Ella M. Beler v. Blatt , Hasenmiller , Leibsker & Moore , LLC

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 06-2707
E LLA M. B ELER ,
Plaintiff-Appellant,
v.
B LATT , H ASENMILLER , L EIBSKER & M OORE , LLC ,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Central District of Illinois.
No. 05-3059—Jeanne E. Scott, Judge.
____________
A RGUED J ANUARY 3, 2007—D ECIDED M ARCH 7, 2007
____________
Before E ASTERBROOK , Chief Judge, and W OOD and
W ILLIAMS , Circuit Judges.
E ASTERBROOK , Chief Judge. This action under the
Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-
1692o, stems from litigation in state court. Ella Beler
bought products from JCPenney using a house-label credit
card. Credit was extended by General Electric Capital
Corporation through the auspices of Monogram Credit
Card Bank of Georgia. When Beler fell behind in repay-
ment, GE Capital filed a collection suit in Illinois. It was
represented by Blatt, Hasenmiller, Liebsker & Moore, LLC
(which we call “the Law Firm”). Beler’s unpaid balance
was $731. A lot more than that has been run up since
in legal fees.

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2 No. 06-2707
Beler admitted in open court on March 26, 2004, that
she owed what GE Capital claimed, and judgment was
entered accordingly. But Beler did not pay, appeal, or file
a bankruptcy petition. Her inaction led the Law Firm to
send a Citation to Discover Assets (see 735 ILCS 5/2-1402)
to U.S. Bank in Springfield, Illinois, where Beler had a
checking account whose balance exceeded what she owed
on the judgment. The citation informed the Bank that
assets exempt from execution under state or federal law
should not be turned over. Having no idea which (if any)
funds might be exempt, the Bank froze the account.
At this point Beler finally hired a lawyer, who asserted
that the entire balance was exempt because all of her
current income consisted of disability payments from the
Social Security program. See 42 U.S.C. §407(a); Philpott
v. Essex County Welfare Board, 409 U.S. 413 (1973). The
Law Firm chose not to contest this assertion—though
Beler might have had assets independent of Social Secu-
rity income—and dismissed the citation. The account
was frozen for 23 days between the Bank’s receipt of the
citation and the Law Firm’s release of the citation. Instead
of paying GE Capital $731, Beler paid the Bank $70 (a fee
imposed for processing the citation) and her lawyer $1,000.
She also hired a second lawyer, who filed this federal suit
against the Law Firm. The judgment debt remains out-
standing.
Beler contends that the Law Firm—a “debt collector” for
purposes of the federal Act, see Heintz v. Jenkins, 514
U.S. 291 (1995)—violated 15 U.S.C. §1692e and §1692f
during the state litigation. The Law Firm does not con-
tend that these contentions should have been raised in
state court. Any potential invocation of claim preclusion,
see Epps v. Creditnet, Inc., 320 F.3d 756 (7th Cir. 2003);
Adair v. Sherman, 230 F.3d 890 (7th Cir. 2000), thus has
been forfeited. But the Law Firm does defend on the
merits, and the district court granted summary judgment

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No. 06-2707 3
in its favor. See 2006 U.S. Dist. L EXIS 31762 (C.D. Ill. May
18, 2006).
According to Beler, the complaint filed in the state suit
and an attached affidavit violated the FDCPA because
their description of the contracts among JCPenney,
Monogram Bank, and GE Capital was not clear enough
to enable an unsophisticated consumer (see Gammon v.
GC Services Limited Partnership, 27 F.3d 1254 (7th Cir.
1994)) to understand the relation among merchant, trans-
action processor, and creditor. The confusing description
violated 15 U.S.C. §1692e, the argument goes.
This theory assumes that the federal Act regulates the
contents of complaints, affidavits, and other papers filed
in state court. The Law Firm is a debt collector, to be sure,
and we held in Thomas v. Simpson & Cybak, 392 F.3d 914
(7th Cir. 2004) (en banc), that the statutory “verification
notice” must precede or accompany a complaint when the
creditor’s law firm satisfies the definition of a debt collec-
tor. But Thomas did not imply that the FDCPA dictates
the complaint’s contents; to the contrary, we suggested
(though we did not have an occasion to hold) that the
state’s rules of procedure, not federal law, determine
which facts, and how much detail, must be included in
documents filed with a clerk of court for presentation to
a judge. A recent amendment nullified the holding of
Thomas: legal pleadings no longer need be preceded or
accompanied by verification notices. Pub. L. 109-351, 120
Stat. 2006 (Oct. 13, 2006), adding 15 U.S.C. §1692g(d).
Given this amendment and the limited rationale of
Thomas itself, it is far from clear that the FDCPA con-
trols the contents of pleadings filed in state court.
Let us suppose, for the sake of argument, that §1692e
applies to complaints, briefs, and other papers filed in
state court. (We postpone to some future case, where the
answer matters, the decision whether §1692e covers the
process of litigation.) Beler thinks that the Act requires

