Summary
In Wehrheim, the court reasoned that if the plaintiff were allowed to pursue her FDCPA claim based on a violation of Section 524, the court would have to decide whether the debt at issue had been discharged in bankruptcy.
Summary of this case from Necci v. Universal Fidelity CorporationOpinion
IP 00-1328-C-T/K
August 16, 2002
ENTRY ON MOTIONS
This Entry is a matter of public record and is being made available to the public on the court's web site, but it is not intended for commercial publication either electronically or in paper form. Although the ruling or rulings in this Entry will govern the case presently before this court, this court does not consider the discussion in this Entry to be sufficiently novel or instructive to justify commercial publication or the subsequent citation of it in other proceedings.
Plaintiff, Jamie M. Wehrheim, sued Defendant, James M. Secrest, P.C. ("Secrest"), alleging violations of the Fair Debt Collection Practices Act (the "FDCPA" or "Act"), 15 U.S.C. § 1691-1692o, specifically 15 U.S.C. § 1692e(2)(A), (2)(B), (5), (10) and § 1692(f), and Indiana's criminal deception statute, Indiana Code § 35-43-5-3. Defendant moved for summary judgment. Plaintiff moved to strike the affidavit of James M. Secrest submitted in support of Defendant's summary judgment motion. The court decides as follows.
The Amended Complaint cites § 1692e(1)(A), but this apparently is a clerical error as the alleged violation is for "misrepresenting the character, amount or legal status" of a debt, which is a § 1692e(2)(A) violation.
I. Summary Judgment Standard
The applicable standard is well-established. Summary judgment is appropriate only where "there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). When a defendant asserts an affirmative defense in response to a summary judgment motion, the defendant must present evidence to "support each element of its defense and demonstrate the lack of any genuine issue of material fact with regard thereto." Rushing v. Kan. City So. Ry. Co., 185 F.3d 496, 505 (5th Cir. 1999), cert. denied, 528 U.S. 1160 (2000).
II. Background
These facts are not disputed. Secrest is an Indiana corporation that engages in collecting consumer debts in Indiana. Sometime before April 19, 1999, Secrest was hired by Trustcorp Mortgage Company ("Trustcorp") to foreclose a mortgage on real estate owned by Ms. Wehrheim which mortgage secured a note on which Ms. Wehrheim had been indebted to Trustcorp. Ms. Wehrheim's debt on the note had previously been discharged in bankruptcy.
On August 23, 1999, while acting on behalf of Trustcorp, Secrest filed a complaint against Ms. Wehrheim in the Marion County Superior Court, Civil Division, Cause Number 49D01-9908-CP-01182 ("state court action") to foreclose on the mortgage and note. At that time Secrest was unaware that Ms. Wehrheim's debt with Trustcorp was discharged in bankruptcy. A copy of the complaint in the state court action is attached to the Complaint as Exhibit F. The complaint states in relevant part:
5. That the defendant, JAMIE M. WEHRHEIM, had made default in the monthly payments of principal and interest due and payable upon said note and mortgage, beginning with and since the date of October 1, 1998, and has made default in the monthly payments for real estate taxes and insurance beginning with and since said date and have wholly failed and refused to pay the same, by reason of which default, failure and refusal to pay, the said note and mortgage have been in default since November 1, 1998; that there is now due and owing from the defendant, JAMIE M. WEHRHEIM, upon said note and mortgage the following:
Principal $41,575.56
Interest thereon to date 2,972.65
Foreclosure abstract 295.00
Aggregate amount of late charges for defaulted payments 190.08
Deficit in Deposit Account for taxes and insurance premiums 847.33 __________ Total $45,880.62
together with interest thereon at the rate of 12 per cent per annum.
(Am. Compl., ¶¶ 22, 27 Ex. F). The note attached to Exhibit F, however, states that it is payable with interest at the rate of 7.15%. (Id., Ex. F, Ex. A at 1.) The second paragraph labeled five in Exhibit F states Trustcorp is entitled to attorney's fees.
