Badeen v. PAR, Inc.
| Decision Date | 13 June 2014 |
| Docket Number | Docket No. 147150. |
| Citation | 496 Mich. 75,853 N.W.2d 303 |
| Parties | BADEEN v. PAR, INC. |
| Court | Michigan Supreme Court |
Xuereb Law Group PC, Canton (by Joseph M. Xuereb ), for George Badeen and Midwest Recovery and Adjustment, Inc.
Miller, Canfield, Paddock and Stone, PLC, Kalamazoo (by Clifford W. Taylor, Lansing, Larry J. Saylor, and Lawrence M. Dudek, Detroit), for PAR, Inc.Wienner & Gould, PC, Rochester (by S. Thomas Wienner and Seth D. Gould ), for PNC Bank, N.A., CenterOne Financial Services, LLC, and The M. Davis Co., Inc.
Law Office of John J. O'Shea, PLC, Detroit (by John J. O'Shea ), for Bank of America, N.A.
Pepper Hamilton LLP, Southfield (by Matthew J. Lund and Adam A. Wolfe ), for TD Auto Finance LLC.
Debrincat, Padgett, Kobliska & Zick, Farmington Hills (by S. Thomas Padgett ), for Santander Consumer USA Inc.
Boyle Burdett, Grosse Pointe Park (by Howard William Burdett, Jr. ), for ASR Nationwide, LLC.
McShane & Bowie, PLC, Grand Rapids (by James R. Bruinsma ), for Nissan Motor Acceptance Corporation.
Warner Norcross & Judd LLP, Grand Rapids (by Molly E. McManus and Gaëtan Gerville–Réache), for Fifth Third Bank.
Plunkett Cooney, Bloomfield Hills (by Jeffrey C. Gerish and Matthew J. Boettcher ), for The Huntington National Bank.
Law Weathers, Grand Rapids (by Leslie C. Morant ), for Toyota Motor Credit Corporation, Remarketing Solutions, LLC, Renovo Services, LLC, and Diversified Vehicle Services, Inc.
Collins Einhorn Farrell PC, Southfield (by Deborah Hebert and Kevin Moloughney ), for Millennium Capital and Recovery Corporation.
Blanco Wilczynski, PLLC (by Derek S. Wilczynski, Troy), for National Asset Recovery Corp.
Bill Schuette, Attorney General, B. Eric Restuccia, Deputy Solicitor General, and Heidi L. Johnson and Bridget K. Smith, Assistant Attorneys General, for the Department of Licensing and Regulatory Affairs.
As long as there have been debts, there have been people tasked with collecting them.1 To regulate the collection industry in Michigan, the Legislature passed a licensing requirement in 1980. This statutory package required collection agencies to obtain licenses and included statutes governing licensees' permissible actions throughout the collection process.2
For many years, the collection industry involved two players: the creditors and the collection agents that they hired to collect debts. But in the late 1990s, as the collection industry evolved, a middleman emerged. These middlemen—known as forwarders or forwarding companies—operate as intermediaries between creditors and local collection agents. The forwarding companies' business model involves obtaining assignments of unpaid accounts from creditors and then allocating the collection of those accounts to local collection agents. The forwarding companies do not, however, contact debtors themselves.
This case requires us to determine whether forwarding companies fall within the statutory definition of collection agencies. We conclude that they do. The statutory definition of a “collection agency” includes “a person directly or indirectly engaged in soliciting a claim for collection.”3 In the context of this statute, soliciting a claim for collection refers to the act of asking a creditor for any unpaid accounts on which the collection agency may pursue payment. The forwarding companies therefore come within the definition of collection agency when they contact creditors asking for debts to allocate to local collection agents.
Accordingly, we vacate Part III(B) of the Court of Appeals judgment and remand this case to the circuit court for further proceedings not inconsistent with this opinion. We do not retain jurisdiction.
Plaintiff George Badeen, a licensed collection agency manager, owns and operates Midwest Recovery and Adjustment, Inc., a licensed collection agency doing business in Michigan. The primary business of Midwest Recovery is repossessing automobiles when it is assigned a delinquent account by a financing company.
