Opinion
No. 03 C 2589
September 15, 2003
MEMORANDUM OPINION AND ORDER
Plaintiff Joyce B. Whaley brought this class action against defendant Shapiro Kreisman, LLC, alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (FDCPA). Defendant filed a motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, defendant's motion is granted in part and denied in part.
BACKGROUND
On December 16, 2002, defendant Shapiro Kreisman, on behalf of its client, filed a foreclosure suit against plaintiff Joyce B. Whaley. The mortgage documents authorized the lenders to recover "reasonable attorneys' fees and costs" (def. mem. in sup. of mo. to dismiss, ¶ 18 exh. A). On February 23, 2003. Whaley paid off the loan in its entirety in order to avoid foreclosure. Of the $127,006.67 paid by plaintiff, $2,307 was for attorneys' fees and costs. On March 19, 2003, the foreclosure suit was dismissed. Plaintiff filed this on behalf of other borrowers who paid attorneys' fees to defendant. She alleges that defendant had no right to the fees and therefore its billing practices violated the FDCPA.
DISCUSSION
In deciding a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) we must assume the truth of all well-pleaded factual allegations, making all inferences in the non-movant's favor. Sidney S. Arst Co. v. Pipefitters Welfare Educ. Fund, 25 F.3d 417, 420 (7th Cir. 1994). We dismiss a claim only if it appears "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957).Plaintiff does not dispute that the mortgage document clearly allows for the recovery of reasonable attorneys' fees and costs, nor did she initially argue that the amount of the fees was unreasonable. Instead, she argued that defendant violated the FDCPA by billing her for the fees without first obtaining court approval.
The plaintiff directs us to a series of cases holding that, when a statute allows for reimbursement of attorneys' fees, the party seeking to collect fees must proceed through the court. See Shula v.Lawent, 2002 WL 31870157, *9 (N.D. III. 2002) (holding that debt collector could not bill for attorneys' fees where no agreement existed between the parties and no judgment had been entered authorizing the collection of fees). These cases do not speak to the situation where a party explicitly agrees to the fees in a contract, as is the case here. In this case defendant had the contractual right to bill plaintiff a reasonable amount without having to first obtain court approval. See Porter v. Fairbanks Capital Corp., 2003 WL 21210115 (N.D. III. 2003); James v. Olympus Servicing, L.P., 2002 WL 31307540, *4 (N.D. III. 2002) (holding, in a case with nearly identical facts, that the FDCPA does not require court approval to collect contractually agreed-upon attorneys* fees).
And it is generally in the debtor's interest that this be so. It is not uncommon for a mortgagor to fall behind, for the mortgagee to engage an attorney to obtain collection or initiate foreclosure proceedings, for the attorney to so advise the mortgagor, for the mortgagor or her attorney to seek and obtain a payoff letter which contains a reasonable attorney's fee figure as authorized by the mortgage documents, and for the mortgagor then to resolve the matter by payment. No court has been involved, unless the complaint has already been filed. If the mortgagee's attorney had to initiate a legal proceeding to obtain court approval of fees, the mortgagor would become liable for additional fees as well as the costs of that proceeding.
As this case has progressed, plaintiff has expanded her legal theories. She claims that an indeterminate claim for fees violates FDCPA, although Veach v. Sheeks, 316 F.3d 690, 692 (7th Cir. 2003), indicates otherwise. She also now alleges that the fees are unreasonable or unearned. That is possibly so. That claim dooms any effort to pursue this case as a class action. Moreover, the representation of what were reasonable fees and costs was made in a payoff letter sent to attorneys — at least one who was representing plaintiff and who raised no questions about the amount of the fees at the time the mortgage was paid. But we are getting ahead of ourselves since all the later filings get us into exhibits and representations, the stuff of summary judgment motions.
For now, we grant the motion to dismiss the claim that defendant violated FDCPA by failing to get court approval for fees and costs. We leave to the parties the procedural issue of how to resolve what remains, which arises from the amendment.