                              In the

    United States Court of Appeals
                For the Seventh Circuit

Nos. 16-1668, 16-2051 & 16-2052

KIMTYLERY HENG, et al.,
                                        Plaintiffs-Appellants,

                                v.


HEAVNER, BEYERS & MIHLAR, LLC,
                                         Defendant-Appellee.




JUSTIN GIERKE, on behalf of plaintiff
and a class,

                                         Plaintiff-Appellant,
                                v.

CODILIS & ASSOCIATES, P.C.,

                                         Defendant-Appellee.
2                                 Nos. 16-1668, 16-2051 & 16-2052

LAURA ZUNIGA, et al.,

                                                Plaintiffs-Appellants,
                                  v.

PIERCE and ASSOCIATES,

                                                  Defendant-Appellee.

         Appeals from the United States District Court for the
            Northern District of Illinois, Eastern Division.
            No. 15 C 08454 — Charles R. Norgle, Judge.
           No. 15 C 11618 — Robert W. Gettleman, Judge.
             No. 16 C 01897 — Milton I. Shadur, Judge.



    ARGUED OCTOBER 27, 2016 — DECIDED FEBRUARY 17, 2017


    Before WOOD, Chief Judge, and BAUER and MANION, Circuit
Judges.
    BAUER, Circuit Judge. In these three separate cases consoli-
dated on appeal, appellants challenge the dismissal of their
claims brought under the Fair Debt Collection Practices Act, 15
U.S.C. § 1692, et. seq. Appellants in Heng, et al., v. Heavner, et al.,
separately challenge the district court’s order striking an
exhibit, and also challenge the district court’s denial of their
request for leave to amend. We affirm.
Nos. 16-1668, 16-2051 & 16-2052                                   3

                      I. BACKGROUND
    We need not discuss the specifics for each individual case
because the underlying facts are consistent (the exception to
this is the procedural history in Heng). Appellants obtained a
Federal Housing Administration-insured residential mortgage
loan and subsequently defaulted due to financial hardship.1
Appellees are law firms that represent the loan servicing
agents; they filed foreclosure complaints in Illinois state court
against appellants. These complaints generally followed the
statutory complaint template set forth in Section 15-1504(a) of
the Illinois’ Mortgage Foreclosure Law. See 735 Ill. Comp. Stat.
5/15-1504(a). The template includes the following language:
“Names of defendants claimed to be personally liable for
deficiency, if any[,]” and, “[a] personal judgment for a defi-
ciency, if sought.” Id. at 5/15-1504(a)(3)(M), (3)(iii). Appellees
included both allegations in their foreclosure complaints, and
identified appellants to be personally liable for any deficiency.
    Appellants filed suit against appellees, alleging violations
of the FDCPA. According to the complaints, the FHA does not
authorize deficiency judgments where, as here, appellants
suffered a financial hardship. Attached as an exhibit to their
complaints, appellants included a letter from the FHA re-
sponding to a Freedom of Information Act request. In part, the
FHA’s response provided:
       There have been zero foreclosed FHA loans in
       Illinois in which the pursuit of a deficiency


1
   Federal Housing Administration (FHA) is part of the United States
Department of Housing and Urban Development (HUD).
4                              Nos. 16-1668, 16-2051 & 16-2052

       judgment was authorized. FHA is not currently
       pursuing deficiency judgments. … [T]he Depart-
       ment has determined it is not [in] the best inter-
       ests of FHA to routinely seek deficiency judg-
       ments in connection with [claims without con-
       veyance of title or “CWCOT”] claims. Therefore,
       FHA is not requesting that the mortgagees
       pursue any deficiency judgments in connection
       with CWCOT claims, unless FHA makes a
       special request pursuant to 24 C.F.R. [§] 203.369.
       … Since FHA is not currently pursuing defi-
       ciency judgments, we do not maintain any
       reports tracking deficiency judgments.
   Appellees filed a motion to dismiss, which the district court
granted under Federal Rule of Civil Procedure 12(b)(6).
Appellants filed timely notices of appeal. This consolidated
appeal followed.
    We turn to certain facts pertaining only to the Heng case. As
stated above, appellants filed a complaint and appellee filed a
motion to dismiss. Shortly thereafter, appellants filed a first
amended complaint on December 12, 2015. On December 23,
2015, appellee filed a motion to dismiss the amended com-
plaint. Appellants received a letter dated December 23, 2015,
from appellants’ loan servicing agent who was represented by
appellee. This letter provided an explanation about deficiency
judgments and an offer to waive a deficiency judgment.
   On February 5, 2016, appellants filed a response to the
second motion to dismiss, which included the letter as an
exhibit and allegations concerning it. Appellee filed both a
Nos. 16-1668, 16-2051 & 16-2052                                 5

