Not Reported in F.Supp.2d, 2009 WL 3015166 (N.D.Ill.)
`(Cite as: 2009 WL 3015166 (N.D.Ill.))
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`Page 1
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`Only the Westlaw citation is currently available.
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`United States District Court,
`N.D. Illinois,
`Eastern Division.
`Sorahaida MANLAPAZ, Plaintiff,
`v.
`UNIFUND CCR PARTNERS, Credit Card Receiv-
`ables Fund, Inc., and ZB Limited Partnership, De-
`fendants.
`
`No. 08 C 6524.
`Sept. 15, 2009.
`
`West KeySummaryAntitrust and Trade Regula-
`213
`tion 29T
`
`29T Antitrust and Trade Regulation
`29TIII Statutory Unfair Trade Practices and
`Consumer Protection
`29TIII(C) Particular Subjects and Regula-
`
`tions
`
`29Tk210 Debt Collection
`29Tk213 k. Practices prohibited or re-
`quired in general. Most Cited Cases
`Debtor sufficiently alleged that a creditor viol-
`ated the FDCPA by attaching a statement to a state
`court complaint. The debtor claimed that the debt
`was not owned by the creditor and thus the state-
`ment attached to the complaint did not accurately
`represent all of the information regarding the debt.
`Fair Debt Collection Practices Act, § 807, 15
`U.S.C.A. § 1692e.
`
`Daniel A. Edelman, Cathleen M. Combs, James O.
`Latturner, Tiffany Nicole Hardy, Edelman, Combs,
`Latturner & Goodwin, LLC, Chicago,
`IL,
`for
`Plaintiff.
`
`Joseph Paul Kincaid, Amy Zoe Knapp, Matthew
`Theron Kinst, Swanson, Martin & Bell, Chicago,
`IL, for Defendants.
`
`MEMORANDUM OPINION AND ORDER
`WILLIAM J. HIBBLER, District Judge.
`*1 In her complaint, Plaintiff Sorahaida Man-
`lapaz alleges that Defendant Unifund CCR Partners
`(“Unifund”) filed a collection action against her in
`state court for a purported debt that it did not own.
`Unifund allegedly attached two documents to that
`complaint that Manlapaz claims are false or contain
`false representations. On the basis of these facts,
`Manlapaz claims that Unifund violated the Fair
`Debt Collection Practices Act (the “FDCPA”), 15
`U.S.C. § 1692 et seq., and the Illinois Collection
`Agency Act (the “ICAA”), 2251 LCS 425/1 et seq.
`She claims that the remaining defendants are liable
`as general partners of Unifund. Defendants now
`move to dismiss Count I of the complaint for failure
`to state a cause of action under the FDCPA and re-
`quest that the court decline to exercise supplement-
`al jurisdiction over the remaining state law claims.
`For the reasons set forth below, the Court denies
`their motion in part and grants it in part.
`
`BACKGROUND
`Manlapaz alleges the following relevant facts,
`which the Court must accept as true for the purpose
`of addressing this motion. Disability Rights Wisc.,
`Inc. v. Walworth County Bd. Of Supervisors, 522
`F.3d 796, 799 (7th Cir.2008). On February 1, 2008,
`Unifund sued Manlapaz in state court to collect an
`alleged credit card debt that it did not own. Unifund
`attached two documents to its state court complaint.
`
`The first document was titled “Unifund State-
`ment” and appeared to be a bill for the purported
`debt dated November 15, 2007 and sent by Unifund
`to Manalapaz. In reality, Unifund created the Uni-
`fund Statement for the purpose of attaching it to the
`state court complaint. Unifund did not send it to
`Manlapaz prior to litigation.
`
`The second document was an affidavit signed
`by Kim Kenney, a Unifund employee,
`in which
`Kenney swore that she had personal knowledge that
`the original creditor had issued an account to Sora-
`
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`
`AVS EXHIBIT 2032
`Toyota Inc. v. American Vehicular Sciences LLC
`IPR2013-00417
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`

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`Not Reported in F.Supp.2d, 2009 WL 3015166 (N.D.Ill.)
`(Cite as: 2009 WL 3015166 (N.D.Ill.))
