Alston v. Central Credit Services Inc
Filing
21
MEMORANDUM OPINION (c/m to Plaintiff 8/26/13 sat). Signed by Chief Judge Deborah K. Chasanow on 8/26/13. (sat, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
YVONNE R. ALSTON
:
v.
:
Civil Action No. DKC 12-2711
:
CENTRAL CREDIT SERVICES, INC.
:
MEMORANDUM OPINION
Presently pending and ready for resolution in this action
alleging violations of the Fair Credit Reporting Act (“FCRA”),
15 U.S.C. § 1681 et seq., the analogous Maryland Consumer Credit
Reporting Agencies Act (“MCCRAA”), Md.Code.Ann., Com. Law § 141201,
et
seq.,
and
the
Fair
Debt
Collection
Practice
Act
(“FDCPA”), 15 U.S.C. § 1692 et seq., is a motion for summary
judgment filed by Defendant Central Credit Services, Inc. (“CCS”
or “Defendant”).
(ECF. No. 13).
The issues are fully briefed,
and the court now rules pursuant to Local Rule 105.6, no hearing
being deemed necessary. For the reasons that follow, the court
will grant Defendant’s motion for summary judgment.1
1
On December 7, 2012, Plaintiff moved to strike the portion
of Defendant’s reply memorandum which referenced a prior Order
from this court.
(See ECF. No. 11, Order vacating Orders
granting leave to proceed in forma pauperis).
Plaintiff’s
motion to strike does not seek to strike any portion of a
pleading; rather, it aims to strike a portion of a memorandum
submitted by Defendant in response to Plaintiff’s opposition to
Defendant’s motion for summary judgment. See Fed.R.Civ.P. 7(a).
Because there is “no basis in the Federal Rules” for striking
I.
Background
A.
Factual Background
The underlying facts of this case are undisputed.
4,
2011,
RBS
Card
Services
(“RBS”)
referred
(“Plaintiff”) account for collection to CCS.
2,3).
On April
Yvonne
Alston’s
(ECF. No. 13-2 ¶¶
When RBS placed the account with CCS, it represented that
the account was in default and that Plaintiff owed $15,653.77.
(Id. ¶ 3).
After RBS referred Plaintiff’s account to CCS for
collection,
CCS
reviewed
the
information
pertaining
Plaintiff’s debt and believed it was accurate.
(Id.
to
¶¶ 3,5).
On July 22, 2011, CCS obtained Plaintiff’s credit report from
Experian,
a
credit
collection efforts.
reporting
agency,
(Id. ¶ 6).
responded
with
a
assist
CCS
with
CCS then sent a collection
letter to Plaintiff on July 25, 2011.
Plaintiff
to
letter
(ECF. No. 13-2 ¶ 7).
dated
August
7,
2011,
disputing the validity of the debt to RBS and CCS’s authority to
collect
attempts.
it,
and
requesting
(ECF. No. 13-3).
August 16, 2011.
(Id.).
that
CCS
cease
its
collection
CCS received Plaintiff’s letter on
CCS terminated its collection efforts
after it received Plaintiff’s letter.
(ECF. No. 13-2 ¶ 9).
such memoranda, Tepeyac v. Montgomery Cnty., 779 F.Supp.2d 456,
460 (D.Md. 2011), Plaintiff’s motion to strike is denied.
2
B.
Procedural Background
On
September
11,
2012,
Plaintiff
commenced
this
action,
proceeding pro se, in the District Court of Maryland for Prince
George’s
County.
(ECF
No.
2).
Plaintiff
asserted
claims
against CCS for violations of the FCRA, the CCRAA, and the FDCPA
resulting from CCS’s accessing her credit report from Experian.2
(Id.).
Defendant removed the action to this court on September
10, 2012, citing federal question as the jurisdictional basis.
On September 13, 2012, the court issued a Scheduling Order,
which
established
January
28,
completing discovery. (ECF No. 10).
judgment on October 22, 2012.
2013
as
the
deadline
for
Defendant moved for summary
(ECF. No. 13).
Plaintiff opposed
the motion on November 8, 2013, (ECF. No. 15) and Defendant
replied on November 26, 2012.
(ECF. No. 16).
II. Analysis
A. Standard of Review
Summary judgment may be entered only if there is no genuine
issue as to any material fact and the moving party is entitled
to judgment as a matter of law.
