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Portalatin v. Blatt, Hasenmiller, Leibsker & Moore, LLC

United States Court of Appeals, Seventh Circuit

August 13, 2018

Iwona Portalatin, Plaintiff-Appellee,
v.
Blatt, Hasenmiller, Leibsker & Moore, LLC, Defendant-Appellant.

          Submitted March 29, 2018

          Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:14-cv-08271 - Matthew F. Kennelly, Judge.

          Before Bauer, Flaum, and Manion, Circuit Judges.

          MANION, CIRCUIT JUDGE.

         Iwona Portalatin allegedly owed $1, 330.75 in consumer debt. In October 2013 the law firm of Blatt, Hasenmiller, Leibsker & Moore, LLC ("Blatt") on behalf of its client Midland Funding, LLC ("Midland") filed a debt-collection suit against Portalatin in downtown Chicago at the Richard J. Daley Center Courthouse, which serves the Circuit Court of Cook County's First Municipal District. Our then-governing precedent interpreting the Fair Debt Collection Practices Act ("FDCPA") allowed Blatt to file suit against Portalatin in that forum even though at the time of filing she lived in the Fourth Municipal District, served by the Maywood Courthouse.

         But in July 2014, we overruled our precedent and held the FDCPA requires debt collectors to file suits in the smallest venue-relevant geographic unit where the debtor signed the contract or resides at commencement of suit. Suesz v. Med-1 Solutions, 757 F.3d 636, 638 (7th Cir. 2014). This meant Blatt should have filed Midland's suit in the Fourth Municipal District where Portalatin lived. Blatt quickly complied with Suesz, but because we made our ruling retroactive, Blatt's earlier filing was frozen in place for purposes of FDCPA liability. As a result, Portalatin sued Blatt and Midland for violating the FDCPA, and she sued Midland for violating the Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA").

         Eventually, Portalatin settled with Midland and expressly abandoned all claims against Blatt except her claim for FDCPA statutory damages. Blatt moved for relief on various grounds, including an argument that Portalatin's settlement with Midland mooted her claim for FDCPA statutory damages against Blatt. The district court denied these motions. The jury awarded Portalatin $200 in statutory damages against Blatt. For this achievement, the court awarded Portalatin $69, 393.75 in attorney's fees and $772.95 in costs against Blatt. Blatt appeals. We conclude the settlement with Midland mooted Portalatin's claim for FDCPA statutory damages against Blatt. As a result, the district court should have dismissed her claim, and she is not entitled to attorney's fees or costs from Blatt.

         I. Background

         The FDCPA requires a debt collector in the circumstances relevant here to bring a legal action "only in the judicial district or similar legal entity" where the debtor signed the contract or resides at commencement of the action. 15 U.S.C. § 1692i(a)(2). In 1996, we interpreted "judicial district" to mean (in Illinois) a Circuit Court, and not its municipal subdivisions. Newsom v. Friedman, 76 F.3d 813, 818-19 (7th Cir. 1996), overruled by Suesz, 757 F.3d 636. In particular, we held the Circuit Court of Cook County, and not its municipal subdivisions, was a "judicial district." Id. This meant a debt collector could file suit in downtown Chicago so long as the debtor resided anywhere in Cook County at commencement of the action.

         In October 2013, Midland, through Blatt, filed an action against Iwona Portalatin in the Circuit Court of Cook County's First Municipal District (in downtown Chicago) to recover credit card debt. Portalatin lived in the Fourth Municipal District at filing. There is no dispute that both Midland and Blatt are debt collectors under the FDCPA. In April 2014, the state court entered default judgment for Midland for $1, 330.75.

         But in July 2014, we overruled Newsom and held "judicial district or similar legal entity" in § 1692i means "the smallest geographic area that is relevant for determining venue in the court system in which the case is filed," and we made that holding retroactive. Suesz, 757 F.3d at 638, 649-50. Blatt claims it "changed the venues for filing collection actions" and "was conforming to this Court's new interpretation of the FDCPA's venue provision the day after the Suesz decision came down." (Appellant's Br., No. 17-3335 at 15-17.) Portalatin does not dispute this claim.

         In October 2014, Portalatin sued Blatt and Midland in federal court. She claimed they violated the FDCPA by suing her in the wrong forum, and she sought statutory damages, [1]actual damages, costs, and attorney's fees from them under the FDCPA. She also claimed Midland violated the ICFA, and she sought actual damages, punitive damages, costs, and attorney's fees from Midland under the ICFA. Portalatin and Midland settled for $5, 000 plus release of the underlying debt of $1, 330.75.[2] The settlement agreement did not apportion any of the settlement funds to any particular claims, although it did say each party bears its own costs and attorney's fees. In August 2015, the district court entered summary judgment for Portalatin on Blatt's affirmative defense, concluding Blatt was not entitled to the bona fide error defense in 15 U.S.C. § 1692k(c).

         In September 2015, Portalatin expressly abandoned her claim for actual damages against Blatt; her attorney stated in open court that they were only seeking statutory damages.

         Blatt moved for dismissal, arguing the settlement with Midland mooted Portalatin's claims against Blatt under the single-satisfaction rule. In November 2015, the district court denied that motion. So Portalatin and Blatt went to trial later that month solely for statutory damages. Portalatin asked for $1, 000, the maximum statutory damages. The jury awarded her $200. Blatt then moved to alter or amend the judgment pursuant to Rule 59(e) or to grant relief from the judgment pursuant to Rule 60(b)(5) on the grounds that the award for statutory damages must be set off or deemed satisfied by Portalatin's settlement with Midland. The district court denied that motion as well.

         In July 2017, we held that a debt collector who violated the FDCPA cannot avoid liability on the ground it relied on Newsom as controlling precedent. Oliva v. Blatt, Hasenmiller, Leibsker & Moore, 864 F.3d 492, 494 (7th Cir. 2017), cert. denied, 138 S.Ct. 1283 (2018). We confined the bona fide error safe harbor provided by § 1692k(c) to factual and clerical errors, and excluded legal errors. Id. at 499. We noted that although defendant had no safe-harbor defense, plaintiff's damages might still be limited by the statute: "[I]n determining damages for a violation where the safe harbor is not available, the court 'shall consider, among other relevant factors … the extent to which such noncompliance was intentional.'" Id. at 500.

         In October 2017, the district court awarded Portalatin $69, 393.75 in attorney's fees and $772.95 in costs against Blatt, because she prevailed by winning $200 at trial.

         Blatt pursues two appeals, consolidated before us. It challenges the statutory-damages award, arguing Portalatin received all possible compensation through her settlement with Midland, thus mooting her action against Blatt. Alternatively, it argues it is entitled to a setoff based on the settlement agreement. Blatt also challenges the award of attorney's fees and costs, arguing it falls with the mootness of the statutory-damages claim. Blatt also argues the district court failed to consider the most critical factor in calculating the award: Portalatin's level of success. Blatt claims the district ...


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