Keller v. Lloyd & McDaniel PLC

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

HAMMOND DIVISION

MAUREEN KELLER, )

)

Plaintiff, )

)

v. ) Case No. 4:19-cv-17

)

LLOYD & MCDANIEL, PLC, )

RESURGENT CAPITAL SERVICES, LP, )

ALEGIS GROUP LLC, and )

LVNV FUNDING, LLC, )

)

Defendants. )

OPINION AND ORDER

This matter is before the court on the Motion for Leave to File Second Amended

Complaint [DE 14] filed by the plaintiff, Maureen Keller, on April 15, 2019. For the following

reasons, the motion is GRANTED.

Background

The plaintiff, Maureen Keller, initiated this matter on February 20, 2019, alleging

violations of the Fair Debt Collection Practices Act (FDCPA). On April 3, 2019, Keller

amended her complaint, as a matter of course, and specifically alleged that the defendants, Lloyd

& McDaniel, PLC, Resurgent Capital Services, LP, Alegis Group LLC,and LVNV Funding

LLC,violated 15 U.S.C. §§1692d-1692fof the FDCPAwhile attempting to collect adebt from

her.

Keller has requestedleave to fileasecond amendedcomplaint. Theproposed second

amended complaint has allegedthat on April 3, 2018, LVNV, through Lloyd & McDaniel

(L&M), filed a complaint against Keller in Tippecanoe County Superior Court 1,in anattempt to

collect adebt. On April 23, 2018, Keller was served with the summons and complaint ofthe

aforementioned lawsuit. On April 30, 2018, Keller spoke with an employee of L&M. Keller has

allegedthat during that conversation L&M used unfair means to attempt to collect thedebt by

making false statements and threatening action that it was neitherintending to take nor would be

legally permitted to take.

Keller seeks to add an additional violation of the FDCPA, specifically a violation of 15

U.S.C. §1692g, for the defendants’ failure to provide her with a written notice of the debt within

five days after the parties’initial communicationthat allegedlytook place on April 30, 2018.

L&M filed an objection to Keller’s motion on April 29, 2019, and Keller filed a reply on May 1,

2019.

Discussion

Federal Rule of Civil Procedure 15(a)provides that “a party may amend the party’s

pleading only by leave of court or by written consent of the adverse party; and leave shall be

freely given when justice so requires.” Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9

L.Ed.2d 222 (1962). Because pleadings merely serve to put the opposing side on notice, they

should be freely amended as the case develops, as long as amendments do not unfairly surprise

or prejudice the opposing party. Rule 15(a);Jackson v. Rockford Hous. Auth., 213 F.3d 389,

390 (7th Cir. 2000). The decision to deny leave to amend a pleading is an abuse of discretion

“only if ‘no reasonable person could agree with the decision.’” Winters v. Fru Con, Inc., 498

F.3d 734, 741 (7th Cir. 2007) (citations omitted).

Leave to amend properly may be denied at the district court's discretion for undue delay,

bad faith,or dilatory motive on the part of the movant, repeated failure to cure deficiencies by

amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of

the amendment, futility of amendment, etc. Foman v. Davis,371 U.S. 178, 182, 83 S. Ct. 227,

230, 9 L. Ed. 2d 222 (1962); Gandhi v. Sitara Capital Management, 721 F.3d 865, 868-869 (7th

Cir. 2013). Futility generally is measured by whether the amendment would survive a motion to

dismiss under Federal Rule of Civil Procedure 12(b)(6). Peoples v. Sebring Capital Corp., 209

F.R.D. 428, 430 (N.D. Ill. 2002) (quoting Bethany Pharmacal Company v. QVC, Inc., 241 F.3d

854, 860 (7th Cir. 2001); see alsoGhandi, 721 F.3d at 869 (explaining that proposed fourth

amended complaint contained inadequacies and did not properly plead fraud claims). If the

proposed amendment is not clearly futile, denying leave to amend on this ground would be

improper. SeeWright & Miller, 6 Federal Practice & Procedure 1487, at 637642 (2d ed. 1990)

(If the proposed change clearly is frivolous or advances a claim or defense that is legally

insufficient on its face, the court may deny leave to amend). Additionally, amotion to amend is

more likely to be denied if it takes place at a relatively late stage in the proceedings. Aldridge v.

