Consumer Finance Litigation

In Suzanne Hill, et al. v. Midland Funding, LLC, et al., No. 1:12-cv-02397-CCB (D.MD. Apr. 16, 2013), Plaintiffs brought a putative class action against Midland Funding LLC (Midland) alleging violations of the Fair Debt Collection Practices Act (FDCPA), the Maryland Consumer Debt Collection Act (MCDCA) and the Maryland Consumer Protection Act (MCPA). In support of their claims, Plaintiffs contend that Midland violated the FDCPA when it filed collection law suits against them listing the address of its parent company, an address at which the stated plaintiff in each lawsuit was not a licensed debt collector under Maryland law. Plaintiffs specifically claim this conduct violated 15 U.S.C. § 1692e(5), which prohibits "[t]he threat to take any action that cannot legally be taken…[,]" and § 1692f, which prohibits any "unfair or unconscionable means" of collection debt. Additionally, Plaintiffs sought damages against Midland for the alleged conduct of filing "false" affidavits and affidavits that were "not made, as required, upon personal knowledge but was artfully and deceptively worded to falsely appear to be made upon personal knowledge." Plaintiffs claim these affidavits violated § § 1692e(5), 1692f and 1692e(10), which prohibits "[t]he use of any false representation or deceptive means to collect or attempt to collect any debt…" Plaintiffs further assert the affidavits violated the MCDCA and MCPA. The Court rejected Plaintiffs argument that Midland's listing an incorrect address on the lawsuits amounted to a "false representation" under § 1692e. It expressly stated "Midland's filing of each lawsuit was not a 'threat to take…action that cannot legally be taken' because Midland, and its servicer whose address was used, were both licensed and authorized to file suit in Maryland against the plaintiffs…" In concluding that Midland's inadvertent use of the address of its servicer was not a plausible violation of § 1692e(5), the Court emphasized a technical error is not a "false representation" and does not involve "abusive debt collection…" Regarding § 1692f, the Court found that the listing of an incorrect address or the use of potentially deficient affidavits, does not qualify as "unfair" or "unreasonable" behavior, which this statute was intended to prevent. Following similar logic, and after concluding that the alleged violative affidavits did not contain any false statements, since they were based on records that the original creditor conveyed to Midland and there was no evidence to indicate otherwise. In its analysis, the Court recognized that filing truthful affidavits which may for some other reason be considered insufficient to obtain a default judgment does not constitute a misrepresentation or other falsehood. Therefore, the Court held that Plaintiffs failed to state a cause of action regarding this alleged conduct under § 1692e and § 1692f. In a brief analysis regarding the MCDCA and MCPA, the Court also rejected Plaintiffs' claims under those theories. Finding specifically that the conduct alleged did not undermine Midland's right to seek repayment of debt Midland reasonably believed it was legally owed. The Court granted Midland's Motion to Dismiss all of Plaintiffs' claims. For more information on consumer finance litigation topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.