2
Fed.R.Civ.P. 56(a); Celotex
Plaintiff asserts that Defendant’s pull of her credit
report was a “‘hard’ pull that reduced [her] credit score.”
(ECF. No. 2 ¶ 9).
A “hard pull” is a full credit inquiry
conducted when someone applies for a loan or line of credit.
See Harkins, Jr. v. Diversified Collection Services, Inc., 2012
WL 5928997, at *1 n. 1 (D.Md. Nov. 26, 2012). It has been said
that each hard pull can result in the reduction of a credit
score by up to five points. Id.
3
Corp. v. Catrett, 477 U.S. 317, 322 (1986); Emmett v. Johnson,
532
F.3d
291,
(4th
297
Cir.
2008).
Summary
judgment
is
inappropriate if any material factual issue “may reasonably be
resolved in favor of either party.”
Inc.,
477
U.S.
242,
250(1986);
Anderson v. Liberty Lobby,
JKC
Holding
Co.LLC
v.
Wash.
Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir. 2001).
“A party opposing a properly supported motion for summary
judgment ‘may not rest upon the mere allegations or denials of
[her]
pleadings,’
but
rather
must
‘set
forth
specific
showing that there is a genuine issue for trial.’”
facts
Bouchat v.
Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir.
2003) (quoting former Fed.R.Civ.P. 56(e)).
proof
.
.
.
will
not
suffice
to
prevent
“A mere scintilla of
summary
Peters v. Jenney, 327 F.3d 307, 314 (4th Cir. 2003).
judgment.”
“If the
evidence is merely colorable, or is not significantly probative,
summary judgment may be granted.”
249-50 (citations omitted).
Liberty Lobby, 477 U.S. at
At the same time, the facts that
are presented must be construed in the light most favorable to
the party opposing the motion.
Scott v. Harris, 550 U.S. 372,
378 (2007); Emmett, 532 F.3d at 297.
4
B. FCRA and MCCRAA Claims (Counts I and II)3
Congress
enacted
the
FCRA
“to
ensure
fair
and
accurate
reporting, promote efficiency in the banking system, and protect
consumer privacy.”
52 (2007).
injured
Safeco Ins. Co. of Am. V. Burr, 551 U.S. 47,
The FCRA creates a private right of action allowing
consumers
to
recover
“any
actual
damages”
caused
by
negligent violations and both actual and punitive damages for
willful noncompliance.
See Robinson v. Equifax Info. Servs.,
LLC, 560 F.3d 235, 239 (4th Cir. 2009); see also 15 U.S.C. §§
1681n, 1681o.
The FCRA imposes duties on “furnishers of information” to
credit
reporting
1681b(a)
agencies.
establishes
consumer report.
15
U.S.C.
permissible
§
purposes
1681s-2.
for
Section
furnishing
a
On its face, Section 1681b(a) appears to apply
only to those furnishing reports, but the Fourth Circuit has
concluded that users of the reports must also comply with the
statutory
provision.
Yohay
v.
City
of
Alexandria
Employees
Credit Union, Inc., 827 F.2d 967, 972 (4th Cir. 1987) (stating
that users are “subject to civil liability . . . if [the user’s]
non-compliance
Korotki
v.
with
Attorney
section
Servs.
1681b
Corp.,
3
was
931
willful”);
F.Supp.
see
also
1269,
1276
Because the MCCRAA contains virtually identical provisions
to the FCRA, the Fourth Circuit has addressed separate claims
brought under both the MCCRAA and FCRA as one.
Ausherman v.
th
Bank of Am. Corp., 352 F.3d 896, 899-900 (4 Cir. 2003).
5
(D.Md.1996) (stating users could only obtain a consumer report
“if they had a permissible purpose”).
Section 1681b(a)(3)(A) provides that there is a permissible
purpose
to
reporting
furnish
agency
a
has
report
a
to
“reason
a
to
person
if
believe”
the
that
consumer
the
user
“intends to use the information 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.”
This “reason to
believe” standard has likewise been applied to users of the
reports.
Korotki, 931 F.Supp. at 1276;
see also Cambridge
Title Co. v. Transamerica Title Ins. Co., 817 F.Supp. 1263, 1278
(D.Md. 1992) (finding user had a permissible purpose to access
credit report where user believed, but did not “know,” whether
consumer had misappropriated money).