Forest River, Inc.,635 F.3d 870, 876(7th Cir. 2011).

Keller’s proposed second amended complaint asserts a claim under 15 U.S.C. §1692g.

Under 15 U.S.C. § 1692g,a debt collector is required, withinfive days after an initial

communication between acreditor and adebtor, to send written notice to the debtor containing,

inter alia, the amount of debt and name of the creditor to whom the debt is owed. L&M

contends that Keller’s claim under§ 1692gis futile. L&M has arguedthat the proposed second

amendedcomplaint does not allegewhen or what was the initial communication between Keller

and L&M and that it has failedto plead any additional factual content that thestatements made

by the L&M employee“were not informational or ministerial responses to Keller’s questions

from a phone call that she initiated.”

Keller contends that she has pled enough facts to state a claim under § 1692g. In the

proposed second amended complaint, Keller has allegedthat the initial communication between

herself and L&M took place on April 30, 2018,when she “spoke” to an employee. The L&M

employeetold her that the next step would be to obtain a judgment, a judgment would add court

costs and fees, accruing at 8% interest, a lien would be placed on any property she owneduntil

the debt was cleared, and that she had twenty days to find an attorney and file a written response.

Keller asserts that the employee’s statements “went much further than merely administrative

responses of fact,” were premised with “this is an attempt to collect a debt,” and “threatened

consequences for nonpayment.” Therefore, Keller has claimed that the defendants violated§

1692gwhen shedid not receive written noticewithin five days oftheApril 30, 2018,

conversation between her and the L&M employee.

L&M has arguedthat the conversation between Keller and the employee does not qualify

as the requisite “initial communication” that must take place in order for § 1692g to be invoked.

L&M contends that Keller initiated the call,asked the employee questions,and that the employee

simply provided her with informative responses. Therefore, thestatements made by the

employeeduring the call were “ministerial responses” and not in line with the collection of a

debt. (citing McElvenn v. Westport Recovery Corp., 310 F.Supp.3d 1374, 1380-1381 (S.D. Fl.

2018)). Additionally, L&M asserts that the proposed second amended complaint does not add

or plead any additional facts to contradict that Keller initiated the call.

The Seventh Circuit has strayed away from the requirement that there be an explicit

demand for payment made by a creditor to a debtor in order for the communication to be

characterized as “in connection with a collection of any debt.” Bailey v. SecurityNat. Servicing

Corp., 154 F.3d 384, 388 (7th Cir. 1998); Gburekv. Litton Loan Servicing LP, 614 F.3d 380,

382 (7th Cir. 2010). In fact, there is no “bright-line” rule that establishes whether a

communication between a debtor and creditor is an attempt to collect adebt for purposes of 15

U.S.C. § 1692g. Gburek, 614 F.3dat.384. Rather, the court makes a “common sense” decision

based on the following factors: “whether the communications contained a demand for payment,

the nature of the parties' relationship, whether payments were past due, the purpose and context

of the communication, and whether the debt collector made the communication to induce the

debtor to settle the debt.” Malik v. Kim, 2016 WL 4709076, at 3 (N.D. Ill. Sep. 8, 2016); see

also Gburek, 614 F.3dat 385 (explaining that as long as a communication was made that would

“specifically induce the debtor to settle her debt will be sufficient to trigger the protections of

FDCPA”).

In measuring whether Keller’s proposed second amended complaint, in particular the

added § 1692gclaim, would in fact be futile,the court must determine if Keller has alleged

enough facts to determine whether theyplausibly give rise to an entitlement to relief. Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009). Plausibility exists “when the plaintiff pleads factual content

that allows the court to draw the reasonable inference that the defendant is liable for the

misconduct alleged.” Iqbal, 556 U.S. at 678. The court finds that Keller has pled enough factual

content for the court toreasonablyassume that the conversation on April 30, 2018,was an

“initial communication” for purposes of § 1692g, and that Keller would have felt compelled to

“settle her debts” after speaking with the employee from L&M. See Gburek, 614 F.3d at 384.

Based on the foregoing reasons, the Motion for Leave to File Second Amended

Complaint [DE 14] is GRANTED. The plaintiff isDIRECTEDto file the Second Amended

Complaint as a separate docket entry within seven days of this Order.

ENTERED this 2ndday of July, 2019.

/s/ Andrew P. Rodovich

United States Magistrate Judge