reply and a motion to strike on February 19, 2016. Appellants
were not given an opportunity to oppose the motion to strike,
which the district court granted without comment.
    On February 25, 2016, appellants filed a motion to recon-
sider the district court’s order granting appellee’s motion to
strike and, alternatively, requested leave to amend the first
amended complaint to include the exhibit. On March 23, 2016,
the district court denied appellants’ motion to reconsider and
the alternative request for leave to amend, and granted appel-
lee’s motion to dismiss.
                       II. DISCUSSION
    On appeal, appellants challenge the dismissal of their
claims that were brought under the FDCPA. Appellants in the
Heng case separately challenge the order granting appellee’s
motion to strike the exhibit attached to their response to
appellee’s motion to dismiss; they also challenge the denial of
their request for leave to amend.
   A. FDCPA Claim
    We review de novo a district court’s decision granting a
motion to dismiss under Rule 12(b)(6), accepting all well-
pleaded factual allegations in the complaint as true and
drawing all reasonable inferences in favor of the appellants.
St. John v. Cach, LLC, 822 F.3d 388, 389 (7th Cir. 2016). To avoid
dismissal, the complaint must “state a claim to relief that is
plausible on its face.” Jackson v. Blitt & Gaines, P.C., 833 F.3d
860, 862 (7th Cir. 2016) (quoting Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009)).
6                               Nos. 16-1668, 16-2051 & 16-2052

    The main issue is whether appellants stated a plausible
claim under the FDCPA. The FDCPA provides that “[a] debt
collector may not use any false, deceptive, or misleading
representation or means in connection with the collection of
any debt.” 15 U.S.C. § 1692e. This broad prohibition is accom-
panied by a non-exhaustive list specifying sixteen potential
violations, including the “threat to take any action that cannot
legally be taken or that is not intended to be taken.” Id.
§ 1692e(5). “[R]epresentations may violate § 1692e of the
FDCPA even if made in court filings in litigation.” Marquez v.
Weinstein, Pinson & Riley, P.S., 836 F.3d 808, 812 (7th Cir. 2016).
We apply the “unsophisticated consumer” standard when
evaluating whether a debt collector’s representations comply
with the FDCPA. Avila v. Rubin, 84 F.3d 222, 226–27 (7th Cir.
1996).
    Appellants contend that appellees violated the FDCPA by
alleging in their state-court foreclosure complaints that
appellants are “claimed to be personally liable for the defi-
ciency, if any,” and by requesting “[a] personal judgment for
a deficiency, if sought.” See 735 Ill. Comp. Stat. 5/15-
1504(a)(3)(M), (3)(iii). Appellants argue that appellees included
these allegations even though appellees knew that the FHA,
the insurer of appellants’ loan, had a longstanding policy of
not authorizing mortgagees to pursue deficiency judgments.
Appellants assert that not only did appellees pursue a defi-
ciency judgment without FHA’s prior authorization, but also
that the FHA’s policies prohibited appellees from taking such
action in the first place. Appellants, therefore, contend that
appellees made threats to seek a deficiency judgment and had
no particularized intention of actually enforcing this legal
Nos. 16-1668, 16-2051 & 16-2052                               7

remedy against appellants. Appellants also assert that appel-
lees falsely represented that this legal remedy was available.
Based on these suppositions, appellants argue that “[b]ecause
the request for a deficiency was not authorized, [appellants’]
FDCPA complaint stated a claim.” Appellant’s Br. at 17.
    As a preliminary matter, we note that the crux of appel-
lants’ argument rests on the assumption that unless the FHA
provides prior authorization to appellees to pursue a defi-
ciency judgment against appellants, appellees are prohibited
from engaging in the complained of conduct. We will therefore
see if appellants have any plausible basis for this assumption.
    First, the regulation governing deficiency judgments
provides that “the Secretary may require the mortgagee
diligently to pursue a deficiency judgment in connection with
any foreclosure.” 24 C.F.R. § 203.369(a)(1) (emphasis added);
see also 24 C.F.R. § 203.402(o) (reimbursement for certain costs
when Commissioner requires or requests the mortgagee to
seek a deficiency judgment pursuant to § 203.369). This
regulation gives FHA the authority to require a mortgagee to
pursue a deficiency judgment on a FHA-insured loan, but does
not prohibit the mortgagee from seeking a deficiency judg-
ment. So the regulation does not support the position that
appellees are prohibited from engaging in the complained of
conduct without FHA’s prior authorization.
   Second, appellants provide references to HUD Mortgagee
Notice 1994-89, and Mortgagee Letters 2006-15, and 2013-15.
However, although neither party pointed this out, these
documents are out-of-date; the letters and notice were super-
seded by HUD’s FHA Single Family Housing Policy Handbook
8                                Nos. 16-1668, 16-2051 & 16-2052