Ms. Wehrheim retained counsel to defend her against Trustcorp's claims. On August 30, 1999, her counsel filed an Answer, Affirmative Defenses, and Disclaimers, which is attached to the Complaint as Exhibit G. It states in relevant part: "Plaintiff is barred from bringing this action by virtue of Defendant's Discharge in Bankruptcy. While Plaintiff may seek in rem relief involving the subject real estate, Plaintiff is absolutely barred from pursuing Defendant for an [sic] alleged in personam liability." (Compl., ¶ 40; Answer ¶ 18.)
On September 8, 1999, Ms. Wehrheim filed in the state court action her Motion for Summary Judgment, Memorandum in Support of Defendant Jamie Wehrheim's Motion for Summary Judgment, and Designation of Evidence. A copy of the motion and memorandum in support are attached to the Complaint in this case as Exhibits H and I. Secrest did not file a response to the motion for summary judgment, but on or about October 25, 1999, Secrest filed a Motion for Summary Judgment against Ms. Wehrheim on behalf of Trustcorp. A copy of the motion, designation of record and affidavit are attached to the Complaint as Exhibits J, K and L.
The parties' motions for summary judgment in the state court action were scheduled for hearing on December 13, 1999. During that hearing, the state court allowed Secrest to amend his complaint to conform to the evidence to allow Trustcorp to seek only in rem liability. The state court had found that the complaint and motion for summary judgment filed by Secrest on behalf of Trustcorp requested in personam liability against Ms. Wehrheim.
III. Discussion A. Alleged Violations of FDCPA
Plaintiff alleges that Defendant violated 15 U.S.C. § 1692e(2)(A), (2)(B), (5) and (10) as well as § 1692f. Defendant does not dispute that Ms. Wehrheim is a "consumer", Secrest is a "debt collector," and the obligation owed to Trustcorp is a "debt" under the FDCPA. See 15 U.S.C. § 1692a(3), (5), (6).
Defendant first argues that the state court complaint does not constitute a "communication" under the FDCPA. A communication is not a prerequisite for the specific FDCPA violations alleged by Plaintiff, see 15 U.S.C. § 1692e(2)(A), (2)(B), (5), (10) and 1692f. None of the cases cited by Defendant holds otherwise, see, e.g., Buckley v. Bass Assoc., 249 F.3d 678 (7th Cir. 2001) (plaintiff's claims brought under 15 U.S.C. § 1692e(11) and § 1692g(a)). Therefore, the court need not decide whether the state court complaint constitutes a communication under the FDCPA.
1. § 1692e(2)(A) and (B)
Defendant argues that the state court action did not violate 15 U.S.C. § 1692e(2)(A) and (B), which prohibit a debt collector from falsely representing "the character, amount, or legal status of any debt" and "any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt," respectively. Plaintiff responds that Defendant violated these provisions of the FDCPA by (1) misrepresenting the interest rate on the note (Defendant stated that the interest rate was 12% when the note provided for an interest rate of 7.15%) and the amount of the interest and (2) overstating the amount of the debt (Defendant requested a judgment against Plaintiff in the amount of $55,000.00 and the final judgment entered was for in rem liability in the amount of $50,169.71).
Defendant contends, citing two district court decisions for support, that to prevail under § 1692e, Plaintiff must establish a knowing misrepresentation by Defendant. The Seventh Circuit, however, has stated that "Section 1692e applies even when a false representation was unintentional." Gearing v. Check Brokerage Corp., 233 F.3d 469, 473 (7th Cir. 2000) (holding false representation violated § 1692e(2) and (10)). This is consistent with the plain language of § 1692e which contains no reference to knowledge or intent. Also, other subsections of § 1692e make knowledge or intent an element of the violation. See, e.g., 15 U.S.C. § 1692d(5) ("Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number."). "[W]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion." Gozlon-Peretz v. United States, 498 U.S. 395, 404 (1991) (quotation omitted). The court thus concludes that § 1692e does not require that alleged the misrepresentation be knowing or intentional.
Simmons v. Miller, 970 F. Supp. 661 (S.D.Ind. 1997), in which the undersigned concluded that § 1692e required that the misrepresentation be knowingly and intentionally made was decided before the Gehring decision and, in light of that decision, should not be followed.