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`Page 2
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`haida Manlapaz and that a sum was due and pay-
`able on that account. Kenney's knowledge of the
`purported debt was based on her reading of inform-
`ation on Unifund's computer system consisting en-
`tirely of statements by people besides Kenney.
`
`Manlapaz retained counsel to defend the col-
`lection lawsuit. The court set a trial date of Septem-
`ber 18, 2008. Unifund nonsuited the case before it
`went to trial. In the instant case, Manlapaz argues
`that by filing that suit on a debt that it did not own,
`and by attaching documents that were false or con-
`tained false representations, Defendants violated §
`1692e of the FDCPA and § 8b the ICAA.
`
`DISCUSSION
`I. Standard of Review
`Motions to dismiss test the sufficiency, not the
`merits, of the case. Gibson v. City of Chicago, 910
`F.2d 1510, 1520 (7th Cir.1990). To survive a mo-
`tion to dismiss under federal notice pleading, a
`plaintiff must “provide the grounds of his entitle-
`ment to relief” by alleging “enough to raise a right
`to relief above the speculative level.” Bell All.
`Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct.
`1955, 1964–65, 167 L.Ed.2d 929 (2007) (internal
`quotation marks, brackets, and citation omitted).
`Specific facts are not necessary. Erickson v. Par-
`dus, 551 U.S. 89, ––––, 127 S.Ct. 2197, 2200, 167
`L.Ed.2d 1081 (2007). The Court will construe the
`complaint
`liberally,
`treating well-pleaded allega-
`tions as true, and drawing all reasonable inferences
`in the plaintiff's favor. Disability Rights Wisc., 522
`F.3d at 799.
`
`II. FDCPA claims based on state court litigation
`*2 Defendants' primary argument is that Man-
`lapaz cannot state a claim under § 1692e of the FD-
`CPA on the basis of what Defendants characterize
`as state court procedural deficiencies. Defendants
`cite to recent case law from this court that stands
`for the principle that the FDCPA does not govern
`what must be or what may not be filed in conjunc-
`tion with a state court complaint. See Rosales v.
`Unifund CCR Partners, No. 08 C 3533, 2008 WL
`5156681, *2 (N.D.Ill.Dec.5, 2008)
`(dismissing
`
`complaint because “the alleged deficiencies in the
`[affidavits] submitted in the state court proceedings
`relate to state court pleading requirements rather
`than the overarching policy concerns behind the
`FDCPA”); King v. Resurgence Fin., LLC, No. 08 C
`3306,
`slip op. at 4 (N.D.Ill. Nov. 3, 2008)
`(hereinafter “King I” ) (dismissing complaint be-
`cause claim “relies on state-court pleading deficien-
`cies alone”); Washington v. North Star Capital Ac-
`quisition, LLC, No. 08 C 2823, 2008 WL 4280139,
`*2 (N.D.Ill. Sep.15, 2008) (dismissing complaint
`because plaintiff “fails to allege the statements con-
`tained in [defendant's] state complaint are false, in-
`stead, he finds the pleading insufficient under [state
`law]”). The Seventh Circuit also provided support
`for this position in Baler v. Blatt, Hasenmiller,
`Leibsker & Moore, LLC, 480 F.3d 470 (7th
`Cir.2007), where the court declined to decide
`whether the FDCPA controls the contents of state
`court pleadings, but noted that state procedural
`rules, not federal law, “determine which facts, and
`how much detail, must be included in document
`filed with a clerk of court for presentation to a
`judge.” Id. at 472–73 (citing Thompson v. Simpson
`& Cybak, 392 F.3d 914 (7th Cir.2004). Defendants
`also cite to dicta in Olvera v. Blitt & Gaines, 431
`F.3d 285, 287 (7th Cir.2005), where the court sug-
`gested more generally that the FDCPA is not to be
`used simply as a mechanism for enforcing state
`law.
`
`However, Manlapaz does not claim that De-
`fendants violated the FDCPA by failing to meet
`Illinois pleading and procedural requirements. In-
`stead, she claims that the Defendants made false
`representations during the course of the state litiga-
`tion. She cites to a number of opinions that hold
`that false representations made during the course of
`state litigation can be violations of the FDCPA. See
`Heintz v. Jenkins, 514 U.S. 291, 299, 115 S.Ct.
