New Century Fin. Servs., Inc. v. Oughla

• Decision Date: 05 March 2014
• Citation: 437 N.J.Super. 299,98 A.3d 583
• Parties: NEW CENTURY FINANCIAL SERVICES, INC., Plaintiff–Respondent, v. Ahlam OUGHLA, Defendant–Appellant. MSW Capital, LLC, Plaintiff–Respondent, v. Azeem H. Zaidi, Defendant–Appellant.
• Court: New Jersey Superior Court

437 N.J.Super. 299

98 A.3d 583

NEW CENTURY FINANCIAL SERVICES, INC., Plaintiff–Respondent,

v.Ahlam OUGHLA, Defendant–Appellant.

MSW Capital, LLC, Plaintiff–Respondent,

v.Azeem H. Zaidi, Defendant–Appellant.

Superior Court of New Jersey, Appellate Division.

Argued May 22, 2013.

Decided March 5, 2014.

Philip D. Stern argued the cause for appellant (both appeals) (Philip D. Stern & Associates, LLC, attorneys; Mr. Stern, Maplewood, on the briefs).

Lawrence J. McDermott, Jr., argued the cause for respondent (both appeals) (Pressler and Pressler, L.L.P., attorneys; Mr. McDermott, Parsippany, and Steven A. Lang, Denville, on the briefs).

John Ukegbu argued the cause for amicus curiae Northeast New Jersey Legal Services, Inc. (A–6078–11) (Northeast New Jersey Legal Services, attorneys; Mr. Ukegbu, Jersey City, on the brief).

Before Judges GRALL, SIMONELLI and ACCURSO.

The opinion of the court was delivered by

ACCURSO, J.A.D.

In these two appeals, calendared back-to-back and consolidated here, we consider the proofs necessary for plaintiffs to prevail on summary judgment in an action to collect an assigned debt on a closed and charged-off credit card account. Plaintiffs are debt buyers. Debt buyers purchase charged-off credit card debts from the card issuers or other debt buyers and attempt to collect the debts, that is, the amount due the card issuer when it charged-off the account, or re-sell them to other debt buyers.¹ Plaintiffs obtained summary judgments against defendants on charged-off credit card debts which plaintiffs claim to have purchased from sellers who, ultimately, albeit indirectly, derived their ownership from the banks that issued the credit cards to defendants. Defendants contend that the summary judgments were improper because plaintiffs did not submit sufficient proof of their ownership of the debts and did not offer admissible evidence of the amounts allegedly owed.

Plaintiffs suing on assigned, charged-off credit card debts must prove two things: ownership of the defendant's charged-off debt and the amount due the card issuer when it charged off the account. In considering whether plaintiffs established prima facie proof of their claims, we hold that: lack of notice to the debtor of the sale of the debt does not affect the validity of the assignment; the assignment need not specifically reference defendant's name or account number and instead may refer to an electronic data file containing that information; a plaintiff need not procure an affidavit from each transferor in its chain of assignments and may instead establish prima facie proof of ownership on the basis of business records documenting its ownership; and that an electronic copy of the periodic billing statement for the last billing cycle is prima facie proof of the amount due on the account at charge off. Applying those standards to the facts presented on the motions, we affirm one judgment and reverse the other.

The Summary Judgment MotionsAhlam Oughla

Plaintiff New Century Financial Services, Inc. (New Century) sued defendant Ahlam Oughla alleging that it was the owner of Oughla's Credit One Bank, N.A., account on which $723.82 was due at charge off. Oughla, representing herself, answered stating “[p]laintiff provided no documentation to support the charges alleged in the complaint, therefore defendant denies all allegations.” Although each side propounded limited interrogatories as allowed in actions cognizable but not pending in the Small Claims Section, R. 6:4–3(f), neither party provided responsive answers.

New Century moved for summary judgment. In its statement of material facts, New Century stated that its predecessor in interest, Credit One, extended credit to Oughla on a specific account; that as set forth in its supporting certification, New Century had purchased that account; that the “Electronically Transmitted Information from Seller,” showed that Oughla opened the account on October 25, 2007; made her last payment on March 2, 2008; and that Credit One charged off the account on October 5, 2008 with a balance due of $723.82, which constituted the principal balance New Century demanded. New Century also sought interest of $1.58 calculated at the rate specified in Rule 4:42–11(a)(ii), not at the rate charged by Credit One when the account was active.

