Hamilton v. Midland Funding LLC et al
MEMORANDUM OPINION that Midland's 35 Motion for Summary Judgment is due to be granted. In light of this, Midland's 50 Motion to Strike is termed as MOOT. Signed by Judge Abdul K Kallon on 1/30/2017. (YMB)
2017 Jan-30 PM 02:11
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
MIDLAND FUNDING LLC, et al.,
Civil Action Number
Thera Hamilton brings this action against Midland Funding, LLC and
Midland Credit Management, Inc. (collectively “Midland”), alleging claims under
the Fair Debt Collection Practices Act (the “FDCPA”), 15 U.S.C. §1692, et seq.,
and Alabama common law. Hamilton contends that Midland filed a purportedly
baseless collections suit against her for a debt she contends she either did not owe
or was time-barred. Doc. 1. Midland has moved for summary judgment, doc. 35,
and its motion is fully briefed and ripe for review. Docs. 38, 47, 49. For the reasons
below, Midland’s motion is due to be granted.
SUMMARY JUDGMENT STANDARD OF REVIEW
Under Rule 56(a) of the Federal Rules of Civil Procedure, summary
judgment is proper “if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” “Rule 56
mandates the entry of summary judgment, after adequate time for discovery and
upon motion, against a party who fails to make a showing sufficient to establish the
existence of an element essential to that party’s case, and on which that party will
bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986) (alteration in original). The moving party bears the initial burden of proving
the absence of a genuine issue of material fact. Id. at 323. The burden then shifts to
the nonmoving party, who is required to “go beyond the pleadings” to establish
that there is a “genuine issue for trial.” Id. at 324 (citation and internal quotation
marks omitted). A dispute about a material fact is genuine “if the evidence is such
that a reasonable jury could return a verdict for the nonmoving party.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The court must construe the evidence and all reasonable inferences arising
from it in the light most favorable to the non-moving party. Adickes v. S. H. Kress
& Co., 398 U.S. 144, 157 (1970); see also Anderson, 477 U.S. at 255 (all
justifiable inferences must be drawn in the non-moving party’s favor). Any factual
disputes will be resolved in the non-moving party’s favor when sufficient
competent evidence supports the non-moving party’s version of the disputed facts.
See Pace v. Capobianco, 283 F.3d 1275, 1276, 1278 (11th Cir. 2002) (a court is
not required to resolve disputes in the non-moving party’s favor when that party’s
version of events is supported by insufficient evidence). However, “mere
conclusions and unsupported factual allegations are legally insufficient to defeat a
summary judgment motion.” Ellis v. England, 432 F.3d 1321, 1326 (11th Cir.
2005) (per curiam) (citing Bald Mountain Park, Ltd. v. Oliver, 863 F.2d 1560,
1563 (11th Cir. 1989)). Moreover, “[a] mere ‘scintilla’ of evidence supporting the
opposing party’s position will not suffice; there must be enough of a showing that
the jury could reasonably find for that party.” Walker v. Darby, 911 F.2d 1573,
1577 (11th Cir. 1990) (citing Anderson, 477 U.S. at 252)).
III. FACTUAL ALLEGATIONS
Midland is a purchaser of debt other creditors have charged off 1 and works
with the debt sellers to request and obtain information that will support its attempts
to subsequently collect the debts. Once it has this information, Midland sends the
accounts to its various law firms to file collection suits on its behalf. See generally
doc. 40-10. Midland requires its law firms to know the evidentiary and procedural
rules in the states in which they operate, and law firms are responsible for “the
accuracy of information within the suit (and affidavits), . . . [including] accurate
statements of amounts due (principal and interest). . . .” Doc. 40-10 at 20–21. To
assist the law firms in prosecuting these suits, Midland maintains a document
portal, in which media “is either available for immediate download or available for
A “charge off” occurs when a creditor determines it is unlikely to collect a debt and closes the
account to further use. Because the debt is still owed, a charged off account may still be reflected
on a credit report.
Firm request.” Doc. 40-10 at 27. Midland also has procedures by which a law firm
may request a “live witness,” if necessary. Doc. 40-10 at 21.
In 2005, Hamilton opened a credit card account at Circuit City through
Chase Bank USA, N.A. 2 Doc. 40-1 at 20 (Hamilton stating: “I do recall opening
the account.”). Hamilton made periodic payments on this account until April 2009.