`1489, 1493,
`, 131, 131 L.Ed.2d 395, ––––, 115
`S.Ct. 1489, ––––, L.Ed.2d 395 (U.S.1995) (holding
`that
`the FDCPA applies to attorneys' activities,
`“even when that activity consists of litigation”);
`Gearing v. Check Brokerage Corp., 233 F.3d 469,
`
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`
`

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`Not Reported in F.Supp.2d, 2009 WL 3015166 (N.D.Ill.)
`(Cite as: 2009 WL 3015166 (N.D.Ill.))
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`Page 3
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`472 (7th Cir.2000) (holding that false allegation of
`subrogation in state complaint was a violation of §
`1692e); Foster v. Velocity Investments, LLC, Nos.
`07 C 0824 & 07 C 2989, 2007 WL 2461665, *2
`(N.D.Ill. Aug.24, 2007) (denying motion to dismiss
`complaint based on false representations made in
`state court filings because “[i]n order to effectuate
`the intent of the FDCPA, it is reasonable that a doc-
`ument filed in a state court proceeding could be in
`violation of the FDCPA”).
`
`*3 Defendants argue that this case is distinct
`because it concerns attachments to the state court
`complaint, rather than substantive allegations made
`in the complaint itself. This is not entirely true, as
`one of Manlapaz's claims is based on Defendants
`bringing a lawsuit on a debt that they did not own,
`rather than on the attachments. Moreover, Defend-
`ants do not provide sufficient argument for why the
`Court should regard false representations made in
`attachments used to support allegations differently
`than false representations made in the allegations
`themselves. Thus, the Court accepts the position
`that false representations made by Defendants dur-
`ing the course of the state court litigation may have
`violated the FDCPA and must analyze whether
`Manlapaz has properly pleaded that Defendants
`made such false representations.
`
`III. Sufficient allegations of false representations
`
`A. The Unifund Statement
`
`Defendants claim that Manlapaz has failed to
`plead that
`the Unifund Statement contained any
`false representations. Manlapaz must allege that
`Defendants used a “false, deceptive, or misleading
`representation or means in connection with the col-
`lection of any debt.” 15 U.S.C. § 1692e. A violation
`includes, but is not limited to, a “false representa-
`tion of ... the character, amount, or legal status of
`the debt.” Id. at § 1692e(2)(A). However, “[i]f a
`statement would not mislead the unsophisticated
`consumer, it does not violate the FDCPA—even if
`it is false in some technical sense.” Wahl v. Mid-
`land Credit Mgmt., Inc., 556 F.3d 643, 645–646
`
`(7th Cir.2009). In addition, “[a] statement cannot
`mislead unless it is material, so a false but non-
`material statement is not actionable.” Hahn v. Tri-
`umph Partnerships LLC, 557 F.3d 755, 758 (7th
`Cir.2009).
`
`Manlapaz alleges that the document was made
`to look as if it were a bill Defendants mailed to her
`prior to litigation when in fact it was prepared for
`the litigation. The Court must accept this allegation
`as true for the purposes of this motion. Nonetheless,
`Defendants claim that: (1) the document's mislead-
`ing appearance is immaterial because all of the in-
`formation regarding the debt owed is accurate; and
`(2) the document would not mislead the unsophist-
`icated consumer.
`
`Manlapaz has alleged the Unifund did not own
`the debt at issue, and thus that the document did not
`accurately represent all of the information regard-
`ing the debt. Moreover, the document's mere ap-
`pearance as a bill previously sent to Manlapaz may
`also qualify as a misrepresentation of the character
`or legal status of the debt. As Defendants have
`pointed out in their motion, a debt collector may
`more easily state a claim in a debt collection law-
`suit under an “account stated” theory if the purpor-
`ted debtor has received and failed to object to a
`statement of the account. Allied Wire Prods., Inc. v.
