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The Security National Bank of Sioux City, IA v. Vera T. Welte Testamentary Trust

Summarizing by Amir Shachmurove


Case Type:
Case Status:
21-3131 (7th Circuit, Apr 26,2023) Published
Like the U.S. District Court for the Northern District of Illinois (DC), the U.S. Court of Appeals for the Seventh Circuit concluded that Kenneth Pucillo (Pucillo) lacked Article III standing to sue National Credit Systems, Inc., for violating the Fair Debt Collection Practices Act (FDCPA) by sending him two collection letters about a debt discharged in his closed bankruptcy case and thus affirmed the DC's dismissal of Pucillo's complaint (Complaint).
Procedural context:
In the eighteen months after Main Street Renewal LLC (Main Street) assigned Puccillo's debt to National Credit without any knowledge of Puccillo's bankruptcy filing in the U.S. Bankruptcy Court for the Northern District of Illinois (BC), National Credit sent him two collection letters, dated February 1, 2018, and February 1, 2019. Comprised of seven sentences, the body of each letter was identical, describing settlement options and promising to, if payment was made, "update credit data it may have previously submitted regarding this debt.” As Puccillo had received his discharge on September 19, 2017, each such letter ran afoul of the discharge injunction. On January 25, 2019, the week before Pucillo received the second letter, he filed the underlying lawsuit. In response, National Credit denied violating the FDCPA, as a bona fide error had prevented proper processing and notice of Pucillo’s bankruptcy filing, and it has not “furnish[ed]” on Pucillo’s account—"that is, give information about a consumer, including credit history, to a credit reporting agency"—before or after his bankruptcy discharge. After discovery and an unsuccessful settlement conference, both parties moved for summary judgment. In March 2021, the DC denied both motions as moot and instead dismissed the entire case. It did so for two reasons. First, it that the allegations in Pucillo’s pleadings regarding ʺconfusion,” “stress,” “concern,” and “fear” were not sufficiently concrete to result in an injury in fact that would give him standing to sue. Second, because Pucillo’s amended complaint did not claim that National Credit had reported the alleged Main Street debt to credit reporting agencies, he could not now argue that his credit was somehow affected, “giving him some concrete, particularized harm.” Pucillo then moved under Federal Rules of Civil Procedure 59 and 60 to amend or alter the judgment; the DC denied the motion based on the arguments' untimeliness and redundancy.
Pucillo, who had once leased an apartment with Main Street, filed for chapter 7 bankruptcy on May 30, 2017. With his opening papers, Pucillo listed as a debt past‐due rent he allegedly owed Main Street. The BC ultimately granted him a discharge, wiping any and all of his debt to Main Street, on September 19, 2017. As a matter of law (and practice), this discharge entered the public record; indeed, it indisputably appeared on Pucillo’s credit reports prior to the actions from which the underlying suit arose. Despite this fact, however, Main Street was never notified of Pucillo’s bankruptcy case and had, ten weeks before the discharge issued, placed Pucillo’s account with National Credit for collection.
Michael B. Brennan; Thomas Kirsch; and John Z. Lee

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