Connor v. Midland Credit Mgmt., Inc.
| Decision Date | 20 February 2019 |
| Docket Number | CASE NO. 18-23023-CIV-GOODMAN |
| Parties | JACKI LYN CONNOR, Plaintiff, v. MIDLAND CREDIT MANAGEMENT, INC., Defendant. |
| Court | U.S. District Court — Southern District of Florida |
[CONSENT CASE]
This putative class action concerns the allegedly questionable debt-collection practices of Defendant Midland Credit Management, Inc. before the now-defunct National Arbitration Forum ("NAF") and Florida state courts. In 2009, following a lawsuit by the Minnesota Attorney General and an investigation by a U.S. House of Representatives' Subcommittee, the NAF agreed to stop arbitrating claims. Plaintiff Jacki Lyn Connor alleges that Midland, which was not registered as a debt collector in Florida until shortly before the NAF ceased to function, used a law firm with close financial ties to the NAF to obtain, without proper notice, thousands of arbitration awards and final judgments against consumers in Florida.
Connor alleges that she became a victim of Midland's practice in 2005 when it obtained, by default, an arbitration award against her before the NAF. Midland then had that award confirmed in Florida state court in 2007, also by default. At neither of those times was Midland registered as a debt collector under Florida law (as Midland first registered as a Florida debt collector on January 1, 2009). Several years later, in November 2017, Midland issued writs of garnishments to Connor's employer.
On July 25, 2018, approximately ten months after the writs issued, Connor sued Midland, raising four claims: violation of 15 U.S.C. § 1692e (Count I) and § 1692f (Count II) of the Fair Debt Collection Practices Act ("FDCPA"); violation of the Florida Consumer Collection Practices Act ("FCCPA"), Fla. Stat. § 559.55 et seq. (Count III); and unjust enrichment (Count IV). Connor later amended her complaint to add a fifth claim: violation of the Federal Arbitration Act ("FAA")(Count V).
Midland's motion to dismiss the amended complaint raises five issues: (1) whether the Rooker-Feldman doctrine divests the Court of subject-matter jurisdiction over some of the FDCPA and FCCPA claims; (2) whether Connor's claims are either barred by the statute of limitations or are meritless (depending on whether the claims are based on pre-registration events); (3) whether Connor is bringing an impermissible private cause of action for failure to register, which the FCCPA does not allow; (4) whether Connor's unjust enrichment claim fails for that same reason; and (5) whether the FAA's 90-day statute of limitations bars the claim to vacate the arbitration award.
For the reasons outlined below, the Court grants in part and denies in part the motion to dismiss as follows:
First, the Court dismisses without prejudice Count I, III, and IV as barred by the Rooker-Feldman doctrine.
Second, the Court dismisses without prejudice Count I as falling outside the FDCPA's one-year statute of limitations. The same ruling applies to those allegations in Count II that are duplicative of Count I, but the Court otherwise denies the motion to dismiss as to Count II on limitations grounds.
Third, the Court dismisses without prejudice Count III based on the additional reason that, as pled, Connor raises an impermissible private cause of action under the FCCPA for failure to register.
Fourth, and last, the Court denies the motion to dismiss as to Count V. Although the question here is a close one, the Court declines to dismiss Count V at this time given that Connor has alleged that she and Midland never entered into an arbitration agreement.
Because this order addresses a motion to dismiss, the Court will deem all well-pled allegations to be true. The amended complaint alleges the following scenario:
Midland is in the business of buying defaulted debt for pennies on the dollar and then bringing enforcement actions against the debtors in Florida state courts orarbitration forums. [ECF No. 22, ¶ 35]. Midland exclusively used NAF to file arbitration proceedings and hired the Mann Bracken law firm to do so. [ECF No. 22, ¶ 36]. Unknown to consumers, NAF and Mann Bracken had close financial ties, and the two, in line with creditors like Midland, worked closely together to generate revenues at the expense of consumers. [ECF No. 22, ¶¶ 37-39].
In 2005, Midland initiated arbitration proceedings before the NAF for a debt it had purchased that Connor allegedly owed to Providian Bank. [ECF No. 22, ¶¶ 40-42]. Midland did not produce or provide an arbitration agreement implicating that debt. [ECF No. 22, ¶ 42]. Although Midland allegedly served Connor on July 13, 2005 with a package that included a copy of the arbitration claim, Connor denies receiving the package and does not recall having been served with the arbitration claim. [ECF No. 22, ¶ 43].