`Inc., 99 Ill.App.3d 29,
`Marketing Techniques,
`39–40, 54 Ill.Dec. 385, 424 N.E.2d 1288, 1296–97
`(Ill.App.Ct.1981). Thus, by attaching what ap-
`peared to be an account statement to their com-
`plaint, Defendants may have misrepresented De-
`fendants' ability to seek legal recourse regarding the
`debt.
`
`*4 Defendants' make the misguided argument
`that because the issue of an “account stated” theory
`may be relevant to the decision of this issue, the
`case is an attempt to use the FDCPA to enforce
`state law. Manlapaz simply contends that the Uni-
`fund Statement falsely represented information in
`violation of § 1692e. The Court need not determine
`whether the document was properly attached to the
`state court complaint or truly supported an account
`
`© 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.
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`

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`Not Reported in F.Supp.2d, 2009 WL 3015166 (N.D.Ill.)
`(Cite as: 2009 WL 3015166 (N.D.Ill.))
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`Page 4
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`stated theory in order to determine whether any
`false representations contained therein were materi-
`al and misleading. The Court finds that statements
`regarding ownership and legal recourse are materi-
`al.
`
`these misrepresentations may
`Additionally,
`very well have been misleading to the unsophistic-
`ated consumer. Defendants only argument to the
`contrary is that they cannot be misleading because
`they do not affect the character, amount, or legal
`status of the debt. However, as discussed above,
`Ms. Manlapaz has alleged false representations that
`do affect the character, amount, or legal status of
`the debt.
`
`Thus, Ms. Manlapaz has sufficiently alleged
`that Defendants violated § 1692e of the FDCPA by
`attaching the Unifund Statement to the state court
`complaint. Defendants' motion is denied as to this
`claim.
`
`B. The Kenney Affidavit
`Manlapaz also alleges that Defendants violated
`§ 1692e by attaching an affidavit signed by Kim
`Kenney in which she swore that she had personal
`knowledge that the original creditor had issued an
`account to Manlapaz, that the sum was due and
`payable on that account, and that she was compet-
`ent to testify to those matters. Manlapaz claims that
`the affidavit contained false representations be-
`cause Kim Kenney's knowledge of these purported
`facts was based entirely on statements by other per-
`sons on Unifund's computer system.
`
`The parties engage in argument about whether
`it is possible for someone to have personal know-
`ledge of information learned through a review of
`business records. Manlapaz contends that it is not
`possible, and that Kenney's affidavit therefore con-
`tained a false representation. Defendants claim that
`it is possible, and that Kenney's affidavit was there-
`fore truthful. In both Illinois state courts and federal
`courts, business records are admissible as an excep-
`tion to the hearsay rule. See e.g., Babich v. River
`Oaks Toyota, 377 Ill.App.3d 425, 430, 316 Ill.Dec.
`
`353, 879 N.E.2d 420, 425 (Ill.App.Ct.2007);
`Fed.R.Evid. 803(6). In other words, although the
`statements contained in business records are not ex-
`cluded from evidence, they are hearsay. Thus, by
`definition, someone testifying on the basis of a re-
`view of business records does not have personal
`knowledge of the information in the records. In
`fact, witnesses called to testify regarding business
`records are usually called simply to establish a
`foundation for the admission of the records and to
`serve as a vehicle for presenting the contents of the
`records to the jury. This is because the business re-
`cords exception makes the record admissible, not
`the testimony of a witness making reference to the
`record. Champaign Nat'l Bank v. Babcock, 273
`Ill.App.3d 292, 298, 210 Ill.Dec. 46, 652 N.E.2d
`848, 853 (Ill.App.Ct.1995).
`
`*5 Nonetheless, there is a distinct possibility
`that Kim Kenney would be able to testify to the
`contents of the business records in precisely this
`manner at
`trial. Babich, 316 Ill.Dec. 353, 879
`N.E.2d at 425 (records admitted pursuant to busi-
`ness
`records
`exception should be
`established
`through testimony of someone familiar with the
`business and its mode of operation). Manlapaz has
`not pleaded that the business records were inad-
`missible or that Kenney is not competent to estab-
`lish a foundation for the admission of the records.
