Knox v. Weltman Weinberg & Reis Co LPA
Filing
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OPINION AND ORDER: Court GRANTS 21 Motion for Summary Judgment. Signed by Judge Jon E DeGuilio on 8/11/2014. cc: Knox (tc)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
HENRY L. KNOX
Plaintiff,
v.
WELTMAN, WEINBERG & REIS CO.,
L.P.A.,
Defendant.
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Case No. 2:12-CV-223-JD
OPINION AND ORDER
Now before the Court is Defendant Weltman, Weinberg & Reis Co., L.P.A’s
(“Weltman”) revised motion for summary judgment [DE 21, 22] on the complaint [DE 1] filed
by Plaintiff Henry L. Knox (“Knox”) alleging Weltman violated the Fair Credit Reporting Act
(“FCRA”) by obtaining Knox’s consumer credit reports from credit reporting agencies without a
permissible purpose as required under 15 U.S.C. § 1681b.1 Proper notice of the summary
judgment motion was also given to Knox consistent with Lewis v. Faulkner, 689 F.2d 100 (7th
Cir. 1982) [DE 21]. The Court denied [DE 18] Weltman’s first motion for summary judgment
on the grounds that it failed to provide the best evidence establishing the existence of the debt
collected which provided a permissible purpose for requesting Knox’s consumer reports [DE
18]. The Court advised that “[i]f the original documentation of the account, its ownership, and
Weltman’s authority to collect on it are unavailable, then sufficient basis for its unavailability
should be provided.” [DE 18 at 12].
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Knox has only claimed that Weltman lacked a permissible purpose for requesting Knox’s credit report under 15
U.S.C. § 1692b, and not that Weltman falsely represented the ownership of the debt under 15 U.S.C. § 1692e. See,
e.g., Miller v. Wolpoff & Abramson, LLP, No. 1:06-CV-207-TS, 2007 WL 2694607, at *11 (N.D. Ind. Sept. 7,
2007), recon. denied, 2008 WL 474202 (N.D. Ind. Feb. 19, 2008), affirmed, 309 Fed. App’x 40 (7th Cir. Feb. 5,
2009).
Weltman’s revised submissions now include exhibits which trace back the transfer of
consumer credit accounts from agency to agency until they reached LVNV Funding LLC, who
then hired Weltman through Resurgent to collect on the accounts. Knox responded to the revised
motion on November 8, 2013 [DE 25] with a series of allegations unsupported by any admissible
evidence. For the following reasons, Weltman’s revised motion for summary judgment is
GRANTED.
I.
Factual Background
Weltman is accused of accessing Knox’s consumer debt information without a
permissible purpose in violation of the FCRA [DE 1]. According to Doreen Abdullovski and
Marsha Makel, Weltman’s compliance attorneys, Weltman is a law firm that performs consumer
and commercial collection services, and was hired by creditor LVNV Funding, LLC through its
servicing agent to collect on a consumer credit account debt owed by Knox to LVNV [DE 22-1
at 1; DE 22-3 at 1]. Weltman received an Account Summary Statement from LVNV on Knox’s
0300 account, which was filed with the Court [DE 22-3 at 2-3], and this document sets forth,
among other things, the account origination date (September 6, 2000), the original creditor
(Citibank/Sears), the current owner (LVNV), the current owner’s purchase date (July 10, 2003),
and the account balance [DE 22-3 at 2-3]. Weltman’s compliance attorneys acknowledge that on
behalf of LVNV and in connection with the collection of that account, Weltman requested
Knox’s credit report and credit score, which Weltman then accessed at least once (and maybe
twice per Knox [DE 25 at 2, 4; DE 25-1 at 3]) from Trans Union on January 22, 2011 [DE 22-1
at 1-2; DE 22-3 at 2]. Weltman later explained its actions were pursuant to a permissible
purpose under the FCRA, 15 U.S.C. § 1681b(a)(3)(A), and it has not otherwise requested or used
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Knox’s credit report, nor furnished any information (including credit-related information)
regarding Knox to consumer reporting agencies [DE 22-1 at 2, 4].