This dispute's origins lie in the shifting landscape of collection practices. In the past, when a creditor needed a debt collected or something repossessed, it would contact and retain a collection agent wherever the debtor was located. But the business model has changed with the introduction of forwarding companies. Now forwarding companies act as middlemen between the lenders and the local collection agents. The forwarding companies operate nationwide, and when a creditor needs a collection it contracts with a forwarding company, which, in turn, allocates the collection to a collection agent in the appropriate location. The forwarding companies maintain networks of collection agents and negotiate favorable rates that save creditors money and allow the forwarding companies to make a profit. Plaintiffs allege that this business model negatively affects licensed local collection agents.
Badeen, on behalf of himself and other licensed collection agents and collection agencies in Michigan, filed a class action against the lenders and forwarding companies doing business in Michigan. He alleged that the forwarding companies were acting as collection agencies under Michigan law but were doing so without a license in violation of MCL 339.904(1). The lenders that hired the forwarding companies, in turn, were allegedly violating Michigan law by hiring unlicensed collection agencies in contravention of MCL 445.252(s). Defendants, Badeen argued, injured the members of the plaintiff class by impeding their business while not complying with Michigan law.
Badeen argued that the forwarding companies “solicit[ed] a claim for collection” when they contacted creditors for unpaid accounts to allocate to local collection agents, thereby satisfying the statutory definition of collection agencies and requiring licensure. In the circuit court, defendants moved for summary disposition, arguing that the forwarding companies did not satisfy the definition because soliciting a claim for collection referred to asking the debtor to pay his or her debt, which the forwarding companies did not do. The circuit court agreed and granted defendants' motion for summary disposition. The Court of Appeals affirmed the circuit court's decision, holding that “the phrase ‘soliciting a claim for collection,’ found in MCL 339.901(b), means requesting the debtor to fulfill his or her obligation on the debt.”4
Badeen sought leave to appeal in this Court. We directed the Clerk of the Court to schedule oral argument on whether to grant the application or take other action and asked the parties to address “whether the defendant forwarding companies engage in ‘soliciting a claim for collection’ and therefore are ‘collection agenc[ies]’ as defined by MCL 339.901(b).”5
A statutory interpretation issue like the meaning of “soliciting a claim for collection” is a question of law that we review de novo. The primary goal of statutory interpretation is, of course, to give effect to the Legislature's intent. The focus of our analysis must be the statute's express language, which offers the most reliable evidence of the Legislature's intent. When construing a statutory phrase such as the one at issue in this case, we must consider it in the context of the statute as a whole.6 “Although a phrase or a statement may mean one thing when read in isolation, it may mean something substantially different when read in context.”7 When reviewing a statute, courts should avoid a construction that would render any part of the statute surplusage or nugatory.8
Additionally, “claim” or “debt” means “an obligation or alleged obligation for the payment of money or thing of value arising out of an expressed or implied agreement or contract for a purchase made primarily for personal, family, or household purposes.”11
The forwarding companies satisfy the statutory definition of a collection agency. In MCL 339.901(b), “soliciting a claim for collection” refers to the act of asking a creditor for unpaid debt that the collection agency can pursue. “Solicit” is defined as “to try to obtain by earnest plea or application.”12 The statute defines “claim” as “an obligation ... for the payment of money or thing of value.”13 “For” is defined as “with the object or purpose of.”14 And “collection” is “the act of collecting.” 15
Combining these definitions, “soliciting a claim for collection” means to try to obtain an obligation with the object or purpose of engaging in the act of collecting.
Unfortunately, applying these dictionary definitions does not end our inquiry because the solicitation could still be directed at the debtor or the creditor depending on how the term “obligation” is understood. An obligation for the payment of money can be understood in two ways. On the one hand, a debtor has an obligation in the sense that he or she must pay the creditor the sum of money owed. But on the other hand, a creditor holds all of its debtors' obligations.16 Thus, the statutory language, without further context, could produce a conclusion that “soliciting a claim for collection” means either asking a debtor to pay his or her debts or asking a creditor for any unpaid debts that it needs collected. Looking at the statute as a whole and applying the strictures of statutory...
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