Defendant next argues that the claims under § 1692e(2)(B) fail. Defendant cites to Spears v. Brennan, 745 N.E.2d 862 (Ind.Ct.App. 2001), for the proposition that a FDCPA misrepresentation claim based on an award of attorneys' fees in a prior state court action is an impermissible collateral attack on the state court judgment. Plaintiff responds that she is not attacking the underlying state court judgment, but rather claims that Defendant misrepresented the amount of attorney's fees in his demand in that action. The state court judgment, she asserts, is evidence that Defendant's fee demand was false and in violation of the FDCPA. Thus, in this court's view, Spears is inapposite since Plaintiff does not challenge the fee award, but rather the fee demand.
In its reply brief, Defendant acknowledges that the state court complaint misstated the interest rate on the mortgage note, but asserts that the misstatement constitutes a bona fide error under § 1692k(c). Though Defendant offers some evidence to establish that the bona fide error defense may apply, the fact that the defense was not argued as a basis for summary judgment until Defendant filed its reply brief gives this court pause as Plaintiff has not had an opportunity to respond to the arguments and evidence relating to the defense. Given Plaintiff's lack of a response on the matter, the court cannot say that Defendant has shown a lack of a genuine issue of material fact with regard to this defense. However, the issue has been raised and, if the material facts are not in dispute, it would appear that the defense would shield Defendant from liability on Plaintiff's FDCPA claims premised upon the misstatement of the interest rate and amount of interest. In order to decide whether Defendant has demonstrated a lack of a genuine issue of material fact, the court allows Plaintiff another opportunity to address the bona fide error defense as it relates to the misstatement of the interest rate and amount of interest. The court therefore affords Plaintiff fifteen days within which to serve and file a surreply addressing the Defendant's Supplemental Statement Of Material Facts In Support Of Motion For Summary Judgment.
As for Plaintiff's claim based on Defendant's alleged overstatement of the amount of the debt, the court finds that Plaintiff has not produced sufficient evidence to raise a genuine issue of material fact for trial. The mere fact that the amount of the final judgment was different, that is, less than the amount requested in the demand for judgment does not prove a violation of § 1692e(2)(A) or (B). In Veach v. Sheeks, IP00-1793-C H/K, 2002 WL 243658 (S.D.Ind. Jan. 4, 2002), the plaintiff had argued at trial that the defendant's demand for damages in the state court complaint of three times the amount of a check violated the FDCPA by falsely implying the state small claims court had decided to award treble damages. Judge Hamilton of this court said that "it is not a violation of the FDCPA to specify in a state court complaint the relief being requested, at least so long as there is a reasonable basis in law for the request." Veach, 2002 WL 243658, at *4 n. 4 (citing Gearing v. Check Brokerage Corp., 233 F.3d 469, 471-72 (7th Cir. 2000)); see also id. at *5. Given the Supreme Court's guidance in Heintz v. Jenkins, 514 U.S. 291 (1995), conveying that the FDCPA should be interpreted to avoid anomalies in litigation activities, id. at 296-97, the court does not find that Defendant's request for a judgment in the amount of $55,000 rises to the level of a violation of § 1692e(2)(A) or (B). Thus, summary judgment will be granted Defendant on Plaintiff's claims under § 1692e(2)(A) or (B) based on the alleged overstatement of the amount of the debt.
