1692g because the letter’s invitation to call for "further information" was confusing and
overshadowed the requirement that disputes be submitted in writing, and (2) S&K’s collection letter
was an “unfair or unconscionable” method of debt collection, violating Section 1692f.
ANALYSIS

S&K argues that both counts of the O’Chaneys’ amended complaint should be dismissed
pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted. The
purpose of a motion to dismiss is to test the sufficiency of the complaint, not to decide the merits of
the lawsuit. Triad Assocs. v. Chicago Housing Auth., 892 F.2d 583, 586 (7" Cir.1990), The federal
notice pleading standard requires only that a complaint give a “short and plain statement showing
that the plaintiff is entitled to relief, the purpose of which is to give the defendant notice of the
claims [brought against it] and the grounds they rest upon.” Thompson v. Illinois Dep't of Prof'l
Regulation, 300 F.3d 750, 753 (7th Cir, 2002) (citing Leatherman v. Tarrant County Narcotics
Intelligence and Coordination Unit, 507 U.S. 163 (1993)). For purposes:of reviewing this motion,
the court must take the plaintiffs’ well-pleaded allegations as true and all inferences must be
construed in their favor. Thompson, 300 F.3d at 753.
Count I: S&K’s Foreclosure Complaint

The FDCPA prohibits debt collectors from using false or misleading representations when
attempting to collect ona given debt. 15 U.S.C.§ 1692e. The O’Chaneys allege in Count I that S&K
violated this section by attaching an attorney verification to its foreclosure complaint that falsely
stated that the complaint was based on the attomey’s “personal knowledge.”

Indeed, courts have found that an attomey verification violates Section 1692e if it falsely
states that it is based on the attomey’s “personal knowledge.” Young v. Myer & Njus, No. 96-C-

4809, 1997 WL 452685, at *1 (N.D. Ill. Aug. 6, 1997). In this case, however, the verification signed

4.


Defendant's motion to dismiss the O’Chaneys’ claim under Section 1692f is granted.
CONCLUSION

Defendant’s motion to dismiss is granted in part and denied in part. Count I and plaintiffs’

claim in Count I under Section1692f are hereby dismissed with prejudice.

ENTER:

hil

[ps AN B. GOTTSCHALL
United States District Judge

DATED: March 25, 2004


Id. at §1692g(a).

“[D]ebt collectors ‘may not defeat the statute’s purpose by making the required disclosures
in a form or within a context in which they are unlikely to be understood by the unsophisticated

debtors who are the particular objects of the statute’s solicitude.’” Marshall-Mosby v. Corporate
Receivables, Inc., 205 F.3d 323, 326 (7th Cir. 2000) (quoting Bartlett v. Heibl, 128 F.3d 497, 500
(7th Cir 1997). Specifically, a collector may not issue a collection notice that causes confusion by
using language that “overshadows” the provisions required by statute. In evaluating whether a
collection notice is confusing, the Seventh Circuit views the letter as seen “through the eyes of an
unsophisticated consumer.” Jang v. A.M. Miller & Assocs., 122 F.3d 480, 483-84 (7th Cir. 1997).
The Seventh Circuit describes this hypothetical consumer as “uninformed, naive or trusting,”
Gammon v. GC Services Ltd. Partnership, 27 F.3d 1254, 1257 (7th Cir. 1994), and “close to the
bottom of the sophistication meter.” Avila v. Rubin, 84 F.3d 222, 226 (7th Cir. 1996). “(T]he

unsophisticated consumer is to be protected against confusion, whatever form it takes.” Bartlett, 128

F.3d at 500.

In the Seventh Circuit, the pleading standard for a FDCPA claim of this nature is very low.
“A FDCPA complaint states a legal claim, and therefore . . . survives a motion to dismiss under Rule
12(b)(6), simply by alleging that a [collection] letter was confusing.” Marshall-Mosby, 205 F.3d at
326 (citing Walker y. National Recovery, Inc., 200 F.3d 500, 503 (7th Cir. 1999)). “A contention
that a debt-collection notice is confusing is a recognized legal claim; no more is needed to survive
a motion under Rule 12(b)(6).” Johnson v. Revenue Mgmt. Corp., 169 F.3d 1057, 1059 (7th Cir.
1999). The standard is set low because courts are poor proxies for the unsophisticated consumer on
the issue whether a legal notice is confusing. Walker, 200 F.3d at 503. The Seventh Circuit has,

therefore, admonished that courts should not rule as a matter of law on that issue without allowing

