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Bey v. Midland Credit Management, Inc.

United States District Court, D. Maryland, Southern Division

March 23, 2016

MALIK BEY, et al, Plaintiffs,
v.
MIDLAND CREDIT MANAGEMENT, INC., et al., Defendants.

MEMORANDUM OPINION

GEORGE J. HAZEL UNITED STATES DISTRICT JUDGE

In this action, which was removed to this Court from the Circuit Court for Prince George's County, Maryland, pro se Plaintiffs Malik Bey and Dawud Best, individually and on behalf of others similarly situated, (collectively. '"Plaintiffs*")[1] allege that Defendants Midland Credit Management. Inc. ("Midland Credit") and Midland Funding. LLC ("Midland Funding") (collectively, "Defendants" or "Midland") violated provisions of the Fair Debt Collection Practices Act ("FDCPA"). 15 U.S.C. § 1601 et seq.. the Fair Credit Reporting Act. 15 U.S.C. § 1681 et seq., the Maryland Consumer Debt Collection Act ("MCDCA"). Md. Code Ann., Com. Law § 14-101 el seq., and the Maryland Consumer Protection Act ("MCPA'"). Md. Code Ann.. Com. Law § 13-101 et seq. See ECF Nos. 1 & 2. Presently pending before the Court is Defendants' Motion to Compel Arbitration and to Stay Proceedings, or. In the Alternative, to Dismiss the Complaint.[2] ECF No. 12. The Motion is fully briefed and no hearing is necessary. See Loc. R. 105.6 (D. Md.). For the reasons that follow. Defendants' Motion is GRANTED.

I. BACKGROUND

According to the Complaint, Midland Funding "is one of the nation's largest buyers of unpaid debt" and it works with its "affiliate. Midland Credit.... to service accounts." ECF No. 2 at ¶ 3. Mr. Bey alleges that, in October 2012, Midland Credit "bought a debt from Citibank. N.A. in which [Mr. Bey] had an unpaid financial obligation." but the only information that Midland Credit had respecting the "alleged debt" was the name, address, last payment date, charge-off date,[3] and balance of the debt.[4] Id. at ¶¶ 4-5. The account had been charged off by Citibank on November 9. 2011. Id at ¶¶ 21, 26. On October 21. 2012. Midland Credit sent a letter to Mr. Bey that was captioned "NOTICE OF NEW OWNERSHIP AND PRE-LEGAL REVIEW" and stated that Midland Credit was considering forwarding the account to an attorney for possible litigation. Id. at ¶ 8 (emphasis in original). Midland Credit never did forward the account to an attorney, however, and Mr. Bey alleges that it only threatened to do so "as an unfair and deceptive collection method to scare [Mr. Bey] into paying the alleged debt." Id. at ¶ 9. Mr. Bey also alleges, inter alia, that Defendants seek to colled from him certain interest that Defendants added to the principal after the debt was charged off by Citibank but before it was sold to Midland Credit. See Id. at ¶¶ 11-26.

Mr. Best alleges that, on September 26, 2012, Midland Funding purchased a debt from T-Mobile PCS Holdings LLC ("T-Mobile"). in which, according to Midland Funding. Mr. Best had an unpaid financial obligation. Id. at ¶ 27. Once again, the only information that Midland Credit obtained respecting Mr. Best's alleged debt with T-Mobile was his name, address, last payment date, charge-off date, and balance. Id. at 28. After Midland Funding purchased the debt, a fee of $163.71 was added to the principal balance, but it is not clear whether that fee was a seller fee added by Defendants or if it was the result of accrued interest. Id. at ¶¶ 29-30. Mr. Best alleges that he contacted T-Mobile and asserted that "he was never contractually liable on the account and that he was not legally responsible for the alleged debt." Id. at ¶ 32. A T-Mobile representative told Mr. Best that T-Mobile could not verify who was contractually responsible for the debt, but that "all documents and/or information was provided to the debt purchaser and if the debt purchaser does not have the contract [between T-Mobile and Mr. Best], then a contract does not exist." Id. at ¶ 33. On February 27. 201 5. Mr. Best contacted Midland Funding to inquire about the contract and the basis of the $167.71 fee. and he was told that "Midland did not have any evidence that [Mr. Best] had a contract with T-Mobile[]" and that "Midland "had no idea' how the interest amount was assessed on the account." Id. ¶ 35.