`Moreover, business records are often one of the
`only sources, if not the primary source, for evid-
`ence of whether someone owns a debt. Therefore,
`the falsity of Kenney's statement that she had per-
`sonal knowledge of facts that she gleaned from a
`review of business records is a technicality which
`would not mislead the unsophisticated consumer.
`As stated above, “[a] statement cannot mislead un-
`less it is material, so a false but non-material state-
`ment is not actionable.” Hahn, 557 F.3d at 758. In
`this case, for example,
`the question of whether
`Kenney technically had personal knowledge of the
`facts that she would testify to or not would not
`likely affect a consumer's reaction to the lawsuit.
`Thus, the Court grants Defendants' motion to dis-
`miss Manlapaz's claim that attachment of the Ken-
`
`© 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.
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`

`
`Not Reported in F.Supp.2d, 2009 WL 3015166 (N.D.Ill.)
`(Cite as: 2009 WL 3015166 (N.D.Ill.))
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`Page 5
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`motion with regard to Manlapaz's claim that De-
`fendants violated the FDCPA by suing on a debt
`they did not own.
`
`CONCLUSION
`*6 For the above reasons, the Court DENIES
`Defendants' motion to dismiss with regard to
`Plaintiff's claims that they violated the FDCPA by
`filing a state court complaint on a debt that they did
`not own and by attaching the Unifund Statement to
`that complaint. In addition, the Court Denies De-
`fendants' motion to dismiss Plaintiff's state court
`claims because supplemental jurisdiction is still ap-
`plicable. The Court GRANTS Defendants' motion
`to dismiss with prejudice with regard to Plaintiff's
`claims that they violated the FDCPA by attaching
`an affidavit to their state court complaint that con-
`tained false claims of personal knowledge.
`
`IT IS SO ORDERED.
`
`N.D.Ill.,2009.
`Manlapaz v. Unifund CCR Partners
`Not Reported in F.Supp.2d, 2009 WL 3015166
`(N.D.Ill.)
`
`END OF DOCUMENT
`
`ney affidavit was a violation of the FDCPA because
`of Kenney's claims of personal knowledge.
`
`C. Ownership of the debt
`Manlapaz also makes the case that Defendants
`violated the FDCPA by suing her on a debt that
`they did not own. Defendants argue that this allega-
`tion does not amount to a violation of § 1692e of
`the FDCPA, citing to King I, slip op. at 3, and
`North Star, 2008 WL 4280139, at *2. In both cases,
`the plaintiffs alleged that the defendants violated
`the FDCPA by bringing debt collection suits in
`state court without attaching assignments as re-
`quired by state law. King I, slip op. at 3; North Star,
`2008 WL 4280139, at *2. However, in both cases
`the court dismissed the claim because of
`the
`plaintiffs' reliance on the state procedural require-
`ment of attaching an assignment, rather than on any
`false statement in the complaint or the underlying
`fraud of filing a debt collection action without hav-
`ing taken title to the debt. King I, slip op. at 3;
`North Star, 2008 WL 4280139, at *2. In fact, the
`plaintiff in King I was later given leave to amend
`her complaint because her new complaint alleged
`not only that the defendant did not attach any as-
`signment of the debt, but also that defendant did not
`own the debt and falsely alleged in its state com-
`plaint that it did. King v. Resurgence Fin., LLC, No.
`08 C 3306, slip. op. at 3 (N.D.Ill. Feb. 9, 2009)
`(hereinafter “King II” ) (finding this claim analog-
`ous to those permitted in Gearing and Jenkins).
`This court made a similar ruling in Matmanivong v.
`Unifund CCR Partners, No. 08 C 6415, 2009 WL
`1181529, *5 (N.D.Ill. Apr.28, 2009).
`
`Defendants also argue that Manlapaz waived
`her right to dispute the motion on this point by fail-
`ing respond in her brief. However, she distin-
`guished King I and North Star in both her response
`brief and in additional citations to authority that the
`Court allowed. She provided ample argument re-
`garding the issue of bringing claims on the basis of
`supposed procedural defects. Thus, because the
`Court agrees with the logic set forth in King II and
`it will
`therefore deny Defendants'
`Matmanivong,
`
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