706 Fed.Appx. 840 (6th Cir. 2017), 16-5468, Stratton v. Portfolio Recovery Associates, LLC

Docket Nº:16-5468
Citation:706 Fed.Appx. 840
Opinion Judge:MERRITT, Circuit Judge.
Party Name:Dede STRATTON, Plaintiff-Appellant, v. PORTFOLIO RECOVERY ASSOCIATES, LLC, Defendant-Appellant.
Attorney:Trevor Wayne Wells, Miller Wells, Valparaiso, IN, James Hays Lawson, James R. McKenzie, Law Office, Louisville, KY, for Plaintiff-Appellant Joseph N. Tucker, Robert Brooks Herrick, Dinsmore & Shohl, Louisville, KY, for Defendant-Appellee
Judge Panel:Before: MERRITT, KETHLEDGE, and WHITE, Circuit Judges.
Case Date:August 23, 2017
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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Page 840

706 Fed.Appx. 840 (6th Cir. 2017)

Dede STRATTON, Plaintiff-Appellant,

v.

PORTFOLIO RECOVERY ASSOCIATES, LLC, Defendant-Appellant.

No. 16-5468

United States Court of Appeals, Sixth Circuit

August 23, 2017

UNPUBLISHED

Editorial Note:

Please Refer Federal Rule of Appellate Procedure Rule 32.1. See also U.S.Ct. of App. 6th Cir. Rule 32.1.

Page 841

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF KENTUCKY

Trevor Wayne Wells, Miller Wells, Valparaiso, IN, James Hays Lawson, James R. McKenzie, Law Office, Louisville, KY, for Plaintiff-Appellant

Joseph N. Tucker, Robert Brooks Herrick, Dinsmore & Shohl, Louisville, KY, for Defendant-Appellee

Before: MERRITT, KETHLEDGE, and WHITE, Circuit Judges.

Opinion

MERRITT, Circuit Judge.

This is a Fair Debt Collection Practices Act ("Act" ) case, now before us for the second time, brought by a plaintiff debtor, Dede Stratton, against a defendant debt collection agency, Portfolio Recovery Associates, LLC ("Portfolio" ). The only question before this court is whether Portfolio violated federal law by attempting to collect prejudgment interest of 8% per annum on a credit card debt in a Kentucky state-court collection action. Portfolio has not changed its position in its subsequent pleadings or briefs that it was entitled to collect the original card debt of "$2,630.95, with interest thereon at the rate of 8% per annum from December 19, 2008 until date of judgment with 12% per annum thereafter until paid, plus court costs."

This case is here for the second time because both parties failed to allege or disclose the existence of a credit card agreement applying Utah law— a fact disclosed only after we remanded the case to the district court. Stratton asserts that Kentucky law rather than Utah law applies, and that Portfolio violated the federal Act by filing a collection action in Kentucky state court for interest on a credit card debt when it had no right to collect the interest under Kentucky law. To prove that Portfolio violated the Fair Debt Collection Practices Act, Stratton must prove that Portfolio was entitled to neither statutory nor contractual interest. Portfolio now argues that the credit card agreement proves Portfolio’s right to collect statutory interest on the debt under Utah law. The district court granted Portfolio’s motion for summary judgment on remand, finding that Utah law applied and that Stratton failed to demonstrate that Portfolio had violated the Act when it filed the collection action. Stratton now appeals again, claiming that the district court improperly relied on a Utah choice-of-law provision in the credit card agreement between Stratton and her original creditor, GE Money Bank, and that the court should have applied Kentucky law.

We conclude that the application of the choice-of-law provision is dispositive in this case. Utah law applies and Portfolio did not violate the Fair Debt Collection Practices Act. As the assignee of the right to collect Stratton’s credit card debt, Portfolio received the rights and obligations arising from Stratton’s original credit card contract, including the right to invoke the Utah choice-of-law provision. The rights of Portfolio as assignee are subject to all terms of the agreement between the account debtor and the assignor. Accordingly, the Utah choice-of-law provision applies, and under Utah law Portfolio was

Page 842

entitled to file a collection action for prejudgment interest in Kentucky state court without violating the Fair Debt Collection Practices Act. Since the only question before this court is whether Portfolio violated the Act, we conclude that the district court properly granted summary judgement to Portfolio. The collection action is a matter for Kentucky’s Scott County state court.

I. Factual and Procedural Background

In September 2007, Dede Stratton opened a credit card account with GE Money Bank, F.S.B./Lowes ("GE" ). On December 19, 2008, GE "charged off" the account, declaring to the credit bureaus that it had given up trying to collect Stratton’s unpaid debt. At the time, Stratton’s debt was $2,630.95, and GE ceased charging interest on it. Before the debt was charged off, the contractual rate of interest on the debt was set in the Credit Card Agreement at 21.99%.

Portfolio, a company primarily engaged in the business of purchasing debt from creditors and collecting those debts, purchased Stratton’s $2,630.95 credit card debt from GE on January 4, 2010. More than two years later on January 20, 2012, Portfolio filed a collection action in Kentucky to collect the debt from Stratton. Importantly, Portfolio alleged in the collection action complaint that Stratton owed $2,630.95 with interest "at the rate of 8% per annum from December 19, 2008 until date of judgment with 12% per annum thereafter until paid, plus court costs." (emphasis added).1 Kentucky sets the legal statutory rate of interest on loans at 8%. Ky. Rev. Stat. § 360.010(1). Stratton then sued Portfolio in federal court under the Fair Debt Collections Practice Act. Stratton argued that since GE had previously "waived" its right to collect interest, Portfolio, as GEs assignee, did not inherit a right to collect any interest. She asserted that Portfolios collection action violated the Fair Debt Collections Practice Act by: (1) pursuing a collection action that was not "expressly authorized by the agreement creating the debt or permitted by law" in violation of 15 U.S.C. § 1692(f)(1), (2) falsely...

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