-6-



by Ms. Kopriva does not state that it is based on “personal knowledge.” Rather, it states that she
believes the information to be true to the best of her “knowledge, information, and belief.” As noted
by defendant, the Illinois Code of Civil Procedure allows verification of matters stated "upon
information and belief." ? See Cohen y. Smith, 269 Ill.App.3d 1087, 1097 (5 Dist.1995) ("Section
2-605 of the Illinois Civil Practice Law provides that even verified pleadings may be stated
positively or upon information and belief."). A plaintiff's claim that an attorney verification violates
Section 1692e because the complaint was not based on “personal knowledge” fails as a matter of law
if—as here — the attorney states that the complaint is based on “information and belief.” See Bradley
y. Fairbanks Capital Corp., No. 02-C-7786, 2003 WL 21011801, at *2-3 (N.D. Ill. May 5, 2003).

Accordingly, defendant’s motion to dismiss Count I is granted.

Count I: S&K’s Collection Letter
A. The O’Chaneys’ Claim That S&K’s Letter Was Confusing.
The O’Chaneys claim in Count Il that S&K’s collection notice violated Sections 1692g and

1692f of the FDCPA. Their first claim in Count II is that S&K violated Section 1692g(a) because
its collection notice was confusing as to whether debt disputes could be made over the telephone.
Pursuant to Section 1692g(a), debt collectors must provide consumer-debtors with a written notice

that, inter alia, includes:

.. a Statement that if the consumer notifies the debt collector in writing within the
thirty-day period that the debt, or any portion thereof, is disputed, the debt collector
will obtain verification of the debt or a copy of a judgment against the consumer and
a copy of such verification or judgment will be mailed to the consumer by the debt
collector.

? Plaintiffs’ argument that defendant failed to adhere to common Illinois pleading practice
by failing to plead each paragraph based on “information and belief’ is of no moment. Even if
S&K’s pleading failed to conform to generally accepted practice in Illinois, there is no authority
for the O’Chaneys’ argument that such a deviation constitutes a violation of the FDCPA.

5+


plaintiffs have to go on is the language of these letters, they must lose in the end.” 169 F.3d at 1060.
However, a complaint that presents a claim turning on factual issues and inferences, as this one does,
may not be disposed of under Rule 12(b)(6). Walker v. National Recovery, Inc., 200 F.3d 500, 503
(7" Cir.1999). S&K's motion to dismiss the O’Chaneys’ claim under Section 1692g is, therefore,

denied?
B. Unfair and Unconscionable Methods of Debt Collection under 1692f.

The O’Chaneys’ final claim in Count I is that S&K’s collection letter, and collection efforts
based on that letter, violated Section 1692f which prohibits “unfair or unconscionable means to
collect or attempt to collect any debt.” 15 U.S.C. §1692f. However, while the Seventh Circuit’s
liberal pleading standard regarding claims of “confusion” may allow the O’Chaneys’ to pursue their
claim under Section 1692g, S&K’s collection letter, as a matter of law, does not constitute an “unfair
or unconscionable” debt collection practice. The language in S&K’s letter contains the requisite

© notice required by 1692g(a), almost to the.word, and the additional language that the O’Chaneys
object to conforms to “safe harbor” language the Seventh Circuit adopted in Miller. Itis conceivable
that the O’Chaneys could prove that the Miller language is confusing in this context. However,
while the Miller language may not immunize S&K from liability under Section 1692g, a collection
letter that includes the statutory notice required by Section 1692g(a) and tracks the “safe harbor”
language provided by the Seventh Circuit cannot be construed as an unfair or unconscionable method

of debt collection. See, e.g., Turner v. J.V.D.B. & Assocs., Inc., 330 F.3d 991, 998 (7" Cir. 2003).

3 The court will not, at this time, separately address plaintiffs’ claim that S&K’s
subsequent collection activities violated Section 1692g. The court notes, however, that
plaintiffs’ claim under Section 1692g is completely dependent on their allegation that the
collection notice was confusing. If the O’Chaneys ultimately prove that S&K’s notice violated
the FDCPA — and S&K has no applicable defense - S&K will be liable for a violation of Section
1692g as provided by statute. If plaintiffs are unable to prove that the notice was confusing, their
claim under Section 1692g will fail.