Plaintiffs initiated this action in state court on March 2, 2015. alleging that Defendants' standard policy and practice is to "purchase no more than an electronic file of names, addresses and amounts owed on accounts" that are in default and that Midland Credit sends alleged debtors "dunning letters'" that threaten litigation if the debtors do not make prompt payment, regardless of whether Defendants may properly pursue litigation under a particular state's laws. Id. at ¶¶ 44-46. Plaintiffs also challenge Defendants" practice of adding interest to debts prior to the date on which Midland Funding claims to have purchased the debt, where the prior owner of the debt did not charge interest during that period. Id. at ¶¶ 48-54.

The present dispute centers on whether Midland, as the purported assignee of all right, title, and interest in Plaintiffs" accounts, may enforce arbitration provisions that were contained in the terms and conditions of the credit card agreement between Mr. Bey and Citibank or the terms and conditions regarding Mr. Best's cellular phone services account with T-Mobile. Both agreements required that all claims relating to each Plaintiffs account be resolved through binding arbitration, and that any such claim must be brought individually, rather than as a class.[5] See ECF No. 12-8 at 6-7: ECF No. 22 at 2-3. Defendants argue that, as the assignee of Mr. Bey's Citibank account and Mr. Best's T-Mobile account, it has the right to enforce the respective arbitration agreements and compel arbitration of the claims presented in this action on an individual, non-class basis. See ECF No. 12-1 at 10-11. 15-16.

In support of their Motion, Defendants attached certain exhibits purporting to show that the Plaintiffs" respective debts were properly transferred to Midland. In particular. Defendants attached the affidavit of Kyle Hannan. an operations manager for Midland Credit, who indicates that Midland Credit "is the servicer and authorized agent of Midland Funding . .. and manages the debt that Midland purchases." ECF No. 12-4 at ¶ 2. Mr. Hannan stated that, pursuant to an October 17. 2012 Bill of Sale and Assignment executed by Citibank. Citibank sold, assigned, and transferred all rights, title, and interest of a portfolio of charged-off accounts to Midland Funding. Id. at ¶ 5. One of those accounts was Mr. Bey's, and the transfer included documents relating to a Home Depot credit card account that he had opened. Id. at ¶ 6. The records from Citibank indicated that Mr. Bey opened the account on August 28. 2006. made purchases on the account, and made several payments on the account. Id. at ¶ 7. Those records also included the ''Card Agreement"-i.e., the terms and conditions-that was associated with the account. Id. at ¶ 8. Attached as exhibits to Mr. Hannan's affidavit are the bill of sale from Citibank and an accompanying affidavit of sale by the original creditor. Citibank: "an abstract of the true and correct data from the electronic file pertaining to the Bey Account." including the last four digits of his account number, the date the account was opened, the charge-off date and charge-off amount, the sale amount, and other relevant information; copies of Mr. Bey's credit card statements, and a copy of the Citibank Card Agreement. See Id. at ¶¶ 5-8; ECF Nos. 12-5. 12-6. 12-7, 12-8. Notably, the Card Agreement provided that "[t]his Agreement is binding on you unless you close your account within 30 days after receiving the card and you have not used or authorized use of the card." ECF No. 12-8 at 3.

