Shular ex rel. Situated v. LVNV Funding LLC
| Decision Date | 18 February 2016 |
| Docket Number | CIVIL ACTION NO. H-14-3053 |
| Parties | MONTE L. SHULAR, On Behalf of Himself and All Others Similarly Situated, Plaintiff, v. LVNV FUNDING LLC and MICHAEL J. SCOTT, PC, Defendants. |
| Court | U.S. District Court — Southern District of Texas |
MONTE L. SHULAR,
On Behalf of Himself and All Others Similarly Situated, Plaintiff,
v.
LVNV FUNDING LLC and MICHAEL J. SCOTT, PC, Defendants.
CIVIL ACTION NO. H-14-3053
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION
February 18, 2016
MEMORANDUM OPINION AND ORDER
This action is brought by plaintiff, Monte L. Shular, against defendants, LVNV Funding LLC ("LVNV") and Michael J. Scott, PC ("Scott"), for violation of federal and state debt collection statutes. See 15 U.S.C. § 16 92, et seq. and Tex. Fin. Code § 392.001, et seq. Pending before the court is Plaintiff's Motion for Class Certification (Docket Entry No. 28), in which Plaintiff seeks certification for the following class:
All individuals subject to debt collection by LVNV Funding, LLC between November 8, 2012, and June 1, 2015, in connection with debt originally owned and purportedly purchased from Conn Appliances, Inc. ("Class Period") and transferred as a part of the November 8, 2012 assignment and sale by and among Conn Appliances, Inc., Sherman Originator III, LLC, Sherman Originator, LLC and LVNV Funding, LLC.1
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Plaintiff also seeks appointment as Class Representative and appointment of his counsel as Class Counsel. For the reasons explained below the motion for class certification will be denied.
Plaintiff alleges that on October 25, 2013, defendants filed suit against him in Montgomery County, Texas, to collect a debt that LVNV had allegedly acquired from Conn Appliances, Inc. ("Conn"). Plaintiff alleges that in the Montgomery County suit LVNV alleged that it was the owner and holder of plaintiff's account, the account was in default, and the full amount was due to LVNV. Plaintiff alleges that through discovery in that suit it became apparent that LVNV did not own the debt it was attempting to collect and that there were numerous other individuals from whom LVNV attempted to collect debt that LVNV did not own. Plaintiff alleges that the Montgomery County suit went to trial on the merits, and that after hiring counsel he prevailed against LVNV. In this action plaintiff alleges based on information and belief that defendants have filed numerous lawsuits throughout Texas against purported creditors of Conn, and that when these lawsuits were filed LVNV was not the assignee of the debt it was attempting to collect. Plaintiff brings this action for statutory and actual damages on his own behalf and as a class action on behalf of all
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others against whom defendants have attempted to collect a debt purportedly obtained from Conn.2
Federal Rule of Civil Procedure 23 requires courts to "determine by order whether to certify the action as a class action." Fed. R. Civ. P. 23(c)(1)(A). Courts have wide discretion in determining whether to certify a class, but they must exercise that discretion within the bounds of Rule 23. Castano v. American Tobacco Co., 84 F.3d 734, 740 (5th Cir. 1996) (citing Gulf Oil Co. v. Bernard, 101 S. Ct. 2193, 2200 (1981)). "[T]he question is not whether the plaintiff or plaintiffs have stated a cause of action or will prevail on the merits, but rather whether the requirements of Rule 23 are met." Eisen v. Carlisle & Jacquelin, 94 S. Ct. 2140, 2153 (1974) (quoting Miller v. Mackey International, Inc., 452 F.2d 424, 427 (5th Cir. 1971)). "An action may proceed only if the party seeking certification demonstrates that all four requirements of Rule 23(a) are met, and that at least one of three requirements of Rule 23(b) are met." Vizena v. Union Pacific R.R. Co., 360 F.3d 496, 503 (5th Cir. 2004) (per curiam). See also Gene and Gene LLC v. Biopav LLC, 541 F.3d 318, 325 (5th Cir. 2008) (party seeking certification bears the burden of proof).
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Under Rule 23(a) the moving party must demonstrate that: (1) the class is so numerous that joinder of all members is impracticable (numerosity); (2) there are questions of law or fact common to the class (commonality); (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class (typicality); and (4) the representative parties will fairly and adequately protect the interests of the class (adequacy). Fed. R. Civ. P. 23(a). See Amchem Products, Inc. v. Windsor, 117 S. Ct. 2231, 2245 (1997). Under Rule 23(b) the moving party must demonstrate that a class action is the appropriate vehicle through which to resolve the litigation. Fed. R. Civ. P. 23(b). See also Vizena, 360 F.3d at 503. Rule 23(b) states, in relevant part, that a class action is appropriate if the moving party establishes the prerequisites set forth in Rule 23(a) and if:
the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members [(predominance)], and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy [(superiority)].
