United States District Court, Southern District of Indiana, Indianapolis Division
Peter Elliott and Misty Elliott, individually and on behalf of all others similarly situated, Plaintiffs,
Cavalry Investments, LLC and Cavalry Portfolio Services, LLC, Defendants
Plaintiffs Peter Elliott and Misty Elliott (the “Elliotts”) bring this suit individually and on behalf of a purported class of others similarly situated under the Fair Debt Collections Practices Act (“FDCPA”) against Defendants Cavalry Investments, LLC and Cavalry Portfolio Services, LLC (collectively, “Cavalry”). The Elliotts filed for Chapter 13 bankruptcy, and Cavalry filed proofs of claim against the Elliotts in their Chapter 13 proceeding regarding time-barred debts— that is, debts for which the statute of limitations had run. The Elliotts objected to Cavalry’s time-barred proofs of claim, and the Bankruptcy Court sustained the Elliotts’ objections. The Elliotts then filed this suit, alleging that Cavalry violated the FDCPA by filing proofs of claim on time-barred debts. Presently pending before the Court is Cavalry’s Motion to Dismiss the Elliotts’ FDCPA claim, in which Cavalry argues that filing proofs of claim on time-barred debts does not violate the FDCPA. [Filing No. 20.] For the reasons that follow, the Court DENIES Cavalry’s Motion to Dismiss.
Standard of Review
The Federal Rules of Civil Procedure require that a complaint provide the defendant with “fair notice of what the . . . claim is and the grounds upon which it rests.’” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007)). In reviewing the sufficiency of a complaint, the Court must accept all well-pled facts as true and draw all permissible inferences in favor of the plaintiff. See Active Disposal Inc. v. City of Darien, 635 F.3d 883, 886 (7th Cir. 2011). A Rule 12(b)(6) motion to dismiss asks whether the complaint “con-tain[s] sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). The Court will not accept legal conclusions or conclusory allegations as sufficient to state a claim for relief. See McCauley v. City of Chicago, 671 F.3d 611, 617 (7th Cir. 2011). Factual allegations must plausibly state an entitlement to relief “to a degree that rises above the speculative level.” Munson v. Gaetz, 673 F.3d 630, 633 (7th Cir. 2012). This plausibility determination is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id.
The Elliotts’ Complaint asserts the following:
The Elliotts experienced financial difficulties in 2003, which forced them to stop paying their debts, including debts allegedly owed for phone services. [Filing No. 1 at 3.] At least some of their phone-service debts were transferred or sold to Cavalry. [Filing No. 1 at 3.]
In 2013 the Elliotts filed a Chapter 13 bankruptcy petition in the Southern District of Indiana. [See Filing No. 1 at 3; In re Elliott, No. 13-06875-JMC-13.] Cavalry filed two proofs of claim in the bankruptcy proceeding for debts they acquired for the Elliotts’ unpaid phone services. [Filing No. 1 at 3.] Claim No. 9-1 for $423.70 was filed regarding an AT&T account owed by Ms. Elliott. [Filing No. 1 at 3; see Filing No. 1-3 at 1-5.] Claim No. 10-1 for $258.97 was filed regarding a Sprint account owed by Mr. Elliott. [Filing No. 1 at 3; see Filing No. 1-3 at 6-10.] The statute of limitations in Indiana for collecting delinquent debts is six years from the date of the last activity. See Ind. Code § 34-11-2-9. The parties do not dispute that the proofs of claim related to time-barred debts. [Filing No. 1 at 3.]
The Elliotts were represented by counsel during their bankruptcy proceeding. [Filing No. 1-4; see In re Elliott, No. 13-06875-JMC-13, Dkt. 1 at 3.] Their counsel objected to the two proofs of claim as time-barred. [Filing No. 1 at 3; Filing No. 1-4.] The Bankruptcy Court sustained the Elliotts’ objections. [Filing No. 1 at 4; Filing No. 1-5.] The Elliotts then filed this suit, alleging that Cavalry violated the FDCPA by filing proofs of claims for debts that were time-barred. [Filing No. 1 at 4.]
The question presented by the parties in this Motion to Dismiss is straightforward: can filing a proof of claim in a Chapter 13 bankruptcy proceeding for a time-barred debt violate the FDCPA? Courts across the country have taken various positions on this and related questions, but the Seventh Circuit has not decided the issue. Given the Elliotts’ allegations and the arguments presented by the parties, the Court cannot say as a matter of law that the Elliotts’ Complaint fails to state a claim. Nor is the Court finding that the allegations categorically establish an FDCPA violation. The Court notes the limited extent of its ...