With respect to Mr. Best's account. Mr. Hannan attested that, through a September 19. 2012 Bill of Sale and Assignment. T-Mobile sold and transferred Mr. Best's account in a portfolio of other charged-off accounts. ECF No. 20-1 at ¶ 5. As with Mr. Bey's account. Defendants attached a copy of that bill of sale, as well as "an abstract of the true and correct data from the electronic file pertaining to the Best Account, which was transferred by T-Mobile to Midland [Funding]." including the last four digits of his account number, the date the account was opened, the last payment date, the sale amount, and other relevant information. See ECF Nos. 12-9, 12-12. Those records also reflected that Mr. Best opened the account with T-Mobile on October 20, 2005. and that his last payment to T-Mobile was made on July 19. 2010. ECF No. 12-9; see also ECF No. 20-1 at¶¶ 7-8. Defendants also provided copies of the relevant terms and conditions that applied to Mr. Best's T-Mobile Account.[6]See ECF Nos. 12-10. 12-11. Like the Card Agreement related to Mr. Bey's Citibank account, the relevant terms and conditions applicable to Mr. Best's T-Mobile account provided that "[b]y activating or using our service. you agree to be bound by these terms and conditions . . . ." ECF No. 12-10 at 2.

Additionally. Mr. Hannan declared that this information was provided as a matter of his "own personal knowledge of the matters set forth [therein] and based on [his] review of the business records of [Midland Credit] and Midland [Funding]." See ECF No. 12-4 at ¶ 3: ECF No. 20-1 at ¶ 3. He indicated that the records "were made by. or from information transmitted by, a person with knowledge of the events described therein, at or near the time of the event described1' and. in particular, that such records "are kept in the ordinary course of the regularly conducted activity of such person and [Midland Credit]" and that he is "familiar with [Midland Credit's] and [Midland Funding's] record keeping systems." ECF No. 12-4 at ¶ 3; ECF No. 20-1 at ¶ 3. He further indicated that some of the business records he relied on "were created by businesses other than [Midland Credit] or Midland [Funding]" but that those records "have been incorporated into the business records of [Midland Credit] and Midland | Funding] and are relied upon by them in conducting their business." ECF No. 12-4 at 14; ECF No. 20-1 at ¶ 4.

II. STANDARD OF REVIEW

A court may compel arbitration under the Federal Arbitration Act (the "FAA") if the parties agreed in writing to arbitrate the dispute. Adkins v. Labor Ready, Inc., 303 F.3d 496. 500-01 (4th Cir. 2002); see also 9 U.S.C. § 2 ('[A]n agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid. irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract."). The FAA reflects the strong federal policy favoring arbitration. Moses H. Cone Mem'l Hasp. v. Mercury Constr. Corp.. 460 U.S. 1. 24-25, 103 S.Ct. 927 (1983). But "even though arbitration has a favored place, there still must be an underlying agreement between the parties to arbitrate." Adkins, 303 F.3d at 501. "Whether a party agreed to arbitrate a particular dispute is an issue for judicial determination to be decided as a matter of contract" Johnson v. Circuit City Stores. 148 F.3d 373. 377 (4th Cir.1998) (citing AT&T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 648-49. 106 S.Ct. 1415 (1986)).

Courts in this District have recognized that "motions to compel arbitration exist in the netherworld between a motion to dismiss and a motion for summary judgment." Shaffer v. ACS Gov't Servs.. Inc., 321 F.Supp.2d 682, 683 (D. Md. 2004); see also PC Const. Co. v. C 7/v of Salisbury, 871 F.Supp.2d 475, 477 (D. Md. 2012). But where the parties dispute the validity of an arbitration agreement, "[m]otions to compel arbitration ... are treated as motions for summary judgment."1 Rose v. New Day Fin., LLC, 816 F.Supp.2d 245. 251 (D. Md. 201 1 ).[7]Therefore, such motions "shall [be] grant[ed] . . . if 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). In considering the motion, "the judge's function is not... to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby. Inc.. 477 U.S. 242, 249. 106 S.Ct. 2505 (1986). Moreover, the Court must "view the evidence in the light most favorable to . . . the nonmovant, and draw all reasonable inferences in h[is] favor." Dennis v. Columbia Colleton Med. Ctr.. Inc., 290 F.3d ...


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