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4 No. 06-2707
everything from a debt collector’s pen to be in plain
language, but that’s not so. Several parts of the FDCPA
require notice about particular topics, and we have held
that the required notices must be clear rather than muddy.
That’s some distance from saying that everything a
lawyer writes during the course of litigation must be
stated in plain English understandable by unsophisti-
cated consumers. However desirable that might be, it is
not a command to be found in the FDCPA.
Section 1692e does not require clarity in all writings.
What it says is that “[a] debt collector may not use any
false, deceptive, or misleading representation or means
in connection with the collection of any debt.” A rule
against trickery differs from a command to use plain
English and write at a sixth-grade level. Beler does not
contend that the complaint was deceptive and that the
Law Firm set out to trick her into paying money she
does not owe, or to mislead her into paying the wrong
person. Whatever shorthand appeared in the complaint—
the payments system through which credit-card slips flow
is complex, and even many lawyers don’t grasp all of its
details—was harmless rather than an effort to lead an-
yone astray. It was the judge, not Beler, who had to be able
to determine to whom the debt was owed, for it is
the judge (or clerk of court) rather than the defendant
who prepares the judgment specifying the relief to which
the prevailing party is entitled.
Beler’s second theory is that the Law Firm violated
15 U.S.C. §1692f by serving a citation that caused her
bank to freeze her checking account for three weeks. This
statute provides that “[a] debt collector may not use unfair
or unconscionable means to collect or attempt to collect
any debt.” What is “unfair or unconscionable”? The statute
does not say. Although the FDCPA does authorize the
Federal Trade Commission to issue advisory opinions
giving shape to these and other vague terms, 15 U.S.C.

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No. 06-2707 5
§1692l(c), the FTC has not issued any advisory opinions
that bear on the question at hand. Nor has it issued any
helpful opinions in enforcement proceedings under 15
U.S.C. §1692l(a).
No other court of appeals has dealt with this subject
either. Instead of asking us to make rules in common-law
fashion, and apply them retroactively, Beler wants us to
use §1692f to enforce other legal rules. Her theory is that
it is “unfair” or “unconscionable” for a debt collector to
violate any other rule of positive law. She has in mind
42 U.S.C. §407(a), which exempts Social Security benefits
from attachment or other legal execution, and Illinois law,
which adopts the same rule. See Fayette County Hospital
v. Reavis, 169 Ill. App. 3d 246, 523 N.E.2d 693 (5th Dist.
1988).
There are two problems with Beler’s approach. First,
§1692f creates its own rules (or authorizes courts and the
FTC to do so); it does not so much as hint at being an
enforcement mechanism for other rules of state and fed-
eral law. This is not a piggyback jurisdiction clause. If the
Law Firm violated the Social Security Act, that statute’s
rules should be applied. Likewise if the Law Firm violated
Illinois law. Section 1692f does not take a state-law
dispute and move it to federal court, even though the
amount in controversy is well under $75,000 and the
parties are not of diverse citizenship.
Second, the Law Firm did not violate any anti-attach-
ment rule. No exempt property reached GE Capital. The
citation used the precise language required by state law,
see 735 ILCS 5/2-1402(b), telling the Bank not to turn
over any exempt asset and informing it that a judgment
debtor has a right to a hearing before any property is
transferred to a creditor.
This citation had the practical effect of freezing the
account until the Bank knew what was exempt. Beler