2. § 1692e(5)
Defendant contends that the state court action did not violate § 1692e(5), which prohibits a debt collector from using a "threat to take any action that cannot legally be taken or that is not intended to be taken." This is so, according to Defendant, because the state court action was an action actually taken rather than a threat of action. Judge Hamilton of this court addressed and rejected a like argument in Clark v. Pollard, No. IP99-1414-C H/G, 2000 WL 1902183 (S.D.Ind. Dec. 28, 2000). The undersigned cannot improve on Judge Hamilton's reasoning and adopts it herein:
Clark is not challenging here any "threat," which is the term used in the portion of the FDCPA she relies upon. She is challenging instead action actually taken. . . . By its plain language, subsection (5) applies to threats of action, not to actions actually taken. Courts have repeatedly applied subsection (5) according to its terms to threats of unlawful action and to threats of action the collector does not actually intend to take. See, e.g., United States v. National Financial Services, Inc., 98 F.3d 131, 136-38 (4th Cir. 1996) (affirming summary judgment against debt collector who threatened legal action without any actual intention to follow through with legal action); Bentley v. Great Lakes Collection Bureau, 6 F.3d 60, 62 (2d Cir. 1993) (false threat of imminent litigation violated § 1692e(5)); Patzka v. Viterbo College, 917 F. Supp. 654, 660 (W.D.Wis. 1996) (granting summary judgment for plaintiff and finding violation of § 1692e(5) by threat to file suit to collect a collection cost prohibited by state law). See generally Wade v. Regional Credit Ass'n, 87 F.3d 1098, 1100 (9th Cir. 1996) (debt collector's violations of state licensing law did not constitute per se violations of FDCPA).
Id. at *3. Plaintiff's claims in the instant case are based upon actions actually taken by Defendant. The court rejects Plaintiff's attempt to equate threats of action with actions actually taken.
Plaintiff argues that Defendant improperly focuses on the term "threat" and ignores the portion of the qualifying language in the section that states: "[w]ithout limiting the general application of the foregoing". 15 U.S.C. § 1692e. This argument might have some force if it were directed to a claim under § 1692e, but it is inapplicable to a claim under § 1692e(5), which applies only to a "threat to take any action that cannot legally be taken or that is not intended to be taken." Plaintiff also argues that it would be anomalous to conclude that threatening to take an illegal action violates the FDCPA without concluding that actually taking an illegal action also violates the Act. The court fails to see any anomaly. Taking an illegal action may violate some provision of the FDCPA, but it does not violate § 1692e(5).
Lastly, Plaintiff claims that Defendant's motion for summary judgment filed in the state court action requested a judgment for personal liability against Plaintiff and, thus, threatened an action that could not legally be taken. The court does not believe that Plaintiff's motion or "request" would constitute a "threat" under § 1692e(5). Compare Webster's II New College Dictionary (2nd ed. 1999) 942 (defining "request" as "1. The act of asking. 2. Something requested. 3. The fact or condition of being requested.") with id. at 1149 (defining "threat" as "1. An expression of an intention to inflict something harmful. 2. An indication of impending danger of harm. 3. One regarded as a possible danger"). Even if the two words were indistinguishable, the conduct about which Plaintiff complains is the filing of the summary judgment motion, which was an action actually taken. No genuine issue of material fact exists and Defendant is entitled to a judgment as a matter of law on Plaintiff's claim under § 1692e(5).
3. § 1692e(10)
Defendant argues that Plaintiff cannot prove a violation of § 1692e(10) which prohibits the "use of any false representations or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer." 15 U.S.C. § 1692e(10).
This argument is premised upon Defendant's belief that the § 1692e(10) claim is based on the alleged representation that Plaintiff was indebted to Trustcorp under the note and mortgage notwithstanding her prior bankruptcy discharge. Plaintiff's response states that the bases for the § 1692e(10) claim are the representations in the state court complaint regarding the interest rate and the overstatement of the amount of the debt in the request for judgment.
As stated in the section regarding Plaintiff's claims under § 1692e(2)(A) and (B), Defendant asserted the bona fide error defense of § 1692k(c) as against the claim based on the misstatement of the interest rate in its reply brief, and Plaintiff will be given an opportunity to file a surreply as to that defense, see supra at pages 6-7. And, for the same reasons as explained with respect to the § 1692e(2)(A) and (B), see supra at pages 7-8, in this court's view, the request for judgment in the state court complaint does not rise to a level of a violation of § 1692e(10). Summary judgment will be granted Defendant on that claim.