Tonya Henderson, an employee of Resurgent Capital Services, LP (“Resurgent”), the
servicing agent for LVNV, provided an affidavit indicating that based “upon [her] review of such
books, records, and documents, . . . LVNV Funding LLC became the owner through purchase of
account number ending in 0300, in the name of Henry Knox, on July 10, 2003 by purchase from
Sears, Roebuck and Co./Citibank, N.A., the original creditor.” [DE 22-2 at 1]. Attached to
Henderson’s affidavit is the “Bill of Sale and Assignment” indicating that specific sellers, one of
which was Sears, Roebuck and Co., transferred various consumer credit accounts to Sherman
Originator LLC [DE 22-2 at 1, at 3-6], which, per the chain of assignments, were ultimately
transferred to LVNV [DE 22-2 at 1, 7-13]. Henderson attested that it was through this series of
transactions that LVNV became the owner of account 0300 in the name of Henry Knox [DE 22-2
at 1, at 3-12]. Henderson also confirmed that on January 21, 2011, LVNV, through Resurgent,
referred the account to Weltman for collection efforts on behalf of LVNV, and that a copy of the
Account Summary Statement was sent to Weltman [DE 22-2 at 1, 13]. Henderson attested that
when the 0300 account was opened by the original creditor on September 6, 2000, the account
was charged off in 2003 and no original account statements were retained beyond the original
creditor’s seven-year retention policy, and therefore other 0300 account documents are currently
unavailable [DE 22-2 at 2].
II.
Standard of Review
On summary judgment, the moving party bears the burden of demonstrating that there “is
no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). A “material” fact is one identified by the substantive law as
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affecting the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A
“genuine issue” exists with respect to any material fact when “the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.” Id. Where a factual record
taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is
no genuine issue for trial, and summary judgment should be granted. Matsushita Elec. Indus.
Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing First Nat. Bank of Ariz. v.
Cities Servs. Co., 391 U.S. 253, 289 (1968)).
In determining whether a genuine issue of material fact exists, this Court must construe
all facts in the light most favorable to the non-moving party and draw all reasonable and
justifiable inferences in that party’s favor. King v. Preferred Technical Grp., 166 F.3d 887, 890
(7th Cir. 1999). However, the non-moving party cannot simply rest on the allegations or denials
contained in its pleadings, but must present sufficient evidence to show the existence of each
element of its case on which it will bear the burden at trial. Celotex Corp. v. Catrett, 477 U.S.
317, 322–23 (1986); Robin v. Espo Eng’g Corp., 200 F.3d 1081, 1088 (7th Cir. 2000).
III.
Discussion
Read liberally, Knox’s response to Weltman’s revised motion for summary judgment
raises the following arguments: 1) Weltman (again) failed to provide the best evidence
establishing the legitimacy of account 0300, that LVNV became the owner of account 0300, and
Weltman was engaged by LVNV to collect on the account; 2) Weltman’s affidavits and the
attached Account Summary Statement should be stricken because they are based on a lack of
personal knowledge and contain hearsay; and 3) Weltman illegally obtained Knox’s credit report
by not having a permissible purpose for doing so, in violation of 15 U.S.C. § 1681b(a)(3)(A) of
the FCRA.
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As detailed below, Weltman has now provided sufficient evidence under the Federal
Rules of Evidence to substantiate on summary judgment that its actions in accessing Knox’s
credit information were permissible under 15 U.S.C. § 1681b.
A.
The best evidence.
Knox raises an argument based on Federal Rule of Evidence 1002, by arguing that
Weltman failed to provide the best evidence establishing the legitimacy of account 0300 and
LVNV’s purchase of it from Sears in 2003. He also contends that Weltman has failed to produce
any contract or invoice proving that it was hired by LVNV through Resurgent to collect on
account 0300.
In providing supporting evidence for the record, parties have an obligation to produce
actual key documents as proof. See Dye v. United States, 360 F.3d 744, 750 (7th Cir. 2004)
(holding testimony evidence as inadmissible because the FSA failed to produce actual key
documents without explanation for their absence). The best evidence rule requires: “[a]n original
writing, recording, or photograph . . . in order to prove its content unless these rules or a federal
statute provides otherwise.” Fed. R. Evid. 1002. However, “[a]n original is not required and
other evidence of the content of a writing, recording, or photograph is admissible if: (a) all the
originals are lost or destroyed, and not by the proponent acting in bad faith; . . .”. Fed. R. Evid.
1004; see Dye, 360 F.3d at 750 (indicating that if the best evidence rule is not met, then
testimony that the original was lost or destroyed would suffice under Fed. R. Evid. 1004, and the
court may then rely on testimony).