See generally docs. 40-3 and 40-8; see also doc. 40-1 at 20 (Hamilton stating: “I
made payments on my Circuit City account.”). When Hamilton ceased making
payments, the account had a balance of $2,334.61, but due to accumulated late
fees, the balance reached $2,960.10 by December 2009. Doc. 40-3 at 12, 19. Chase
charged off the debt on December 31, 2009. Id. at 19 (notation on credit card
statement that the outstanding balance was scheduled to be written off as a bad
In July 2011, Midland purchased a pool of charged-off accounts from Chase,
including Hamilton’s account. Docs. 40-4; 40-7 at 47–52. Thereafter, Midland
placed Hamilton’s account with Holloway and Moxley, LLP, an Alabama law
firm, for collection. As a result, on April 10, 2014, the law firm filed suit in
Jefferson County Small Claims Court to recover the full amount due on the Chase
account. Doc. 48-6.
Chase later converted this account to a Best Buy account in 2014. Doc. 40-1 at 27.
In Hamilton’s answer, she denied responsibility for the debt claiming that
she “never had an account with Midland Funding, LLC.” Doc. 40-9. As a result,
Holloway and Moxley sent Hamilton the Chase account number to clarify the debt
at issue and to provide her with the opportunity to enter into a consent judgment.
Doc. 40-7 at 60–61. Holloway and Moxley also included the relevant Chase
account statements, as well as an affidavit from a Midland employee explaining
that Midland purchased the charged-off account from Chase. Doc. 40-7 at 60–77.
When Hamilton declined to sign a consent judgment, the case proceeded to trial,
where Holloway and Moxley presented the affidavit of a Midland employee,
chain-of-title documentation, and Hamilton’s monthly Chase account statements in
support of their case. Doc. 40-7 at 6 (stating that they did not present a live witness
because “Small Claims Rule J permits that Court to accept affidavit testimony in
the place of live witness testimony.”). The court ruled in Hamilton’s favor. Doc.
Hamilton subsequently filed this current lawsuit, in which she pleads nine
counts challenging Midland’s decision to file the collection suit against her. The
court addresses these claims, beginning with subsection A with Count I, which
pleads violations of section 1692d of the FDCPA. Next, in subsection B, the court
addresses Counts II–VI, which plead violations of sections 1692e, 1692e(2),
1692e(5), 1692e(8), 1692e(10). Finally, in subsection C, the court will address
Count XII, Hamilton’s remaining state law claim of malicious prosecution. See
docs. 47 at 30 n. 18 (stating that she is abandoning her claims for negligent hiring
and wanton and malicious conduct); 21 (August 21, 2015 Order disposing of
counts VII, VIII, and IX).
Congress passed the FDCPA to “eliminate abusive debt collection practices
by debt collectors, to insure that those debt collectors who refrain from using
abusive debt collection practices are not competitively disadvantaged, and to
promote consistent State action to protect consumers against debt collection
abuses.” 15 U.S.C. § 1692(e). The FDCPA prohibits a debt collector from using
“any false, deceptive, or misleading representation or means in connection with the
collection of any debt.” 15 U.S.C. § 1692e. The statute is “remedial . . . and its
provisions are to be liberally construed in favor of consumer debtors,” Bandy v.
Midland Funding LLC, 2013 WL 210730, * 5 (S.D. Ala. Jan. 18, 2013) (citing
Johnson v. Riddle, 305 F.3d 1107, 1117 (10th Cir. 2002); Mammen v. Bronson &
Migliaccio, LLP, 715 F. Supp. 2d 1210, 1213 (M.D. Fla. 2009)), utilizing the “least
sophisticated consumer” standard, Jeter v. Credit Bureau, Inc., 760 F.2d 1168,
1174–75 (11th Cir. 1985). With these principles in mind, the court turns to
Hamilton’s contentions below.
A. Alleged Violation of 15 U.S.C. § 1692d (Count I)
Hamilton alleges that Midland violated § 1692d of the FDCPA when it filed
its collection suit because “without ownership [of the debt], the [underlying]
lawsuit is baseless and 1692d has been violated.” Doc. 47 at 17. The FDCPA
prohibits debt collectors from “engag[ing] in any conduct the natural consequence
of which is to harass, oppress, or abuse any person in connection with the
collection of a debt.” 15 U.S.C. § 1692d.3 By Hamilton’s own contention,
Midland’s filing of the collection lawsuit is the harassing and oppressing behavior.