Plaintiff also maintains that Defendant's request for in personam liability in its motion for summary judgment in the state court action violated § 1692e(10). This raises the issue of whether Plaintiff's FDCPA claims which are based on Defendant's alleged efforts to collect a debt previously discharged in bankruptcy are precluded by the United States Bankruptcy Code. The courts are divided on this issue, but the majority have held that such FDCPA claims are precluded. See, e.g., Walls v. Wells Fargo Bank, N.A., 276 F.3d 502 (9th Cir. 2002); Bolen v. Bass Assocs., No. 97 C 2944, 2001 WL 1249058 (N.D.Ill. Oct. 17, 2001); DeGrosiellier v. Solomon Solomon, P.C., No. 00-CV-1065, 2001 WL 1217181 (N.D.N.Y. Sept. 27, 2001); Diamante v. Solomon Solomon, P.C., No. 1:99CV1339 (FJS/DRH), 2001 WL 1217226 (N.D.N.Y. Sept. 18, 2001); but see Peeples v. Blatt, No. 00 C 7028, 2001 WL 921731 (N.D.Ill. Aug. 15, 2001); Wagner v. Ocwen Fed. Bank, No. 99 C 5405, 2000 WL 138222 (N.D.Ill. Aug. 28, 2000).
Defendant has argued that the filing of the state court action was not actionable under the FDCPA just because Plaintiff may have had the affirmative defense of discharge in bankruptcy. Defendant's citation to Transamerica Financial Services, Inc. v. Sykes, 171 F.3d 553 (7th Cir. 1999), is puzzling since the case did not involve or mention a discharge in bankruptcy.
In Walls v. Wells Fargo Bank, the plaintiff claimed that the defendant attempted to collect her debt after it had been discharged in bankruptcy and alleged this constituted an unfair and unconscionable collection practice in violation of the FDCPA and also violated the bankruptcy discharge injunction. The Ninth Circuit held that the debtor's remedy for the creditor's alleged violation of the discharge injunction was under the Bankruptcy Code and the debtor could not pursue a simultaneous claim under the FDCPA. Walls, 276 F.3d at 510-11. The court stated that: "[t]here [was] no escaping that Walls's FDCPA claim is based on an alleged violation of § 524" which necessarily involves "bankruptcy-laden determinations." Id. at 510. The court reasoned:
The Bankruptcy Code provides its own remedy for violating § 524, civil contempt under § 105. To permit a simultaneous claim under the FDCPA would allow through the back door what Walls cannot accomplish through the front door — a private right of action. This would circumvent the remedial scheme of the Code under which Congress struck a balance between the interests of debtors and creditors by permitting (and limiting) debtors' remedies for violating the discharge injunction to contempt. . . . Nothing in either Act persuades us that Congress intended to allow debtors to bypass the Code's remedial scheme when it enacted the FDCPA. While the FDCPA's purpose is to avoid bankruptcy, if bankruptcy nevertheless occurs, the debtor's protection and remedy remain under the Bankruptcy Code.
Walls, 276 F.3d at 510 (citing Kokoszka v. Belford, 417 U.S. 642, 651 (1974)). Thus, under Walls, a debtor may not pursue a claim under the FDCPA based on an alleged violation of the Bankruptcy Code's discharge injunction provision.
In Cox v. Zale Delaware, Inc., 239 F.3d 910 (7th Cir. 2001), the Seventh Circuit considered whether the bankruptcy discharge injunction preempts various state law claims. A debtor, Cox, filed a petition for bankruptcy and listed a debt to defendant Zale. He then signed a reaffirmation agreement with Zale, agreeing to pay the unpaid balance. Subsequently he was discharged from all his listed debts, including the debt to Zale because the reaffirmation agreement was not filed with the bankruptcy court. Cox sued Zale under state law seeking to rescind the agreement and recover the amounts that he had paid Zale after the discharge order was entered. Id. at 912-13. The case was referred to the bankruptcy court which dismissed the case, ruling that § 524(c) does not create a private right of action for violation of the requirement that a reaffirmation agreement be filed with the bankruptcy court. Id. at 913.
The Seventh Circuit then considered whether the remedy of § 524-contempt sanctions — was exclusive and said:
Section 524(a)(2) provides that an order discharging the debtor from his debts "operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover, or offset any such debt as a personal liability of the debtor, whether or not discharge of such debt is waived." Until the addition of section 14(f) to the Bankruptcy Act in 1970 (the section that is now section 524(a)(2) of the Bankruptcy Code), a discharge was merely an affirmative defense that the debtor could plead if later sued by the holder of one of the discharged debts. Section 524(a)(2) not only prohibits but also enjoins such suits, as well as other collection actions, and so the creditor who attempts to collect a discharged debt is violating not only a statute but also an injunction and is therefore in contempt of the bankruptcy court that issued the order of discharge.