Here, Henderson has confirmed that as the servicing agent for LVNV, she has access to
records pertaining to consumer credit accounts owned by LVNV, including access to an account
ending in number 0300 in the name of Henry Knox [DE 22-2 at 1]. Henderson confirmed that
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after the 0300 account was opened in 2000 and charged off in 2003, the account statements were
not retained and therefore additional documents relating to the account are unavailable. This
uncontradicted affidavit testimony establishes that additional documents relative to the 0300
account were not retained and are thus unavailable. See, e.g., United States v. McGaughey, 977
F.2d 1067, 1071 (7th Cir. 1992). Thus, the Court may rely on the affidavit testimony provided
by Weltman concerning account 0300, assuming those affidavits are based on sufficient personal
knowledge.
B.
The affidavits.
In ruling on summary judgment motions, the Court will consider the types of materials
listed in Rule 56(c) and evidence that would be admissible if offered at trial. Fed. R. Civ. P. 56;
Modrowski v. Pigatto, 712 F.3d 1166, 1168-69 (7th Cir. 2013); Patel v. Allstate Ins. Co., 105
F.3d 365, 371 n.6 (7th Cir. 1997) (declining to consider hearsay evidence in ruling on a motion
for summary judgment). Any affidavit submitted for the court’s consideration in ruling on a
motion for summary judgment must “be made on personal knowledge, set out facts that would be
admissible in evidence, and show that the affiant is competent to testify on the matters stated.”
Fed. R. Civ. P. 56(c)(4). “[A]lthough personal knowledge may include reasonable inferences,
those inferences must be ‘grounded in observation or other first-hand personal experience. They
must not be flights of fancy, speculations, hunches, intuitions, or rumors about matters remote
from that experience.’” Payne v. Pauley, 337 F.3d 767, 772 (7th Cir. 2003) (quoting Visser v.
Packer Eng’g Assoc., 924 F.2d 655, 659 (7th Cir. 1991) (en banc)). Conclusory allegations,
unsupported by specific facts, are insufficient to defeat a motion for summary judgment. Payne,
337 F.3d at 773 (citing Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 888 (1990)).
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Knox argues that the three affidavits submitted by Weltman should be struck from the
record because they are not based on personal knowledge and because they contain hearsay.2
Knox’s arguments are without merit.
First, the very fact that the affiants never worked for the original creditor (Citibank/Sears)
or LVNV does not ipso facto mean the affiants lack the requisite knowledge to provide
admissible testimony in this case. Specifically, the affidavit testimony provided by Abdullovski
and Makel are based on their personal knowledge and experience as compliance attorneys for
Weltman, and their familiarity with Weltman’s records and client files. Similarly, Henderson’s
testimony is based on her personal knowledge and experience as an employee for Resurgent, and
her familiarity with Resurgent’s acting as a servicing agent for LVNV and collecting on
consumer credit accounts owned by LVNV. Thus, based on personal experiences and
investigation into their own employer’s accounts and records, the affiants have demonstrated the
requisite personal knowledge under Rule 56(c) to explain Weltman and Resurgent’s involvement
in the attempt to collect on account 0300. See Payne, 337 F.3d at 773.
In a similar vein, Knox argues that the Account Summary Statement Weltman received
from LVNV [DE 22-3 at 2-3] should be stricken because it contains language that it was
“generated on behalf of LVNV Funding LLC, account owner” and therefore had to be
“generated based on unknowns.” However, even if Makel has not demonstrated the requisite
knowledge to testify about the document’s creation or accuracy, Makel’s employment with
Weltman and review of Weltman’s records certainly allows her to testify that Weltman in fact
2
While the Court could refrain from considering Knox’s argument because it was not made in a separate motion to
strike as required by the local rules, see N.D. Ind. L.R. 7-1(a), the Court, in the interest of justice, considers Knox’s
pro se request. See Modrowski v. Pigatto, 712 F.3d 1166 (7th Cir. 2013) (“we have consistently and repeatedly
upheld a district court’s discretion to require strict compliance with its local rules governing summary judgment. It
does not follow, however, that district courts cannot exercise their discretion in a more lenient direction: litigants
have no right to demand strict enforcement of local rules by district judges” so long as the district court does not
enforce or relax the rules unequally as between the parties) (internal quotation marks and citations omitted).
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received the Account Summary Statement from LVNV and that Weltman was engaged by
LVNV through Resurgent to collect on the account identified on it. Thus, Weltman had reason
to believe it was collecting on an actual account ending in numbers 0300 and assigned to Knox.