However, “the filing of a lawsuit does not have the natural consequence of
harassing or oppressing a debtor,” Milkjovic v. Shafritz and Dinkin, P.A., 791 F.3d
1291, 1305 (11th Cir. 2015), and, without more, “the filing of a lawsuit is not
within the scope of prohibited activities that § 1692d contemplates,” Pack v.
Unifund CCR Partners, G.P., 2008 WL 686800 (M.D. Fla. Mar. 13, 2008).
The statute also proscribes the following actions:
(1) The use or threat of use of violence or other criminal means to harm the physical
person, reputation, or property of any person.
(2) The use of obscene or profane language or language the natural consequence of which
is to abuse the hearer or reader.
(3) The publication of a list of consumers who allegedly refuse to pay debts, except to a
consumer reporting agency or to persons meeting the requirements of section 1681a(f) or
1681b(3) of this title.
(4) The advertisement for sale of any debt to coerce payment of the debt.
(5) Causing a telephone to ring or engaging any person in telephone conversation
repeatedly or continuously with intent to annoy, abuse, or harass any person at the called
(6) Except as provided in section 1692b of this title, the placement of telephone calls
without meaningful disclosure of the caller's identity
15 U.S.C. § 1692d(1)–(6).
Moreover, a review of the record shows that Midland, in fact, owned the
debt. Specifically, Midland alleged in its complaint that it was the successor in
interest to Chase’s interests in Hamilton’s credit card debt. After Hamilton
answered and denied the debt, doc. 40-9, Midland’s attorneys provided Hamilton
with a Bill of Sale, Chase Bank Affidavit of Sale, and Hamilton’s Chase account
statements. Doc. 40-7 at 6. The documents established Midland’s ownership as
follows: (1) the Bill of Sale stated in relevant part that Chase “assigns effective as
of the File Creation Date of 07/21/2011 all rights, title and interest of Seller in and
to those certain receivables, judgments, or evidence s of debt described in the Final
Data File . . .”, doc. 40-7 at 49–50; (2) the Chase Affidavit of Sale authenticated
the transfer of the account numbers and indicated that Chase maintained the
electronic records in the regular course of business, doc. 40-7 at 64; and (3) the
account statements traced Hamilton’s debt obligation to Chase, doc. 40-7 at 9–45.
Moreover, Midland presented the affidavit of one of its employees showing that
Chase assigned Midland the rights, title and interest of Hamilton’s account through
the Bill of Sale and listed the amount that remained due on the account. Doc. 40-7
at 57–58. In addition to these documents, a data printout from the purchased Chase
electronic records indicating Hamilton’s credit account number and the full amount
of the debt due supported Midland’s contention. Doc. 40-7 at 66.
These documents belie Hamilton’s contention that Midland filed a frivolous
lawsuit. In fact, there is nothing in this record to support the contention that
Midland filed false affidavits or knowingly made false statements when it filed the
lawsuit. As another court faced with a similar lawsuit against Midland stated,
“[w]ithout more, Midland’s filing and prosecution of its state court collection
lawsuit without possessing or obtaining evidence to prove its claims does not rise
to an FDCPA violation.” Bandy, 2013 WL 210730 at * 9; see also Samuels v.
Midland Funding, LLC, 921 F. Supp. 2d 1321, 1328–1333 (S.D. Ala. 2013)
(discussing the supporting evidence a creditor can attach to a complaint to prove its
claim). Therefore, Midland’s motion for summary judgment is due to be granted
on this claim.
B. Alleged Violations of 15 U.S.C. § 1692e (Counts II–VI)
Hamilton contends that Midland violated various provisions of § 1692e
when it falsely represented that Hamilton owned the debt and attempted to collect a
debt that it purportedly did not own.4 Doc. 44 at 14–15. In support of this
contention, Hamilton argues that Midland’s failure to produce the Purchase and
The Complaint also alleged that Midland filed its collection suit in spite of the fact that the debt
was time-barred. Doc. 1 at 8–10. The statute of limitations on accounts stated and actions for
breach of contract in Alabama is six (6) years. Ala. Code § 6-2-34 (1975); see also Cook v.
