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United States Court of Appeals, Seventh Circuit.

Linda GUNN and Christopher Gunn, Plaintiffs-Appellants, v. THRASHER, BUSCHMANN & VOELKEL, P.C., Defendant-Appellee.

No. 19-3514

Decided: December 15, 2020

Before Easterbrook, Brennan, and St. Eve, Circuit Judges. Cathleen M. Combs, Daniel A. Edelman, Attorneys, Edelman Combs Latturner & Goodwin, LLC, Chicago, IL, for Plaintiffs-Appellants. Dina M. Cox, Joseph Neal Bowling, Attorneys, Lewis Wagner, LLP, Indianapolis, IN, for Defendant-Appellee.

Linda and Christopher Gunn fell behind in paying assessments owed to their homeowners’ association. When the debt reached about $2,000, the association hired a law firm (Thrasher, Buschmann & Voelkel). It sent the Gunns a letter demanding payment. One sentence in this letter reads:

If Creditor has recorded a mechanic's lien, covenants, mortgage, or security agreement, it may seek to foreclose such mechanic's lien, covenants, mortgage, or security agreement.

This letter did not induce the Gunns to pay, and the law firm filed suit in state court—but the remedy it sought was damages for breach of contract rather than foreclosure. The Gunns replied with this suit under the Fair Debt Collection Practices Act (FDCPA), part of which forbids false or misleading statements in dunning letters. 15 U.S.C. § 1692e(2), (4), (5) & (10). Although the Gunns acknowledge that the letter's statement is true both factually and legally, they contend that it must be deemed false or misleading because the law firm would have found it too costly to pursue foreclosure to collect a $2,000 debt.

The district court dismissed the complaint on the pleadings, ruling that a true statement about the availability of legal options cannot be condemned under the Act just because the costs of collection may persuade a law firm to seek one remedy (damages) rather than another (foreclosure). 2019 WL 5898195, 2019 U.S. Dist. Lexis 195718 (S.D. Ind. Nov. 12, 2019), reconsideration denied, 2019 WL 7049707, 2019 U.S. Dist. Lexis 219829 (S.D. Ind. Dec. 23, 2019).

The parties’ briefs in this court locked horns on the question whether a true statement violates the statute when it mentions a remedy that a creditor probably will not use. In addition to supporting the district court's legal analysis, the law firm observes that sometimes creditors will take steps that seem uneconomic when viewed by themselves but that are necessary to make threats credible. In the language of game theory, rational creditors pursue mixed strategies. The Gunns do not offer any data showing that homeowners’ associations never seek foreclosure as a means to collect unpaid assessments.

But we do not reach the merits. Like the district court's opinions, neither side's brief mentions an antecedent question: whether the complaint presents a case or controversy within the scope of Article III. For neither the complaint nor the plaintiffs’ brief explains how the contested sentence injured the Gunns. They did not pay anything in response and do not say that the sentence about foreclosure could have reduced their credit rating. And the letter could not have affected their ownership interest. That would require a foreclosure judgment in state court—and, even after such a judgment, owners may retain possession by paying the debt and redeeming their property interests. We directed the parties to file supplemental briefs addressing the question whether plaintiffs have standing to sue. We directed their attention to Spokeo, Inc. v. Robins, ––– U.S. ––––, 136 S. Ct. 1540, 194 L.Ed.2d 635 (2016), and Casillas v. Madison Avenue Associates, Inc., 926 F.3d 329 (7th Cir. 2019), both of which hold that concrete harm is essential to standing. Spokeo concerns the Fair Credit Reporting Act, while Casillas concerns the same statute as the Gunns’ suit.

The Gunns’ main argument is that they were annoyed or intimidated by the letter, which as a matter of law satisfies the constitutional injury requirement. The principal decision on which they rely is Gadelhak v. AT&T Services, Inc., 950 F.3d 458 (7th Cir. 2020). It does not help them. Gadelhak dealt with uninvited and unintelligible text messages, which intruded on the plaintiffs’ seclusion. Pestiferous text messages, spam phone calls, and unwelcome faxes can cause cognizable injury, for the reasons we gave in Gadelhak when explaining how the common law treats noises and other aggravating intrusions. Yet the Gunns do not contend that the law firm's letter was a forbidden invasion of privacy. They owned a home and owed a debt; the association and its law firm were entitled to communicate with them, no matter how unwelcome the Gunns found the demand for payment. Their claim is that legally sound language in an otherwise proper letter violated the Act. Nothing in Gadelhak implies that this has ever been deemed a concrete injury.

Consider the upshot of an equation between annoyance and injury. Many people are annoyed to learn that governmental action may put endangered species at risk or cut down an old-growth forest. Yet the Supreme Court has held that, to litigate over such acts in federal court, the plaintiff must show a concrete and particularized loss, not infuriation or disgust. See, e.g., Lujan v. Defenders of Wildlife, 504 U.S. 555, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). Similarly many people are put out to discover that a government has transferred property to a religious organization, but Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982), holds that a sense of indignation (= aggravated annoyance) is not enough for standing. See also, e.g., Freedom from Religion Foundation, Inc. v. Obama, 641 F.3d 803 (7th Cir. 2011) (no standing to litigate about a presidential declaration of a day of prayer, when the declaration vexes the plaintiff but does not cause concrete loss).

Indeed, it is hard to imagine that anyone would file any lawsuit without being annoyed (or worse). Litigation is costly for both the pocketbook and peace of mind. Few people litigate for fun. Yet the Supreme Court has never thought that having one's nose out of joint and one's dander up creates a case or controversy. No one can doubt that the plaintiff in Spokeo was sore annoyed. If that were enough, however, then the very fact that a suit had been filed would show the existence of standing, and the need to have a concrete injury that could be cured by a favorable judicial decision would be abolished.

The Gunns make one additional argument: that Spokeo and Casillas involved procedural rights, while their claim arises under one of the Act's substantive provisions. That's true enough, but it does not show that they have standing. Article III of the Constitution does not distinguish procedural from substantive claims; it makes injury essential to all litigation in federal court. In Thole v. U.S. Bank N.A., ––– U.S. ––––, 140 S. Ct. 1615, 207 L.Ed.2d 85 (2020), where the plaintiff asserted the violation of a substantive right, the Supreme Court found no standing using the approach of Spokeo. And this court has recently held that the asserted violation of a substantive right conferred by the Fair Debt Collection Practices Act does not guarantee the plaintiff's standing. There must still be a concrete injury. See Larkin v. Finance System of Green Bay, Inc., No. 18-3582, 982 F.3d 1060 (7th Cir. Dec. 14, 2020). See also Trichell v. Midland Credit Management, Inc., 964 F.3d 990 (11th Cir. 2020).

Because the Gunns do not contend that the contested sentence in the defendant's letter caused them any concrete harm, the judgment of the district court is vacated and the case remanded with instructions to dismiss for want of subject-matter jurisdiction.

Easterbrook, Circuit Judge.

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Docket No: No. 19-3514

Decided: December 15, 2020

Court: United States Court of Appeals, Seventh Circuit.

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