Further, Henderson collaborated these facts by stating that as an employee of Resurgent, she can
attest to the fact that as LVNV’s servicing agent, Weltman was sent the Account Summary
Statement and Resurgent engaged Weltman to collect on the 0300 account. And while it is true
that no available document specifically lists account 0300 as one which was ultimately
transferred from Sears to LVNV, or that LVNV (through Resurgent) hired Weltman to collect on
the account, Henderson’s uncontested affidavit testimony establishes that additional
documentation is unavailable. Thus, the Court may rely on the affidavit testimony.
Second, the affiants’ relevant statements do not constitute hearsay. Hearsay is a
statement that: “1) the declarant does not make while testifying at the current trial or hearing; and
2) a party offers in evidence to prove the truth of the matter asserted in the statement.” Fed. R.
Evid. 801(c). By definition, Abdullovski, Henderson, and Makel’s affidavits are not considered
hearsay where they contain their own testimony, not the testimony of another.
To the extent their testimony relies on the contents of the “Bill of Sale and
Assignment[s]” or the “Account Summary Statement”, the statements contained therein are not
necessarily offered for the truth of the matter, but rather to explain Resurgent’s intent in hiring
Weltman to collect on the debt, to reveal Weltman’s belief that it was collecting on an actual
account, and to show that Weltman’s intent for requesting Knox’s consumer report was to collect
on the alleged debt. See Eaton v. Plaza Recovery, Inc. No. H-12-3043, 2014 WL 29561, at *3
(S.D. Tex. Jan. 3, 2014) (the declaration was submitted to show the agency’s intent in requesting
the report, not to prove that plaintiff owed a debt, because an agency attempting to collect a debt
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is not required under the FCRA to verify, validate, or ‘prove-up’ a person’s debt before seeking a
credit report). And to the extent the documents were provided for the truth of their contents,
they would fall under the residual exception to the hearsay rule under Rule 807 (requiring the
opposing party to have an opportunity to respond to the statement and where “(1) the statement
has equivalent circumstantial guarantees of trustworthiness; (2) it is offered as evidence of a
material fact; (3) it is more probative on the point for which it is offered than any other evidence
that the proponent can obtain through reasonable efforts; and (4) admitting it will best serve the
purposes of these rules and the interests of justice.”). As to the contents of the letters from Knox
and Weltman, which Abdullovski discusses in her affidavit, these letters are essentially irrelevant
for purposes of ruling on the instant summary judgment motion, because Weltman had accessed
Knox’s credit history long before the letters were ever created.3 For these reasons, the Court
declines to strike the affidavits offered by Weltman as hearsay.
Finally, to the extent Knox (again) argues that the affidavits refer to facts not in evidence,
the Court (again) rejects such an argument. The argument demonstrates Knox’s
misunderstanding of Rule 56(c). At the summary judgment stage, affidavits properly submitted
are intended to present the facts that are then admitted as evidence for purposes of creating the
record. See Lujan v. Nat’l Wildlife Fed’n, 497 U.S. at 888 (requiring movant to set forth by
affidavit or other evidence specific facts for purposes of summary judgment). In other words,
the affidavits are the evidence and are to be considered on summary judgment. Moreover,
Weltman properly used the affidavits in order to authenticate the records attached thereto. See
Article II Gun Shop, Inc. v. Gonzales, 441 F.3d 492, 496 (7th Cir. 2006) (“To be admissible,
3
On April 23, 2012, Knox mailed Weltman a letter alleging his rights had been violated by Weltman
because it had accessed his credit report [DE 22-1 at 3]. Then, on May 15, 2012, Weltman mailed Knox a letter
explaining that Weltman’s admitted actions in obtaining Knox’s credit information were authorized under the FCRA
as a permissible purpose because they were in connection with the collection of an account [DE 22-1 at 4].
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documents must be authenticated by and attached to an affidavit that meets the requirements of
Rule 56(e) and the affiant must be a person through whom the exhibits could be admitted into
evidence.”).
C.
The FCRA.
The purpose of the FCRA is to ensure “that consumer reporting agencies adopt
reasonable procedures for meeting the needs of commerce for consumer credit, personnel,
insurance, and other information in a manner which is fair and equitable to the consumer, with
regard to the confidentiality, accuracy, relevancy, and proper utilization of such information.” 15
U.S.C. § 1681(b). The FDCPA creates a private right of action against a debt collector. 15
U.S.C. § 1692k. To protect consumer privacy, the FCRA limits the furnishing of consumer
reports to specific statutorily enumerated purposes, 15 U.S.C. § 1681b(a), which are the same
permissible purposes for which one can obtain or use a consumer report. Id. at § 1681b(f).