Cox, 239 F.3d at 915. The Seventh Circuit held that "a suit for violation of section 524(c) can be brought only as a contempt action under section 524(a)(2)." Id. at 917. Thus, Cox teaches that the remedy provided for by § 524 is the exclusive remedy for violations of that provision.
In Bolen, a case decided by another district court in the Seventh Circuit, the plaintiff alleged the defendant debt collector violated the FDCPA by attempting to collect debts discharged in bankruptcy under unenforceable reaffirmation agreements. The defendant argued that under Cox the plaintiff's claim should be decided in the bankruptcy court. The court first considered whether Cox was distinguishable in an effort to harmonize the FDCPA and Bankruptcy Code, but concluded in light of Cox's holding and the reasoning in Baldwin v. McCalla, Raymer, Padrick, Cobb, Nichols Clark, L.L.C., No. 98 C 4280, 1999 WL 284788 (N.D.Ill. Apr. 26, 1999) (holding that an FDCPA claim cannot be premised on the filing of proofs of claim in a bankruptcy proceeding), that the plaintiff could not proceed under the FDCPA for a violation of the discharge injunction provision of § 524(c). Bolen, 2001 WL 124058, at *3.
The Baldwin court relied in part on the Supreme Court's decision in Kokoszka v. Belford, which addressed the application of a provision of the Consumer Credit Protection Act ("CCPA"), of which the FDCPA is a part. In examining whether the CCPA's wage garnishment provisions were applicable in the bankruptcy context, the Supreme Court said:
Plaintiff takes issue with the case's reliance on Kokoszka, stating that the FDCPA was not enacted until 1976, after that case was decided. Though this is true enough, Plaintiff's attorney knows full well that the FDCPA is a part of the CCPA.
The Congress did not enact the Consumer Credit Protection Act in a vacuum. The drafters of the statute were well aware that the provisions and the purposes of the Bankruptcy Act and the new legislation would have to coexist. Indeed, the Consumer Credit Protection Act explicitly rests on both the bankruptcy and commerce powers of the Congress. . . .
An examination of the legislative history of the Consumer Protection Act makes it clear that, while it was enacted against the background of the Bankruptcy Act, it was not intended to alter the clear purpose of the latter Act to assemble, once a bankruptcy petition is filed, all of the debtor's assets for the benefit of his creditors. Indeed, Congress' concern was not the administration of a bankrupt's estate but the prevention of bankruptcy in the first place. . . .417 U.S. at 650. The Supreme Court then stated: "In short, the Consumer Credit Protection Act sought to prevent consumers from entering bankruptcy in the first place. However, if despite its protection, bankruptcy did occur, the debtor's protection and remedy remained under the Bankruptcy Act." Id. at 651. The Baldwin court reasoned that as with the wage garnishment provisions of the CCPA, the FDCPA was intended to eliminate practices that "contribute to the number of personal bankruptcies," 15 U.S.C. § 1692(a), and neither Act indicates a congressional intent to interfere with the bankruptcy system. The court concluded that Kokoszka compelled the finding that a FDCPA claim cannot be based on proofs of claim filed in a bankruptcy proceeding. Baldwin, 1999 WL 284788, at *4.