As applied to a user, this
means that if a user had a reason to believe that a consumer
owed a debt, it would have a permissible purpose to access the
consumer’s
credit
report.
See
15
U.S.C.
§
1681b(a)(3)(A);
Korotki, 931 F.Supp. at 1277.
Here, CCS has produced evidence of a permissible purpose in
accessing Plaintiff’s credit report – to collect a debt that it
had “reason to believe” Plaintiff owed to RBS.
3).
Alston
(ECF. No. 13-2 ¶
Plaintiff avers that “CCS falsely represented that Ms.
had
a
debt
with
RBS
Card
6
Services
in
the
amount
of
$15,656.37 and that CCS had authority to collect the debt.”
(ECF. No. 2 ¶ 10).
CCS
pulled
The undisputed facts, however, indicate that
Plaintiff’s
credit
report
in
furtherance
of
collecting on a debt that CCS believed Plaintiff owed, which is
a valid purpose under Section 1681b(a)(3)(A).
6).
(ECF. No. 13-3 ¶
Specifically, Defendant submitted an affidavit from CCS’s
Executive Vice President, confirming that RBS placed Plaintiff’s
account with CCS for collection on April 4, 2011 and that “[a]t
the time of the placement of the Account, it was represented
that the Account was in default and that a balance of $15,656.37
was valid, due and owing by Plaintiff.”
(Id. ¶ 3).4
CCS’s account notes further support this point.
A February
17, 2012 entry in Plaintiff’s account provides the following:
“CLIENT GVG AUTH TO CCS TO COLLECT/ SEE SCAN.”
(ECF. No. 13-3).
CCS further provides that after RBS placed Plaintiff’s account
with CCS, CCS reviewed the information provided and believed it
4
Plaintiff asserts that “Defendant’s self-serving affidavit
does not establish that CCS had an agreement with RBS,” and thus
had a permissible purpose to pull Plaintiff’s credit history.
(ECF. No. 15, at 2). Plaintiff further argues that Defendant’s
submission of an account history is “inadmissible as the affiant
does not testify as to the person making the phone calls, to
having supervised or observed or listened to the phone calls, to
having reviewed the recorded phone calls, or to having inputting
the notes.” (Id. at 2-3). Plaintiff is incorrect. “[E]mployees
who are familiar with record-keeping practices of a business are
qualified to speak from personal knowledge that particular
documents are admissible business records, and affidavits sworn
by such employees constitute summary judgment evidence.”
Nader
v. Blair, 549 F.3d 953, 963 (4th Cir. 2008); see also Fed.R.Evid.
803(6).
7
was
accurate.
requested
a
(ECF.
copy
No.
of
13-2
¶
5).
Plaintiff’s
CCS
credit
alleges
report
that
to
it
pursue
collection activities and that it “did not request Plaintiff’s
credit report for any other purposes.”
(Id.
¶ 6).
“The defendants, having produced evidence of a permissible
purpose, are entitled to summary judgment unless plaintiff, who
bears the burden of going forward to show lack of a proper
purpose, produces some evidence upon which a jury could find to
the
contrary.”
Korotki,
931
F.Supp.
at
1279.
Plaintiff
contests the debt to RBS, but offers no evidence to establish
that CCS accessed her credit report in bad faith, or for reasons
other than in an attempt to collect on a debt it had reason to
believe
Plaintiff
indebtedness
to
RBS
owed.
is
The
immaterial
validity
to
of
Korotki’s
Plaintiff’s
“reason
to
believe” standard; by its own terms, “reason to believe” implies
that there may be instances where a debt turns out not to be
valid.
RBS
CCS did not need ironclad proof of Plaintiff’s debt to
to
satisfy
the
permissible
purpose
requirement.
Accordingly, summary judgment is appropriate on Plaintiff’s FCRA
and MCCRAA claims.
8
C. FDCPA Claims (Count 3)5
Plaintiff also alleges that CCS violated various provisions
of
the
deceptive
FDCPA,
which
debt
protects
collection
consumers
practices
by
from
debt
“abusive
and
collectors.”
Akalwadi v. Risk Mgmt. Alternatives, Inc., 336 F.Supp.2d 492,
500 (D.Md. 2004).
Section 1692a(6) includes in the definition
of debt collector “any person who . . . regularly collects or
attempts to collect, directly or indirectly, debts owed or due
or
asserted
to
be
owed
or
due
another.”
