Unensaikhan Chuluunbat v. Weltman, Weinberg & Reis Co., Lpa

United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued March 1, 2022
Decided May 20, 2022
Before
MICHAEL S. KANNE, Circuit Judge
DIANE P. WOOD, Circuit Judge
THOMAS L. KIRSCH II, Circuit Judge
No. 21-1584
UNENSAIKHAN CHULUUNBAT,
Plaintiff-Appellant,
v.
WELTMAN, WEINBERG & REIS CO.,
LPA,
Defendant-Appellee.
Appeal from the United States District
Court for the Northern District of
Illinois, Eastern Division.
No. 20 C 2697
Robert W. Gettleman,
Judge.
O R D E R
Unensaikhan Chuluunbat is trying to pursue a class action against the firm of
Weltman, Weinberg & Reis, a debt collector, which allegedly sent misleading letters to
him and others similarly situated. The district court dismissed the action for failure
adequately to assert an actual injury. But we think the court acted too quickly.
Chuluunbat’s complaint alleged that the debt collector sent him a misleading letter that
induced him to forgo settling and instead to allow interest on his debt to accrue at a
high rate. This was enough. At that early stage, he was not required also to allege that
he could have paid the debt or that he did pay other debts instead of this one. And
although the debt collector raised a factual dispute about Chuluunbat’s solvency based
NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1

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on statements he made in other litigation (on the theory that he lacks standing to sue if
he was unable to pay), the district court should have resolved that dispute with an
evidentiary hearing. We therefore vacate and remand for further proceedings.
I
After Chuluunbat defaulted on a credit card debt to Discover Bank, Discover
hired Weltman, Weinberg & Reis (“Weltman”) for collection services. Weltman sued in
the Circuit Court of Cook County on behalf of Discover, which retained ownership of
the debt. The complaint included a Weltman reference number and stated that the debt
was incurred on a credit card number ending in 1116. After a trial, in which Chuluunbat
participated, judgment was entered against Chuluunbat for $3,607.02 plus $366.63 in
costs. The judgment did not mention interest, which accrues at a rate of nine percent per
year by statute. See 735 ILCS 5/2-1303(a).
Weltman attempted to satisfy the judgment through Chuluunbat’s employer and
another of his banks but was unsuccessful. Weltman then sent Chuluunbat a letter on
January 16, 2020. The letter indicated that it related to the 1116 credit card account, and
it used the same Weltman reference number that appeared in the Cook County case.
The letter did not, however, mention the judgment or interest. Instead, it stated that an
“account” had a “balance due” of $4,212.90. It offered to settle the debt for 40 cents on
the dollar if Chuluunbat paid before April 30, 2020, in which case the “balance due”
would be $1,685.16. He did not pay by that date. Instead, on May 1, 2020, he called a
Weltman representative, who told him that he now owed $4,306.29. Only after
Chuluunbat later contacted his lawyer did he realize that the interest on the judgment
was increasing daily.
Chuluunbat sued Weltman, alleging that it had violated the Fair Debt Collection
Practices Act (FDCPA) by sending him a misleading letter. See 15 U.S.C. § 1692e(2), (10),
§ 1692f. He complained that Weltman (1) described the debt as an “account” even
though it had been reduced to a judgment, (2) listed two different amounts as the
“balance due,” and (3) did not tell him that the debt was increasing daily. He did not
specify how the allegedly misleading letter injured him, but he did assert that he “could
not afford to pay” the settlement it offered.
After Weltman moved to dismiss under Federal Rule of Civil Procedure 12(b)(6),
the district court ordered the parties to submit simultaneous briefs on whether
Chuluunbat had standing to sue in light of this court’s recent decision in Nettles v.
Midland Funding LLC, 983 F.3d 896, 900 (7th Cir. 2020). They did so, and Chuluunbat
also moved for leave to amend his complaint, arguing that his proposed amended
pleading established standing under Nettles and other recent cases decided after he filed

