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Debt Collector Successfully Argues that Wrong Address was a Mistake

Business Reply Mail.jpgA debt collector that once saw thousands of cases thrown out of the Maryland court system for not being licensed by the state was successful recently in fending off charges when it used the address of the parent company that wasn't licensed in the Free State to sue Maryland residents. The United States District Court for the District of Maryland dismissed a lawsuit brought against Midland Funding, ruling that the plaintiffs had failed to state a plausible claim for recovery under the legal theories they used.

Suzanne Hill, et al. v. Midland Funding, LLC et al. is a class action brought against Midland Funding and its attorneys, Lyons Doughty, Veldius, P.C., alleging violations of the Fair Debt Collection Practices Act (FDCPA), the Maryland Consumer Debt Collection Act (MCDCA) and the Maryland Consumer Protection Act (MCPA).

According to the complaint, each of the three plaintiffs was sued once or twice by Midland to collect unpaid credit card debt that the debt collector had purchased from Chase. The plaintiffs alleged that Midland had violated the law in two ways.

First, the plaintiffs said, all but one of the suits was filed using the wrong address for Midland by listing the out-of-state parent company. Apparently, the parent company is not a licensed debt collector under Maryland law. Under Maryland law, collection agencies operating in Maryland must have a license for each place of business from which they operate. However, Midland's service company, Midland Capital Management, was licensed as a debt collector at the address used in suit papers.

The plaintiffs contended that Midland's lawsuit listing an address at which it was not licensed violated the section of the FDCPA that prohibits threats to take an action that cannot be legally taken. In response, Midland argued that the plaintiffs had failed to state a claim on this basis because the incorrect address was not a "material" misrepresentation that violated the FDCPA.

Midland has run afoul of Maryland's licensing laws in the past. In 2011, the District Court of Maryland, dismissed 10,168 debt collection cases spanning from 2007 to 2010 under the terms of a settlement of a class action lawsuit against Midland Funding in U.S. District Court because Midland Funding was not then licensed as a debt collection agency by the Maryland Department of Licensing and Labor Regulation (DLLR).

The federal trial court agreed with Midland. "The plaintiffs' allegations that Midland acted as a collection agency in Maryland without a license and operated illegally in Maryland without the mandatory license are overstated. Midland was licensed - it merely listed an address in its initial filings at which it was not licensed, but a related company was, and it rectified this error, when it was discovered, by filing change of address forms with the court," the trial court said, describing it as a "technical error," not a false representation or the kind of abusive debt collection practice that the FDCPA was designed to prevent.

The plaintiffs' second contention was that the affidavits filed were "false" and "not made, as required, upon personal knowledge but was artfully and deceptively worded to falsely appear to be made upon personal knowledge," thus violating the FDCPA, MCDCA and the MCPA which forbids using false representations or deceptive means to collect a debt. The court said the plaintiffs were arguing that, because the affidavit might not be sufficient to withstand the requirements of the Maryland Rules, the affidavits violated debt collection law. "But," the court said, "the affidavits themselves, attached as exhibits to Midland's motion, do not actually contain any false statements. For example, the affiant in the first Hill collection case states only that she has personal knowledge of the records of the debt that Chase conveyed to Midland. The plaintiffs do not allege that this statement itself was false, and the court finds no reason to believe it was." The court also pointed out that Midland's affiants only certified that they had looked at the Chase business records acquired by Midland. "As plaintiffs' counsel noted at oral argument, these affidavits may be insufficient to support a judgment against any of the plaintiffs - and indeed the plaintiffs appear to have prevailed in Midland's suits against them where they have reached trial. But, the fact that the affidavits may be legally insufficient does not make them "false," the court said.

As a result, the federal trial court granted the motion to dismiss, ruling that the plaintiffs had failed to state a plausible claim under any legal theory.

It is worth noting that in a Chapter 7 or Chapter 13 bankruptcy, creditor collection efforts must stop upon the filing of the bankruptcy paperwork with the court.

Baltimore, Maryland-based Belsky, Weinberg & Horowitz has represented consumers in bankruptcy and debt collection cases for many years. Call our bankruptcy attorneys at 410-234-0100 or email us for a free consultation and let us help you to resolve your credit and debt problems through prompt and professional action that will make what otherwise would appear to be an impossible situation a very manageable one for you and your family!

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