Motes v. Midland Funding, LLC
| Decision Date | 06 January 2017 |
| Docket Number | 6:15–cv–00961–LSC |
| Citation | 230 F.Supp.3d 1254 |
| Parties | Michael MOTES, Plaintiff, v. MIDLAND FUNDING, LLC, et al., Defendants. |
| Court | U.S. District Court — Northern District of Alabama |
John G. Watts, M. Stan Herring, Jr., Watts and Herring LLC, Birmingham, AL, for Plaintiff.
Jason B. Tompkins, Ginny Willcox Leavens, Thomas R. Debray, Jr., Balch & Bingham LLP, Birmingham, AL, for Defendants.
Before the Court is Defendants', Midland Funding, LLC, and Midland Credit Management, Inc. (collectively "Midland"), Motion for Summary Judgment (Doc. 25), as well as Plaintiff Michael Motes's ("Motes") First Motion to Strike (Doc. 33) and Motion to Strike (Doc. 39). Motes brought this action alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"). Motes also asserts state-law claims for invasion of privacy, wanton conduct, malicious prosecution, and negligent, wanton, or intentional hiring, training, and supervision of incompetent debt collectors. For the reasons stated below, Midland's motion for summary judgment is due to be granted in part and denied in part. Motes's Motion to Strike (Doc. 33) and Midland's Motion to Strike (Doc. 39) are due to be denied as moot.
Motes has lived in Crane Hill, Alabama with his wife Sherry Motes ("Sherry") since 1996.1 (Motes Dep. at 16.) The United States Postal Service website lists the Crane Hill address as located in Cullman County, Alabama. (Smith Dec. ¶ 11, Smith Dec. Ex. 8.) GE Capital Retail Bank, which is now Synchrony Bank ("Synchrony") provided a credit account ("SB account") for an individual named "MKE Motes" at the Crane Hill address. (Murphy Dec. Ex. 3.) Motes does not dispute that payments on the SB account were made from Sherry's bank account from February 2012 to December 2013. However, Motes professes that he did not open or ever have any credit account with Synchrony. (Motes Dep. at 282–83.) No payments have been made on the SB account since December 2013, and a balance of $2,069.37 remains unpaid. (Murphy Dec. Ex. 3 & 4.)
After seven months without receiving any payments on the SB account, Synchrony charged-off the account on July 16, 2014. (Id. at Ex. 3.) Midland claims that in August 2014, it bought a number of charged-off accounts from Synchrony, including the SB account. (Id. at ¶ 3.) Midland provides a Bill of Sale and an Affidavit of Sale of Account by Original Creditor as proof of this transaction. (Id. at Ex. 1 & 2.) According to Midland, the Bill of Sale "assigned all of [Synchrony's] rights, title, and interest" in the purchased accounts to Midland, including the SB account. (Id. at ¶ 5.) The affidavit of Synchrony's authorized representative states that "Synchrony ... sold a pool of charge-off accounts ... to Midland," and declares that "[Synchrony] has a process to detect and correct errors on these accounts." (Id. at Ex. 2.) However, Motes states that this process does not check for accuracy, but simply ascertains that the data "meets the expectations of what should be there." (Murphy Dep. Vol. 1 at 66–9.) Midland also charges that the sale involved transfer of a "Final Data File," which "contained Synchrony Bank's electronic records and other records on the individual accounts purchased by Midland," including information about the SB account which was extracted by Midland and contained in a Field Data sheet. (Murphy Dec. ¶ 5.)
The parties do not dispute that Synchrony also gave Midland two account statements for the SB account, which list "MKE Motes" as the account owner and the Crane Hill address as the mailing address. (Id. at ¶ 7 & Ex. 4.) Midland attempted to collect on this debt, calling Motes seven times and sending him "some" letters in September and November 2014. (Murphy Dec. ¶ 10.) However, Motes admits that he never spoke to Midland directly. (Motes Dep. at 252–53.) Further, Midland only communicated with Motes, Synchrony, Zarzaur & Schwartz, P.C. ("Zarzaur"), credit reporting agencies, and the Small Claims Courts of Cullman and Winston Counties about the SB account. (Murphy Dec. ¶ 11.)