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his initial complaint. His proposed amended complaint stated that he would have
“pursued a different course of action” if he had known that the “account” Weltman was
collecting was the judgment. He also alleged that if he had known that post-judgment
interest was accruing, he would have “sought to resolve the alleged debt over other
debts he had at the time” with lower interest rates. The proposed amended complaint
does not state whether he could have paid off the debt or whether he was solvent.
The district court granted Chuluunbat’s motion to amend his complaint but, in
the same order, dismissed his case for lack of Article III standing. Relying on Nettles, the
court ruled that Chuluunbat lacked a concrete injury because his amended complaint
did not allege “that he had the ability to pay the debt owed, that he actually paid other
debts instead, or that he took any detrimental step as a result of the alleged confusion.”
The court also reasoned that Chuluunbat must have known about the interest because
the amount that the Weltman representative told him he owed had increased since the
letter. The court dismissed the complaint without prejudice based on the lack of
standing, entered judgment, and closed the case. Chuluunbat appealed.
II
We briefly touch on two preliminary matters before turning to standing. First,
although the district court dismissed the case without prejudice, its decision is final, and
this court therefore has appellate jurisdiction under 28 U.S.C. § 1291. A dismissal for
lack of Article III standing is necessarily without prejudice. See White v. Illinois State
Police, 15 F.4th 801, 808 (7th Cir. 2021). It does, however, finally resolve Chuluunbat’s
right to proceed in federal court on these allegations. It is also noteworthy that, rather
than permitting a second amended complaint, the district court noted “case terminated”
on the docket and entered a separate Rule 58(a) judgment, signifying that it was done
with the case. See F ED. R. C IV. P. 58(a); Hernandez v. Dart, 814 F.3d 836, 840–41 (7th Cir.
2016). The decision is therefore final for purposes of appeal.
Second, the specific decision on appeal is the dismissal of the amended
complaint, not the original complaint. Weltman contends that the proposed complaint
is a nullity because Chuluunbat never separately filed it after the district court granted
leave to amend. But that docketing nicety is not decisive. The district court assessed
standing based on the amended complaint, which was before it as an exhibit to
Chuluunbat’s motion. Chuluunbat had no reason to docket it independently after the
case was dismissed.
The issue on appeal is therefore whether the amended complaint sufficiently
alleged Article III standing—a question we review de novo. See Bazile v. Fin. Sys. of Green
Bay, Inc., 983 F.3d 274, 278 (7th Cir. 2020). To establish standing, Chuluunbat had to

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“clearly allege facts” showing that he (1) suffered a concrete and particularized injury
(2) that is fairly traceable to the challenged conduct, and (3) likely to be redressed by a
favorable judicial decision. See Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016).
A defendant may challenge standing in two ways at the pleading stage: through
a facial attack contending that standing does not exist even if the allegations are true, or
through a factual attack challenging the truth of the allegations pertinent to standing.
Bazile, 983 F.3d at 279. In response to the latter, a plaintiff must offer proof of standing,
see Spuhler v. State Collection Serv., Inc., 983 F.3d 282, 285 (7th Cir. 2020), and the court
may consider evidence outside the pleadings. See Bazile, 983 F.3d at 279.
A
Chuluunbat first defends the facial adequacy of his amended complaint. He
points out that he alleged that he would have taken the settlement offer, which would
have saved him thousands of dollars, had he known that his “balance” was a judgment
that was increasing daily. Weltman’s failure to follow the statute, he asserts, harmed
him financially. He distinguishes his case from others in which a plaintiff alleged a
violation of the FDCPA without detailing how the defendant’s action caused harm.
See, e.g., Nettles, 983 F.3d at 899; Larkin v. Fin. Sys. of Green Bay, Inc., 982 F.3d 1060, 1066
(7th Cir. 2020); Casillas v. Madison Ave. Assocs., Inc., 926 F.3d 329, 339 (7th Cir. 2019).
We agree with him that this described more than a bare procedural violation;
Chuluunbat alleged dollars-and-cents harm resulting from the letter. That fact
distinguishes this case from Nettles, upon which the district court relied, where the
“complaint [did] not allege that the statutory violations harmed [the plaintiff] in any
way.” Nettles, 983 F.3d at 900. We have acknowledged that a debtor confused by a letter
may be injured if the confusion causes her to prioritize another debt with a lower
interest rate. See Brunett v. Convergent Outsourcing, Inc., 982 F.3d 1067, 1068 (7th Cir.
2020). Here, Chuluunbat’s increased debt is both concrete (it is a tangible harm) and
particularized (it affects him in an individual way). See Spokeo, 578 U.S. at 339–40.
Chuluunbat further argues that the district court erred by insisting on affirmative
allegations in the complaint addressing his ability to pay the settlement offer of $1,685
or any revision in his sequencing of payments prompted by the letter. He is correct,
because general allegations in a complaint are presumed to embrace the specific facts
necessary to support those allegations. See Bazile, 983 F.3d at 278. Chuluunbat’s
allegation that he would have prioritized paying the judgment over other debts
supports the reasonable inference that he had the ability to pay the settlement and that
he used his available funds on other debts. In a facial challenge to standing, we assume