Fed R. Civ. P. 23(b)(3).
In making the class certification determination courts must undertake a rigorous analysis of Rule 23's prerequisites by probing beyond the pleadings to understand the claims, defenses, and relevant facts. See General Telephone Co. of the Southwest v. Falcon, 102 S. Ct. 2364, 2372 (1982). To conduct the rigorous analysis required by Rule 23, courts must address class
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certification on a claim-by-claim basis, James v. City of Dallas, Texas, 254 F.3d 551, 563 (5th Cir. 2001), cert. denied, 122 S. Ct. 919 (2002), and must "identify the substantive law issues which will control the outcome of the litigation." Castano, 84 F.3d at 741.
Plaintiff seeks certification for a class consisting of
[a] 11 individuals subject to debt collection by LVNV Funding, LLC between November 8, 2012, and June 1, 2015, in connection with debt originally owned and purportedly purchased from Conn Appliances, Inc. ("Class Period") and transferred as a part of the November 8, 2012 assignment and sale by and among Conn Appliances, Inc., Sherman Originator III, LLC, Sherman Originator, LLC and LVNV Funding, LLC.3
Citing the declaration of his attorney, Sammy Ford, plaintiff argues that upon applying for credit at Conn, he signed a form contract pursuant to which Conn automatically assigned the debt to Conn Funding II, LP.4 Plaintiff argues that
[t]he documents purporting to show that LVNV Funding owned [his] debt revealed that no entity ever purchased [his] debt from Conn Funding II, LP. Instead, Conn Appliances sold [his] debt, along with the debt of thousands of others to Sherman Originator III, LLC on November 8, 2012. On the same date, through a transaction by and among Sherman Originator II, LLC, Sherman Originator, LLC, and LVNV Funding, LLC the latter came to be the owner of the purported debt from Conn Appliances. . . But as is clear from the transaction and
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the documents produced in this case thus far, there is no record that Conn Appliances ever owned the debt in the first place and accordingly that it could sell the debt to anyone else.
[Plaintiff's] case went to trial on the merits and he prevailed, after having hired counsel.
LVNV Funding, through Michael J. Scott PC, has filed 3,768 lawsuits against individuals whose debt they purported to purchase from Conn's Appliances. These lawsuits have been filed in counties throughout the state of Texas. As discovery has shown, LVNV Funding was not the assignee of the debt it was attempting to collect.5
Defendants oppose certification of the proposed class on grounds that plaintiff has failed to satisfy the requirements of either Rule 23(a) or Rule 23(b).6
A. Elements of Plaintiff's Claims
Asserting that defendants are debt collectors, plaintiff alleges that defendants have violated the federal Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, et seq., and the Texas Debt Collection Act ("TDCA"), Tex. Fin. Code § 392.001, et seq., by attempting to collect a debt they did not own and were not entitled to collect, and that defendants' actions injured him and others similarly situated.7
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1. Elements of a FDCPA Claim
Congress enacted the FDCPA to eliminate "abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." McMurray v. PreCollect, Inc., 687 F.3d 665, 668 (5th Cir. 2012) (citing 15 U.S.C. § 1692e). See also McCartney v. First City Bank, 970 F.2d 45, 47 (5th Cir. 1992) (recognizing that the FDCPA "is designed to protect consumers who have been victimized by unscrupulous debt collectors, regardless of whether a valid debt actually exists"). The FDCPA "prohibits 'debt collector[s]' from making false or misleading representations and from engaging in various abusive and unfair practices." Heintz v. Jenkins, 115 S. Ct. 1489, 1490 (1995). Among other things, the FDCPA prohibits debt collectors from using "any false, deceptive or misleading representation or means in connection with the collection of any debt," 15 U.S.C. § 1692e, including "the threat to take any action that legally cannot be taken," 15 U.S.C. 1692e(5).
The FDCPA's definition of the term "debt collector" includes a person "who regularly collects or attempts to collect, directly or indirectly, debts owed [to] . . . another." 15 U.S.C. § 1692a(6). The term "debt" is defined as
any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money,
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property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.
15 U.S.C. § 1692a(5). The term "consumer" is defined as "any natural person obligated or allegedly obligated to pay any debt." 15 U.S.C. § 1692(a)(3). The collection of actual or alleged obligations related...
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