-8-


Minute Order Form (96/97)

United States District Court, Northern District of Dlinois

Name of Assigned Judge Sitting Judge if Other
or Magistrate Judge Joan B. Gottschall than Assigned Judge
CASE NUMBER 02 C 3866 DATE 3/25/2004
CASE O’Chaney vs. Shapiro & Kreisman, LLC
TITLE
[Un the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
qd) Oo Filed motion of [ use listing in “Motion” box above.]
(2) oO Brief in support of motion due
(3) o Answer brief to motion due . Reply to answer brief due.
(4) Oo Ruling/Hearing on set for at
(5) im) Status hearing[held/continued to] [set for/re-set for] on set for at
(6) oO Pretrial conference[held/continued to] [set for/re-set for] on set for at :
(7) oO Trial[set for/re-set for]on__—at__ .
(8) Oo [Bench/Jury trial] [Hearing] held/continued to at
(9) o This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(Qn) Local Rule 41.1 CFRCP41(a)(1) O FRCP41(a)(2).
(do) if [Other docket entry] Enter Order. Defendant’s motion to dismiss [18-1] is granted in part and
denied in part.
(11) @ [For further detail see order attached to the original minute order.]
No notices required, advised in open court.
No notices required.
Notices mailed by judge’s staff.
‘Notified counsel by telephone.
X_ | Docketing to mail notices.
Mail AO 450 form
Copy to judge/magistrate judge.
courtroom date mailed notice
RTL deputy’s
initials
\Date/time received in
central Clerk’s Office mailing deputy initials



evidence to be presented showing confusion as a matter of fact. Id.

The O’Chaneys claim that S&K’s placement of the sentence, “[fJor further information, call
(847) 498-9990" at the end of the collection letter overshadowed the debt collector’s responsibility
to inform them that a debt must be disputed in writing. The O’Chaneys allege that the letter is
confusing because consumers are given the false impression that it is sufficient to call to dispute the
debt. While this court may not consider that language confusing, plaintiffs have stated a legally

cognizable claim. Nothing more is required under Rule 12(b)(6). Johnson, 169 F.3d at 1059.

S&K argues that itis nevertheless immune from the O’Chaneys’ claims of confusion because
its “for further information” language conforms to “safe harbor” language drafted by the Seventh
Circuit in Miller v. McCalla, 214 F.3d 872, 876 (7th Cir. 2000) and Bartlett, 128 F.3d at 501-02.
That argument is unavailing. First, although the disputed language in S&K’s collection letter tracks
the “safe harbor” language in Miller, S&K cannot claim “safe harbor” based on that case. The Miller
court expressly limited the reach of its “safe harbor” language to claims brought under a different

section of the FDCPA. Miller, 214 F.3d at 876.

Second, the language of S&K’s letter does not track the “safe harbor” language in Bartlett.

S&K''s letter is worded differently and alters the sequence of Bartlett's “safe harbor” provisions.

The Bartlett court cautioned that “[w]e cannot require debt collectors to use ‘our’ form. But of
course if they depart from it, they do so at their own risk.” Jd. at 502, Because S&K departed from
the “safe harbor” language in Bartlett, S&K is not immunized from the O’Chaneys’ claim that the

letter was confusing.

If the O’Chaneys are unable to muster additional evidence that the collection letter is
confusing — i.e. evidence of the letter’s effect on unsophisticated readers — then their claim will not

survive summary judgment. Fed.R.Civ.P. 56. As the Seventh Circuit held in Johnson, "If all the

-7-



(PI. Resp. Ex. B).'

The O'Chaneys allege that, upon receipt of the letter, they telephoned S&K to dispute the
validity of a portion of the debt relating to attorney's fees and costs and requested an itemized copy
of all charges prior to paying the alleged debt. On July 10, 2001, S&K filed a complaint in Illinois
Circuit Court on behalf of FNMA to foreclose on plaintiffs' mortgage. Rosemary Kopriva, an S&K.
attorney, signed and attached a sworn "verification" to the mortgage foreclosure complaint. The
verification stated in part that "(s)he has read the above and foregoing complaint and has knowledge
of the facts stated therein, and that the matters set out therein are true to the best of affiant's
knowledge, information, and belief." (PI. Resp. Ex. C.)

On July 27, 2001, more than thirty days after receiving the collection letter from S&K, the
O’Chaneys’ counsel sent a letter to S&K "memorializing" the O’Chaneys’ previous phone call
disputing the debt. After receiving no response to their first letter, the O'Chaneys sent two additional
letters to S&K which stated that the balance of the debt was still in dispute.

- On May 30, 2002, the O’Chaneys filed suit against S&K under Section 1962 of the FDCPA.
Count I of their amended complaint alleges that S&K’s attorney-verified foreclosure complaint
contained false and misleading representations in violation of 15 U.S.C. § 1692e because it falsely
purports to be based on the attorney’s "personal knowledge.” Count II essentially comprises two

statutory claims: (1) that S&K’s collection letter and subsequent collection activities violated Section

‘Generally if, in conjunction with a motion to dismiss, materials outside the pleadings are
submitted, the motion must be converted to a Rule 56 motion for summary judgment. Fed. R.
Civ. P. 12(b)(6); Tacket v. General Motors Corp., 93 F.3d 332, 334 (7th Cir. 1996). However,
the documents attached to S&K’s Rule 12(b)(6) motion are explicitly referred to in the
O’Chaneys’ complaint and are central to the their claim. It is, therefore, unnecessary to convert
S&K’s motion into one for summary judgment. See Wright v. Associated Ins. Cos., 29 F.3d
1244, 1248 (7th Cir 1994); Venture Assocs. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th
Cir. 1993).

