Madden v. Midland Funding, LLC

• Decision Date: 27 February 2017
• Docket Number: 11–CV–8149 (CS)
• Parties: Saliha MADDEN, on behalf of herself and all others similarly situated, Plaintiffs, v. MIDLAND FUNDING, LLC and Midland Credit Management, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

237 F.Supp.3d 130

Saliha MADDEN, on behalf of herself and all others similarly situated, Plaintiffs,

v.MIDLAND FUNDING, LLC and Midland Credit Management, Inc., Defendants.

11–CV–8149 (CS)

United States District Court, S.D. New York.

Signed February 27, 2017

Daniel Adam Schlanger, Kakalec & Sclanger, LLP, New York, NY,O. Randolph Bragg, Horwitz, Horwitz & Associates, Chicago, IL, for Plaintiffs.

Thomas Arthur Leghorn, Joseph Louis Francoeur, Wilson Elser Moskowitz Edelman & Dicker LLP, New York, NY, for Defendants.

OPINION & ORDER

Seibel, Judge.

Before the Court are Defendants' Renewed Motion for Summary Judgment, (Doc. 112), and Plaintiff's Renewed Motion for Class Certification, (Doc. 99). For the reasons stated below, Defendants' Motion is GRANTED in part and DENIED in part, and Plaintiff's Motion is GRANTED as modified below.

I. FACTUAL BACKGROUND

The following facts are set forth based on the parties' Local Civil Rule 56.1 statements and supporting materials, and are undisputed unless otherwise noted. Plaintiff in this action, Saliha Madden, opened a credit card account with Bank of America on April 23, 2005. (Doc. 117 ("P's Stmt. & Resp."), ¶ 10.) Plaintiff received the Cardholder Agreement applicable to such accounts, and agreed to be bound by it. (Id. ¶¶ 11, 12.) The Cardholder Agreement provided that it was "governed by applicable Arizona and federal law." (Doc. 113 ("Leghorn Decl.") Ex. 3–B ("Cardholder Agreement"), at 1.)

Plaintiff's August 14, 2006 account statement was sent to her address in White Plains, New York, (Doc. 118 ("Schlanger Decl.") Ex. E, at 1), and disclosed a variable daily periodic interest rate of 0.08833, which corresponds to an annual percentage rate of 32.24%, (P's Stmt. & Resp. ¶ 18). It stated that payment was to be made online or sent to an address in Newark, New Jersey, and that billing disputes were to be sent to an address in Norfolk, Virginia. (Schlanger Decl. Ex. E, at 2.) The August 2006 account statement also contained an "Important Notice" alerting customers that Bank of America was "changing the terms of the Cardholder Agreement that governs [Plaintiff's] credit card Account." (Id. at 1.) Plaintiff received the Change in Terms attached to her August 14, 2006 account statement. (P's Stmt. & Resp. ¶¶ 13, 14.)

The Change in Terms advised Plaintiff that, beginning on the effective date of October 19, 2006,¹ the Change in Terms would replace the Cardholder Agreement. (Schlanger Decl. Ex. F ("Change in Terms"), at 1.) It also stated that "beginning on October 19, 2006 ... your Bank of America credit card account will be issued and administered by FIA Card Services, N.A." (Id. ) The Change in Terms provided that "The Agreement is made in Delaware and we extend credit to you from Delaware. This Agreement is governed by the laws of the State of Delaware (without regard to its conflict of laws principles) and by any applicable federal laws." (Id. ¶ 44.) FIA Card Services, N.A. ("FIA") was at all times relevant to this action an active national bank. (P's Stmt. & Resp. ¶ 16.)

On November 10, 2010, FIA sold, transferred, and set over unto Midland Funding, LLC ("Midland") Plaintiff's outstanding debt of $5,291.25, with full authority to perform all acts necessary for collection, settlement, adjustment, compromise, or satisfaction of the claim. (Id. ¶ 20.) This charge-off constituted an assignment of Plaintiff's debt from FIA to Midland. (Id. ¶ 21.) Midland is in the business of purchasing defaulted debts, (Doc. 16 ("Answer to AC"), ¶ 6), and Midland Credit Management, Inc. ("MCM") is in the business of collecting those debts, (id. ¶ 8). Both are indirect wholly-owned subsidiaries of Encore Capital Group, Inc. and both have their principal places of business in San Diego, California. (Id. ¶¶ 6–9.)

Midland sued Plaintiff in the City Court of the City of White Plains, Westchester County on May 2, 2011 to collect on her debt of $5,291.25. (Schlanger Decl. Ex. A.) In that complaint, Midland alleged that Plaintiff lived in White Plains, New York, and that its action to collect the debt arose out of transactions in Westchester County, New York. (Id. at 2.) That case has since been dismissed. (Schlanger Decl. ¶ 3.)

