

amend its pleading once as a matter of course within 21 days

after service of defendant’s motion to dismiss under Rule

12(b)). The denial of appellants’ request for leave to further

amend was based on the reasoning that even if “the Court

allowed Plaintiffs to amend their complaint and allege that the

letter – not the Mortgage Litigation Complaint – was the actual

false or misleading statement, Plaintiffs would not be able to

state a claim.” In other words, allowing appellants to file a

second amended complaint would be futile. We have no

qualms with considering the district court’s denial as a futilitybased denial.

Appellants contend that the exhibit shows how the false

representations made in the foreclosure complaint may be

misused to the detriment of an unsophisticated consumer.
Nos. 16-1668, 16-2051 & 16-2052 13

Appellants claim that this detriment would not have otherwise

occurred had appellee accurately stated the need for FHA’s

authorization prior to seeking a deficiency judgment in the

foreclosure complaint. In other words, appellee’s false representations in the foreclosure complaint allowed the loan

servicing agent to capitalize on those false representations.

Appellants’ argument is without merit. The proposed

significance of the exhibit is premised on appellants’ failed

assumption that a mortgagee of an Illinois, FHA-insured loan

must have FHA authorization prior to including the two

allegations at issue in their state-foreclosure complaint.

Moreover, not only was the exhibit sent by a non-party to

appellants, but it was sent over a year after the foreclosure

complaint was filed. There is no basis in law for appellants’

theory on how a non-party’s representations may be probative

as to how an unsophisticated consumer perceives appellee’s

year-old foreclosure complaint. Because what appellants

sought to include in an additional amended complaint would

not make their FDCPA claim plausible, we conclude that an

amendment would be futile.

III. CONCLUSION 

Forthe foregoing reasons, we AFFIRM each district courts’

grant of appellees’ motion to dismiss the appellants’ complaints. We AFFIRM the district court’s grant of appellee’s

motion to strike an exhibit that was included in appellants’

response to appellee’s motion to dismiss the amended complaint. We AFFIRM the district court’s denial of appellants’

request for leave to amend.