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the truth of the allegations in the complaint, and so no more was required of
Chuluunbat until later stages of the proceeding. See Spuhler, 983 F.3d at 285.
Weltman responds that Chuluunbat’s allegations are implausible because
Chuluunbat must have known that its letter referred to the judgment: the letter listed
the same credit card and reference numbers as the judgment. He also surely knew,
Weltman urges, that the debt was accruing interest because the amount in the letter was
greater than the judgment amount, and he was being charged (other) interest even
before the judgment.
But Chuluunbat’s allegations are not inherently implausible; they permit a
reasonable inference that he did not understand the nature of the debt to which
Weltman referred in its letter. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Chuluunbat
might have understood the letter to be an attempt to satisfy the judgment, but it is at
least plausible that he believed otherwise: the letter referred to a “balance,” not a
judgment, and requested payment of an amount different from the initial judgment
amount. Chuluunbat also might have realized that interest was increasing his debt, but
he might not have. He could see that he owed more than the initial judgment amount
and that Weltman requested post-judgment interest in the state-court complaint, but if
he did not understand that the letter was about the judgment at all, he may not have
connected the dots the way Weltman thinks he should have. In other words, Weltman
proposes other possibilities, but it does not establish that the allegations are
implausible. (To be clear, however, we have no occasion to decide here whether the
alleged withholding of information actually violated the FDCPA.)
Turning to the requirement of causation, Chuluunbat argues that his injury is
fairly traceable to Weltman because he would have paid the settlement if Weltman had
explained that the reduced amount would satisfy a judgment on which interest was
increasing daily. He contests the district court’s inference that he knew about the
interest because a Weltman representative told him the amount owed had increased.
The district court should have accepted Chuluunbat’s contrary allegation in the
amended complaint as true. The phone call to which Weltman refers took place on May
1, 2020, months after Weltman’s letter, and so Chuluunbat was injured at least by the
interest that accrued during the time between the letter and the call. And the interest is
not the only injury: Chuluunbat also let the time-sensitive settlement offer of $1,685.16
lapse on April 30, 2020.
Weltman also contends that Chuluunbat’s injury, if any, arises from his
ignorance of statutory interest under state law. Because Chuluunbat did not know
about the post-judgment interest before Weltman’s letter, the letter could not have