New Century attached what it claimed to be the bill of sale and assignment by which it acquired Oughla's debt as well as documents relating to several prior transfers of the account. Specifically, New Century attached four executed assignment documents memorializing the sale and assignment of certain charged-off credit card account receivables, purportedly described on computer files transferred therewith: from MHC Receivables, L.L.C. (MHC Receivables) to Sherman Originator, L.L.C. (Sherman Originator); from Sherman Originator to LVNV Funding, L.L.C. (LVNV Funding); from LVNV Funding to Sherman Acquisition, L.L.C. (Sherman Acquisition); and from Sherman Acquisition to New Century. Only one of the assignments referenced a portfolio number and none referenced Oughla's account, or indeed, any individual account.

New Century also attached an electronic copy of the final periodic account statement for “VISA Account [XXXX]” from Credit One to Oughla with the same address she noted on her answer, advising that the account was closed and scheduled to be charged off with a balance of $723.82.

Oughla filed a response to the motion and consented to disposition on the papers. She did not dispute any of the particular facts New Century asserted, but contended that there was no admissible evidence of the formation of a contract between her and Credit One, or of the breach of any such contract, and no reference to her name or account number in any of the assignments. On that evidence, the judge granted New Century summary judgment in the sum of $725.40 plus costs without a statement of reasons.

Oughla retained counsel who filed a motion for reconsideration. Counsel argued that New Century did not establish its ownership of the debt or provide a proper foundation for the final periodic account statement.

New Century responded with additional proofs of its ownership of the debt. Its “business development manager,” Marko Galic, certified that he participated in the transaction in which New Century purchased Oughla's debt and thus had personal knowledge of the records New Century obtained in that sale, including the assignments, a copy of the electronically-transmitted spreadsheet New Century acquired, redacted to show only the information relating to Oughla's account, and the final periodic statement Credit One issued to Oughla.

In addition, New Century provided evidence of the transfers that preceded its acquisition, the first being from Credit One to MHC Receivables. John Mazzoli submitted an affidavit stating that he is an authorized representative for MHC Receivables, having personal knowledge of “the method and manner” by which MHC “originates, services, owns and manages VISA and MasterCard accounts.” Mazzoli explained that MHC Receivables “purchases and holds VISA and MasterCard accounts” originated by Credit One, which Credit One thereafter continues to service on behalf of MHC Receivables, the legal owner. According to Mazzoli, “[t]he Agreements that transfer the accounts between Credit One and MHC are self-executing, allow for the accounts to be transferred immediately after origination, and comply with all state and federal regulations,” and that “[c]ardholders receive appropriate notice of these events in accordance with all state and federal laws.” Mazzoli averred that “[t]he transfer between MHC and any subsequent buyer [is] evidenced by a Purchase and Sale Agreement and corresponding Bill of Sale.” ²

The judge denied the motion for reconsideration and reaffirmed the entry of summary judgment. She was satisfied that New Century had established a prima facie case that it was the owner of the account and that Oughla was in default in the sum of $723.82 plus interest of $1.58, for a total due of $725.40. The judge found that Oughla's only defense to the motion was that she “was not satisfied” with New Century's proofs, which the judge concluded was not sufficient to defeat summary judgment.

Azeem H. Zaidi

Plaintiff MSW Capital, L.L.C. (MSW Capital) sued defendant Azeem H. Zaidi alleging that it was the owner of Zaidi's “CHASE–WAMU” account, on which $12,487.36 was due at charge off. Zaidi, representing himself, filed an answer leaving plaintiff to its proofs.

MSW Capital served Zaidi with interrogatories seeking the factual basis for any defense Zaidi claimed, to which Zaidi declined to provide responsive answers. MSW Capital also served Zaidi with requests for admissions asking whether he admitted applying for credit privileges with CHASE–WAMU; whether he made purchases or received cash advances using the account; and whether he received monthly statements. Zaidi responded without admitting or denying any of the requested admissions.

MSW Capital moved for summary judgment. In its statement of material facts, MSW Capital stated that its predecessor in interest, CHASE–WAMU, extended credit to Zaidi, and that as set forth in the certification submitted in support of the motion, MSW Capital was the current owner of that account on which $12,487.36 was due at charge-off. MSW Capital attached copies of eighteen monthly billing statements for Zaidi's CHASE–WAMU account from August 2009 through January 2011, each addressed to Zaidi at the address indicated on Zaidi's answer.

MSW Capital supported the motion with a certification of its managing director, Lawrence A. Whipple, Jr., who claimed both personal knowledge of MSW Capital's “books and business” and authority to make the certification on its behalf. Whipple certified that MSW Capital “is the owner by purchase of [Zaidi's] defaulted CHASE–WAMU Account” on which there is due the sum of $12,487.36.³

Zaidi, through counsel...