CCS
is
a
“debt
5
Section 1692k(d) of the FDCPA provides that “[a]n action
to enforce any liability created by this subchapter may be
brought . . . within one year from the date on which the
violation occurs.”
15 U.S.C. § 1692k(d).
Here, the alleged
violations took place on July 22, 2011, more than one year
before Plaintiff filed the complaint in the District Court of
Maryland for Prince George’s County on September 11, 2012. CCS
did not plead the statute of limitations as an affirmative
defense.
Ordinarily, a statute of limitations is treated as an
affirmative defense that a party must raise; otherwise, it is
deemed waived.
Fed.R.Civ.P. 8(c)(1).
Courts, however, are
split on the issue of whether Section 1692k(d) is a statute of
limitations or a jurisdictional prerequisite and thus not
subject to waiver or tolling.
Compare Mattson v. U.S. West
Commc’ns, Inc., 967 F.2d 259, 262 (8th Cir. 1992)(describing
FDCPA’s statute of limitations as a “jurisdictional statute”),
with Mangum v. Action Collection Serv., Inc., 575 F.3d 935, 93940 (9th Cir. 2009) (holding that the FDCPA’s statute of
limitations is not jurisdictional); Betskoff v. Enterprise Rent
A Car Co. of Baltimore, LLC, 2012 WL 32575, at *5 n.6 (D.Md.
Jan. 4, 2012) (same).
Although one might argue that Section
1692k(d) provides a jurisdictional prerequisite, neither the
Fourth Circuit nor the Supreme Court has resolved the matter.
Accordingly, the court declines to address the issue now.
9
collector” within the meaning of the FDCPA, but as a threshold
matter,
Plaintiff
must
also
show
that
CCS
used
“prohibited
practices . . . in an attempt to collect the debt.”
336
F.Supp.2d
at
500.
Plaintiff
has
not
Akalwadi,
satisfied
this
threshold.
1.
Section 1692e(2)(A)
Section 1692e(2)(A) states that a debt collector may not
falsely represent “the character, amount, or legal status of any
debt.”
The language of the statute does not require a plaintiff
to establish that a defendant acted with intent to represent
falsely or with knowledge of the falsehood.
1692e(2)(A);
See 15 U.S.C. §
Spencer v. Hendersen-Webb, Inc., 81 F.Supp.2d 582,
592 (D.Md. 1999) (“The language of the [FDCPA] is clear: a debt
collector’s mistaken belief, . . . is not sufficient to preclude
liability”).
Pursuant to Section 1692k(c), however, liability
may be avoided where a debt collector can establish a bona fide
error defense.
Specifically, Section 1692k(c) states that:
A debt collector may not be held liable in
any action brought under this subchapter if
the debt collector shows by a preponderance
of evidence that the violation was not
intentional and resulted from a bona fide
error notwithstanding the maintenance of
procedures reasonably adapted to avoid any
such error.
Plaintiff contends that Defendant falsely represented that:
(1) the Plaintiff had a debt with RBS Card Services; (2) the
10
Defendant had authority to collect a debt that Plaintiff owed;
(3)
the
Plaintiff
Plaintiff
owed
was
in
default
$15,656.37.
on
(ECF.
No.
the
2
debt;
¶
and
23).
(4)
the
Plaintiff
maintains that she did not owe any debt to RBS.
(Id. ¶ 11).
Plaintiff further asserts for the first time in her opposition
to
Defendant’s
motion
that,
on
August
30,
2011,
after
Plaintiff’s account was referred to CCS, Plaintiff was “advised
by RBS representative that [CCS] was not authorized to collect
for RBS on [her] alleged debt.”
(ECF. No. 15-1 ¶ 4).
Assuming these assertions are true, CCS can still rely on
the bona fide error defense.
first
instance
on
concerning a debt.
Debt collectors can rely in the
information
they
obtain
from
creditors
See Chaudhry v. Gallerizzo, 174 F.3d 394,
406 (4th Cir. 1999) (holding that debt collectors do not have to
“vouch for the validity of the underlying debts”);
see also
Randolph v. IMBS, Inc., 368 F.3d 726, 729 (7th Cir. 2004) (noting
that creditors’ knowledge is not imputed to debt collectors).
CCS
received
Plaintiff’s
account
from
RBS,
the
creditor,
on
April 4, 2011, and, at the time, “it was represented that the
Account was in default and that a balance of $15,656.37 was
valid, due and owing by Plaintiff.”
