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Melton v. Select Portfolio Services, Inc.

United States District Court, D. Maryland

December 12, 2019

VELMA M. MELTON, Plaintiff,
SELECT PORTFOLIO SERVICING, INC. and STERLING JEWELERS, INC. dba Jared-Galleria of Jewelry, Defendants.



         Plaintiff Velma M. Melton, a Maryland citizen and resident, filed suit against Defendants Select Portfolio Servicing, Inc. ("SPS"), Sterling Jewelers, Inc. d/b/a Jared-Galleria of Jewelry ("Sterling"), Prestige Financial Services, Inc. ("Prestige"), Experian Information Solutions, Inc. ("Experian"), Equifax Information Services, LLC ("Equifax"), and Trans Union, LLC ("Trans Union"), alleging that SPS, Sterling, and Prestige reported inaccurate information to consumer reporting agencies Experian, Equifax, and Trans Union, failed to conduct reasonable investigations into her disputes, and failed to correct their internal records for reporting credit information, in violation of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681-1681x (2018). Melton also asserts a common law tort claim of defamation alleging that SPS, Sterling, and Experian published false and misleading information in her credit report. Presently pending before the Court is Sterling's Motion to Dismiss. Upon review of the submitted materials, the Court finds that no hearing is necessary. See D. Md. Local R. 105.6. For the reasons set forth below, the Motion will be DENIED.


         For purposes of deciding this Motion, the Court accepts the facts asserted in Melton's Second Amended Complaint as true. On or about April 13, 2015, Melton, a resident of Hyattsville, Maryland, purchased a piece of jewelry from the Jared-Galleria of Jewelry retail store in Waldorf, Maryland ("the Jared Store"). The Jared Store is owned by Sterling, a Delaware corporation with its principal place of business in Ohio. Sterling has approximately 50 brick-and-mortar retail jewelry stores within Maryland, including the Jared Store. Sterling advertises extensively and directly to Maryland consumers through radio, television, and internet commercial solicitations, and it uses the Maryland courts and judicial system to enforce its contracts with Maryland residents, including by filing approximately 90 lawsuits against Maryland residents in Maryland courts since April 2017.

         When Melton bought jewelry from Sterling at the Jared Store, she financed the purchase by opening a line of credit. Specifically, while at the Jared Store, Melton signed a financing contract with Sterling requiring Melton to pay the purchase price plus interest over a period of time. Due to financial difficulties, in January 2017, Melton fell behind on the payments required by the contract. In order to resolve the outstanding payments, Sterling representatives called Melton twice in Maryland to request and arrange a payment. Sterling eventually made a settlement offer to Melton which would allow her to pay off the debt for an amount less than what was due. After Sterling sent a letter to Melton containing that settlement offer in writing, Melton accepted the offer and authorized Sterling to debit the agreed amount from her Navy Federal Credit Union account, located in Maryland. Sterling received the payoff amount from that account on March 29, 2017.

         After making this payment in satisfaction of the debt, Melton discovered that Sterling was inaccurately reporting an unpaid charge-off balance for the credit account to consumer reporting agencies Experian, Equifax, and Trans Union ("the CRAs"). In the two years before she filed the present action, Melton repeatedly requested and received copies of her credit report, as compiled and maintained by the CRAs, and saw that each credit report contained errors, including statements that Melton continued to have an unpaid charge-off balance relating to the debt to Sterling. Melton sent letters to the CRAs disputing the inaccuracies regarding the Sterling credit account, including in June 2017 and November 2018. Melton alleges that the CRAs forwarded at least some notice of her disputes to Sterling, but Sterling failed to conduct a reasonable investigation into her disputes or correct its flawed reporting. Instead, Melton received correspondence back from the CRAs stating that Sterling had verified that the status of the credit account was being reported accurately.