To the extent that Wagner and Peeples hold that a plaintiff can maintain a FDCPA claim based on a violation of the Bankruptcy Code, the court does not find their reasoning persuasive. In Wagner, the plaintiff alleged that the defendant violated the FDCPA when it attempted to collect a debt discharged in bankruptcy. The court held that plaintiff's FDCPA premised on an alleged violation of the Bankruptcy Code's discharge injunction was not precluded. Wagner, 2000 WL 1382222, at *2. The court relied on the fact that the plaintiff did not attempt to bypass any remedies available under the Bankruptcy Code while her bankruptcy petition was pending since the conduct about which she complained occurred after her bankruptcy case was closed. Id. In Peeples, the plaintiffs had their debts discharged in bankruptcy. After the discharge, the defendant law firm made demands of the plaintiffs for return of merchandise purchased from Sears and also offered to allow plaintiffs to redeem the merchandise for a lump sum payment. The plaintiffs claimed the defendant attempted to collect discharged debts in violation of the FDCPA. Peeples, 2001 WL 921731 at *1. The court held that the plaintiffs' FDCPA claim was not precluded by the Bankruptcy Code in reliance on Wagner and upon finding that the defendant's activities alleged to have violated the FDCPA occurred after the bankruptcy case was closed. Id. at *4. This court does not understand the discharge injunction provision to reach only conduct that occurs during the pendency of a bankruptcy case. Therefore, the reasoning of Wagner and Peeples is unpersuasive.
In Wagner the court said that the fact that the plaintiff's debt was discharged in bankruptcy did not logically differentiate her case from that of a debtor whose debt was discharged in some other way. 2001 WL 921731 at *4. This court disagrees and finds that the fact that a debt was discharged in bankruptcy does matter. The debtor would have no FDCPA claim but for the discharge injunction.
This court finds the reasoning and conclusions of those decisions holding that the Bankruptcy Code precludes FDCPA claims based on violations of the Bankruptcy Code to be more persuasive than those that hold otherwise. Under § 524, creditors are prohibited from attempting to collect debts discharged in bankruptcy. That provision, allegedly violated by Defendant in this case, provides for its own remedy for violations — a civil contempt proceeding. To allow Plaintiff to bring an FDCPA claim for damages based on a violation of § 524 would undercut the remedies provided by § 524. If Plaintiff were allowed to pursue her FDCPA claim based on a violation of § 524, then the court would have to decide whether the debt on the mortgage note had been discharged in bankruptcy. This would interject the court into bankruptcy laden questions and require reference to the Bankruptcy Code. Even if the state court determination that the debt had been discharged had res judicata, collateral estoppel or claim preclusion effect in the instant case, as Plaintiff urges, the bankruptcy court that ordered the discharge should enforce the discharge injunction. Or, if the FDCPA claim were not precluded, the remedy provided for in § 524 would become superfluous as most debtor-plaintiffs would opt to bring their claim under the FDCPA which allows for damages and attorney's fees rather than § 524.
The court therefore concludes that the Bankruptcy Code precludes Plaintiff's FDCPA claim based on Defendant's attempt to collect a debt discharged in bankruptcy. Accordingly, the court finds that summary judgment should be granted on Plaintiff's claim based on Defendant's request for a finding of in personam liability against her in the state court action.
4. § 1692(f)
Defendant contends that Plaintiff's § 1692f claim is subject to summary judgment because Defendant had no knowledge of Plaintiff's prior discharge in bankruptcy and thus could not have knowingly and intentionally used an unfair or unconscionable means of collection in connection with the state court action. Plaintiff responds that her § 1692f claim is not limited to the filing of the underlying state court complaint but includes Defendant's request of a finding of in personam liability against her in his motion for summary judgment. As explained in the preceding section, such a claim is precluded by the Bankruptcy Code, so Plaintiff's § 1692(f) claim based on Defendant's request for a finding of in personam liability does not survive summary judgment.
B. State Law Deception Claim
Defendant makes a few arguments for summary judgment in its favor on the state law deception claim under Indiana Code § 35-43-5-3(a)(2). First, Defendant argues that the Amended Complaint fails to allege the elements of a claim under subpart (a)(2) and thus fails to state a claim. But as the Seventh Circuit recently reiterated, a complaint need not allege elements of a claim, with the exceptions listed in Rule 9, which are inapplicable here. See Walker v. Thompson, 288 F.3d 1005, 1007 (7th Cir. 2002). Under federal notice pleading standards, a complaint need only allege enough to put the defendant on notice of the plaintiff's claim to enable the defendant to prepare a defense and to allow the district court to determine "at the outset of the litigation, before costly discovery is undertaken, whether the plaintiff has any tenable theory or basis of suit[.]" Ryan v. Mary Immaculate Queen Ctr., 188 F.3d 857, 860 (7th Cir. 1999); see also Walker, 288 F.3d at 1008. The Complaint satisfies this pleading standard.