Midland Funding, LLC, 2016 WL 2817086, *4 (Ala. Civ. App. May 13, 2016). The record
shows that the last payment on Hamilton’s Chase account was April 2009. Doc. 40-3 at 12.
Accordingly, because Midland filed the collection suit in April 2014, which is within the six year
statute of limitations period, doc. 48-6, the lawsuit is timely.
Sale Agreement (PSA) and the judgment in her favor in state court demonstrate
that Midland did not own the debt. Doc. 44 at 21–22. For the reasons below, this
argument is unpersuasive.
The FDCPA prohibits a debt collector from “us[ing] any false deceptive, or
misleading representation or means in connection with the collection of any debt,”
15 U.S.C. § 1692e, including “the false representation of the . . . legal status of any
debt,” id. § 1692e(2)(A). Communications are misleading if they “erroneously
state the amount of the debt owed . . . [or] incorrectly identify the holder of the
alleged debt.” Miljkovic, 791 F.3d at 1306. Once a debt collector has made a claim
or requested collection, upon request by the alleged debtor, the creditor is required
to provide “verification” of the debt, i.e., the chain of title and any account
statements that would provide the alleged debtor with enough information that they
can identify the debt. 15 U.S.C. §1692g(a). Midland fully complied with these
provisions. As discussed above, once Hamilton answered the state court action,
Midland sent Hamilton a letter containing a Bill of Sale, a Chase Bank Affidavit of
Sale, and Hamilton’s Chase account statements. Doc. 40-7 at 6. Critically, the
Chase account at issue is one Hamilton admits she opened, doc. 40-1 at 20, and the
record shows that Hamilton owed $2,960.10 on the account when Chase charged it
off. Doc. 40-3 at 19. This is the specific amount that Midland sought to recover in
its collection suit. Doc. 48-6.
Although Hamilton does not dispute that she owned the account or that it
had a past due balance that matched the amount Midland sought to collect, she
argues nonetheless that the state court judgment in her favor means that Midland
did not have a legal right to the debt. Consequently, she contends that Midland’s
suit was false and/or misleading in violation of § 1692e(2). Doc. 47 at 29. This
argument is unavailing because, first, “the filing of a debt-collection lawsuit
without the immediate means of proving the debt does not have the natural
consequence of harassing, abusing, or oppressing a debtor.” Harvey v. Great
Seneca Financial Corp., 453 F.3d 324, 330 (6th Cir. 2006); see also Gonzalez v.
Erskine, 2008 WL 6822207, *3 (S.D. Fla. Aug. 7, 2008) (Debt collector’s “act of
filing a lawsuit, with evidentiary support, is consistent with the purpose of the
FDCPA . . .”); Deere v. Javitch, Block, and Rathbone, LLP, 413 F. Supp. 2d 886,
890 (S.D. Ohio 2006) (Filing a lawsuit supported by the client’s affidavit attesting
to the existence and amount of a debt, is not a false representation about the
character or legal status of a debt, nor is it unfair or unconscionable. A defendant in
any lawsuit is entitled to request more information and details about a plaintiff’s
claim, either through formal pleadings challenging a complaint, or through
Second, the judgment in Hamilton’s favor does not establish a violation of
the FDCPA. 5 See doc. 48-8. As the Supreme Court has stated, “we do not see how
the fact that a lawsuit turns out to be unsuccessful could, by itself, make the
bringing of it an ‘action that cannot legally be taken.’” Heintz v. Jenkins, 514 U.S.
291, 296 (1995); see also Krawczyk v. Centurion Capital Corp., 2009 WL 395458,
*9 (N.D. Ill. Feb. 18, 2009) (“Losing or voluntarily dismissing a collection case
does not by itself create an FDCPA claim against the creditor and its attorneys.
Filing a lawsuit is an authorized method of collecting a debt.”). Put simply, no
legal basis exists for the contention that losing a collections suit in state court
means that the debt collector had no legal basis to file the suit or that it is
automatically exposed to FDCPA liability.
