mn

No. 03 C 2589 Page 3

And it is generally in the debtor’s interest that this be so. It is not uncommon for a
mortgagor to fall behind, for the mortgagee to engage an attorney to obtain collection or
initiate foreclosure proceedings, for the attorney to so advise the mortgagor, for the mortgagor
or her attorney to seek and obtain a payoff letter which contains a reasonable attorney’s fee
figure as authorized by the mortgage documents, and for the mortgagor then to resolve the
matter by payment. No court has been involved, unless the complaint has already been filed.
If the mortgagee’s attorney had to initiate a legal proceeding to obtain court approval of fees,
the mortgagor would become liable for additional fees as well as the costs of that proceeding.

As this case has progressed, plaintiff has expanded her legal theories. She claims that
an indeterminate claim for fees violates FDCPA, although Veach v. Sheeks, 316 F.3d 690, 692
(7" Cir. 2003), indicates otherwise. She also now alleges that the fees are unreasonable or
unearned. That is possibly so. That claim dooms any effort to pursue this case as a class
action. Moreover, the representation of what were reasonable fees and costs was made in a
payoff letter sent to attorneys — at least one who was representing plaintiff and who raised no
questions about the amount of the fees at the time the mortgage was paid. But we are getting
ahead of ourselves since all the later filings get us into exhibits and representations, the stuff
of summary judgment motions,

For now, we grant the motion to dismiss the claim that defendant violated FDCPA by
failing to get court approval for fees and costs. We leave to the parties the procedural issue

of how to resolve what remains, which arises from the amendment.

a

JAMES B. MORAN

Senior Judge, U. S. District Court
Sagh. 1S”, 2003.



Form (06/97)
United States District Court, Northern District of Illinois ()

Name of Assigned Judge James B. Moran Sitting Judge if Other
or Magistrate Judge than Assigned Judge
CASE NUMBER 03 C 2589 DATE 9/15/2003
CASE Joyce B, Whaley vs. Shapiro & Kreisman, LLC
TITLE

[In the following box (a) indicate the party filing the motion, c.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the motion being presented.)

MOTION:
Memorandum Opinion and Order
DOCKET ENTRY:
(1) oa Filed motion of [ use listing in “Motion” box above.]
(2) Qo Brief in support of motion due
(3) o Answer brief to motion due___. Reply to answer brief due.
(4) a Ruling/Hearingon___—s set for__—_att
(5) Oo Status hearing[held/continued to] [set for/re-set for]on_—ssetfor_ at,
(6) Oo Pretrial conference{held/continued to] [set for/re-set for] ons setfor_— sat
ag oO Trial{set for/re-set for]on__at
~@) oO [Bench/Jury trial] [Hearing] held/continued to___—_at
(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
COFRCP4(m) (Local Rule 41.1 C)FRCP41(a)(1) O FRCP41(a)(2).
qo) =o {Other docket entry) Enter Memorandum Opinion and Order. Defendant’s motion to dismiss for

failure to state a claim pursuant to F.R.C.P. 12(b)(6) is granted in part and denied in part. Status hearing
set for October 9, 2003 at 9:15am.

aly ff [For further detail see order attached to the original minute order.]

No notices required, advised in open court.

No notices required.
‘i number of notices

Notices mailed by judge's staff.

, SEP 1 6 2003
Notified counsel by telephone. (dale docketed
vu | Dockcting to mail notices,
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Mail AO 450 form. sn doficting/dep\oy iia

Copy to judge/magistrate judge.

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Datebinld received in
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IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
JOYCE B. WHALEY, ) 4
Plaintiff, } aOCkE TE
vs. No. 03 C 2589 ves 7003
SHAPIRO & KREISMAN, LLC,
Defendant. }

MEMORANDUM OPINION AND ORDER

Plaintiff Joyce B. Whaley brought this class action against defendant Shapiro &
Kreisman, LLC, alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692
et seq. (FDCPA). Defendant filed a motion to dismiss for failure to state a claim pursuant to
Federal Rule of Civil Procedure 12(b)(6). For the following reasons, defendant’s motion is
granted in part and denied in part.

BACKGROUND

On December 16, 2002, defendant Shapiro & Kreisman, on behalf of its client, filed a
foreclosure suit against plaintiff Joyce B. Whaley. The mortgage documents authorized the
lenders to recover “reasonable attorneys’ fees and costs” (def. mem. in sup. of mo. to dismiss,
418, exh. A). On February 23, 2003, Whaley paid off the loan in its entirety in order to avoid
foreclosure. Of the $127,006.67 paid by plaintiff, $2,307 was for attorneys’ fees and costs. On
March 19, 2003, the foreclosure suit was dismissed. Plaintiff filed this on behalf of other
borrowers who paid attorneys’ fees to defendant. She alleges that defendant had no right to

the fees and therefore its billing practices violated the FDCPA.


No. 03 C 2589 Page 2

DISCUSSION
In deciding a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) we
must assume the truth of all well-pleaded factual allegations, making all inferences in the non-

movant’s favor. Sidney S. Arst Co. v. Pipefitters Welfare Educ. Fund, 25 F.3d 417, 420 (7"

Cir. 1994), We dismiss a claim only if it appears “beyond doubt that the plaintiff can prove
no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355
USS. 41, 45-46 (1957).

Plaintiff does not dispute that the mortgage document clearly allows for the recovery
of reasonable attorneys’ fees and costs, nor did she initially argue that the amount of the fees
was unreasonable. Instead, she argued that defendant violated the FDCPA by billing her for
the fees without first obtaining court approval.

The plaintiff directs us to a series of cases holding that, when a statute allows for
reimbursement of attorneys’ fees, the party seeking to collect fees must proceed through the
court. See Shula y. Lawent, 2002 WL 31870157, *9 (N.D. Ill. 2002) (holding that debt collector
could not bill for attorneys’ fees where no agreement existed between the parties and no
judgment had been entered authorizing the collection of fees) . These cases do not speak to the
situation where a party explicitly agrees to the fees in a contract, as is the case here. In this
case defendant had the contractual right to bill plaintiff a reasonable amount without having

to first obtain court approval. See Porter v. Fairbanks Capital Corp., 2003 WL 21210115

(N.D. Il. 2003); James v. Olympus Servicing, L.P., 2002 WL 31307540, *4 (N.D. Ill. 2002)
(holding, in a case with nearly identical facts, that the FDCPA does not require court approval

to collect contractually agreed-upon attorneys’ fees).