4000.1 (or “Handbook”).2 These Mortgagee Letters and Notice
also do not help appellants’ position.
    Lastly, the Handbook provides that “[u]nless specifically
requested by FHA, the Mortgagee is not required by FHA to
pursue any deficiency Judgments in connection with CWCOT
procedures.” Handbook at III.A.2.u.ii.3 It further states that a
“[m]ortgagee may engage in Judgment collection activities if a
claim for FHA insurance benefits is not filed.” Id. at
III.A.2.u.iii.(B). Appellees contend that the Handbook supports
its position that a mortgagee is allowed to pursue a deficiency
judgment if it chooses not to file a claim for insurance benefits.
In response, appellants argue that the decision to pursue a
deficiency judgment “belongs to HUD at all relevant times,”
and to accept appellees’ interpretation takes that decision-
making away from the FHA. Appellant’s R. Br. at 7. Not
exactly, the Handbook follows the wording of 24 C.F.R.
§ 203.369, by reiterating FHA’s authority to request or require



2
   See “Single Family Housing Notices Superseded by Handbook 4000.1”
https://portal.hud.gov/hudportal/HUD?src=/program_offices/admini
stration/hudclips/sfhsuperseded/notices (noting that the “documents on
this page should be used for reference purposes only[,]” including
Mortgagee Letter 1994-89 ) (last visited February 17, 2017); see also
“Mortgagee Letters Superseded by HUD Handbook 4000.1”
https://portal.hud.gov/hudportal/HUD?src=/program_offices/admini
stration/hudclips/sfhsuperseded/mltrs_full (listing Mortgagee Letters
2006-15 and 2013-15 as superseded by the Handbook) (last visited
February 17, 2017).

3
    See FHA Single Family Housing Policy Handbook 4000.1, p. 720.
https://portal.hud.gov/hudportal/documents/huddoc?id=40001HSGH
.pdf (last visited February 17, 2017).
Nos. 16-1668, 16-2051 & 16-2052                                          9

a mortgagee to pursue a deficiency judgment; it does not
prohibit the complained of conduct.
    Appellants have not identified any law, regulation, or FHA
policy requiring a mortgagee to obtain authorization from the
FHA prior to including the two allegations at issue in their
state-foreclosure complaint.4 Appellants have failed to distin-
guish themselves from all other Illinois mortgagors who have
defaulted on their payments and had Illinois-statutory-short-
form complaints filed against them. Because the predicate to
appellants’ arguments is absent, we need not address them.
Appellants have failed to state a plausible claim under the
FDCPA.
    B. Procedural Claims in Heng
        1. Motion to Strike
    The Heng appellants contend that the district court erred in
granting appellee’s motion to strike an exhibit that was
included in appellants’ response to appellee’s motion to
dismiss the amended complaint. “A district court’s grant or
denial of a motion to strike is reviewed for an abuse of discre-
tion.” Zuppardi v. Wal-Mart Stores, Inc., 770 F.3d 644, 647 (7th
Cir. 2014) (citation omitted).
   The district court granted appellee’s motion to strike the
exhibit without comment, and it did not give appellants an
opportunity to respond. However, the district court’s reason-
ing for granting the motion to strike was provided in its order


4
  We note that Appellants do not claim that Appellees violated any Illinois
state law.
10                              Nos. 16-1668, 16-2051 & 16-2052

denying appellants’ motion to reconsider the order granting
the motion to strike. The district court noted that the exhibit
was sent by a non-party and that it was not mentioned in the
complaint. The district court also found that the exhibit was
not material to the complaint, and that the exhibit “did not
comply with Rule 12(b)’s requirement that the Court’s consid-
eration of motions to dismiss is limited to the facts alleged in
the complaint.” The district court reasoned that because it did
not construe the motion as one for summary judgment, it was
required to disregard outside material submitted by appel-
lants.
    Appellants argue that they were entitled to offer the exhibit
in response to appellee’s motion to dismiss in light of our
decisions in Defender Security Co. v. First Mercury Insurance Co.,
803 F.3d 327 (7th Cir. 2015), and Early v. Bankers Life & Casualty
Co., 959 F.2d 75, 79 (7th Cir. 1992). In Defender Security Co., we
noted that “nothing prevents a plaintiff opposing dismissal
from elaborating on the complaint or even attaching materials
to an opposition brief illustrating the facts the plaintiff expects
to be able to prove.” 803 F.3d at 335. Appellants claim that the
exhibit was probative of how the non-party’s representations
based on the foreclosure complaint may be used to the detri-
ment of the consumer.
    While our precedent makes it clear that appellants have
“much more flexibility in opposing a Rule 12(b)(6) motion,”
Geinosky v. City of Chi., 675 F.3d 743, 745 n.1 (7th Cir. 2012), the
flexibility is not without limitations. Materials or elaborations
in appellants’ brief opposing dismissal may be considered, so
long as those materials or elaborations are “consistent with the
Nos. 16-1668, 16-2051 & 16-2052                                 11