Finally, Hamilton’s reliance on Prince v. LVNV Funding for the contention
that Midland needed to prove ownership through a PSA is misplaced. In that case,
in addition to failing to provide a PSA in the state court action, the defendants also
failed to show any evidence that it had purchased the debt or evidence that the
plaintiff had, in fact, incurred the debt. 2014 WL 3361912 at *10 (M.D. Ala. 2014)
vacated per stipulation by 2014 WL 7506753. By contrast here, Midland produced
the complete bill of sale evidencing its purchase of the debt, statements from Chase
In fact, there is nothing before the court to help it decipher what factors the state judge weighed
in finding for Hamilton. The judgment states only: “This case came before the court for trial on
this date. Judgment on trial is hereby entered in favor of Defendant and against Plaintiff. Court
costs are taxed to Plaintiff.” Doc. 48-8.
to Hamilton indicating the amount owed, and Hamilton has admitted that she
opened and made payments on the Chase account at issue. See docs. 40-3 and 408; 40-1 at 20.
In short, because the record shows that Midland presented evidence in the
state court action that supported its contention that it owned Hamilton’s debt, and
the record is devoid of any evidence that Midland made false statements or filed
false affidavits, Hamilton has failed to establish a violation of 15 U.S.C. 1692e and
Midland’s motion is due to be granted on Counts II–VI.6
C. Alleged Malicious Prosecution (Count XII)
Hamilton contends that Midland violated Alabama law by maliciously
prosecuting her in light of its failure to produce a PSA to establish ownership of
the debt. A malicious prosecution claim requires that Hamilton prove (1) a judicial
proceeding initiated by Midland, (2) the lack of probable cause, (3) malice, (4)
termination in Hamilton’s favor, and (5) damages. See, e.g., Cutts v. American
United Life Ins. Co., 505 So. 2d 1211, 1214 (Ala. 1987). “The question is not
Hamilton also alleges that Midland violated 15 U.S.C. § 1692e(8), which provides that a debt
collector may not “communicat[e] or threaten to communicate to any person credit information
which is known or which should be known to be false, including the failure to communicate that
a disputed debt is disputed” and § 1692e(5), which provides that a debt collector may not
threaten “to take any action that cannot legally be taken or that is not intended to be taken.”
However, nothing in the record supports either contention because the evidence demonstrates
that Midland had probable cause to file its lawsuit. Again, the FDCPA does not prohibit a
creditor from filing a collection suit, and losing such a suit is not automatic grounds for finding
an FDCPA violation. Furthermore, once Hamilton prevailed in the collection suit, Midland
ceased reporting the debt to credit agencies. Doc. 40-5 at 39.
whether the . . . plaintiff [claiming malicious prosecution] was guilty of the thing
charged, but whether the . . . defendant acted in good faith on the appearance of
things.” Edison v. Olin Corp., 527 So. 2d 1283, 1285 (Ala. 1988). For purposes of
a malicious prosecution claim, “the element of malice may be inferred from the
lack of probable cause . . .” Ex parte Tuscaloosa County, 796 So. 2d 1100, 1107
(Ala. 2000) (internal citations omitted). However, “[f]or purposes of summary
judgment, the . . . [plaintiff’s] burden of proof may be stated as follows: If there
are any undisputed facts of record establishing that [the defendant] had probable
cause to bring the former action . . . against [the plaintiff], then [the plaintiff]
cannot recover for malicious prosecution and summary judgment is appropriate.”
Willis v. Parker, 814 So. 2d 857, 863 (Ala. 2001) (internal citations omitted)
(emphasis original). Again, here, Midland had probable cause because it produced
documents attesting to its ownership of Hamilton’s debt—i.e., the Bill of Sale, the
closing statement, the affidavit from Chase indicating that it had sold a pool of
charged off assets to Midland, and electronic records indicating that Hamilton had
incurred a debt from Chase. See doc. 40-7 at 47, 49–52. Because Hamilton cannot
establish that Midland lacked probable cause to bring its suit, she cannot succeed
on her malicious prosecution claim, and summary judgment is due to be granted on
For the foregoing reasons, Midland’s motion for summary judgment is due
to be granted. In light of this, Midland’s Motion to Strike Doc. 45-5, doc. 50, is
termed as MOOT. A separate order in accordance with the memorandum of
decision will be entered.
DONE the 30th day of January, 2017.
ABDUL K. KALLON
UNITED STATES DISTRICT JUDGE
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