Istvan v. Portfolio Recovery Associates LLC
MEMORANDUM OPINION AND ORDER DENYING Istvan's 42 First MOTION in Limine, without prejudice to Istvan's right to raise objections to evidence pursuant to the Federal Rules of Evidence at the appropriate time, as further set out in order. Signed by Honorable Judge Charles S. Coody on 6/20/14. (djy, )
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
MARK E. ISTVAN,
CIVIL ACT. NO. 2:13cv539-CSC
MEMORANDUM OPINION AND ORDER
Before the court is the motion in limine (Doc. 42) filed by the Plaintiff, Mark E.
Istvan. Having considered the motion, and for the reasons stated in this memorandum
opinion and at oral argument on the motion on June 19, 2014, the court concludes that the
motion is due to be denied.
I. Facts and Procedural History
Defendant Portfolio Recovery Associates LLC (“PRA”) is a company that purchases
delinquent debts from creditors and then attempts to collect those debts from the debtors. By
a contract effective November 1, 2011, and which continued in effect until March 2012, PRA
purchased a bundle of debts from HSBC Bank and various affiliated corporate entities.
(Doc. 51-3). Among those debts, allegedly, was a debt attributed to the Plaintiff, Mark E.
Istvan. Istvan contends that the debt was not his.
Istvan alleges that, in January 2013, PRA contacted him at work and at home
attempting to collect the debt. On at least one occasion, according to Istvan, PRA threatened
to contact Istvan’s supervisor about the debt. Istvan disputed the debt. PRA allegedly
reported the debt to Experian credit bureau. (Doc. 14 ¶ 6).
On January 28, 2013, PRA filed a collection action against Istvan in the Montgomery
County Circuit Court. Portfolio Recovery Associates, LLC v. Mark E. Istvan, Case No. CV
2013-9000157.00, case action summary sheet. On March 4, 2013, Istvan, acting pro se, filed
an answer denying that he owed the debt and requesting verification of the debt. Id., March
4, 2013 document titled “Response to Complaint.” On May 13, 2013, PRA filed a voluntary
motion to dismiss the case with prejudice. Id., May 13, 2013 Motion to Dismiss. The court
granted the motion on June 11, 2013. Id., June 11, 2013 Order.
On July 26, 2013, Istvan filed a complaint in this court alleging that, in pursuing the
debt and filing the state court collection lawsuit, PRA violated the Fair Debt Collection
Practices Act (FDCPA) and committed several state law torts. Istvan alleges that, as a result
of the allegedly baseless state court lawsuit, he was forced to spend time and money to
defend the case. (Doc. 14 ¶¶ 21-22).
On March 31, 2014, in response to a subpoena to Istvan’s bank, PRA received bank
records showing that, from February 17, 2009 to February 12, 2011, Istvan made 34 separate
payments on the debt. (Doc. 50 II. ¶¶ 8-9). PRA intends to introduce the records to show
that Istvan owed the debt and that PRA did not improperly collect, report, or file suit on the
debt. (Doc. 50 II. ¶ 9). In addition, PRA plans to introduce documents provided by the
original creditor that demonstrate that Istvan owed the debt. (Doc. 50 II. ¶¶ 8-9 n.2).
On April 14, 2014, Istvan filed a “motion in limine” (Doc. 42). On April 21, 2014,
the court denied the motion in limine as premature. (Doc. 44). However, upon the parties’
joint request that the motion in limine be considered on its merits, the court vacated its order
denying the motion as premature, set a briefing schedule, and held oral argument on the
motion. (Docs. 47, 48, 62).
Res Judicata and Collateral Estoppel
Istvan argues that, because the state court (allegedly) dismissed the collection action
on the merits, the doctrines of res judicata and collateral estoppel preclude PRA from
introducing any of the following in this case:
evidence or argument that Istvan owed the debt;
evidence or argument that Istvan ever made payments on the debt;
evidence that Istvan was contributorily negligent.
Because the state court judgment was rendered by the Montgomery Circuit Court, the
court must look to Alabama law to determine the preclusive effect of the state court
judgment. Brown v. R.J. Reynolds Tobacco Co., 611 F.3d 1324, 1331 (11th Cir. 2010). As
the parties both recognize, under Alabama law, neither claim preclusion nor issue preclusion
are applicable in the absence of a prior final judgment on the merits. Martin v. Cash Express,
Inc. 60 So. 3d 236, 250 (Ala. 2010) (holding that res judicata applies when a “final judgment
on the merits” was entered in a prior action by a court of competent jurisdiction in a case
involving the same cause of action between substantially identical parties); Shelby County
Planning Com'n v. Seale, 564 So. 2d 900, 901-02 (Ala. 1990) (holding that issue preclusion
applies where the identical issue was actually litigated and necessarily determined by a prior
“valid, final” judgment “on the merits of the claim”).
Under Alabama law, “a dismissal without prejudice does not constitute an
adjudication on the merits,” but “a dismissal with prejudice does.” Alfa Life Ins. Corp. v.
