Stratton v. Portfolio Recovery Associates, LLC
706 F. App'x 840
| 6th Cir. | 2017Background
- Stratton opened a GE credit‑card account; debt charged off Dec. 19, 2008 (balance $2,630.95); contractual rate 21.99%.
- Portfolio purchased the receivable from GE in 2010 and sued Stratton in Kentucky in 2012 claiming $2,630.95 plus prejudgment interest at 8% (Kentucky statutory rate) and post‑judgment 12%.
- Stratton sued under the Fair Debt Collection Practices Act (FDCPA), alleging Portfolio had no contractual or legal right to collect interest and thus unlawfully attempted to collect interest in violation of 15 U.S.C. §§ 1692(e), (f).
- On remand Portfolio produced the original GE credit‑card agreement containing a Utah choice‑of‑law clause; district court admitted the agreement under the business‑records exception and found Utah law governed.
- The district court held Portfolio, as assignee, stepped into GE’s contractual rights including the Utah choice‑of‑law clause; under Utah law Portfolio could pursue statutory prejudgment interest, so no FDCPA violation.
- The Sixth Circuit affirmed, concluding (1) the agreement was properly admitted, (2) Portfolio acquired GE’s contractual rights as assignee, (3) the Utah choice‑of‑law clause governs, and (4) Stratton’s FDCPA claims fail under Utah law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of the Credit Card Agreement | Agreement is hearsay and unreliable; should be stricken. | Admissible under Fed. R. Evid. 803(6) as business record; supported by custodian affidavit. | Admitted under business‑records exception; affidavit sufficed. |
| Scope of Assignment | Portfolio bought only "receivables," not GE’s contractual rights; therefore cannot invoke contract terms. | Forward Flow/Bill of Sale transferred rights, title, and interest in receivables; assignee takes debtor–creditor contract terms. | Portfolio is GE’s assignee and acquired contractual rights/obligations. |
| Choice of law | Kentucky law governs; Utah choice clause should not control. | Credit card agreement contains a Utah choice‑of‑law clause; enforceable and governs disputes. | Utah law applies; clause valid (substantial relation and no public‑policy bar). |
| FDCPA liability for collecting interest | Under Kentucky law assignee could not collect statutory interest; FDCPA claim plausible. | Under Utah law Portfolio could collect statutory prejudgment interest; hence no FDCPA violation. | Because Utah law governs and permits interest collection, Portfolio did not violate the FDCPA; summary judgment for Portfolio affirmed. |
Key Cases Cited
- Stratton v. Portfolio Recovery Assocs., LLC, 770 F.3d 443 (6th Cir. 2014) (prior panel decision addressing Kentucky law and pleading sufficiency)
- Melendez‑Diaz v. Massachusetts, 557 U.S. 305 (2010) (on reliability concerns for documentary evidence prepared for litigation)
- New Hampshire v. Maine, 532 U.S. 742 (2001) (judicial estoppel doctrine and its prerequisites)
- United States v. McDaniel, 398 F.3d 540 (6th Cir. 2005) (standard for admitting business records under Rule 803(6))
- Miller Truck Lines, LLC v. Central Refrigerated Serv., Inc., 781 F. Supp. 2d 488 (W.D. Ky. 2011) (choice‑of‑law principles applying contractual forum/choice clauses)
- Sears, Roebuck & Co. v. Lea, 198 F.2d 1012 (6th Cir. 1952) (assignee stands in assignor's shoes; contract rights transfer on assignment)