Samuels v. Midland Funding, LLC
921 F. Supp. 2d 1321
S.D. Ala.2013Background
- Defendant is a debt collector buying bulk small debts and pursuing informal collection efforts, then filing state court actions if needed.
- Complaint alleges the information upon bulk purchase is insufficient to establish debt validity, ownership, or balance.
- Plaintiff alleges defendant intends to obtain default judgments or settlements without evidence, coercing payment by threat of litigation.
- Trial did occur with defendant present but without witnesses or documents to prove the debt; judgment favored plaintiff.
- Counts include FDCPA claims (Counts 1) and state-law claims for invasion of privacy, negligent/harmful hiring/supervision, negligence, malicious prosecution, and abuse of process.
- Defendant moves for judgment on the pleadings; court denies the motion, leaving open whether a federal FDCPA claim can lie here.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| FDCPA coverage of litigation conduct | FDCPA applies to collection actions in state court by debt collectors. | FDCPA does not reach state-law litigation strategy or mere lack of immediate proof. | FDCPA may apply to litigation conduct in collection actions. |
| Materiality of misrepresentation | Misrepresentation about intent to prove claims is material to a consumer's decision. | Misrepresentation not material under least sophisticated consumer standard. | Materiality under least-sophisticated-consumer standard assumed; misrepresentation likely material. |
| Compulsory counterclaim under Alabama Rule 13 | FDCPA-based claims are not compulsory counterclaims in state action and may be pursued here. | FDCPA claims are compulsory counterclaims in the collection action and should have been raised there. | Court declines to decide strict compulsory-counterclaim bars at this stage; issues survive in part. |
| Invasion of privacy viability | Continual calls and filing action without evidence to collect a debt invade privacy. | Routine debt collection communications do not show outrageous conduct; pleadings insufficient under Twombly. | Plaintiff plausibly states an invasion of privacy claim under Twombly. |
| Negligent hiring/supervision and agency | Managerial supervision of debt-collection agents caused tortious conduct. | No underlying wrongful conduct and firm is independent contractor. | Alive dispute; underlying torts remain viable; agency issue unresolved at pleadings stage. |
Key Cases Cited
- Heintz v. Jenkins, 514 U.S. 291 (Supreme Court, 1995) (FDCPA applies to lawyers in collection litigation)
- LeBlanc v. Unifund CCR Partners, 601 F.3d 1185 (11th Cir. 2010) (FDCPA covers collection actions; elections of remedies relevant)
- Harvey v. Great Seneca Financial Corp., 453 F.3d 324 (6th Cir. 2006) (Harvey paradigm for lack of evidence approach to FDCPA claim)
- Beler v. Blatt, Hasenmiller, Leibsker & Moore, LLC, 480 F.3d 470 (7th Cir. 2007) (Describes evidence issues in FDCPA claim)
- Donohue v. Quick Collect, Inc., 592 F.3d 1027 (9th Cir. 2010) (Materiality as an element in misrepresentation claims under FDCPA)
- Hahn v. Triumph Partnerships, LLC, 557 F.3d 755 (7th Cir. 2009) (Materiality standard for false/misleading statements)
- Miller v. Javitch, Block & Rathbone, LLP, 561 F.3d 588 (6th Cir. 2009) (Materiality of misrepresentations under FDCPA)
- Ex parte Tuscaloosa County, 796 So.2d 1100 (Ala. 2000) (Probable-cause/malice standard in state context)