II. PROCEDURAL BACKGROUND

Plaintiff filed the amended complaint on May 7, 2012, asserting violations of: (1) the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. , based on Defendants' attempt to collect interest on her debt above the rate permitted by New York's usury laws; (2) New York General Business Law ("GBL") § 349, based on Defendants' representations that they were entitled to collect interest at a usurious rate; and (3) New York's civil and criminal usury laws, entitling Plaintiff to a declaration that her debts are void and to disgorgement. (Doc. 13 ("AC"), ¶¶ 50–70.)

Plaintiff moved for class certification on January 18, 2013. (Doc. 25.) Defendants moved for summary judgment on January 25, 2013, (Doc. 30), arguing that Plaintiff's state-law claims were preempted by the National Bank Act ("NBA") and thus that Plaintiff's federal claim, which is predicated on the state law claims, also failed. On September 30, 2013, I denied both motions, finding that although the NBA preempted state law usury claims against assignees of national banks, fact issues remained as to whether Plaintiff had agreed to the Cardholder Agreement and Change of Terms, and whether Plaintiff's debt had been validly assigned to Defendants. I also denied Plaintiff's motion for class certification because each individual's claims would turn on the factual issues I identified in Plaintiff's case.

The parties then entered into a Stipulation for Entry of Judgment dated May 30, 2014, agreeing that "FIA assigned Defendants Ms. Madden's account, and that Plaintiff received the Cardholder Agreement and Change in Terms." (Doc. 84 Ex. 3 ("Stipulation"), ¶ 1.) In light of the Stipulation, I entered judgment for Defendants on June 2, 2014.

The Second Circuit reversed and remanded, holding that the NBA did not preempt Madden's state law usury claims, but leaving it to me "to address in the first instance whether the Delaware choice-of-law clause precludes Madden's claims." Madden v. Midland Funding, LLC , 786 F.3d 246, 247 (2d Cir. 2015). The Second Circuit also vacated my denial of class certification as it was "entwined" with the preemption analysis, and remanded for me to consider the question again in light of its opinion. Id. at 255. Defendants' petition for writ of certiorari was denied on June 27, 2016. (Doc. 126 Ex. 1.)

Defendants now move for summary judgment again, (Doc. 112), arguing that Delaware law applies to Plaintiff's claims, and so Plaintiff's claims under New York law fail, (Doc. 114 ("Ds' Mem."), at 1). Defendants further argue that because governing Delaware law imposes no usury cap and Plaintiff's FDCPA claims are predicated on a violation of New York's usury laws, Plaintiff's FDCPA claims must also fail. (Id. )

Plaintiff moves again for class certification. (Doc. 99.)

III. SUMMARY JUDGMENT

A. Legal Standard

Summary judgment is appropriate when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "[T]he dispute about a material fact is ‘genuine’ ... if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is "material" if it "might affect the outcome of the suit under the governing law .... Factual disputes that are irrelevant or unnecessary will not be counted." Id. On a motion for summary judgment, "[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Id. at 255, 106 S.Ct. 2505. The movant bears the initial burden of demonstrating "the absence of a genuine issue of material fact," and, if satisfied, the burden then shifts to the non-movant to present "evidence sufficient to satisfy every element of the claim." Holcomb v. Iona Coll. , 521 F.3d 130, 137 (2d Cir. 2008) (citing Celotex Corp. v. Catrett , 477 U.S. 317, 323–24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). "The mere existence of a scintilla of evidence in support of the [non-movant's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [non-movant]." Anderson , 477 U.S. at 252, 106 S.Ct. 2505. Moreover, the non-movant "must do more than simply show that there is some metaphysical doubt as to the material facts," Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), and he "may not rely on conclusory allegations or unsubstantiated speculation," Fujitsu Ltd. v. Fed. Express Corp. , 247 F.3d 423, 428 (2d Cir. 2001) (internal quotation marks omitted).

"A party asserting that a fact cannot be or is genuinely disputed must support the assertion by ... citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials ...." Fed. R. Civ. P. 56(c)(1). Where an affidavit is used to support or oppose the motion, it "must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant ... is competent to testify on the matters stated." Fed. R. Civ. P. 56(c)(4) ; see Major League Baseball Props., Inc. v. Salvino, Inc. , 542 F.3d 290, 310 (2d Cir. 2008). In the event that "a party fails ... to properly address another party's assertion of fact as required by Rule 56(c), the court may," among other things, "consider the fact undisputed for purposes of the motion" or "grant summary judgment if the motion and supporting materials—including the facts considered undisputed—show that the movant is...