(ECF. No. 13-3 ¶ 3).
Based
on the record, CCS had no reason to know that Plaintiff may not
owe the debt until Plaintiff disputed the debt in an August 7,
2011 letter to CCS.
After Defendant received the letter on
11
August
16,
2011,
Plaintiff.”
it
“made
no
further
attempts
to
contact
(ECF. No. 13-2 ¶¶ 8-9).
In order to establish the bona fide error defense, a debt
collector is not required to prove that it had procedures in
place to guard against the unknown or potential errors of others
–
instead,
the
debt
correct
any
errors
plainly
did
here
collector
once
has
to
received
ceasing
by
it
all
Plaintiff disputed the debt.
prompt
notice,
which
collection
steps
to
Defendant
efforts
after
See In re Creditrust Corp., 283
B.R. 826, 832 (Bankr.D.Md. 2002).
not contest this point.
take
Importantly, Plaintiff does
In contrast to Akalwadi, where, over
plaintiff’s multiple objections, the collection agency either
refused
to
reinvestigate
or
reinvestigated
and
made
a
false
determination, CCS ceased its collection efforts after Plaintiff
contested the debt.
See
Akalwadi, 336 F.Supp.2d at 498-99.
Plaintiff’s account history further confirms August 16, 2011 as
the last date of activity on the account.
(ECF. No. 13-3).
Contrary to Plaintiff’s arguments, CCS need not submit any
agreements
or
contracts
it
had
with
RBS
authorizing
CCS
to
collect the debt in order to assert the bona fide error defense.6
6
Plaintiff also states that she “has not had enough time to
conduct her discovery and therefore moves this Court to deny the
motion for summary judgment or defer considering it until
Discovery has been completed.”
(ECF. No. 15, at 5) (emphasis
added).
Pursuant to the court’s Scheduling Order, discovery
ended on January 28, 2013.
(ECF. No. 10).
Furthermore, the
12
The FDCPA expressly provides procedures that a debt collector
must take when a debtor disputes a debt.
For example, Section
1692g(b) states that if a debt is disputed, the debt collector
must
“cease
collection
of
the
debt
.
.
collector obtains verification of the debt.”
that here.
.
until
the
debt
Defendant did just
Notably, there is nothing in the statute stating
that, where a debt is later found to be invalid, any initial
collection efforts are per se violations of Section 1692e(2)(A).
See
Ducrect v. Alco Collections,
Inc., 931 F.Supp. 459, 462
(M.D.La. 1996) (noting the key issue is whether defendant has
acted “unscrupulously in attempting to collect a debt,” and not
the actual validity of the debt).
Accordingly, plaintiff has
failed to provide any facts indicating actionable misconduct by
CCS.
2.
Section 1692e(10)
Section
prohibited
1692e(10)
from
using
states
“any
that
false
a
debt
representation
collector
or
is
deceptive
means to collect or attempt to collect any debt or to obtain
information concerning a consumer.”
To prove a claim under this
parties submitted a joint status report on January 28, 2013, and
Defendant indicated that it “will be objecting to Plaintiff’s
discovery as untimely . . . but will provide substantive answers
to relevant and not otherwise objectionable discovery.”
(ECF.
No. 20, at 1).
Plaintiff has not moved to reopen briefing.
Based on the foregoing, Plaintiff’s request that the court
postpone adjudication on Defendant’s motion for summary judgment
pending completion of discovery is now moot.
13
provision of the FDCPA, Plaintiff must provide factual support
bearing
support
on
CCS’s
for
her
purported
misconduct.
assertion
that
Plaintiff
CCS
made
offers
any
no
false
representations or used deceptive means in pulling her credit
report.
To the contrary, CCS accessed Plaintiff credit report
on July 22, 2011, after Plaintiff’s account was referred to CCS
for collection on April 4, 2011, and upon belief that Plaintiff
owed the debt and that the information concerning the account
was accurate.
Moreover, CCS ceased all collection efforts after
Plaintiff disputed the debt to CCS.
Accordingly, judgment will
be entered in Defendant’s favor on this Count too.
III. Conclusion
For the foregoing reasons, Defendant’s motion for summary
judgment will be granted.
denied.
Plaintiff’s motion to strike will be
A separate Order will follow.
/s/
DEBORAH K. CHASANOW
United States District Judge
14
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