Commercial Banking, Collections, and Bankruptcy

Dist. Ct. did not err in dismissing plaintiffs’ actions under Fair Debt Collection Practices Act (FDCPA), alleging that defendant’s dunning letter, which stated, in part, that “You want to be worthy of the faith put in you by your creditor,” and that “We are interested in you preserving a good credit rating with the above creditor,” contained false, deceptive or misleading statements. While Dist. Ct. found that said statements did not violate section 1692e or 1692f of FDCPA, Ct. of Appeals found that plaintiffs lacked Article III standing to bring instant actions, because: (1) both complaints failed to contain any allegation of harm or appreciable risk of harm arising from claimed statutory violations; and (2) plaintiffs only generally alleged that said statements were false, deceptive or misleading.

Dist. Ct. did not err in finding in favor of plaintiff after bench trial in action that sought recovery for costs incurred by plaintiff-buyer in supply contract, where plaintiff’s costs arose out of buying from third-party carbon black to replace carbon black that defendant would have supplied to plaintiff under instant supply contract, and where defendant had failed to give plaintiff adequate assurance of its future performance under section 2-609 of Uniform Commercial Code. Defendant conceded that it had attempted to impose price increase on carbon black during lifetime of supply contract, and that such conduct gave plaintiff reasonable grounds of insecurity for purposes of section 2-609. Moreover, record showed that: (1) plaintiff placed orders for black carbon at contract price, and defendant did not respond to said orders; (2) plaintiff wrote letter to defendant to say that it expected defendant to abide by contract price; and (3) individuals at defendant subsequently told plaintiff that it could not guarantee shipment of carbon black under plaintiff’s purchase orders or confirm any future shipment dates. Also, defendant hedged as to whether it would actually fill plaintiff’s orders and continued to demand that plaintiff accept defendant’s price increase. As such, plaintiff could treat defendant as having repudiated contract, so as to allow it to look elsewhere for supplier of carbon black and seek difference between cost of carbon black supplied by third-party and cost of carbon black under supply contract.

Dist. Ct. did not err in granting defendant-debt collector’s motion to dismiss plaintiff-debtor’s action under Fair Debt Collection Practices Act (FDCPA), alleging that defendant’s dunning letter, which told plaintiff that plaintiff would not owe interest or fees on debt “through course of [defendant’s] collection efforts concerning your account” was misleading because: (1) subsequent letter contained itemized summary of plaintiff’s current balance, which listed “0.00” as interest charge; and (2) plaintiff contended that letter implied that creditor would begin to add interest if plaintiff failed to resolve debt with defendant. Itemization of debt is record of what has already happened, such that unsophisticated consumer would construe letter as only status of debt as of date of letter. As such, plaintiff could only speculate as to whether debt would accrue interest in future, and that instant letter, which related only to current status of debt and was silent as to future treatment, did not run afoul of FDCPA.

Dist. Ct. did not err in granting plaintiff’s motion for summary judgment in action alleging that defendant breached contract calling for sale of 30 parcels of land with gas stations and convenience stores, where defendant failed to close on agreement and failed to pay plaintiff earnest money called for in agreement, which served as liquidated damages clause. Contract called for defendant to pay total of $750,000 in earnest money in two stages, and defendant never paid any earnest money and had failed to provide timely written notice of disapproval of said sale, which would have entitled defendant to return of any earnest money. Ct. rejected defendant’s argument that plaintiff had failed to satisfy two conditions precedent requiring plaintiff to have authority to sell subject properties and to submit certain due diligence materials. Moreover, instant liquidated damages provision satisfied all three factors required in any valid liquidated damages provision, in that: (1) it was agreed to by parties as settlement of damages claim; (2) amount of liquidated damages was reasonable in light of instant $67 million contract; and (3) actual damages arising out of breach would be uncertain and difficult to prove. Fact that plaintiff had not incurred any damages at time of defendant’s failure to close on properties or that defendant had not placed any money into escrow account did to require different result.

Dist. Ct. did not err in dismissing for failure to state viable cause of action plaintiffs-debtors’ action under Fair Debt Collection Practices Act (FDCPA), alleging that defendant-debt collector’s practice of reporting obligations to single creditor separately instead of in aggregate fashion constituted unfair way to collect debts under section 1692f of FDCPA. It is reasonable and not deceptive for debt collector to report individually accurate debts that correspond to different charges, and that said practice was not within plain meaning of “unfair” or “unconscionable” in context of FDCPA. Moreover, plaintiffs’ proposed debt-reporting rule requiring single aggregate total of debt to single creditor would conceal debt-specific information that other consumers may prefer to see on their credit reports. Fact that plaintiffs’ credit scores would have been higher had defendant reported debts in aggregated manner did not require different result.

Bankruptcy Ct. erred in confirming Chapter 13 plan that kept debtor’s car in bankruptcy estate, which essentially prevented City of Chicago from using devices such as towing or booting to collect on fines that had been assessed against debtor for parking and other vehicular offenses. Confirmation of said plan was contrary to holding of Steenes I, 918 F.3d 554, and in Steenes II, 942 F.3d 834, which held that there must be a good, case specific reason for keeping car in bankruptcy estate after confirmation of Chapter 13 plan, and that vehicular fines are administrative expenses under 11 USC section 507(a)(2). Moreover, record did not contain good, case specific reason for why instant confirmation of plan should not vest all estate property in debtor, and Ct. rejected claim that debtor is entitled to have property remain in bankruptcy estate following confirmation of plan, even if debtor’s choice was motivated by desire to avoid payment of fines.

Dist. Ct. did not err in dismissing (for failure to exhaust remedies under FIRREA mandatory claims process) defendants’ petition to quash service in state-court foreclosure action filed by failed bank now under receivership by FDIC. While defendants asserted in petition that service of process in foreclosure action had been defective and that state-court lacked personal jurisdiction over defendants so as to render void foreclosure order against defendants, dismissal of petition was appropriate because defendants had failed to submit any claim to FDIC by submission deadline set forth in FDIC notice to defendants. Ct. rejected defendants’ contention that mandatory claims process did not apply to them because their petition did not seek financial restitution, since: (1) defendants’ petition constituted “claim” against failed bank; and (2) 12 USC section 1821(d)(13)(D)(ii) precluded Dist. Ct. from reviewing claims “relating to any act or omissions” of failed bank or of FDIC as receiver of failed bank, unless said claims had been first subjected to FIRREA’s administrative claims process.

Dist. Ct. did not err in granting defendant's motion for summary judgment in plaintiff-debtor's action under Fair Debt Collections Practices Act, alleging that defendant sent dunning letter that was misleading. While plaintiff alleged that sentence in dunning letter, i.e., "This letter serves as notification that your delinquent account may be reported to credit bureaus," was misleading because her debt had already been reported to credit bureaus by time she had received dunning letter, said sentence was not deceptive because it simply apprised her that defendant has/had permission to report her delinquent debt at any time. Moreover, defendant's explanation in letter that payment of settlement amount by certain date would stop collection activity was not promise that if offered settlement was paid then delinquent debt would not be reported. As such, plaintiff was required to produce evidence of letter's confusion with respect to "significant fraction" of population, and plaintiff failed to do so through use of objective measure such as consumer survey. Moreover, record lacked evidence of how unsophisticated (as opposed to least sophisticated) consumer would actually read defendant's dunning letter, and plaintiff's own testimony regarding her alleged confusion was not enough to support her claim.