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caused him to prioritize other debts over the debt to Discover. But Weltman again asks
too much of Chuluunbat, who needed to allege only a causal connection between his
injury and Weltman’s conduct, not that Weltman’s action is the only cause. See J.B. v.
Woodard, 997 F.3d 714, 720 (7th Cir. 2021). Chuluunbat adequately pleaded a causal
connection. His decision to forgo settling is fairly traceable to Weltman’s purportedly
misleading letter because, regardless of whether Chuluunbat knew the relevant law, he
says he would have accepted the offer if he had known it would satisfy the judgment
and that interest would continue to accrue if he did not accept. In any event, even if
Chuluunbat had known the law surrounding post-judgment interest, the letter still
could have caused injury by leading him to believe that Weltman was collecting a
separate debt—one that was not a judgment and thus not subject to post-judgment
interest.
The third standing requirement, redressability, is not disputed. The district court
could redress Chuluunbat’s injury by awarding statutory or compensatory damages.
On its face, Chuluunbat’s amended complaint thus alleged an injury in fact that
is both fairly traceable to Weltman and redressable by a favorable judicial decision.
B
That brings us to Weltman’s factual attack on Chuluunbat’s standing. In its
supplemental brief in the district court, Weltman argued that Chuluunbat could not
have paid his debt to Discover over other debts because he was insolvent at all relevant
times, as he represented in prior cases. See Chuluunbat v. Portfolio Recovery Associates,
Case No. 19-cv-08291 (N.D. Ill. 2019); Chuluunbat v. Cavalry Portfolio Services, Case No.
20-cv-00164 (N.D. Ill. 2020). This raises a question of fact (whether Chuluunbat could
have paid the settlement offer) underlying Chuluunbat’s allegation of an injury (that he
would have paid it but for the letter misleading him). If payment within a reasonable
time was impossible for him, then nothing Weltman did could have injured him.
When the defendant challenges the truth of the facts underlying the plaintiff’s
allegations of standing, the district court must resolve any dispute before determining
whether the plaintiff has standing. See Bazile, 983 F.3d at 281. Because the district court
did not so here, Weltman asks this court to look to the evidence and determine that
Chuluunbat lacked a concrete injury because he was not capable of paying the credit
card debt regardless of whether the letter misled him. That is not the way we normally
proceed, however; instead, we rely on the district court to make this type of factual
finding in the first instance.

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That, we believe, is the best approach here. Whether Chuluunbat would have
been able to pay either the $1,685 or other, lower-interest, bills, is a question of fact.
Although relevant, Chuluunbat’s prior statements do not resolve whether he was
insolvent at the moment when Weltman offered him the settlement. His complaints in
the cases mentioned above include an allegation that he sent a letter in September 2019
informing a credit agency that it was reporting inaccurate information about him, and
that letter stated that he was insolvent. But Chuluunbat had until April 30, 2020, to
accept Weltman’s settlement offer. He conceivably could have paid that settlement even
if he was insolvent six months earlier, especially to settle a rapidly increasing debt. And
Chuluunbat cannot be held to the allegation in his first complaint that he could not pay
the settlement. Factual allegations that are not included in a later complaint cannot be
considered on a motion to dismiss, even when the complaints contradict each other.
Scott v. Chuhak & Tecson, P.C., 725 F.3d 772, 782–83 (7th Cir. 2013).
Second, Chuluunbat had little opportunity to respond to the factual attack.
Weltman first raised the issue in its brief on standing, which was filed simultaneously
with Chuluunbat’s brief. Weltman never filed a motion based on lack of standing, and
so Chuluunbat had no reason to anticipate that Weltman would bring in evidence
outside the pleadings to prove that he could not have paid the settlement. Although
eventually Chuluunbat will need to show that payment was not impossible, see Spuhler,
983 F.3d at 285, he did not need to do that at this stage. In Bazile, we remanded for an
evidentiary hearing in even when the plaintiff had an opportunity to respond to a
factual attack on standing. The same approach is proper here. See Bazile, 983 F.3d at 279,
281–82 (defendant challenged facts necessary for standing in motion to dismiss).
To determine whether Chuluunbat has alleged an injury that confers standing,
the district court must resolve whether he could have paid the settlement amount
before the offer closed or successfully changed the order of other payments. We
therefore VACATE and REMAND for further proceedings consistent with this order.

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