3.


offering a phone number to call "for further information." The letter stated, in relevant part:

3. The Fair Debt Collection Practices Act entitles you to dispute the debt, or any
portion thereof, within thirty (30) days of your receipt of this letter. If you do not
dispute the debt within this period, it will be assumed to be valid. The law also
entitles you to request that we provide you the name of the original creditor if the
original creditor is different from the creditor, our client FEDERAL NATIONAL
MORTGAGE ASSOCIATION. If you choose to dispute the debt, or any portion
thereof, or if you choose to request the name of the original creditor, you must
notify us in writing thirty (30) days of the date your [sic] receive this letter.

4. Ifyou notify us in writing within (30) days of the date of this letter that you
are disputing the debt or any portion thereof, or if you notify us in writing within
thirty (30) days of the date you receive this letter that you want to know the name
of the original creditor if that creditor is different from our client, FEDERAL
NATIONAL MORTGAGE ASSOCIATION, then we will obtain and mail to you
verification of the debt and/or the name and address of the original creditor.

5. The Fair Debt Collection Practices Act does not require that we wait thirty
(30) days to from the date you receive this letter to before filing a lawsuit to
foreclosure [sic] on your mortgage. In the event we do file a lawsuit to
foreclosure [sic] on your mortgage, within thirty (30) days from the date you
receive this letter you will still retain the right to dispute the debt, or any portion
thereof and you also retain the right to request the name of the original creditor, if
the original creditor is different for the current creditor, our client FEDERAL
NATIONAL MORTGAGE ASSOCIATION.

6. Ifyou request proof of the debt or any portion thereof or if you request the
name of original creditor within thirty (30) days from the date you receive this
letter, the Fair Debt Collection Practices Act requires us to suspend our efforts to
foreclose the mortgage on your property, even if we have already filed the lawsuit
until we mail you the information validating the debt and/or until we provide you
with the name of the original creditor.

Because of interest, late charges and other charges that may vary from day to day,
the amount due on the day you pay may be greater. Hence, if you pay the amount
shown above, an adjustment may be necessary after we receive your check, in
which event we will inform you before depositing the check for collection. For
further information, call (847) 498-9990.

Any written request should be addressed to:
Fair Debt Clerk
SHAPIRO & KREISMAN
4201 Lake Cook Road - Ist floor
Northbrook, IL 60062


UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
)
Gul O’CHANEY and Archana O’CHANEY, )
)
Plaintiffs, ) Judge Joan B. Gottshcall
v. )
)
SHAPIRO & KREISMAN, LLC, )
) Case No. 02-C-3866
Defendant. )

POCKETED

MAR 2 9 2094
MEMORANDUM OPINION AND ORDER

Plaintiffs, Gul O'Chaney and Archana O'Chaney (the “O’Chaneys”), have sued defendant,
Shapiro & Kreisman, LLC ("S&K"), alleging violations of the Fair Debt Collection Practices Act
("FDCPA"), 15 U.S.C. §1692, et seg. in connection with S&K’s notice to foreclose on the
O’Chaneys’ mortgage. The lawsuit alleges that S&K did not provide proper notice to the O’Chaneys
‘that they could dispute their outstanding mortgage debt only in writing rather than over the «
telephone. S&K has moved to dismiss the O'Chaneys’ amended complaint pursuant to Fed. R. Civ.
P. 12(b)(6) for failure to state a claim upon which relief can be granted. For the reasons stated
below, S&K's motion to dismiss is granted in part and denied in part.

BACKGROUND

The O'Chaneys are consumer-debtors whose mortgage is held by Federal National Mortgage
Association ("FNMA"). When the O’Chaneys’ mortgage became past-due, FNMA retained S&K,
a law firm that regularly represents clients in collecting past-due accounts, to collect the allegedly
delinquent amount. On June 22, 2001, S&K sent a letter to the O’Chaneys (1) stating that S&K had
been hired to bring a lawsuit to foreclose on their property, (2) informing them of the alleged amount

unpaid, (3) notifying them of their statutory right to request verification of the alleged debt, and (4)

: 2D