Jackson, 906 So. 2d 143, 155 (Ala. 2005). Because the parties did not provide this court
with a copy of an order from the Montgomery Circuit Court expressly stating whether the
collections action was dismissed with prejudice, the court takes judicial notice 1 of the
contents of the state court record in that action. See United States v. Jones, 29 F.3d 1549,
1553 (11th Cir. 1994) (“[A] court may take notice of another court’s order . . . for the limited
purpose of recognizing the ‘judicial act’ that the order represents or the subject matter of the
litigation.”). According to the records of the Montgomery Circuit Court, after Istvan filed
an answer to the complaint, PRA voluntarily moved the court to dismiss the case with
prejudice. At 5:55 p.m. on June 11, 2013, PRA’s motion to dismiss was “GRANTED” by
a separate written order that did not specify whether the case was dismissed with or without
prejudice. According to the state court case action summary sheet, at 8:43 a.m. on June 12,
At oral argument on June 19, 2014, the parties were presented with a copy of the case action
summary sheet and the June 11, 2013 Order in Portfolio Recovery Associates, LLC v. Mark E. Istvan, Case
No. CV 2013-9000157.00. The parties acknowledged the authenticity of those documents and, further, both
acknowledged that the state court collections action was dismissed without prejudice.
2013, the case was assigned a status of “disposed by (dismissed without prejudice)” by
operation of the June 11 order.
As noted, the Montgomery Circuit Court’s June 11, 2013 Order does not specify
whether the case was dismissed with or without prejudice. However, the June 11, 2013 Order
is a “separate written document,” which, although lacking the usual formal adjudicatory
language, would constitute a “final order” of dismissal under the Alabama Rules of Civil
Procedure. Ala R. Civ P. 54(a); Ala. R. Civ. P. 58(a)-(b). Because PRA filed its voluntary
motion to dismiss after Istvan filed an answer, and because the motion to dismiss was not
signed by both parties, the motion cannot be construed as a notice or stipulation of dismissal
under Ala. R. Civ. P. 41(a)(1). Rather, the June 11, 2013 order of dismissal was entered
pursuant to Ala. R. Civ. P. 41(a)(2), which states:
Except as provided in paragraph (1) of this subdivision of this rule, an action
shall not be dismissed at the plaintiff’s instance save upon order of the court
and upon such terms and conditions as the court deems proper. . . . Unless
otherwise specified in the order, a dismissal under this paragraph is without
Therefore, because the June 11, 2013 Order does not specify otherwise, the state court
collections action was unambigously dismissed without prejudice, Ala. R. Civ. P. 41(a)(2),
as is duly reflected on the state court case action summary sheet. Thus, under Alabama law,
the Montgomery, Alabama, Circuit Court’s judgment in the collections action has no
preclusive effect at all. Hoppe v. Slovik, 675 So. 2d 888, 889 (Ala. Civ. App. 1996) (“The
district court’s order [of dismissal under Rule 41(a)(2)] did not specify that the action was
dismissed with prejudice. Therefore, the dismissal was without prejudice, and the doctrine
of res judicata d[oes] not apply.”); see also Ex parte Sealy, L.L.C., 904 So. 2d 1230, 1236
(Ala. 2004) (“‘[T]he effect of a voluntary dismissal without prejudice is to render the
proceedings a nullity and leave the parties as if the action had never been brought.’” (quoting
In re Piper Aircraft Distrib. Sys. Antitrust Litig., 551 F.2d 213, 219 (8th Cir. 1977)).
This court does not have the authority to revisit the terms of the Montgomery Circuit
Court’s order of dismissal.2 Rather, under the Full Faith and Credit Act, 28 U.S.C. § 1738,
this court must give the judgment of the Montgomery Circuit Court the same preclusive
effect as that judgment would be afforded by the courts of the State of Alabama. Kahn v.
Smith Barney Shearson Inc., 115 F.3d 930, 933 (11th Cir. 1997). Because Alabama courts
would not give that judgment preclusive effect, the judgment cannot serve as the basis for
res judicata or collateral estoppel in this court.
Istvan argues that PRA must be precluded from offering evidence that he owed or
made payments on the debt because such evidence constitutes inadmissible, irrelevant
“[F]ederal district courts have ‘no authority to review final judgments of a state court’” because
“that task is reserved for state appellate courts or, as a last resort, the United States Supreme Court.’”
Lozman v. City of Riviera Beach, Fla., 713 F.3d 1066, 1071-72 (11th Cir. 2013) (quoting Nicholson v. Shafe,
558 F.3d 1266, 1271 (11th Cir. 2009) and Casale v. Tillman, 558 F.3d 1258, 1260 (11th Cir. 2009)); see also
Bevill v. Owen, 364 So.2d 1201, 1204 (Ala. 1979) (holding that the proper procedure for challenging a Rule
41 judgment is to file a postjudgment motion in the state trial court, followed (if necessary) by a notice of
appeal). But see Brown v. R.J. Reynolds Tobacco Co., 611 F.3d 1324, 1330-31 (holding that the RookerFeldman doctrine does not apply to a federal case brought by the winner of the state court action).
hearsay, and because the danger of unfair prejudice and confusion of the issues substantially
outweighs any probative value the evidence may have. See Fed. R. Evidence 402, 403, 803.
The court finds that these objections are premature and will overrule them without prejudice
to Istvan’s right to renew them at the appropriate time.
Accordingly, it is
ORDERED that Istvan’s motion in limine (Doc. 42) be and is hereby DENIED,
without prejudice to Istvan’s right to raise objections to evidence pursuant to the Federal
Rules of Evidence at the appropriate time.
Istvan is foreclosed, however, from arguing that res judicata or collateral estoppel
apply to the judgment of the Montgomery Circuit Court in Portfolio Recovery Associates,
LLC v. Mark E. Istvan, Case No. CV 2013-9000157.00.
Done this 20th day of June, 2014.
/s/Charles S. Coody
CHARLES S. COODY
UNITED STATES MAGISTRATE JUDGE
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