On August 26, 2005, the NAF arbitrator entered, by default, an award in favor of Midland and against Connor for $2,826.02. [ECF Nos. 22, ¶ 44; 22-1, pp. 2-3]. Connor alleges that "[t]he arbitration award was void because Midland was not licensed in Florida to engage in debt collection activity." [ECF No. 22, ¶ 45].
On July 21, 2006, Midland, as a servicing agent for MRC Receivables, filed an action in the County Court in Palm Beach County, Florida to confirm the arbitration award. [ECF Nos. 22, ¶ 46; 22-1, pp. 5-6]. Midland was unlicensed at that time, too. [ECF No. 22, ¶ 46]. Midland did not attach a copy of any arbitration award to its complaint. [ECF No. 22, ¶ 47].
On January 22, 2007, the County Court entered a default final judgment against Connor and in favor of Midland, as servicing agent for MRC, for $3,348.01, plus interest. [ECF Nos. 22, ¶ 48; 22-1, p. 8]. Midland later became a licensed consumer collection agency in Florida, effective January 1, 2009. [ECF No. 22, ¶ 51]. At no time before then was Midland licensed to collect debts in Florida. [ECF No. 22, ¶ 51].
In July 2009, the Minnesota Attorney General sued the NAF for consumer fraud, false advertising, and deceptive trade practices. [ECF No. 22, ¶ 52]. That same month, the U.S. House of Representatives' Domestic Policy Subcommittee Majority Staff of the Oversight and Government Reform Committee issued a report critical of NAF's arbitration practices. [ECF No. 22, ¶ 53]. The NAF settled the Minnesota lawsuit by agreeing to stop arbitrating in the United States. [ECF No. 22, ¶ 52].
Connor accuses Midland of "us[ing] the NAF, represented by Mann Bracken, to receive thousands of arbitration awards and final judgments against consumers in Florida without disclosing the institutional bias and partiality that existed in the arbitration proceedings or that Midland was not licensed to engage in debt collection activity in Florida." [ECF No. 22, ¶ 57]. Connor also alleges that "Midland regularly initiated arbitration proceedings through the NAF, which has less strict notice and service requirements tha[n] Florida courts," and that "Midland obtained an arbitration award from the NAF, without proper notice, and then sought enforcement of the arbitration award in Florida courts." [ECF No. 22, ¶ 57].
On November 14, 2017, Midland filed a motion for writ of garnishment against Connor. [ECF Nos. 22, ¶ 59; 22-1, pp. 12-13]. The writ issued several days later, and Midland served the writ on Connor's employer and garnished her wages. [ECF No. 22, ¶ 60]. According to Connor, "Midland is actively trying to garnish [her] wages based on the arbitration award and final judgment it received when it wasn't licensed to do so." [ECF No. 22, ¶ 62].
Connor filed this lawsuit against Midland approximately ten months after the writ of garnishment issued, on July 25, 2018. [ECF No. 1]. The original complaint contained Counts I through IV, which are discussed below. Midland moved to dismiss the complaint [ECF No. 17], and, in response, Connor filed her amended complaint, which added a fifth count, also discussed below. [ECF No. 22].
In Count I of the amended complaint, Connor alleges that Midland violated § 1692e of the FDCPA. [ECF No. 22, ¶¶ 75-81]. Connor claims that Midland "violated 15 U.S.C. § 1692e when it used deceptive and misleading methods to collect debts when it threatened to take an action (collecting on void judgments and arbitration awards) that could not be legally taken." [ECF No. 22, ¶ 79].
In Count II of the amended complaint, Connor alleges that Midland violated § 1692f of the FDCPA. [ECF No. 22, ¶¶ 82-87]. Connor alleges that "[a]t no time did Defendant communicate the required statutory disclosures to Plaintiff that she was entitled to verification of the debt and a right to dispute the debt, disclosures required by15 U.S.C. § 1692g." [ECF No. 22, ¶ 86]. Connor then adds that Midland "used unfair means when it garnished the Plaintiff's wages based on the void arbitration award and final judgment." [ECF No. 22, ¶ 86].
In Count IV of the amended complaint, Connor raises an unjust enrichment claim against Midland. [ECF No. 22, ¶¶ 94-98]. Connor alleges that "[b]y its failure to obtain a license as a debt collector in Florida prior to filing an...
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