         Separately, Melton sent at least five dispute letters to Sterling over a two-year period, but Sterling continued to refuse to stop reporting the erroneous charge-off status to the CRAs. As a result, Melton's credit report effectively reflects that she was 180 days delinquent on the Sterling credit account, even though she was only approximately 60 days past due on the debt at the time of the settlement. As a result of these derogatory items appearing on her credit report, Melton was unable to obtain additional credit she sought.

         On January 22, 2019, Melton filed the present case. With leave of the Court, Melton filed an Amended Complaint on March 27, 2019 and a Second Amended Complaint on June 21, 2019. The CRAs and Prestige have since been voluntarily dismissed from this action after settling individually with Melton. As relevant here, in Melton's Second Amended Complaint, she alleges that Sterling violated the FCRA, specifically, 15 U.S.C. § l68ls-2(b), and committed the tort of defamation. Alleging that she has suffered "financial loss, expenditure of time and resources, mental anguish, humiliation, embarrassment and emotional distress," Melton seeks actual damages, statutory damages, punitive damages, attorney's fees, and costs. Second Am. Compl. ¶¶ 106, 134, ECF No.47.


         Sterling has moved for dismissal of the Second Amended Complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2): Sterling asserts that it is not subject to personal jurisdiction in Maryland because Melton has failed to allege sufficient facts demonstrating that the exercise of personal jurisdiction over it comports with either Maryland's long-arm statute or the Due Process Clause of the Fourteenth Amendment to the United States Constitution. Specifically, Sterling asserts that the relevant provisions of Maryland's long-arm statute, Md. Code Ann., Cts. & Jud. Proc. § 6-103(b)(1)-(b)(5) (2013), do not authorize personal jurisdiction because the conduct giving rise to Melton's claims occurred entirely outside of Maryland, and because Sterling's contacts with Maryland are "unrelated and outside of the causal link to her FCRA suit." Mot. Dismiss at 2, ECF No. 31-1. Sterling further asserts that the Court lacks specific jurisdiction over it because its Maryland contacts are unrelated to the cause of action, and that it lacks general jurisdiction over it because Maryland is not Sterling's state of incorporation or principal place of business, and Sterling is not otherwise "at home" in Maryland. Id. at 5.

         I. Legal Standards

         It is the plaintiffs burden to establish personal jurisdiction. See Mylan Labs. Inc. v. Akzo, N.V., 2 F.3d 56, 59-60 (4th Cir. 1993). To carry that burden at the pleading stage, the plaintiff need only make a prima facie showing that a defendant is properly subject to this Court's jurisdiction. Id. In evaluating the plaintiffs showing, this Court must accept the plaintiffs allegations as true, and it must draw all reasonable inferences and resolve any factual conflicts in the plaintiffs favor. Id. The Court may consider evidence outside the pleadings in resolving a Rule 12(b)(2) motion. CoStar Realty Info., Inc. v. Meissner, 604 F.Supp.2d. 757, 763-64 (D. Md. 2009). A district court's exercise of personal jurisdiction over a non-resident defendant must satisfy both the long-arm statute of the state in which the court sits and the Due Process Clause of the Fourteenth Amendment. Carefirst of Md., Inc. v. Carefirst Pregnancy Centers, Inc., 334 F.3d 390, 396 (4th Cir. 2003).

         II. Due Process Clause

         Under the Due Process Clause, personal jurisdiction may be exercised over a party upon a showing that the party has sufficient "minimum contacts" with the forum state such that "maintenance of the suit [in this state] does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). In assessing the presence of minimum contacts, courts distinguish between two types of personal jurisdiction: general and specific. General, or all-purpose, jurisdiction offers a path to personal jurisdiction when the suit brings "causes of action arising from dealings entirely distinct from" the defendant's contacts with the forum. Daimler AG v. Bauman,134 S.Ct. 746, 754 (2014) (quoting Int'l Shoe Co. v. Washington,326 U.S. 310, 318 (1945)). Specific, or case-linked, jurisdiction provides ...

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