Relevant to the instant case is the fact that a person can use or obtain a consumer report when a
person has reason to believe the information will be used “in connection with a credit transaction
involving the consumer on whom the information is to be furnished and involving the extension
of credit to, or review or collection of an account of, the consumer.” 15 U.S.C. § 1681b(a)(3)(A).
This type of permissible purpose extends to debt collection by a law firm. See Miller v. Wolpoff
& Abramson, LLP, No. 1:06-CV-207-TS, 2007 WL 2694607, at *11 (N.D. Ind. Sept. 7, 2007),
recon. denied, 2008 WL 474202 (N.D. Ind. Feb. 19, 2008), affirmed, 309 Fed. App’x 40 (7th
Cir. Feb. 5, 2009). Moreover, many courts have held that obtaining consumer credit reports in
an attempt to collect on a credit card account is permissible under section 1681b. See id.; see
also, Pyle II v. First Nat’l Collection Bureau, No. 1:12-cv-00288-AWI-SKO, 2012 WL 5464357
(E.D. Cal. Nov. 8, 2012) (listing cases).
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Weltman, by affidavit, affirms it is a law firm which performs consumer and commercial
collection services on behalf of its creditors, and it was engaged by LVNV through its servicing
agent to collect the alleged indebtedness of Knox on account 0300 when it pulled Knox’s
consumer credit report on January 22, 2011. In his response to the revised motion for summary
judgment, Knox does not dispute that attempting to collect a debt in this fashion is a permissible
purpose under the FCRA. See, e.g., Stergiopoulos v. First Midwest Bancorp, Inc., 427 F.3d 1043,
1047 (7th Cir. 2005) (noting that the statute’s use of the word “involved” implies that the entity
requesting the credit report does not have to have a prior transaction with the consumer directly,
but there must be a clear connection between the entity’s request and the consumer’s
transactions). Rather, Knox only took issue with the evidence Weltman used to support its claim
of having such a permissible purpose—evidence which the Court deemed admissible for the
reasons previously detailed.
Moreover, Knox has not produced any evidence to contradict Weltman’s sworn affidavit
testimony that when it pulled Knox’s consumer credit report, Weltman had been engaged by
LVNV through its servicing agent to collect the indebtedness on an account ending in 0300 and
assigned to Knox. Knox’s unsworn blanket assertions in his response brief [DE 25] suggesting
this may not be the case, amount to nothing more than speculation and do not create a genuine
factual issue. See Miller, No. 1:06-CV-207-TS, 2007 WL 2694607, at *11 (“An invitation to
speculate does not create a genuine factual issue.”) (citing Zayre Corp. v. S.M. & R. Co., 882
F.2d 1145, 1152 (7th Cir. 1989)).
Because it is undisputed that LVNV retained Weltman through its servicing agent to
collect an alleged outstanding debt on the 0300 account, and that Weltman obtained copies of
Knox’s credit report in connection with its collection efforts on the 0300 account on behalf of
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LVNV, Weltman had a legitimate purpose. See 15 U.S.C. § 1681b(a)(3)(A); see also Miller v.
Wolpoff & Abramson, LLP, 309 Fed. App’x 40 (7th Cir. Feb. 5, 2009). Therefore, because the
only basis on which Knox attempts to assert a claim is the obtaining and usage of his consumer
credit report without a permissible purpose, Weltman is entitled to summary judgment on Knox’s
claim that Weltman violated the FCRA. See Trinh v. Weltman, Weinberg& Reis Co., L.P.A.,
Civil No. 3:12cv379, 2012 WL 5824799 (N.D. Ind. Nov. 14, 2012).
Finally, Knox’s conclusory argument [DE 25 at 4-5] that Indiana’s six year statute of
limitations on contracts bars collection efforts on his account is misplaced. Indiana Code 34-112-7 and 34-11-2-9 require “actions” on contracts to be filed within six years; however, the statute
of limitations does not prevent debt collectors from attempting to collect on debts. They just
cannot successfully sue to collect the debts.
IV.
Conclusion
For the foregoing reasons, Weltman’s revised motion for summary judgment [DE 21] is
GRANTED.
SO ORDERED.
ENTERED: August 11, 2014
/s/ JON E. DEGUILIO
Judge
United States District Court
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