Next, Defendant argues that none of the misstatements in the pleadings or motions filed in the state court action were knowing or intentional or false or misleading with the intent to obtain property, citing Secrest Aff. ¶ 13. The cited paragraph of the affidavit states:
13. At the time I filed the State Court Action I was not aware that Plaintiff had apparently previously received a bankruptcy discharge from any personal liability under the Trustcorp note and mortgage. I became aware of Plaintiff's bankruptcy discharge when it was raised in the Plaintiff's answer and summary judgment filing to the State Court Action.
(Secrest Aff., dated 10/29/01 ¶ 13.) This evidence concerns Defendant's lack of knowledge of Plaintiff's discharge in bankruptcy at the time the state court action was filed; it does not address Plaintiff's claims based on the representation in the state court complaint of the amount of interest and the amount due under the note and mortgage or the claim based on Defendant's continued pursuit of an in personam judgment against Plaintiff. Nonetheless, Plaintiff has offered no evidence to raise a triable issue as to Defendant's fraudulent intent with regard to any of Defendant's actions about which she complains, which intent she must prove to prevail on her statutory deception claim, see Indiana Code § 35-43-5-3(a)(2) (stating that a person who "knowingly or intentionally makes a false or misleading written statement with intent to obtain property . . ." commits deception); Veach v. Sheeks, IP00-1793-C H/K, 2002 WL 243658, at *6 n. 5 (S.D.Ind. Jan. 4, 2002) (granting judgment as a matter of law on state law deception claim where the attorney defendant had evidence of a prima facie case of check deception and there was a lack of any evidence of attorney's fraudulent intent). Plaintiff seeks to criminalize errors in state court pleadings, errors which may amount to violations of Indiana Trial Rule 11, but surely do not amount to the commission of a crime.
Moreover, the majority of courts that have considered the issue have held that the Bankruptcy Code preempts state law claims premised upon allegations that the defendant violated the Bankruptcy Code. See, e.g., Diamante v. Solomon Solomon, P.C., No. 1:99CV1339 (FJS/DRH), 2001 WL 1217226, at *2 (N.D.N.Y. Sept. 18, 2001) (citing cases); but see Wagner v. Ocwen Fed. Bank, No. 99 C 5405, 2000 WL 138222, at *3 (N.D.Ill. Aug. 28, 2000) (state law claims for unjust enrichment and under consumer fraud statute not preempted). The court finds the reasoning and conclusions of the former decisions more persuasive than those of the latter for the reasons stated supra with respect to FDCPA claims based on violations of the Bankruptcy Code. In essence, Plaintiff alleges that Defendant committed statutory deception by attempting to collect on a mortgage note which debt had been discharged in bankruptcy. Her sole remedy is a contempt proceeding under § 524. For these reasons, summary judgment should be granted Defendant on Plaintiff's statutory deception claim.
The Wagner court did not address the state law claims in detail, but simply said they were not preempted for the same reasons the court found the FDCPA claims were not preempted. See id.
V. Plaintiff's Motion To Strike
Plaintiff moves to strike portions of the affidavit of James M. Secrest. In making its ruling on the summary judgment motion, the court has not considered the particular paragraphs to which Plaintiff objects. The motion to strike is therefore DENIED. The court will reconsider this ruling if consideration of the challenged portions of Mr. Secrest's affidavit becomes necessary for the determination of whether the bona fide error defense of § 1692k(c) shields Secrest from liability.
VI. Conclusion
For the foregoing reasons, Plaintiff's motion to strike is DENIED; Defendant's motion for summary judgment will be GRANTED at least in part, in accordance with this entry; and Plaintiff is AFFORDED fifteen days within which to serve and file a surreply addressing the Defendant's Supplemental Statement Of Material Facts In Support Of Motion For Summary Judgment.
No judgment will be entered at this time as further briefing has been ordered and issues remain to be decided.
ALL OF WHICH IS ORDERED this 16th day of August 2002.