pleadings.” Geinosky, 675 F.3d at 745 n.1; see also Early, 959 F.2d
at 79 (“[A] plaintiff is free … to allege without evidentiary
support any facts he pleases that are consistent with the
complaint … [.]”).
    The district court did not abuse its discretion when it
granted appellee’s motion to strike the exhibit. The district
court found that the exhibit was not material to the complaint
and was a letter sent by a non-party; in other words, those
materials and elaborations were not consistent with the
complaint. While the district court was incorrect in reasoning
that it was required to disregard the outside material if it did
not convert appellants’ response to a motion for summary
judgment, it does not negate the overall finding that the exhibit
was not material. Furthermore, as we have considered appel-
lants’ exhibit and elaborations as part of our de novo review of
the district court’s futility-based denial of appellants’ request
for leave to amend, “we are all the more at ease in holding that
the district court properly exercised its discretion in striking
[the exhibit].” McLeod v. Arrow Marine Transp., Inc., 258 F.3d
608, 617 (7th Cir. 2001).
       2. Leave to Amend
    As a general rule, a district court “should freely give leave
[to amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2).
“[D]istrict courts have broad discretion to deny leave to amend
where there is undue delay, bad faith, dilatory motive, re-
peated failure to cure deficiencies, undue prejudice to the
defendants, or where the amendment would be futile.” Arreola
v. Godinez, 546 F.3d 788, 796 (7th Cir. 2008). Generally, we
review a district court’s denial of leave to amend for an
12                              Nos. 16-1668, 16-2051 & 16-2052

abuse of discretion. Runnion v. Girl Scouts of Greater Chi. & Nw.
Ind., 786 F.3d 510, 524 (7th Cir. 2015). However, “our review for
abuse of discretion of futility-based denials includes de novo
review of the legal basis for the futility.” Id.; see also Cohen v.
Am. Sec. Ins. Co., 735 F.3d 601, 607 (7th Cir. 2013). (noting
“[t]here is no practical difference, in terms of review, between
a denial of a motion to amend based on futility and the grant
of a motion to dismiss for failure to state a claim”).
    At first glance, the district court’s decision on this point is
fuzzy. The district court mentioned only the “fail[ure] to cure
the pleading’s deficiency” category of denials. There is,
however, no indication in the record that the district court ever
pointed out any deficiencies to appellants. Appellants also
appear to have filed the first amended complaint as a matter of
course. See Fed. R. Civ. P. 15(a)(1)(B) (a party has a right to
amend its pleading once as a matter of course within 21 days
after service of defendant’s motion to dismiss under Rule
12(b)). The denial of appellants’ request for leave to further
amend was based on the reasoning that even if “the Court
allowed Plaintiffs to amend their complaint and allege that the
letter – not the Mortgage Litigation Complaint – was the actual
false or misleading statement, Plaintiffs would not be able to
state a claim.” In other words, allowing appellants to file a
second amended complaint would be futile. We have no
qualms with considering the district court’s denial as a futility-
based denial.
   Appellants contend that the exhibit shows how the false
representations made in the foreclosure complaint may be
misused to the detriment of an unsophisticated consumer.
Nos. 16-1668, 16-2051 & 16-2052                            13

Appellants claim that this detriment would not have otherwise
occurred had appellee accurately stated the need for FHA’s
authorization prior to seeking a deficiency judgment in the
foreclosure complaint. In other words, appellee’s false repre-
sentations in the foreclosure complaint allowed the loan
servicing agent to capitalize on those false representations.
    Appellants’ argument is without merit. The proposed
significance of the exhibit is premised on appellants’ failed
assumption that a mortgagee of an Illinois, FHA-insured loan
must have FHA authorization prior to including the two
allegations at issue in their state-foreclosure complaint.
Moreover, not only was the exhibit sent by a non-party to
appellants, but it was sent over a year after the foreclosure
complaint was filed. There is no basis in law for appellants’
theory on how a non-party’s representations may be probative
as to how an unsophisticated consumer perceives appellee’s
year-old foreclosure complaint. Because what appellants
sought to include in an additional amended complaint would
not make their FDCPA claim plausible, we conclude that an
amendment would be futile.
                    III. CONCLUSION
   For the foregoing reasons, we AFFIRM each district courts’
grant of appellees’ motion to dismiss the appellants’ com-
plaints. We AFFIRM the district court’s grant of appellee’s
motion to strike an exhibit that was included in appellants’
response to appellee’s motion to dismiss the amended com-
plaint. We AFFIRM the district court’s denial of appellants’
request for leave to amend.