By November 20, 2014, Midland placed the SB account with its outside counsel, Zarzaur, for collection. (Smith Dec. ¶ 4 & 5.) Midland gave Zarzaur access to the following documents related to the SB account: (Id. at ¶ 6.) Midland relates that after multiple unsuccessful attempts to collect the debt from "MKE Motes," Zarzaur reviewed the evidence and "had a good faith belief that MKE Motes owed the Synchrony debt, there were no legal or procedural barriers to filing suit, and Midland could prevail at trial." (Id. at ¶ 7 & 9.) Motes disputes this assertion, stating that Midland and its lawyers should have known that there was not enough evidence to file a successful action against him. According to Midland, it relies on Zarzaur to determine if there is sufficient evidence for a successful collection suit, and decide which documents or witnesses should be used in that action. (Id. at ¶ 8.) Yet, Midland also admits that Zarzaur acts as Midland's agent in its collection cases, and that it requires firms like Zarzaur to comply with a code of conduct or risk termination. (Murphy Dep. Vol. 1 at 93 & 94.)
On December 23, 2014, Zarzaur filed a collection action against "MKE Motes" on behalf of Midland in the Small Claims Court of Cullman County, Alabama, seeking to recover the charge-off balance of $2,069.37. (Smith Dec. ¶ 10, Ex. 7.) According to Zarzaur and Midland, the state court action was filed against "MKE Motes" who resided at the Crane Hill address based on the information contained in Midland and Synchrony's SB account records. (Id. at ¶ 20, Ex. 1 & 2.) The action was filed in Cullman County because Zarzaur's system—which flags zip codes that could match with more than one county—identified it as the corresponding county for the Crane Hill address zip code. (Id. at ¶ 11.) However, when Motes answered the complaint, he indicated that he did not live in Cullman County, and asked for the action to be transferred to Winston County.
(Motes Dep. Ex. 19.) He also denied—and continues to deny—that he owed Midland any money or that he had ever done business with them, claiming that he did not know who Midland was and noting that the name on the complaint was incorrect. (Id. at 282–83, Pl. Ex. H.)
Trial for the collection case was on April 8, 2015. (Smith Dec. ¶ 15.) Zarzaur did not request that Midland send a live witness for this trial because, Midland asserts, affidavits can be admitted in lieu of live testimony in Alabama Small Claims Court. (Murphy Dep. Vol. 1 at 103, Smith Dec. ¶ 14.) During the state court action and other collection attempts, Midland asserts that it required Zarzaur to "abide by all applicable laws and evidentiary and procedural rules," including a requirement that "they can't file suit until they have what they need" to "see that lawsuit through." (Smith Dec. ¶ 22, Murphy Dep. Vol. 1 at 144 & 146.) Zarzaur presented the following documents at trial: "[1] the two monthly account statements ... [2] the Field/Seller Data sheet ... [3] the Bill of Sale ... [4] the charge-off information from Synchrony ... [5] the Synchrony affidavit regarding the bill of sale, and [6] the [Midland representative] Stocker affidavit." (Smith Dec. ¶ 18.)
However, Motes claims that none of these documents is the contract of sale, and therefore, they are not enough to evidence that the sale occurred. According to Motes, the full contract can only be evidenced by the Purchase and Sale Agreement ("the PSA"), because the Bill of Sale states that the sale is conducted "in further consideration of the mutual covenants and conditions set forth" in the PSA and that Synchrony sold "to the extent of its ownership, the Receivables ... [ ] as defined" in the PSA. (Pl. Ex. A.) Further, Motes puts forward testimony that Midland very rarely provides PSAs to its lawyers for admittance at trial, did not produce it in the state court action, and has not produced it in this action, purportedly because "it is very confidential information, and [they] make other documents available." (Murphy Dep. Vol. 1 at 60–1 & 143.) Deposition testimony also demonstrates that Midland's representative had not reviewed and does not know what the PSA contains. (Murphy Dep. Vol. 1 at 61–65.) Midland, however, counters that the PSA was not produced because it is immaterial, as the Bill of Sale is enough to transfer and prove ownership. Midland also avers that after Midland objected to producing the PSA during discovery, Motes never communicated with Midland about these objections or moved to compel production.
While the state court action was pending, from February 2015 to April 8, 2015, Midland provided information about the SB account to Consumer Reporting Agencies ("CRAs"). (Murphy Dec. ¶ 13.) After judgment was entered for Motes on April 8, 2015, Midland no longer reported on the SB account, because "[t]he Court had determined at that point in time that the defendant does not owe any money to Midland." (Id. , Murphy Dep. Vol. 1 at 153.) Further, Motes does not dispute that he never wrote to the CRAs to challenge the appearance of the SB account on his credit report before the state court action. Motes charges that Midland never asked and does not know why it lost the state court case against Motes. (Murphy Dep. Vol. 2 at 76–7, 82.)
According to Motes, having to defend himself at trial and "everything that entails" caused him emotional distress. (Motes Dep. at 139–40.) Specifically, he presents testimony that the threat of garnishment or sale of his assets made him feel...
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