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6 No. 06-2707
could have asked a judge under 735 ILCS 5/2-1402(l) to
separate exempt from non-exempt assets; at the debtor’s
request, the court must afford a “prompt hearing date”.
(The Supreme Court of Illinois held in Bank of Aspen v.
Fox Cartage, Inc., 126 Ill. 2d 307, 533 N.E.2d 1080 (1989),
that a prompt post-citation hearing is adequate as a
matter of both state law and the federal Constitution.) But
instead of demanding a judicial resolution, Beler (through
counsel) and the Law Firm resolved the issue amicably,
and the citation was dismissed. Illinois law was followed
to the letter.
Beler could prevail under §1692f only if we were to
declare, as a matter of federal common law, that a pre-
citation hearing is essential to “fair” debt collection, lest
exempt assets be immobilized for even a brief period, even
though a freeze plus a post-citation hearing complies
with state law. Whatever may be said for or against pre-
citation hearings as a matter of wise public policy, such a
rule should be adopted (if at all) through the administra-
tive process or a statutory amendment rather than judicial
definition of the phrase “unfair or unconscionable”. The
legislative and administrative processes can take full
account of all affected interests in a way that judicial case-
by-case decisionmaking cannot.
How often, for example, would a pre-citation notice
enable debtors to clean out accounts and hide their assets,
frustrating efforts to collect judgments? How often do
banks erroneously hand over exempt assets when they
misconstrue citations and think that immediate action is
required? How long does Illinois take to afford judicial
resolution when a post-citation request is made? The
longer it takes, the more attractive is a pre-citation
hearing even at some cost in allowing debtors to evade
collection. But we know none of these vital details and
thus are poorly suited to make a rule on the subject. At
all events, Beler does not ask us to do so (as we’ve men-

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No. 06-2707 7
tioned, her argument is that we should use §1692f to
enforce existing state and federal laws exempting certain
assets from execution).
Section 1692f certainly does not create a pre-citation
hearing requirement on its own. The phrase “unfair or
unconscionable” is as vague as they come. The list fol-
lowing the main clause provides some guidance. Here is
the full text:
A debt collector may not use unfair or unconsciona-
ble means to collect or attempt to collect any debt.
Without limiting the general application of the
foregoing, the following conduct is a violation of
this section:
(1) The collection of any amount (including
any interest, fee, charge, or expense inci-
dental to the principal obligation) unless
such amount is expressly authorized by
the agreement creating the debt or permit-
ted by law.
(2) The acceptance by a debt collector from
any person of a check or other payment
instrument postdated by more than five
days unless such person is notified in
writing of the debt collector’s intent to
deposit such check or instrument not more
than ten nor less than three business days
prior to such deposit.
(3) The solicitation by a debt collector of
any postdated check or other postdated
payment instrument for the purpose of
threatening or instituting criminal prose-
cution.
(4) Depositing or threatening to deposit
any postdated check or other postdated

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8 No. 06-2707
payment instrument prior to the date on
such check or instrument.
(5) Causing charges to be made to any
person for communications by concealment
of the true purpose of the communication.
Such charges include, but are not limited
to, collect telephone calls and telegram
fees.
(6) Taking or threatening to take any
nonjudicial action to effect dispossession or
disablement of property if—
(A) there is no present right to
possession of the property claimed
as collateral through an enforce-
able security interest;
(B) there is no present intention to
take possession of the property; or
(C) the property is exempt by law
from such dispossession or disable-
ment.
(7) Communicating with a consumer re-
garding a debt by post card.
(8) Using any language or symbol, other
than the debt collector’s address, on any
envelope when communicating with a
consumer by use of the mails or by tele-
gram, except that a debt collector may use
his business name if such name does not
indicate that he is in the debt collection
business.
None of these illustrations implies that federal courts
should make new rules that change how state-court
judgments are collected. Subsection (6) is especially

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No. 06-2707 9
interesting. It says that creditors may not take
“nonjudicial” actions that seize property exempt by law.
The implication is that state judicial proceedings are
outside the scope of §1692f. State judges may decide how
their judgments are to be collected. This does not neces-
sarily mean that the FTC must steer clear of the sub-
ject, but it certainly implies that federal judges ought not
use this ambulatory language to displace decisions con-
sciously made by state legislatures and courts about
how judgment creditors collect judgments entered under
state law.
A FFIRMED
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—3-7-07

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